Macau E&M Holding Limited — Proxy Solicitation & Information Statement 2008

Apr 25, 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold all your shares in SHENZHEN INVESTMENT LIMITED , you should at once hand this circular with the accompanying form of proxy to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected, for transmission to the purchaser.

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)

PROPOSALS INVOLVING GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE SHARES, RE-ELECTION OF RETIRING DIRECTORS AND PROPOSED GRANT OF OPTION

A notice convening the annual general meeting of Shenzhen Investment Limited to be held at Garden Room, 2nd Floor, Hotel Nikko Hong Kong, 72 Mody Road, Tsimshatsui East, Kowloon, Hong Kong on Monday, 2 June 2008 at 9 a.m. is set out in the 2007 Annual Report of the Company to be despatched to shareholders together with this circular. Whether or not you propose to attend the meeting, you are requested to complete the accompanying form of proxy enclosed with the 2007 Annual Report of the Company in accordance with the instructions printed thereon and return the same to the registered office of the Company at 8th Floor, New East Ocean Centre, 9 Science Museum Road, Tsimshatsui, Kowloon, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the meeting or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting at the meeting or any adjourned meeting should you so desire.

28 April 2008

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1-3
Letter from the Chairman
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Re-election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
General Mandate to Repurchase Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
General Mandate to Issue Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Proposed Grant of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6-10
Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Right to Demand a Poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11-12
Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Appendix I – Details of Directors proposed for re-election. . . . . . . . . . . . . . . . . . . . . .	13-15
Appendix II – Explanatory Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16-20

– i –

DEFINITIONS

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

“Annual General Meeting”	the annual general meeting of the Company to be held at
	Garden Room, 2nd Floor, Hotel Nikko Hong Kong, 72 Mody
	Road, Tsimshatsui East, Kowloon, Hong Kong, on Monday,
	2 June 2008 at 9 a.m. or, where the context so admits, any
	adjournment thereof
“Articles of Association”	the articles of association of the Company, as originally
	adopted, or as from time to time altered in accordance with
	the Companies Ordinance
“associate(s)”	has the meaning as defined under the Listing Rules
“Board”	the board of directors of the Company
“Companies Ordinance”	the Companies Ordinance, Chapter 32 of the Laws of Hong
	Kong
“Company”	Shenzhen Investment Limited, a company incorporated in
	Hong Kong with limited liability, the shares of which are
	listed on the Stock Exchange
“Directors”	the directors of the Company
“Group”	the Company and its subsidiaries
“Independent Shareholders”	Shareholders except for Mr. Zhang and his associate(s)
“Issue Mandate”	a general mandate to the Directors to issue Shares
	representing up to 20% of the aggregate nominal amount of
	the share capital of the Company in issue at the date of the
	passing of the resolution
“Last Annual General Meeting”	the annual general meeting of the Company held on 21
	May 2007
“Latest Practicable Date”	23 April 2008, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information
	referred to in this circular

– 1 –

DEFINITIONS

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

• “Mr. Zhang” or “Proposed Grantee” Mr. Zhang Huaqiao, an executive Director “Notice of Annual General Meeting” the notice dated 28 April 2008 convening the Annual General Meeting as set out in the 2007 Annual Report of the Company

• “Proposed Grant” the proposed grant of option under the Share Option Scheme to Mr. Zhang to subscribe for an aggregate of up to 12,000,000 Shares

• “Repurchase Mandate” a general mandate to the Directors to exercise the powers of the Company to repurchase on the Stock Exchange Shares representing up to a maximum of 10% of the aggregate nominal amount of the share capital of the Company in issue at the date of passing of the resolution

• “Scheme Mandate Limit” the maximum number of Shares which may be issued upon the exercise of all options under the Share Option Scheme and any other share option schemes of the Company stipulated in the Note (1) to Rule 17.03(3) of the Listing Rules, namely, that such number shall not exceed 10% of the Shares in issue as at the date of approval of the refreshed limit

• “Shareholder(s)” holder(s) of Shares “Shares” shares of HK$0.05 each in the share capital of the Company “Share Option Scheme” the share option scheme adopted by the Company on 5 June 2002

• “Shum Yip Holdings” Shum Yip Holdings Company Limited, a substantial shareholder of the Company

– 2 –

DEFINITIONS

“Single Participant Limit”	the maximum entitlement of each participant under the Share
	Option Scheme stipulated in the Note to Rule 17.03(4) of
	the Listing Rules, namely, that the aggregate number of the
	Shares issued and to be issued upon exercise of the options
	granted to such participant (including both exercised and
	outstanding options) in any 12-month period shall not
	exceed 1% of the Shares in issue
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Takeovers Code”	the Code of Takeovers and Mergers
“HK$”	Hong Kong dollar(s), the lawful currency of Hong Kong
“%”	per cent.

– 3 –

LETTER FROM THE CHAIRMAN

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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:

Lee Yip Wah, Peter Dr. Wu Jiesi

Independent Non-Executive Directors:

Wong Po Yan Wu Wai Chung, Michael Li Wai Keung

28 April 2008

To the Shareholders

Dear Sir or Madam,

PROPOSALS INVOLVING GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE SHARES, RE-ELECTION OF RETIRING DIRECTORS AND PROPOSED GRANT OF OPTION

INTRODUCTION

The purpose of this circular is to provide you with information regarding the proposed general mandates to repurchase Shares and to issue Shares, the extension of the Issue Mandate, re-election of retiring Directors and proposed grant of option and to seek your approval at the Annual General Meeting in connection with such matters.

– 4 –

LETTER FROM THE CHAIRMAN

RE-ELECTION OF DIRECTORS

The Board currently comprises 13 Directors, namely, Mr. HU Aimin, Mr. ZHANG Yijun, Mr. ZHAO Gesheng, Mr. XIAO Rihai, Mr. LIANG Kaiping, Mr. LIU Weijin, Mr. ZHANG Huaqiao, Mr. TAM Ping Lung, Mr. LEE Yip Wah, Peter, Dr. WU Jiesi, Mr. WONG Po Yan, Mr. WU Wai Chung, Michael and Mr. LI Wai Keung.

On 10 April 2008, the Board announced that Mr. XIAO Rihai and Mr. LIANG Kaiping, executive Directors, shall retire by rotation in accordance with Article 101 of the Articles of Association at the Annual General Meeting and have notified the Company that due to pursuing a new assignment, they will not seek for re-election as Directors at the Annual General Meeting. Mr. XIAO and Mr. LIANG confirmed that they had no disagreement with the Board and there was no other matter in relation to their retirement that needed to be brought to the attention of the Shareholders.

On 10 April 2008, the Board also announced that Mr. LEE Yip Wah, Peter, non-executive Director, shall retire by rotation in accordance with Article 101 of the Articles of Association at the Annual General Meeting and has notified the Company that due to other job commitments, he would not seek for re-election as Director at the Annual General Meeting. Mr. LEE confirmed that he had no disagreement with the Board and there was no other matter in relation to his retirement that needed to be brought to the attention of the Shareholders. In addition, Mr. LEE will cease to be a member of the audit committee of the Company upon his retirement as a Director at the Annual General Meeting.

In accordance with Article 101 of the Articles of Association, Mr. ZHAO Gesheng, Dr. WU Jiesi, Mr. XIAO Rihai, Mr. LIANG Kaiping and Mr. LEE Yip Wah, Peter will retire by rotation and except for Mr. XIAO, Mr. LIANG and Mr. LEE, all other retiring Directors, being eligible, offer themselves for re-election at the Annual General Meeting.

The Board has no immediate plan to nominate suitable persons for election as Directors to fill the places of those retiring Directors who will not seek for re-election at the Annual General Meeting. Pursuant to Article 103 of the Articles of Association, a resolution will be proposed at the Annual General Meeting to resolve not to fill up the vacated offices resulted from the retirement of Mr. XIAO Rihai, Mr. LIANG Kaiping and Mr. LEE Yip Wah, Peter as Directors.

Details of the retiring Directors who are proposed to be re-elected at the Annual General Meeting are set out in Appendix I to this circular.

– 5 –

LETTER FROM THE CHAIRMAN

GENERAL MANDATE TO REPURCHASE SHARES

An ordinary resolution was passed at the Last Annual General Meeting whereby a general mandate was granted to the Directors to repurchase Shares. Such a general mandate will lapse at the conclusion of the Annual General Meeting. Therefore, an ordinary resolution will be proposed at the Annual General Meeting to grant the Repurchase Mandate, details of which are set out in ordinary resolution No. 5 of the Notice of Annual General Meeting.

In accordance with the Listing Rules, an explanatory statement to provide Shareholders with all the information reasonably necessary to enable them to make an informed decision on whether to vote for or against the resolution to approve the Repurchase Mandate is set out in Appendix II to this circular.

GENERAL MANDATE TO ISSUE SHARES

Ordinary resolutions were passed at the Last Annual General Meeting whereby (i) a general mandate was given to the Directors to allot, issue and deal with Shares and (ii) such a general mandate was extended by adding thereto the Shares repurchased by the Company pursuant to the general mandate to repurchase Shares granted to the Directors at the Last Annual General Meeting. Such general mandate will lapse at the conclusion of the Annual General Meeting. Therefore, an ordinary resolution will be proposed at the Annual General Meeting to grant to the Directors the Issue Mandate in order to ensure flexibility and discretion to the Directors to issue any Shares, details of which are set out in ordinary resolution No. 6 of the Notice of Annual General Meeting.

In addition, an ordinary resolution will be proposed to extend the Issue Mandate by adding to it the number of Shares repurchased under the Repurchase Mandate, details of which are set out in ordinary resolution No.7 of the Notice of Annual General Meeting.

PROPOSED GRANT OF OPTION

Pursuant to the resolution passed by the Shareholders at the annual general meeting of the Company held on 12 June 2006 (“ AGM 2006 ”), the Scheme Mandate Limit was refreshed by which the Company was entitled to grant further options under the Share Option Scheme carrying rights to subscribe for up to 250,271,396 Shares (the “ Refreshed Limit ”, representing 10% of the Shares in issue as at the date of the AGM 2006). As at the Latest Practicable Date, options carrying rights to subscribe for 90,780,000 Shares have been granted under the Refreshed Limit.

– 6 –

LETTER FROM THE CHAIRMAN

Subject to the approval of the Independent Shareholders, the Board proposes that an option will be granted to Mr. Zhang under the Share Option Scheme to subscribe for an aggregate of up to 12,000,000 Shares within ten days after obtaining the approval of the Proposed Grant by the Independent Shareholders, representing approximately 0.37% of the existing issued share capital of the Company and approximately 0.37% of the issued share capital of the Company as enlarged by the exercise of option granted under the Proposed Grant, assuming that the option is fully exercised.

As the Proposed Grant would exceed the Single Participant Limit for the grant of options to Mr. Zhang, the Company is seeking approval from the Independent Shareholders for a special mandate on the Proposed Grant. The Proposed Grant was also approved by the independent nonexecutive Directors.

The Proposed Grant is made pursuant to a service contract entered into between Mr. Zhang and the Company on 11 April 2008, in which Mr. Zhang is entitled to the grant of options carrying rights to subscribe for an aggregate of 24,000,000 Shares. The option carrying rights to subscribe for 12,000,000 Shares had been granted on 11 April 2008 and an option carrying rights to subscribe for the remaining 12,000,000 Shares will be granted within ten days after obtaining the approval of the Proposed Grant by the Independent Shareholders.

The following table illustrates the number of Shares to be issued upon exercise in full of the option which may be granted to the Proposed Grantee under the Proposed Grant:

Maximum approximate percentage of shareholding interests Maximum in the Company number of Shares represented by the which may be issued Shares which may be upon exercise in full of the issued upon exercise option [(Note)] proposed to in full of the option be granted under the proposed to be Proposed Grant granted under the Name (Up to) Proposed Grant Mr. Zhang 12,000,000 0.37%

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LETTER FROM THE CHAIRMAN

Note: –

The option under the Proposed Grant will be valid until the end of the period of the fifth year from the date of grant of the option (the “ Exercisable Period ”), during which they are exercisable in the following manner:

	Maximum proportion of option	Exercisable period
	exercisable including proportion of	(subject to the approval of the Independent
	option previously exercised	Shareholders having been obtained)
1	1/3	One year starting from 27 August 2009
2	2/3	One year starting from 27 August 2010
3	3/3	From 27 August 2011 up to the end of the
		Exercisable Period

As at the Latest Practicable Date, a total of 3,203,091,090 Shares had been issued by the Company.

The following table illustrates the shareholding interests in the Company of Mr. Zhang as at the Latest Practicable Date:

Approximate percentage [(Note 1)]

of shareholding interests in the Company upon exercise in full of all the options granted and proposed Maximum to be granted Number of under the Share Shares which Option Scheme Number of may be issued as enlarged Shares in upon exercise by the option respect of in full of granted under Number of outstanding the option the proposed Shares held options held proposed Grant as as at the Latest as at the Latest to be granted at the Latest Practicable Practicable under the Practicable Proposed Grantee Date Date Proposed Grant Date [(Note 2)] Mr. Zhang 9,012,000 25,340,000 12,000,000 1.447%

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LETTER FROM THE CHAIRMAN

Notes: –

1. The approximate percentage is calculated based on the number of issued Shares as at the Latest Practicable Date.

2. The options include the options previously granted and the option which may be granted under the Proposed Grant.

Particulars of Mr. Zhang

Set out below are the brief particulars of Mr. Zhang:

The Board proposes to seek the approval of the Independent Shareholders at the Annual General Meeting to approve the proposed grant of option beyond the Single Participant Limit to Mr. Zhang. Mr. Zhang is an executive Director.

Mr. Zhang, aged 44, has been Chief Operating Officer of the Company since March 2006 and an executive Director since May 2006. Prior to joining the Company, he was a managing director and co-head of China research at UBS Securities where he worked for seven years. In the 1980s, he worked at the People’s Bank of China in Beijing. Between 1991 and 1994, he was a tenured lecturer of banking and finance at the University of Canberra, Australia. He holds a Master of Economics from the Australian National University and a Master of Economics from the Graduate School of the People’s Bank of China.

An option is proposed to be granted to Mr. Zhang entitling him to subscribe for an aggregate number of up to 12,000,000 Shares within ten days after obtaining the approval of the Proposed Grant by the Independent Shareholders. There will be no performance target which must be achieved before the option can be exercised and the consideration payable for the grant of the option will be HK$1.00.

The number of Shares in issue as at the Latest Practicable Date is 3,203,091,090. The Single Participant Limit for Mr. Zhang is 32,030,910 Shares. The aggregate number of Shares upon exercise of outstanding options previously granted to him is 25,340,000, of which options carrying rights to subscribe for 12,000,000 Shares had been granted to Mr. Zhang within the 12-month period immediately before the Latest Practicable Date and options carrying rights to subscribe for 6,660,000 Shares had been exercised by Mr. Zhang within the 12-month period immediately before the Latest Practicable Date. As at the Latest Practicable Date, option carrying rights to subscribe for 30,910 Shares only will be available to be granted to Mr. Zhang and his Single Participant Limit will therefore be exceeded under the Proposed Grant.

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LETTER FROM THE CHAIRMAN

Other conditions of the Proposed Grant

The termination and lapse of the options proposed to be granted under the Share Option Scheme to Mr. Zhang will be subject to the conditions of the Share Option Scheme and the letter of grant of option to Mr. Zhang. The Shares to be allotted and issued upon the exercise of an option will not carry voting rights until completion of the registration of Mr. Zhang as the holder thereof. Subject to the aforesaid, the Shares allotted and issued on the exercise of options will rank pari passu with, and shall have the same voting right, dividend, transfer and other rights as the Shares in issue. The Proposed Grant will be made in accordance with the terms of the Share Option Scheme.

A consideration of HK$1.00 is payable by Mr. Zhang to the Company upon acceptance of the option under the Proposed Grant in accordance with the terms of the Share Option Scheme.

Reasons for the Proposed Grant

Pursuant to a service contract entered into between Mr. Zhang and the Company on 11 April 2008, in which Mr. Zhang is entitled to the grant of options carrying rights to subscribe for an aggregate of 24,000,000 Shares. The option carrying rights to subscribe for 12,000,000 Shares had been granted on 11 April 2008 and an option carrying rights to subscribe for the remaining 12,000,000 Shares will be granted within ten days after obtaining the approval of the Proposed Grant by the Independent Shareholders. The Proposed Grant is to recognize Mr. Zhang’s contribution in corporate communication; to retain on-going relationship with him whose contributions was beneficial to the development of the Company; and to provide him with motivation and incentive to enhance the growth of business of the Company.

Accordingly, the Directors consider that the Proposed Grant is made by reference to Mr. Zhang’s duties and responsibilities with the Company, his performance, the Company’s business performance, profitability and market conditions and therefore is beneficial to the Company and the Shareholders as a whole. As the Proposed Grantee is a Shareholder, according to the Listing Rules, Mr. Zhang and his associates will abstain from voting of the resolution to approve the Proposed Grant and the voting for such resolution will be conducted by poll. Details of such resolution are set out in ordinary resolution No.8 of the Notice of Annual General Meeting.

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LETTER FROM THE CHAIRMAN

ANNUAL GENERAL MEETING

At the Annual General Meeting, resolutions will be proposed to the Shareholders in respect of the ordinary business to be considered at the Annual General Meeting, including the re-election of retiring Directors and the special business to be considered at the Annual General Meeting, being the granting of the Repurchase Mandate, the Issue Mandate and the extension of the Issue Mandate. An ordinary resolution will also be proposed at the Annual General Meeting for the Independent Shareholders to approve the Proposed Grant. The Notice of Annual General Meeting will be set out in the 2007 Annual Report of the Company expected to be despatched to Shareholders together with this circular.

A form of proxy for use at the Annual General Meeting is enclosed with the 2007 Annual Report of the Company to be despatched to Shareholders together with this circular. Whether or not you are able to attend the Annual General Meeting, you are requested to complete the form of proxy and return it to the registered office of the Company in accordance with the instructions printed thereon not later than 48 hours before the time fixed for holding the Annual General Meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting at the Annual General Meeting or any adjourned meeting if you so desire.

RIGHT TO DEMAND A POLL

Pursuant to Article 73 of the Articles of Association, at any general meeting resolutions put to the vote of the meeting shall be decided on a show of hands unless a poll is taken as may from time to time be required under the Listing Rules or any other applicable laws, rules or regulations or unless a poll is (before or on the declaration of the result of the show of hands) demanded:–

• (i) by the Chairman of the meeting; or

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

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

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LETTER FROM THE CHAIRMAN

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

Pursuant to Article 78, at any general meeting on a show of hands every member who (being an individual) is present in person or (being a corporation) is present by a representative duly authorised under Section 115 of the Companies Ordinance shall have one vote and on a poll every member present in person or by proxy or by duly authorised representative shall have one vote for every fully paid Share of which he is the holder. On a poll a member entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

As the Proposed Grantee is a Shareholder, the Proposed Grantee shall abstain from voting in the ordinary resolution proposed to be passed at the Annual General Meeting for the Independent Shareholders to approve the Proposed Grant. Pursuant to Rules 2.15 and 13.39(4) of the Listing Rules respectively, the vote to approve the Proposed Grant should therefore be taken on a poll.

RESPONSIBILITY STATEMENT

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

RECOMMENDATION

The Directors consider that the re-election of the retiring Directors, the granting of the Repurchase Mandate and the Issue Mandate, the extension of the Issue Mandate and the Proposed Grant are in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that all Shareholders should vote in favour of the relevant resolutions to be proposed at the Annual General Meeting.

By order of the Board

HU Aimin Chairman

– 12 –

APPENDIX I DETAILS OF DIRECTORS PROPOSED FOR RE-ELECTION

The details of the two Directors proposed to be re-elected at the Annual General Meeting to be held on 2 June 2008 are set out below:

1. Mr. ZHAO Gesheng , aged 58, was appointed as an Executive Director on 11 May 2006. He is a senior economist and graduated at Inner Monglia Engineering College. He joined Shum Yip Holdings in 2001. He is currently Vice President of Shum Yip Holdings. Prior to such date, he was the chairman of the trade union of Shum Yip Holdings, assistant managing director and general manager of Shenzhen Shum Yip Logistics Group Holdings Company Limited. He also served in organizations like Shenzhen Lionda Holdings Company Limited, Shenzhen Petrochemical Group Co., Ltd. and Chemcial Mining Planning & Design Institute of CNCIM. He has more than twenty years of management experience. Save as disclosed above, Mr. Zhao has not held any directorship in other listed public companies in the last three years or any position with the Company or other members of the Group.

Save as disclosed above, Mr. Zhao does not have any relationships with any Directors, senior management, substantial or controlling shareholders of the Company.

As at the Latest Practicable Date, Mr. Zhao has beneficial interest in 4,000,000 Shares within the meaning of Part XV of the Securities and Futures Ordinance.

Mr. Zhao has not entered into any service contract wit the Company. There is no specific term of service with the Company but he is subject to retirement and reelection provisions in the Articles of Association pursuant to which he shall retire from office at the Annual General Meeting and shall then be eligible for re-election and shall also retire from office by rotation at the subsequent annual general meeting of the Company. Mr. Zhao is currently entitled to receive a remuneration of HK$741,966 per annum which is subject to annual review by the Board. In addition, Mr. Zhao is entitled to receive discretionary bonuses or other benefits as may be decided by the Board having regard to his performance and duties, the Company’s business performance and profitability and the prevailing market conditions.

Save as disclosed above, there are no other matters relating to his re-election that need to be brought to the attention of the Shareholders and there is no information which is required to be disclosed pursuant to Rule 13.51(2)(h)-(v) of the Listing Rules.

– 13 –

DETAILS OF DIRECTORS PROPOSED FOR RE-ELECTION

APPENDIX I

1. Dr. WU Jiesi , aged 56, was appointed as a Non-Executive Director on 11 May 2006. He holds a Doctorate degree in Economics. He conducted post-doctorate research work in theoretical economics at the Nankai University in the PRC and was conferred a professorship qualification by the Nankai University in 2001. Dr. Wu served in various capacities with The Industrial and Commercial Bank of China (“ICBC”) from 1984 to 1995 and was the President of ICBC Shenzhen Branch prior to his appointment as Deputy Mayor of the Shenzhen Municipal Government. As the Deputy Mayor between 1995 and 1998, he was responsible for finance, taxation, public revenue, securities, banking and education for the municipality. Dr. Wu was appointed Assistant to the Governor of Guangdong Province from 1998 to February 2000 and assisted the Governor in the handling of the Guangdong International Trust and Investment Corporation bankruptcy, and the financial restructuring of Guangdong Enterprises (Holdings) Limited. He was the Chairman of 廣東粵海投資控股有限公司(Guangdong Yue Hai Investment Holdings Company Limited) and GDH Limited between 2000 and 2005. Dr. Wu is an independent non-executive director of listed public companies in Hong Kong, namely Beijing Enterprises Holdings Limited, China Insurance International Holdings Company Limited and non-executive director of China Water Affairs Group Limited and an independent director of China Merchants Bank Co., Ltd. (which is listed on the Shanghai Stock Exchange). Dr. Wu had been the managing director and chief executive officer of Hopson Development Holdings Limited, a listed public company in Hong Kong, until 16 January 2008. Save as disclosed above, Dr. Wu has not held any directorship in other listed public companies in the last three years or any position with the Company or other members of the Group.

Save as disclosed above, Dr. Wu does not have any relationships with any Directors, senior management, substantial or controlling shareholders of the Company.

As at the Latest Practicable Date, Dr. Wu has beneficial interest in 6,600,000 Shares and options to subscribe for 3,400,000 Shares at a subscription price of HK$2.165 per Share within the meaning of Part XV of the Securities and Futures Ordinance.

– 14 –

DETAILS OF DIRECTORS PROPOSED FOR RE-ELECTION

APPENDIX I

Dr. Wu’s term of service with the Company is three years up to 10 May 2009 but is subject to retirement and re-election provisions in the Articles of Association pursuant to which he shall retire from office by rotation at the Annual General Meeting and shall then be eligible for re-election and shall also retire from office by rotation at the subsequent annual general meeting of the Company. His director’s fee is to be determined by the Board with reference to his duties and responsibilities with the Company, the Company’s business performance and profitability and the prevailing market conditions. For the year ended 31 December 2007, Dr. Wu received a director’s fee of HK$280,000. For the year ending 31 December 2008, a director’s fee of HK$280,000 will be payable to Dr. Wu subject to authorization to be given by the Shareholders at the Annual General Meeting.

Save as disclosed above, there are no other matters relating to his re-election that need to be brought to the attention of the Shareholders and there is no information which is required to be disclosed pursuant to Rule 13.51(2)(h)-(v) of the Listing Rules.

– 15 –

EXPLANATORY STATEMENT

APPENDIX II

The Listing Rules permit a company with a primary listing on the Stock Exchange to repurchase in cash its own shares on the Stock Exchange subject to certain restrictions, the most important of which are summarised below:

• (i) the shares proposed to be purchased by the company are fully-paid up;

• (ii) the company has previously sent to its shareholders an explanatory statement complying with the provisions of Rule 10.06(1)(b) of the Listing Rules; and

• (iii) the shareholders of the company have given a specific approval or a general mandate to the directors to make such purchase(s), by way of an ordinary resolution which complies with the provisions of Rule 10.06(1)(c) of the Listing Rules and which has been passed at a general meeting of the company duly convened and held and the company has delivered a copy of such resolution, together with the necessary supporting documentation, to the Stock Exchange in accordance with Rule 10.06(1)(d) of the Listing Rules.

This appendix serves as an explanatory statement, as required by the Listing Rules, to provide requisite information to Shareholders for their consideration of the Repurchase Mandate and also constitutes the memorandum as required under Section 49BA(3) of the Companies Ordinance.

1. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 3,203,091,090 Shares.

Subject to the passing of the ordinary resolution no.5 set out in the Notice of Annual General Meeting, and on the basis that no further Shares are issued or repurchased prior to the Annual General Meeting, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 320,309,109 Shares.

2. REASONS FOR REPURCHASE

Repurchases of Shares will only be made when the Directors believe that such a repurchase will benefit the Company and its Shareholders. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net value of the Company and its assets and/or its earnings per Share.

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EXPLANATORY STATEMENT

APPENDIX II

3. FUNDING OF REPURCHASES

Repurchases will be funded entirely from the Company’s available cash flow or working capital facilities which will be funds legally available for the purpose and in accordance with the laws of Hong Kong and the memorandum and articles of association of the Company.

The Companies Ordinance provides that the amount of capital repaid in connection with a share repurchase may only be paid from the distributable profits of the company or from the proceeds of a new issue of shares made for the purpose. The Companies Ordinance further provides that the amount of premium payable on repurchase may only be paid out of the distributable profits of the company. Where the repurchased shares were issued at a premium, any premium payable on repurchase may be paid out of the proceeds of a fresh issue of shares made for the purposes of the share repurchase up to certain limits specified by the Companies Ordinance.

There might be a material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the audited accounts contained in the annual report for the year ended 31 December 2007) in the event that the Repurchase Mandate is exercised in full at any time during the proposed purchase period. However, the Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

4. GENERAL

None of the Directors nor, to the best of their knowledge, having made all reasonable enquires, any of their associates, has any present intention, if the Repurchase Mandate is approved by the Shareholders, to sell any Shares to the Company.

The Directors have undertaken to the Stock Exchange that they will exercise the power to repurchase Shares pursuant to ordinary resolution No. 5 set out in the Notice of Annual General Meeting in accordance with the Listing Rules, the Memorandum and Articles of Association and the applicable laws and regulations of Hong Kong.

No connected persons (as defined in the Listing Rules) of the Company have notified the Company that they have a present intention to sell Shares held by them to the Company, or have undertaken not to do so, if the Repurchase Mandate is approved by the Shareholders.

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EXPLANATORY STATEMENT

APPENDIX II

If as a result of a repurchase of Shares a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purpose of the Takeovers Code. As a result, a Shareholder, or group of Shareholders acting in concert, depending on the level of increase of the Shareholders’ interest, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

As at the Latest Practicable Date, Shum Yip Holdings held 1,517,647,489 Shares, representing approximately 47.38% of the issued share capital of the Company. To the best of the knowledge and belief of the Company, no other person, together with his/her associates, was beneficially interested in Shares representing 10% or more of the issued share capital of the Company.

In the event that the Directors exercise in full the power to repurchase Shares which is proposed to be granted pursuant to ordinary resolution No. 5 set out in the Notice of Annual General Meeting, the shareholding of Shum Yip Holdings in the Company would be increased to approximately 52.65% of the issued share capital of the Company. Then, Shum Yip Holdings could be required under Rule 26 of the Takeovers Code to make a mandatory offer in respect of all the issued shares of the Company by reason of such increase. Save as aforesaid, the Directors are not aware of any consequences which may arise under the Takecovers Code as a consequence of any purchases made under the Repurchase Mandate. The Directors will use their best endeavours to ensure that the Repurchase Mandate will not be exercised to the extent that the number of Shares held by the public would be reduced to less than 25% of the issued share capital of the Company. The Directors have no intention to exercise the Repurchase Mandate which may result in possible mandatory offer being made under the Takeovers Code.

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EXPLANATORY STATEMENT

APPENDIX II

5. SHARE PRICES

The highest and lowest prices at which the Shares have been traded on the Stock Exchange during each of the previous twelve months before the Latest Practicable Date were as follows:–

		Shares
	Highest		Lowest
	HK$		HK$
2007
April	4.80		3.95
May	5.13		4.53
June	6.30		4.66
July	7.15		5.75
August	7.00		4.20
September	8.00		6.29
October	7.98		6.67
November	7.79		5.05
December	6.37		4.96
2008
January	5.68		3.06
February	4.59		3.45
March	4.20		2.72
April (up to Latest Practicable Date)	3.99		3.15

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EXPLANATORY STATEMENT

APPENDIX II

6. SHARE REPURCHASE MADE BY THE COMPANY

In the six months preceding the Latest Practicable Date, the Company had purchased a total of 34,860,000 of its Shares on the Stock Exchange. Details of the repurchases are summarized as follows:

	Number	Highest	Lowest	Aggregate
	of Shares	price paid	price paid	consideration
Date	repurchased	per Share	per Share	paid
		HK$	HK$	HK$
24/01/2008	9,972,000	4.00	3.55	37,873,500.00
25/01/2008	3,470,000	3.95	3.78	13,459,640.00
28/01/2008	5,000,000	3.80	3.70	18,703,940.00
29/01/2008	6,706,000	3.80	3.74	25,249,760.00
30/01/2008	5,000,000	3.79	3.47	18,100,360.00
31/01/2008	4,712,000	3.58	3.41	16,597,580.00

Save as disclosed above, neither the Company nor any of its subsidiaries had purchased any of the Company’s Shares (whether on the Stock Exchange or otherwise) during the six months preceding the Latest Practicable Date.

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