New City Development Group Limited — Proxy Solicitation & Information Statement 2005

Oct 18, 2005

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 you should take, you should consult a 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 China Everbright International Limited , you should at once hand this circular to the purchaser or transferee or to the bank, stock broker 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.

CHINA EVERBRIGHT INTERNATIONAL LIMITED 中國光大國際有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 257)

DISCLOSEABLE TRANSACTION

ACQUISITION OF WASTE WATER TREATMENT FACILITIES IN ZIBO CITY, SHANDONG PROVINCE, THE PRC

A letter from the board of directors of the Company is set out on pages 5 to 12 of this circular.

18 October 2005

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13

DEFINITIONS

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

“Acquisition”	the acquisition by the Project Company of the
	Transferred Assets from the Transferors pursuant to
	the Asset Transfer Agreement
“Asset Transfer Agreement”	the asset transfer agreement entered into between Zibo
	Finance Bureau, Zibo Environmental and Everbright
	Water Investments (on behalf of the Project Company)
	on 26 September 2005 in respect of the Acquisition
“Assets Valuation Report”	an assets valuation report on the Transferred Assets
	valued as at the Valuation Date and issued by the
	Valuer on 30 April 2005
“associates”	has the meaning ascribed to it under the Listing Rules
“Board”	the board of Directors of the Company
“BVI”	the British Virgin Islands
“Everbright Water Investments”	China Everbright Water Investments Limited, a
	company incorporated in the BVI and a wholly owned
	subsidiary of the Company
“Company”	China Everbright International Limited, a company
	incorporated in Hong Kong, the shares of which are
	listed on the Stock Exchange
“Concession Right Agreement”	the concession right agreement entered into between
	Zibo City Water Resources and Fisheries Bureau and
	Everbright Water Investments (on behalf of the Project
	Company) on 26 September 2005 in respect of the
	granting of an exclusive right to the Project Company
	to operate the Waste Water Treatment Plants during
	the Term
“Directors”	the directors of the Company
“Group”	the Company and its subsidiaries from time to time
“Independent Third Parties”	third parties not connected with any director, chief
	executive or substantial shareholder of the Company
	or any of its subsidiaries or their respective associates
	according to the Listing Rules

– 1 –

DEFINITIONS

“Latest Practicable Date” 14 October 2005, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular

“Listing Rules” Rules Governing the Listing of Securities on the Stock Exchange “Original Contracts” all contracts or agreements in relation to the titles, operation and maintenance of the Waste Water Treatment Plants and Project Facilities entered into by the Transferors or other parties which are valid or still remain valid after the signing of the Asset Transfer Agreement

• “PRC” The People’s Republic of China

“Project” the investment in the business of waste water treatment service in Zibo City, Shandong Province, the PRC through the acquisition and operation of the Waste Water Treatment Plants and to provide waste water treatment service in certain specified areas in Zibo City pursuant to the Project Agreements

• “Project Agreements” the Asset Transfer Agreement, the Concession Right Agreement and the Waste Water Treatment Service Agreement

• “Project Company” or a wholly foreign owned enterprise with registered “Transferee” capital (in US dollars) of not less than RMB90,000,000 (approximately HK$86.27 million) to be established in the PRC and wholly owned by Everbright Water Investments after the signing of the Project Agreements which shall operate as a project company to carry out the Project

• “Project Facilities” all facilities held by Zibo Environmental to be transferred to the Project Company pursuant to the Asset Transfer Agreement and all other facilities to be built or expanded by the Project Company pursuant to the Concession Right Agreement

“Public Facilities” the public facilities and utilities other than the Project Facilities, including without limitation, water, electricity and gas supply, communication systems, roads and passage ways, water pipes, etc.

– 2 –

DEFINITIONS

“SFO”	Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“Shares”	ordinary shares of HK$0.10 each in the share capital
	of the Company
“Shareholders”	registered holders of the Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“subsidiaries”	has the meaning ascribed to it under the Listing Rules
“Supplemental Agreement”	an agreement dated 26 September 2005 entered into
	between Zibo Municipal Government, the Company
	and Everbright Water Investments in relation to the
	Project
“Term”	a period of 25 years commencing from the date of
	transfer of the Transferred Assets pursuant to the Asset
	Transfer Agreement
“Transferors”	Zibo Finance Bureau and Zibo Environmental
	collectively
“Transferred Assets”	the assets of the Transferors relating to the Waste Water
	Treatment Plants (including the land use right) as
	valued in the Assets Valuation Report to be transferred
	by the Transferors to the Project Company pursuant
	to the Asset Transfer Agreement
“Valuation Date”	31 December 2004
“Valuer”	Shandong Bohui Accounting Company Limited (山東
	博會有限責任會計師事務所), an independent qualified
	valuer in the PRC engaged by Zibo City Water
	Resources and Fisheries Bureau
“Waste Water Treatment	the waste water treatment service agreement entered
Service Agreement”	into between Zibo City Water Resources and Fisheries
	Bureau, Zibo City Environmental Protection Bureau
	and Everbright Water Investments (on behalf of the
	Project Company) on 26 September 2005 in respect of
	the provision of waste water treatment service by the
	Project Company

– 3 –

DEFINITIONS

• “Waste Water Treatment Plants”

• the two waste water treatment plants respectively situated at No. 9, Mingbo Road, New & Hi-Tech Industrial Development Zone (comprising one waste water treatment factory) and Mazhuang Village, Nanding Zhen, Zhangdian District, Zibo City, Shandong Province (comprising two waste water treatment factories phase I and phase II) (山東省淄博 市高新技術開發區銘波路9號和山東省淄博市張店區南 定鎮馬莊村) which are state-owned assets held by Zibo Environmental as at the date of the Asset Transfer Agreement including all facilities and equipments in connection therewith, with aggregate waste water treatment capacity of 250,000 tonnes per day upon full operation of the three factories

• “Zibo Environmental”

Zibo Environmental Waste Water Treatment Company (淄博市環保污水處理公司 ), a state-owned enterprise established in the PRC

• “HK$”

Hong Kong dollars, the lawful currency of Hong Kong

• “RMB”

Renminbi, the lawful currency of the PRC

• “US$” or “US dollars”

• United States dollars, the lawful currency of the United States of America

• “%” per cent.

For the purposes of illustration only and unless otherwise stated, the conversions of (i) Renminbi into Hong Kong dollars and US dollars are based on the exchange rates of HK$0.9586=RMB1.00 and US$1=RMB8.091; and (ii) the conversion of US dollars into Hong Kong dollars is based on the exchange rate of US$1=HK$7.756. Such conversions should not be construed as a representation that the amount in question have been, could have been or could be converted at any particular rate or at all.

– 4 –

LETTER FROM THE BOARD

CHINA EVERBRIGHT INTERNATIONAL LIMITED 中國光大國際有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 257)

Directors: WANG Mingquan (Chairman) ZANG Qiutao (Vice-Chairman) LI Xueming (Vice-Chairman) CHEN Xiaoping (Chief Executive Officer) FAN Yan Hok, Philip (General Manager) HUANG Chaohua WONG Kam Chung, Raymond CHEN Shuang ZHANG Weiyun Sir David AKERS-JONES * LI Kwok Sing, Aubrey * MAR Selwyn *

Registered office: Room 2703, 27th Floor Far East Finance Centre 16 Harcourt Road Hong Kong

• independent non-executive Directors

18 October 2005

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

ACQUISITION OF WASTE WATER TREATMENT FACILITIES IN ZIBO CITY, SHANDONG PROVINCE, THE PRC

INTRODUCTION

On 28 September 2005, the Board announced that on 26 September 2005, Everbright Water Investments, a wholly owned subsidiary of the Company entered into the Asset Transfer Agreement with Zibo Finance Bureau and Zibo Environmental, pursuant to which, Zibo Finance Bureau and Zibo Environmental agreed to sell and Everbright Water Investments, on behalf of the Project Company, agreed to acquire the Transferred Assets at a total consideration of RMB224,055,000 which shall be paid in US$27,691,880 (approximately HK$214.78 million).

– 5 –

LETTER FROM THE BOARD

The terms of the Asset Transfer Agreement were negotiated on an arm’s length basis. The entering into of the Asset Transfer Agreement constitutes a discloseable transaction for the Company under Rule 14.06(2) of the Listing Rules, and will accordingly be subject to reporting and announcement requirements of the Listing Rules, but no Shareholders’ approval of the Asset Transfer Agreement is required.

The purpose of this circular is to give Shareholders further information regarding the Acquisition.

BACKGROUND

In order to improve operational efficiency of public utilities, Zibo Municipal Government (淄博市人民政府 ) had decided to authorize Zibo Finance Bureau (淄博市財 政局 ) and Zibo Environmental to transfer the state-owned Transferred Assets (including the Waste Water Treatment Plants) to the Project Company pursuant to the Asset Transfer Agreement, and will at the same time (i) authorize Zibo City Water Resources and Fisheries Bureau (淄博市水利與漁業局) to grant an exclusive concession right to the Project Company to operate the Waste Water Treatment Plants to provide waste water treatment service in certain specified areas in Zibo City, Shandong Province, the PRC during the Term pursuant to a Concession Right Agreement; and (ii) authorize Zibo City Water Resources and Fisheries Bureau and Zibo City Environmental Protection Bureau (淄博市環境保護局 ) to engage the waste water treatment services at prescribed service charges to be provided by the Project Company through the operation of the Waste Water Treatment Plants during the Term pursuant to a Waste Water Treatment Service Agreement.

ASSET TRANSFER AGREEMENT

Date : 26 September 2005

Parties

• Transferors : Zibo Finance Bureau and Zibo Environmental. To the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, Zibo Finance Bureau and Zibo Environmental and their ultimate beneficial owners are not connected persons of the Company and are Independent Third Parties.

• Transferee : Everbright Water Investments signing on behalf of the Project Company, a wholly foreign owned enterprise to be set up by Everbright Water Investments in the PRC after the signing of the Asset Transfer Agreement, and thus an indirect wholly owned subsidiary of the Company.

– 6 –

LETTER FROM THE BOARD

Assets to be acquired

Zibo Finance Bureau and Zibo Environmental agreed to sell and Everbright Water Investments, on behalf of the Project Company, agreed to acquire the Transferred Assets which were valued at RMB224,055,000 (approximately HK$214.78 million) as at the Valuation Date by the Valuer.

The Waste Water Treatment Plants comprise a total of three waste water treatment factories, only one of which has been in operation and the remaining two factories are not yet in operation since further repair/replacement works or purchases of facilities or equipments (as mentioned in sub-paragraph (c) under the paragraph “Consideration and its payment” below) are required in order for the two factories to commence operation. The unaudited net profits (both before and after taxation and extraordinary items) attributable to the only operating waste water treatment factory under the management of Zibo Environmental for the financial years ended 31 December 2003 and 31 December 2004 were approximately RMB2.58 million (approximately HK$2.47 million) and approximately RMB2.20 million (approximately HK$2.11 million) respectively. Upon completion of the Asset Transfer Agreement, all three waste water treatment factories will be in operation to generate waste water treatment service charges for the Project Company.

Consideration and its payment

The total consideration for the Acquisition shall be RMB224,055,000 to be paid in US$27,691,880 (approximately HK$214.78 million), among which, RMB110,579,500 (approximately HK$106.00 million) shall be the consideration for the transfer of the land use right of the land where the Waste Water Treatment Plants are located, and RMB113,475,500 (approximately HK$108.78 million) shall be the consideration for the transfer of the Waste Water Treatment Plants and other assets relating thereto.

40% of the total consideration being RMB89,622,000 shall be paid by the Transferee to the Transferors in US dollars with reference to the exchange rate as announced by the People’s Bank of China on 26 September 2005 being approximately US$11,076,752 (approximately HK$85.91 million), upon fulfillment of all the following conditions:

• (a) the Project Agreements having been signed and the Asset Transfer Agreement having become effective upon approval by the relevant PRC government authority;

• (b) the transfer to the Project Company of (i) the right of possession, use and control of all assets of the Waste Water Treatment Plants; (ii) the land use right of a proportionate portion of the land where part of the Waste Water Treatment Plants are located for a term of 30 years; and (iii) all operation manuals, operation notes, assignment records, design drawings and documents, information and files in relation to the operation and maintenance of the Waste Water Treatment Plants; and (iv) all keys for accessing the Waste Water Treatment Plants, security codes and all other things necessary for the continuous operation and maintenance of the Waste Water Treatment Plants; and

– 7 –

LETTER FROM THE BOARD

• (c) the Transferors having paid the Project Company the sum of RMB7,500,000 (approximately HK$7.19 million), being the expenses for further repair, replacement or purchase of facilities and equipment of or for the existing Waste Water Treatment Plants. This sum has not been paid by the Transferors as at the date of this announcement.

As at the date of this circular, apart from the signing of the Asset Transfer Agreement as mentioned in sub-paragraph (a) above which has been fulfilled, the fulfillment of the remaining conditions are still in progress.

The remaining 60% of the total consideration being RMB134,433,000 shall be paid by the Transferee in US dollars with reference to the exchange rate as announced by the People’s Bank of China on 26 September 2005 being approximately US$16,615,128 (approximately HK$128.87 million) within 15 days of the fulfillment of the following conditions:

• (a) the operation test period expires with all the Transferred Assets passing the operation test; and

• (b) the Transferors have, at their own expenses, completed certain facilities and construction works relating to the Waste Water Treatment Plants as required under the Assets Transfer Agreement to ensure that waste water can be supplied to the Waste Water Treatment Plants.

Supplemental Agreement

Further, pursuant to the Supplemental Agreement, Zibo Municipal Government shall procure that (i) the fixed assets among the Transferred Assets on the date of transfer of the Transferred Assets pursuant to the Asset Transfer Agreement shall be the same as that valued under the Assets Valuation Report; and (ii) the amount of the current assets among the Transferred Assets as at the date of transfer of the Transferred Assets pursuant to the Asset Transfer Agreement shall be basically the same as the valued amount as determined by the Assets Valuation Report. The Company and Everbright Water Investments have also jointly agreed under the Supplemental Agreement to guarantee the payment obligations of the Project Company up to RMB224,055,000 (approximately HK$214.78 million), being the amount of the total consideration for the Acquisition, together with late charges and default payments payable under the Asset Transfer Agreement, for a period of 6 months commencing from the relevant due dates of the payments.

The Board currently intends to fund part of the consideration by internal resources of the Group and the remaining will be funded by way of long-term financing arrangements of the Project Company.

The consideration has been arrived at after arm’s length negotiations between the Transferors and Everbright Water Investments with reference to the valuation of the Transferred Assets of RMB224,055,000 (approximately HK$214.78 million) as determined by the Assets Valuation Report. According to the Assets Valuation Report, the Assets Valuation Report remains valid for one year from the Valuation Date.

– 8 –

LETTER FROM THE BOARD

Listing Rules aspects

Taking into account the consideration of RMB224,055,000 (approximately HK$214.78 million) for the Acquisition, the Asset Transfer Agreement constitutes a discloseable transaction for the Company under Rule 14.06(2) of the Listing Rules, and will accordingly be subject to reporting and announcement under the Listing Rules but no Shareholders’ approval is required.

Effectiveness of the Asset Transfer Agreement

Prior to the Asset Transfer Agreement becoming effective, the following conditions shall have been fulfilled:

• (a) the Transferors have passed resolution to approve the Acquisition and carried out all legal procedures incidental thereto;

• (b) the Transferors have duly dealt with all indebtedness relating to the Transferred Assets and released all guarantees or security of any type over or in relation to the Transferred Assets to ensure that none of the liabilities of Zibo Environmental or in relation to the Transferred Assets will be borne by the Project Company. In the event that the Project Company suffers any loss as a result of a breach of this provision, the Transferors will indemnify the Project Company of such loss. Zibo Municipal Government has also guaranteed to the Company and Everbright Water Investments under the Supplemental Agreement that it will ensure that the Transferred Assets are free from encumbrance, mortgages or third party rights and not subject to any mandatory measures imposed by any courts or government authorities in the PRC, that all existing liabilities relating to the Transferred Assets are being settled prior to the Asset Transfer Agreement becomes effective and shall provide full indemnity to the Project Company for any loss arising from any breach of its guarantee;

• (c) the Transferors have procured the preparation, approval and filing of an assets valuation report in relation to the Transferred Assets in accordance with the requirements of the State-owned Assets Administration Bureau;

• (d) the staff representatives of the Transferors have approved the staff arrangement proposal jointly prepared by the parties to the Asset Transfer Agreement; and

• (e) the Transferors have submitted the reorganization application in accordance with the relevant PRC requirements and have obtained the approval from the relevant PRC department in charge.

As at the date of this circular, the condition mentioned under sub-paragraph (d) above has been fulfilled.

– 9 –

LETTER FROM THE BOARD

Completion of the Asset Transfer

Completion of the transfer of the Transferred Assets shall take place one business day after the fulfillment of the following conditions:

• (a) the Project Company has received all the relevant information and documents in relation to the Waste Water Treatment Plants, Project Facilities and Public Facilities;

• (b) all amendments to, assignments, termination or release of all Original Contracts have been completed;

• (c) the stock-take of the Transferred Assets, the transfer of part of the land use right, the hand-over of the operation, the arrangement of staff and all other necessary preliminary works in relation to the Transferred Assets have been completed;

• (d) the specific charging mechanism and the designated bank account in relation to the waste water treatment service charges have been established; and

• (e) the pre-transfer performance test carried out in accordance with the Asset Transfer Agreement has been completed.

Restrictions on financing arrangements

During the Term, the Project Company may apply all or part of the Transferred Assets, land use rights, fixed assets and facilities, interests in contracts or other intangible assets as security to obtain borrowings provided that the borrowed amounts must first be used to satisfy the payment of the consideration of the Acquisition and may then be used to finance any construction works relating to the Project and the operation of the Project Company during the Term, but for no other purposes.

CONCESSION RIGHT AGREEMENT

Pursuant to the Concession Right Agreement, the Project Company was granted the exclusive right to, inter alia, operate the Waste Water Treatment Plants to provide waste water treatment service in certain specified areas in Zibo City during the Term, with further right to invest, construct, operate and provide reusable water generation service during the Term depending on Zibo City water resources development plans and market demands at the relevant time, and to collect service charges in connection therewith during the Term. In the event that the waste water treatment capacity of the Waste Water Treatment Plants shall become insufficient to process all waste water generated in the specified areas, Zibo City Water Resources and Fisheries Bureau may permit the construction of new waste water treatment facilities in the same area but the Project Company shall have the first right to invest, construct and operate such new facilities to provide further waste water treatment services to the specified areas.

– 10 –

LETTER FROM THE BOARD

Upon expiry of the Term, the Transferred Assets shall be transferred back to the Transferors with nil consideration (the “Returned Assets”) and the Project Company shall cease to have any rights and obligations under the Concession Right Agreement, and the Waste Water Treatment Service Agreement and the Asset Transfer Agreement shall be automatically terminated simultaneously. The Company and Everbright Water Investments have further undertaken to Zibo Municipal Government under the Supplemental Agreement that the Returned Assets shall be free from any encumbrances, mortgages or third party rights and not subject to any mandatory measures imposed by any courts or government authorities in the PRC.

WASTE WATER TREATMENT SERVICE AGREEMENT

Pursuant to the Waste Water Treatment Service Agreement, Zibo City Water Resources and Fisheries Bureau and Zibo City Environmental Protection Bureau agreed to engage the service of the Project Company to provide waste water treatment service to certain specified areas in Zibo City during the Term and the Project Company shall receive monthly service charges based on the volume of waste water processed.

The Project Company shall during the Term have the obligations to maintain the facilities and equipments of the Waste Water Treatment Plants in good condition in accordance with all applicable PRC regulatory requirements and standards and the provisions of the Waste Water Treatment Service Agreement. In the event that any of the facilities or equipments is incapable of providing normal waste water treatment service in accordance with the Waste Water Treatment Service Agreement, the Project Company shall have the obligation to promptly repair or upgrade such facilities and equipments.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Group is principally engaged in infrastructure investment, property investment and environmental protection businesses. To the best of the Company’s knowledge, Zibo Environmental is principally engaged in the provision of waste water treatment service.

The Group has been focusing on environmental protection businesses since 2002. Urban sewage treatment has been one of the development directions of the Group’s environmental protection business. As disclosed in the interim results announcement of the Company dated 15 September 2005, the Qingdao waste water treatment project (the “Qingdao Project”) which commenced operation on 1 January 2005 has shown encouraging progress and is one of the Group’s major environmental protection businesses.

In view of the satisfactory progress of the Qingdao Project, the Group is committed to expand its regional investment coverage in Shandong Province, the PRC. Zibo City is the third largest industrial city in Shandong Province. It enjoys geographical advantage with solid industrial and economic background and there is good potential for development of environmental protection business. Such potential matches with the Group’s plan of investing and developing the environmental protection business in Shandong Province. To facilitate this investment, in June 2005 the Group entered into a framework agreement of cooperation with Zibo Municipal Government, pursuant to which both parties planned to cooperate in certain areas including waste water treatment.

– 11 –

LETTER FROM THE BOARD

The Board believes that the Acquisition and the Project will further strengthen the Group’s environmental protection business and its regional investment in Shandong Province and the terms of the transaction under the Asset Transfer Agreement are fair and reasonable and in the interests of the Shareholders as a whole.

FINANCIAL EFFECT OF THE ACQUISITION

Upon completion of the Acquisition, the total assets of the Group will increase by approximately HK$214.78 million which represents the total value of the Transferred Assets as determined by the Valuer in the Assets Valuation Report. Given that the Group currently intends to fund part of the consideration by way of internal resources of the Group and the remaining will be funded by way of long-term financing arrangement, it is currently expected that the liabilities of the Group will increase as a result of such long-term financing and the Group’s bank balance will decrease to the extent of the amount of consideration paid out of the Group’s internal resources.

It is currently expected that upon completion of the Acquisition, the operation of the waste water treatment facilities in Zibo City will contribute steady long term revenue to the Group.

ADDITIONAL INFORMATION

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

Yours faithfully, For and on behalf of the Board of

China Everbright International Limited CHEN Xiaoping Chief Executive Officer

– 12 –

APPENDIX

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests of the Directors and 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 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:

(a) Share options in the Company

				No. of	Approximate
				underlying	percentage of
				Shares	the Company’s
		Exercise	Exercise	pursuant to	total issued
Name of Director	Date of grant	price	period	share options	share capital
		(HK$)
WANG Mingquan	29.09.03	0.296	29.03.2004 –	25,400,000	0.995%
			25.05.2013
			(Note)
LI Xueming	29.09.03	0.296	29.03.2004 –	18,000,000	0.705%
			25.05.2013
			(Note)
CHEN Xiaoping	29.09.03	0.296	29.03.2004 –	18,000,000	0.705%
			25.05.2013
			(Note)
FAN Yan Hok, Philip	29.09.03	0.296	29.03.2004 –	10,000,000	0.392%
			25.05.2013
			(Note)

– 13 –

APPENDIX

GENERAL INFORMATION

					No. of	Approximate
					underlying	percentage of
					Shares	the Company’s
			Exercise	Exercise	pursuant to	total issued
Name of Director	Date	of grant	price	period	share options	share capital
			(HK$)
HUANG Chaohua		29.09.03	0.296	29.03.2004 –	9,000,000	0.353%
				25.05.2013
				(Note)
WONG Kam Chung,		29.09.03	0.296	29.03.2004 –	9,000,000	0.353%
Raymond				25.05.2013
				(Note)
CHEN Shuang		29.09.03	0.296	29.03.2004 –	4,000,000	0.157%
				25.05.2013
				(Note)
ZHANG Weiyun		29.09.03	0.296	29.03.2004 –	4,000,000	0.157%
				25.05.2013
				(Note)
Sir David AKERS-JONES		29.09.03	0.296	29.03.2004 –	1,000,000	0.039%
				25.05.2013
				(Note)
LI Kwok Sing, Aubrey		29.09.03	0.296	29.03.2004 –	1,000,000	0.039%
				25.05.2013
				(Note)

Note: The option(s) relating to half of the total number of the underlying Shares indicated in the next column can be exercised during the period from 29.03.2004 to 25.05.2013, whilst the option(s) relating to the remaining half of the total number of the underlying Shares indicated in the next column can be exercised during the period from 29.09.2004 to 25.05.2013.

– 14 –

APPENDIX

GENERAL INFORMATION

• (b) Share options in China Everbright Limited (“CEL”), an associated corporation (within the meaning of Part XV of the SFO) of the Company

					Approximate
				No. of underlying	percentage of
				shares of CEL	the total issued
		Exercise	Exercise	pursuant to	share capital
Name of Director	Date of grant	price	period	share options	of CEL
		(HK$)
WANG Mingquan	26.06.02	4.360	27.06.2003 –	6,000,000	0.38%
			26.12.2005
	07.07.03	2.375	08.07.2004 –	3,000,000	0.19%
			07.01.2007
	03.05.05	2.850	04.05.2006 –	1,920,000	0.12%
			03.05.2010
CHEN Shuang	03.09.04	3.225	04.09.2005 –	750,000	0.05%
			03.03.2008
	03.05.05	2.850	04.05.2006 –	1,280,000	0.08%
			03.05.2010

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests or short positions in the Shares, underlying Shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) to be entered in the register required to be kept by the Company pursuant to section 352 of the SFO; or (c) 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.

– 15 –

APPENDIX

GENERAL INFORMATION

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as is known to the Directors and chief executive of the Company, the following person or corporation (not being Director or chief executive of the Company), had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who were directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or had any options in respect of such capital, were as follows:

(a) The Company

			Approximate
			percentage of the
			Company’s total
Name of			issued share
substantial Shareholder	Capacity	Interests in Shares	capital
China Everbright Holdings	Beneficial	1,758,595,910	68.92%
Company Limited (“CEH”)	owner	(Note 1)

Note:

1. Out of the 1,758,595,910 Shares, 1,758,215,910 Shares are held by Guildford Limited (“Guildford”). Guildford is owned as to 55% by Datten Investments Limited (“Datten”) and as to 45% by CEH. Datten is a wholly-owned subsidiary of CEH. The remaining 380,000 Shares are held by Everbright Investment & Management Limited (“EIM”), a wholly-owned subsidiary of CEH. Accordingly, CEH is deemed to be interested in the 1,758,215,910 Shares held by Guilford and the 380,000 Shares held by EIM.

2. Mr. WANG Mingquan, Mr. Zang Qiutao, Mr. LI Xueming, Mr. CHEN Xiaoping and Mr. CHEN Shuang, five of the executive Directors, are also directors of CEH. Ms. ZHANG Weiyun, another executive Director, is also an employee of CEH.

3. Mr. WANG Mingquan, Mr. CHEN Xiaoping and Ms. ZHANG Weiyun, three of the executive Directors, are also directors of Guildford.

4. Save as disclosed in Notes 2 and 3 above, no Director or proposed Director (if any) is a director or employee of a company which as at the Latest Practicable Date had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

– 16 –

APPENDIX

GENERAL INFORMATION

(b) Subsidiaries

			Approximate
			percentage of
Name of subsidiary	Name of substantial	Number and class	shareholding/
of the Company	shareholder	of shares held	interest
High Luxury Trading	Mao Li Ching	49,000	49%
Limited		ordinary shares
Greenway Venture	CEH	20 shares	20%
Limited
EB-VW HK Holding	Veolia Water	4,284,272	40%
Company Limited		ordinary shares
Qingdao EB-VW Waste	Qingdao Municipal	–	40%
Water Treatment Co. Ltd.*	Drainage Company

• Registered under the laws of the PRC as sino-foreign co-operative joint venture.

Save as disclosed above, as at the Latest Practicable Date, the Directors are not aware of any other person who, had an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group or had any options in respect of such capital.

4. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered, or was proposing to enter, into a service contract with any member of the Group which does not expire or is not determinable by the relevant member of the Group within one year without compensation, other than statutory compensation.

5. COMPETING INTEREST

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

6. LITIGATION

As at the Latest Practicable Date, 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.

– 17 –

APPENDIX

GENERAL INFORMATION

7. GENERAL

• (a) The qualified accountant of the Company is Mr. WONG Kam Chung, Raymond, an executive Director. Mr. WONG is a member of the Institute of Certified Public Accountants of Hong Kong.

• (b) The secretary of the Company is Ms. POON Yuen Ling. Ms POON is an associate member of The Hong Kong Institute of Company Secretaries and The Institute of Chartered Secretaries and Administrators.

• (c) The registered office of the Company is situated at Room 2703, 27th Floor, Far East Finance Centre, 16 Harcourt Road, Hong Kong.

• (d) The share registrar and transfer office of the Company is Tengis Limited of Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

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

– 18 –