Long Investment Corp - Proxy Solicitation & Information Statement 2010

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 licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser for independent advice.

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 enclosed form of proxy to the purchaser(s) or the transferee(s), or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or the transfer was effected for transmission to the purchaser(s) or transferee(s).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim 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 DISCLOSEABLE TRANSACTION DISPOSAL OF PARTIAL INTEREST IN SHUI ON LAND LIMITED

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

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A letter from the Board is set out on pages 4 to 10 of this circular. A letter from the Independent Board Committee containing its recommendation is set out on pages 11 and 12 of this circular. A letter from BNP Paribas, the Independent Financial Adviser, containing its advice and recommendation to the Independent Board Committee and the Independent Shareholders is set out on pages 13 to 31 of this circular.

A notice convening the special general meeting to be held at Room 103, 1st Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong on Monday, 28 June 2010 at 11:00 a.m. is set out on page 39 of this circular. A form of proxy for the meeting is enclosed. Whether or not you are able to attend the meeting, you are requested to complete the enclosed 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 less than 48 hours before the time appointed for holding 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 adjournment thereof (as the case may be), should you so desire.

* for identification purpose only

10 June 2010

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Letter of advice from the Independent Financial Adviser. . . . . . . . . . . . . . . . . . . . . .	13
Appendix — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32
Notice of Special General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	39

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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 1 June 2010 entered into between New Rainbow and SOPL in respect of the Disposal; “associates”, each has the meaning as ascribed to it under the Listing Rules; “connected persons” “BNP Paribas” BNP Paribas Capital (Asia Pacific) Limited; “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 shares 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. Gerrit Jan de Nys, Ms. Li Hoi Lun, Helen, Mr. David Gordon Eldon, Mr. Chan Kay Cheung and Mr. Tsang Kwok Tai, Moses, being independent non-executive Directors, formed to advise the Independent Shareholders on whether the terms and conditions of the Agreement are fair and reasonable; “Independent Financial Adviser” the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Disposal; “Independent Shareholders” shareholders of the Company other than SOCL and its associates; “Latest Practicable Date” 7 June 2010, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein;

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DEFINITIONS

“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange;
“Maximum Purchase Price”	HK$4.00 per SOL Share;
“Minimum Purchase Price”	HK$3.4088 per SOL Share;
“New Rainbow”	New Rainbow Investments Limited, which is a wholly-owned
	subsidiary of the Company and holds approximately 8.67% of
	the issued share capital of SOL at the Latest Practicable Date;
“PRC”	the People’s Republic of China, and for the purpose of this
	circular, excluding Hong Kong, the Macao Special
	Administrative Region and Taiwan;
“Price Fixing Date”	the eleventh Business Day immediately prior to the date of the
	SGM;
“Purchase Price”	the price per SOL Share to be paid by SOPL to New Rainbow
	for the Sale Shares determined in accordance with the
	Agreement;
“Resolution”	the ordinary resolution to be proposed at the SGM as set out
	in the notice of SGM which is set out on page 39 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 HK$1,080,000,000 by
	the Purchase Price;
“SFC”	the Securities and Futures Commission;
“SFO”	the 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 the Agreement and the transactions contemplated
	thereunder;
“Shareholders”	holder of the shares of the Company;
“Shui On Group”	SOCL and its subsidiaries;
“SOCL”	Shui On Company Limited, the controlling shareholder
	interested in approximately 37.24% of the issued share capital
	of the Company at the Latest Practicable Date;

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	DEFINITIONS
“SOL”	Shui On Land Limited, a company incorporated in the
	Cayman Islands, whose shares are listed on the main board of
	the Stock Exchange (Stock Code: 272);
“SOL Share(s)”	ordinary share(s) of nominal value US$0.0025 each in the
	capital of SOL;
“SOPL”	Shui On Properties Limited, a wholly-owned subsidiary of
	SOCL and an investment holding company;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Takeovers Code”	the Code on Takeovers and Mergers of Hong Kong; and
“%”	per cent.

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LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code: 983)

Executive Directors:

Mr. Lo Hong Sui, Vincent Mr. Choi Yuk Keung, Lawrence Mr. Wong Yuet Leung, Frankie Mr. Wong Kun To, Philip Mr. Wong Fook Lam, Raymond

Independent Non-executive Directors: Mr. Gerrit Jan de Nys Ms. Li Hoi Lun, Helen Mr. David Gordon Eldon Mr. Chan Kay Cheung Mr. Tsang Kwok Tai, Moses

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head Office and Principal Place of Business in Hong Kong: 34th Floor Shui On Centre 6-8 Harbour Road Hong Kong

10 June 2010

To the Shareholders

Dear Sir or Madam,

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

INTRODUCTION

On 1 June 2010, New Rainbow, a wholly-owned subsidiary of the Company, entered into the Agreement with SOPL whereby New Rainbow agrees to sell to SOPL approximately Hong Kong dollars one billion and eighty million (HK$1,080,000,000) 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 constitutes a connected and discloseable 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.

This circular provides you with, among other things, (i) further details of the Disposal; (ii) the recommendation of the Independent Board Committee to the Independent Shareholders; (iii) the advice and recommendation from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; and (iv) a notice of the SGM.

* for identification purpose only

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LETTER FROM THE BOARD

THE AGREEMENT

Date: 1 June 2010 Parties: (1) New Rainbow; and

(2) SOPL

Sale and purchase

New Rainbow agrees to sell and SOPL agrees to purchase approximately Hong Kong dollars one billion and eighty million (HK$1,080,000,000) 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$3.4088 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 calculated based on the trading volume of the SOL Shares and the 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$4.00 per SOL Share, SOPL shall have the right to terminate the Agreement by written notice on or before the first Business Day immediately following the Price Fixing Date.

Further announcement will be made to update the Shareholders and investors of the Purchase Price on or before the second Business Day immediately after the Price Fixing Date.

The Minimum Purchase Price and the Maximum Purchase Price of HK$3.4088 and HK$4.00 per SOL Share respectively represent:

(a) a premium of 3.93% and 21.95% over the closing price of HK$3.28 per SOL Share as quoted on the Stock Exchange on 1 June 2010, being the date of signing the Agreement;
(b) a premium of 2.12% and 19.83% over the average closing price of HK$3.34 per SOL Share for the last five (5) dealing days up to and including 1 June 2010;

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LETTER FROM THE BOARD

(c) a discount of 0.52% to and a premium of 16.73% over the average closing price of HK$3.43 per SOL Share for the last thirty (30) dealing days up to and including 1 June 2010;
(d) a premium of 4.24% and 22.32% over the closing price of HK$3.27 per SOL Share at the Latest Practicable Date; and
(e) a discount of 30.10% and 17.97% to the net asset value per SOL Share at 31 December 2009 as disclosed in the latest annual report of SOL.

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$3.4088 and HK$4.00 respectively, up to approximately 316.83 million SOL Shares and 270.00 million SOL Shares may be sold by New Rainbow to SOPL under the Agreement, representing approximately 6.31% and 5.38% 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 following conditions being satisfied (or in the case of condition (b) below, waived by both parties to the extent it is legally permitted to do so):

(a) the approval of the Independent Shareholders at the SGM for the execution of the Agreement and the Disposal;
(b) the obtaining of all consents, approvals, clearances and authorisations of any relevant governmental authorities or other relevant third parties in Hong Kong or elsewhere as may be necessary for the execution and implementation of the Agreement; and
(c) Shui On Group obtaining a waiver from the SFC on the obligations of Shui On Group and the persons acting in concert with it to make a general offer pursuant to the Takeovers Code in respect of the Disposal.

At the Latest Practicable Date, condition (c) above has been satisfied.

Completion

Completion shall take place within three (3) Business Days after the above conditions have been satisfied (or in the case of condition (b) above, waived) not later than 30 June 2010 (or such later date as both parties may agree in writing).

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LETTER FROM THE BOARD

INFORMATION RELATING TO SOL

SOL, through its subsidiaries, 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 audited consolidated 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 published audited financial statements are set out below:

				Profit before	Profit after
				taxation and	taxation and
				extraordinary	extraordinary
Year	ended	31	December	items	items
				(RMB’million)	(RMB’million)
2008				2,725	2,068
2009				3,894	2,593

The audited consolidated net asset value of SOL at 31 December 2008 and 31 December 2009 were as follows:

At			Net asset value
			(RMB’million)
31	December	2008	16,863
31	December	2009	21,579

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

IMPACT OF AND REASONS FOR THE DISPOSAL

The Group is principally engaged in property development, asset management, cement production and construction in Hong Kong and the PRC.

SOCL and SOPL are both investment holding companies.

Impact on the Group’s ownership in SOL

At the Latest Practicable Date, SOL is owned as to approximately 8.67% by the Group, and as to approximately 41.39% by SOCL and its subsidiaries (including SOPL). Collectively, the Shui On Group and the Group hold approximately 50.06% in the issued share capital of SOL.

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LETTER FROM THE BOARD

After the completion of the Disposal, the Group’s interest in SOL will be reduced from approximately 8.67% to approximately 2.36% (assuming the Purchase Price is the Minimum Purchase Price of HK$3.4088) and approximately 3.29% (assuming the Purchase Price is the Maximum Purchase Price of HK$4.00). The interest of the Shui On Group in SOL will be increased from approximately 41.39% to approximately 47.70% (assuming the Purchase Price is the Minimum Purchase Price of HK$3.4088) and approximately 46.77% (assuming the Purchase Price is the Maximum Purchase Price of HK$4.00). The collective interest of the Shui On Group and the Group in SOL will remain unchanged at approximately 50.06%.

Financial impact on the Group

The Group will record a gain on the Disposal, being the difference between the Purchase Price and the carrying investment cost of the Sale Shares of approximately HK$2.23 per SOL Share. The actual amount of the gain will be determined on the Price Fixing Date when the Purchase Price and the number of Sale Shares are fixed. Assuming the Purchase Price is the Minimum Purchase Price of HK$3.4088 per SOL Share, the gain, before transaction costs, is estimated to be approximately HK$374.34 million, including transfer from the investment revaluation reserve. Assuming the Purchase Price is the Maximum Purchase Price of HK$4.00 per SOL Share, the gain, before transaction costs, is estimated to be approximately HK$478.64 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 2010.

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 property business at a more rapid rate.

Reasons for the 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 the property business of the Group. The Directors (including the independent non-executive Directors) consider that the terms of the Agreement are normal commercial terms, 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 Group 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 better utilising its assets to produce attractive returns for Shareholders in ways that are proactive and effective.

From time to time and in its ordinary course of business, the Group explores and pursues suitable property investment opportunities in the PRC. However, at the Latest Practicable Date, the Group had not committed to any investment project that is required to be disclosed under the Listing Rules.

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LETTER FROM THE BOARD

(b) 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 expanding its property business at a more rapid rate.

IMPLICATIONS OF THE TAKEOVERS CODE

Upon completion of the Disposal, Shui On Group (comprising SOCL and its subsidiaries including SOPL) will increase its shareholding in SOL from approximately 41.39% to 47.70% (based on the Minimum Purchase Price of HK$3.4088), and a general offer obligation under the Takeovers Code may arise on the part of Shui On Group as a result of the Disposal. Accordingly, a waiver application has been made by SOCL to the SFC, and a waiver has been granted by the SFC, on such general offer obligation.

IMPLICATIONS OF THE LISTING RULES

Pursuant to Rule 14A.59(6) of the Listing Rules, an independent property valuation on all the properties of SOL and its subsidiaries would be required for this circular. Accordingly, a waiver application has been made by the Company to the Stock Exchange, and a waiver has been granted by the Stock Exchange, on such independent property valuation requirements under Rule 14A.59(6).

Mr. Lo Hong Sui, Vincent, the chairman of the Company and an executive Director, is also the chairman and chief executive officer of SOCL and a director of SOPL, and the chairman and chief executive officer of SOL. He is also a discretionary beneficiary of a unit trust that holds the entire interest in SOCL. Mr. Wong Yuet Leung, Frankie and Mr. Choi Yuk Keung, Lawrence, both executive Directors, are also directors of certain members of the Shui On Group, including SOCL and SOPL. In view of the aforesaid interests, they have abstained from voting on the board resolutions relating to the Agreement and the Disposal.

At the SGM, the Company will seek Independent Shareholders’ approval for the Agreement and the transactions contemplated thereunder. In view of the interest of SOCL and its associates in the Agreement, SOCL and its associates, which were interested in approximately 37.24% of the issued share capital of the Company at the Latest Practicable Date, will abstain from voting at the SGM in this regard. Mr. Wong Yuet Leung, Frankie and Mr. Choi Yuk Keung, Lawrence, who were interested in approximately 0.16% and 0.11% of the issued share capital of the Company respectively at the Latest Practicable Date, will also abstain from voting at the SGM. The votes to be taken at the SGM will be taken by poll, the results of which will be announced after the SGM.

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LETTER FROM THE BOARD

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 Monday, 28 June 2010 at 11:00 a.m. is set out on page 39 of this circular. At the SGM, the Resolution will be proposed to approve the Agreement and the transactions contemplated thereunder.

A form of proxy for 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 no 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 SGM and any adjournment thereof (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 for the Resolution to be proposed at the SGM. The results of the voting will be announced after the SGM.

RECOMMENDATION

The Directors consider that the terms of the Agreement and the Disposal are normal commercial terms, fair and reasonable and in the interests of the Shareholders as a whole. Accordingly, the Directors recommend that all the Independent Shareholders should vote in favour of the Resolution.

ADDITIONAL INFORMATION

The Independent Board Committee, comprising all the independent non-executive Directors, has been established to advise the Independent Shareholders on the terms of the Agreement and the transactions contemplated thereunder. Your attention is drawn to its letter of recommendation set out on pages 11 and 12 of this circular.

BNP Paribas has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in the same regard. Your attention is drawn to its letter of recommendation set out on pages 13 to 31 of this circular.

Yours faithfully, For and on behalf of

Shui On Construction and Materials Limited Wong Kun To, Philip Chief Executive Officer

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of the letter of recommendation from the Independent Board Committee which has been prepared for the purpose of inclusion in this circular.

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(Incorporated in Bermuda with limited liability)

(Stock Code: 983)

10 June 2010

To the Independent Shareholders

Dear Sir or Madam,

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

INTRODUCTION

We refer to the circular of the Company dated 10 June 2010 (the “ Circular ”), of which this letter forms part. Unless specified otherwise, terms used herein shall have the same meanings as those defined in the Circular.

We have been appointed by the Board to advise you on the terms of the Agreement and the transactions contemplated thereunder. BNP Paribas has been appointed as the Independent Financial Adviser to advise you and us in this regard. Details of their advice, together with the principal factors and reasons they have taken into consideration in giving such advice, are set out on pages 13 to 31 of the Circular. Your attention is also drawn to the letter from the Board in the Circular and the additional information set out in the appendix thereto.

RECOMMENDATION

Having considered the terms of the Agreement and the transactions contemplated thereunder and taking into account the independent advice of the Independent Financial Adviser and the relevant information contained in the letter from the Board, we are of the opinion that the Agreement and the transactions contemplated thereunder are on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

* for identification purpose only

— 11 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Accordingly, we recommend that you vote in favour of the Resolution to be proposed at the SGM to approve the Agreement and the transactions contemplated thereunder.

Yours faithfully For and on behalf of

Independent Board Committee of Shui On Construction and Materials Limited

Gerrit Jan de Nys Independent non-executive Director

Li Hoi Lun, Helen Independent non-executive Director

David Gordon Eldon Chan Kay Cheung Independent non-executive Independent non-executive Director Director

Tsang Kwok Tai, Moses Independent non-executive Director

— 12 —

10 June 2010

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of the letter prepared by BNP Paribas setting out its advice to the Independent Board Committee and the Independent Shareholders in respect of the Agreement and the transactions contemplated thereunder for inclusion in this circular.

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BNP Paribas Capital (Asia Pacific) Limited

59/F - 63/F Two International Finance Centre, 8 Finance Street, Central, Hong Kong

To the Independent Board Committee and the Independent Shareholders Shui On Construction and Materials Limited

Dear Sirs,

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

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Agreement and the transactions contemplated thereunder, details of which are set out in the Letter from the Board contained in the circular of the Company dated 10 June 2010 (the “ Circular ”), of which this letter forms part. Terms defined in the Circular shall have the same meanings when used herein, unless the context otherwise requires.

On 1 June 2010, New Rainbow, a wholly-owned subsidiary of the Company, entered into the Agreement with SOPL, a wholly-owned subsidiary of SOCL, the controlling shareholder of the Company, whereby New Rainbow agreed to sell to SOPL approximately Hong Kong dollars one billion and eighty million (HK$1,080,000,000) worth of Sale Shares at a price per SOL Share equal to the Purchase Price and subject to the terms of the Agreement. Based on the Minimum Purchase Price of HK$3.4088 per SOL Share, a maximum of up to approximately 316.83 million SOL Shares representing approximately 6.31% of the issued share capital of SOL may be sold under the Agreement. In the event that the Purchase Price exceeds the Maximum Purchase Price of HK$4.00 per SOL Share, SOPL shall have the right to terminate the Agreement.

SOPL is a wholly-owned subsidiary of SOCL, the controlling shareholder of the Company. Accordingly, both SOCL and SOPL are connected persons of the Company. As one or more of the applicable percentage ratios set out in Rule 14.07 of the Listing Rules for the Disposal are over 5% but less than 25%, the Disposal constitutes a connected and discloseable 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. The Disposal is conditional upon, among others, approval by the Independent Shareholders at the SGM. In view of the interest of SOCL and its associates in the Agreement, SOCL and its associates, which were interested in approximately 37.24%

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LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

of the issued share capital of the Company at the Latest Practicable Date, will abstain from voting at the SGM in this regard. Mr. Wong Yuet Leung, Frankie and Mr. Choi Yuk Keung, Lawrence, both executive Directors, are also directors of certain members of Shui On Group (including SOCL and SOPL). As they were interested in approximately 0.16% and 0.11% of the issued share capital of the Company respectively as at the Latest Practicable Date, they will also abstain from voting at the SGM. Any vote of the Independent Shareholders at the SGM shall be taken by poll.

The Independent Board Committee has been established to advise the Independent Shareholders in respect of the Agreement and the transactions contemplated thereunder. Our role is to advise the Independent Board Committee and the Independent Shareholders in the same regard.

We are a licensed corporation holding a licence to conduct Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the Securities and Futures Ordinance (Cap 571 of the Laws of Hong Kong). We shall receive a fee from the Company for the delivery of this letter in accordance with the terms of our engagement. The Company has also agreed to indemnify us and certain related persons against certain liabilities and expenses in connection with this engagement.

Apart from the professional fees for our services to the Company as described above, no separate arrangement exists whereby we shall receive any fees or benefits from the Company, its subsidiaries or associates. As at the Latest Practicable Date, BNP Paribas S.A., our parent company, beneficially owned the following interests:

(i) 17,486,469 shares of the Company, representing approximately 3.58% of the issued share capital of the Company; and
(ii) 1,809,900 shares of SOL, representing approximately 0.04% of the issued share capital of SOL.

As at the Latest Practicable Date, BNP Paribas and its holding company, controlling shareholder, fellow subsidiaries and associates (collectively “BNP Paribas Group”) provided certain banking facilities to certain group companies of the Company and SOL, which was less than 0.05% of the total assets of BNP Paribas Group as at 31 December 2009.

We do not consider these shareholding interests and banking facilities would affect the objectivity of our advice, given the fact that (i) the interests so held by BNP Paribas S.A. in the Company are immaterial and are no different from that of the Independent Shareholders; (ii) the respective interests so held by BNP Paribas S.A. in SOL are also immaterial; and (iii) the banking facilities provided by BNP Paribas Group to them are immaterial to their total assets and are under normal banking relationships.

We consider ourselves suitable to give independent financial advice to the Independent Board Committee and the Independent Shareholders in respect of the Agreement and the transactions contemplated thereunder.

In arriving at our advice, we have relied on the statements, information and facts supplied, the opinions expressed and the representations made by the Directors and management of the Company including those set out in the Circular and assumed that all statements, intentions, opinions and representations made, for which the Company and its Directors are solely and wholly responsible, were true, complete and accurate at the time they were made and continue to be so in all material respects up to and as at the Latest Practicable Date and that they may be relied upon. We have been

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LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

advised by the Directors that to the best of their information, knowledge and belief having made reasonable enquiries all material information and facts necessary for the purposes of BNP Paribas carrying out the work have been provided. We have no reasons to believe that any material information has been withheld, or to doubt the truth or accuracy of the information provided.

We have reviewed, among others, the information prepared by the Company relating to the Disposal. We have assumed that the Agreement is enforceable against each of the parties thereto in accordance with its terms and that each of the parties will perform and will be able to perform their respective obligations thereunder. We have also assumed that all statements of intention of the management or the Directors, as set forth in the Circular, will be implemented and that all of the expectations of the Directors can be met. We have also relied on certain information available to the public (such as the relevant published documents of the Company and SOL) and we have assumed such information to be accurate and reliable. We consider that we have received and reviewed sufficient information to enable us to provide a reasonable basis for our opinion. We have not carried out any independent verification of such information, or conducted an independent investigation into the business and affairs of the Company or SOL or the underlying assets of SOL, or conducted any valuation or appraisal of any assets or liabilities, or conducted any form of investigation into the commercial viability of the future prospects of the Group or of SOL or of their respective underlying assets, or of the financial conditions or future prospects of any other parties.

Our opinion is necessarily based upon market, economic and other conditions as they existed and could be evaluated on, and on the information publicly available to us as of the Latest Practicable Date. We have no obligation to update this opinion to take into account events occurring after this opinion is delivered to the Independent Board Committee and the Independent Shareholders. It should be understood that subsequent developments or changes could occur that, if known at the time we rendered our opinion, would have affected or altered our opinion. We assume no responsibility or liability under such circumstances.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our view, we have taken into consideration the principal factors and reasons set out below. In reaching our conclusion, we have considered the results of the analyses in light of each other and ultimately reached an opinion based on the results of all analyses taken as a whole.

Background for the Group

Business of the Group

We noted from the 2009 annual report of the Company that the Group is primarily engaged in the following business:

(i) property development in the PRC, investment in property development in the PRC through SOL, and investment in and development of distressed and special situation properties in the PRC through China Central Properties Limited (“CCP”);
(ii) management of property development projects in the PRC;

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LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

(iii) cement manufacturing and sales in the PRC through a joint venture with Lafarge S.A. under the name of Lafarge Shui On Cement Limited (“LSOC”) and other cement operations;
(iv) construction, construction management and fitting out in Hong Kong, Macau and the PRC; and
(v) venture capital investment in the PRC and Hong Kong.

According to the 2009 annual report of the Company, in the last ten years, the Group has been undergoing a transformation from a Hong Kong-focused construction and construction materials company into a predominately PRC-based group, tapping into the fast-growing property and cement markets.

Financials of the Group

Turnover and profit

According to the 2009 annual report of the Company, the Group’s profit attributable to shareholders for the year ended 31 December 2009 was HK$807 million on a turnover of HK$3,200 million, compared with the HK$562 million profit and HK$2,944 million turnover recorded for the previous year. A breakdown of the total turnover is shown below:

	Year ended	Year ended
	31 December 2008	31 December 2009
	(HK$ million)	(HK$ million)
Turnover
SOCAM and subsidiaries
Construction and building maintenance	2,729	3,065
Property	188	127
Others	27	8
Total	2,944	3,200
Jointly controlled entities and
associates
Cement operations	2,579	3,191
Property	1,089	3
Others	21	3
Total	3,689	3,197
Total turnover	6,633	6,397

Source: 2009 annual report of the Company

Note: The Group’s property business prior to the privatisation of CCP in June 2009 was principally undertaken through associates while its cement operations and venture capital investments are conducted through jointly controlled entities.

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LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

As set out in the 2009 annual report of the Company, turnover from construction and building maintenance works and cement operations increased during the year on higher business volumes. However, total turnover decreased slightly to HK$6,397 million for the year, largely attributable to the fact that CCP achieved minimal property sales revenue following the sales of a number of properties in the previous year, which generated revenue in excess of HK$3.4 billion, as most of the property projects on hand were in planning and construction stages during the year.

Total assets

As at 31 December 2009, the Group’s total assets amounted to HK$18,641 million. The holding of SOL Shares contributes to the cash 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. The Group’s interest in the SOL Shares is treated as non-current assets “available-for-sale investments” in the consolidated balance sheet. As at 31 December 2009, the carrying value of SOL Shares in the consolidated balance sheet of the Group was HK$2,004 million, which made up approximately 10.8% of the Group’s total assets.

Bank borrowings and interest rates

Net borrowings of the Group, which represented bank borrowings, net of bank balances, deposits and cash, amounted to HK$4,796 million on 31 December 2009. This compared with HK$4,255 million on 31 December 2008, which included outstanding convertible bonds that were redeemed in full in July 2009. During 2009, the Group drew on its credit facilities to finance the privatisation of CCP and acquisition and construction of property development projects, leading to an increase in the net borrowings of the Group.

We noted that, as at 31 December 2009, total borrowings of the Group amounted to HK$6,640 million, of which HK$4,980 million, or approximately 75%, were payable in 2010.

The maturity profile of the Group’s total borrowings is set out below:

	As at 31	As at
	December 2008	31 December 2009
	(HK$ million)	(HK$ million)
Bank borrowings payable:
Within one year	3,448	4,980
After one year but within two years	320	940
After two years but within five years	750	720
Total bank borrowings	4,518	6,640
Convertible bonds due 2009	430	—
Total borrowings	4,948	6,640
Bank balances, deposits and cash	(693)	(1,844)
Net borrowings	4,255	4,796

Source: 2009 annual report of the Company

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LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

The carrying amount of the Group’s bank borrowings, all of which carry interest at variable market rates and are mainly denominated in Hong Kong dollars, is analysed as follows:

	Interest rate	As at 31	As at 31
Denominated in	(per annum)	December 2008	December 2009
		(HK$ million)	(HK$ million)
Renminbi	5.40% to 7.56%	—	681
	(2008: Nil)
Hong Kong dollars	1.58% to 6.00%	4,285	5,959
	(2008: 1.00% to 5.89%)
United States dollars	Nil (2008: 5.45%)	233	—
		4,518	6,640

Source: 2009 annual report of the Company

Property business of the Group

Privatisation of CCP

CCP is a leader in the distressed and special situation properties in the PRC. The Company privatised CCP in June 2009 to increase its interest in CCP from 42.9% to 100.0%. According to the circular of the Company dated 15 May 2009, the privatisation resulted in a significant expansion in the Group’s asset and equity bases, enabling the Company to capitalise on the investment and development opportunities in the PRC. Following completion of the privatisation, CCP became a wholly-owned subsidiary of the Company and the financial results of CCP were consolidated into the financial statements of the Group. The principal investment vehicle of CCP was renamed Shui On China Central Properties Limited (“SOCCP”). In August 2009, all CCP projects were also rebranded under SOCCP to help the Company leverage the “Shui On” brand’s reputation for quality and innovation in China.

We noted from the 2009 annual report of the Company that SOCCP’s primary focus will continue to be the acquisition and development of distressed and special situation projects. As opportunities arise, the Company will also build on its success in undertaking medium-sized greenfield projects in prime locations in major and secondary cities in China. The Directors consider the privatisation of CCP a proactive and a strategic move to enhance significantly the growth of the Group’s core business in property.

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LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Property portfolio of the Group

As at 31 December 2009, the Group’s total attributable developable gross floor area (“GFA”) breaks down as follows:

	Total
	attributable
	developable		Estimated
Project	GFA(1)	Property type	completion year
	(square metres)
	(“sq.m.”)
Beijing Fengqiao Villas	76,000	Residential	2010
Beijing Chaoyang Project	30,300	Residential	2011
Chengdu Central Point (2)	96,000	Composite	2010
Chengdu Orient Home	474,000	Composite	2013
Chongqing Creative Concepts Center	86,000	Composite	2010
(formerly Ruiqi Building)
Chongqing Haomen Building	13,000	Commercial	To be sold in its
			existing condition in
			2010
Chongqing Nanyang Building	53,000	Residential and retail	2011
Chongqing Qianxinian Building	35,000	Commercial and retail	2011
Chongqing Danlong Road Project	149,000	Residential and retail	Agreement for
			the disposal of this
			project signed in
			January 2010 with
			completion in
			May 2010
Guangzhou Chuangyi Centre	112,000	Residential and retail	2011
Qingdao Central International Plaza	4,000	Composite	Completed
(Blocks A and C)	(yet-to-be sold)
Shanghai Lakeville Regency Tower 18	16,800	Residential	Completed
Shenyang Project Phase I (formerly	281,200	Composite	2011
Central Plaza Phase I)
Shenyang Project Phase II (formerly	640,700	Composite	2014
Central Plaza Phase II)
Total	2,067,000

Source: 2009 annual report of the Company

Notes:

(1) The GFAs shown are the effective share attributable to the Group
(2) According to subsequent events following the balance sheet date, the serviced apartment portion was sold in March 2010

As at 31 December 2009, the Group had a diverse property portfolio of 14 distressed, greenfield and special situation projects comprising approximately 2.07 million sq.m. of attributable developable GFA, all located in prime locations in Beijing, Shanghai, Chengdu, Chongqing, Guangzhou, Shenyang, and Qingdao. Most of these projects will be completed in 2010 and 2011.

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LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

In addition to the above, the Group also holds a 22% interest in the knowledge community project of Dalian Tiandi, an integrated development with GFA of approximately 3.54 million sq.m. which includes a software hub, commercial and retail properties, residential, educational, outdoor recreation and environmental facilities, as well as public amenities. The development will be constructed over 10 phases with final completion in 2020. This project, a joint venture involving SOL, the Company and Yida Group, aims to create a critical mass of software and IT outsourcing industries, business process outsourcing ventures and educational establishments. Land acquisitions and leasing are progressing smoothly, and as at 31 December 2009, various land plots of total developable GFA of approximately 2.85 million sq.m. have been acquired.

According to the 2009 annual report of the Company, the Group has benefited from the rapid emergence of China from the global financial crisis by continuing its search for quality property projects and seizing market opportunities that arose subsequent to the injection of colossal liquidity by the Central Government into the economy. The Group will continue to search for attractive property projects, with a view to building this sector into a dominant operation for the Group.

Cement business of the Group

According to the 2009 annual report of the Company, LSOC made good progress with its capacity expansion plans. Construction of the third line in Dujiangyan, Sichuan and the new dry kilns in Yongchuan, Chongqing and Sancha, Guizhou were on schedule with completion expected in mid 2010. This additional capacity of 13,800 tonnes per day (“tpd”) will further strengthen LSOC’s leadership position in Southwest China. Another five dry kilns with an aggregate capacity of 17,500 tpd in strategic locations in Sichuan, Chongqing and Yunnan will commence construction in due course.

A number of other new projects in LSOC’s core operating region are also on the drawing board and applications for government approvals are well under way. LSOC’s expansion plans will continue and a number of acquisitions of its competitors are under consideration. There is also a proposed injection by LSOC of its 50% interest in the Dujiangyan plants into Sichuan Shuangma Cement (“Shuangma”), a company listed on the Shenzhen Stock Exchange and acquired by LSOC in 2007 at a valuation of RMB2.3 billion in consideration for new shares issued by Shuangma. It is expected this asset injection will be completed in 2010. On completion, LSOC will hold beneficial interests of about 78% and 64% in the Shuangma and the Dujiangyan plants respectively.

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LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Information on SOL

Business of SOL

According to the 2009 annual report of SOL, SOL is engaged in the business of property development in the PRC 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. SOL is planning to launch a total of 426,200 sq.m. of GFA from seven projects for sale and pre-sale in 2010, of which 10% will be from the three Shanghai projects and 90% from projects in other four cities, namely Wuhan, Chongqing, Foshan and Dalian.

Financials of SOL

According to the 2009 annual report of SOL, turnover increased by 2.3 times to RMB6,758 million (2008 restated: RMB2,066 million), primarily due to the increase in property sales recognised in 2009. Property sales rose by 3.2 times to RMB6,078 million (2008 restated: RMB1,449 million). During the year ended 31 December 2009, the SOL group has contracted sales of 266,900 sq.m., out of which 194,300 sq.m. were recognised (2008: contracted sales were 85,100 sq.m. with 76,600 sq.m. recognised).

Increase in fair value of investment properties was RMB536 million (2008: RMB382 million). The amount for 2009 included the fair value gain of investment properties under construction or development of RMB277 million due to the application of the amendment to IAS 40 Investment Property arising from improvements to IFRS.

Profit before taxation increased by 43% to RMB3,894 million (2008 restated: RMB2,725 million). It is noted that such increase included a gain on partial disposals of equity interests in subsidiaries of RMB1,883 million.

Profit attributable to shareholders of SOL for 2009 was RMB2,673 million, an increase of 49% when compared to 2008 (2008 restated: RMB1,798 million). The full year dividend per share was HK$0.13 in 2009 (2008: HK$0.08 per share).

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LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Share price performance of SOL

Chart: Performance of SOL Shares measured against Hang Seng Index (“HSI”) since SOL’s listing on the Stock Exchange in 2006

==> picture [443 x 158] intentionally omitted <==

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

250% 700
600
200%
500
150% 400
100% 300
200
50%
100
0% -
Oct-06 Feb-07 Jun-07 Oct-07 Feb-08 Jun-08 Oct-08 Feb-09 Jun-09 Oct-09 Feb-10 Jun-10
SOL Volume (million shares) (RHS) SOL (LHS) HSI (LHS)
% change
million shares
----- End of picture text -----

Source: Bloomberg as at 7 June 2010

HSI consists of 43 “blue chip” companies and represents more than 50% of capitalisation of the Stock Exchange. Based on the chart above, we noted that shares of SOL had performed mostly in line with HSI from its listing up to September 2008, but lagged behind HSI most of the time since September 2008 up to the Latest Practicable Date.

For the three years ended 31 December 2009, full year dividend per SOL Share amounted to HK$0.15, HK$0.08 and HK$0.13 respectively. These payments represented cash yield, being the amount of dividend paid out over the price of the stock, of approximately 4.4%, 2.4% and 3.8% at the Minimum Purchase Price, and approximately 3.8%, 2.0% and 3.3% at the Maximum Purchase Price. We noted that the cash yield of HSI constituent stocks as at 7 June 2010 for the three years ended 31 December 2009 was approximately 3.2%, 3.6%, and 2.8% respectively .

Previous disposals of SOL interest by the Group

Since July 2007, the Group has been progressively disposing of its shareholdings in SOL. The first disposal of SOL Shares occurred in July 2007, where the Group disposed of HK$1.8 billion worth of SOL Shares, representing a 5.27% interest in the then issued share capital of SOL. After the first disposal, the Group decreased its shareholding in SOL from approximately 17.84% to 12.57%. The second disposal occurred in March 2008, where the Group disposed of another tranche of SOL Shares stake worth HK$1.0 billion, representing a 3.11% interest in the then issued share capital of SOL. After this second disposal, the Group’s interest in SOL decreased to approximately 9.46% and remained as such for the year ended 31 December 2008. In June 2009, SOL issued one bonus share for every ten ordinary shares held, and in the same month, SOL executed a share placement. As at the date of the Agreement, the Group’s interest in SOL was approximately 8.67%.

As disclosed in the 2007, 2008 and 2009 annual reports of the Company, the available-for-sale investments, which comprise the investment in SOL, represented 10.8%, 8.4% and 36.0% of the total

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LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

assets of the Group as at 31 December 2009, 31 December 2008 and 31 December 2007, respectively. We noted that SOL’s weighting in the Group’s consolidated balance sheet has decreased substantially as a result of the previous disposals and the share price performance of SOL as at the respective reporting dates.

We noted from the circular of the Company dated 31 July 2007 and 20 March 2008, the reasons for the first and second disposals are similar and are set out below:

Reasons for the first disposal

The first disposal allowed the Company to rebalance the Group’s investment portfolio, which was presently somewhat concentrated in SOL Shares.
The first disposal allowed the Company to realise its investment in SOL at least at the closing price per SOL Share as quoted on the Stock Exchange as at the date of the agreement on 16 July 2007. Because of the pricing mechanism, the Company benefited from a premium on the first disposal in the event of further increase in the market price of SOL Shares following the date of the agreement and the price fixing date on 8 August 2007.
A sale of SOL Shares to Shui On Investment Company Limited (“SOICL”), a wholly-owned subsidiary of SOCL, allowed the Shui On Group to maintain and further consolidate its control over SOL. This enhanced stability in the management and operation of SOL, and thereby allowed the Group to continue to benefit from its growth through its remaining interest in SOL.
The Group could use a substantial part of the proceeds from the first disposal to repay its bank borrowings, thereby reducing its gearing considerably. This could strengthen the Group’s financial position and allow it to expand its core businesses.

Reasons for the second disposal

The second disposal allowed the Company to rebalance the Group’s investment portfolio, which is presently somewhat concentrated in SOL Shares.
The second disposal allowed 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 second disposal reflected the Group’s efforts in utilising its assets to produce attractive returns for Shareholders in ways that are proactive and effective.
A sale of SOL Shares to SOICL did not affect the control of the Shui On Group over SOL. This could 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.

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LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

The Group could use a substantial part of the proceeds from the second disposal to repay its bank borrowings, thereby reducing its gearing level and freeing up gearing capacity for future expansion of its core businesses.

Reasons for the Disposal

According to the Letter from the Board, the Group intends to dispose of further interests in the SOL Shares and use the sale proceeds to fund future growth and development of the property business of the Group. Principal reasons for selling the SOL Shares are set out below:

(a) The Disposal allows the Group 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 better utilising its assets to produce attractive returns for Shareholders in ways that are proactive and effective.

(b) 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 expanding its property business at a more rapid rate.

Based on the above, we noted that (i) the Group will focus on the PRC property and cement businesses and will continue to invest in these areas if opportunities arise; (ii) 75% of the Group’s bank borrowings at 31 December 2009 is payable within one year in 2010; (iii) the share price performance of SOL has underperformed against HSI most of the time since September 2008; and (iv) the Group has been progressively disposing of its interest in SOL to reduce its holding of available-for-sale investments and repay bank borrowings, and we concur with the view of the Directors that the principal reasons for the Disposal are reasonable and in the interest of the Shareholders as a whole.

The Consideration and the Purchase Price

The Agreement is a conditional sale and purchase agreement under which New Rainbow agrees to sell and SOPL agrees to purchase approximately Hong Kong dollars one billion and eighty million (HK$1,080,000,000) worth of Sale Shares at a price per SOL Share equal to the 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$3.4088 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

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LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

(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;

The Minimum Purchase Price and the Maximum Purchase Price of HK$3.4088 and HK$4.00 per SOL Share respectively represent:

(a) a premium of 3.93% and 21.95% over the closing price of HK$3.28 per SOL Share as quoted on the Stock Exchange on 1 June 2010, being the date of signing the Agreement;
(b) a premium of 2.12% and 19.83% over the average closing price of HK$3.34 per SOL Share for the last five (5) dealing days up to and including 1 June 2010;
(c) a discount of 0.52% to and a premium of 16.73% over the average closing price of HK$3.43 per SOL Share for the last thirty (30) dealing days up to and including 1 June 2010; and
(d) a premium of 4.24% and 22.32% over the closing price of HK$3.27 per SOL Share as at the Latest Practicable Date; and
(e) a discount of 30.10% and 17.97% to the net asset value per SOL Share as at 31 December 2009 as disclosed in the latest annual report of SOL.

We noted that from the price adjustment mechanism as stated above, the Purchase Price is protected by a Minimum Purchase Price of HK$3.4088, the lowest Purchase Price will not be at a discount to the closing price of HK$3.28 per SOL Share as quoted on the Stock Exchange on 1 June 2010, being the date of the Agreement. We also noted that based on the Minimum Purchase Price, the number of SOL Shares subject to disposal will be approximately 316.83 million shares. Based on the above, we are of the view that the availability of the price adjustment mechanism is in the interest of the Shareholders.

Analysis on the Purchase Price

For our analysis, we have conducted (i) a comparable precedent transaction analysis on the consideration of the Sale Shares, and (ii) a comparable company trading analysis. It should be noted

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LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

however that when considering such analysis (i) the businesses, operations and prospects of SOL are not entirely the same as the Comparable Companies (as defined below) and (ii) that the financial statements of the Comparable Companies were prepared in accordance with their respective accounting policies which may differ from those of SOL.

Comparable precedent transaction analysis

The precedent transactions that we consider are broadly comparable to the placement of SOL Shares by the Company. We have focused on precedent transactions of companies operating in the property development business in the PRC and which are listed on the Main Board of the Stock Exchange, as far as we are aware of, that have reliable transaction information available in the public domain from 1 January 2009 up to and including the Latest Practicable Date.

Set out below are the (i) amount raised and (ii) premium over / (discount to) the last trade price, 5-day volume weighted average price (VWAP) and 30-day VWAP.

Table: Share placements of listed companies in Hong Kong since 1 January 2009 up to and including the Latest Practicable Date

Stock code Issuer Pricing date Amount raised Offer price Shares offered (HK$ million) (HK$) (million) 1387 Renhe Commercial Holdings Co. Ltd. 26-Mar-09 756 1.68 450.0 1387 Renhe Commercial Holdings Co. Ltd. 3-Apr-09 680 1.70 400.0 0813 Shimao Property Holdings Ltd. 7-Apr-09 1,961 6.95 282.2 0412 Heritage International Holdings Ltd. 28-Apr-09 26 0.50 51.0 1109 China Resources Land Ltd. 19-May-09 4,302 14.34 300.0 0817 Franshion Properties (China) Ltd. 25-May-09 120 2.78 43.3 0754 Hopson Development Holdings Ltd. 3-Jun-09 1,596 13.30 120.0 0272 Shui On Land Ltd. 10-Jun-09 2,038 4.87 418.5 0119 Poly (Hong Kong) Investments Ltd. 12-Jun-09 1,587 3.45 460.0 0295 Kong Sun Holdings Ltd. 18-Jun-09 82 0.10 817.0 1207 SRE Group Ltd. 29-Jun-09 499 0.96 520.0 1813 KWG Property Holding Ltd. 30-Jun-09 1,530 5.10 300.0 3883 China Aoyuan Property Group Ltd. 10-Jul-09 623 1.73 360.0 1387 Renhe Commercial Holdings Co. Ltd. 16-Jul-09 5,580 1.86 3,000.0 0817 Franshion Properties (China) Ltd. 22-Jul-09 1,938 2.52 768.9 1224 C C Land Holdings Ltd. 28-Jul-09 2,534 5.92 428.0 0604 Shenzhen Investment Ltd. 4-Aug-09 1,116 3.72 300.0 0230 Minmetals Land Ltd. 13-Aug-09 466 2.10 222.0 0412 Heritage International Holdings Ltd. 29-Sep-09 159 0.44 361.4 1168 Sinolink Worldwide Holdings Ltd. 9-Oct-09 542 1.87 290.1 0119 Poly (Hong Kong) Investments Ltd. 14-Oct-09 3,078 8.10 380.0 0230 Minmetals Land Ltd. 17-Dec-09 1,054 2.45 430.0	Premium over / (discount to)
	Last trade 5-day VWAP 30-day VWAP (16.8%) (15.2%) (17.3%) (12.4%) (3.8%) (10.5%) (12.4%) (8.5%) 14.6% (9.1%) (14.9%) (16.2%) (6.0%) (2.6%) 5.6% (0.4%) (4.2%) 15.1% (4.2%) 8.2% 50.2% (5.1%) (11.5%) 19.2% (7.3%) (4.4%) 0.7% (95.8%) (95.2%) (93.6%) (14.3%) (10.1%) (13.5%) (8.6%) (3.2%) 4.3% (12.2%) (15.5%) (17.2%) (8.8%) (1.9%) 8.2% (8.0%) (6.9%) (6.6%) (10.0%) 0.8% 11.7% (6.8%) (5.5%) 4.4% (10.3%) (15.6%) 22.5% (8.3%) (27.9%) (37.5%) (8.8%) (6.3%) 3.4% (8.9%) (11.5%) (3.6%) (13.1%) (16.0%) (9.7%)

Stock
code
Issuer
Pricing
date
Amount
raised
Offer
price
Shares
offered
(HK$
million)
(HK$)
(million)
1387
Renhe Commercial Holdings Co. Ltd.
26-Mar-09
756
1.68
450.0
1387
Renhe Commercial Holdings Co. Ltd.
3-Apr-09
680
1.70
400.0
0813
Shimao Property Holdings Ltd.
7-Apr-09
1,961
6.95
282.2
0412
Heritage International Holdings Ltd.
28-Apr-09
26
0.50
51.0
1109
China Resources Land Ltd.
19-May-09
4,302
14.34
300.0
0817
Franshion Properties (China) Ltd.
25-May-09
120
2.78
43.3
0754
Hopson Development Holdings Ltd.
3-Jun-09
1,596
13.30
120.0
0272
Shui On Land Ltd.
10-Jun-09
2,038
4.87
418.5
0119
Poly (Hong Kong) Investments Ltd.
12-Jun-09
1,587
3.45
460.0
0295
Kong Sun Holdings Ltd.
18-Jun-09
82
0.10
817.0
1207
SRE Group Ltd.
29-Jun-09
499
0.96
520.0
1813
KWG Property Holding Ltd.
30-Jun-09
1,530
5.10
300.0
3883
China Aoyuan Property Group Ltd.
10-Jul-09
623
1.73
360.0
1387
Renhe Commercial Holdings Co. Ltd.
16-Jul-09
5,580
1.86
3,000.0
0817
Franshion Properties (China) Ltd.
22-Jul-09
1,938
2.52
768.9
1224
C C Land Holdings Ltd.
28-Jul-09
2,534
5.92
428.0
0604
Shenzhen Investment Ltd.
4-Aug-09
1,116
3.72
300.0
0230
Minmetals Land Ltd.
13-Aug-09
466
2.10
222.0
0412
Heritage International Holdings Ltd.
29-Sep-09
159
0.44
361.4
1168
Sinolink Worldwide Holdings Ltd.
9-Oct-09
542
1.87
290.1
0119
Poly (Hong Kong) Investments Ltd.
14-Oct-09
3,078
8.10
380.0
0230
Minmetals Land Ltd.
17-Dec-09
1,054
2.45
430.0

Premium over / (discount to)

Last
trade
5-day
VWAP
30-day
VWAP
(16.8%)
(15.2%)
(17.3%)
(12.4%)
(3.8%)
(10.5%)
(12.4%)
(8.5%)
14.6%
(9.1%)
(14.9%)
(16.2%)
(6.0%)
(2.6%)
5.6%
(0.4%)
(4.2%)
15.1%
(4.2%)
8.2%
50.2%
(5.1%)
(11.5%)
19.2%
(7.3%)
(4.4%)
0.7%
(95.8%)
(95.2%)
(93.6%)
(14.3%)
(10.1%)
(13.5%)
(8.6%)
(3.2%)
4.3%
(12.2%)
(15.5%)
(17.2%)
(8.8%)
(1.9%)
8.2%
(8.0%)
(6.9%)
(6.6%)
(10.0%)
0.8%
11.7%
(6.8%)
(5.5%)
4.4%
(10.3%)
(15.6%)
22.5%
(8.3%)
(27.9%)
(37.5%)
(8.8%)
(6.3%)
3.4%
(8.9%)
(11.5%)
(3.6%)
(13.1%)
(16.0%)
(9.7%)

— 26 —

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Stock code Issuer Pricing date Amount raised Offer price Shares offered (HK$ million) (HK$) (million) 3377 Sino-Ocean Land Holdings Ltd. 24-Dec-09 5,819 6.23 934.0 0295 Kong Sun Holdings Ltd. 20-Jan-10 24 0.40 60.4 2362 Macau Investment Holdings Ltd. 3-Feb-10 24 0.25 97.0 0412 Heritage International Holdings Ltd. 22-Mar-10 33 0.24 137.9 0412 Heritage International Holdings Ltd. 9-Apr-10 100 0.25 400.0 Average Median Minimum Maximum	Premium over / (discount to)
	Last trade 5-day VWAP 30-day VWAP (6.7%) (7.3%) (18.9%) (19.2%) (19.1%) (35.0%) (18.0%) (18.1%) (26.4%) (2.8%) 0.6% 1.4% (21.9%) (13.2%) 2.6% (13.0%) (12.1%) (5.4%) (9.0%) (8.9%) (1.5%) (95.8%) (95.2%) (93.6%) (0.4%) 8.2% 50.2%

Stock
code
Issuer
Pricing
date
Amount
raised
Offer
price
Shares
offered
(HK$
million)
(HK$)
(million)
3377
Sino-Ocean Land Holdings Ltd.
24-Dec-09
5,819
6.23
934.0
0295
Kong Sun Holdings Ltd.
20-Jan-10
24
0.40
60.4
2362
Macau Investment Holdings Ltd.
3-Feb-10
24
0.25
97.0
0412
Heritage International Holdings Ltd.
22-Mar-10
33
0.24
137.9
0412
Heritage International Holdings Ltd.
9-Apr-10
100
0.25
400.0
Average
Median
Minimum
Maximum

Premium over / (discount to)

Last
trade
5-day
VWAP
30-day
VWAP
(6.7%)
(7.3%)
(18.9%)
(19.2%)
(19.1%)
(35.0%)
(18.0%)
(18.1%)
(26.4%)
(2.8%)
0.6%
1.4%
(21.9%)
(13.2%)
2.6%
(13.0%)
(12.1%)
(5.4%)
(9.0%)
(8.9%)
(1.5%)
(95.8%)
(95.2%)
(93.6%)
(0.4%)
8.2%
50.2%

Source: Dealogic

When comparing to precedent share placements of companies operating in the real estate development business listed on the Main Board of the Stock Exchange, it is noted that share placements since January 2009 are typically priced at a discount to the last closing price of the relevant shares prior to the price fixing date. There was an average discount of 13.0% compared to the closing price of the last trading day before the price fixing, and a 12.1% and 5.4% discount for the five trading days and the thirty trading days before the price fixing respectively.

The Directors anticipate that if the SOL Shares are sold under a typical share placement, a discount to the then market price similar to the comparable share placements as stated above would usually be required, and the vendor has to pay a commission to the placing agent. Whereas for the Disposal, SOPL, as a connected person, agreed to purchase the SOL Shares at least at the Minimum Purchase Price, which is without any discount to the closing price at the signing of the Agreement, and the Company is not required to pay any placing commission.

Comparable company trading analysis

In conducting the comparable company trading analysis, we view as the broadly comparable companies (“Comparable Companies”) to SOL on the basis that they, as far as we are aware of, are all the property development companies in the PRC listed on the Main Board of the Stock Exchange, details of which are set in the table below.

Amongst various ratios analysis, we consider that the analysis of a price-to-book ratio (PB) and a price-to-earnings ratio (PE) are the most commonly used and appropriate valuation benchmarks. The PB calculates the market value of a property developer’s net assets attributable to the equity holders compared to its book value. The PE is calculated by dividing the share price by the earnings per share of the company.

— 27 —

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below are the PB and the PE of the Comparable Companies as of 1 June 2010, which is the date of the Agreement:

		Market	2009	2010E	2009	2010E
Company name	Stock code	Capitalisation	PB	PB	PE	PE
		(HK$ million)
China Overseas	0688	119,634	2.8x	2.4x	16.0x	13.8x
China Resources Land	1109	70,292	1.8x	1.6x	15.5x	15.1x
Shimao Property	0813	39,978	1.6x	1.4x	9.8x	8.8x
Longfor Properties	0960	39,449	2.8x	2.1x	12.6x	14.8x
Renhe Commercial	1387	36,300	2.9x	2.4x	7.5x	5.8x
Country Garden	2007	35,864	1.5x	1.3x	15.0x	11.0x
Sino-Ocean Land	3377	31,174	1.1x	1.0x	14.4x	12.1x
Guangzhou R&F	2777	30,419	1.6x	1.4x	9.2x	7.0x
Evergrande	3333	30,300	2.4x	1.7x	23.9x	3.9x
Agile Property	3383	28,297	1.8x	1.5x	13.5x	8.7x
Poly Hong Kong	0119	24,216	1.4x	1.1x	25.5x	16.8x
SOHO China	0410	21,010	1.1x	1.0x	5.7x	5.5x
Franshion Properties	0817	20,888	1.2x	1.2x	16.6x	16.9x
Glorious Property	0845	17,845	1.5x	1.2x	5.3x	6.0x
Hopson Development	0754	16,507	0.6x	0.5x	2.6x	5.2x
Mingfa	0846	13,800	2.7x	2.2x	10.7x	7.5x
New World China	0917	13,702	0.4x	0.4x	7.1x	11.1x
Beijing North Star	0588	13,528	0.5x	n/a	3.7x	n/m
Greentown	3900	13,485	1.2x	1.0x	11.6x	6.9x
KWG Property	1813	12,498	1.0x	0.9x	14.6x	8.9x
Yuexiu Property	0123	11,777	0.9x	0.9x	n/m	9.6x
Powerlong	1238	9,032	0.9x	0.9x	2.1x	6.2x
Kaisa Group	1638	8,047	1.4x	1.1x	10.4x	2.9x
Shenzhen Investment	0604	8,023	0.7x	0.6x	7.7x	7.0x
China South City	1668	6,960	n/a	0.8x	n/m	14.7x
C C Land	1224	6,303	0.6x	0.5x	n/m	n/m
Fantasia	1777	5,849	1.4x	1.1x	10.5x	4.3x
Yuzhou Properties	1628	5,760	1.4x	n/a	3.6x	n/m
China SCE Property	1966	5,706	0.2x	1.6x	9.8x	4.7x
Shanghai Forte Land	2337	5,160	0.8x	0.7x	9.1x	4.9x
Beijing Capital Land	2868	4,633	0.8x	0.7x	7.4x	5.7x
Zhong An Real Estate	0672	4,488	0.8x	0.8x	9.6x	8.8x

— 28 —

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

		Market	2009	2010E	2009	2010E
Company name	Stock code	Capitalisation	PB	PB	PE	PE
		(HK$ million)
China Properties	1838	3,672	0.1x	n/a	0.4x	n/m
Central China Real Estate	0832	3,520	1.1x	0.9x	7.7x	4.1x
SPG Land	0337	3,311	0.9x	0.9x	5.1x	3.6x
China Aoyuan	3883	3,083	0.5x	0.5x	8.2x	10.7x
SRE Group	1207	2,523	0.4x	n/a	3.0x	n/m
Average			1.2x	1.2x	9.9x	8.5x
Median			1.1x	1.0x	9.4x	7.2x
Minimum			0.1x	0.4x	0.4x	2.9x
Maximum			2.9x	2.4x	25.5x	16.9x
SOL(1)	272	17,121	0.7x	0.6x	5.4x	11.2x

Source: Bloomberg at 1 June 2010

Note:

(1) Assuming SOL Share at the Minimum Purchase Price

Based on the Minimum Purchase Price, both 2009 and 2010E PB and PE of SOL are in the range of the corresponding multiples of the Comparable Companies. It should be noted that the prevailing traded share price of each individual company is generally an indication of the market’s sentiment towards that particular company.

According to the data compiled by Bloomberg, based on the Minimum Purchase Price, we noted that SOL traded below its net asset value in 2009 and in 2010E. We also noted that 17 out of the 37 Comparable Companies traded below their net asset value for 2009 and 2010E as at 1 June 2010.

— 29 —

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

According to Bloomberg, since January 2010, SOL has been trading below its net asset value as shown in the chart below.

Chart: SOL’s Price-to-Book ratio since 1 July 2007

==> picture [433 x 183] intentionally omitted <==

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

3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10
SOL PB ratio
----- End of picture text -----

Source: Bloomberg as at 7 June, 2010

FINANCIAL EFFECTS

Effects on the liquidity

The liquidity of the Group will be increased by the Disposal which will result in an infusion of approximately HK$1,080 million in cash, which represents approximately 58.6% of the bank balances, deposits and cash of the Group as at 31 December 2009. This infusion will free up gearing capacity and/or provide funds for new investments.

Effects on the earnings

Upon completion of the Disposal, the Group will record a gain on the Disposal, being the difference between the Purchase Price and the carrying investment cost of the Sale Shares of approximately HK$2.23 per SOL Share. The actual amount of the gain will be determined on the Price Fixing Date when the Purchase Price and the number of Sale Shares are fixed. As set out in the Letter from the Board, assuming the Purchase Price is the Minimum Purchase Price of HK$3.4088 per SOL Share, the gain, before transaction costs, is estimated to be approximately HK$374.34 million, including transfer from the investment revaluation reserve; assuming the Purchase Price is the Maximum Purchase Price of HK$4.00 per SOL Share, the gain, before transaction costs, is estimated to be approximately HK$478.64 million, including transfer from the investment revaluation reserve. The Company has advised that the gain referred to above will be reflected in the Group’s consolidated income statement for the year ending 31 December 2010. The Disposal will however diminish the amount of dividend income to be received from the investment in SOL proportionally to the percentage stake disposed.

— 30 —

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

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. For illustration purpose, based on 31 December 2009 audited financial information of the Group, the loan interest amount that can be saved, if all of the proceeds from the Disposal are used to settle existing bank borrowings, will range from HK$17.06 million to HK$81.65 million (assuming the lowest interest rate is 1.58% p.a. and the highest 7.56% p.a. according to the interest rate for the Group’s Hong Kong dollars and Renminbi financing in 2009). This amount is to compare with the loss of dividend income to be received from the investment in SOL of HK$41.19 million assuming the Purchase Price is the Minimum Purchase Price of HK$3.4088 and of HK$35.10 million assuming the Purchase Price is the Maximum Purchase Price of HK$4.00, if SOL’s 2009 dividend pay-out of HK$0.13 per SOL Share is used.

Effects on the net assets

According to the accounting policies of the Company, the Group’s holding of SOL Shares is booked in its accounts as non-current assets “available-for-sale investments”, and marked to market from time to time. According to the Directors, upon completion of the Disposal, there will not be any material adverse impact on the net asset value of the Group.

Effects on the gearing

The total borrowings of the Group could be reduced by up to HK$1,080 million from the proceeds from the Disposal if all of the proceeds are used to settle existing bank borrowings. If all of the proceeds from the Disposal are used to settle loans, the net borrowings would be reduced from HK$4,796 million as at 31 December 2009 down to HK$3,716 million, and the net gearing of the Group, calculated as net borrowings over the equity attributable to the Shareholders, would improve after the Disposal.

CONCLUSION

Having considered the above principal reasons and factors, we are of the view that the Disposal is on normal commercial terms, in the ordinary and usual course of business, fair and reasonable and in the interests of the Company and its Shareholders as a whole. Accordingly, we would advise the Independent Board Committee to recommend the Independent Shareholders to and also recommend the Independent Shareholders to vote in favour of the Disposal.

Yours faithfully, For and on behalf of

BNP Paribas Capital (Asia Pacific) Limited Cecil Ng Executive Director

— 31 —

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF 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 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

					Approximate
					percentage of
	Number of ordinary		shares in the	Company	shareholding
	Personal	Family	Other		in the
Name of Directors	interests	interests	interests	Total	Company
Mr. Lo Hong Sui,	—	312,000	181,981,000	182,293,000	37.30%
Vincent		(Note 1)	(Note 2)
Mr. Choi Yuk Keung,	540,000	—	—	540,000	0.11%
Lawrence
Mr. Wong Yuet Leung,	800,000	—	—	800,000	0.16%
Frankie
Mr. Wong Kun To,	—	72,533	—	72,533	0.01%
Philip		(Note 3)
Mr. Wong Fook Lam,	32,000	—	—	32,000	0.01%
Raymond

— 32 —

GENERAL INFORMATION

APPENDIX

Notes:

(1) These shares are beneficially owned by Ms. Loletta Chu (“Mrs. Lo”), the spouse of Mr. Lo Hong Sui, Vincent. Under the SFO, Mr. Lo Hong Sui, Vincent is deemed to be interested in such shares and both Mr. Lo Hong Sui, Vincent and Mrs. Lo are also deemed to be interested in the 181,981,000 shares mentioned in note (2) below.
(2) These shares are beneficially owned by SOCL. Of these 181,981,000 shares, 166,148,000 shares are held by SOCL itself and 15,833,000 shares are held by Shui On Finance Company Limited (“SOFCL”), an indirect wholly-owned subsidiary of SOCL. SOCL is owned by the Bosrich Unit Trust, the trustee of which is Bosrich Holdings (PTC) 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, Mrs. Lo, HSBC International Trustee Limited and Bosrich Holdings (PTC) Inc. are deemed to be interested in such shares under the SFO.
(3) These shares are beneficially owned by the spouse of Mr. Wong Kun To, Philip. Under the SFO, Mr. Wong Kun To, Philip is deemed to be interested in such shares.

(b) Short position in the shares of the Company

					Approximate
					percentage of
	Number of ordinary		shares in the	Company	shareholding
	Personal	Family	Other		in the
Name of Director	interests	interests	interests	Total	Company
Mr. Lo Hong Sui,	—	—	1,600,000	1,600,000	0.32%
Vincent			(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, Mrs. Lo, HSBC International Trustee Limited and Bosrich Holdings (PTC) Inc. are deemed to have short position in these shares under the SFO.

— 33 —

GENERAL INFORMATION

APPENDIX

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

			Period during	Number
		Subscription	which options	of ordinary
	Date of	price per	outstanding are	shares subject
Name of Directors	grant	share	exercisable	to the options
		HK$
Mr. Choi Yuk Keung,	14-6-2007	20.96	14-12-2007 to	250,000
Lawrence			13-6-2012
	7-5-2008	19.76	7-11-2008 to	250,000
			6-5-2013
	7-5-2008	19.76	7-5-2011 to	1,000,000
			6-5-2018
	9-4-2009	7.63	9-10-2009 to	250,000
			8-4-2014
	9-4-2009	7.63	9-4-2012 to	1,000,000
			8-4-2019
	12-4-2010	12.22	12-10-2010 to	250,000
			11-4-2015
	12-4-2010	12.22	12-4-2013 to	1,000,000
			11-4-2020
Mr. Wong Yuet Leung,	1-8-2006	14.00	1-2-2007 to	2,000,000
Frankie			31-7-2011
	14-6-2007	20.96	14-12-2007 to	500,000
			13-6-2012
	7-5-2008	19.76	7-11-2008 to	500,000
			6-5-2013
	7-5-2008	19.76	7-5-2011 to	2,000,000
			6-5-2018
	9-4-2009	7.63	9-10-2009 to	750,000
			8-4-2014
	9-4-2009	7.63	9-4-2012 to	2,000,000
			8-4-2019
	12-4-2010	12.22	12-10-2010 to	350,000
			11-4-2015
	12-4-2010	12.22	12-4-2013 to	1,000,000
			11-4-2020

— 34 —

APPENDIX

GENERAL INFORMATION

			Period during	Number
		Subscription	which options	of ordinary
	Date of	price per	outstanding are	shares subject
Name of Directors	grant	share	exercisable	to the options
		HK$
Mr. Wong Kun To, Philip	5-6-2009	11.90	3-1-2010 to	1,602,000
			2-1-2012
	5-6-2009	11.90	1-7-2010 to	104,000
			13-6-2012
	12-4-2010	12.22	12-10-2010 to	350,000
			11-4-2015
	12-4-2010	12.22	12-4-2013 to	1,500,000
			11-4-2020
Mr. Wong Fook Lam,	1-8-2006	14.00	1-2-2007 to	176,000
Raymond			31-7-2011
	14-6-2007	20.96	14-12-2007 to	200,000
			13-6-2012
	12-4-2010	12.22	12-10-2010 to	200,000
			11-4-2015
	12-4-2010	12.22	12-4-2013 to	1,000,000
			11-4-2020

Note: The vesting of the share options granted to the Directors is subject to the vesting schedules and/or performance conditions as set out in their respective offer letters.

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

— 35 —

APPENDIX

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.

Save as disclosed herein regarding the Disposal, at the Latest Practicable Date, there is no contract or arrangement subsisting in which any of the Directors is materially interested and which is significant in relation to the business of the Group.

Save as disclosed herein regarding the Disposal and in the announcement of the Company dated 31 May 2010 in respect of the master agreement for the leasing of commercial premises by the Group from the Shui On Group, at the Latest Practicable Date, none of the Directors has had any direct or indirect interest in any assets which have since 31 December 2009 (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.

At the Latest Practicable Date, save as disclosed below, none of the Directors was a director or employee of a company which had an interest or short position in the shares and 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:

	Name of companies
	which had such
	discloseable interest	Position within
Name of Directors	or short position	such companies
Mr. Lo Hong Sui, Vincent	SOCL and SOFCL	Director
Mr. Choi Yuk Keung, Lawrence	SOCL and SOFCL	Director
Mr. Wong Yuet Leung, Frankie	SOCL and SOFCL	Director
Mr. Wong Fook Lam, Raymond	SOFCL	Director

3. SERVICE CONTRACTS

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

4. COMPETING BUSINESS INTERESTS OF DIRECTORS

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

— 36 —

GENERAL INFORMATION

APPENDIX

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.

5. EXPERT AND CONSENT

The following is the qualification of the expert who has given opinion and advice, which is contained in this circular:

Name Qualification BNP Paribas A corporation licensed under the SFO to conduct Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

BNP Paribas 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 appears.

6. EXPERT’S INTEREST IN ASSETS

At the Latest Practicable Date, BNP Paribas:

(a) did 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, save that:
(i) BNP Paribas S.A., the parent company of BNP Paribas, beneficially owned the following interests:
- (A) 17,486,469 shares of the Company, representing approximately 3.58% of the issued share capital of the Company; and
- (B) 1,809,900 shares of SOL, representing approximately 0.04% of the issued share capital of SOL;
(ii) BNP Paribas and its holding company, controlling shareholder, fellow subsidiaries and associates (collectively “BNP Paribas Group”) provided certain banking facilities to certain group companies of the Company and SOL, which was less than 0.05% of the total assets of BNP Paribas Group at 31 December 2009; and
(b) did 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 2009, the date to which the latest published audited consolidated financial statements of the Company were made up.

— 37 —

GENERAL INFORMATION

APPENDIX

7. 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 2009, the date to which the latest published audited consolidated financial statements of the Company were made up.

8. GENERAL

(a) The secretary of the Company is Ms. Tsang Yuet Kwai, Anita, an Associate of The Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Chartered Secretaries.
(b) The principal share registrar and the transfer office of the Company is HSBC Bank Bermuda Limited (formerly known as The Bank of Bermuda Limited), 6 Front Street, Hamilton HM 11, Bermuda.
(c) The branch share registrar and transfer office of the Company in Hong Kong is Tricor Standard Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.
(d) 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 in Hong Kong is at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong.
(e) The English text of this circular shall prevail over the Chinese text.

9. 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 28 June 2010:

(i) the Agreement;
(ii) the “Letter from the Independent Board Committee” as set out in this circular;
(iii) the “Letter of advice from the Independent Financial Adviser” as set out in this circular; and
(iv) the letter of consent from BNP Paribas referred to in paragraph 5 of this Appendix.

— 38 —

NOTICE OF SPECIAL GENERAL MEETING

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(Incorporated in Bermuda with limited liability)

(Stock Code: 983)

NOTICE IS HEREBY GIVEN that a special general meeting 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 Monday, 28 June 2010 at 11:00 a.m. for the purpose of considering and, if thought fit, passing with or without amendments, the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT :

(a) the entry into of the Agreement (as defined in the circular to the shareholders of the Company dated 10 June 2010), a copy of which has been produced to this meeting marked “A” and signed by the chairman of this meeting for identification purpose, and the transactions contemplated thereunder be hereby confirmed, approved, authorised and ratified; and
(b) the directors of the Company be hereby authorised for and on behalf of the Company to execute any such documents, instruments and agreements and to do any such acts or things as may be deemed by such directors in their absolute discretion to be incidental to, ancillary to or in connection with the Agreement and the transactions contemplated thereunder.”

By Order of the Board Shui On Construction and Materials Limited Tsang Yuet Kwai, Anita Company Secretary

Hong Kong, 10 June 2010

Notes:

(i) 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.
(ii) 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.
for identification purpose only

— 39 —

AI assistant

Long Investment Corp — Proxy Solicitation & Information Statement 2010

50512_rns_2010-06-09_7d2a3069-1683-48a6-bd17-86b4a1bec3af.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

CONTENTS

DEFINITIONS

DEFINITIONS

(Stock Code: 983)

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

INTRODUCTION

LETTER FROM THE BOARD

THE AGREEMENT

Sale and purchase

Purchase Price

LETTER FROM THE BOARD

Sale Shares

Conditions

Completion

LETTER FROM THE BOARD

INFORMATION RELATING TO SOL

IMPACT OF AND REASONS FOR THE DISPOSAL

Impact on the Group’s ownership in SOL

LETTER FROM THE BOARD

Financial impact on the Group

Reasons for the Disposal

LETTER FROM THE BOARD

IMPLICATIONS OF THE TAKEOVERS CODE

IMPLICATIONS OF THE LISTING RULES

LETTER FROM THE BOARD

SPECIAL GENERAL MEETING

RECOMMENDATION

ADDITIONAL INFORMATION

(Stock Code: 983)

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

INTRODUCTION

RECOMMENDATION

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

BNP Paribas Capital (Asia Pacific) Limited

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

INTRODUCTION

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

Background for the Group

Business of the Group

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Turnover and profit

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Total assets

Bank borrowings and interest rates

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Property business of the Group

Privatisation of CCP

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Property portfolio of the Group

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Cement business of the Group

Information on SOL

Business of SOL

Financials of SOL

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Previous disposals of SOL interest by the Group

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Reasons for the first disposal

Reasons for the second disposal

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Reasons for the Disposal

The Consideration and the Purchase Price

Analysis on the Purchase Price

Comparable precedent transaction analysis

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Comparable company trading analysis

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

FINANCIAL EFFECTS

Effects on the liquidity

Effects on the earnings

LETTER OF ADVICE FROM THE INDEPENDENT FINANCIAL ADVISER

Effects on the net assets

Long Investment Corp Proxy Solicitation & Information Statement 2010