Long Investment Corp — Proxy Solicitation & Information Statement 2008

Mar 19, 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, 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, you should at once hand this circular and the accompanying form of proxy 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.

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(Stock Code: 983)

CONNECTED AND MAJOR TRANSACTION DISPOSAL OF PARTIAL INTEREST IN SHUI ON LAND LIMITED

Independent Financial Adviser to

the Independent Board Committee and the Independent Shareholders

ANGLO CHINESE CORPORATE FINANCE, LIMITED

AND

PROPOSED RE-ELECTION OF DIRECTORS

A letter from the Independent Board Committee is set out on page 12 of this circular.

A letter from Anglo Chinese, the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders, is set out on pages 13 to 28 of this circular.

A notice convening the SGM to be held at Room 103, 1st Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong on 23 April 2008 at 3:00 p.m. is set out on pages 46 and 47 of this circular. Whether or not you are able to attend the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the head office of the Company at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong as soon as possible and, in any event, not later than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting and any adjourned meeting (as the case may be) should you so wish.

* for identification purpose only

20 March 2008

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Letter of advice from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Appendix I — Financial information on the Group . . . . . . . . . . . . . . . . . . . . . . . . . .	29
Appendix II — General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	31
Appendix III — Details of Directors proposed to be re-elected . . . . . . . . . . . . . . . . . .	44
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	46

— i —

DEFINITIONS

In this circular, the following expressions have the meanings respectively set opposite them unless the context otherwise requires:

“Agreement”

the sale and purchase agreement dated 4 March 2008 entered into between New Rainbow and SOICL in respect of the Disposal, as supplemented and amended by the supplemental agreement entered into between the same parties dated 14 March 2008;

• “ Anglo Chinese ” or “ Independent Financial Adviser ”

Anglo Chinese Corporate Finance, Limited, the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Disposal, and a corporation licensed under the SFO to conduct Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO;

• “ associate(s) ”, “ connected person(s) ”, “ substantial shareholder(s) ”, “ subsidiary(ies) ”

each has the meaning ascribed to it in the Listing Rules;

• “ Board ”

the board of Directors;

• “ Business Day ”

a day other than a Saturday or Sunday, on which banks are open in Hong Kong to the general public for business;

• “ Company ”

Shui On Construction and Materials Limited, a company incorporated in Bermuda whose securities are listed on the main board of the Stock Exchange (stock code: 983);

• “ Directors ”

directors of the Company;

• “ Disposal ” the disposal of the Sale Shares by New Rainbow pursuant to the Agreement;

• “ 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 PRC;

• “ Independent Board Committee ”

the committee of the Board comprising Mr. Anthony Griffiths, Mr. Cheng Mo Chi, Moses and Mr. Gerrit Jan de Nys, all being independent non-executive Directors, formed to advise the Independent Shareholders on whether the terms and conditions of the Agreement are fair and reasonable;

— 1 —

DEFINITIONS

“ Independent Shareholders ” shareholders of the Company other than members of the Shui On Group and its associates;

• “ Latest Practicable Date ” 14 March 2008, being the latest practicable date prior to the printing of this circular for ascertaining certain information herein;

• “ Listing Rules ” the Rules Governing the Listing of Securities on the Stock Exchange;

• “ Maximum Purchase Price ” HK$8.50 per SOL Share;

• “ Minimum Purchase Price ” the minimum price of HK$7.68 per SOL Share to be paid by SOICL under the Agreement;

• “ New Rainbow ” New Rainbow Investments Limited, which is a wholly owned subsidiary of the Company and holds approximately 12.57% of the issued share capital in SOL at the Latest Practicable Date;

• “ PRC ” or “ Mainland China ” the People’s Republic of China, and for the purpose of this circular, excluding Hong Kong and the Macau Special Administrative Region;

• “ Previous Disposal ” the disposal of the SOL Shares by New Rainbow to SOICL as announced by the Company on 16 July 2007;

• “ Price Fixing Date ” 14 March 2008, being the day for determining the Purchase Price;

• “ Purchase Price ” the price per SOL Share to be paid by SOICL to New Rainbow for the Sale Shares determined in accordance with the Agreement;

• “ Resolution ” the ordinary resolution no.1 to be proposed at the SGM as set out in the notice of the SGM which is set out at the end of this circular;

• “ RMB ” Renminbi, the lawful currency of the PRC;

• “ Sale Shares ” such number of SOL Shares (rounded to the nearest whole number) as shall result from dividing Hong Kong dollars one billion (HK$1,000,000,000) by the Purchase Price;

• “ SFO ” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);

• “ SGM ” the special general meeting to be convened by the Company to consider, among others, the Agreement and the Disposal;

— 2 —

DEFINITIONS

“Shareholders”	holders of the shares of the Company;
“Shui On Group”	SOCL and its subsidiaries;
“SOCL”	Shui On Company Limited, the controlling shareholder
	interested in approximately 56.57% of the issued share capital
	of the Company at the Latest Practicable Date;
“SOICL”	Shui On Investment Company Limited, a wholly owned
	subsidiary of SOCL and an investment holding company;
“SOL”	Shui On Land Limited, a company established in the Cayman
	Islands as an exempted company with limited liability whose
	securities are listed on the main board of the Stock Exchange;
“SOL Share(s)”	ordinary share(s) of nominal value US$0.0025 each in the
	capital of SOL;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“US$”	US dollars, the lawful currency of the United States of
	America; and
“%”	per cent.

— 3 —

LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code: 983)

Executive Directors:

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

Non-executive Director: Professor Michael John Enright

Independent Non-executive Directors: Mr. Anthony Griffiths Mr. Cheng Mo Chi, Moses Mr. Gerrit Jan de Nys

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 Hong Kong

20 March 2008

To the Shareholders

Dear Sir or Madam,

CONNECTED AND MAJOR TRANSACTION DISPOSAL OF PARTIAL INTEREST IN SHUI ON LAND LIMITED AND PROPOSED RE-ELECTION OF DIRECTORS

INTRODUCTION

The Board is pleased to announce that on 4 March 2008, New Rainbow, a wholly owned subsidiary of the Company, entered into the Agreement with SOICL whereby New Rainbow agreed to sell to SOICL and SOICL agreed to purchase approximately Hong Kong dollars one billion (HK$1,000,000,000) worth of Sale Shares at a price per SOL Share equal to the Purchase Price and subject to the terms of the Agreement. The Disposal, when aggregated with the Previous Disposal, constitutes a connected and major transaction for the Company and is subject to the approval by the Independent Shareholders at the SGM.

* for identification purpose only

— 4 —

LETTER FROM THE BOARD

At the SGM, ordinary resolutions will also be proposed to re-elect Mr. Gerrit Jan de Nys and Ms. Lau Jeny as Directors in compliance with the Code on Corporate Governance Practices as set out in Appendix 14 to the Listing Rules.

The purpose of this circular is to provide you with further information about the Disposal and the proposed re-election of Directors to enable you to make an informed decision on whether to vote for or against the proposed resolutions at the SGM.

THE AGREEMENT

Date: 4 March 2008

Parties: (1) New Rainbow; and

• (2) SOICL

Sale and purchase

New Rainbow agrees to sell and SOICL agrees to purchase approximately Hong Kong dollars one billion (HK$1,000,000,000) worth of Sale Shares at a price per SOL Share equal to the Purchase Price.

Purchase Price

The Purchase Price shall be determined on the Price Fixing Date, and shall be the higher of the following:

• (i) Minimum Purchase Price - HK$7.68 per SOL Share, being the higher of (A) the closing price per SOL Share as quoted on the Stock Exchange on the date of the Agreement and (B) the volume weighted average price per SOL Share as quoted on the Stock Exchange for the consecutive thirty (30) dealing days immediately preceding and including the date of the Agreement; and

• (ii) current market price - the volume weighted average closing price per SOL Share as quoted on the Stock Exchange for the dealing days commencing from the date of the Agreement and ending on the Price Fixing Date or, if that is not a dealing day, the immediately preceding dealing day, both days inclusive,

PROVIDED that if the Purchase Price exceeds the Maximum Purchase Price of HK$8.50 per SOL Share, SOICL shall have the right to terminate the Agreement by written notice on or before the first Business Day immediately following the Price Fixing Date.

— 5 —

LETTER FROM THE BOARD

The Minimum Purchase Price and the Maximum Purchase Price of HK$7.68 and HK$8.50 per SOL Share respectively represents:

• (a) a premium of 3.09% and 14.09% over the closing price of HK$7.45 per SOL Share as quoted on the Stock Exchange on 4 March 2008, being the date of signing the Agreement;

• (b) a premium of 1.59% and 12.43% over the average closing price of HK$7.56 per SOL Share for the last five (5) dealing days up to and including 4 March 2008; and

• (c) a discount of 0.92% to and a premium of 9.66% over the average closing price of approximately HK$7.75 per SOL Share for the last thirty (30) dealing days up to and including 4 March 2008.

The basis of determination of the Purchase Price and the Maximum Purchase Price were arrived at based on arm’s length negotiation between the parties having made reference to the prevailing market price of the SOL Shares on the Stock Exchange.

Sale Shares

Based on the Minimum Purchase Price and the Maximum Purchase Price of HK$7.68 and HK$8.50 respectively, up to approximately 130.21 million SOL Shares and 117.65 million SOL Shares may be sold by New Rainbow to SOICL under the Agreement, representing approximately 3.11% and 2.81% respectively of the issued share capital of SOL.

Conditions

The completion of the sale and purchase of the Sale Shares under the Agreement is conditional upon the approval of the Independent Shareholders at the SGM for the execution of the Agreement and the Disposal.

Completion

Completion shall take place within three (3) Business Days after the above condition has been satisfied and in any event shall not be later than 31 May 2008 (or such later date as the parties may agree).

SUPPLEMENTAL AGREEMENT

Date: 14 March 2008 Parties: (1) New Rainbow; and (2) SOICL

Subject:

The parties have agreed to amend the Agreement whereby the definition of Price Fixing Date in the Agreement was amended to 14 March 2008.

— 6 —

LETTER FROM THE BOARD

FINAL PURCHASE PRICE

The final Purchase Price as determined on 14 March 2008 was HK$7.68 per SOL Share, being the Minimum Purchase Price. As the Purchase Price does not exceed the Maximum Purchase Price of HK$8.50 per SOL Share, SOICL is obliged to purchase approximately Hong Kong dollars one billion (HK$1,000,000,000) worth of SOL Shares, being 130,208,333 SOL Shares at HK$7.68 per SOL Share, representing approximately 3.11% of the issued share capital of SOL at the Latest Practicable Date.

INFORMATION RELATING TO SOL

SOL, through its subsidiaries and associates, is one of the leading property developers in the PRC. It engages principally in the development, sale, leasing, management and long-term ownership of high-quality residential, office, retail, entertainment and cultural properties in the PRC.

The net profits (both before and after taxation and extraordinary items) of SOL for the two financial years immediately preceding the Disposal, as extracted from its audited published financial statements are set out below:

				Profit before	Profit after
**Year **	**ended **	**31 **	December	taxation	taxation
				(RMB’million)	(RMB’million)
2006				2,586	1,640
2005				878	546

The net asset value of SOL at 30 June 2007 and 31 December 2006 were as follows:

At		Net asset value
		(RMB’million)
30	June 2007 (unaudited)	16,249
31	December 2006 (audited)	15,165

The Group’s interest in SOL is accounted for as “available-for-sale investments” in the Group’s consolidated balance sheet, and will remain accounted for as “available-for-sale investments” after completion of the Disposal.

IMPACT OF AND REASONS FOR THE DISPOSAL

The Group is principally engaged in asset management, cement production, construction, property development, investment in property development and venture capital investment in Hong Kong and the PRC. SOCL and SOICL are both investment holding companies.

— 7 —

LETTER FROM THE BOARD

Impact on the Group’s ownership in SOL

At the Latest Practicable Date, SOL is owned as to approximately 12.57% by the Group, and as to approximately 41.58% by SOICL and its subsidiary. Collectively, the Shui On Group holds approximately 54.15% in the issued share capital of SOL through SOICL and its subsidiary, and the Group.

After the completion of the Disposal, the Group’s interest in SOL will be reduced from approximately 12.57% to approximately 9.46% (based on the final Purchase Price of HK$7.68 per SOL Share). SOICL and its subsidiary will increase their interest in SOL from approximately 41.58% to approximately 44.69% (based on the final Purchase Price of HK$7.68 per SOL Share). The collective interest of the Shui On Group, held through SOICL and its subsidiary and the Group, in SOL will remain unchanged at approximately 54.15%.

Financial Impact on the Company

The Group will record a gain on the Disposal, calculated based on the difference between the Purchase Price and the investment cost of the Sale Shares of approximately HK$3.86 per SOL Share. Based on the Purchase Price of HK$7.68 per SOL Share, the gain on the Disposal before transaction costs, is estimated to be approximately HK$497 million, including transfer from the investment revaluation reserve. Such gain is expected to be recognised in the Group’s consolidated income statement for the year ending 31 December 2008.

Upon completion of the Disposal, the total assets of the Company would be reduced by an amount equal to the marked-to-market value of the Sale Shares on the date of completion, calculated with reference to the closing price of SOL Shares as quoted on the Stock Exchange on that date.

On the other hand, the liabilities of the Company would be reduced by approximately HK$1,000 million as a result of the repayment of the bank loans using the proceeds from the Disposal, and the investment revaluation reserve of the Company would also be reduced by an amount equal to the difference between the aforementioned marked-to-market value of the Sale Shares on the date of completion and the total investment cost of such shares calculated based on approximately HK$3.86 per SOL Share.

The net proceeds after the transaction costs from the Disposal will be used by the Group as its working capital and to repay its existing debts. This would strengthen the Group’s financial position for expanding its core businesses.

— 8 —

LETTER FROM THE BOARD

Reasons for the Disposal

Further to the Previous Disposal, the Group intends to dispose of further interests in the SOL Shares and use the sale proceeds to fund future growth and development of business of the Group. The Directors (including the independent non-executive Directors) consider that the terms of the Agreement are normal commercial terms and are fair and reasonable and in the interests of the Group and the Shareholders as a whole for the following reasons:

• (a) The Disposal allows the Company to rebalance the Group’s investment portfolio, which is presently somewhat concentrated in SOL Shares.

• (b) The Disposal allows the Company to realise some of the profits locked up in its investment in SOL. It is the strategic intention of the Group to strengthen its balance sheet by better matching its long term assets with long term capital funding. The Disposal reflects the Group’s efforts in utilising its assets to produce attractive returns for Shareholders in ways that are proactive and effective.

• (c) A sale of the Sale Shares to SOICL does not affect the control of the Shui On Group over SOL. This would help ensure stability in the management and operation of SOL, and thereby allow the Group to continue to benefit from its growth through its remaining interest in SOL.

• (d) The Group will use a substantial part of the proceeds from the Disposal to repay its bank borrowings, thereby reducing its gearing level and freeing up gearing capacity for future expansion of its core businesses.

FINANCIAL AND TRADING PROSPECTS OF THE GROUP

The Group will continue to focus on asset management, cement production, construction, property development, investment in property development and venture capital investment in Hong Kong and the PRC.

Following completion of the Disposal, the Group will have greater financial flexibility for other investment opportunities, and the Group will continue to look for attractive investments to enhance return to the Shareholders.

IMPLICATIONS OF THE LISTING RULES

SOICL is a wholly owned subsidiary of SOCL, the controlling shareholder of the Company. SOCL and SOICL are therefore connected persons of the Company. The applicable percentage ratios for the Disposal, when aggregated with the Previous Disposal pursuant to Rules 14.22 and 14A.25 of the Listing Rules, exceed 25%. Accordingly, the Disposal together with the Previous Disposal constitute a connected and major transaction for the Company and is subject to the reporting, announcement and independent shareholders’ approval requirements of Chapter 14A and Chapter 14 of the Listing Rules.

— 9 —

LETTER FROM THE BOARD

At the SGM, the Company will seek Independent Shareholders’ approval for the Agreement and the Disposal. The votes to be taken at the SGM will be taken by poll, the results of which will be announced after the SGM.

An Independent Board Committee has been established to advise the Independent Shareholders in respect of the Agreement and Anglo Chinese has been retained as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard. Shareholders should consider carefully the recommendations of the Independent Board Committee and the factors, reasons and recommendations in relation to the Agreement.

PROPOSED RE-ELECTION OF DIRECTORS

In compliance with code provision A.4.2 of the Code on Corporate Governance Practices as set out in Appendix 14 to the Listing Rules, Mr. Gerrit Jan de Nys and Ms. Lau Jeny, who have been appointed as Directors to fill casual vacancies during the year 2007, will retire at the SGM and offer themselves for re-election as Directors. Pursuant to Rule 13.74 of the Listing Rules, the details of the Directors proposed to be re-elected at the SGM are set out in Appendix III to this circular.

SPECIAL GENERAL MEETING

A notice convening the SGM to be held at Room 103, 1st Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong on 23 April 2008 at 3:00 p.m. is set out on pages 46 and 47 of this circular. At the SGM, the Resolution will be proposed to approve the Agreement. In view of the interest of SOCL and its associates in the Agreement, SOCL and its associates, which collectively held approximately 56.57% of the issued share capital of the Company at the Latest Practicable Date, will abstain from voting at the SGM in this regard.

A proxy form for use at the SGM is enclosed. Whether or not you are able to attend the SGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the head office of the Company at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not prevent you from attending and voting in person at the SGM and any adjourned meeting (as the case may be) if you so wish.

In accordance with Rule 13.39(4) of the Listing Rules, the chairman of the SGM will demand a poll in relation to the Resolution to approve the major and connected transaction relating to the Agreement. The results of the voting will be announced after the SGM.

PROCEDURES FOR VOTING BY POLL

In accordance with bye-law 66 of the bye-laws of the Company, a resolution put to the vote of a general meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded:

• (a) by the chairman of such meeting; or

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LETTER FROM THE BOARD

• (b) by at least three members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or

• (c) by a member or members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy and representing not less than one-tenth of the total voting rights of all members having the right to vote at the meeting; or

• (d) by a member or members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

A demand by a person as proxy for a member or in the case of a member being a corporation its duly authorised representative shall be deemed to be the same as a demand by a member.

RECOMMENDATION

The Directors (including the independent non-executive Directors) take the view that the transaction contemplated under the Agreement is on normal commercial terms and in the ordinary and usual course of business of the Company; and that the terms and conditions of the Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole. The Directors recommend the Shareholders to vote in favour of all the ordinary resolutions to be proposed at the SGM.

ADDITIONAL INFORMATION

Your attention is drawn to the letter from the Independent Board Committee to the Independent Shareholders set out on page 12 of this circular, to the letter from Anglo Chinese, the Independent Financial Adviser to the Company’s Independent Board Committee and Independent Shareholders in respect of the Agreement set out on pages 13 to 28 of this circular, and to the information set out in the Appendices to this circular.

Yours faithfully For and on behalf of

Shui On Construction and Materials Limited Wong Yuet Leung, Frankie Chief Executive Officer

— 11 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(Incorporated in Bermuda with limited liability)

(Stock Code: 983)

20 March 2008

To the Independent Shareholder(s)

Dear Sir or Madam,

CONNECTED AND MAJOR TRANSACTION DISPOSAL OF PARTIAL INTEREST IN SHUI ON LAND LIMITED

We refer to the circular (the “ Circular ”) dated 20 March 2008 issued by the Company to its Shareholders of which this letter forms part. Terms defined in the Circular shall have the same meanings when used in this letter, unless the context otherwise requires.

The Independent Board Committee has been formed to advise the Independent Shareholders as to whether, in its opinion, the terms of the transaction contemplated under the Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Anglo Chinese has been appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the transaction contemplated under the Agreement.

We wish to draw your attention to the letter from the Board, as set out on pages 4 to 11 of this Circular and the text of a letter of advice from Anglo Chinese, as set out on pages 13 to 28 of this Circular, both of which provide details of the Agreement.

Having considered the terms of the Agreement, the advice of Anglo Chinese and the relevant information contained in the letter from the Board, we are of the opinion that the terms of the transaction contemplated under the Agreement are fair and reasonable so far as the Independent Shareholders are concerned and that the transaction contemplated under the Agreement is in the interests of the Company and the Shareholders as a whole.

Accordingly, we recommend the Independent Shareholders to vote in favour of the Resolution to be proposed at the SGM.

Yours faithfully,

Independent Board Committee of Shui On Construction and Materials Limited

Anthony Griffiths	Cheng Mo Chi, Moses	Gerrit Jan de Nys
Independent	Independent	Independent
Non-executive Director	Non-executive Director	Non-executive Director

* for identification purpose only

— 12 —

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

www.anglochinesegroup.com

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The Independent Board Committee and the Independent Shareholders Shui On Construction and Materials Limited 34/F., Shui On Centre 6-8 Harbour Road Hong Kong

20th March, 2008

Dear Sirs,

Disposal of partial interest in Shui On Land Limited

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Agreement. Details of the Agreement are contained in the circular from the Company dated 20th March, 2008 (the “Circular”) of which this letter forms a part. Expressions used in this letter have the same meanings as defined in the Circular unless the context requires otherwise.

The Agreement together with the Previous Disposal gives rise to a connected and major transaction for the Company under Chapters 14A and 14 of the Listing Rules and is therefore subject to the reporting and announcement requirements set out therein, and requires the approval of Independent Shareholders in the prescribed manner.

On 31st July, 2007, we gave an opinion on the terms of the Previous Disposal and the terms of that transaction and the issues arising from it are, in our opinion, similar to those in the Agreement. Therefore, the contents and conclusions in this letter are similar but not identical to those in our opinion dated 31st July, 2007.

The Disposal when aggregated with the Previous Disposal is a connected and major transaction because SOICL, which is purchasing the Sale Shares in terms of the Agreement, is a wholly owned subsidiary of SOCL, which is the controlling shareholder of the Company. SOICL and SOCL are therefore connected persons of the Company under the Listing Rules and the Disposal has to be aggregated with the Previous Disposal and therefore falls within the tests for a major transaction under the Listing Rules.

— 13 —

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising all of the Company’s independent non executive directors namely, Mr. Anthony Griffiths, Mr. Cheng Mo Chi, Moses and Mr. Gerrit Jan de Nys has been formed to consider whether the Agreement is on normal commercial terms, in the ordinary and usual course of business and is fair and reasonable and in the interests of the Company and its Shareholders as a whole. We have been appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the Agreement.

In formulating our opinion and recommendation, we have relied on the information and facts supplied to us by the Company and the opinions expressed by the Directors. We have reviewed the Agreement, the supplemental agreement dated 14th March, 2008, the published information of the Company and SOL, including their recent announcements available on the website of the Stock Exchange, their annual financial statements and interim reports, investment portfolio and related funding requirements of the Company.

We assumed that the information and representations contained or referred to in the Circular were true and accurate at the time they were made and continued to be so on the date of the despatch of the Circular. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors. We have also been advised by the Directors that they believe that no material facts have been omitted from the Circular. However, we have not conducted an independent investigation into the affairs of the Company or SOL or verified any of the information that we have considered or that has been provided to us.

We consider we have reviewed sufficient information to reach an informed view and to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our recommendation.

Apart from normal professional fees for our services to the Company in connection with this appointment and an engagement on 18th January, 2008 where Anglo Chinese was appointed to advise the Independent Board Committee in relation to a proposed connected transaction of the Company, no arrangement exists whereby Anglo Chinese will receive any benefits from the Company or any of its associates.

PRINCIPAL FACTORS

We have set out below the principal factors that we have taken into account in arriving at our advice to the Independent Board Committee and to Independent Shareholders.

The nature of the Group’s business

The Company is primarily engaged in the following business:

• property development in Mainland China, investment in property development in Mainland China, through SOL, and investment in and development of distressed properties in Mainland China through China Central Properties Limited (“CCP”);

• management of property development projects in Mainland China;

— 14 —

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

• cement manufacturing and sales through a joint venture with Lafarge S.A., and other cement operations in Mainland China;

• venture capital investment in Mainland China and Hong Kong; and

• construction, construction management and fitting out in Hong Kong, Macau and Mainland China.

The businesses compliment one another either in the field of property development or in investment disciplines such that the Group is both an active operator of businesses and an opportunistic or strategic investor in them.

The investment in SOL Shares is categorised as “available-for-sale investments” in the books of account of the Group at its carrying value of HK$7.01 as at 30th June, 2007 and is treated as an investment asset such that the financial results of SOL are not reflected in the consolidated accounts of the Group. The investment cost of SOL Shares is approximately HK$3.86 per SOL Share. Under the Previous Disposal announced on 16th July, 2007, 220,415,360 SOL Shares were disposed of by New Rainbow to SOICL at a total consideration of approximately HK$1.8 billion, or HK$8.1664 per SOL Share.

The make up of the Group’s business

As at 30th June, 2007 the make up of the Group’s business as published in its interim report for 2007 was as follows:

Total Assets	HK$ million	Approx. per cent
SOL Shares	5,234	42.3
		(Note)
Distressed property development	2,070	16.7
Cement	3,105	25.1
Construction	699	5.7
Venture capital investments	529	4.3
Bank balances and deposits	217	1.8
Others	506	4.1
Total	12,360	100.0

Note: The Group in August, 2007 made the Previous Disposal, which was a disposal of approximately 220.4 million SOL Shares, equivalent to about 5.27 per cent of the issued share capital of SOL, to SOICL for HK$1.8 billion at a price of HK$8.1664 per SOL Share.

The Group’s largest asset is its investment in SOL which is a relatively passive investment and makes up the greatest part of the Group’s assets. The holding in SOL Shares contributes to the cash

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LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

income of the Group through dividends and the carrying value of the SOL Shares is marked to market in the books of account of the Group when its interim and annual reports are prepared as at 30th June and 31st December respectively in each year. Any rise or fall in the carrying value of SOL Shares does not produce or reduce any cash for or from the Group.

The Group’s balance sheet

The Group’s latest published consolidated balance sheet at 30th June, 2007 shows total assets of approximately HK$12,360 million and current liabilities of approximately HK$4,739 million and non current liabilities of approximately HK$1,973 million or total liabilities of approximately HK$6,712 million. Shareholders funds and minority interests were approximately HK$5,648 million. Non current assets held for sale were approximately HK$32 million and bank balances were approximately HK$137 million.

Since then, the Group extended a shareholders’ loan of HK$507.7 million to the joint venture company of Dalian Tiandi • Software Hub (formerly known as Dalian Software Park Phase II), a US$2 billion large scale mixed use development project in Dalian, the PRC, in which the Company has a 22 per cent interest.

The Group also made a cash contribution of US$24.2 million (approximately HK$187.6 million) to a joint venture company Lafarge Shui On Cement to reduce the debt level of the company, in which the Company has a 45 per cent shareholding.

On 16th January, 2008, the Company and SOL jointly announced that the Group, through its wholly owned subsidiary Main Zone Group Limited, would inject further cash of RMB200 million (approximately HK$215 million) for the development of Dalian Tiandi • Software Hub. This further cash contribution was made in March, 2008.

Pursuant to a shareholders deed entered into by the Company on 19th February, 2008, the Group through its wholly owned subsidiary Poly Edge Enterprises Limited has subscribed shares for a nominal consideration in a joint venture company, and would provide the joint venture company with an interest free shareholders’ loan of US$59.8 million (approximately HK$466.7 million). The joint venture company will acquire the land use rights of a piece of land located in Shenyang City, Liaoning Province, the PRC, following the successful bid for the piece of land on 25th January, 2008.

On 25th February, 2008, the Company announced the formation of joint ventures for the acquisition of a piece of land located in Chengdu in the PRC. The Group has, through its wholly owned subsidiary, subscribed new shares in two joint venture companies for a nominal consideration. Further, the Group would provide a loan in foreign currency equivalent to RMB393.5 million (approximately HK$427.7 million) to the joint venture companies on an interest free, unsecured basis.

The abovementioned commitments made by the Group have been or will be funded by its internal resources and unutilised banking facilities. We conclude from a review of the Group’s consolidated balance sheet and subsequent events that the Group’s financial leverage or gearing can be substantially reduced by the Disposal and provide the balance sheet with a new source of working capital which it otherwise lacks given the recently made financial commitments. In our opinion, the Group is presently fully invested/committed unless it increases gearing and its risk profile accordingly.

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LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Following the Disposal, the Company’s residual shareholding in SOL will remain categorised as “available-for-sale investments” in the books of account of the Group.

The make up of the Group’s earnings and cash flow

From our review of the interim report of the Group as at 30th June, 2007 and discussions with the Directors we conclude that the greater part of the Group’s earnings for the interim period arose from the distressed property development business and since then the principal sources of revenue for the Group will be capital appreciation on the sale of and dividends from its investments in SOL, CCP, Lafarge Shui On Cement and venture capital funds and earnings from its construction and cement related businesses, while the Group’s property development projects, being in initial stages of development, have yet to generate substantive earnings and cash flow. Based on the announced dividend policy of SOL and CCP, the actual dividends receivable in the foreseeable future from these investments will represent a cash yield that is lower than the cost of borrowing making the realisation of capital appreciation from the sale of investments an important aspect of the Group’s earnings and its primary source of cash flow.

Background on SOL

The Group invested in SOL in 2004 subscribing US$50 million for convertible redeemable participating junior preference shares of US$0.01 each issued by SOL and was issued 130,000,000 ordinary shares in the capital of SOL as consideration for the sale to SOL of a subsidiary which holds the development rights for the Rui Hong Xin Cheng project in Shanghai. In 2005 and 2006, the Group was issued a total of 8,800,000 ordinary shares in the capital of SOL as performance bonus for the achievement of certain targets in respect of the Rui Hong Xin Cheng project. The ordinary shares in the capital of SOL were subdivided into SOL Shares.

SOL Shares were listed on the Stock Exchange on 4th October, 2006 and upon that listing the Group’s interest in convertible redeemable participating junior preference shares were exchanged for 191,495,324 SOL Shares. These SOL Shares were listed at the issue price of HK$5.35 per SOL Share. Following the Previous Disposal, the Group through New Rainbow presently holds 526,279,964 SOL Shares representing (approximately) 12.57 per cent of the issued SOL Shares.

SOL’s business is property development in Mainland China where it is one of the leading property development companies. SOL focuses primarily on investing in projects which are long term in nature and large in scale and built in phases and for multiple uses. These include large scale master planned city centre and integrated residential development projects including premium commercial properties.

Presently SOL’s portfolio comprises eight multi phase projects in various stages of development. These are:

• the Shanghai Taipingqiao project;

• the Shanghai Rui Hong Xin Cheng project;

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LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

• the Shanghai Knowledge and Innovation Community project;

• the Chongqing Tiandi project;

• the Wuhun Hankou Tiandi project;

• the Hangzhou Xihu Tiandi project;

• the Dalian Tiandi • Software Hub project; and

• the Foshan City Centre redevelopment project.

Details of these projects are set out in the SOL listing document dated 20th September, 2006, SOL’s annual report for 2006 and in the circulars to Shareholders dated 4th June, 2007 and 6th February, 2008 in respect of the Dalian Tiandi • Software Hub project and the Foshan City Centre redevelopment project respectively.

As at the Latest Practicable Date, SOL had a stock market capitalisation of about HK$30,346 million.

China Central Properties Limited

The Group has created a listed vehicle through which to expand and conduct investment in distressed property assets in Mainland China and accordingly the Disposal will not significantly reduce the Group’s exposure to property development in Mainland China but rather will rebalance the portfolio and risk exposures.

CCP raised about £179.6 million from a placing of new shares in CCP and US$200 million from an issue of convertible bonds. The Group’s interest in CCP is about 40.4 per cent of its shares falling to about 34.8 per cent on full conversion of convertible bonds issued by CCP and held by the Group and others. Presently, CCP’s portfolio comprises thirteen property projects spanning seven major cities in the PRC namely, Beijing, Dalian, Chengdu, Qingdao, Chongqing, Shenyang and Guangzhou, with an aggregate existing and planned gross floor area (GFA) of approximately 1,872,000 square metres. Details of these projects are set out in CCP’s interim report for 2007, and in the announcements dated 22nd November, 2007, 30th November, 2007, 5th February, 2008 and 19th February, 2008.

CCP has a different business model to that of SOL since CCP concentrates primarily on investing in medium to large partially completed property projects in major and secondary cities in Mainland China where projects become available as a result of their current owners’ financial constraints. This business therefore has a much shorter investment time frame than the relatively larger projects undertaken by SOL.

As at the Latest Practicable Date, the stock market capitalisation of CCP was £171.7 million or about HK$2,715 million.

— 18 —

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Past year performances of SOL shares and of the Company’s shares measured against each other and against relevant indices

Chart 1: Performances of SOL shares and of the Company’s shares measured against Hang Seng Index (“HSI”) and Hang Seng China Enterprises Index (“HSCEI”)

==> picture [344 x 446] intentionally omitted <==

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

SOL Company HSI HSCEI
30 0
25 0
20 0
15 0
10 0
50
0
Mar-07 Apr-07 May-07 Jul-07 Aug-07 Sep-07 Oct-07 Dec-07 Jan-08 Feb-08
SOL - Volume Company - Volume
10 0
90
80
70
60
50
40
30
20
10
0
Mar-07 Apr-07 May-07 Jul-07 Aug-07 Sep-07 Oct-07 Dec-07 Jan-08 Feb-08
% Change
Million Shares
----- End of picture text -----

— 19 —

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Past five year performance of the Company’s shares measured against relevant indices

Chart 2: Performance of the Company’s shares measured against HSI and HSCEI

==> picture [358 x 445] intentionally omitted <==

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

Company HSI HSCEI
1,000
900
800
700
600
500
400
300
200
100
0
Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08
Company - Volume
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08
% Change
Million Shares
----- End of picture text -----

Source: Bloomberg (as at 4th March, 2008)

For the past year, the average daily volume in SOL Shares has been 11.1 million shares per day.

Shares in SOL performed well upon listing but have lagged the surging Hang Seng China Enterprise Index since December, 2006 but have been performing in line with the Hang Seng Index. Shares in the Company performed extremely well in the first half of 2007 against both indices and has since February, 2008 slightly outperformed SOL Shares and Hang Seng Index.

— 20 —

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Key considerations surrounding the Purchase Price

The following considerations are important in assessing the underlying value of SOL Shares.

The market price

• SOL Shares were listed in October, 2006 at HK$5.35 per SOL Share, the price has risen to HK$7.25 as at the Latest Practicable Date, a gain of about 35.5 per cent.

• During the period from 1st January, 2008 to the Latest Practicable Date, the price of SOL Shares decreased by 18.5 per cent while the Hang Seng Index declined by 19.3 per cent. In this period, the SOL Shares traded between HK$6.85 and HK$8.90 in a market that was in general volatile.

• The premium or discount at which the Disposal will take place is set out below under the heading “Premium or discount to the market price for SOL Shares�”

Normal market comparable discounts for placing of this type of which a sample is set out below. For the placings listed below, the issuers placed their shares to more than one placee while there is only one placee under the Disposal. We consider these recent share placements by other issuers to be comparable to the Disposal.

— 21 —

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Table 1: Share placements of listed companies in Hong Kong since January 2007 to 4th March, 2008 (Note)

			Amount	Amount	Offer	Shares	Premium/(discount) to	Premium/(discount) to	Premium/(discount) to
		Pricing date	raised	raised	price	offered	Last	5-day	30-day
Code	Issuer		(US$m)	(HK$m)	(HK$)	(m)	trade	VWAP	VWAP
16	Sun Hung Kai Properties	29-Oct-07	1,404.8	10,929.4	150.75	72.5	(5.7%)	3.7%	15.6%
	Limited
190	HKC (Holdings) Limited	05-Oct-07	106.0	825.0	2.75	300.0	(5.8%)	(0.3%)	10.1%
683	Kerry Properties Limited	20-Sep-07	532.9	4,146.3	59.23	70.0	(5.0%)	(1.6%)	6.2%
467	Orient Resources Group	08-Aug-07	284.3	2,212.1	1.61	1,374.0	(8.5%)	(21.6%)	(35.5%)
	Company Limited
604	Shenzhen Investment Limited	24-Jul-07	168.6	1,312.0	6.56	200.0	(3.5%)	5.8%	(5.9%)
1109	China Resources Land Limited	08-May-07	504.4	3,924.0	9.81	400.0	(6.0%)	(0.7%)	2.8%
813	Shimao Property	04-May-07	702.9	5,468.5	17.88	305.8	(5.1%)	2.3%	6.0%
	Holdings Limited
3900	Greentown China	04-May-07	297.4	2,313.5	16.35	141.5	(3.8%)	1.5%	9.0%
	Holdings Limited
131	Cheuk Nang (Holdings)	12-Feb-07	21.1	164.5	7.15	23.0	(3.8%)	4.8%	27.8%
	Limited
						Minimum	(8.5%)	(21.6%)	(35.5%)
						Mean	(5.3%)	(0.7%)	4.0%
						Median	(5.1%)	1.5%	6.2%
						Maximum	(3.5%)	5.8%	27.8%

Note: Since January, 2007, there were a number of share placements made by companies listed on the Stock Exchange. The above list shows only those placings by companies which engage in property related businesses in general. VWAP means the volume weighted average price.

Details of the Previous Disposal are shown below:

			Amount	Amount	Offer	Shares	Premium to	Premium to
	Previous Disposal of	Pricing date	raised	raised	price	offered	Previous	5-day	30-day
Code	SOL Shares		(US$m)	(HK$m)	(HK$)	(m)	trade*	VWAP	VWAP
272	Shui On Land Limited	08-Aug-07	231.4	1,800.0	8.1664	220.4	2.5%	1.8%	2.8%

* The date being the last dealing date before the signing of the sale and purchase agreement relating to the Previous Disposal. Source: Bloomberg, website of the Stock Exchange

It is noted from Table 1 above that share placements are typically priced at a discount to the last closing price of the relevant shares immediately prior to placing.

— 22 —

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

The pricing by the market of companies which we consider comparable companies is shown below.

Table 2: SOL comparable companies

				2006 Net	Historic	Forward
		Market	Stock	Income	Price to	Price to	Dividend
	Capitalisation		Price	Growth	Book	Book	Yield
**Code **	Company Name	(HK$m)	(HK$)	(%)	(x)	(x)	(%)
3383	Agile Property Holdings	38,056	10.16	27.0	5.2	3.6	1.2
	Ltd
2868	Beijing Capital Land Ltd	7,310	3.55	25.8	1.8	1.0	1.7
588	Beijing North Star Co Ltd	40,534	3.80	56.0	1.4	1.1	1.1
3883	China Aoyuan Property	6,938	3.08	58.9	1.4	1.3	0.0
	Group Ltd
1838	China Properties Group	6,799	3.60	50.5	0.7	NA	0.0
	Ltd
1109	China Resources Land	55,894	13.86	123.3	3.2	2.8	0.5
	Ltd
817	Franshion Properties	15,139	3.08	6.7	2.5	2.4	0.0
	(China) Ltd
3900	Greentown China	13,908	9.07	103.8	2.8	1.6	0.0
	Holdings Ltd
2777	Guangzhou R&F	71,053	22.05	68.9	8.6	4.2	2.7
	Properties Co Ltd
754	Hopson Development	17,816	12.10	27.6	1.8	1.2	3.1
	Holdings Ltd
1813	KWG Property Holding	19,738	7.61	18.2	3.2	2.0	0.0
	Ltd
917	New World China Land	20,317	5.30	60.9	0.8	0.7	1.5
	Ltd
813	Shimao Property Holdings	48,611	14.74	151.0	3.9	2.3	1.4
	Ltd
			Minimum	6.7	0.7	0.7	0.0
			Mean	59.9	2.9	2.0	1.0
			Median	56.0	2.5	1.8	1.1
			Maximum	151.0	8.6	4.2	3.1

Source: Bloomberg (as at 4th March, 2008)

Note: This list has been selected taking into account of the type of property development, principal location of properties and market capitalisation.

2006 Net Income Growth based on actual figures for the year ended 31st December, 2006 (New World Land Limited based on year ended 30th June, 2007).

Forward Price to Book based on Bloomberg estimates for the year ended 31st December, 2007 (New World Land Limited based on year ending 30th June, 2008).

— 23 —

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Below is the market pricing on SOL:

				2006
				Net	Historic	Forward
		Market	Stock	Income	Price to	Price to	Dividend
Code	Company Name	Capitalisation	Price	Growth	Book	Book	Yield
		(HK$m)	(HK$)	(%)	(x)	(x)	(%)
272	Shui On Land	31,183	7.45	201.6	2.2	0.5	1.5
	Limited

Source: Bloomberg (as at 4th March, 2008)

Note: Forward price to book is based on forward looking market consensus

We do not regard “A” shares issued by comparable property development companies in Mainland China as a relevant comparison since the “A” share market is subject to market forces apparently not present in the Stock Exchange and not applicable to companies listed in Hong Kong.

The book value of SOL Shares

As at 30th June, 2007 the consolidated net asset value per SOL Share was about RMB3.88 as reported in the books of account of SOL, equivalent to about HK$4.25 per SOL Share based on an exchange rate on the Latest Practicable Date. Forward looking analysis by market participants provides a consensus of about HK$14.57 per SOL Share for consolidated tangible assets per SOL Share for the 2007 financial year[1] . This analysis had not been reflected in the market traded prices of SOL Shares and is necessarily subjective. It is noted that many of the comparable companies of SOL are trading at above their respective net book values (see Table 2).

The earnings yield per SOL Share

For the year ended 31st December, 2006, the basic earnings per SOL Share was about RMB0.48 equivalent to about HK$0.49 per SOL Share, an earnings yield of about 6.38 per cent at the Purchase Price.

The dividend yield per SOL Share

A final dividend of HK$0.06 per SOL Share was paid in June, 2007 and an interim dividend of HK$0.05 per SOL Share was paid in October, 2007. These payments represented a cash yield of about 1.43 per cent per annum at the Purchase Price.

1 Figure compiled from analyst’s reports of Deutsche Bank dated 10th October, 2007, Macquarie dated 3rd December, 2007 and JP Morgan dated 1st February, 2008.

— 24 —

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Premium or discount to the market price for SOL Shares arising from the Disposal

The Minimum Purchase Price and the Maximum Purchase Price of HK$7.68 and HK$8.50 per SOL Share represent respectively:

• (a) a premium of 3.09% and 14.09% over the closing price of HK$7.45 per SOL Share as quoted on the Stock Exchange on 4th March, 2008, being the date of signing of the Agreement

• (b) a premium of 1.59% and 12.43% over the average closing price of HK$7.56 per SOL Share for the last five (5) dealing days up to and including 4th March, 2008; and

• (c) a discount of 0.92% to and a premium of 9.66% over the average closing price of approximately HK$7.75 per SOL Share for the last thirty (30) dealing days up to and including 4th March, 2008.

The Purchase Price and the Maximum Purchase Price were determined based on arm’s length negotiation between the parties with reference to the prevailing market price of the SOL Shares on the Stock Exchange.

REASONS FOR THE DISPOSAL

The Directors believe that the principal reasons for selling the Sale Shares are:

• (a) The Disposal allows the Company to rebalance the Group’s investment portfolio, which is presently somewhat concentrated in SOL Shares.

• (b) The Disposal allows the Company to realise some of the profits locked up in its investment in SOL. It is the strategic intention of the Group to strengthen its balance sheet by better matching its long term assets with long term capital funding. The Disposal reflects the Group’s efforts in utilising its assets to produce attractive returns for Shareholders in ways that are proactive and effective.

• (c) A sale of the Sale Shares to SOICL does not affect the control of the Shui On Group over SOL. This would help ensure stability in the management and operation of SOL, and thereby allow the Group to continue to benefit from its growth through its remaining interest in SOL.

• (d) The Group will use a substantial part of the proceeds from the Disposal to repay its bank borrowings, thereby reducing its gearing level and freeing up gearing capacity for future expansion of its core businesses.

— 25 —

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL TERMS OF THE AGREEMENT

Set out below are the principal terms of the Agreement.

The Agreement is a conditional sale and purchase agreement under which New Rainbow agrees to sell and SOICL agrees to purchase the Sale Shares.

The Purchase Price is set on the Price Fixing Date and is the higher of the Minimum Purchase Price of HK$7.68 per Sale Share and the current market price. However, if the Purchase Price exceeds the Maximum Purchase Price of HK$8.50 per Sale Share then SOICL has the right but not the obligation to terminate the Agreement. As described above, the Maximum Purchase Price represents a premium of between 9.66 per cent and 14.09 per cent over the closing price of SOL Shares during the last thirty dealing days up to and including 4th March, 2008. In relation to the Disposal, it is a commercial term for SOICL as the purchaser to have a right but not the obligation to terminate the Agreement if the Purchase Price exceeds the Maximum Purchase Price, a ceiling price pre-agreed by the Company and SOICL. On 14th March, 2008, the final Purchase Price was determined to be HK$7.68, equivalent to the Minimum Purchase Price. Accordingly, SOICL did not exercise its right and is obliged to purchase the Sale Shares from New Rainbow.

Completion of the Agreement is subject to one condition that must be satisfied by 31st May, 2008 or such later date as the parties may agree (the “Long Stop Date”). The condition is the approval of Independent Shareholders at the SGM for the execution of the Agreement and the sale of the Sale Shares to SOICL.

Completion is to take place within three business days of the condition having been satisfied unless the parties agree otherwise and the consideration of up to HK$1,000 million will be paid at completion to the Company for the Sale Shares which will then be acquired by SOICL.

Notwithstanding the discount of the prices offered by the Agreement when measured against the forward looking net asset value projections per SOL Share referred to above and which is necessarily subjective, we consider the basis of determining the consideration for the Sale Shares and the payment and other terms of the Agreement to be on normal commercial terms, and to be fair and reasonable and in the interests of the Company and Independent Shareholders.

FINANCIAL EFFECTS ON THE GROUP

1. Net assets

The carrying value of SOL Shares in the books of account of the Group as at 30th June, 2007 was HK$7.01 per SOL Share. Accordingly, the Disposal will give rise to an additional gain before transaction costs in the books of account of the Group of about HK$497 million which includes transfer from the investment revaluation reserve as the Disposal is made at the Purchase Price of HK$7.68. A total of 130,208,333 SOL Shares will be sold at the Purchase Price. The consolidated net asset value of the Group will be increased by the amount of the gain over and above that already realised in the books of account of the Group as at 30th June, 2007. The Group’s residual interest in SOL will fall from 12.57 per cent to 9.46 per cent.

— 26 —

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

It is important to note that the Minimum Purchase Price in the Agreement and selling at the Purchase Price thereunder safeguards the Company from placing the Sale Shares at any discount to the market price on the day on which the sale was agreed as is normally the case (see Table 1 above) and may indeed provide a benefit which would not otherwise have occurred should the price of SOL Shares rise between signing and Completion.

Notwithstanding the foregoing, there are circumstances in which volume in the trading of SOL Shares or volatility in the price of SOL Shares could result in a Purchase Price for the Sale Shares set at the Price Fixing Date which would be below the market price as at Completion by virtue of the Purchase Price having been calculated with reference to a volume weighted average daily market price formula. In the event of a significant increase in the trading price of SOL Shares, the market price at Completion would likely be above the Maximum Purchase Price.

Thus, in the event that the market price of SOL Shares at Completion were to be significantly above the Purchase Price, calculated by reference to the volume weighted average daily market price formula, this would be an incentive for SOICL to proceed and acquire the Sale Shares since the Purchase Price would then be standing at a discount to the market price.

However, whatever the outcome Independent Shareholders and the Company would have been in a more favourable position than if the Sale Shares had been sold through the market at a discount when the sale was agreed as is normally the case.

2. Earnings

The gain referred to above will be reflected in the consolidated profit and loss account of the Group for the year ending 31st December, 2008. Any further impact on the earnings of the Group will depend upon the use of the proceeds of the Disposal and the future performance of SOL which cannot be determined now. If loans are repaid, the costs of borrowing will fall accordingly until loans are redrawn.

3. Liquidity

The liquidity of the Group will be markedly increased by the Disposal which will result in an infusion of approximately HK$1,000 million in cash. This infusion will free up gearing capacity and, or, provide funds for new investments.

4. Use of proceeds from the Disposal

Net proceeds from the Disposal will be used as working capital for general corporate purposes and in repaying existing debts.

1. Gearing

The gearing of the Group may be reduced by HK$1,000 million from the proceeds of the Disposal pending new investments being made. The Disposal will have a marked impact on the Group’s consolidated balance sheet and free up considerable gearing capacity for future investments, including the Group’s recent development projects in the PRC.

— 27 —

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

RISK FACTORS

Independent Shareholders should take note that the Agreement is conditional and the condition set out above must be satisfied or the Disposal will not take place.

RECOMMENDATION

Having considered the principal factors and reasons for the Disposal which are set out above, we consider that the Agreement is made on normal commercial terms, in the ordinary and usual course of business and is fair and reasonable and in the interests of, the Independent Shareholders and Shareholders as a whole. Accordingly, we recommend that Independent Shareholders vote in favour of the ordinary resolution to be proposed at the SGM to approve the Agreement and that the Independent Board Committee advises the Independent Shareholders accordingly.

Yours faithfully, for and on behalf of

Anglo Chinese Corporate Finance, Limited Christopher J. Howe Managing Director

— 28 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

1. INDEBTEDNESS

Borrowings

At 31 December 2007, being the latest practicable date for this statement of indebtedness prior to the date of this circular, the Group had total borrowings amounting to approximately HK$4,668.0 million, details of which are as follows:

	HK$’ million
Bank borrowings - due within one year	2,800.5
Bank borrowings - due after one year	1,259.0
Convertible bonds - aggregate outstanding principal amount	395.1
Amounts due to jointly controlled entities	12.4
Amounts due to associates	101.0
Loan from a related company	100.0
	4,668.0
Secured	85.5
Unsecured	4,582.5
	4,668.0

Mortgages and charges

At 31 December 2007, the Group had bank deposits of HK$386.4 million pledged to banks as security for certain banking facilities extended to the Group.

Contingent liabilities

At 31 December 2007, the Group had the following material contingent liabilities:

	HK$’ million
Guarantees relating to performance bonds issued by banks	130.6
Standby documentary credit issued to secure a bank loan granted
to an associate	300.0
	430.6

Disclaimer

Save as disclosed above, at the close of business on 31 December 2007, the Group did not have any outstanding loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under debentures, mortgages, charges, finance lease commitments, guarantees or other material contingent liabilities.

— 29 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. WORKING CAPITAL

The Directors are of the opinion that taking into account the Group’s internal resources and available banking facilities, the Group has sufficient working capital for its present requirements for the next 12 months from the date of this circular.

— 30 —

GENERAL INFORMATION

APPENDIX II

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 Issuers 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	Approximate
	**in the **	Company	percentage of
	Personal	Other	shareholding in
Name of Director	interests	interests	the Company
Lo Hong Sui, Vincent	-	181,981,000	56.57%
		(Note)
Choi Yuk Keung, Lawrence	1,100,000	-	0.34%
Wong Yuet Leung, Frankie	800,000	-	0.24%
Lowe Hoh Wai Wan, Vivien	720,000	-	0.22%

Note: Among 181,981,000 shares beneficially owned by Shui On Company Limited (“SOCL”), 166,148,000 shares and 15,833,000 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

APPENDIX II

• (b) Short position in the shares of the Company

			Approximate
			percentage of
	Number of ordinary shares		shareholding in
	in the Company		the Company
	Personal	Other
Name of Director	interests	interests
Lo Hong Sui, Vincent	—	1,600,000	0.49%
		(Note)

Note: These shares represent the call option granted by SOCL on 27 August 2002 to Mr. Wong Yuet Leung, Frankie as part of the incentive reward to his services to the Company. Mr. Lo Hong Sui, Vincent, HSBC International Trustee Limited and Bosrich Holdings Inc. are deemed to have short position in these shares under the SFO.

(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:

				Number of
			Period during	ordinary
		Subscription	which options	shares
	Date of	price	outstanding	subject to
Name of Director	grant	per share	are exercisable	the options
		HK$
Choi Yuk Keung, Lawrence	3-1-2007	16.78	3-1-2010 to	700,000
			2-1-2017
	14-6-2007	20.96	14-12-2007 to	250,000
			13-6-2012
Wong Yuet Leung, Frankie	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
	14-6-2007	20.96	14-12-2007 to	500,000
			13-6-2012
Lowe Hoh Wai Wan, Vivien	1-8-2006	14.00	1-2-2007 to	120,000
			31-7-2011
	3-1-2007	16.78	3-1-2010 to	625,000
			2-1-2017
	14-6-2007	20.96	14-12-2007 to	176,000
			13-6-2012

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GENERAL INFORMATION

APPENDIX II

• (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 (b) above:

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

(e) Long position in the SOL Shares

	**Number **	of ordinary	Approximate
	shares in SOL		percentage of
	Personal	Other	shareholding
Name of Director	interests	interests	in SOL
Lo Hong Sui, Vincent	—	2,396,965,058	57.26%
		(Note)

• Note: These shares comprises 2,266,756,725 shares of SOL owned by Shui On Group before the Disposal and 130,208,333 shares of SOL based on the final Purchase Price of HK$7.68 per SOL Share to be transferred from New Rainbow to SOICL upon completion of the Agreement. The 2,266,756,725 shares of SOL are directly held by subsidiaries of SOCL, namely SOICL, Shui On Properties Limited and New Rainbow. 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. Upon completion of the Agreement, the transfer of the 130,208,333 SOL Shares will be reported in accordance with the requirements under Part XV of the SFO and the deemed interest of Mr. Lo Hong Sui, Vincent will then be reduced back to 2,266,756,725 SOL Shares.

• (f) Long position in the shares of China Central Properties Limited (“CCP”)

	Number of ordinary	Approximate
	shares in CCP	percentage of
	Personal Other	shareholding
Name of Director	interests interests	in CCP
Anthony Griffiths	6,000 —	0.002%

— 33 —

APPENDIX II

GENERAL INFORMATION

Save as disclosed above, 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 Issuers or which were required to be entered in the register required to be kept under section 352 of the SFO.

There is no contract or arrangement subsisting at the Latest Practicable Date in which any of the Directors is materially interested and which is significant in relation to the business of the Group.

Save as disclosed in section 8 below, none of the Directors has had any direct or indirect interest in any assets which have since 31 December 2006 (being the date to which the latest published audited consolidated financial statements of the Company were made up) been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

(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:

			Number of
			ordinary	Approximate
			shares/	percentage of
	Class of		underlying	shareholding in
Name of Shareholders	shares	Capacity	shares held	the Company
John Zwaanstra	Ordinary	Interest of controlled	32,290,248 (L)	10.03%
		corporation	(Note 2)
Penta Investment	Ordinary	Investment manager	32,290,248 (L)	10.03%
Advisers Limited			(Note 2)
Mercurius GP LLC	Ordinary	Founder of	16,095,951 (L)	5.00%
		discretionary trust	(Note 2)
Todd Zwaanstra	Ordinary	Trustee	16,095,951 (L)	5.00%
			(Note 2)
Penta Asia Fund, Ltd.	Ordinary	Interest of controlled	16,095,951 (L)	5.00%
		corporation	(Note 2)

— 34 —

GENERAL INFORMATION

APPENDIX II

			Number of
			ordinary	Approximate
			shares/	percentage of
	Class of		underlying	shareholding in
Name of Shareholders	shares	Capacity	shares held	the Company
Cheah Cheng Hye	Ordinary	Founder of	25,700,000 (L)	7.98%
		discretionary trust
To Hau Yin	Ordinary	Interest of spouse	25,700,000 (L)	7.98%
Hang Seng Bank Trustee	Ordinary	Trustee	25,700,000 (L)	7.98%
International Limited
Cheah Company Limited	Ordinary	Interest of controlled	25,700,000 (L)	7.98%
		corporation
Cheah Capital	Ordinary	Interest of controlled	25,700,000 (L)	7.98%
Management Limited		corporation
Value Partners Group	Ordinary	Interest of controlled	25,700,000 (L)	7.98%
Limited		corporation
Value Partners Limited	Ordinary	Investment manager	25,700,000 (L)	7.98%

Notes:

1. ”L” denotes a long position.

2. Among the interests owned by these shareholders, 5,560,000 shares are derivative interests.

— 35 —

GENERAL INFORMATION

APPENDIX II

(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:

Name of owner of shares		Effective
or equity interest		% equity
(as the case may be)	Name of subsidiary	interest held
廣州市番禺廣鋁實業有限公司	Panyu Dynamic Mark Steel and	20%
(Guangzhou Panyu Guanglu	Aluminium Engineering Co. Ltd.
Industrial Co., Ltd.)
Eversound Enterprise Limited	Panyu Dynamic Mark Steel and	16%
	Aluminium Engineering Co. Ltd.
Metro Materials Engineering	Lamma Concrete Products Limited	40%
Company Limited
Metro Materials Engineering	廣東南丫混凝土構件有限公司	40%
Company Limited
廣州市番禺廣鋁實業有限公司	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
Ecomat (Hong Kong) Limited	Pacific Extend Limited	18%*
Win Media Limited	Pacific Extend Limited	10%#
上海建五實業有限公司	Shanghai Shui On Construction Co., Ltd.	15%
上海國際集團投資管理有限公司	Shanghai Shui On Construction Co., Ltd.	15%

— 36 —

GENERAL INFORMATION

APPENDIX II

Name of owner of shares		Effective
or equity interest		% equity
(as the case may be)	Name of subsidiary	interest held
江蘇昆山德普設備租賃有限公司	Chongqing T.H. Desheng Engineering	20%
	Co. Ltd.
上海和晟機械成套設備有限公司	Chongqing T.H. Desheng Engineering	20%
	Co. Ltd.
重慶市第二建築材料廠	Chongqing T.H. White Cement Co. Ltd.	40%
重慶建工集團有限責任公司	重慶騰建石材開發有限責任公司	45%
Hangshing Limited	Honour Link Development Limited	24%
Glory Prospect International	Honour Link Development Limited	24%
Company Limited
Shenzhen Yue Jie Concrete	Lamma Yue Jie Company Limited	40%
Products Co., Ltd.

• The 18% equity interest held by Ecomat (Hong Kong) Limited represents 18% of the issued ordinary shares and carries voting right of 11.25% of the total issued share capital comprising ordinary shares and special shares.

• The 10% equity interest held by Win Media Limited represents 10% of the issued ordinary shares and carries voting right of 6.25% of the total issued share capital comprising ordinary shares and special shares.

3. SERVICE CONTRACTS

At the Latest Practicable Date, none of the Directors had entered into any service contract with the Company other than contracts expiring or determinable by the Group within one year without payment of compensation (other than statutory compensation).

4. LITIGATION

At the Latest Practicable Date, the Group was not engaged in any litigation or arbitration of material importance and there was no litigation or claim of material importance known to the Directors to be pending or threatened by or against the Group.

5. COMPETING BUSINESS INTERESTS OF DIRECTORS

At the Latest Practicable Date, Mr. Lo Hong Sui, Vincent was the chairman and controlling shareholder of SOL which is engaged in property development in the PRC.

— 37 —

GENERAL INFORMATION

APPENDIX II

Save as referred to herein, at the Latest Practicable Date, none of the Directors or their respective associates had any interest in a business which competes or may compete with the business of the Group.

6. EXPERT AND CONSENT

The followings are the qualifications of the expert who has given opinion and advice, which is contained in this circular:

Name Qualification Anglo Chinese A corporation licensed under the SFO to conduct Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO

Anglo Chinese has given and have not withdrawn its written consent to the issue of this circular with the inclusion of its letter and references to its name in the form and context in which it appear.

7. EXPERT’S INTEREST IN ASSETS

At the Latest Practicable Date, Anglo Chinese:

• (a) does not have any shareholding, directly or indirectly, in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group; and

• (b) does not have any interest, direct or indirect, in any assets which have been acquired or disposed of by or leased to any member of the Group, or which are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2006, the date to which the latest published audited consolidated financial statements of the Company were made up.

8. MATERIAL CONTRACTS

The following contracts (not being contracts in the ordinary course of business) have been entered into by the Group within the two years immediately preceding the Latest Practicable Date:

• (a) a completion guarantee dated 2 June 2006 entered into among the Company as guarantor, 北京中天宏業房地產諮詢有限責任公司 Beijing ZhongTian HongYe Real Estate Consulting Co., Ltd. (“BJ ZhongTian”) as borrower and The Bank of East Asia, Limited, Beijing Branch (“BEA”) as lender whereby the Company agreed to guarantee the obligation of BJ ZhongTian to complete the construction works of a distressed property in Beijing, the PRC as a condition for the granting of a loan facility of RMB730 million by BEA to BJ ZhongTian;

— 38 —

APPENDIX II

GENERAL INFORMATION

• (b) an agreement on completion guarantee dated 2 June 2006 entered into between the Company and JPMorgan Special Situations Asia Corporation (“JPMorgan”) whereby JPMorgan, in consideration of the Company entering into the completion guarantee dated 2 June 2006 with BJ ZhongTian and BEA, agreed to indemnify the Company on a fully back to back basis for 50% of all payments made by the Company under the said completion guarantee;

• (c) a public offer underwriting agreement dated 9 June 2006 made among (i) SOL, (ii) SOCL, (iii) Mr. Lo Hong Sui, Vincent, (iv) the Company, (v) Deutsche Bank A.G., Hong Kong Branch, The Hongkong and Shanghai Banking Corporation Limited and J.P. Morgan Securities (Asia Pacific) Limited (as Joint Global Co-ordinators) and (vi) Deutsche Bank A.G., Hong Kong Branch, The Hongkong and Shanghai Banking Corporation Limited, J.P. Morgan Securities (Asia Pacific) Limited and the other underwriters named in Schedule 1 therein (as the Public Offer Underwriters) relating to a public offering of 105,462,000 shares (subject to reallocation and adjustment) in the capital of SOL;

• (d) a subscription agreement dated 18 July 2006 made between the Company as issuer and J.P. Morgan Securities Ltd. as bookrunner and lead manager in relation to HK$930,000,000 zero coupon convertible bonds due 2009 convertible into ordinary shares of the Company;

• (e) a public offer underwriting agreement dated 19 September 2006 made among (i) SOL, (ii) SOCL, (iii) Mr. Lo Hong Sui, Vincent, (iv) the Company, (v) Deutsche Bank A.G., Hong Kong Branch, The Hongkong and Shanghai Banking Corporation Limited and J.P. Morgan Securities (Asia Pacific) Limited (as Joint Global Co-ordinators) and (vi) Deutsche Bank A.G., Hong Kong Branch, The Hongkong and Shanghai Banking Corporation Limited, J.P. Morgan Securities (Asia Pacific) Limited and the other underwriters named in Schedule 1 therein relating to a public offering of 115,875,000 shares (subject to reallocation and adjustment) in the capital of SOL;

• (f) an international underwriting agreement dated 27 September 2006 made among (i) SOL, (ii) SOCL, (iii) Mr. Lo Hong Sui, Vincent, (iv) the Company, (v) the several selling shareholders named in Schedule 1 therein, (vi) Deutsche Bank A.G., Hong Kong Branch, The Hongkong and Shanghai Banking Corporation Limited and J.P. Morgan Securities Ltd. (as Joint Global Co-ordinators) and (vii) Deutsche Bank A.G., Hong Kong Branch, The Hongkong and Shanghai Banking Corporation Limited, J.P. Morgan Securities Ltd. and the other underwriters named in Schedule 2 therein relating to an international offer of 1,042,871,000 shares (subject to reallocation and adjustment) in the capital of SOL;

• (g) a guarantee dated 2 April 2007 entered into by the Company in favour of BEA in respect of a loan facility of RMB730 million granted by BEA to BJ ZhongTian;

• (h) an agreement on guarantee dated 2 April 2007 entered into between the Company and JPMorgan whereby JPMorgan, in consideration of the Company entering into a guarantee dated 2 April 2007 with BEA in respect of a loan facility of RMB730 million granted to BJ ZhongTian, agreed to indemnify the Company on a fully back to back basis for 50% of all payments made by the Company under the said guarantee;

— 39 —

GENERAL INFORMATION

APPENDIX II

• (i) an agreement dated 12 April 2007 entered into among Fortune Up Investments Limited (a wholly owned subsidiary of the Company), Spinnaker Global Opportunity Fund Ltd., Spinnaker Global Emerging Markets Fund Ltd., Spinnaker Global Strategic Fund Ltd., Tancherry Holdings Limited (now known as China Central Properties (BVI) Limited) (“CCP (BVI)”), CCP and the Company relating to the sale and purchase of the entire issued share capital of Prosper Idea Limited and the related shareholders’ loan together with a supplemental letter dated 14 May 2007;

• (j) an agreement dated 12 April 2007 entered into among Shine Honest Investments Limited (a wholly owned subsidiary of the Company), Spinnaker Global Emerging Markets Fund Ltd., Rich Resources Investment Limited, Value Partners China Greenship Fund Limited, Freemont Alliance Limited, CCP (BVI), CCP, the Company, Yida Group Co., Ltd. and V Ventures Limited relating to the sale and purchase of the entire issued share capital of Coral Waters (Barbados) SRL together with a supplemental letter dated 14 May 2007;

• (k) an agreement dated 12 April 2007 entered into among Elite Great Investments Limited (a wholly owned subsidiary of the Company), Spinnaker Global Opportunity Fund Ltd., Spinnaker Global Emerging Markets Fund Ltd., Spinnaker Global Strategic Fund Ltd., Sunwin Pacific Limited, Rich Alliance International Limited, CCP (BVI), CCP, the Company, V Ventures Limited and Yida Group Co., Ltd. relating to the sale and purchase of the entire issued share capital of Caperidge Group Limited and the related shareholders’ loan together with a supplemental letter dated 14 May 2007;

• (l) an agreement dated 12 April 2007 entered into among Keygrow Investments Limited (a wholly owned subsidiary of the Company), Rich Resources Investment Limited, Silver Summit (Delaware) Corporation, CCP (BVI), CCP, the Company, Yida Group Co., Ltd. and JPMorgan relating to the sale and purchase of the entire issued share capital of Mountain Mist (Barbados) SRL and the related shareholders’ loan together with a supplemental letter dated 14 May 2007;

• (m) an agreement dated 12 April 2007 entered into among Jumbo China Investments Limited (a wholly owned subsidiary of the Company), Silver Summit (Delaware) Corporation, CCP (BVI), CCP, the Company and JPMorgan relating to the sale and purchase of the entire issued share capital of Mountain Breeze (Barbados) SRL and the related shareholders’ loan together with a supplemental letter dated 14 May 2007;

• (n) a subscription agreement relating to shares of CCP dated 12 April 2007 entered into among CCP, Brilliance Investments Limited (“BIL”, a wholly owned subsidiary of the Company), Spinnaker Global Opportunity Fund Ltd., Spinnaker Global Emerging Markets Fund Ltd. and Spinnaker Global Strategic Fund Ltd. together with two supplemental letters dated 14 May 2007 and 23 May 2007;

• (o) an investment management agreement dated 12 April 2007 entered into among CCP (BVI), SOCAM Asset Management Limited (a wholly owned subsidiary of the Company) and the Company in relation to the provision of investment management services by SOCAM Asset Management Limited to CCP (BVI);

— 40 —

APPENDIX II

GENERAL INFORMATION

• (p) a subscription agreement dated 14 May 2007 and an amended and restated subscription agreement dated 25 May 2007 entered into among CCP, the Company, BIL and Deutsche Bank AG, Hong Kong Branch whereby BIL agreed to subscribe for the convertible bonds due 2012 issued by CCP in the principal amount of US$25 million;

• (q) a shareholders agreement dated 25 May 2007 entered into among Innovate Zone Group Limited, Main Zone Group Limited (a wholly owned subsidiary of the Company), Many Gain International Limited and Richcoast Group Limited in relation to the establishment of Richcoast Group Limited as a joint venture company for the purpose of the development and operation of Dalian Software Park Phase II (now known as Dalian Tiandi • Software Hub) in Dalian, the PRC;

• (r) a placing agreement dated 8 June 2007 entered into among CCP, the directors of CCP, the Company, BIL, SOCAM Asset Management Limited and Deutsche Bank AG, London Branch in relation to the placing of 151,230,000 ordinary shares of £0.01 each in the share capital of CCP on the AIM of London Stock Exchange at a price of £1.00 per ordinary share;

• (s) an agreement dated 16 July 2007 entered into between New Rainbow as seller and SOICL as purchaser in relation to the sale and purchase of HK$1.8 billion worth of shares in the issued share capital of SOL;

• (t) a letter agreement dated 4 February 2008 entered into between the Company and CCP (BVI) in relation to the subscription by Park Wealth Investments Limited (a wholly owned subsidiary of the Company) for a 50% interest in the enlarged issued share capital or capital contribution of each of Gracious Spring Limited and Mountain Snow (Barbados) SRL for the development of a parcel of land in Chengdu, the PRC; and

• (u) a shareholders deed dated 19 February 2008 entered into among Poly Edge Enterprises Limited (a wholly owned subsidiary of the Company), the Company, CCP (BVI), HSBC Custody Services (Guernsey) Ltd. and Broad Wise Limited for the purpose of setting out the terms governing the future funding for and management of Broad Wise Limited and its subsidiaries for the development of a parcel of land in Shenyang, the PRC; and

• (v) the Agreement.

9. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2006, the date to which the latest published audited consolidated financial statements of the Company have been made up.

10. GENERAL

• (a) The qualified accountant of the Company is Mr. Li Chi Keung, Evans, a Fellow of The Association of Chartered Certified Accountants and an Associate of the Hong Kong Institute of Certified Public Accountants, The Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Chartered Secretaries.

— 41 —

GENERAL INFORMATION

APPENDIX II

• (b) The secretary of the Company is Ms. Tsang Yuet Kwai, an Associate of The Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Chartered Secretaries.

• (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 of the Company is Tricor Standard 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, Hong Kong.

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

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during business hours at the head office of the Company at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong from the date of this circular up to and including 23 April 2008:

• (a) the Memorandum and Bye-laws of the Company;

• (b) the Agreement;

• (c) the “Letter from the Independent Board Committee” as set out in this circular;

• (d) the “Letter from the Independent Financial Adviser” as set out in this circular;

• (e) the material contracts referred to in the paragraph headed “Material Contracts” of this Appendix;

• (f) the annual reports of the Group for the two financial periods ended 31 March 2006 and 31 December 2006;

• (g) the written consent of Anglo Chinese referred to in paragraph headed “Expert and Consent” of this Appendix;

• (h) exempt continuing connected transactions circular dated 8 March 2007 in relation to the provision of construction services by Shanghai Shui On Construction Co., Ltd. to SOL and its subsidiaries;

• (i) discloseable transaction circular dated 18 April 2007 regarding the proposal in relation to PRC distressed asset development operations;

— 42 —

GENERAL INFORMATION

APPENDIX II

• (j) discloseable transaction circular dated 24 April 2007 in relation to the granting of a further guarantee to the completion guarantee in respect of a distressed property project in Beijing;

• (k) connected and discloseable transaction circular dated 4 June 2007 in relation to the formation of a joint venture for the development of Dalian Software Park Phase II;

• (l) connected and discloseable transaction circular dated 31 July 2007 in relation to the disposal of partial interest in SOL;

• (m) discloseable transaction circular dated 25 February 2008 in relation to the formation of joint ventures for the acquisition of a parcel of land in Chengdu; and

• (n) discloseable transaction circular dated 5 March 2008 in relation to the formation of a joint venture in relation to a parcel of land in Shenyang.

— 43 —

DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED

APPENDIX III

The details of the Directors proposed to be re-elected at the SGM are set out below.

Gerrit Jan de Nys (“Mr. de Nys”)

Mr. de Nys, aged 64, has been appointed as an independent non-executive Director since 18 August 2007. He is a member of the audit committee and the remuneration committee of the Company. Mr. de Nys joined Shui On Group in 1978 as managing director of the construction materials division and subsequently also assumed the position of managing director of the construction and contracting division, and was appointed deputy chairman and chief executive of the publicly listed Shui On (Contractors) Limited in 1988. He left Shui On Group in 1991 and returned to Australia to set up his own businesses in home building and the leisure industry. In 1994, he joined the IMC Pan Asia Alliance Group assuming chief executive roles in its subsidiaries and had worked in its Thailand and Singapore offices. He retired from executive responsibilities of the IMC Group in 2006. He has extensive experience in construction. Mr. de Nys graduated with a bachelor of technology degree in civil engineering from the University of Adelaide. He is a chartered professional engineer and a fellow of the Institution of Engineers, Australia and The Australian Institute of Company Directors.

Mr. de Nys is currently the non-executive chairman of the IMC Resources Australia Pty Ltd. He is also a non-executive director of Horizon Oil Limited, a company which is listed on the Australian Stock Exchange. He has been a non-executive director of View Resources Ltd., a company which is listed on the Australian Stock Exchange, but resigned in October 2007. He has been a non-executive director of LinQ Capital Limited, manager of the LinQ Resources Fund (a registered managed investment scheme traded on the Australian Stock Exchange) from February 2005 to November 2006. Save as aforesaid, Mr. de Nys has not held any directorship in any other listed companies in the past three years.

Save and except the relationship arising from his position as a Director, Mr. de Nys does not have any relationship with any Directors, senior management or substantial or controlling shareholders of the Company.

Mr. de Nys does not have any interest in shares of the Company within the meaning of Part XV of the SFO.

Mr. de Nys has not been appointed for a specific term. He will be subject to retirement by rotation at annual general meetings of the Company in accordance with the Bye-laws of the Company. There is no service contract signed between the Company and Mr. de Nys. His emoluments are determined by the Board, based on his performance, qualifications and competence displayed, and subject to the approval of the Shareholders. Pursuant to a board resolution of the Company passed on 10 December 2007, the total annual director’s fee payable to Mr. de Nys has been fixed at HK$350,000 with effect from 1 January 2008.

Save as disclosed herein, there is no matter that needs to be brought to the attention of the Shareholders, nor is there any information as required to be disclosed pursuant to Rule 13.51(2)(h) to (v) of the Listing Rules.

— 44 —

DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED

APPENDIX III

Lau Jeny (“Ms. Lau”)

Ms. Lau, aged 49, has been appointed as an executive Director and the chief financial officer of the Company since 2 October 2007. Prior to joining the Company, Ms. Lau was the director of corporate finance of Shun Tak Holdings Limited, a conglomerate listed on the Stock Exchange. Before that, Ms. Lau had over ten years of corporate finance experience with Platinum Securities Company Limited and Jardine Fleming Securities Limited. She has also spent over ten years with major U.S. banks and international accounting firms. Ms. Lau holds a Master of Science degree in Accountancy and Systems and a Bachelor of Science degree in Accounting. She is a Certified Public Accountant and is a member of the American Institute of Certified Public Accountants, the Hong Kong Institute of Certified Public Accountants and the Hong Kong Securities Institute.

Ms. Lau is currently an independent non-executive director of Tan Chong International Limited which is listed on the Stock Exchange. Save as aforesaid, Ms. Lau has not held any directorship in any other listed companies in the past three years.

Save and except the relationship arising from her position as a Director, Ms. Lau does not have any relationship with any Directors, senior management or substantial or controlling shareholders of the Company.

Ms. Lau does not have any interest in the shares of the Company within the meaning of Part XV of the SFO.

Ms. Lau has not been appointed for a specific term. She will be subject to retirement by rotation at annual general meetings of the Company in accordance with the Bye-laws of the Company. There is an employment contract signed between the Company and Ms. Lau, which is determinable by the Company giving three months’ notice, and is determinable without payment of compensation other than statutory compensation. She is entitled to a monthly remuneration of approximately HK$250,000 in her capacity as chief financial officer of the Company and is eligible for a performance-related bonus subject to the approval of the remuneration committee of the Company. Ms. Lau is also entitled to receive an annual director’s fee of HK$10,000 apart. Her emoluments are determined based on her performance, qualifications and responsibilities.

Save as disclosed herein, there is no matter that needs to be brought to the attention of the Shareholders, nor is there any information requiring to be disclosed pursuant to Rule 13.51(2)(h) to (v) of the Listing Rules.

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NOTICE OF SPECIAL GENERAL MEETING

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(Incorporated in Bermuda with limited liability)

(Stock Code: 983)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting of the shareholders of Shui On Construction and Materials Limited (the “ Company ”) will be held at Room 103, 1st Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong on Wednesday, 23 April 2008 at 3:00 p.m. for the purpose of considering and, if thought fit, passing with or without amendments, the following resolutions as ordinary resolutions of the Company:-

ORDINARY RESOLUTIONS

(1) “ THAT

• (a) the Agreement (as defined in the circular to the shareholders of the Company dated 20 March 2008 and a copy of which has been produced to this meeting marked “A” and signed by the chairman of this meeting for the purpose of identification) and the transaction contemplated thereunder be and is hereby approved, confirmed and ratified; and

• (b) the directors of the Company (the “ Director(s) ”) be and are hereby authorised to do all such further acts and things and execute such further documents and take all steps which in their opinion may be necessary, desirable or expedient to implement and/or give effect to the Agreement and all other transactions of the Company which arise following completion of the Agreement and all other transactions contemplated thereunder with any changes as such Directors may consider necessary, desirable or expedient.”

• (2) “ THAT Mr. Gerrit Jan de Nys be and is hereby re-elected as a Director of the Company.”

• (3) “ THAT Ms. Lau Jeny be and is hereby re-elected as a Director of the Company.”

By Order of the Board Tsang Yuet Kwai Company Secretary

Hong Kong, 20 March 2008.

* for identification purpose only

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NOTICE OF SPECIAL GENERAL MEETING

Notes :

• (1) Any member entitled to attend and vote at the above meeting is entitled to appoint one or more proxies to attend and, on a poll, vote in his stead. A proxy need not be a member of the Company.

• (2) To be valid, a form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a certified copy thereof, must be lodged with the head office of the Company at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong not less than 48 hours before the time fixed for holding the meeting.

At the date of this notice, the executive Directors are Mr. Lo Hong Sui, Vincent, Mr. Choi Yuk Keung, Lawrence, Mr. Wong Yuet Leung, Frankie, Ms. Lau Jeny and Mrs. Lowe Hoh Wai Wan, Vivien; the non-executive Director is Professor Michael John Enright; and the independent non-executive Directors are Mr. Anthony Griffiths, Mr. Cheng Mo Chi, Moses and Mr. Gerrit Jan de Nys.

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