Macau E&M Holding Limited — Proxy Solicitation & Information Statement 2006

Sep 19, 2006

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, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Shenzhen Investment Limited , you should at once hand this circular to the purchaser or the transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

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(Incorporated in Hong Kong with limited liability)

(Stock Code: 604)

DISCLOSEABLE TRANSACTION DISPOSAL OF SHAREHOLDING IN NEWTON INDUSTRIAL LIMITED

A letter from the Board is set out on pages 5 to 14 of this circular.

19 September 2006

CONTENTS

		Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
LETTER FROM THE BOARD
1.	INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
2.	THE AGREEMENT DATED 28 AUGUST 2006 . . . . . . . . . . . . . . . . . . . . . . . . . .	6
3.	REASONS FOR AND BENEFITS OF THE DISPOSAL . . . . . . . . . . . . . . . . . . .	12
4.	FINANCIAL EFFECTS OF THE DISPOSAL . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
5.	USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
6.	GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
7.	ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
APPENDIX – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		15

– i –

DEFINITIONS

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

“Agreement”	the agreement dated 28 August 2006 entered into between the
	Company and the Purchaser pursuant to which the Company has
	conditionally agreed to sell and the Purchaser has conditionally
	agreed to purchase the Sale Shares pursuant to the terms and
	conditions of such agreement
“Board”	the board of Directors
“China Everbright”	China Everbright International Limited（中國光大國際有限公
	司）, a company incorporated in Hong Kong with limited liability,
	the shares of which are listed on the main board of the Stock
	Exchange
“Company”	Shenzhen Investment Limited（深圳控股有限公司）, a company
	incorporated in Hong Kong with limited liability, the shares of
	which are listed on the main board of the Stock Exchange
“Completion”	completion of the Disposal
“Conditions”	the conditions precedent to Completion, as more particularly set
	out under the section headed “Conditions” in the letter from the
	Board
“connected person”	has the meaning ascribed to it under the Listing Rules
“Consideration”	the aggregate amount payable by the Purchaser to the Company
	for the Sale Shares pursuant to the Agreement, as more particularly
	set out under the section headed “The Consideration and
	Guarantee” of this circular
“Directors”	the directors of the Company
“Disposal”	the disposal of the Sale Shares by the Company pursuant to the
	terms and conditions of the Agreement
“Guangdong Electricity”	廣東省電力集團公司(Guangdong Province Electricity Group
	Company)

– 1 –

DEFINITIONS

“Guarantee”	the aggregate amount payable by Shenzhen Energy Group to the
	Company pursuant to the Agreement, as more particularly set out
	under the section headed “The Consideration and the Guarantee”
	of this circular
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Joint Account”	an account with a bank in Hong Kong in the name of the Company
	with an individual nominated by the Purchaser as one of the
	authorized signatories
“kilowatt hour” or “kWh”	a unit of energy equal to the work done by 1,000 watts of electrical
	power in one hour
“Latest Practicable Date”	14 September, 2006, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information
	contained herein
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Mawan Plant”	the 2 x 300 MW coal-fired power plant of Mawan Power in Mawan,
	Shenzhen, PRC
“Mawan Power”	深圳媽灣電力有限公司(Shenzhen Ma Wan Power Co., Ltd.), a
	sino-foreign equity joint venture established in the PRC on 11th
	September 1989 with a joint venture period of 30 years
“MW”	1,000,000 watts; a megawatt
“Newton”	Newton Industrial Limited, a company incorporated under the laws
	of British Virgin Islands, of which its 55.88% shareholding is
	owned by the Company and its 44.12% shareholding is owned by
	China Everbright
“PRC”	the People’s Republic of China which for the purpose of this
	circular excludes Hong Kong, the Macau Special Administrative
	Region of the PRC and Taiwan

– 2 –

DEFINITIONS

“PRC Joint Account”	an account with a bank in the PRC in the name of the Company
	with an individual nominated by the Purchaser as one of the
	authorized signatories
“Purchaser” or	Shenzhen Energy (H.K.) International Limited（深圳能源（香港）
“Shenzhen Energy HK”	國際有限公司）, a company incorporated in Hong Kong with
	limited liability and a wholly-owned subsidiary of Shenzhen
	Energy Group
“Registered Agent”	the registered agent of Newton in the British Virgin Islands
“Sale Shares”	the 19 B shares of US$1.00 each in the issued capital of Newton,
	representing approximately 55.88% of the total issued shares in
	Newton
“Shareholder(s)”	holders of shares of the Company
“Shenzhen Energy Group”	深圳市能源集團有限公司, a limited liability company established
	in the PRC
“Shum Yip”	Shum Yip Holdings Company Limited（深業（集團）有限公司）,
	a limited company incorporated in Hong Kong and the controlling
	shareholder of the Company
“SSAAC”	Shenzhen State-Owned Assets Supervision and Administration
	Commission（深圳市國有資產委員會）
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“working day(s)”	a day on which commercial banks in the PRC and Hong Kong are
	generally open for business (excluding Saturdays, Sundays and
	public holidays of both places)
“Yueliangwan Plant”	the 200 MW oil-fired power plant with five oil-fired generating
	units of Mawan Power in Yueliangwan, Shenzhen, PRC
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“US$”	United Sates dollars, the lawful currency of the United States of
	America

– 3 –

DEFINITIONS

“RMB”

“%”

Renminbi yuan, the lawful currency of the PRC per cent.

For the purposes of this circular, the exchange rate at RMB1.00=HK$0.97 has been used, where applicable, for purpose of illustration only and does not constitute a representation that any amount has been, could have been or may be exchanged at any particular rate on the date or dates in question or any other date.

– 4 –

LETTER FROM THE BOARD

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(Incorporated in Hong Kong with limited liability)

(Stock Code: 604)

Executive Directors: HU Aimin (Chairman) ZHANG Yijun ZHAO Gesheng XIAO Rihai LIANG Kaiping LIU Weijin ZHANG Huaqiao TAM Ping Lung

Registered Office: 8th Floor, New East Ocean Centre 9 Science Museum Road Tsimshatsui, Kowloon Hong Kong

Non-Executive Directors:

HU Zuoyuan LEE Yip Wah, Peter Dr. WU Jiesi

Independent Non-Executive Directors:

WONG Po Yan LI Wai Keung WU Wai Chung, Michael

19 September 2006

To the shareholders,

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION DISPOSAL OF SHAREHOLDING IN NEWTON INDUSTRIAL LIMITED

1. INTRODUCTION

By an announcement dated 28 August 2006, the Company announced that it entered into the conditional Agreement with the Purchaser and Shenzhen Energy Group relating to the Disposal on 28 August 2006, pursuant to which the Company has agreed to sell and the Purchaser has agreed to acquire the Sale Shares at a Consideration of RMB 840,594,100 (approximately HK$815,377,000).

– 5 –

LETTER FROM THE BOARD

The Sale Shares, being an approximately 55.88% shareholding in Newton represents the entire interest held by the Company in Newton. Newton in turn through its subsidiaries holds a 34% equity interest in Mawan Power which operates two power plants in Shenzhen, the PRC.

The Disposal constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules. The purpose of this circular is to provide further information on the Agreement and the Disposal and other information relating to the Group.

2. THE AGREEMENT DATED 28 AUGUST 2006

A. The parties

(a) Vendor: the Company

• (b) Purchaser: Shenzhen Energy HK

• (c) Guarantor: Shenzhen Energy Group

The Purchaser is a wholly-owned subsidiary of Shenzhen Energy Group which in turn is owned by SSAAC as to 70%. The SSAAC is an executive government body under the Shenzhen Municipal Government. Shenzhen Municipal Government owns the entire issued share capital of Shum Yip, the controlling shareholder of the Company.

B. Transfer of interest

Pursuant to the Agreement, the Company has conditionally agreed to sell and the Purchaser has conditionally agreed to acquire the Sale Shares. The Sale Shares, being an approximately 55.88% shareholding in Newton represents the entire interest held by the Company in Newton. Newton in turn through its subsidiaries holds a 34% equity interest in Mawan Power.

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LETTER FROM THE BOARD

The present shareholding structure of Newton and Mawan Plant is as follows:–

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

China Everbright
Company
(note 1)
55.88% 44.12%
Newton
100% 100%
Sinocity
Charterway International
Limited
Limited
19% 15%
34%
Shenzhen an independent
Energy Group third party (note 2)
58% 8%
Mawan Power
----- End of picture text -----

Note 1: To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, China Everbright, apart from its holding of shares in Newton and its nomination of one director to the board of Newton, is independent of and not connected with the Group, and the directors, chief executive and substantial shareholders of the Group and their respective associates.

Note 2: To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, such shareholder of Mawan Power is not a connected person of the Company and is independent of and not connected with the directors, chief executive and substantial shareholders of the Group and their respective associates.

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LETTER FROM THE BOARD

After Completion, the respective shareholding interest in Newton will be as follows:–

	Interest in Newton
Purchaser	55.88%
China Everbright_(Note)_	44.12%

Note: China Everbright issued an announcement dated 29 August, 2006 regarding its agreement to dispose of the entire 44.21% shareholding in Newton held by itself to the Purchaser. Based on information in the announcement of China Everbright, after completion of such disposal by China Everbright and the Completion, the Purchaser will hold the entire issued share capital of Newton. The agreement entered into by China Everbright to dispose of its entire 44.21% shareholding in Newton to the Purchaser is not inter-conditional with the Agreement.

After Completion, the Company will no longer have any shareholding interest in Newton and Newton will cease to be a subsidiary of the Company.

Mawan Power is currently owned by Shenzhen Energy Group as to 58%. After Completion, Shenzhen Energy Group will through the Purchaser and its approximately 55.88% shareholding in Newton have acquired an indirect interest in an additional 34% equity interest in Mawan Power.

Information on Newton

Newton is an investment holding company incorporated under the laws of British Virgin Islands on 3 July, 1998. The authorized capital of Newton is US$50,000 divided into 25,000 A shares of US$1.00 each and 25,000 B shares of US$1.00 each, of which 15 A shares were issued to China Everbright and 19 B shares were issued to the Company. Therefore, approximately 55.88% of the total issued shares of Newton is owned by the Company and approximately 44.12% is owned by China Everbright. Each issued A share and issued B share rank pari passu with each other in relation to voting rights and rights to dividends declared and distributions made by Newton. Under the articles of association of Newton, the holder(s) of A shares (which is China Everbright) is entitled to appoint one “A” director and the secretary of Newton, and the holder(s) of B shares (which is the Company) is entitled to appoint two “B” directors of Newton. The quorum for meetings of the board of directors of Newton is one A director and one B director, and each A director and each B director is entitled to one vote.

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LETTER FROM THE BOARD

The principal activity of Newton is holding of an aggregate of 34% equity interest in Mawan Power, through two of its wholly-owned subsidiaries namely Charterway Limited and Sinocity International Limited. Such equity interests in Mawan Power are the only investments held by Charterway Limited and Sinocity International Limited. Mawan is an associated company of the Group, and is equity accounted for and not consolidated in the audited financial statements of the Group.

Mawan Power is a sino-foreign equity joint venture established in the PRC on 11 September 1989, with a joint venture period of 30 years from the issue of the first business licence in September 1989. Mawan Power currently operates two power plants, being a 200 MW oil-fired power plant with five oil-fired generating units in the Yueliangwan Plant and a 2 x 300 MW coal-fired power plant in the Mawan Plant. The Yueliangwan Plant commenced power generation in July 1990. The two power generating units of the Mawan Plant commenced power generation in November 1993 and November 1994 respectively. Guangdong Electricity is the largest customer of Mawan Power. Mawan Power sold 5,381,703,700 kWh of electricity and 5,590,651,000 kWh of electricity in the year ended 31 December 2004 and the year ended 31 December 2005 respectively. Guangdong Electricity is independent of and not connected with the Group or the Purchaser.

Financial information on Newton

Based on the audited consolidated accounts of Newton and its subsidiaries for the year ended 31 December 2005 prepared in accordance with generally accepted accounting principles in Hong Kong, the total assets and the net asset value of Newton as at 31 December 2005 amounted to approximately HK$935,105,000 and approximately HK$935,054,000 respectively. The audited consolidated profit before and after taxation of Newton and its subsidiaries for the two years ended 31 December 2004 and 31 December 2005 are as follows:–

	For year ended 31 December
	2004 2005
	HK$ HK$
	Approximately Approximately
Net profit before and after taxation	164,628,000 154,646,000

The above consolidated profits of Newton and its subsidiaries represented the share of profits from the respective equity interest held by Charterway Limited and Sinocity International Limited in Mawan Power.

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LETTER FROM THE BOARD

The consolidated profits of Newton and its subsidiaries from 1 January 2006 up to Completion will continue to be consolidated into the audited consolidated profit and loss account of the Group for the year ending 31 December, 2006.

C. The Consideration and the Guarantee

The aggregate amount payable by the Purchaser in cash under the Agreement for the Consideration shall be RMB840,594,100 (approximately HK$815,377,000).

The Consideration is payable by the Purchaser in the following manner upon the delivery of a share certificate and the execution of an instrument of transfer for the Sale Shares to the Purchaser:–

• (i) the amount of RMB504,356,460 (equivalent to approximately HK$489,226,000), being 60% of the Consideration, shall be paid by the Purchaser to the Company; and

• (ii) the amount of RMB336,237,640 (equivalent to approximately HK$326,151,000), being the remaining 40% of the Consideration, shall be paid by the Purchaser to the Joint Account (to be released to the Company upon the provision by the Company of a certificate issued by the Registered Agent (or other evidence) confirming that the Purchaser has become the holder of the Sale Shares);

The Guarantee is payable by Shenzhen Energy Group to the PRC Joint Account in the following manner:–

• (iii) the amount of RMB50,000,000 (equivalent to approximately HK$48,500,000) which is the Guarantee, was paid by Shenzhen Energy Group on 4 September 2006;

• (iv) the amount of RMB202,178,110 (equivalent to approximately HK$196,113,000), which is equivalent to 30% of the Consideration less the RMB50,000,000 already paid under sub-paragraph (iii) above, shall be paid by Shenzhen Energy Group as additional Guarantee in the event that the Purchaser has not made payment of the Consideration as referred to in sub-paragraph (i) and (ii) above by 31 October 2006; and

– 10 –

LETTER FROM THE BOARD

• (v) the amount of RMB168,118,740 (equivalent to approximately HK$163,075,000), which is equivalent to 20% of the Consideration, shall be paid by Shenzhen Energy Group as additional Guarantee in the event that the Purchaser has not made the payment as referred to in sub-paragraph (i) and (ii) above by 20 December 2006.

The total Guarantee paid by Shenzhen Energy Group to the PRC Joint Account together with interest accrued on the Guarantee in the bank deposit shall be refunded by the Company to Shenzhen Energy Group within 7 working days from the date on which the Company has received documentary evidence that the Purchaser has made payment of the Consideration as referred to in sub-paragraph (i) and (ii) above.

The Company and Shenzhen Energy Group jointly appointed an independent valuer to carry out a valuation of the entire equity interest in Mawan Power as at 31 December 2005 using primarily the discounted cash flow method. The valuation took into account the profits of Mawan Power from 1 January 2006 onwards, and included the distributable profits of Mawan Power in 2005 and previous years not yet distributed as of 31 December 2005, and assessed the value of the entire equity interest in Mawan Power as at 31 December 2005 at RMB5,024,179,700 (equivalent to approximately HK$4,873,454,000). As the Sale Shares represent an approximately 55.88% shareholding in Newton which owns in aggregate 34% equity interest in Mawan Power, the assessed value of Mawan Power attributable to the Sale Shares (being a 19% effective interest) amounted to RMB954,594,100 (approximately HK$925,956,000) (the “Assessed Value”). The Consideration was arrived at arm’s length negotiations between the Company and the Purchaser and was determined based on the Assessed Value, with the deduction of an amount of RMB114,000,000 (approximately HK$110,580,000) being the dividend on the Sale Shares for 2005 and previous financial years declared in April 2006 and payable to the Company. All the profits and losses of Newton after 31 December 2005 attributable to the Sale Shares shall belong to the Purchaser.

D. Conditions

Completion of the Agreement is conditional upon satisfaction of all of the following conditions:–

• (a) the Purchaser and Shenzhen Energy Group having obtained unanimous approval from its respective board of directors and/or shareholders in respect of the transfer of the Sale Shares contemplated under the Agreement; and

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LETTER FROM THE BOARD

• (b) the Purchaser and Shenzhen Energy Group having obtained approval from the Ministry of Commerce of the PRC（中國商務部）and the State Administration of Foreign Exchange（國家外匯管理局）in relation to the Hong Kong dollars currency exchange restriction as contemplated under the Agreement and having obtained all other necessary approval documents and consents for the purpose of completion of transactions contemplated under the Agreement,

If the Conditions cannot be fulfilled on or before 30 June 2007 or such other date as the Company and the Purchaser may agree in writing, the Agreement shall automatically terminate. In such case, the Company shall return the total Guarantee paid by Shenzhen Energy Group to the Company (together with the interest accrued on the Guarantee).

As at the Latest Practicable Date, the Conditions had not been fulfilled yet.

E. Completion

Completion shall take place within 20 working days from the date of fulfillment of all the Conditions. For Completion, the Company shall deliver the share certificate and execute an instrument of transfer in respect of the Sale Shares to the Purchaser. The Company shall also procure that the directors of Newton nominated by itself resign and the persons nominated by the Purchaser be appointed as directors of Newton, and assist the Purchaser to obtain a certificate issued by the Registered Agent that the Purchaser has become the holder of the Sale Shares.

F. Guarantee

Shenzhen Energy Group guarantees the performance by the Purchaser of all of its duties and obligations under the Agreement in favour of the Company.

3. REASONS FOR AND BENEFITS OF THE DISPOSAL

It is the Group’s long term policy to obtain control and management of companies and business in which it is interested. The Group’s indirect interest in Mawan Power (through its shareholding in Newton) has however been held only as an investment so far with no management involvement by the Group in Mawan Power. The Disposal is thus congruent with the Group’s long term investment policy of obtaining control and management of companies and business in which it invests. In addition, in view of the increasing costs of fuel in recent years, the Directors consider that the investment return from the Group’s interest in Mawan Power will gradually decrease in the short run. The Directors are of the view that the Disposal is in the interest of the Group.

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LETTER FROM THE BOARD

The Directors (including the independent non-executive Directors) consider that the Disposal is on normal commercial terms, and the terms of the Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

4. FINANCIAL EFFECTS OF THE DISPOSAL

The Group estimates that the expected gain from the Disposal (before costs and expenses) will be approximately HK$371,192,000. Such estimated gain is calculated by deducting the amount of the Consideration from the cost of investment of the Sale Shares to the Group, which is equal to the audited net asset value of the Sale Shares as at 31 December, 2005 of HK$521,767,000 plus the unaudited profit attributable to the Sale Shares for the six months ended 30 June, 2006 of HK$32,998,000 minus the dividend on the Sale Shares for 2005 and previous years declared and payable to the Company of RMB114,000,000 (equivalent to approximately HK$110,580,000). As a special gift to the Shareholders to commemorate the 10th anniversary of the listing of the Company on the Stock Exchange, the board of Directors proposes to distribute such gain as a special dividend to the Shareholders together with the 2006 final dividend after Completion and receipt of the Consideration. The Company will announce the proposal to pay the special dividend to the Shareholders when it has been resolved by the board of Directors.

The audited net profit before and after taxation attributable to Newton for the year ended 31 December 2005 was HK$154,646,000, which was consolidated into the profit and loss account of the Group. The audited consolidated total assets of Newton as at 31 December 2005 was approximately HK$935,105,000, which accounted for 7.75% of the audited consolidated total assets of the Group as at 31 December 2005. The audited consolidated total liabilities of Newton as at 31 December, 2005 was approximately HK$51,000. After Completion, Newton will cease to be a subsidiary of the Company, and thus, its post-Completion financial results (including its assets, liabilities and profits or losses) will not be consolidated into the consolidated financial results of the Group. After Completion, the cash balance of the Group will be increased by approximately HK$ 815,000,000.

5. USE OF PROCEEDS

The Company intends to apply the net proceeds of the Disposal of approximately HK$815 million to its property development business and to such other investment opportunities as it may identify from time to time.

The Company has been considering investment opportunities from time to time, but as at the Latest Practicable Date had not concluded any negotiations or made any commitment in respect of potential investments.

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LETTER FROM THE BOARD

6. GENERAL

The Group is principally engaged in property development, property investment and management, infrastructure investment, provision of transportation services, manufacture and sale of industrial and commercial products.

Shenzhen Energy Group is principally engaged in the development, manufacture, operation and management of different types of energy resources, energy engineering projects and related equipments as well as the related personnel training and consultancy services. The principal business activities of the Purchaser are investment holding of equity interest in energy companies in the PRC and trading of fuel and parts for electricity generators.

The Disposal contemplated under the Agreement constitutes a discloseable transaction for the Company under the Listing Rules.

7. ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendix to this circular.

Yours faithfully, By Order of the Board

Shenzhen Investment Limited

Hu Aimin

Chairman

– 14 –

GENERAL INFORMATION

APPENDIX

(1) RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other matters the omission of which would make any statement in this circular misleading.

(2) DISCLOSURE OF INTERESTS

(a) Directors’ interests and short positions in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of each of the Directors and the chief executive of the Company in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (“the SFO”)) which (i) 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 or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required to be entered in the register maintained by the Company pursuant to section 352 of the SFO; or (iii) were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies as contained in the Listing Rules, were as follows:

Interest in shares of the Company

				Underlying		Percentage of
				shares		issued share
		Nature of	Number of	pursuant to	Aggregate	capital of
Name of Director	Capacity	interests	shares	share options	**interests **	the Company
HU Aimin	Beneficial owner	Personal interest	3,000,000	10,000,000	13,000,000	0.52
ZHANG Yijun	Beneficial owner	Personal interest	2,500,000	8,800,000	11,300,000	0.45
ZHAO Gesheng	Beneficial owner	Personal interest	–	4,000,000	4,000,000	0.16
XIAO Rihai	Beneficial owner	Personal interest	–	4,000,000	4,000,000	0.16
LIANG Kaiping	Beneficial owner	Personal interest	–	8,000,000	8,000,000	0.32

– 15 –

APPENDIX

GENERAL INFORMATION

				Underlying		Percentage of
				shares		issued share
		Nature of	Number of	pursuant to	Aggregate	capital of
Name of Director	Capacity	interests	shares	share options	**interests **	the Company
LIU Weijin	Beneficial owner	Personal interest	–	6,000,000	6,000,000	0.24
ZHANG Huaqiao	Beneficial owner	Personal interest	–	24,000,000	24,000,000	0.96
TAM Ping Lung	Beneficial owner	Personal interest	–	8,000,000	8,000,000	0.32
HU Zuoyuan	Beneficial owner	Personal interest	–	4,000,000	4,000,000	0.16
WU Jiesi	Beneficial owner	Personal interest	–	10,000,000	10,000,000	0.40
WONG Po Yan	Beneficial owner	Personal interest	3,400,000	–	3,400,000	0.14
LEE Yip Wah, Peter	Beneficial owner	Personal interest	3,400,000	–	3,400,000	0.14
WU Wai Chung, Michael	Beneficial owner	Personal interest	–	2,600,000	2,600,000	0.10
LI Wai Keung	Beneficial owner	Personal interest	5,300,000	1,400,000	6,700,000	0.27

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which (i) 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 or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required to be entered in the register maintained by the Company pursuant to section 352 of the SFO; or (iii) were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies as contained in the Listing Rules.

– 16 –

GENERAL INFORMATION

APPENDIX

• (b) Persons or corporations who have an interest or short position which is discloseable under Divisions 2 and 3 of Part XV of the SFO and substantial shareholders

So far as is known to each Director or the chief executive of the Company, as at the Latest Practicable Date, the following persons or corporations 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 and the amount of each of such person’s/corporate’s interest in such securities, together with particulars of any options in respect of such capital, were as follows:

Interest in shares of the Company

				Percentage of
				issued share
		Nature of	Number of	capital of
Name	Capacity	interest	shares	the Company
Shum Yip	Beneficial	Corporate	1,401,123,966	56.12
Holdings	owner	interest
Company
Limited_(Note)_

Note: Hu Aimin, Zhang Yijun, Zhao Gesheng and Hu Zuoyuan, being Directors, are also directors of Shum Yip Holdings Company Limited.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company was aware of any other person or corporation who had an interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

(3) COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors, the Company’s supervisors or their respective associates had any interests in a business which competes or is likely to compete, either directly or indirectly with the business of the Group.

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GENERAL INFORMATION

APPENDIX

(4) SERVICE CONTRACTS

Each of the non-executive Directors and the independent non-executive Directors has been appointed for a fixed term of three years (subject to earlier termination if the corresponding Director is not re-elected upon retirement by rotation), commencing on 1 January 2005 (except for Mr. Hu Zuoyuan who was appointed on 23 December 2005 and for Dr. Wu Jiesi who was appointed on 11 May 2006) and thereafter eligible for re-election. Save for an annual remuneration of HK$250,000 and share options as may be granted by the Company, none of the non-executive Directors and independent non-executive Directors is entitled to receive any other remuneration for holding their office as a non-executive Director and an independent non-executive Director (as the case may be).

Save as disclosed above, as at the Latest Practicable Date, none of the Directors has entered, or proposed to enter, into a service contract the Group which does not expire or is not determinable by any member of the Group within one year without compensation (other than statutory compensation).

(5) LITIGATION

A statement of claim dated 27 August 2002 was issued by Fancheng Property Development Co., Limited (the “Plaintiff”) as plaintiff against Shum Yip Group (Shenzhen) Co., Ltd. (“Shum Yip Shenzhen”), a wholly-owned subsidiary of the Company as first defendant and Yaoheng Development Co., Ltd. as the second defendant in a civil claim at the court in PRC.

To the best of the Directors’ knowledge, information and belief, Yaoheng Development Co., Ltd. is a third party independent of the Company and its connected persons.

The Plaintiff claimed against Shum Yip Shenzhen for, inter alia, damages suffered by the Plaintiff as a result of the breach by Shum Yip Shenzhen of the terms of a cooperation agreement entered into between the Plaintiff and Shum Yip Shenzhen dated 8 July 1991, which include (i) Shum Yip Shenzhen’s deliberate registration of the properties named Shenfa Garden under the name of Shum Yip Shenzhen and its refusal to give the properties to the Plaintiff and (ii) Shum Yip Shenzhen’s appropriation of the Plaintiff’s sales proceeds to compensate the individual owners and the construction party of Shenfa Garden and the keeping of the income in relation to certain car parks and the kindergarten situated within the area of Shenfa Garden. The Plaintiff claimed a total compensation of approximately RMB1.3 million against the Plaintiff on 22 October 2002. This case was heard in court on 26 March 2003 and 5 November 2004, the arbitration process is complicated and time-consuming. As at the Latest Practicable date, the parties were still waiting for the delivery of the arbitration award. The PRC lawyers of the Company are of the view that the outcome of the case is not determinable at this stage.

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GENERAL INFORMATION

APPENDIX

As advised by the Hong Kong lawyers of the Company, pursuant to a deed (the “Deed”) entered into on 12 February 1997 by Shum Yip Holdings Company Limited as covenantor in favour of the Company as covenantee in connection with the listing of the Company, the Company may be able to claim indemnity from Shum Yip Holdings Company Limited if the Plaintiff and/or the applicant are successful in their claims against Shum Yip Shenzhen on the ground that Shum Yip Shenzhen had materially breached the cooperation agreement, and the circumstances which gave rise to the above litigation was already in existence at the time of execution of the Deed. The Company will request Shum Yip Holdings Company Limited to indemnify itself for losses suffered if the Plaintiff and/or the applicant are successful in their claims against Shum Yip Shenzhen as aforesaid.

Save as disclosed, as at the Latest Practicable Date and so far as the Directors are aware, no member of the Group is engaged in any litigation or arbitration proceedings of material importance and there is no litigation or claim of material importance known to the Directors to be pending or threatened by or against the Company or any member of the Group.

(6) GENERAL

• (a) The secretary of the Company is Mr. Cheung Wing Yui, who is a practising solicitor of Hong Kong.

• (b) The qualified accountant of the Company is Ms. Kwan Ka Yuet, who is a fellow of the Association of Chartered Certified Accountants and an associate member of Hong Kong Institute of Certified Public Accountants.

• (c) The head office and registered office of the Company is situate at 8th Floor, New East Ocean Centre, 9 Science Museum Road, Tsimshatsui, Kowloon, Hong Kong.

• (d) The share registrar and transfer office of the Company is Standard Registrars Ltd. of 26/F Tesbury Centre, 28 Queen’s Road East, Hong Kong.

• (e) The English text of this circular shall prevail over the Chinese text in case of inconsistency.

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