Macau E&M Holding Limited — Proxy Solicitation & Information Statement 2007

Jan 24, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

==> picture [297 x 43] intentionally omitted <==

(Incorporated in Hong Kong with limited liability)

(Stock Code : 604)

DISCLOSEABLE TRANSACTION PROPOSED DISPOSAL OF 49% INTEREST IN HUBEI SHUMYIP HUAYIN TRAFFIC DEVELOPMENT COMPANY LIMITED

A letter from the board of directors of Shenzhen Investment Limited is set out on pages 4 to 16 of this circular.

24 January 2007

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
The Master Framework Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
The Articles of Association of Huayin Traffic and Jingdong Company . . . . . . . . . . . .	10
Information on Huayin Traffic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Financial Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Reasons for and the Benefits of the Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17

– i –

DEFINITIONS

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

“Board”	the board of Directors
“Company”	Shenzhen Investment Limited, a company incorporated in Hong
	Kong with limited liability, whose shares are listed on the
	Stock Exchange
“Consideration”	the aggregate consideration for the Transfer in the amount of
	RMB618,167,657
“Director(s)”	director(s) of the Company
“Eastern Golden Dragon”	!"#$%&'()*+,(Xiamen Dongfang Jinglong
	Investment Co. Ltd.), a limited liability company established
	under the laws of the PRC and a former shareholder of Huayin
	Traffic
“Group”	the Company and its subsidiaries from time to time
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Huayin Group”	-./01234)*+,(Hubei Huayin Enterprise Group
	Company Limited), a limited liability company established
	under the laws of the PRC and a shareholder of Jingdong
	Company
“Huayin Traffic”	-.52/06789)*+,(Hubei Shumyip Huayin
	Traffic Development Company Limited), a limited liability
	company established under the laws of the PRC which is
	wholly-owned by the Vendor
“Jingdong Company”	- . : # ; < + = > ? 8 9 ) * + ,(Hubei Jingdong
	Expressway Construction and Development Company Limited),
	a limited liability company established under the laws of the
	PRC which owns and operates the Jingdong Expressway

– 1 –

DEFINITIONS

“Jingdong Expressway”	the expressway beginning at the south bank of Jingsha Yangzi
	River Bridge@:ABCDEFand ending at Dongyuemiao at
	the border of Xiange@GHIJK#LMF, consisting of 58.5
	kilometers of expressway and 4.3 kilometers of extension lane,
	exclusively constructed and operated by Jingdong Company
“Latest Practicable Date”	19 January, 2007, which is the latest practicable date for
	ascertaining certain information in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Master Framework Agreement”	the master framework agreement entered into between the
	Vendor and the Purchaser on 29 December, 2006 in relation to
	arrangements for the Transfer
“Ping An Insurance”	Ping An Insurance (Group) Co. of China Ltd., a joint stock
	limited company established under the laws of the PRC, the H
	shares of which are listed on the main board of the Stock
	Exchange
“Purchaser”	NOPQ'()*+,(China Ping An Trust & Investment
	Co. Ltd.), a limited liability company established under the
	laws of the PRC and a 99.52% owned subsidiary of Ping An
	Insurance
“PRC”	the People’s Republic of China
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Transfer and Capital	the agreement dated 29 July, 2006 entered into between Eastern
Contribution Agreement”	Golden Dragon and the Vendor for the acquisition of the entire
	equity interest in Huayin Traffic and the making of capital
	contribution to Huayin Traffic by the Vendor
“Transfer”	the proposed disposal of 49% of the equity interest in Huayin
	Traffic by the Vendor to the Purchaser as contemplated under
	the Master Framework Agreement

– 2 –

DEFINITIONS

“Vendor”	52RS@5TF)*+,(Shum Yip Investment (Shenzhen)
	Limited), a limited liability company incorporated under the
	laws of the PRC and a wholly-owned subsidiary of the
	Company
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“RMB”	Renminbi, the lawful currency of the PRC
“%”	per cent

For the purposes of this circular, the exchange rate at HK$1 = RMB1 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.

In this circular, English names of PRC established companies are unofficial English translation of the official Chinese names. In case of inconsistencies, the Chinese names shall prevail.

– 3 –

LETTER FROM THE BOARD

==> picture [297 x 43] intentionally omitted <==

(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

24 January 2007

To the shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION PROPOSED DISPOSAL OF 49% INTEREST IN HUBEI SHUMYIP HUAYIN TRAFFIC DEVELOPMENT COMPANY LIMITED

INTRODUCTION

On 3 January 2007, the Company published an announcement that the Vendor being a subsidiary of the Company entered into the Master Framework Agreement with the Purchaser on 29 December 2006 in respect of the proposed disposal of 49% equity interest in Huayin Traffic by

– 4 –

LETTER FROM THE BOARD

the Vendor to the Purchaser at an aggregate consideration of RMB618,167,657 (equivalent to approximately HK$618,167,657) which is subject to various conditions. As the applicable percentage ratios for the transfer of equity interest in Huayin Traffic contemplated under the Master Framework Agreement exceed 5% but are less than 25%, such transaction constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. The purpose of this circular is to provide you with further details of the Transfer and the Master Framework Agreement, as well as other information as required by the Listing Rules.

THE MASTER FRAMEWORK AGREEMENT

Date

29 December, 2006

The Parties

• (a) the Vendor, a wholly-owned subsidiary of the Company

• (b) the Purchaser

Assets to be disposed of

The Vendor is proposing to transfer 49% of the entire equity interest in Huayin Traffic to the Purchaser.

Huayin Traffic, a wholly-owned subsidiary of the Company held through the Vendor, holds a 91% equity interest in Jingdong Company, the remaining 9% of the equity interest of which is held by Huayin Group. Jingdong Company is principally engaged in the construction and operation of the Jingdong Expressway in Hubei Province, the PRC. The Vendor acquired the entire equity interest in Huayin Traffic pursuant to the Transfer and Capital Contribution Agreement.

Upon completion of the Transfer contemplated by the Master Framework Agreement, Huayin Traffic will remain a subsidiary of the Company, owned by the Vendor as to 51% and by the Purchaser as to 49%. The financial results of Huayin Traffic and of Jingdong Company will continue to be consolidated into the audited consolidated financial results of the Group after completion of the Transfer.

– 5 –

LETTER FROM THE BOARD

Conditions precedent to the agreement

The agreement between the Vendor and the Purchaser for the Transfer shall be subject to the following conditions precedent:–

1. the Vendor having obtained the entire equity interest in Huayin Traffic and can legally transfer the same;

2. Huayin Traffic and Jingdong Company having incurred no new debts, contingent liabilities and shareholders loans, and there having been no change to the shareholding structure of Huayin Traffic and Jingdong Company from the date of the Transfer and Capital Contribution Agreement to completion of the registration of the change in shareholding of Huayin Traffic pursuant to the Transfer;

3. completion of the legal and financial due diligence by the Purchaser without discovering any significant issue that may affect the Transfer;

4. the legal validity of the provisions under the Transfer and Capital Contribution Agreement that the portion of the total costs of the Jingdong Expressway exceeding RMB2,342,847,200 shall be indemnified by Eastern Golden Dragon to Huayin Traffic or Jingdong Expressway; and that 91% of the portion of the total costs that falls short of RMB2,342,847,200 shall be repaid by the Vendor to Eastern Golden Dragon;

5. to fulfill the requirement of capital reaching 35% of the total investment of a project, the Vendor, the Purchaser and Huayin Group shall (1) contribute capital to 35% of the portion of the total investment of Jingdong Company in excess of RMB2,200 million in the ratio of 46.41:44.59:9 (the amount of total investment of Jingdong Company shall be deemed to be RMB2,340 million for this purpose if the actual total investment exceeds RMB2,340 million), and (2) contribute additional capital to the investment by Jingdong Company in the construction for conversion of the 4.3 kilometer extension of Jingdong Expressway into an expressway in the ratio of 46.41:44.59:9 in the event the proportion of capital in the total amount of such investment does not reach 35%; and neither the Vendor nor the Purchaser shall be required to assist in fund raising by Huayin Traffic or Jingdong Expressway apart from these two events;

6. the Vendor and the Purchaser shall endeavour to find out a solution if the administration and management fees of the Jingdong Expressway is confirmed to have seriously affected the costs of Jingdong Company, causing a relatively large difference between the actual profits of Huayin Traffic and Jingdong Expressway and the profit analysis by the Vendor and the Purchaser;

– 6 –

LETTER FROM THE BOARD

1. both the Vendor and the Purchaser shall have the right to request for repurchase by Eastern Golden Dragon of the entire equity interest in Huayin Traffic in the event of significant breach of certain consideration factors under the Transfer and Capital Contribution Agreement (as disclosed in the announcement of the Company dated 1 August, 2006).

Apart from those provisions referred to in condition 4 above being already stipulated in the Transfer and Capital Contribution Agreement, the other conditions precedent had not yet been fulfilled as of the Latest Practicable Date. There is no long stop date for fulfillment of the above conditions precedent.

Consideration

The Consideration will amount to RMB618,167,657 and has been determined after arm’s length negotiations between the Vendor and the Purchaser, and is equal to 49% of (1) the consideration payable by the Vendor for the entire equity interest in Huayin Traffic under the Transfer and Capital Contribution Agreement; (2) the amount of capital contribution by the Vendor to Huayin Traffic pursuant to the Transfer and Capital Contribution Agreement; and (3) the costs incurred by the Vendor in engaging intermediaries in relation to the Transfer and Capital Contribution Agreement.

Payment Arrangements

The Consideration shall be payable by the Purchaser to the Vendor in two equal installments in cash.

First Installment

The first 50% of the Consideration shall be paid within 10 working days of the fulfillment of all the following conditions:–

1. the obtaining of consents to the Transfer by all relevant PRC government departments, board of directors and shareholders’ in general meetings;

2. the issue of a consent letter by the former shareholders of Huayin Traffic to the Transfer and the share repurchase arrangement referred to in item 7 of the conditions precedent above;

– 7 –

LETTER FROM THE BOARD

1. execution of articles of association and shareholders’ agreements in respect of Huayin Traffic and Jingdong Company in accordance with the terms of the formal agreement for the Transfer to be entered into, and the obtaining of such necessary consents to the execution of these documents;

2. obtaining of written consents from the lending banks and other creditors of Huayin Traffic and Jingdong Company (a) agreeing to the Transfer and (b) agreeing not to call for early repayment of the loans, early exercise of creditors’ rights or request for provision of guarantee;

3. fulfillment of the conditions precedent as set out above (failing which the Vendor and the Purchaser shall re-negotiate on the structure and price of the Transfer);

4. the publication of an announcement and issue of a circular to shareholders by the Company in respect of the Transfer in compliance with the Listing Rules;

5. the execution of a formal agreement for the Transfer by the Vendor and the Purchaser;

6. confirmation by both the Vendor and the Purchaser that the capital of the Jingdong Expressway project of Jingdong Company has reached 35% of its total investment;

7. payment by the Vendor of the second installment of the consideration for the acquisition of equity interest in Huayin Traffic under the Transfer and Capital Contribution Agreement, and amendment of the register of members of Huayin Traffic (with a 16% equity interest in Huayin Traffic remaining pledged to Eastern Golden Dragon in accordance with the terms of the Transfer and Capital Contribution Agreement);

8. that there has been no breach by the Vendor of its representations, warranties and undertakings in the Master Framework Agreement up to the date of fulfillment of all the above conditions (or that any such breach has been rectified).

– 8 –

LETTER FROM THE BOARD

Second Installment

The second 50% of the Consideration shall be paid within 10 working days of the fulfillment of all the following conditions:–

1. fulfillment of the conditions for the payment of the first installment of the Consideration;

2. amendment of the register of members of Huayin Traffic by the Vendor on the day of payment by the Purchaser of the first installment of the Consideration, and the Vendor procuring the completion of the registration by Huayin Traffic of the change pursuant to the Transfer with the relevant Administration of Industry and Commerce;

3. payment by the Vendor of the third installment of the consideration for the acquisition of equity interest in Huayin Traffic under the Transfer and Capital Contribution Agreement, and amendment of the register of members of Huayin Traffic (and all equity interest in Huayin Traffic released from the pledge to Eastern Golden Dragon in accordance with the terms of the Transfer and Capital Contribution Agreement);

4. that there has been no breach by the Vendor of its representations, warranties and undertakings in the Master Framework Agreement up to the date of fulfillment of all the above conditions (or that any such breach has been rectified).

The obligations of the Vendor and the Purchaser under the Master Framework Agreement shall be subject to there being no laws, regulations, or orders, decrees, judgments or injunctions restricting or prohibiting or canceling the Transfer, and there being no litigation, arbitration, judgments, orders, decrees or injunctions which can adversely affect the Transfer, as well as the above conditions for payment of the Consideration.

– 9 –

LETTER FROM THE BOARD

THE ARTICLES OF ASSOCIATION OF HUAYIN TRAFFIC AND JINGDONG COMPANY

The Master Framework Agreement provides that the articles of association of Huayin Traffic and of Jingdong Company shall contain the following key terms:–

(1) Articles of Association of Huayin Traffic

(a) Shareholders’ resolutions

Resolutions of shareholders in general meeting shall be passed by shareholders representing 100% of the voting rights. Huayin Traffic as a shareholder of Jingdong Company shall vote at shareholders’ general meeting of Jingdong Company in accordance with resolutions passed by shareholders of Huayin Traffic.

(b) Transfers of equity interest

There shall be no transfer of equity interest in Huayin Traffic from the date of completion of the registration of the Transfer to the completion of the audit of the total costs of Jingdong Expressway. Subject to such restriction, transfer of any shareholder of its equity interest in Huayin Traffic shall be subject to the pre-emption rights of the other shareholder at the same price.

No shareholder shall transfer equity interest in Huayin Traffic to a competitor or potential competitor of the other shareholder.

(c) Board of directors

The board of directors of Huayin Traffic shall comprise 5 directors, of which 3 directors shall be nominated by the Vendor and 2 directors shall be nominated by the Purchaser. The quorum for meeting of the board of directors shall be 4 directors. Resolutions to elect the chairman of the board shall be passed by more than half of the directors voting in favour, and other resolutions shall be passed by at least 4 directors voting in favour.

(d) Senior management

The senior management shall include a general manager, a financial controller and a secretary to the board of directors, and the latter two shall be appointed by the Purchaser.

– 10 –

LETTER FROM THE BOARD

(e) Profit distribution

Profits of Huayin Traffic shall be distributed to the greatest extent, and there shall be not less than two distributions of profits each year as far as practicable.

(2) Articles of Association of Jingdong Company

(a) Shareholders’ resolutions

Resolutions of shareholders in general meeting shall be passed by shareholders representing two-thirds of the voting rights.

Shareholders shall have the right to veto the following resolutions:–

• (i) increase or reduce the registered capital of Jingdong Company;

• (ii) merger, separation, change of corporate form, dissolution or liquidation of Jingdong Company;

• (iii) issue of debentures by Jingdong Company;

• (iv) provision of external guarantee or investment or raising external capital by Jingdong Company

provided that the financial controller shall carry out a profit forecast of Jingdong Company, and the veto shall be ineffective if the profit forecast shows that the resolution concerned will not produce adverse effect to the operational results of Jingdong Company. If the relevant shareholder disputes the aforesaid profit forecast, the shareholders shall jointly appoint an independent professional institution to carry out a profit forecast again.

– 11 –

LETTER FROM THE BOARD

(b) Board of directors

The board of directors of Jingdong Company shall comprise 9 directors, of which 5 directors shall be nominated by the Vendor, 3 directors shall be nominated by the Purchaser and 1 director shall be nominated by Huayin Group. In the event of a change of shareholding proportions of Jingdong Company, the number of directors nominated by each shareholder shall be adjusted accordingly.

The chairman of the board of directors shall be nominated by the Vendor.

The quorum for meeting of the board of directors shall be 6 directors. Resolutions to elect the chairman of the board shall be passed by more than half of the directors voting in favour, and other resolutions shall be passed by at least 6 directors voting in favour.

(c) Senior management

The senior management shall include a general manager, a deputy general manager, a financial controller, an operational controller, a chief executive and a secretary to the board of directors. The general manager shall be appointed by the Vendor, the deputy general manager, the financial controller and the secretary to the board of directors shall be appointed by the Purchaser.

If Jingdong Company cannot achieve the principal operational target under the annual budget approved by the shareholders in general meeting for two consecutive years, the Purchaser shall have the right to request for a change of the general manager.

(d) Supervisory Committee

Jindong Company shall have a supervisory committee consisting of 3 members, of which 1 shall be appointed by the Vendor, 1 shall be appointed by the Purchaser and 1 shall be a staff representative.

– 12 –

LETTER FROM THE BOARD

(e) Profit distribution

Profits of Huayin Traffic shall be distributed to the greatest extent, and there shall be not less than two distributions of profits each year as far as practicable.

Corporate Structure before and after completion of the Transfer

Before completion of the Transfer

==> picture [185 x 173] intentionally omitted <==

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

the Company
100%
Vendor
100%
Huayin Traffic Huayin Group
91% 9%
Jingdong Company
----- End of picture text -----

After completion of the Transfer

==> picture [235 x 181] intentionally omitted <==

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

Ping An
the Company Insurance
100% 99.52%
Vendor Purchaser
51% 49%
Huayin Traffic Huayin Group
91% 9%
Jingdong Company
----- End of picture text -----

– 13 –

LETTER FROM THE BOARD

INFORMATION ON HUAYIN TRAFFIC

Huayin Traffic is a limited liability company established in the PRC on 9 September, 2005. It is an investment holding company and its sole investment is 91% equity interest in Jingdong Company. Jingdong Company has obtained approval by the Hubei Provincial Government of its right to operate the Jingdong Expressway for 34 years from September, 2003, and has obtained the right to charge toll fees for the Jingdong Expressway.

Huayin Traffic has a total registered capital of RMB110,000,000 (equivalent to approximately HK$110,000,000). The Vendor entered into the Transfer and Capital Contribution Agreement to acquire the entire registered capital of Huayin Traffic from Eastern Golden Dragon, which has not yet been completed as of the Latest Practicable Date pending the payment by the Vendor of the second and third installments of the amount for transfer of such registered capital.

The unaudited consolidated total asset value and the unaudited consolidated net asset value of Huayin Traffic as at 31 March, 2006, according to the unaudited consolidated management accounts of Huayin Traffic for the three months up to 31 March, 2006, amounted to approximately RMB2,456,000,000 (equivalent to approximately HK$2,456,000,000) and approximately RMB105,842,000 (equivalent to approximately HK$105,842,000).

Huayin Traffic does not have any material turnover or profit up to the Latest Practicable Date as the Jingdong Expressway (which is owned by Jingdong Company and the only investment indirectly held by Huayin Traffic) only opened to traffic in September, 2006. Huayin Traffic incurred an unaudited consolidated loss of approximately RMB38,661 (equivalent to approximately HK$38,661) from 9 September, 2005 (the date of establishment) to 31 December, 2005, and an unaudited consolidated loss of approximately RMB4,158,000 (equivalent to approximately HK$4,158,000) for the three months ended 31 March, 2006.

FINANCIAL EFFECTS

Upon completion of the Transfer, the Group’s holding of equity interest in Huayin Traffic will be reduced from 100% to 51%. Huayin Traffic will change from a wholly-owned to a 51% owned subsidiary of the Group and its accounts (including accounts of Jingdong Company) will continue to be consolidated in the Group’s accounts. On a consolidation basis, the Group shall be entitled to share 51% of the net assets and earnings of Huayin Traffic. There will be no immediate material impact on the earnings and assets and liabilities of the Group as a result of the Transfer.

– 14 –

LETTER FROM THE BOARD

The Directors expect that there will be no material gain or loss from the Transfer, as the Consideration will be equal to the cost of the Vendor’s acquisition of the asset being transferred and will be approximately equal to the net book value of such asset in the accounts of the Group.

REASONS FOR AND THE BENEFITS OF THE TRANSFER

The Group intends to introduce a strategic investor to Huayin Traffic, with whom it can collaborate in the coming future to undertake more investments in infrastructure projects, and the Directors consider that Ping An Insurance will be a good partner in this regard.

Pursuant to the Transfer, the Group will retain a controlling shareholding in Huayin Traffic and in Jingdong Company, while at the same time retrieving part of the capital invested in the Jingdong Expressway project. The Group intends to use the proceeds from the Transfer for increasing its land reserve and investment in its property development projects, which are having good developments.

The Directors (including the independent non-executive Directors) consider that the Master Framework Agreement was entered into on normal commercial terms after arm’s length negotiations, and the terms are fair and reasonable and in the interest of the Company and its shareholders taken as a whole.

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.

The Purchaser is principally engaged in investment trust and financial advisory activities.

To the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, the Purchaser and its holding company Ping An Insurance are third parties independent of the Company and connected persons of the Company.

The Transfer constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules because the applicable percentage ratios for the Transfer exceed 5% but are less than 25%.

– 15 –

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is drawn to the information on the Company set out in the appendix to this circular.

By order of the Board SHENZHEN INVESTMENT LIMITED Hu Aimin Chairman

– 16 –

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:

Long positions in the shares and underlying shares of the Company

				Underlying		Percentage of	Percentage of
				shares		issued share
Name of			Number of	pursuant to	Aggregate		capital of
Director	Capacity	Nature of interests	shares	share options	interests	the Company
HU Aimin	Beneficial owner	Personal interest	2,000,000	10,000,000	12,000,000		0.43
ZHANG Yijun	Beneficial owner	Personal interest	1,700,000	8,800,000	10,500,000		0.37
ZHAO Gesheng	Beneficial owner	Personal interest	–	4,000,000	4,000,000		0.14
XIAO Rihai	Beneficial owner	Personal interest	–	4,000,000	4,000,000		0.14
LIANG Kaiping	Beneficial owner	Personal interest	–	8,000,000	8,000,000		0.28
LIU Weijin	Beneficial owner	Personal interest	–	6,000,000	6,000,000		0.21

– 17 –

APPENDIX

GENERAL INFORMATION

				Underlying		Percentage of
				shares		issued share
Name of			Number of	pursuant to	Aggregate	capital of
Director	Capacity	Nature of interests	shares	share options	interests	the Company
ZHANG Huaqiao	Beneficial owner	Personal interest	–	14,000,000	14,000,000	0.50
TAM Ping Lung	Beneficial owner	Personal interest	–	8,000,000	8,000,000	0.28
HU Zuoyuan	Beneficial owner	Personal interest	4,000,000	–	4,000,000	0.14
WU Jiesi	Beneficial owner	Personal interest	–	10,000,000	10,000,000	0.35
WONG Po Yan	Beneficial owner	Personal interest	3,400,000	–	3,400,000	0.12
LEE Yip Wah,	Beneficial owner	Personal interest	3,400,000	–	3,400,000	0.12
Peter
WU Wai Chung,	Beneficial owner	Personal interest	–	2,600,000	2,600,000	0.09
Michael
LI Wai Keung	Beneficial owner	Personal interest	5,300,000	1,400,000	6,700,000	0.24

Long positions in the underlying shares of an associated corporation – Road King Infrastructure Limited

				Underlying		Percentage of
				shares		issued share
Name of			Number of	pursuant to	Aggregate	capital of
Director	Capacity	Nature of interests	shares	share options	interests	the Company
HU Aimin	Beneficial owner	Personal interest	–	250,000	250,000	0.04
ZHANG Yijun	Beneficial owner	Personal interest	–	250,000	250,000	0.04
ZHANG Huaqiao	Beneficial owner	Personal interest	300,000	700,000	1,000,000	0.14

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

– 18 –

GENERAL INFORMATION

APPENDIX

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.

• (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 corporation 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 such corporation’s interest in such securities were as follows:

Interest in shares of the Company

			Percentage of
			issued share
		Number of	capital of
Name	Capacity	shares	the Company
Shum Yip Holdings	Beneficial owner	1,401,123,966	49.66%
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.

– 19 –

GENERAL INFORMATION

APPENDIX

(3) COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or their respective associates had any interests in any business which competes or may compete, either directly or indirectly with any business of the Group.

(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 had 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

– 20 –

GENERAL INFORMATION

APPENDIX

total compensation of approximately RMB170 million against Shum Yip Shenzhen. Shum Yip Shenzhen lodged a defence and counterclaim for compensation of 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.

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 is successful in its 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 is successful in its claims against Shum Yip Shenzhen as aforesaid.

Save as disclosed above, 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 in 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.

– 21 –