Long Investment Corp — Proxy Solicitation & Information Statement 2007

Apr 18, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Shui On Construction and Materials Limited (the “Company”), you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities nor it is calculated to invite any such offer or invitation. Neither this circular nor anything contained herein shall form the basis of any contract or commitment whatsoever. Such offer or invitation will be made only by means of a listing document and only in jurisdictions in which such offer or invitation may legally and validly be made.

This circular is not for distribution, directly or indirectly, in or into the United States (including its territories and dependencies, any State of the United States and the District of Columbia). This circular does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. The CCP Shares mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “Securities Act”). The CCP Shares may not be offered or sold in the United States except pursuant to registration or an exemption from the registration requirements of the Securities Act. CCP does not intend to make any public offering of the Shares in the United States.

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(Stock Code: 983)

PROPOSAL IN RELATION TO PRC DISTRESSED ASSET DEVELOPMENT OPERATIONS

Discloseable Transactions

Financial Adviser to the Company

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* for identification purpose only

18 April 2007

CONTENTS

Pages	Pages
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26

— i —

DEFINITIONS

In this circular, the following expressions shall have the following meanings, unless the context otherwise requires:

“Asset Injection”	the transfer of the entire equity capital in, and all the related
	shareholders loans to, the Project Companies to Tancherry
	satisfied by the allotment and issue of CCP Shares, the details
	of which are set out in the paragraphs under the heading
	“Asset Injection Agreements”;
“Asset Injection Agreements”	5 asset injection agreements all dated 12 April 2007 among,
	inter alia, the Group, the respective Co-investors, CCP and
	Tancherry in relation to Asset Injection;
“associates”	has the meaning as ascribed to the term under the Listing
	Rules;
“BIL”	Brilliance Investments Limited, a company incorporated in
	the BVI and a wholly owned subsidiary of the Company;
“Board”	board of Directors;
“BVI”	the British Virgin Islands;
“CCP”	China Central Properties Limited, a company incorporated in
	the Isle of Man and an associated company held as to 50% of
	its issued share capital by the Group as at the Latest
	Practicable Date;
“CCP Group”	CCP and its subsidiaries;
“CCP Shares”	ordinary shares of £0.01 each in the issued share capital of
	CCP;
“Co-investors”	the shareholders of the Project Companies, namely Rich
	Resources Investment Limited, Silver Summit (Delaware)
	Corporation (formerly known as Silver Summit (Delaware)
	LLC), Spinnaker Global Opportunity Fund Ltd., Spinnaker
	Global Emerging Markets Fund Ltd., Spinnaker Global
	Strategic Fund Ltd., Value Partners China Greenchip Fund
	Limited, Freemont Alliance Limited, Sunwin Pacific Limited,
	and Rich Alliance International Limited, other than the
	Group;
“Company” or “SOCAM”	Shui On Construction and Materials Limited, a company
	incorporated in Bermuda and listed on the main board of the
	Stock Exchange;
“connected persons”	has the meaning ascribed to it under the Listing Rules;

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DEFINITIONS

• “Consideration Shares” the consideration to be settled by the issue and allotment of new CCP Shares pursuant to the Asset Injection Agreements;

• “Construction and Project construction and project management agreements dated 12 Management Agreements” April 2007 for the provision of construction and project management services on property projects of the CCP Group in the PRC and entered into by each of Pat Davie and SOPM with Tancherry separately;

• “Contributing Projects” 4 partially completed property projects namely Central International Plaza Blocks A & C, Beijing Huapu Centre Phase I, Shengyuan Centre and Huitong Building, and one recently completed and upgraded property, namely Xiwang Building, the particulars of which are summarised in the section under the heading “Contributing Projects and DAD Business”;

“DAD Business” the business of developing partially completed assets in the PRC, which become available as a result generally of the financial constraints on the original owner/developer in completing the project, and which assets are held by the Project Companies as at the Latest Practicable Date, comprising the Contributing Projects and the contract to acquire Qingdao Central International Plaza Block B, and when the context so requires, includes future partially completed asset development business available as a result of the aforesaid constraints, and which is to be held by the Group or the CCP Group;

“Director(s)” the director(s) of the Company; “Group” the Company and its subsidiaries; “HK$” Hong Kong dollars, the lawful currency of Hong Kong; “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China; “Invested Equity Capital” all amounts applied by CCP for a direct or indirect investment in the CCP Group’s projects and reserves and retained earning of the CCP Group;

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	DEFINITIONS
“Investment Management	the investment management agreement dated 12 April 2007
Agreement”	among the Investment Manager, Tancherry, and the Company
	whereby the Investment Manager will provide investment
	management services to the CCP Group pursuant to such
	agreement;
“Investment Manager”	SOCAM Asset Management Limited, a company incorporated
	in the BVI and a wholly owned subsidiary of the Company;
“IRR”	the annualised internal rate of return, being the discounted
	rate calculated on a compound and monthly basis at which the
	present value of all the amounts invested into a project equals
	the present value of all cash flows generated by the project
	discounted to the date of making such investment;
“Latest Practicable Date”	11 April 2007, being the latest practicable date, prior to the
	printing of this circular for the purpose of ascertaining certain
	information contained in this circular;
“Listing”	listing of the CCP Shares on a Recognised Stock Exchange;
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange;
“Listing Time”	the time immediately prior to Listing;
“Non-competition Undertaking”	the non-competition undertaking given by the Group to the
	CCP Group under the terms of the Investment Management
	Agreement;
“Over-allotment Option”	the option to be granted by CCP to the Placing Agent under
	the underwriting agreement relating to the Placing pursuant to
	which CCP may be required to allot and issue additional CCP
	Shares;
“Pat Davie”	Pat Davie (China) Limited, a company incorporated in Hong
	Kong and a subsidiary of the Company;
“Placing”	the offer of the ordinary shares of CCP incidental to Listing;
“Placing Agent”	Deutsche Bank AG, London Branch;
“Placing Agreement”	the placing and underwriting agreement to be entered by, inter
	alia, CCP, the Placing Agent and the Company in relation to
	the Placing;
“Placing Price”	offer price per CCP Share in the Placing;

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	DEFINITIONS
“PRC”	the People’s Republic of China, and for the purpose of this
	circular, excluding Hong Kong, the Macau Special
	Administrative Region and Taiwan;
“Project Companies”	5 companies which indirectly hold the DAD Business, namely
	Coral Waters (Barbados) SRL, Prosper Idea Limited,
	Caperidge Group Limited, Mountain Mist (Barbados) SRL
	and Mountain Breeze (Barbados) SRL;
“Proposal”	the Asset Injection, the Subscription and the Placing;
“Recognised Stock Exchange”	means an internationally recognised stock exchange;
“Recognised Stock Exchange	the rules governing listing on, and the operation of the
Rules”	relevant Recognised Stock Exchange;
“RMB”	Renminbi, the lawful currency of the PRC;
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong);
“Shareholder(s)”	holder(s) of Shares;
“Shares”	shares of HK$1.00 each in the issued share capital of the
	Company;
“SOPM”	Shui On Project Management (China) Limited, a company
	incorporated in the BVI and a wholly owned subsidiary of the
	Company;
“Spinnaker Group”	Spinnaker Global Opportunity Fund Ltd., Spinnaker Global
	Strategic Fund Ltd., and Spinnaker Global Emerging Markets
	Fund Ltd., each of which being also one of the Co-investors;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Subscription”	the subscription for the new CCP Shares by BIL and the
	Spinnaker Group in accordance with the Subscription
	Agreement;
“Subscription Agreement”	the subscription agreement dated 12 April 2007 among BIL,
	the Spinnaker Group and CCP for the Subscription;
“subsidiary”	has the meaning ascribed thereto in the Listing Rules;
“Tancherry”	Tancherry Holdings Limited (to be renamed China Central
	Properties (BVI) Limited), a company incorporated in the
	BVI and a wholly owned subsidiary of CCP;

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			DEFINITIONS
“Total	Equity	Capital”	total share capital of CCP including its paid up share capital,
			share premium, and retained earnings of the CCP Group;
“US$”			United States dollars, the lawful currency of the United States
			of America;
“£”			pound sterling, the lawful currency of the United Kingdom;
“%”			percentage.

Unless otherwise specified in this circular, translations of RMB and US$ into HK$ are made in this circular, for illustration only, at the rates of RMB1.00 to HK$1.00 and US$1.00 to HK$7.80 respectively. No representation is made that any amount in RMB or HK$ or US$ could have been or can be converted at that rate or at any other rates.

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LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code: 983)

Executive Directors:

Mr. Vincent Lo Hong Sui (Chairman) Mr. Lawrence Choi Yuk Keung (Vice-chairman) Mr. Frankie Wong Yuet Leung (Chief Executive Officer) Mr. Raymond Wong Fook Lam Mrs. Vivien Lowe Hoh Wai Wan

Non-executive Director: Professor Michael John Enright

Independent Non-executive Directors: Mr. Anthony Griffiths Mr. Moses Cheng Mo Chi Professor K.C. Chan

Registered Office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Principal place of business in Hong Kong: 34th Floor, Shui On Centre, 6-8 Harbour Road, Wanchai, Hong Kong

18 April 2007

To the Shareholders

Dear Sir or Madam,

PROPOSAL IN RELATION TO PRC DISTRESSED ASSET DEVELOPMENT OPERATIONS

Discloseable Transactions

INTRODUCTION

The Directors announced that on 12 April 2007, the following agreements were signed:

• Asset Injection Agreements, comprising 5 agreements in total, whereby the Group and the Co-investors will, subject to Listing and other conditions of the agreements, transfer the entire equity capital in, and a majority of their related shareholders loans to, the Project Companies to Tancherry at a consideration to be settled by the issue and allotment of new CCP Shares in CCP, a company which intends to apply for a listing of its shares on a Recognised Stock Exchange. Such Consideration Shares will be issued as fully paid, to the Group and the Co-investors or as they may direct. The Directors expect that such shares

• for identification purpose only

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LETTER FROM THE BOARD

will represent approximately 35% (of which approximately 16.7% will be attributable to the Group) and the CCP Shares to be issued under Placing and Subscription will represent approximately 65% of the total issued share capital of CCP immediately following the completion of the Proposal (assuming Over-allotment Option is not exercised), but such percentage holding is subject to change pending the decision of the directors of CCP in relation to the Placing and Subscription. The adjusted net assets value of the Project Companies attributable to the Group and the shareholders loans as at 15 March 2007, together with further shareholders loans to be made prior to Listing, to be assigned by the Group to CCP amounted to approximately RMB1,093 million (approximately HK$1,093 million). However the value of the Consideration Shares to be received by the Group will be determined by reference to the Placing Price upon the completion of the Placing; and

• A Subscription Agreement whereby BIL, a wholly owned subsidiary of the Group, and the Spinnaker Group will, subject to Listing and other conditions set out in the agreement, subscribe at the Placing Price in cash for such number of new CCP Shares as is equal to the lesser of: (1) the maximum number of new CCP Shares that may be purchased with HK$1,200 million (in the case of BIL) or HK$393 million (in the case of the Spinnaker Group) and (2) such number of new CCP Shares which will upon issue increase their interests in CCP up to not more than 49% (in the case of BIL) or 9.9% (in the case of the Spinnaker Group) of the total number of CCP Shares in issue immediately after completion of the Proposal. In the event the Over-allotment Option is exercised, BIL and the Spinnaker Group may subscribe for additional CCP Shares at the Placing Price to the extent that such subscription shall not involve total cash outlay in excess of HK$1,200 million nor increase its interests in CCP to more than 49% of the total issued share capital of CCP (in the case of BIL) or 9.9% of the total issued share capital of CCP (in the case of the Spinnaker Group) immediately after completion of the Over-allotment Option. The Company understands that it is the intention of the Spinnaker Group to subscribe for additional CCP Shares at the Placing Price (in the event of Over-allotment Option is exercised) to the extent that such subscription shall not involve total cash outlay in excess of HK$393 million.

The Subscription is conditional upon, inter alia, completion of the Placing Agreement, which the Company will be a party to this agreement. The Directors confirm that the final number of CCP shares to be subscribed shall be subject to the Placing Price and the Subscription (including Over-allotment Option) will be, in any circumstances, in compliance with Listing Rules if so required.

The purpose of this circular is to provide you with further information in relation to the Asset Injection Agreements, the Subscription Agreement, the Investment Management Agreement and the Construction and Project Management Agreements.

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LETTER FROM THE BOARD

THE PROPOSAL

On 12 April 2007, the Asset Injection Agreements and the Subscription Agreement were entered into between, inter alia, the Group and the CCP Group in respect of the Asset Injection and the Subscription.

The Asset Injection Agreements

Date

12 April 2007

Parties

• (1) The Group and the Co-investors as the vendors;

• (2) Tancherry as the purchaser;

• (3) CCP; and

• (4) The Company as the guarantor of the obligations of the Group and Yida Group Co. Ltd., V Ventures Limited, and JPMorgan Special Situations Asia Corporation as the guarantors of the relevant vendors under the Asset Injection Agreements.

Assets Involved

The Group and the Co-investors will together sell to Tancherry, the entire issued share capital of each of the Project Companies, and the benefit of a majority of the related shareholder loans, together representing a majority interest of the Group and the Co-investors in the Project Companies at a consideration to be settled by the issue and allotment of the Consideration Shares. Such Consideration Shares will be issued as fully paid, to the Group and the Co-investors or as they may direct. The Directors expect that such shares will represent approximately 35% (of which approximately 16.7% will be attributable to the Group) and the CCP Shares to be issued under Placing and Subscription will represent approximately 65% of the total issued share capital of CCP immediately following the completion of the Proposal (assuming Over-allotment Option is not exercised), but such percentage holding is subject to change pending the decision of the directors of CCP in relation to the Placing and Subscription. The adjusted net assets value of the Project Companies attributable to the Group and the shareholders loans as at 15 March 2007, together with further shareholders loans to be made prior to Listing, to be assigned by the Group to CCP amounted to approximately RMB1,093 million (approximately HK$1,093 million). However the value of the Consideration Shares to be received by the Group will be determined by reference to the Placing Price upon the completion of the Placing. The Group has directed that all CCP Shares which are to be issued

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LETTER FROM THE BOARD

to the Group shall be issued and allotted to BIL. The table below sets out the equity interest and shareholders loans to be sold and transferred by the Group and the Co-investors, their respective adjusted net assets value as at 15 March 2007 and the consideration receivable under the Asset Injection Agreements:

Vendors Keygrow Investments Limited (a wholly owned subsidiary of the Company) Relevant members of the Co-investors Fortune Up Investments Limited (a wholly owned subsidiary of the Company) Relevant members of the Co-investors Jumbo China Investments Limited (a wholly owned subsidiary of the Company) Relevant members of the Co-investors

Subject Matter to be sold/transferred Consideration (Percentage in issued share capital of CCP represented by the Consideration Shares) (Notes 2&3) % Project Company and the related interest in the DAD Business Number of securities and percentage holding Shareholders loan as at 15 March 2007 (RMB’ million) Shareholders loan to be made prior to Listing (RMB’ million) Total investment cost (Note 1) (RMB’ million) Adjusted net assets value as at 15 March 2007 (RMB’ million) Mountain Mist (Barbados) SRL, the holding company of the owner of the Dalian Xiwang Building project 7,200,000 common quotas with no par value 48.0% 9.3 — 67.5 302.9 13.7% 7,800,000 common quotas with no par value 52.0% 10.1 — 73.2 328.2 14.8% Prosper Idea Limited, the holding company of the owner of the Chengdu Huitong Building project 25 ordinary shares of US$1 each 50.0% 125.0 — 125.0 75.6 8.8% 25 ordinary shares of US$1 each 50.0% 125.0 — 125.0 75.6 8.8% Mountain Breeze (Barbados) SRL, the holding company of the owner of the Beijing Huapu Centre Phase I project 1 common quota with no par value 50.0% 113.8 70.0 183.8 196.7 16.7% 1 common quota with no par value 50.0% 113.8 70.0 183.8 196.7 16.7%

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LETTER FROM THE BOARD

Vendors Shine Honest Investments Limited (a wholly owned subsidiary of the Company) Relevant members of the Co-investors Elite Great Investments Limited (a wholly owned subsidiary of the Company) Relevant members of the Co-investors

Subject Matter to be sold/transferred Consideration (Percentage in issued share capital of CCP represented by the Consideration Shares) (Notes 2&3) % Project Company and the related interest in the DAD Business Number of securities and percentage holding Shareholders loan as at 15 March 2007 (RMB’ million) Shareholders loan to be made prior to Listing (RMB’ million) Total investment cost (Note 1) (RMB’ million) Adjusted net assets value as at 15 March 2007 (RMB’ million) Coral Waters (Barbados) SRL, the holding company of the owner of Qingdao Central International Plaza Blocks A&C and contract holder of the project in Block B 30,000,000 common quotas with no par value 50.0% — — 31.0 90.0 3.9% 30,000,000 common quotas with no par value 50.0% — — 31.0 90.0 3.9% Caperidge Group Limited, the holding company of the owner of the Beijing Shengyuan Centre project 375 ordinary shares with no par value 37.5% 55.0 — 55.0 54.5 4.8% 625 ordinary shares with no par value 62.5% 91.6 — 91.6 90.8 7.9%

Notes:

1. The total investment cost includes the shareholders loan as at 15 March 2007 and further shareholders loan to be made prior to Listing.

2. The percentages of Consideration Shares are derived from the respective shares of the Group and the Co-investors in the aggregate amount of the adjusted net assets value and the shareholders loans as at 15 March 2007, and further shareholders loans to be made prior to Listing.

3. Excluding any CCP Shares which may be issued under the Placing (including Over-allotment Option) and the Subscription.

The Project Companies hold the Contributing Projects which comprise four partially completed property projects in the PRC and one recently completed and upgraded property asset in the PRC. A subsidiary under one of the Project Companies has also recently entered into a contract on 8 March 2007 to acquire an additional property, namely Block B of Central International Plaza in Qingdao, PRC for a consideration of approximately RMB197.4 million, payable in stages, which together with the Contributing Projects are referred to as the DAD Business. These are partially completed property projects in the PRC that the Group has invested in to capture the opportunity arising generally as a

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LETTER FROM THE BOARD

result of the financial constraints on the original owner/developer in completing the project. The Group holds interests ranging from 37.5% to 50% in the Project Companies and does not control the board of any of them. All Project Companies were accounted for as jointly controlled entities of the Group.

The total investment cost, including shareholders loan, of the Group in the Project Companies as at 15 March 2007 (excluding the shareholders loan of approximately HK$70 million to be made prior to Listing) was approximately HK$549.3 million, of which approximately HK$392.3 million will be transferred to the CCP Group. The proforma unaudited consolidated net profit (before and after taxation and extraordinary items) and the aggregate net assets value of the Project Companies for the years ended 31 December 2005 and 2006 were as follows:

	Mountain		Mountain	Coral
Year ended	Mist	Prosper	Breeze	Waters	Caperidge
31 December 2006	(Barbados)	Idea	(Barbados)	(Barbados)	Group
(RMB’ million)	SRL	Limited	SRL	SRL	Limited	Total
Net profit before
taxation and
extraordinary items	4.8	0.6	3.5	(3.3)	-	5.6
Net profit after taxation
and extraordinary
items	4.8	0.6	3.5	(3.3)	-	5.6
Aggregate net assets
value	126.2	1.2	3.6	58.6	-	189.6
	Mountain		Mountain	Coral
Year ended	Mist	Prosper	Breeze	Waters	Caperidge
31 December 2005	(Barbados)	Idea	(Barbados)	(Barbados)	Group
(RMB’ million)	SRL	Limited	SRL	SRL	Limited	Total
Net profit before
taxation and
extraordinary items	-	-	-	-	-	-
Net profit after taxation
and extraordinary
items	-	-	-	-	-	-
Aggregate net assets
value	121.2	-	-	-	-	121.2

Consideration

The consideration will be settled by the issue and allotment of the Consideration Shares to the Group and the Co-investors, which will represent approximately 35% of the total issued share capital of CCP immediately following the completion of the Proposal (assuming Over-allotment Option is not

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LETTER FROM THE BOARD

exercised), but such percentage holding is subject to change pending the decision of the directors of CCP in relation to the Placing and Subscription. The Consideration Shares were arrived at after arm’s length negotiations among the Company, the Co-investors and CCP and determined by reference primarily to:

• (a) the value of the underlying assets in the Contributing Projects with reference to the market valuation based on an independent valuation report compiled by Savills Valuation and Professional Services Limited of RMB3,970 million (approximately HK$3,970 million) as at 15 March 2007;

• (b) the unaudited adjusted proforma consolidated net assets value of the Project Companies (adjusted to take into account of the value of underlying assets in the Contributing Projects referred to in (a) above) as at 15 March 2007 of approximately RMB1,501 million (approximately HK$1,501 million));

• (c) the total amount of the shareholders loans of approximately RMB643.6 million (approximately HK$643.6 million) to the Project Companies as at 15 March 2007 to be assigned to CCP;

• (d) the total amount of shareholders loans of approximately RMB140 million (approximately HK$140 million) to be made to one of the Project Companies prior to Listing to be assigned to CCP; and

• (e) the Placing Price.

The adjusted net assets value of the Project Companies attributable to the Group and the shareholders loans as at 15 March 2007, together with further shareholders loans to be made prior to Listing, to be assigned by the Group to CCP amounted to approximately RMB1,093 million (approximately HK$1,093 million) which will represent approximately 16.7% of the total issued share capital of CCP immediately following the completion of the Proposal (assuming Over-allotment Option is not exercised), but such percentage holding is subject to change pending the decision of the directors of CCP in relation to the Placing and Subscription. However the value of the Consideration Shares to be received by the Group will be determined upon the completion of the Placing.

Conditions

The Asset Injection is conditional on, among other things:

• (1) the passing of the resolution(s) by the shareholders of CCP to approve the Listing application to a Recognised Stock Exchange and the Placing;

• (2) due execution by each of the parties to and each of the Placing Agreement, and the Asset Injection Agreements, becoming unconditional in all respects (save as to Listing occurring) and not being terminated;

• (3) the Listing Time having arrived; and

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LETTER FROM THE BOARD

• (4) the respective Project Companies (and the vendors, where relevant) receiving all relevant consents from the Bank of East Asia as may be necessary in connection with the proposed change in shareholding of the Project Companies and the related shareholders loans.

Completion

Completion will take place simultaneously with the completion of the Subscription and the Placing when all the above conditions precedent are fulfilled on or before 31 May 2007. In the event any of the Subscription is not completed, completion will still take place.

The Subscription Agreement

Date

12 April 2007

Parties

• (1) BIL, a wholly owned subsidiary of the Company;

• (2) Spinnaker Global Opportunity Fund Ltd., Spinnaker Global Emerging Markets Fund Ltd., and Spinnaker Global Strategic Fund Ltd, members of the Spinnaker Group, collectively with BIL as the subscribers; and

• (3) CCP.

Subscription

BIL and the Spinnaker Group shall subscribe at the Placing Price in cash for such number of new CCP Shares as is equal to the lesser of (1) the maximum number of new CCP Shares that may be purchased with HK$1,200 million (in the case of BIL) or HK$393 million (in the case of the Spinnaker Group) and (2) such number of new CCP Shares which will upon issue increase their interests in CCP up to not more than 49% (in the case of BIL) or 9.9% (in the case of the Spinnaker Group) of the total number of CCP Shares in issue immediately after completion of the Proposal. In the event the Over-allotment Option is exercised, BIL and the Spinnaker Group may subscribe for additional CCP Shares at the Placing Price to the extent that such subscription shall not involve total cash outlay in excess of HK$1,200 million nor increase its interests in CCP to more than 49% of the total issued share capital of CCP (in the case of BIL) or 9.9% of the total issued share capital of CCP (in the case of the Spinnaker Group) immediately after completion of the Over-allotment Option. The Company understands that it is the intention of the Spinnaker Group to subscribe for additional CCP Shares at the Placing Price (in the event of Over-allotment Option is exercised) to the extent that such subscription shall not involve total cash outlay in excess of HK$393 million.

The Subscription is conditional upon, inter alia, completion of the Placing Agreement, which the Company will be a party to this agreement. The Directors confirm that the final number of CCP shares to be subscribed shall be subject to the Placing Price and the Subscription (including Over-allotment Option) will be, in any circumstances, in compliance with Listing Rules if so required.

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LETTER FROM THE BOARD

The Directors intend to fund the Subscription in relation to the Group from its internal resources and unutilised banking facilities.

Conditions

The Subscription is conditional on, among other things:

• (1) the passing of the resolution(s) by the shareholders of CCP to approve the Listing application to a Recognised Stock Exchange and the Placing;

• (2) due execution by each of the parties to, and each of the Placing Agreement, the Asset Injection Agreements and the Subscription Agreement becoming unconditional in all respects (save as to Listing occurring) and not being terminated; and

• (3) the Listing Time having arrived.

Completion

Completion of the Subscription will take place simultaneously with the completion of the Asset Injection Agreements and the Placing and, if BIL and the Spinnaker Group subscribe for additional new CCP Shares on the exercise of the Over-allotment Option, simultaneously with the completion of the Over-Allotment Option, when all the above conditions precedent are fulfilled on or before 31 May 2007.

FURTHER INFORMATION ON CCP, CCP GROUP AND THE GROUP

Background and business of CCP and the CCP Group

CCP is a property investment company newly incorporated in the Isle of Man by the Group and Spinnaker Global Emerging Markets Funds Ltd. (a member of the Spinnaker Group and one of the Co-investors) to facilitate the restructuring and listing of the DAD Business on a Recognised Stock Exchange. CCP is jointly owned by the Group and the Spinnaker Group, each of which holds 1 share in the company. The board of directors of CCP currently comprises 2 members, one of whom is Mr. Wong Fook Lam, Raymond, a Director of the Company. It is the intention of Mr. Wong Fook Lam. Raymond that he will resign as Director from the Company upon the listing of CCP to focus on the business and affairs of the CCP Group. It is also intended that the board of directors of CCP, when fully constituted, will be led by Mr. Lo Hong Sui, Vincent, a Director and chairman of the Company, as its non-executive chairman, and will comprise 9 members including Mr. Wong Wah Kit, David, as managing director, Mr. Wong Yuet Leung, Frankie, a Director as non-executive director and Mr. David Eldon, Mr. Nicholas Brooke, Mr. Kay-Cheung Chan, Mr. Alexander R. Hamilton, and Mr. Tsang Kwok Tai, Moses as independent non-executive directors of CCP. Upon Listing, the Directors expect that the Group will hold not more than 49% of the issued share capital of CCP.

CCP will focus on medium to large partially completed property projects in major and secondary cities in the PRC where such projects become available generally as a result of their owners’ financial constraints. CCP may also invest in other property projects, if appropriate opportunities arise, that conform with its investment criteria.

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LETTER FROM THE BOARD

Other than the Asset Injection Agreements, the CCP Group has also entered into two agreements with independent third party vendors (parties unrelated to any Director, chief executive or substantial shareholder of the Company or any of its subsidiaries or their respective associates) on 15 March 2007 (as supplemented on 29 March 2007) and 12 April 2007 (as supplemented on the same day) respectively, to acquire (i) at least 142 units and the club house of Beijing Fengqiao Villas, a residential development in Beijing with a gross floor area of approximately 77,600 square metres for 142 units and a gross floor area of approximately 7,700 square metres for the club house and (ii) the rights to participate in the upgrading work of certain units of Beijing Huapu Centre Phase III, a residential and retail property in Beijing with a gross floor area of approximately 25,500 square metres in return for an interest return of 20% over the loans provided or a share in 55% of the net sale proceeds of the upgraded property in accordance with its terms. The upgrading work for both Fengqiao Villas and Huapu Centre Phase III is subject to the successful repurchase of various unit of these properties that have been sold to third parties by their respective vendors and the removal and discharge of all the existing encumbrances on the properties in accordance with the terms of the two agreements. The maximum consideration and loan commitment of CCP under the two agreements together is approximately RMB1,344 million (approximately HK$1,344 million) in aggregate (the final amount will depend on the number of units the vendors manage to repurchase). It is the intention of CCP to fund the acquisitions partly with the proceeds from the Placing and partly from bank borrowings. In the event the Listing does not proceed, and the Group is required to provide funding for such acquisition consideration and loan commitment, the Directors expect that the consideration and commitment in aggregate would constitute a discloseable transaction of the Company under Chapter 14 of the Listing Rules. The Company will comply with the relevant announcement and disclosure requirements as and when appropriate.

Contributing Projects and the DAD Business

Since November 2005, the Group began to invest in the DAD Business, establishing a number of investment consortia with the Co-investors and holding an interest ranging from 37.5% to 50% in each investment consortium and the projects thereunder. These projects comprise:

• (a) Xiwang Building, an office and retail complex in Dalian with a gross floor area of approximately 88,370 square metres. Development and upgrading work were completed and completion certificate was issued by relevant government authority in February 2007. Leasing of the office and retail areas of the property has already commenced and about 25% of the leasable office and retail areas has been signed up;

• (b) Huapu Centre Phase I, an office and retail complex in Beijing with a gross floor area of approximately 127,500 square metres. Completion of the development and upgrading work is expected to be in the fourth quarter of 2007;

• (c) Shengyuan Centre, an office development with two towers in Beijing with a gross floor area of approximately 42,400 square metres. Completion of the development and upgrading work is expected to be in the fourth quarter of 2007;

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LETTER FROM THE BOARD

• (d) Central International Plaza Blocks A & C, a mixed office, retail and residential development in Qingdao with a gross floor area of approximately 64,000 square metres. Sale of the office space commenced in November 2006 and over 46% of the office space have been sold and over 73% of the retail space is under offer with earnest money received. Sale of the residential and retail units is expected to begin in 2007;

• (e) Huitong Building, a hotel/serviced apartment, office and retail project in Chengdu with a gross floor area of approximately 102,000 square metres. It comprises two phases — two existing towers in Phase I consisting of hotel/serviced apartment, office and retail spaces; and an office building on a retail podium to be built in Phase II. Completion of the development and upgrading work of Phases I and II are expected to be in the fourth quarter of 2007 and in the fourth quarter of 2008 respectively; and

• (f) Central International Plaza Block B, a residential and retail development in Qingdao with a gross floor area of approximately 25,600 square metres which a subsidiary under one of the Project Companies entered into a contract to acquire for a consideration of approximately RMB197.4 million on 8 March 2007.

Pursuant to the Asset Injection, the Group will inject a majority of its interest in the DAD Business into the CCP Group. To strengthen the CCP Group as a separate and distinct platform for the Group’s interest in partially completed property projects in the PRC, the Group has given the Non-competition Undertaking not to be involved in the partially completed property projects in the PRC, which would include the DAD Business, during the term of the Investment Management Agreement, subject to certain exceptions set out in the undertaking. Further, the Group will also transfer all its potential DAD Business related projects now in discussion to the CCP Group on Listing.

Currently, the Group has entered into five letters of intent (or documents of a similar nature) (all with independent third parties unrelated to any Director, chief executive or substantial shareholder of the Company or any of its subsidiaries or their respective associates) in relation to mainly partially completed property projects in the PRC. They include a mixed use property project in Shenyang, a commercial and retail property project in Guangzhou, a commercial and retail property project in Tianjin and a mixed use property project in Qingdao with an aggregate gross floor area of approximately 525,000 square metres, as well as a mixed use property project in Dalian with a site area of approximately 6,300 square metres. Negotiations are still at preliminary stage and subject to the consent of the vendors of these projects, the Group will assign all its rights under these letters of intent (or documents of a similar nature) to the CCP Group for a nominal consideration on Listing.

Intention to obtain listing on a Recognised Stock Exchange and the Placing

CCP is a property investment company newly incorporated in the Isle of Man. It will focus primarily on investing in medium to large partially completed property projects in major and secondary cities in the PRC where such projects become available generally as a result of their current owners’ financial constraints.

It is the intention of CCP to apply for a listing of its CCP Shares on a Recognised Stock Exchange and to place new CCP Shares with institutional investors under the Placing. The Placing will be completed simultaneously with the completion of the Asset Injection and the Subscription at the time of Listing becoming effective. The Directors consider the Proposal and the Listing of CCP to be an

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LETTER FROM THE BOARD

attractive opportunity for the Group to access the international capital market for future fund raising if so required to develop the PRC partially completed property development business and to retain an interest in such businesses through the Group’s shareholding in CCP.

The Directors believe the formation of a dedicated corporation will permit the Group to more efficiently capitalise on opportunities in the partially completed property market in the PRC. To date, the Group relied on internal funds as well as seeking co-investment partners’ funds for each individual project. Through the incorporation and the Listing of CCP, the Directors believe this will allow the Group to fully realise the opportunity in the market and the capabilities of the Group without the need to utilise internal funds. Further, through the Investment Management Agreement, the Group will also benefit from potential payment from the performance fee as well.

Immediately after the completion of the Proposal, the Group’s interest in the Project Companies is likely to be changed from their respective interests to not more than 49% in the issued share capital of CCP. Thus, it is currently expected that CCP will become and be accounted for as an associated company of the Company following the completion of the Proposal. The shareholding structure below sets out the shareholding interests in CCP immediately after the completion of the Proposal:

==> picture [458 x 355] intentionally omitted <==

----- Start of picture text -----

Other institutional
SOCAM Other Co-investors
investors
Not more than 49% (Note 3) To be determined (Note 3) To be determined (Note 3)
China Central Properties Limited
(Isle of Man)
China Central Properties (BVI) Limited
(BVI)
Mountain Mist Caperidge Mountain Coral Waters Mountain
Prosper Idea Jumbo Grow
(Barbados) Group Breeze (Barbados) Flower
Limited Limited
SRL Limited (Barbados) SRL SRL (Barbados) SRL
(BVI) (BVI)
(Barbados) (BVI) (Barbados) (Barbados) (Barbados)
Xiwang Huitong Shengyuan Huapu Centre Huapu Centre
Building Building Centre (Phase I) (Phase III) Fengqiao Villas
Beijing
Dalian Chengdu Beijing Beijing Beijing
Central Central
International Plaza International
(Blocks A & C) Plaza (Block B)
Qingdao Qingdao
----- End of picture text -----

Contractual right to acquire an interest and/or the right to participate in the upgrading of property

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LETTER FROM THE BOARD

Notes:

1. The shareholding structure is for illustration purposes only since the respective shareholdings have yet to be finalised, and the respective holdings in CCP upon Listing will be determined following CCP and other relevant parties having determined the size and pricing of the Placing and the CCP Shares to be issued pursuant to the Placing and the Over-allotment Option.

2. Certain wholly-owned intermediate holding companies are excluded in this chart.

3. The respective shareholdings of CCP will be determined upon the completion of the Placing.

No final decision has been made and no final timetable has been fixed as to whether and when the Placing will be carried out or of the number and price of CCP Shares to be placed thereunder. However, the Directors understand that the directors of CCP intend to launch and complete the Placing as soon as practicable and where possible on or before 31 May 2007. The Listing and the Proposal are subject to, among other things, the final decision of the board of directors of CCP, the signing of the Placing Agreement with the Placing Agent and Listing having become effective in accordance with the Recognised Stock Exchange Rules. Further announcement will be made to update the Shareholders of any further development in relation to the Proposal and Listing as and when appropriate. Shareholders and other investors are reminded to exercise caution when dealing in the securities of the Company.

Relationship between the Group and CCP Group

The Group has been the investment manager for a number of investment consortia established by the Group for investing in the DAD Business. At the same time, Pat Davie and SOPM, each being a subsidiary of the Group, are also providing general construction and project management services to various Contributing Projects. The Group has also entered into certain security arrangements with various lenders to secure banking facilities granted to a number of the Project Companies. The Group intends to continue to provide investment management and general construction and project management services to the partially completed property projects in the PRC including the DAD Business under CCP Group. CCP Group also intends to enter into new financing arrangement with existing lenders of the Project Companies and to arrange new banking facilities to release the Group from all existing security arrangement in favour of the lenders of the Project Companies as soon as possible after Listing.

Investment management services

In relation to the investment management services provided by the Group to various investment consortia holding the DAD Business, the Group will, under the terms of the existing shareholders arrangement for some of these investment consortia, receive a bonus payment in the event the investment return of the relevant Co-investors exceeds a specific IRR. To formalise the relationship of the Group and CCP in the provision of these investment manager services in the future, and to provide the Group with a performance-linked incentive payment, the Group entered into the Investment Management Agreement with Tancherry.

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LETTER FROM THE BOARD

Investment Management Agreement

Date

12 April 2007

Parties

• (1) SOCAM Asset Management Limited as the Investment Manager;

• (2) Tancherry; and

• (3) the Company.

Subject Matter

Subject to Listing, the Investment Manager will provide project investment management services as well as other services with respect to the sourcing, structuring, financing, marketing, sales, leasing, and disposal of investment opportunities for the CCP Group in the PRC in accordance with investment strategy of CCP to focus primarily on partially completed property developments with financial constraints to complete the construction. The provision of services by the Group and the engagement of the Investment Manager by the CCP Group under the Investment Management Agreement is on a mutually exclusive basis.

Term

An initial term of 10 years and thereafter for successive 3 year period unless terminated by 6 months notice from either party or otherwise terminated in accordance with its terms. The agreement can also be terminated by the CCP Group prior to the expiry of its initial terms by 6 months notice if, among other things:

• (a) at any time after the fifth anniversary of the date of Listing, CCP fails to achieve an IRR of at least 10% based on its Total Equity Capital for the preceding three (3) consecutive calendar years, and the shareholders of CCP approve the termination; or

• (b) the Company ceases to hold more than 10% of the issued share capital of CCP.

Fee

The Group will be entitled to a base fee and a performance fee. The base fee will be an annual fee of 2% of CCP’s Invested Equity Capital, payable quarterly in arrears less a deduction for all general and administration expenses incurred by CCP and Tancherry subject to a cap of 0.5% of CCP’s Invested Equity Capital. If the IRR of the CCP Group’s project exceeds 10%, the Group will also be entitled to a performance fee of 20% over such part of the cash flows generated by the project that

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LETTER FROM THE BOARD

resulted in an IRR exceeding 10%. Also, 75% of the performance fee will be paid on disposal of the relevant project, and the remaining 25% will be kept in escrow until, among other things, the directors of CCP are satisfied that the projects of the CCP Group will achieve an IRR of at least 10% on an aggregate basis.

General construction and project management services

Pat Davie and SOPM, each being a subsidiary of the Group, have been engaged to provide general construction and project management services to some of the Contributing Projects, namely Xiwang Building in Dalian, the Central International Plaza Blocks A & C in Qingdao and Huitong Building in Chengdu respectively at a fee based on cost plus 4% of the construction cost involved. The fee payable to Pat Davie in respect of the project in Qingdao will be the aggregate of its cost being HK$5,032,000 plus 4% of the construction cost of RMB126,495,000 (approximately HK$126,495,000). The fee payable to Pat Davie in respect of the project in Dalian will be the aggregate of its cost being HK$9,418,300 plus approximately 4% of the budget cost, being HK$7,692,300. A further bonus fee will be payable to Pat Davie (or fee deduction will be made, as the case may be) of up to 40% of the savings in the final construction cost or, in a case of a fee deduction, 40% of the amount by which the final construction cost exceeds the budget cost subject to a maximum deduction of HK$5,769,300. The fee payable to SOPM in respect of the project in Chengdu will be the aggregate of its cost (to be agreed by the parties) and 4% of the total construction cost which shall be calculated upon completion of the project. In order that the Group may continue to provide construction and project management services to the Contributing Projects and other projects of the CCP Group, each of Pat Davie and SOPM entered into Construction and Project Management Agreements with Tancherry, the contents of which are identical.

Construction and Project Management Agreements

Date

12 April 2007

Parties

• (1) Pat Davie and SOPM; and

• (2) Tancherry

Subject Matter

Pat Davie or SOPM, will either by itself or will procure its subsidiaries to provide construction and project management services on all construction related matters for such property projects of the CCP Group in the PRC as the CCP Group may request. The services provided under the Construction and Project Management Agreements are not exclusive to the CCP Group, and the CCP Group has the right to obtain the same services from other service providers.

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LETTER FROM THE BOARD

Term

10 years commencing from the date of Listing

Fee

A lump sum cost as agreed between the parties plus 4% of the budget construction cost or the total construction cost if the budget construction cost cannot be agreed before the provision of services. If the total construction cost is less than the budget construction cost agreed before the provision of the services, a bonus of 40% of the cost savings will be paid to Pat Davie or SOPM, as the case may be. If the total construction cost exceeds the budget construction costs, 40% of the excess will be payable by Pat Davie or SOPM, as the case may be, to Tancherry subject to a cap of 3% of the budget construction cost. All service fees are payable on a monthly basis by equal instalments over the term of the service.

Financial assistance

The Group has also provided various financial assistance in funding the Contributing Projects:

• in relation to the Shengyuan Centre project in Beijing, the Group together with certain other Co-investors have provided a cash deposit in the amount of US$10,300,000 (approximately HK$80,340,000) as security to a commercial bank to facilitate the making of the RMB80,000,000 (approximately HK$80,000,000) entrustment loan by a commercial bank to fund the project;

• in relation to the Huapu Centre Phase I project in Beijing, the Company has given a completion guarantee in favour of a commercial bank in relation to the completion of the construction work for the Huapu Centre Phase I project as announced on 16 June 2006. As announced in a recent announcement dated 3 April 2007, the Company has further provided a corporate guarantee in favour of the relevant bank in respect of the bank loan provided for the sum of RMB730,000,000 (approximately HK$730,000,000) in relation to such project; and

• in relation to the Central International Plaza Blocks A and C project in Qingdao, the Company and certain other Co-investors have given completion guarantee in favour of a commercial bank in relation to the completion of construction work for the project.

The Directors understand that the CCP Group intends to enter into new security arrangement with existing lenders of the Project Companies and to arrange new banking facilities to release the Group from all existing security arrangement in favour of the lenders of the Project Companies as soon as possible after Listing.

Non-competition Undertaking

Pursuant to the terms of the Investment Management Agreement, the Company and the Investment Manager have agreed to undertake and procure that the Group will not be involved in acquiring, developing or dealing in any interest in partially completed property projects in the PRC

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LETTER FROM THE BOARD

including the DAD Business other than through the Investment Management Agreement or the CCP Group during the term of the Investment Management Agreement. Such undertaking will not apply to any other member of Shui On Company Limited and its subsidiaries other than the Group, and will not prevent the Group from:

• participating in any joint ventures with the CCP Group;

• acquiring, holding or dealing in less than 10% of the issued securities or trust units of any class of such company, trust or entity listed on a stock exchange; or

• acquiring or holding or dealing in any securities in any company, investment trust or joint venture which is engaged or interested in any partially completed property projects in the PRC, where the investment held does not exceed 15% of the outstanding voting securities or units of such entity or trust.

Ownership, control and lock up undertakings

Immediately after the completion of the Proposal, the Group intends that it will, through BIL, own not more than 49% of the issued share capital of CCP.

Subject to certain exceptions and conditional upon Listing, the Group will undertake to the Placing Agent and CCP not to offer, sell or otherwise dispose of the new CCP Shares it owns upon Listing (i.e. CCP Shares receivable under the Asset Injection Agreements and the Subscription) for a period of 12 months from the date of Listing. Each of the Co-investors will also undertake to CCP Group not to offer, sell or otherwise dispose of the new CCP Shares they respectively own immediately upon Listing (i.e. CCP Shares receivable under the Asset Injection Agreements and the Subscription (in the case of the Spinnaker Group)) subject to certain conditions and exceptions for a period of 6 months immediately after the Listing.

IMPACT ON THE GROUP AND REASONS FOR THE PROPOSAL

The Group is engaged in, among others, the DAD Business in the PRC, cement operation in the PRC, investment in venture funds, construction and contracting, renovations and fitting out in Hong Kong and, through Shui On Land Limited, a subsidiary of Shui On Company Limited, its ultimate holding company, in property development in the PRC.

Impact of the Proposal on the Group

Clear segregation of business

Following the completion of the Proposal, the Group will consolidate all its interests in the DAD Business under the CCP Group. The CCP Group will become a separate and distinct platform to focus on the development of partially completed property projects in the PRC, including the DAD Business,

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LETTER FROM THE BOARD

and a separate and independent platform to raise its own funds for such operations. The Group will, at the same time, continue to capitalise on its experience in the PRC property market by acting as the investment and project manager of the CCP Group under the Investment Management Agreement and the Construction and Project Management Agreements.

Ownership and control

The Group invests in its DAD Business by forming investment consortia with the Co-investors, and hold an interest ranging from 37.5% to 50% in each of the related projects involved. Following the Asset Injection, the Group will segregate partially completed property projects in the PRC, including the DAD Business from its existing business by consolidating all these interests in the Project Companies under one single entity under the CCP Group. Under the Subscription Agreement, the Group can maintain a substantial interest in the partially completed property projects in the PRC, including DAD Business in CCP.

The Group does not control any of the boards of directors of the Project Companies. It manages their operations by acting as the investment manager and in some cases, the construction and project manager of the projects involved. Following completion of the Proposal, the Group will not control the board of CCP, but Mr. Lo Hong Sui, Vincent will continue to lead all partially completed property projects businesses, including the DAD Business by leading the board of CCP as the non-executive chairman, and Mr. Wong Yuet Leung, Frankie will participate in the supervision and operation of the CCP Group as its non-executive director. The Group will also continue to act as the investment manager at a base fee and a performance fee and, where appropriate, the construction and project manager of the CCP Group for its projects.

Financial impact

It is expected that the Group’s ordinary shareholding in CCP will be not more than 49% as a result of the Proposal. Accordingly, upon completion of the Asset Injection, the Group is expected to recognise a gain in the financial year ending 31 December 2007, being the difference between (a) the attributable share of net assets of the Project Companies immediately before the Asset Injection and the total amount of shareholders loans to be assigned to CCP; and (b) the share of net assets of the CCP Group attributable to the Asset Injection upon completion of the Proposal. Such gain will mainly arise from the revaluation of properties underlying the Contributing Projects and is subject to the Placing Price and any such gain will however be non-recurring in nature and will not have any cash impact to the Group. The Subscription will have no impact on the earnings and the net assets position of the Group.

Reasons for the Proposal

The Directors consider the Proposal and the Listing of CCP to be an attractive opportunity for the Group to:

(a) capitalise on the strong interest of international capital in the PRC property market;

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LETTER FROM THE BOARD

• (b) access the international capital market for future fund raising if so required for investing in and developing partially completed property projects in the PRC;

• (c) stay focused in investing in and developing partially completed property projects in the PRC but without having to negotiate separate joint venture agreement or shareholders agreement on a project by project basis, which can be very time consuming and may cause undue delay to the closings of these projects;

• (d) participate in larger projects through CCP which, to date, is subject to capital resources constraints of the Group; and

• (e) retain a stable income to the Group though the Investment Management Agreement as a result of an agreed base fee and a performance fee over all projects of the CCP Group, saving negotiating time and effort in fixing the investment bonus for each projects on a case by case basis.

The Directors consider the terms of the Asset Injection Agreements and the Subscription Agreement are fair and reasonable and the Proposal is in the interest and benefit of the Company and its Shareholders as a whole.

The Directors confirm, to the best of their knowledge, and after having made all reasonable enquiries, the counterparty and the ultimate beneficial owner of the counterparty are third parties independent of the Company and connected persons of the Company.

Implications of the Listing Rules

Value Partners Limited, the investment manager of one of the Co-investors, is interested in about 5.02% of the issued share capital of the Company. None of the Co-investors is connected with any Director, chief executive or substantial shareholder of the Company or any of its subsidiaries or their respective associates.

The Asset Injection Agreements and the Subscription Agreement and the transactions contemplated thereunder together will constitute discloseable transactions of the Company under Chapter 14 of the Listing Rules.

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LETTER FROM THE BOARD

INFORMATION ON THE GROUP

The Group is engaged principally in distressed property development, cement production, construction, investment in property development and venture capital investment in Hong Kong and the PRC.

Yours faithfully By Order of the Board Shui On Construction and Materials Limited Vincent Lo Hong Sui Chairman

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GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts not contained in this circular, the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

(A) Interests of Directors and chief executive

At the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which were taken or deemed to have been taken under such provisions of the SFO) or the Model Code for Securities Transactions by Directors of Listed Companies or which were required to be entered in the register required to be kept under section 352 of the SFO were as follows:

• (a) Long position in the shares of the Company

	**Number of **	ordinary shares	ordinary shares	Approximate
	**in the **	Company		percentage of
	Personal		Other	shareholding in
Name of Director	interests	interests		the Company
Lo Hong Sui, Vincent	—	188,915,000		66.56%
			(Note)
Choi Yuk Keung, Lawrence	740,000		—	0.26%
Wong Fook Lam, Raymond	700,000		—	0.25%
Lowe Hoh Wai Wan, Vivien	396,000		—	0.14%

Note:

These shares comprise 181,871,000 shares beneficially owned by Shui On Company Limited (“SOCL”) and 7,044,000 shares and underlying shares deemed to be interested by SOCL under sections 317 and 318 of the SFO.

Among 181,871,000 shares beneficially owned by SOCL, 166,148,000 shares and 15,723,000 shares were held respectively by SOCL and Shui On Finance Company Limited, which is an indirect wholly-owned subsidiary of SOCL. SOCL is owned by the Bosrich Unit Trust, the trustee of which is Bosrich Holdings Inc. The units of the Bosrich Unit Trust are the property of a discretionary trust, of which Mr. Lo Hong Sui, Vincent is a discretionary beneficiary and HSBC International Trustee Limited is the trustee. Accordingly, Mr. Lo Hong Sui, Vincent, HSBC International Trustee Limited and Bosrich Holdings Inc. are deemed to be interested in such shares under the SFO.

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GENERAL INFORMATION

On 27 August 2002, SOCL granted call options over certain existing shares of the Company beneficially owned by SOCL to each of Mr. Wong Ying Wai, Wilfred (“Mr. Wilfred Wong”), Mr. Wong Hak Wood, Louis (“Mr. Louis Wong”) and Mr. Wong Yuet Leung, Frankie as part of the incentive reward for their services to the Company. A maximum of 50% of the shares transferred or to be transferred upon exercise of call options shall be subject to a restriction of disposal within 12 months from the date such shares are transferred. Mr. Wilfred Wong and Mr. Louis Wong had exercised all their call options and accordingly are deemed to be parties to an agreement to acquire shares under sections 317 and 318 of the SFO. As such, SOCL is deemed to be interested in the shares and underlying shares owned by Mr. Wilfred Wong and Mr. Louis Wong.

(b) Short position in the shares of the Company

			Approximate
	Number of ordinary shares		percentage of
	in the Company		shareholding in
Name of Director	Personal interests	Other interests	the Company
Lo Hong Sui, Vincent	—	1,600,000	0.56%
		(Note)

Note: These shares represent the outstanding balance of the call options granted by SOCL under the call option arrangement mentioned in the note to item (a) above.

(c) Share options of the Company

At the Latest Practicable Date, the following Directors had interests in the share options granted by the Company under the share option scheme adopted by the Company on 27 August 2002:

			Period during	Number of the
		Subscription	which options	ordinary shares
		price per	outstanding	subject to the
Name of Director	Date of grant	share	are exercisable	options
		HK$
Choi Yuk Keung,	27-8-2002	6.00	27-2-2003 to	168,000
Lawrence			26-8-2007
	27-8-2002	6.00	27-8-2005 to	2,175,000
			26-8-2010
	3-1-2007	16.78	3-1-2010 to	700,000
			2-1-2017
Wong Yuet Leung,	27-8-2002	6.00	27-8-2005 to	1,600,000
Frankie			26-8-2010
	1-8-2006	14.00	1-2-2007 to	2,000,000
			31-7-2011
	3-1-2007	16.78	3-1-2010 to	1,500,000
			2-1-2017

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GENERAL INFORMATION

			Period during	Number of the
		Subscription	which options	ordinary shares
		price per	outstanding	subject to the
Name of Director	Date of grant	share	are exercisable	options
		HK$
Wong Fook Lam,	1-8-2006	14.00	1-2-2007 to	176,000
Raymond			31-7-2011
	3-1-2007	16.78	3-1-2010 to	700,000
			2-1-2017
Lowe Hoh Wai Wan,	27-8-2002	6.00	27-8-2005 to	660,000
Vivien			26-8-2010
	1-8-2006	14.00	1-2-2007 to	150,000
			31-7-2011
	3-1-2007	16.78	3-1-2010 to	625,000
			2-1-2017

• (d) Call option over the shares of the Company

At the Latest Practicable Date, the following Director had a call option granted by SOCL over the shares of the Company pursuant to the arrangement mentioned in the note to item (a) above:

Number of shares subject to Name of Director Exercise price Exercise period the call option Wong Yuet Leung, Frankie HK$6.00 27-8-2005 to 1,600,000 26-8-2010

• (e) Long position in the shares of Shui On Land Limited (“SOL”)

Approximate Number of ordinary shares percentage of in SOL shareholding Name of Director Personal Interest Other interests in SOL Lo Hong Sui, Vincent — 2,250,565,225 53.78% (Note)

Note: These shares are directly held by subsidiaries of SOCL, namely Shui On Properties Limited, Shui On Investment Company Limited and New Rainbow Investments Limited. SOCL is owned by the Bosrich Unit Trust, the trustee of which is Bosrich Holdings Inc. The units of the Bosrich Unit Trust are the property of a discretionary trust, of which Mr. Lo Hong Sui, Vincent is a discretionary beneficiary and HSBC International Trustee Limited is the trustee. Accordingly, Mr. Lo Hong Sui, Vincent is deemed to be interested in such shares under the SFO.

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GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which were taken or deemed to have been taken under such provisions of the SFO) or the Model Code for Securities Transactions by Directors of Listed Companies or which were required to be entered in the register required to be kept under section 352 of the SFO.

(B) Interests of shareholders discloseable pursuant to the SFO

Save as disclosed below and under the section “Interests of Directors and chief executive” above, the Directors are not aware of any other person (other than a Director or chief executive of the Company or his/her respective associate(s)) who, at the Latest Practicable Date, had an interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:

				Approximate
				percentage of
				shareholding
Name of	Class of		Number of	in the
shareholders	shares	Capacity	shares held	Company
Louis Wong	Ordinary	Beneficial owner/Interests of	188,915,000 (L)	66.56% (L)
		party to an agreement to	(Note ii)
		acquire shares under sections
		317 and 318 of the SFO
Wilfred Wong	Ordinary	Beneficial owner/Interests of	188,915,000 (L)	66.56% (L)
		party to an agreement to	(Note ii)
		acquire shares under sections
		317 and 318 of the SFO
John Zwaanstra	Ordinary	Interest of controlled	25,185,251 (L)	8.87% (L)
		corporation	(Note iii)
Cheah Cheng Hye	Ordinary	Interest of controlled	14,238,000 (L)	5.02% (L)
		corporation	(Note iv)
Citigroup Inc.	Ordinary	Interest of controlled	14,675,501 (L)	5.17% (L)
		corporations/Holder of	702,000 (P)	0.25% (P)
		security interest in
		shares/custodian
		corporation/approved lending
		agent

Notes:

(i) The letter “L” denotes a long position and the letter “P” denotes interest in a lending pool.

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GENERAL INFORMATION

• (ii) These shares include the aggregate interests of SOCL deemed under sections 317 and 318 of the SFO as mentioned in the note to item (a) under “Interests of Directors and chief executive” above.

• (iii) These shares are held by Penta Investment Advisers Limited which is wholly owned by Mr. John Zwaanstra.

• (iv) These shares are held by Value Partners Limited which is controlled by Mr. Cheah Cheng Hye.

(C) Substantial shareholding in other members of the Group

Save as disclosed below, the Directors are not aware of any other person (other than a Director or chief executive of the Company or his/her respective associate(s)) who, at the Latest Practicable Date, was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group:

==> picture [432 x 405] intentionally omitted <==

----- Start of picture text -----

||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|Name|of|owner|of|shares|Effective|%|
|or|equity|interest|equity|interest|
|(as|the|case|may|be)|Name|of|subsidiary|held|
|Panyu|Dynamic|Mark|Steel|&|Aluminum|20%|
|(Guangzhou|Panyu|Guanglu|Engineering|Co.|Ltd.|
|Industrial|Co.,|Ltd.)|
|Eversound|Enterprise|Limited|Panyu|Dynamic|Mark|Steel|&|Aluminum|16%|
|Engineering|Co.|Ltd.|
|Metro|Materials|Engineering|Lamma|Concrete|Products|Limited|40%|
|Company|Limited|
|Metro|Materials|Engineering|Guangdong|Lamma|Concrete|Products|40%|
|Company|Limited|Limited|
|Panyu|Shui|Fai|Metal|Works|Engineering|22.5%|
|(Guangzhou|Panyu|Guanglu|Company|Limited|
|Industrial|Co.,|Ltd.)|
|Hip|Kwan|Engineering|Company|Panyu|Shui|Fai|Metal|Works|Engineering|22.5%|
|Limited|Company|Limited|
|Eversound|Enterprise|Limited|Dynamic|Mark|Limited|20%|
|Hip|Kwan|Engineering|Company|Shui|Fai|Metal|Works|Engineering|22.5%|
|Limited|Company|Limited|
|Eversound|Enterprise|Limited|Shui|Fai|Metal|Works|Engineering|22.5%|
|Company|Limited|

----- End of picture text -----

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GENERAL INFORMATION

==> picture [437 x 308] intentionally omitted <==

----- Start of picture text -----

||||||||||
|---|---|---|---|---|---|---|---|---|
|Name|of|owner|of|shares|Effective|%|
|or|equity|interest|equity|interest|
|(as|the|case|may|be)|Name|of|subsidiary|held|
|Ecomat|(Hong|Kong)|Limited|Pacific|Extend|Limited|18%*|
|Win|Media|Limited|Pacific|Extend|Limited|10%|[#]|
|(Shanghai|Shui|On|15%|
|Construction|Co.,|Ltd.)|
|(Shanghai|Shui|On|15%|
|(SIG|Investment|Management|Construction|Co.,|Ltd.)|
|Co.,|Ltd.)|
|(Chongqing|20%|
|T.H.|Desheng|Engineering|Co.|Ltd.)|
|(Chongqing|20%|
|T.H.|Desheng|Engineering|Co.|Ltd.)|
|Chongqing|T.H.|White|Cement|Co.|Ltd.|40%|
|45%|

----- End of picture text -----

• The 18% equity interest held by Ecomat (Hong Kong) Limited carries voting right of 11.25%.

• The 10% equity interest held by Win Media Limited carries voting right of 6.25%.

3. SERVICE CONTRACTS

At the Latest Practicable Date, no Director had a service contract with any member of the Group which is not expiring or determinable by the Company within one year without the payment of compensation other than statutory compensation.

4. LITIGATION

At the Latest Practicable Date, neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

5. COMPETING BUSINESS INTERESTS OF DIRECTORS

At the Latest Practicable Date, none of the Directors and their respective associates has any interest in a business apart from the Group’s business, which competes or is likely to compete directly or indirectly, with the Group’s business and would require disclosure under Rule 8.10 of the Listing Rules.

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GENERAL INFORMATION

6. GENERAL

• (a) The qualified accountant of the Company is Mr. Wong Fook Lam, Raymond, a fellow of the Institute of Chartered Accountants in England and Wales and the Hong Kong Institute of Certified Public Accountants and an associate of the Institute of Chartered Accountants of Australia.

• (b) The secretary of the Company is Mr. Sincere Wong, a qualified lawyer in the jurisdictions of Hong Kong, England and Wales.

• (c) The principal share registrar and the transfer office of the Company is the Bank of Bermuda Limited, 6 Front Street, Hamilton HM 11, Bermuda.

• (d) The Hong Kong branch share registrar and transfer office is Standard Registrars Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.

• (e) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. The head office and principal place of business of the Company is at 34th Floor, Shui On Centre, 6-8 Harbour Road, Wanchai, Hong Kong.

• (f) The English text of this circular shall prevail over the Chinese text.

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