Snack Empire Holdings Limited — Proxy Solicitation & Information Statement 2002

Nov 11, 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

This circular does not constitute an offer or invitation to subscribe for or purchase any securities of Shanghai Century Holdings Limited nor is it calculated to invite any such offer or invitation.

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 Shanghai Century Holdings Limited, you should at once hand this circular and the accompanying form of proxy 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 disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

Shanghai Century Holdings Limited

*

(Incorporated in Bermuda with limited liability)

MAJOR AND CONNECTED TRANSACTION PURCHASE OF INTERESTS IN SHANGHAI ZENDAI LAND AND CONNECTED TRANSACTION ADVANCES BY SHANGHAI ZENDAI LAND TO

(Shanghai New Century Shui Qing Mu Hua Property Development Company Limited)

Financial adviser to Shanghai Century Holdings Limited

Shenyin Wanguo Capital (H.K.) Limited

Independent financial adviser to the Independent Board Committee of Shanghai Century Holdings Limited

Kingsway Capital Limited

A letter from the Independent Board Committee is set out on page 12 of this circular. A letter from Kingsway, the independent financial adviser to the Independent Board Committee, containing its advice to the Independent Board Committee is set out on pages 13 to 22 of this circular.

A notice convening the Special General Meeting of Shanghai Century Holdings Limited to be held at 10:00 a.m. on 26 November, 2002 at 26/F., COSCO Tower, 183 Queen’s Road Central, Hong Kong is set out on pages 103 to 104 of this circular. A form of proxy for use at the Special General Meeting is enclosed. Whether or not you are able to attend and vote at the Special General Meeting, you are requested to complete the enclosed proxy form and return it to the Company’s branch registrar in Hong Kong, Secretaries Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the Special General Meeting. Completion and return of the proxy form will not preclude you from subsequently attending and voting at the Special General Meeting or any adjourned meetings should you so wish.

• For identification purpose only

8 November, 2002

Shanghai Century Holdings Limited

CONTENTS

		Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
The Share Purchase Agreement dated 29 September, 2002 . . . . . . . . . . . . . . . . . . . . . . .		5
Information on Shanghai Zendai Land	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Reasons for the proposed Share Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		8
Implication under Practice Note 19 of the Listing Rules and connected transaction — advances to . . . . . . . . . . . . . . . . . . . . . . . . . . .		9
Major and connected transaction . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
The Independent Board Committee . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
The SGM . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Recommendation . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Additional information . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		12
Letter from Kingsway . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Appendix I — Financial information on the Group . . . . . . . . . . . . . . . . . . . . . . . . . .		23
Appendix II — **Accountants’ report **	on Shanghai Zendai Land . . . . . . . . . . . . . . . . .	67
Appendix III — Financial information on Shanghai Zendai Land . . . . . . . . . . . . . . . .		89
Appendix IV — Property valuation	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	90
Appendix V — General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		97
Notice of Special General Meeting . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	103

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Shanghai Century Holdings Limited

DEFINITIONS

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

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“ ” (Shanghai New Century
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“ ”	(Shanghai New Century
	Shui Qing Mu Hua Property Development Company Limited),
	a sino-foreign equity joint venture and is 25% owned by the
	Company
“Ample Century”	Ample Century Limited, a company incorporated in the
	British Virgin Islands with limited liability and is a wholly-
	owned subsidiary of the Company
“associate(s)”	has the meaning ascribed to it under the Listing Rules
“BMI”	BMI Appraisals Limited, an independent professional valuer
	whose property valuation report is set out in Appendix IV to
	this circular
“Board”	the executive directors of the Company
“Business Day”	a day (other than a Saturday or Sunday) on which banks are
	open for business in Hong Kong
“Company”	Shanghai Century Holdings Limited (formerly known as
	Fourseas.com Limited), a company incorporated in Bermuda,
	the shares of which are currently listed on the Stock Exchange
“Completion”	the completion of the Share Purchase, which shall take place
	within 5 Business Days subject to the fulfillment of all the
	Conditions
“Conditions”	conditions under the Share Purchase Agreement
“Director(s)”	the director(s) of the Company
“Giant Glory”	Giant Glory Assets Limited, a limited company established in
	the British Virgin Islands and is a substantial shareholder of
	the Company holding approximately 36.95% of the entire
	issued share capital of the Company
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Independent Board Committee”	the independent board committee of the Company comprising
	Messrs Lo Mun Lam, Raymond and Hui King Wai, both being
	independent non-executive Directors
“Independent Shareholders”	Shareholders of the Company other than Mr. Dai Zhi Kang,
	Giant Glory and their respective associates as defined in the
	Listing Rules

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Shanghai Century Holdings Limited

DEFINITIONS

“Kingsway”	Kingsway Capital Limited, an investment adviser registered
	under the Securities Ordinance (Chapter 333 of the Laws of
	Hong Kong), appointed as the independent financial adviser
	to the Independent Board Committee
“Latest Practicable Date”	6 November, 2002, being the latest practicable date prior to
	the printing of this circular for the purpose of ascertaining
	certain information for inclusion in this circular
“Listing Committee”	Listing Committee of the Stock Exchange
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Mr. Dai Zhi Feng”	the younger brother of Mr. Dai Zhi Kang, an executive
	Director
“Mr. Huang”	Huang Su Dong, an independent third party not connected
	with any of the directors, chief executives or substantial
	shareholders of the Company or any of its subsidiaries or any
	of their respective associates (as defined in the Listing Rules)
“Mr. Zhu”	Zhu Nan Song, an independent third party not connected with
	any of the directors, chief executives or substantial
	shareholders of the Company or any of its subsidiaries or any
	of their respective associates (as defined in the Listing Rules)
“New Joint Venture Agreements”	new agreements to be entered into between Ample Century
	and Shanghai Zendai Investment in respect of the conversion
	of Shanghai Zendai Land into a sino-foreign equity joint
	venture, including the joint venture agreement and articles of
	association
“PRC”	the People’s Republic of China which, for the purpose of this
	circular, excludes Hong Kong and the Macau Special
	Administrative Regions and Taiwan
“PRC GAAP”	the generally accepted accounting principles in the PRC
“SDI Ordinance”	Securities (Disclosure of Interests) Ordinance (Chapter 396 of
“Shanghai Zendai Investment”	the Laws of Hong Kong) (Shanghai Zendai Investment
	Development Company Limited), a limited liability company
	incorporated in the PRC with limited liability which is
	beneficially owned as to approximately 65.67% by Mr. Dai
	Zhi Kang, an executive Director

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Shanghai Century Holdings Limited

DEFINITIONS

“Shanghai Zendai Investment	(Shanghai Zendai Investment
Management”	Management Company Limited), a limited liability company
	incorporated in the PRC with limited liability which is
	beneficially owned as to approximately 40% by Mr. Dai Zhi
	Kang, an executive Director, approximately 26.7% by
	Mr. Zhu, one of the Vendors, and the remaining 33.3% by an
	independent third party not connected with any of the
	directors, chief executives or substantial shareholders of the
	Company or any of its subsidiaries or any of their respective
“Shanghai Zendai Land”	associates (as defined in the Listing Rules) (Shanghai Zendai Real Estate Company
	Limited), a limited liability company incorporated in the PRC
	with limited liability which is beneficially owned as to 5% by
	Mr. Huang, 30% by Mr. Zhu, 30% by Mr. Dai Zhi Feng and
	the remaining 35% by Shanghai Zendai Investment
“Share(s)”	share(s) of HK$0.02 each in the capital of the Company
“Share Purchase”	the proposed conditional acquisition of a 65% interest in
	Shanghai Zendai Land pursuant to the terms and conditions of
	the Share Purchase Agreement
“Share Purchase Agreement”	a conditional agreement in relation to the Share Purchase
	dated 29 September, 2002 entered into between Ample
	Century and the Vendors in connection with the acquisition of
	a 65% interest in Shanghai Zendai Land by Ample Century
“Shareholders”	holder(s) of the Shares
“Special General Meeting”	a special general meeting of the Company to be convened and
or “SGM”	held on 26 November, 2002 for approving the Share Purchase
	Agreement
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Vendors”	Mr. Huang, Mr. Zhu and Mr. Dai Zhi Feng, being the current
	shareholders of Shanghai Zendai Land
“HK$”	Hong Kong dollars
“RMB”	Renminbi
“%”	per cent.

Translation of Renminbi into Hong Kong dollars is based on the exchange rate of RMB1.00 = HK$0.9346.

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Shanghai Century Holdings Limited

LETTER FROM THE BOARD

**Shanghai Century Holdings Limited ***

(Incorporated in Bermuda with limited liability)

Executive Directors: He Xuechu Dai Zhi Kang Ku Wai Kwan

Registered office: Cedar House 41 Cedar Avenue Hamilton HM12 Bermuda

Independent non-executive Directors:

Lo Mun Lam Raymond Hui King Wai

Principal place of business in Hong Kong:

26/F., COSCO Tower 183 Queen’s Road Central Hong Kong

8 November, 2002

To the Shareholders

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTION PURCHASE OF INTERESTS IN SHANGHAI ZENDAI LAND AND

CONNECTED TRANSACTION ADVANCES BY SHANGHAI ZENDAI LAND TO

(Shanghai New Century Shui Qing Mu Hua Property Development Company Limited)

INTRODUCTION

The Board announced that Ample Century, a wholly-owned subsidiary of the Company, had entered into the Share Purchase Agreement on 29 September, 2002 with the Vendors and Shanghai Zendai Investment pursuant to which Ample Century has conditionally agreed to purchase 65% interest in Shanghai Zendai Land for a total consideration of RMB70,000,000 (equivalent to approximately HK$65,422,000) from the Vendors. The Company intends to finance the Share Purchase by its internal resources. Shanghai Zendai Land is a company incorporated in the PRC principally engaging in property development. The Share Purchase is conditional and is subject to conditions set out under “Conditions of the Share Purchase” below.

• For identification purpose only

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Shanghai Century Holdings Limited

LETTER FROM THE BOARD

The Directors believe that the terms of the Share Purchase Agreement are negotiated on normal commercial terms.

Currently, Mr. Dai Zhi Kang is interested in approximately 65.67% of equity interest in Shanghai Zendai Investment, which in turn is interested in a 35% equity interest in Shanghai Zendai Land. Mr. Dai Zhi Kang is a Director and holds a 36% interest in the entire issued share capital of Giant Glory. Giant Glory is the controlling shareholder of the Company and is holding approximately 36.95% interest in the entire issued share capital of the Company. In addition, Mr. Dai Zhi Feng, one of the Vendors, who holds a 30% equity interest in Shanghai Zendai Land, is the younger brother of Mr. Dai Zhi Kang. Accordingly, the Share Purchase constitutes a connected transaction for the Company under the Listing Rules and is subject to the approval of Independent Shareholders at the SGM. In view of Mr. Dai Zhi Kang’s relationship with Shanghai Zendai Land and Mr. Dai Zhi Feng, Mr. Dai Zhi Kang, Giant Glory and their respective associates will abstain from voting in respect of the ordinary resolution to be proposed at the SGM to approve the Share Purchase Agreement.

In addition, the advances of approximately RMB58,339,000 (equivalent to approximately HK$54,524,000) made by Shanghai Zendai Land to will also constitute a connected transaction for the Company upon Completion. As this connected transaction is incidental to the Completion, the approval from the Independent Shareholders will be sought in the SGM together with the ordinary resolution to be proposed to approve the Share Purchase Agreement and the transactions contemplated therein (including the advances to ).

Since the results from both of the consideration test and the asset test under the Listing Rules exceed 50% and below 100%, the Share Purchase also constitutes a major transaction of the Company.

The Independent Board Committee has been set up to advise the Independent Shareholders on the terms of the Share Purchase Agreement and the transactions contemplated therein (including the advances to ). Kingsway has been appointed as the independent financial adviser to advise the Independent Board Committee. The recommendation of the Independent Board Committee and the advice of Kingsway are also included in this circular. The purpose of this circular is to give you further information on the proposed Share Purchase and the transactions contemplated therein (including the advances to ), to set out the advice of Kingsway to the Independent Board Committee and the recommendation of the Independent Board Committee in respect of the proposed Share Purchase and the transactions contemplated therein (including the advances to ) as well as to give you notice of the SGM at which the ordinary resolution will be proposed to approve the proposed Share Purchase and the transactions contemplated therein (including the advances to ).

THE SHARE PURCHASE AGREEMENT DATED 29 SEPTEMBER, 2002

1. Parties

2. a. Ample Century;

3. b. the Vendors; and

4. c. Shanghai Zendai Investment.

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Shanghai Century Holdings Limited

LETTER FROM THE BOARD

2. Particulars of the Share Purchase Agreement

Pursuant to the Share Purchase Agreement, the Vendors have agreed to sell and Ample Century has agreed to purchase 65% of the registered capital of Shanghai Zendai Land for a total consideration of RMB70,000,000 (equivalent to approximately HK$65,422,000). The consideration was arrived after arms’ length negotiation with reference to Shanghai Zendai Land’s paid-up registered capital and unaudited net asset value as at 31 August, 2002 as per Shanghai Zendai Land’s management accounts. The Directors consider that the terms of the Share Purchase are on normal commercial terms.

Shanghai Zendai Land will be converted from a PRC domestic company into a sino-foreign equity joint venture with registered capital of RMB100,000,000 (equivalent to approximately HK$93,460,000) and total investment of RMB150,000,000 (equivalent to approximately HK$140,190,000).

Pursuant to the Share Purchase Agreement, Shanghai Zendai Investment has agreed that any funding in excess of the registered share capital of Shanghai Zendai Land should be satisfied by obtaining additional financing from banks and financial institutions by Shanghai Zendai Land itself. Failing which, Shanghai Zendai Investment will procure additional financing to Shanghai Zendai Land and has undertaken that Ample Century will not be required to provide any additional financing to Shanghai Zendai Land in excess of its required contribution to the registered capital of Shanghai Zendai Land under the Share Purchase Agreement. As such, save for the total consideration of RMB70,000,000 (equivalent to approximately HK$65,422,000), the Company has no other commitment and financial exposure pursuant to the Share Purchase Agreement.

3. Source of Funding of the Share Purchase

The Share Purchase will be funded by the Company’s internal resources. The Company does not intend to fund the Share Purchase by bank loans or other financing.

4. Conditions of the Share Purchase

The Share Purchase is conditional upon, among other things, the following occurring on or before 31 January, 2003 or such other date as the parties to the Share Purchase Agreement may otherwise agree:

• (a) the passing by the Independent Shareholders of an ordinary resolution at the SGM to approve the Share Purchase Agreement and the transactions as contemplated therein;

• (b) the due execution of the New Joint Venture Agreements by Ample Century and Shanghai Zendai Investment;

• (c) Ample Century has conducted due diligence (including but not limited to relevant legal, financial and business aspects) on Shanghai Zendai Land and its subsidiaries and the results of which are satisfactory and acceptable to Ample Century in all respects;

• (d) the permissions and approvals in respect of the Share Purchase and the New Joint Venture Agreement having been obtained from the relevant PRC governmental authorities, including but not limited to the new business license for Shanghai Zendai Land;

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Shanghai Century Holdings Limited

LETTER FROM THE BOARD

• (e) the obtaining of all necessary consents and approvals from all relevant regulatory authorities in the PRC with regard to all the transactions contemplated in the Share Purchase Agreement; and

• (f) the obtaining of a legal opinion by Ample Century issued by licensed PRC legal advisers on PRC securities laws, confirming:

• (i) the legality and effect of the Share Purchase Agreement upon signing;

• (ii) the completion of all necessary procedures and obtaining of all necessary approvals regarding Shanghai Zendai Land’s conversion into a sino-foreign equity joint venture;

• (iii) no change in the permitted scope of business of Shanghai Zendai Land after its conversion into a sino-foreign equity joint venture;

• (iv) the appointment of legal representative(s) and director(s) to the board of directors of Shanghai Zendai Land nominated by Ample Century become effective;

• (v) the legality of the businesses in respect of the real estate property carried on by Shanghai Zendai Land; and

• (vi) all other matters reasonably requested by Ample Century.

5. Completion of the Share Purchase

Completion of the Share Purchase will take place 5 Business Days after the satisfaction of all the Conditions or the waiver from Ample Century on the Conditions. If the Conditions are not satisfied before the deadline set out above, the Share Purchase Agreement will lapse and all the obligations and liabilities of the parties to the Share Purchase Agreement will cease and terminate. Upon Completion, Ample Century will appoint directors to replace the majority of members of the board of directors of Shanghai Zendai Land.

INFORMATION ON SHANGHAI ZENDAI LAND

Shanghai Zendai Land is a company incorporated in the PRC with limited liability on 31 August, 1999 with fully paid up registered capital of RMB100,000,000 (equivalent to approximately HK$93,460,000). Shanghai Zendai Land is principally engaged in property development and has been developing a residential property project named “ ”.

involves the development of three contangious parcels of land located in Northern Pudong District, Shanghai, the PRC. The total site area is approximately 480,000 square metres. According to the business development plan, will be a large-scale residential real estate development divided into four phases with a total gross floor area of approximately 580,000 square metres to be constructed upon completion. Apartments and condominiums will be developed to target the middle to high end market. Phase one and phase two of the development plan commenced in October 2000 and is expected to complete by the end of year 2002. The entire project is expected to be completed in year 2006.

According to the management of Shanghai Zendai Land, total investment of phase one and phase two of is estimated to be approximately RMB450,000,000 to RMB550,000,000 (equivalent to approximately HK$420,570,000 to HK$514,030,000) which is expected to be funded by the registered capital of Shanghai Zendai Land, sale proceeds from the pre-sale units of and external financing to be arranged by Shanghai Zendai Land.

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Shanghai Century Holdings Limited

LETTER FROM THE BOARD

According to the accountants’ report of Shanghai Zendai Land as set out in Appendix II to this circular, the audited net assets of Shanghai Zendai Land for the two years ended 31 December, 2001 and the eight months ended 31 August, 2002 under HK GAAP were approximately RMB45,307,000 (equivalent to approximately HK$42,344,000), approximately RMB92,694,000 (equivalent to approximately HK$86,632,000) and approximately RMB81,558,000 (equivalent to approximately HK$76,224,000) respectively. Shanghai Zendai Land recorded audited net losses of approximately RMB4,327,000 (equivalent to approximately HK$4,044,000), approximately RMB2,613,000 (equivalent to approximately HK$2,442,000) and approximately RMB11,136,000 (equivalent to approximately HK$10,408,000) respectively for the two years ended 31 December, 2001 and the eight months ended 31 August, 2002 under HK GAAP. The pro forma unaudited adjusted net tangible assets of Shanghai Zendai Land, adjusted for the property revaluation according to the property valutaion report as set out in Appendix III to this circular, is approximately RMB117,624,000 (equivalent to approximately HK$109,931,000). Detail of which are also set out in Appendix II and Appendix III to this circular.

Under the Share Purchase Agreement, Shanghai Zendai Land will be converted from a PRC company with limited liability into a sino-foreign equity joint venture. The profit and loss of Shanghai Zendai Land will be shared among its shareholders in accordance with their respective equity interests in the registered capital.

REASONS FOR THE PROPOSED SHARE PURCHASE

The Group is principally engaged in travel related business and is also engaged in property related business.

Since 2002, the Group has been actively adjusting its business portfolio in order to improve its future prospects after the restructuring in 2001. In March 2002, the Group acquired a 25% interest in the registered capital of . is principally engaged in property management services and is developing a residential property named “ ” in Shanghai, the PRC.

In May 2002, the Company has successfully raised approximately HK$110 million through a private placement of 350 million new Shares. As such, the Group has improved its financial position significantly and will be able to take advantage of potential investment projects that could improve the Group’s future prospects.

In August 2002, the Group entered into a joint venture agreement to establish (Shanghai Binhai Golf and Tourist Resort Company Limited) (“Shanghai Binhai”). Shanghai Binhai will be principally engaged in travel related business in the PRC, including golf and tourist resort management and operation and is owned as to 91% by the Group and 9% by . The registered capital of Shanghai Binhai shall be RMB20,000,000 (equivalent to approximately HK$18,692,000) and the total investment of Shanghai Binhai shall be RMB40,000,000 (equivalent to approximately HK$37,384,000).

Since the executive Directors have extensive experiences in the investments in and development of property projects in the PRC, the Group intends to further expand its property related projects in the PRC property market.

With a view to further develop the Company’s property business in the PRC, the Directors envisage that the Share Purchase will enhance the Group’s presence and complement the Group’s property related business in Shanghai, the PRC, one of the fastest growing financial centers in Asia.

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Shanghai Century Holdings Limited

LETTER FROM THE BOARD

Upon Completion, Shanghai Zendai Land will become a 65% owned subsidiary of the Company and its financial results will be consolidated into the Group’s consolidated financial statements and the Directors confirm that the Company has no present intention to acquire the remaining 35% interest in Shanghai Zendai Land.

The Directors believe that investment in Shanghai Zendai Land provides the Group with an excellent opportunity to capitalise on the robust property market in Shanghai, one of the fastest growing financial centers in Asia. In addition, pre-sale of phase one of has almost been completed and the proceeds will be recognized as Shanghai Zendai Land’s income after the completion of the sales contracts. The Directors consider that the Share Purchase will improve the Group’s financial performance and broaden its earnings bases.

As set out in Appendix I to this Circular, the unaudited pro forma adjusted consolidated net tangible assets of the enlarged Group will increase to approximately HK$129,137,000 as a result of Completion, representing an increase of approximately 4.9% from the Group’s unaudited consolidated net tangible assets as at 30 June, 2002. The Share Purchase will improve the Group’s financial performance and broaden its earning bases.

As at the Latest Practicable Date, other than the interest in the registered capital of , the Company does not have any other property investment in the PRC. is principally engaged in property development and investment and property management services and is currently developing a deluxe residential properties project named in Pudong District, Shanghai.

The Directors consider that the terms of the Share Purchase Agreement are fair and reasonable and are in the interests of the Group and the shareholder of the Company as a whole.

IMPLICATION UNDER PRACTICE NOTE 19 OF THE LISTING RULES AND CONNECTED TRANSACTION — ADVANCES TO

As disclosed in the accountants’ report of Shanghai Zendai Land set out in Appendix II to this circular, Shanghai Zendai Land had made advances of an aggregate amount of approximately RMB58,339,000 (equivalant to approximately HK$54,524,000) to , an associate of Mr. Dai Zhi Chang, the elder brother of Mr. Dai Zhi Kang, since November 2001. The advances being short-term financing to are unsecured, non-interest bearing and have no fixed terms of repayment. As at the Latest Practicable Date, the registered capital of is beneficially owned as to 18.75% by Shanghai Zendai Investment, 56.25% by Mr. Dai Zhi Chang, the elder brother of Mr. Dai Zhi Kang and the remaining 25% by Best East Developments Limited, a wholly owned subsidiary of the Company.

Following the Completion, Shanghai Zendai Land will become a subsidiary of the Company and the aggregate advances made by Shanghai Zendai Land to will therefore represent approximately 263% of the Group’s audited consolidated net assets value of approximately HK$20.76 million as at 31 December, 2001. The advances also represent approximately 42% of the Group’s unaudited pro forma adjusted consolidated net tangible asset value as shown in the section headed “Financial information on the Group” in Appendix I to the circular. As such, the Company will be subject to the disclosure obligation under Practice Note 19 of the Listing Rules regarding such advances and an announcement will be made to set out further details as required under the Listing Rules immediately upon the despatch of this document.

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Shanghai Century Holdings Limited

LETTER FROM THE BOARD

However, has undertaken to the Group for the repayment of the aforesaid advances within two months after the Completion. In addition, Shanghai Zendai Investment Management has guaranteed the repayment of the aforesaid advances to Shanghai Zendai Land in case of failing to repay the advances within the time specified. According to the PRC audited accounts of Shanghai Zendai Investment Management, its audited net tangible assets of as at 31 December, 2001 amounted to approximately RMB206.7 million (equivalent to approximately HK$193.2 million). As per Shanghai Zendai Investment Management’s management accounts, its unaudited net tangible assets as at 30 September, 2002 amounted to approximately RMB302.2 million (equivalent to approximately HK$282.4 million). Given the strong financial position of Shanghai Zendai Investment Management, the Directors are of the view that Shanghai Zendai Investment Management would be able to honour its guarantee should fail to repay the advances within the time specified.

As mentioned above, Shanghai Zendai Land would become a subsidiary of the Company following the Completion and the making of such advances by Shanghai Zendai Land to , an associate of a connected person of the Company, would constitute a connected transaction for the Company under Rule 14.26 of the Listing Rules. Compliance with the relevant connected transaction requirements under the Listing Rules, including obtaining the approval of the Independent Shareholders in general meeting under the Listing Rules, is also required. As this connected transaction is incidental to the Completion, the approval from Independent Shareholders will be sought in the SGM together with the ordinary resolution to be proposed to approve the Share Purchase Agreement and the transactions contemplated therein (including the advances to ).

MAJOR AND CONNECTED TRANSACTION

Currently, Mr. Dai Zhi Kang is interested in approximately 65.67% of equity interests in Shanghai Zendai Investment, which in turn interested in a 35% equity interest in Shanghai Zendai Land. Mr. Dai Zhi Kang is a Director and holds a 36% interest in the entire issued share capital of Giant Glory. Giant Glory is the controlling shareholder of the Company and is holding approximately 36.95% interest in the entire issued share capital of the Company. In addition, Mr. Dai Zhi Feng, one of the Vendors, who holds a 30% equity interest in Shanghai Zendai Land, is the younger brother of Mr. Dai Zhi Kang. Accordingly, the Share Purchase constitutes a connected transaction for the Company under the Listing Rules and is subject to the approval of Independent Shareholders at the SGM. In view of Mr. Dai Zhi Kang’s relationship with Shanghai Zendai Land and Mr. Dai Zhi Feng, Mr. Dai Zhi Kang, Giant Glory and their respective associates will abstain from voting at the SGM in respect of the ordinary resolution proposed to approve the Share Purchase Agreement.

Since the results from both of the consideration test and the asset test under the Listing Rules exceed 50% and below 100%, the Share Purchase also constitutes a major transaction of the Company.

THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee, comprising Messrs Lo Mun Lam, Raymond and Hui King Wai, both being the independent non-executive Directors, has been formed for the purpose of advising the Independent Shareholders on the terms of the Share Purchase Agreement and the transactions contemplated therein (including the advances to ). Kingsway has been appointed as independent financial adviser to advise the Independent Board Committee on the same.

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Shanghai Century Holdings Limited

LETTER FROM THE BOARD

THE SGM

A notice convening the SGM at which the ordinary resolution will be proposed to approve the Share Purchase Agreement and the transactions contemplated therein (including the advances to ) is set out on pages 103 to 104 of this circular.

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you intend to attend the SGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as practicable and in any event by not later than 48 hours before the time appointed for holding such meeting or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the SGM should you so wish.

RECOMMENDATION

Your attention is drawn to (i) the letter from the Independent Board Committee containing its recommendation to the Independent Shareholders in respect of the proposed Share Purchase and the transactions contemplated therein (including the advances to ) as set out on page 12 of this circular; and (ii) the letter from Kingsway containing its advice to the Independent Board Committee in respect of the terms of the proposed Share Purchase and the transactions contemplated therein (including the advances to ) as well as the principal factors and reasons taken into account in arriving at its advice as set out on pages 13 to 22 of this circular.

The Independent Board Committee has considered the terms of the proposed Share Purchase and the transactions contemplated therein (including the advances to ) as well as the advice given by Kingsway and is of the opinion that the proposed Share Purchase and the transactions contemplated therein (including the advances to ) are in the interests of the Company and the Shareholders as a whole and that the terms of the Share Purchase Agreement and the transactions contemplated therein (including the advances to ), as a whole, are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, the Directors and the Independent Board Committee recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM in respect of the Share Purchase Agreement and the transactions contemplated therein (including the advances to ).

ADDITIONAL INFORMATION

Your attention is also drawn to the respective recommendation and advice given by the Independent Board Committee and Kingsway as well as the additional information set out in the appendices to this circular.

Yours faithfully, By Order of the Board Dai Zhi Kang Executive Director

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Shanghai Century Holdings Limited

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

**Shanghai Century Holdings Limited ***

(Incorporated in Bermuda with limited liability)

26/F., COSCO Tower 183 Queen’s Road Central Hong Kong 8 November, 2002

To the Independent Shareholders

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTION PURCHASE OF INTERESTS IN SHANGHAI ZENDAI LAND AND

CONNECTED TRANSACTION ADVANCES BY SHANGHAI ZENDAI LAND TO

(Shanghai New Century Shui Qing Mu Hua Property Development Company Limited)

We refer to the circular dated 8 November, 2002 (the “Circular”) issued by the Company of which this letter forms part. Terms used herein shall have the same meanings as defined in the Circular unless the context otherwise requires.

We have been appointed by the Board to be the members of the Independent Board Committee for the purpose of considering the terms of the Share Purchase Agreement and the advances to and the transactions contemplated therein, details of which are set out in the text of the letter from the Board as set out on pages 4 to 11 of the Circular.

We wish to draw your attention to the letter from Kingsway as set out on pages 13 to 22 of the Circular which contains, inter alia, its advice to us as regards the terms of the Share Purchase Agreement and the transactions contemplated therein (including the advances to ) together with the principal factors and reasons for its advice.

Having taken into account the advice of Kingsway, we consider that the proposed Share Purchase and the transactions contemplated therein (including the advances to ) are in interests of the Company and the Shareholders as a whole and that the terms of the Share Purchase Agreement and the transactions contemplated therein (including the advances to ), as a whole, are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution approving the proposed Share Purchase and the transactions contemplated therein (including the advances to ) at the SGM.

Yours faithfully, For and on behalf of

* For identification purpose only

The Independent Board Committee Lo Mun Lam Raymond Hui King Wai Independent Non-executive Directors

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Shanghai Century Holdings Limited

LETTER FROM KINGSWAY

Kingsway Group

5/F., Hutchison House, 10 Harcourt Road, Central, Hong Kong. Tel. No.: (852) 2877-1830 Fax No.: (852) 2868-3570

==> picture [56 x 55] intentionally omitted <==

8 November, 2002

To the Independent Board Committee

Dear Sirs,

MAJOR AND CONNECTED TRANSACTION PURCHASE OF INTERESTS IN SHANGHAI ZENDAI LAND AND

CONNECTED TRANSACTION ADVANCES BY SHANGHAI ZENDAI LAND TO

(Shanghai New Century Shui Qing Mu Hua Property Development Company Limited)

We have been appointed as the independent financial adviser to advise the Independent Board Committee in relation to the terms of the proposed Share Purchase, details of which are contained in the circular dated 8 November, 2002 (the “Circular”) to the Shareholders, of which this letter forms a part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

Pursuant to the Listing Rules, the Share Purchase Agreement constitutes a major and connected transaction for the Company and is subject to the approval of the Independent Shareholders at the SGM. In addition, the advances of approximately RMB58,339,000 (equivalent to approximately HK$54,524,000) made by Shanghai Zendai Land to will constitute a connected transaction of the Company upon completion of the Share Purchase and approval from the Independent Shareholders will be sought in the SGM, together with the ordinary resolution to be proposed to approve the Share Purchase Agreement and the transaction contemplated therein. In view of Mr. Dai Zhi Kang’s relationship with Shanghai Zendai Land and Mr. Dai Zhi Feng, Mr. Dai Zhi Kang and his associates will abstain from voting on the ordinary resolution proposed to approve the Share Purchase Agreement at the SGM. Accordingly, Giant Glory, which is owned as to 36% by Mr. Dai Zhi Kang, and its associates, will abstain from voting at the SGM.

In formulating our opinion and recommendation, we have assumed that all information and representations made or referred to in the Circular, or otherwise supplied to us by the Company, were true, accurate and complete in all respects at the time they were made and continue to be true, accurate and complete as at the date of the Circular. Accordingly, we have relied on them. We have also assumed that all statements of belief, opinion and intention made by the Directors in the Circular were reasonably made after due and careful enquiry. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us. The Directors have confirmed, 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 in the Circular misleading.

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Shanghai Century Holdings Limited

LETTER FROM KINGSWAY

We consider that we have been provided with sufficient information to reach an informed view and to justify our reliance on the accuracy of the information and representations contained in the Circular and to provide a reasonable basis for our recommendation. We have no reason to suspect that any relevant information has been withheld by the Company. We have not, however, carried out any independent verification of the information, nor have we conducted any form of investigation into the business, financial standing or affairs of Shanghai Zendai Investment, Shanghai Zendai Investment Management, the Vendors, Shanghai Zendai Land, and the Group. Furthermore, we have not conducted any form of investigation regarding the commercial viability of the business of Shanghai Zendai Land.

SUMMARY OF THE SHARE PURCHASE

Share Purchase Agreement

On 29 September, 2002, Ample Century entered into the Share Purchase Agreement with the Vendors and the Shanghai Zendai Investment pursuant to which Ample Century has conditionally agreed to purchase 65% of the registered capital of Shanghai Zendai Land for a total consideration of RMB70,000,000 (equivalent to approximately HK$65,422,000).

Upon Completion, Ample Century and Shanghai Zendai Investment will be respectively interested in 65% and 35% of the entire registered capital of Shanghai Zendai Land. Under the Share Purchase Agreement, a reorganisation of Shanghai Zendai Land will take place in which Shanghai Zendai Land will be converted from a PRC domestic company with limited liability into a sino-foreign equity joint venture with registered capital of RMB100,000,000 (equivalent to approximately HK$93,460,000) and total investment of RMB150,000,000 (equivalent to approximately HK$140,190,000).

The Directors confirm that the terms of the Share Purchase Agreement were negotiated on normal commercial terms.

Conditions of the Share Purchase

The Share Purchase is conditional upon, among other things, the following occurring on or before 31 January, 2003 or such other date as the parties to the Share Purchase Agreement may otherwise agree:

• (a) the passing by the Independent Shareholders of an ordinary resolution at the SGM to approve the Share Purchase Agreement and the transactions as contemplated therein;

• (b) the due execution of the New Joint Venture Agreements by Ample Century and Shanghai Zendai Land;

• (c) Ample Century has conducted due diligence (including but not limited to relevant legal, financial and business aspects) against Shanghai Zendai Land and its subsidiaries and the results of which are satisfactory and acceptable to Ample Century in all respects;

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Shanghai Century Holdings Limited

LETTER FROM KINGSWAY

• (d) the permissions and approvals in respect of the Share Purchase and the New Joint Venture Agreements having been obtained from the relevant PRC governmental authorities, including but not limited to the new business licence for Shanghai Zendai Land;

• (e) the obtaining of all necessary consents and approvals from all relevant regulatory authorities in the PRC with regard to all the transactions contemplated in the Share Purchase Agreement; and

• (f) the obtaining of a legal opinion by Ample Century issued by licenced PRC legal advisers on PRC securities laws, confirming:

• (i) the legality and effect of the Share Purchase Agreement upon signing;

• (ii) the completion of all necessary procedures and obtaining of all necessary approvals regarding Shanghai Zendai Land’s conversion into a sino-foreign equity joint venture;

• (iii) no change in the permitted scope of business of Shanghai Zendai Land after its conversion into a sino-foreign equity joint venture;

• (iv) the appointment of legal representative(s) and director(s) to the board of directors of Shanghai Zendai Land nominated by Ample Century become effective;

• (v) the legality of the businesses in respect of the real estate property and other transactions carried on by Shanghai Zendai Land;

• (vi) all other matters reasonably requested by Ample Century.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our recommendation and arriving at our opinion to the Independent Board Committee in respect of the terms of the Share Purchase, we have taken into consideration the following principal factors and reasons:

1. Shanghai Zendai Land

Principal business

Shanghai Zendai Land is a company incorporated in the PRC with limited liability on 31 August, 1999 with fully paid up registered capital of RMB100,000,000 (equivalent to approximately HK$93,460,000) as at the Latest Practicable Date. Shanghai Zendai Land is principally engaged in property development and has been developing a residential property project named “ ” in Shanghai.

“ ”

According to its business development plan, involves the development of three contiguous parcels of land located in Northern Pudong District, Shanghai, the PRC with total site area of approximately 480,000 square metres. will be developed into a large-scale residential real

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Shanghai Century Holdings Limited

LETTER FROM KINGSWAY

estate development with a total gross floor area of approximately 580,000 square metres. Divided into four phases, will comprise apartments and condominiums and target the middle to high end market. The development of phase one and phase two of commenced in October 2000 and is expected to be completed by the end of year 2002. The entire project is expected to be completed in 2006.

As at 30 September, 2002, being the date of valuation of the land and property of as set out in Appendix IV to the Circular, phase one and phase two of was about 95% and 75% completed respectively. According to the Directors, phase one of comprises 800 residential units and 14 commercial units. For the year ended 31 December, 2001, 54 residential units in phase one were sold. The remaining 746 residential units and 14 commercial units were under final decoration. As at 31 August, 2002, 684 residential units and 12 commercial units in phase one of were pre-sold.

As stated in the “Letter from the Board” to the Circular, total investment of phase one and phase two of is estimated to be approximately RMB450 million to RMB550 million (equivalent to approximately HK$421 million to HK$514 million). The total investment is expected to be funded by the registered capital of Shanghai Zendai Land, sale proceeds from the pre-sale units of and external financing to be arranged by Shanghai Zendai Land. Save for the total consideration of RMB70,000,000 (equivalent to HK$65,422,000) under the Share Purchase Agreement, Ample Century does not have any commitment to provide additional funding or financing to Shanghai Zendai Land.

Financial information and property valuation

According to the accountants’ report of Shanghai Zendai Land as set out in Appendix II to the Circular, the audited net asset value of Shanghai Zendai Land as at 31 August, 2002 under HK GAAP was approximately RMB81,558,000 (equivalent to approximately HK$76,224,000). Shanghai Zendai Land recorded audited net losses of approximately RMB4,327,000 (equivalent to approximately HK$4,044,000), RMB2,613,000 (equivalent to approximately HK$2,442,000) and RMB11,136,000 (equivalent to approximately HK$10,408,000) for each of the two years ended 31 December, 2001 and the eight months ended 31 August, 2002 under the HK GAAP. During the year ended 31 December, 2001, Shanghai Zendai Land recorded turnover of approximately RMB35,733,000 (equivalent to approximately HK$33,396,000) under the HK GAAP and was mainly attributable to the sale of 54 residential units in phase one of . Shanghai Zendai Land did not record any turnover for the eight months ending 31 August, 2002 under the HK GAAP. As at 31 August, 2002, Shanghai Zendai Land had receipt in advance of approximately RMB367,473,000 (equivalent to approximately HK$343,440,000), representing amount received from pre-sale of 684 residential units and 12 commercial units in phase one of during the period from October 2000 to August 2002. Such receipt in advance will be recognized as Shanghai Zendai Land’s income after the completion of the relevant sales contracts and transfer of the title of properties to the purchasers.

According to the property valuation report as set out in Appendix IV to the Circular, the land and property of was valued at approximately RMB400,000,000 (equivalent to approximately HK$373,840,000) as at 30 September, 2002, representing approximately 111.9% of the audited book value of the land and property of held for/under development for sale at RMB357,569,000 (equivalent to approximately HK$334,184,000) as at 31 August, 2002. Such valuation was carried out by BMI based on an open market value basis by the Direct Comparison Approach, which involves

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Shanghai Century Holdings Limited

LETTER FROM KINGSWAY

making reference to comparable transactions in the locality and have taken into account the construction cost and professional fees already spent and the remainder to be expended to complete the development of . The pro forma unaudited adjusted net tangible assets of Shanghai Zendai Land (after the adjustment of a net surplus on property revaluation (after taxation) of RMB36,066,000 (equivalent to approximately HK$33,707,000) amounted to approximately RMB117,624,000 (equivalent to approximately HK$109,931,000) as set out in Appendix III to the Circular, representing approximately 117.62 % of the registered capital of Shanghai Zendai Land.

Shareholding structure and profit distribution

At present, the Vendors and Shanghai Zendai Investment are respectively interested in 65% and 35% of the entire registered capital of Shanghai Zendai Land. Upon Completion, Ample Century and Shanghai Zendai Investment will be respectively interested in 65% and 35% of the entire registered capital of Shanghai Zendai Land.

As confirmed by the Directors, the profit and loss of Shanghai Zendai Land will be shared among its shareholders in accordance with their respective equity interests in the registered capital, which we consider as fair and reasonable.

Composition of the board of directors

Upon Completion, Ample Century will be entitled to appoint directors to replace the majority of members of the board of directors of Shanghai Zendai Land. As Ample Century will have majority to the board of directors of Shanghai Zendai Land, the Group would be able to assume control and participate in the management of Shanghai Zendai Land which is in the interests of the Company and its Shareholders.

2. Consideration

The total consideration of the Share Purchase is RMB70,000,000 (equivalent to approximately HK$65,422,000). Such consideration values the 100% interest of Shanghai Zendai Land at approximately RMB107,692,000 (equivalent to approximately HK$100,649,000), representing a discount of approximately 8.4% to the pro forma unaudited adjusted net tangible assets of Shanghai Zendai Land as at 31 August, 2002 of approximately RMB117,624,000 (equivalent to approximately HK$109,931,000) as set out in Appendix III to the Circular. In view of the foregoing, we are of the opinion that the consideration payable by the Company for the purchase of the 65% interest in Shanghai Zendai Land is fair and reasonable.

3. Source of Funding of the Share Purchase

As stated in the Circular, the Share Purchase will be funded from the Company’s internal resources.

In May 2002, the Company effected a private placement of 350,000,000 new Shares and raised approximately HK$110 million for working capital and funding potential investment projects.

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Shanghai Century Holdings Limited

LETTER FROM KINGSWAY

According to the Group’s unaudited consolidated balance sheet as at 30 June, 2002 set out in Appendix I to the Circular, the the Group had bank balances and cash of approximately HK$132 million. As advised by the Directors, the Group currently has approximately HK$96.3 million cash on hand as at 30 September, 2002 and had outstanding bank overdraft of approximately HK$56,000 as at 30 June, 2002.

The Directors have confirmed that the Company has sufficient financial resources to effect the Share Purchase.

4. Future capital commitments for Shanghai Zendai Land

Pursuant to the Share Purchase Agreement, Shanghai Zendai Land has agreed that any funding requirement in excess of the registered capital of Shanghai Zendai Land should be satisfied by obtaining additional financing from banks and financial institutions by Shanghai Zendai Land itself. Failing which, Shanghai Zendai Investment will procure additional financing to Shanghai Zendai Land and have undertaken that Ample Century will not be required to provide any financing to Shanghai Zendai Land in excess of its required contribution to the registered capital of Shanghai Zendai Land under the Share Purchase Agreement. The Directors confirmed that save for the contribution of RMB70,000,000 (equivalent to approximately HK$65,422,000) to the registered capital of Shanghai Zendai Land, Ample Century does not have any obligations to provide further financing to Shanghai Zendai Land.

In view of the fact that Ample Century does not have any obligations to provide further financing to Shanghai Zendai Land, we are of the opinion that the Share Purchase provides the Company and its Shareholders with a good opportunity to invest in the property market in the PRC with a capped capital commitment.

5. Reasons for and benefits for the proposed Share Purchase

Recent developments of the Group

On 25 March, 2002, the Company acquired 25% interest of , a company incorporated in the PRC with fully paid up registered capital of RMB60,000,000 (equivalent to approximately HK$56,076,000), and is principally engaged in property development and property management services and is solely developing a residential property named “ ”. Following the acquisition of the 25% equity of , the Group intends to expand its property related projects in the PRC property market. Mr. He Xuechu, Mr. Dai Zhi Kang and Mr. Ku Wai Kwan, the directors of the Company, have extensive experiences in the investments in and development of property projects in the PRC. Leveraging on the extensive experience of the Group’s management, the Directors believe that investment in Shanghai Zendai Land provides the Group with an excellent opportunity to capitalise on the robust property market in Shanghai, one of the fastest growing financial centers in Asia. In addition, given the prime location of , the Directors consider that the Share Purchase will enable the Group to enjoy the potential benefits through equity participations in Shanghai Zendai Land in the development of .

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Shanghai Century Holdings Limited

LETTER FROM KINGSWAY

Currently, the Group is principally engaged in travel related business and is also engaged in property related business. The Directors are of the opinion that the Group’s investment and participation of the development of is in line with its business activity. The Directors also confirmed that save for the Share Purchase, the Company has no present intention to acquire the remaining 35% interest in Shanghai Zendai Land.

Taking the above into consideration, we concur with the view of the Directors that the proposed Share Purchase is in line with the Group’s development strategies and objectives.

6. Information on Pudong New District and Shanghai

General economic development

According to the statistics bureau of the Pudong New District, the Pudong New District (“Pudong”) reported an economic growth of 16.1% in 2001, which was 5.9% higher than the growth rate of Shanghai as a whole. In addition, the year 2001 is the 10th consecutive year in which Pudong has reported a growth rate of above 16%.

Pudong’s gross domestic product (“GDP”) reached a high of RMB108.2 billion in 2001, amounting to 21.9% of the GDP of Shanghai. Pudong also recorded fixed asset investment worth RMB42 billion in 2001, and 2 billion U.S. dollars worth of contracted overseas investment. Since the establishment of Pudong, the district has introduced more than 7,000 foreign investment projects from nearly 70 countries and regions, with total investment reaching 40 billion U.S. dollars.

Residential properties market of Shanghai

Local and international investors were active in the Shanghai residential markets. Statistics showed that in the first half of 2002, Shanghai’s residential markets continued the upward trend that began in 2000. It is expected that the Shanghai’s residential market will continue to grow for the next few years as a result of the expected economic growth of Shanghai. A number of local developers starting to extend their presence into downtown of Shanghai and to develop into the high quality residential properties market and a significant number of large-scale residential developments in Shanghai being developed by overseas developers recently also suggested that the market is optimistic about the future growth.

In view of the above, we concur with the Directors’ view that the proposed Share Purchase provides an opportunity for the Group to capitalise on the robust property market in Shanghai.

7. Financial effects of the Share Purchase

Upon completion of the Share Purchase, the Group will become a major shareholder of Shanghai Zendai Land and will assume control in its management. Accordingly, the financial result of Shanghai Zendai Land will be consolidated in the Group’s consolidated financial statements upon Completion. The Directors believe that the Share Purchase will improve the Group’s financial performance and broaden its earning bases.

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Shanghai Century Holdings Limited

LETTER FROM KINGSWAY

(i) Earnings

As confirmed by the Directors, any gain or loss arising from the completion of the Share Purchase is not expected to have any immediate material impact on the consolidated profit or loss account of the Company.

As at 31 August, 2002, the pre-sale of 684 residential units and 12 commercial units in phase one during the period from October 2000 to August 2002 recorded RMB367,473,000 (equivalent to approximately HK$343,440,000) receipt in advance in Shanghai Zendai Land. These amounts will be recognized as the Group’s income after acquisition. The Directors currently cannot determine the total actual amount of sales income that will be recognized in the income statement for the financial year ended 31 December, 2002 as the actual amount of sales income have to be determined by the completion of sales contracts and transfer of the title of properties to purchasers. We consider the increase in sales income is in the interests of the Company and its Shareholders.

(ii) Net Tangible Assets

As set out in Appendix I to the Circular, the unaudited pro forma consolidated net tangible assets of the enlarged Group will increase to approximately HK$129 million as a result of completion of the Share Purchase, representing an increase of approximately 4.9% from the Group’s unaudited consolidated net tangible assets as at 30 June, 2002. We consider such increase in net tangible asset of the Group is in the interests of the Company and its Shareholders.

(iii) Gearing ratio and current ratio

As at 30 June, 2002, the total asset of the Group was approximately HK$207.5 million and the total liabilities of the Group amounted to approximately HK$89 million. On such basis, the Group’s gearing ratio would be approximately 43% (being the amount of total liabilities divided by the total asset). According to the Directors, the pro forma gearing ratio would have increased to approximately 78% (being the amount of unaudited pro forma total liabilities divided by the Group’s unaudited pro forma total assets). The increase in the gearing ratio was mainly attributable to Shanghai Zendai Land’s receipt in advance of approximately RMB367,473,000 (equivalent to approximately HK$343,440,000) which substantially increase the enlarged Group’s current liability. As advised by the Directors, such receipt in advance represented the amount received from pre-sale of the 684 residential units and 12 commercial units in phase one of which will not be recognised as revenue unless and until the title of the properties are transferred to the purchaser and are therefore inevitable in its normal course of business. However, the increase in current liability will be crystallized as the Group’s future income when all sales contracts are completed and the title of properties are transferred to the purchasers.

In view of the above and taking into account the potential possibility of a stronger earning base, we are of the opinion that the increase in the Group’s gearing ratio is acceptable.

As stated in the Circular, the Share Purchase will be funded from the Company’s internal resources. The current ratio of the Group will be decreased from approximately 2.28 before Share Purchase to approximately 0.71 upon Completion. The reason for the decrease in current ratio is mainly attributable to (a) the satisfaction of the consideration for the Share Purchase by cash; and (ii)

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Shanghai Century Holdings Limited

LETTER FROM KINGSWAY

Shanghai Zendai Land’s receipt in advance of approximately RMB367,473,000 (equivalent to approximately HK$343,440,000) which substantially increase the enlarged Group’s current liability. As advised by the Directors, the Group currently has approximately HK$96.3 million cash on hand as at 30 September, 2002 and had outstanding bank overdraft of approximately HK$56,000 as at 30 June, 2002. The Directors has confirmed that the Group has sufficient cash level for its daily operation and repays the outstanding borrowings after the Share Purchase. The Directors believe that the Share Purchase would not have material adverse impact to the Group’s daily operating and financial position. The Directors also expect that the current ratio will be improved after Shanghai Zendai Land’s receipt in advance being crystallized as the Group’s future income when all sales contracts are completed and the title of properties are transferred to the purchasers.

Taking into account (a) the Group does not have any pressure to raise external funds; (b) the Company has sufficient financial resources to finance the Share Purchase and (c) the daily operation and financial position of the Group would not be materially and adversely affected after the Share Purchase, (d) the expected increasing future income shared by the Company from Shanghai Zendai Land and (e) the expected improvement of the current ratio following Shanghai Zendai Land’s receipt in advance being crystallized as the Group’s future income, we are of the view that the decrease in the current ratio of the group is acceptable.

RISK FACTORS

The Independent Shareholders should note that the Share Purchase involves a property development project in the PRC and is subject to the risks associated with property development in the PRC, which mainly relate to the property market in the PRC, general economic developments, relevant government policies and approvals, financing, construction and joint venture risks. There is a possibility that undesired results may arise as a result of any of these factors. Therefore, the Independent Shareholders should carefully consider the nature and the risks associated with the Share Purchase.

ADVANCES TO

As disclosed in the accountants’ report of Shanghai Zendai Land set out in Appendix II to the Circular, as at the end of August 2002, Shanghai Zendai Land had advances of approximately RMB58,339,000 (equivalent to approximately HK$54,524,000) to (“Advances”). As stated in the “Letter from the Board”, the registered capital of was beneficially owned as to 18.75% by Shanghai Zendai Investment, 56.25% by Mr. Dai Zhi Chang, the elder brother of Mr. Dai Zhi Kang, and the remaining 25% by Best East Development Limited, a wholly owned subsidiary of the Company. The Advances were short-term financing made to since November 2001 and are unsecured, non-interest bearing and has no fixed terms of repayment. The Advances represent approximately 263% of the Group’s audited consolidated net assets of approximately HK$20.76 million as at 31 December, 2001. The Advances also represent approximately 42% of the enlarged Group’s unaudited pro forma adjusted consolidated net tangible assets of approximately HK$129,137,000 (being the unaudited consolidated net tangible assets as at 30 June, 2002 adjusted for the Share Purchase) as shown in the section headed “Financial information on the Group” in Appendix I to the Circular.

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Shanghai Century Holdings Limited

LETTER FROM KINGSWAY

has undertaken to the Group for the repayment of the Advances within two months after the Completion. Further, Shanghai Zendai Investment Management, a PRC company which is owned as to 40% by Mr. Dai Zhi Kang, has guaranteed the repayment of the Advances in case of failing to repay the Advances within two months after the Completion. As stated in the “Letter from the Board”, according to its PRC audited accounts, the net tangible assets of Shanghai Zendai Investment Management as at 31 December, 2001 amounted to approximately RMB206.7 million (equivalent to approximately HK$193.2 million) and according to its management accounts, the net tangible assets of Shanghai Zendai Investment Management as at 30 September, 2002 amounted to approximately RMB302.2 million (equivalent to approximately HK$282.4 million). Accordingly, the Directors are of the view that Shanghai Zendai Investment would be able to honour its guarantee should fail to repay the Advances. In view of the above and the fact that the Advances were made prior to the Share Purchase, we consider such repayment arrangement acceptable.

RECOMMENDATION

Having considered the principal factors and reasons as mentioned above, we are of the opinion that the terms of the Share Purchase Agreement and the transactions contemplated thereunder (including the Advances), as a whole, are fair and reasonable so far as the Independent Shareholders are concerned and that the proposed Share Purchase and the transactions contemplated thereunder (including the Advances) is in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM in respect of the Share Purchase Agreement and the transactions contemplated thereunder (including the Advances).

Yours faithfully, For and on behalf of Kingsway Capital Limited Katherine Lam Director

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Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

1. SUMMARY OF CONSOLIDATED PROFIT AND LOSS ACCOUNTS

The consolidated results of the Group for the last five financial years/periods, as extracted from the audited financial statements of the Group and reclassified as appropriate, are summarised below:

			Period from	Period from
				1 April,
				1999
	**Year **	ended		to 31
	31 December,			December,	**Year ended **		31 March,
	2001	2000		1999		1999	1998
	HK$’000	HK$’000		HK$’000	HK$’000		HK$’000
Results
Turnover	677,767	719,995		440,400	816,367		1,212,816
Operating (loss)/profit	(61,177)	(39,020)		(41,908)	(98,503)		(23,553)
Share of losses of an
associate	—	—		(316)		(704)	(3,998)
(Loss)/profit from ordinary
activities before taxation	(61,177)	(39,020)		(42,224)	(99,207)		(27,551)
Taxation credit/(charge)	—	—		1,597		—	174
(Loss)/profit before minority
interests	(61,177)	(39,020)		(40,627)	(99,207)		(27,377)
Minority interests	4,513	—		—		—	—
(Loss)/profit for the
year/period	(56,664)	(39,020)		(40,627)	(99,207)		(27,377)
Dividends	—	—		—		—	—

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Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. EXTRACT OF THE FINANCIAL STATEMENTS

a. Audited consolidated financial statements

The following audited consolidated financial statements of the Group are extracted from pages 12 to 41 of the annual report of the Company for the year ended 31 December, 2001.

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December, 2001

Notes Turnover 4 Cost of sales Gross profit Other revenue Administrative expenses Deficit arising on revaluation of properties Loss from operations 6 Finance costs 7 Gain on disposal of subsidiaries Write back of provision for a guarantee in respect of a former associate 15 Loss before minority interests Minority interests Net loss for the year Loss per share Basic 11	2001 HK$’000 677,767 (654,429)	2000 HK$’000 719,995 (690,433) 29,562 1,938 (49,902) — (18,402) (20,618) — — (39,020) — (39,020) (16.2 cents)
	23,338 8,080 (30,297) (84,041) (82,920) (11,777) 29,075 4,445 (61,177) 4,513	29,562 1,938 (49,902 —
		(18,402 (20,618 — —
		(39,020 —
	(56,664) (3.7 cents)

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Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONSOLIDATED BALANCE SHEET

At 31 December, 2001

2001 Notes HK$’000 Non-current assets Property, plant and equipment 12 2,889 Investment properties 13 2,100 Interest in an associate 15 — 4,989 Current assets Properties held for resale — Inventories 16 — Trade and other receivables 17 54,402 Tax recoverable — Pledged bank deposits 8,715 Bank balances and cash 27,648 90,765 Current liabilities Trade and other payables 18 51,940 Amounts due to related companies 29 — Bank borrowings — due within one year 19 27,565 79,505 Net current assets (liabilities) 11,260 Total assets less current liabilities 16,249 Non-current liability Bank borrowings — due after one year 19 — Minority interests 24 (4,513) 20,762 Capital and reserves Share capital 20 79,616 Reserves 21 (58,854) 20,762	2001 Notes HK$’000 Non-current assets Property, plant and equipment 12 2,889 Investment properties 13 2,100 Interest in an associate 15 — 4,989 Current assets Properties held for resale — Inventories 16 — Trade and other receivables 17 54,402 Tax recoverable — Pledged bank deposits 8,715 Bank balances and cash 27,648 90,765 Current liabilities Trade and other payables 18 51,940 Amounts due to related companies 29 — Bank borrowings — due within one year 19 27,565 79,505 Net current assets (liabilities) 11,260 Total assets less current liabilities 16,249 Non-current liability Bank borrowings — due after one year 19 — Minority interests 24 (4,513) 20,762 Capital and reserves Share capital 20 79,616 Reserves 21 (58,854) 20,762	2000 HK$’000 36,650 182,700 (4,445) 214,905 1,443 1,302 40,101 1,091 — 1,832 45,769 72,777 51,807 37,105 161,689 (115,920) 98,985 78,666 — 20,319 76,157 (55,838) 20,319
	4,989 — — 54,402 — 8,715 27,648 90,765 51,940 — 27,565 79,505 11,260 16,249 — (4,513)	214,905
		1,443 1,302 40,101 1,091 — 1,832
		45,769
		72,777 51,807 37,105
		161,689
		(115,920
		98,985
		78,666
		—
	20,762
	79,616 (58,854)	76,157 (55,838
	20,762

— 25 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

BALANCE SHEET

At 31 December, 2001

		2001	2000
	Notes	HK$’000	HK$’000
Non-current assets
Property, plant and equipment	12	366	—
Interests in subsidiaries	14	8,000	95,921
		8,366	95,921
Current assets
Trade and other receivables		276	73
Bank balances and cash		24,442	1
		24,718	74
Current liabilities
Trade and other payables		673	3,091
Bank borrowings	19	—	150
		673	3,241
Net current assets (liabilities)		24,045	(3,167)
		32,411	92,754
Capital and reserves
Share capital	20	79,616	76,157
Reserves	21	(47,205)	16,597
		32,411	92,754

— 26 —

Shanghai Century Holdings Limited

APPENDIX I FINANCIAL INFORMATION ON THE GROUP

CONSOLIDATED STATEMENT OF RECOGNISED GAINS AND LOSSES

For the year ended 31 December, 2001

	2001	2000
	HK$’000	HK$’000
(Deficit) surplus arising on revaluation of properties	(8,302)	859
Net loss for the year	(56,664)	(39,020)
Total recognised gains and losses	(64,966)	(38,161)

— 27 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December, 2001

		2001	2000
	Notes	HK$’000	HK$’000
NET CASH OUTFLOW FROM OPERATING ACTIVITIES	22	(28,384)	(16,421)
RETURNS ON INVESTMENTS AND SERVICING
OF FINANCE
Interest paid		(11,777)	(20,617)
Interest received		329	178
Interest paid on obligations under finance leases		—	(1)
NET CASH OUTFLOW FROM RETURNS ON
INVESTMENTS AND SERVICING OF FINANCE		(11,448)	(20,440)
TAXATION
Hong Kong Profits Tax refunded		1,091	611
INVESTING ACTIVITIES
(Increase) decrease in pledged bank deposits		(8,715)	12,394
Purchase of property, plant and equipment		(1,045)	(1,057)
Proceeds from disposal of subsidiaries
(net of cash and cash equivalents disposed of)	23	897	—
Proceeds from disposal of property, plant and equipment		15	274
NET CASH (OUTFLOW) INFLOW FROM
INVESTING ACTIVITIES		(8,848)	11,611
NET CASH OUTFLOW BEFORE FINANCING		(47,589)	(24,639)
FINANCING	24
Net proceeds from issue of shares		99,427	62,846
(Net repayment to) advance from related companies		(37,807)	1,848
Repayment of bank and mortgage loans		(2,342)	(27,545)
Repayment of obligations under finance leases		—	(7)
NET CASH INFLOW FROM FINANCING		59,278	37,142
INCREASES IN CASH AND CASH EQUIVALENTS		11,689	12,503
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR		(11,606)	(24,109)
CASH AND CASH EQUIVALENTS AT END OF YEAR		83	(11,606)
ANALYSIS OF THE BALANCES OF CASH AND
CASH EQUIVALENTS
Bank balances and cash		27,648	1,832
Bank overdrafts		(27,565)	(13,438)
		83	(11,606)

— 28 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December, 2001

1. GENERAL

The Company is an exempted limited company incorporated in Bermuda with its shares listed on the Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The Company acts as an investment holding company. The Group is principally engaged in the sale of air tickets and the provision of other travel related services (“Travel Business”) and property investment. The activities of its principal subsidiaries are set out in note 32.

Pursuant to a financial restructuring (the “Financial Restructuring”) completed during the year, the Group disposed of its entire interest in certain subsidiaries engaged in property investment and 49% equity interest in certain subsidiaries engaged in Travel Business to South China Information and Technology Limited (“SCIT”), a former controlling shareholder of the Company, for a consideration of HK$15,000,000.

2. ADOPTION OF STATEMENTS OF STANDARD ACCOUNTING PRACTICE

In the current year, the Group adopted for the first time a number of new and revised Statements of Standard Accounting Practices (“SSAP(s)”) issued by the Hong Kong Society of Accountants. These revised and new accounting policies are set out in note 3. Adoption of these SSAPs has led to a number of changes in the Group’s accounting policies. In addition, the new and the revised accounting policies have introduced additional and revised disclosure requirements which have been adopted in the financial statements.

In particular:

SSAP 14 (Revised) “Leases”has introduced some amendments to the basis of accounting for finance and operating leases, and some additional and revised disclosure requirements for the Group’s leasing arrangements. Adoption of this revised standard has not had any effect on the results for the current or prior periods. Disclosures for all the Group’s leasing arrangements have been modified so as to comply with requirements of SSAP 14 (Revised). Comparative figures have been restated in order to achieve a consistent presentation.

In the current year, the Group has changed the basis of identification of reportable segments to that required by SSAP 26 “Segment reporting”. Segment disclosures for the year ended 31 December, 2000 have been amended so that they are presented on a consistent basis.

In the current year, the Group has adopted SSAP 30 “Business combinations” and has elected not to restate goodwill (negative goodwill) previously eliminated against (credited to) reserves. Accordingly, goodwill arising on acquisitions prior to 1 January, 2001 is held in reserves and will be charged to the income statement at the time of disposal of the relevant subsidiary, or at such time as the goodwill is determined to be impaired. Negative goodwill arising on acquisitions prior to 1 January, 2001 will be credited to the income statement at the time of disposal of the relevant subsidiary. Adoption of this accounting policy has not had any effect on the results for the current or prior periods.

— 29 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

3. SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared under the historical cost convention, as modified for the revaluation of certain properties, and in accordance with accounting principles generally accepted in Hong Kong. The principal accounting policies adopted are set out below:

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to 31 December each year.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Investments in subsidiaries

Investments in subsidiaries are included in the Company’s balance sheet at cost less any identified impairment loss.

Interests in associates

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. The carrying amount of such investments is reduced to recognise any identified impairment loss in the value of individual investments.

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition.

Goodwill arising on acquistions prior to 1 January, 2001 continues to be held in reserves and will be charged to the income statement at the time of disposal of the relevant subsidiary, or at such time as the goodwill is determined to be impaired.

Goodwill arising on the acquisitions after 1 January, 2001 is capitalised and amortised on a straight-line basis over its useful economic life and is presented separately in the balance sheet.

On disposal of a subsidiary, the attributable amount of unamortised goodwill is included in the determination of the profit or loss on disposal.

Negative goodwill

Negative goodwill represents the excess of the Group’s interest in the fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition over the cost of acquisition.

Negative goodwill arising on acquisitions prior to 1 January, 2001 continues to be held in reserves and will be credited to income at the time of disposal of the relevant subsidiary.

— 30 —

Shanghai Century Holdings Limited

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Negative goodwill arising on the acquisitions after 1 January, 2001 is presented separately in the balance sheet as a deduction from assets. Negative goodwill is released to the income statement based on an analysis of the circumstances from which the balance resulted. To the extent that the negative goodwill is attributable to losses or expenses anticipated at the date of acquisition, it is released to the income statement in the period in which those losses or expenses arise. The remaining negative goodwill is recognised as income on a straight-line basis over the remaining average useful life of the identifiable acquired depreciable assets. To the extent that such negative goodwill exceeds the aggregate fair value of the acquired identifiable non-monetary assets, it is recognised as income immediately.

Revenue recognition

Sale of air tickets is recognised when the tickets are issued and delivered to the customers.

Revenue from the provision of other travel related services is recognized when the relevant services are provided.

Incentive commission from airlines is recognised on an accrual basis.

Rental income is recognised on a straight line basis over the term of the relevant lease.

Sales of goods is recognised when the good are delivered and titled has passed.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the interest rate applicable.

Property, plant and equipment

Property, plant and equipment are stated at cost or valuation less depreciation and accumulated impairment loss identified.

Land and buildings are stated in the balance sheet at their revalued amount, being the fair value at the date of revaluation less any subsequent accumulated depreciation and any subsequent impairment losses. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the balance sheet date.

Any revaluation increase arising on revaluation of such land and buildings is credited to the property revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised as an expense, in which case the increase is credited to the income statement to the extent of the decrease previously charged. A decrease in net carrying amount arising on revaluation of such land and buildings is charged as an expense to the extent that it exceeds the balance, if any, held in the property revaluation reserve relating to a previous revaluation of that asset.

On the subsequent sale or retirement of a revalued property, the attributable revaluation surplus remaining in the revaluation reserve is transferred to retained profits.

Depreciation is provided to write off the cost of property, plant and equipment over their estimated useful lives and after taking into account their estimated residual value, using the straight line method, at the following rates per annum:

Leasehold land	Over the term of the lease
Buildings	2.5%-4% or over the term of the lease, whichever is shorter
Other assets	20%

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceed and the carrying amount of the asset and is recognised in the income statement.

— 31 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Investment properties

Investment properties are completed properties which are held for their investment potential, any rental income being negotiated at arm’s length.

Investment properties are stated at their open market value based on independent professional valuation at each balance sheet date. Any surplus or deficit arising on the revaluation of investment properties is credited or charged to the investment property revaluation reserve unless the balance on this reserve is insufficient to cover a deficit, in which case the excess of the deficit over the balance on the investment property revaluation reserve is charged to the income statement. Where a decrease has previously been charged to the income statement and a revaluation increase subsequently arises this increase is credited to the income statement to the extent of the decrease previously charged.

On disposal of investment property, the balance on the investment property revaluation reserve attributable to the property disposed of is released to the income statement.

No depreciation is provided on investment properties except where the unexpired term of the relevant lease is twenty years or less.

Properties held for resale

Properties held for resale are included in current assets and are stated at the lower of cost and net realisable value.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the first-in, first-out method.

Impairment

At each balance sheet date, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount,the carrying amount of the asset is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Taxation

The charge for taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed. Timing differences arise from the recognition for tax purposes of certain items of income and expense in a different accounting period from that in which they are recognised in the financial statements. The tax effect of the resulting timing differences, computed using the liability method, is recognised as deferred taxation in the financial statements to the extent that it is probable that a liability or an asset will crystallise in the foreseeable future.

Operating leases

Rental expense is charged to the income statement on a straight-line basis over the term of the relevant lease.

— 32 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Retirement benefits schemes

The retirement benefits costs charged in the income statement represent the contribution payable to the Group’s defined contribution retirement scheme and mandatory provident fund scheme during the year.

Foreign currencies

Transactions in currencies other than Hong Kong dollars are translated at the rates ruling on the dates of the transactions. Monetary assets and liabilities denominated in currencies other than Hong Kong dollars are retranslated to Hong Kong dollars at the rates ruling on the balance sheet date. Profits and losses arising on exchange are included in the net profit or loss for the year.

4. TURNOVER

Turnover represents the amount received and receivable for air tickets sold and the provision of other travel related services, less allowances, to outside customers, property rental income and miscellaneous merchandise sold during the year. Turnover is analysed as follows:

Sale of air tickets, including incentive commission from airlines, and revenue from other travel related services Property rental income Others	2001 HK$’000 675,011 2,470 286 677,767	2000 HK$’000 714,892 3,847 1,256
		719,995

5. BUSINESS AND GEOGRAPHICAL SEGMENTS

Business segment

For management purposes, the Group is currently organised into three operating activities. These division are the basis on which the Group reports its primary segment information.

Principal activities are as follows:

Sale of air tickets	—	Sale of air tickets and provision of travel related services
Property investment	—	Leasing of properties
Other activities	—	Sale of miscellaneous merchandise

Segment information about these business is presented below.

— 33 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

For the year ended 31 December, 2001

Sale of air tickets Property investment HK$’000 HK$’000 TURNOVER External sales 675,011 2,470 Inter-segment sales 2,959 488 Total 677,970 2,958 Inter-segment sales are charged at prevailing market rates. RESULT Segment result (376) (80,317) Unallocated other revenue Unallocated corporate expenses Loss from operations Finance costs Gain on disposal of subsidiaries Write back of provision for a guarantee in respect of a former associate Loss before minority interests OTHER INFORMATION Capital additions 1,045 — Depreciation 2,357 357

Other activities Eliminations Consolidated HK$’000 HK$’000 HK$’000 286 — 677,767 15 (3,462) — 301 (3,462) 677,767 (518) — (81,211) 329 (2,038) (82,920) (11,777) 29,075 4,445 (61,177) — 1,045 226 2,940

— 34 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

At 31 December, 2001
	Sale of air			Property	Other
		tickets	investment		activities	Consolidated
		HK$’000		HK$’000	HK$’000	HK$’000
BALANCE SHEET
ASSETS
Segment assets		68,550		2,100	—	70,650
Unallocated corporate assets						25,104
Consolidated total assets						95,754
LIABILITIES
Segment liabilities		73,682		—	—	73,682
Unallocated corporate liabilities						5,823
Consolidated total liabilities						79,505
For the year ended 31 December, 2000
	Sale of air	Property		Other
	tickets	investment		**activities **	**Eliminations **	Consolidated
	HK$’000	HK$’000		HK$’000	HK$’000	HK$’000
TURNOVER
External sales	714,892	3,847		1,256	—	719,995
Inter-segment sales	3,588	1,276		26	(4,890)	—
Total	718,480	5,123		1,282	(4,890)	719,995
Inter-segment sales and charged at prevailing	market rates.
RESULT
Segment result	(13,191)	(1,160)		(826)	—	(15,177)
Unallocated other revenue						177
Unallocated corporate expenses						(3,402)
Loss from operations						(18,402)
Finance costs						(20,618)
Loss before minority interests						(39,020)
OTHER INFORMATION
Capital additions	1,057		—	—		1,057
Depreciation	2,519		859	344		3,722

— 35 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

At 31 December, 2000
	Sale of air	Property	Other
	tickets	investment	activities	Consolidated
	HK$’000	HK$’000	HK$’000	HK$’000
BALANCE SHEET
ASSETS
Segment assets	56,515	206,396	2,134	265,045
Interest in an associate	(4,445)	—	—	(4,445)
Unallocated corporate assets				74
Consolidated total assets				260,674
LIABILITIES
Segment liabilities	173,166	63,581	367	237,114
Unallocated corporate liabilities				3,241
Consolidated total liabilities				240,355

No analysis of the Group’s turnover and attributable loss from operations by geographical segment is presented as the Group’s turnover and loss from operations are mainly derived from the Hong Kong market.

The Group’s operations are located in Hong Kong. Accordingly, all the carrying amounts of segment assets and additions to property, plant and equipment are located in Hong Kong.

6. LOSS FROM OPERATIONS

Loss from operations has been arrived at after charging: Auditors’ remuneration Depreciation Staff costs, excluding directors’ remuneration and retirement benefits scheme contributions Loss on disposal of property, plant and equipment Retirement benefits scheme contributions, net of forfeited contributions of HK$34,921 (2000: HK$131,000) and after crediting: Gross rental income from investment properties Less: Outgoings Net rental income from investment properties Interest income	2001 HK$’000 500 2,940 18,260 229 700 2,470 (1,160) 1,310 329	2000 HK$’000 450 3,722 22,480 353 96 3,847 (1,563) 2,284 178

— 36 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

7. FINANCE COSTS

Interest on: Bank borrowings wholly repayable within five years Amounts due to related companies Obligations under finance leases DIRECTORS’ AND HIGHEST PAID INDIVIDUALS’ EMOLUMENTS Directors’ emoluments Fees: Executive directors Independent non-executive directors Other emoluments for executive directors: Salaries and other benefits Retirement benefits scheme contributions Total emoluments	2001 HK$’000 6,066 5,711 — 11,777 2001 HK$’000 27 120	2000 HK$’000 13,333 7,284 1
		20,618
		2000 HK$’000 49 20
	147 2,668 16 2,684	69
		4,224 —
		4,224
	2,831	4,293

8. DIRECTORS’ AND HIGHEST PAID INDIVIDUALS’ EMOLUMENTS

The emoluments of the directors are within the following bands:

Nil-HK$1,000,000 HK$3,000,001-HK$3,500,000	Number of directors 2001 2000 13 7 — 1 13 8	Number of directors 2001 2000 13 7 — 1 13 8
		8

During the year ended 31 December, 2001, no director waived any emoluments (2000: Nil).

— 37 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Highest paid individuals’ emoluments

During the year, the five highest paid individuals included two directors (2000: two), details of whose emoluments are set out above. The emoluments of the remaining three (2000: three) highest paid individuals were as follows:

Salaries and other benefits Retirement benefits scheme contributions	2001 HK$’000 1,507 36 1,543	2000 HK$’000 1,515 —
		1,515

The emoluments of the highest paid individuals were within the following band:

	**Number **	**of **	individuals
	2001		2000
Nil-HK$1,000,000	3		3

9. TAXATION

No provision for Hong Kong Profits Tax has been made in the financial statements as the Company and its subsidiaries had no assessable profit for the year.

Details of the unproivded deferred taxation of the Group are set out in note 26.

10. DIVIDEND

No dividend was paid by the Company during the year.

11. LOSS PER SHARE

The calculation of the basic loss per share is based on the net loss for the year of HK$56,664,000 (2000: HK$39,020,000) and on the weighted average number of 1,525,440,092 (2000: 241,225,044) ordinary shares in issue during the year as adjusted for the effect of consolidation of shares of the Company as set out in note 20(i)(a).

There were no dilutive potential ordinary shares in issue during the current year and, accordingly, no diluted loss per share was presented.

Diluted loss per share for the year ended 31 December, 2000 was not presented because the exercise price of the Company’s warrants was higher than the average market price for shares during that year.

— 38 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

12. PROPERTY, PLANT AND EQUIPMENT

THE GROUP

	Leasehold		Furniture,
	land and	Leasehold	fixtures and	Motor
	Buildings	improvements	equipment	vehicles	Total
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
COST OR VALUATION
At 1 January, 2001	31,700	—	20,732	324	52,756
Additions	—	148	797	100	1,045
Disposals	—	—	(7,395)	(324)	(7,719)
Deficit on revaluation	(11,343)	—	—	—	(11,343)
Disposal of subsidiaries	(20,357)	—	(1,732)	—	(22,089)
At 31 December, 2001	—	148	12,402	100	12,650
Comprising:
At cost	—	148	12,402	100	12,650
At valuation	—	—	—	—	—
	—	148	12,402	100	12,650
DEPRECIATION
At 1 January, 2001	—	—	15,782	324	16,106
Charge for the year	357	10	2,557	16	2,940
Eliminated on disposals	—	—	(7,151)	(324)	(7,475)
Eliminated on disposals
of subsidiaries	(357)	—	(1,453)	—	(1,810)
At 31 December, 2001	—	10	9,735	16	9,761
NET BOOK VALUES
At 31 December, 2001	—	138	2,667	84	2,889
At 31 December, 2000	31,700	—	4,950	—	36,650

During the year, the Group disposed of certain subsidiaries which held all of the Group’s leasehold land and buildings. Prior to the disposal of these subsidiaries, the Group’s leasehold land and buildings were revalued at 30 June, 2001 by Sallmanns (Far East) Limited, an independent firm of professional property valuers, on an open market value basis. The deficit arising on revaluation of the Group’s leasehold land and buildings amounted to HK$11,343,000, of which HK$7,009,000 was charged to the property revaluation reserve attributable to the relevant properties and the balance of HK$4,334,000 was charged to the income statement.

— 39 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The carrying amount of the Group’s land and buildings comprises:

Land in Hong Kong held under: Long-term leases Medium-term leases	2001 HK$’000 — — —	2000 HK$’000 19,500 12,200
		31,700

At 31 December, 2000, had all of the Group’s leasehold land and buildings been carried at historical cost less accumulated depreciation, the carry amount would have been approximately HK$27,393,000.

THE COMPANY

		Furniture,
	Leasehold	fixtures and
	improvements	equipment	Total
	HK$’000	HK$’000	HK$’000
COST
At 1 January, 2001	—	61	61
Additions	148	244	392
At 31 December, 2001	148	305	453
DEPRECIATION
At 1 January, 2001	—	61	61
Charge for the year	10	16	26
At 31 December, 2001	10	77	87
NET BOOK VALUES
At 31 December, 2001	138	228	366
At 31 December, 2000	—	—	—

— 40 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

13. INVESTMENT PROPERTIES

THE GROUP

VALUATION At 1 January, 2001 Deficit on revaluation Transfered to properties held for resale Disposal of subsidiaries At 31 December, 2001	HK$’000 182,700 (81,000) (19,500) (80,100)
	2,100

During the year, the Group disposed of certain subsidiaries which held investment properties of the Group. Prior to the disposal of these subsidiaries, the Group’s investment properties were revalued at 30 June, 2001 by Sallmanns (Far East) Limited, an independent firm of professional property valuers, on an open market value basis. The deficit arising on revaluation amounted to HK$81,000,000, of which HK$1,293,000 was charged to the investment property revaluation reserve and the balance of HK$79,707,000 was charged to the income statement.

On 30 June, 2001, certain of the Group’s investment properties with a revalued amount of HK$19,500,000 were transferred to properties held for resale as a result of a change in the directors’intention for holding these properties.

The remaining investment properties of the Group were revalued at 31 December, 2001 by BMI Appraisals Limited, an independent firm of professional property valuers, on an open market value basis. There was no surplus or deficit arising on from the revaluation.

The carrying amount of the Group’s investment properties comprises:

Land in Hong Kong held under: Long-term leases Medium-term leases Land outside Hong Kong held under: Medium-term leases	2001 HK$’000 — 2,100 — 2,100	2000 HK$’000 42,800 111,100 28,800
		182,700

The investment properties are either rented out under operating leases or vacant.

— 41 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

14. INTERESTS IN SUBSIDIARIES

Unlisted shares, at cost Less: Pre-acquisition’s dividend Amounts due from subsidiaries Less: Accumulated impairment loss	THE COMPANY 2001 2000 HK$’000 HK$’000 79,251 79,251 (2,050) (2,050) 77,201 77,201 190,999 121,681 268,200 198,882 (260,200) (102,961) 8,000 95,921	THE COMPANY 2001 2000 HK$’000 HK$’000 79,251 79,251 (2,050) (2,050) 77,201 77,201 190,999 121,681 268,200 198,882 (260,200) (102,961) 8,000 95,921
	77,201 190,999 268,200 (260,200)	77,201 121,681
		198,882 (102,961
	8,000

Particulars of the Company’s principal subsidiaries at 31 December, 2001 are set out in note 32.

The amounts due from subsidiaries are unsecured, interest free and have no fixed repayment terms. In the opinion of the directors, the Company will not demand repayment within twelve months from the balance sheet date and the amounts are therefore shown as non-current.

During the year, the directors of the Company reviewed the carrying amount of the investments in subsidiaries and the amounts due from subsidiaries based on the past performance, earning potential and realisable value of its principal subsidiaries. In the opinion of the directors, the recoverable amount of these assets would approximate to HK$8,000,000, being the consideration to be received by the Group upon the exercise of an option to require SCIT to acquire the Group’s interests in certain principal subsidiaries, details of which are set out in note 29(b). Accordingly, an additional impairment loss of HK$157,239,000 was recognised in the current year.

15. INTEREST IN AN ASSOCIATE

			**THE **	GROUP
			2001	2000
			HK$’000	HK$’000
Provision	for	losses	—	(4,445)

At 31 December, 2000,the amount represented provision for an outstanding claim in respect of a guarantee given by the Group to a bank for banking facilities granted to a former associate. The amount was written back during the year, details of which are set out in note 31(a).

16. INVENTORIES

At 31 December, 2000, the amount represented miscellaneous merchandise held for resale carried at net realisable value.

— 42 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

17. TRADE AND OTHER RECEIVABLES

Included in trade and other receivables are trade receivables of HK$49,414,000 (2000:HK$32,384,000).

The Group grants a credit period ranging from 30 to 60 days on average to its customers.

The following is an aging analysis of trade receivables at the balance sheet date:

0-30 days 31-60 days Over 60 days	THE GROUP 2001 2000 HK$’000 HK$’000 41,043 30,464 6,473 1,446 1,898 474 49,414 32,384	THE GROUP 2001 2000 HK$’000 HK$’000 41,043 30,464 6,473 1,446 1,898 474 49,414 32,384
		32,384

18. TRADE AND OTHER PAYABLES

Included in trade and other payables are trade payables of HK$40,763,000 (2000: HK$58,673,000).

The following is an aging analysis of trade payables at the balance sheet date:

0-30 days 31-60 days Over 60 days	THE GROUP 2001 2000 HK$’000 HK$’000 39,470 56,276 761 1,011 532 1,386 40,763 58,673	THE GROUP 2001 2000 HK$’000 HK$’000 39,470 56,276 761 1,011 532 1,386 40,763 58,673
		58,673

— 43 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

19. BANK BORROWINGS

Bank borrowings comprise: Bank overdrafts Bank loans Mortgage loans Analysed as: Secured Unsecured Bank borrowings are repayable as follows: On demand or within one year In the second year In the third to fifth year inclusive After five years Less: Amount due within one year shown under current liabilities Amount due after one year	THE GROUP 2001 2000 HK$’000 HK$’000 27,565 13,438 — 3,081 — 99,252 27,565 115,771 — 115,771 27,565 — 27,565 115,771	THE GROUP 2001 2000 HK$’000 HK$’000 27,565 13,438 — 3,081 — 99,252 27,565 115,771 — 115,771 27,565 — 27,565 115,771	THE COMPANY 2001 2000 HK$’000 HK$’000 — 150 — — — — — 150 — 150 — — — 150 — 150 — — — — — — — 150 — (150) — —	THE COMPANY 2001 2000 HK$’000 HK$’000 — 150 — — — — — 150 — 150 — — — 150 — 150 — — — — — — — 150 — (150) — —
	27,565 — — — 27,565 (27,565)	37,105 41,560 22,126 14,980 115,771 (37,105)	— — — — — —	150 — — —
				150 (150
	—	78,666	—

— 44 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

20. SHARE CAPITAL

Number of shares Share Capital Authorised: Ordinary shares of HK$0.02 each - Balance at 1 January, 2000 and 31 December, 2000 10,000,000,000 - Consolidation of shares (9,000,000,000) - Reduction in capital — - Increase in capital 9,000,000,000 - Balance at 31 December, 2001 10,000,000,000 Issued and fully paid: Ordinary shares of HK$0.02 each - Balance at 1 January, 2000 917,136,250 - Open offer of shares 2,855,869,185 - Exercise of warrants 34,820,145 - Balance at 31 December, 2000 3,807,825,580 - Consolidation of shares (3,427,043,022) - Reduction in capital — - Issue of new shares 3,600,000,000 - Balance at 31 December, 2001 3,980,782,558	Number of shares Share Capital Authorised: Ordinary shares of HK$0.02 each - Balance at 1 January, 2000 and 31 December, 2000 10,000,000,000 - Consolidation of shares (9,000,000,000) - Reduction in capital — - Increase in capital 9,000,000,000 - Balance at 31 December, 2001 10,000,000,000 Issued and fully paid: Ordinary shares of HK$0.02 each - Balance at 1 January, 2000 917,136,250 - Open offer of shares 2,855,869,185 - Exercise of warrants 34,820,145 - Balance at 31 December, 2000 3,807,825,580 - Consolidation of shares (3,427,043,022) - Reduction in capital — - Issue of new shares 3,600,000,000 - Balance at 31 December, 2001 3,980,782,558	Amount HK$’000 200,000 — (180,000) 180,000 200,000 18,343 57,118 696 76,157 — (68,541) 72,000 79,616
	917,136,250 2,855,869,185 34,820,145 3,807,825,580 (3,427,043,022) — 3,600,000,000	18,343 57,118 696
		76,157 — (68,541 72,000
	3,980,782,558

• (i) Pursuant to a special resolution passed on 29 August, 2001 at a special general meeting (“SGM”), the share capital of the Company were reorganised with effect on the same date as follows:

• (a) Every ten issued and unissued ordinary shares of HK$0.02 each were consolidated into one issued and unissued ordinary share of HK$0.20 each, respectively;

• (b) The authorised share capital of HK$200,000,000 divided into 1,000,000,000 ordinary shares of HK$0.20 each was reduced by HK$180,000,000 and the issued share capital of HK$76,157,000 divided into 380,782,558 ordinary shares of HK$0.20 each was reduced by HK$68,541,000, by cancelling the authorised share capital and the paid up share capital to the extent of HK$0.18 on each of the unissued ordinary shares and the ordinary shares in issue, respectively. The credit of HK$68,541,000 arising from the effect of reduction in capital was transferred to the special capital reserve account;

• (c) After the consolidation of shares and reduction in share capital as set out above, the authorised share capital was increased from HK$20,000,000 to HK$200,000,000 divided into 10,000,000,000 ordinary shares of HK$0.02 each (“New Shares”).

— 45 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

• (ii) Pursuant to an agreement entered into between the Company, SCIT, the then controlling shareholder of the Company, and Giant Glory Assets Limited (“Giant Glory”) on 18 June, 2001 (the “Subscription Agreement”), the Company issued 3,500,000,000 New Shares at a subscription price of HK$0.02 each to Giant Glory on 3 September, 2001, being the completion date of the Subscription Agreement.

Giant Glory has become the existing controlling shareholder of the Company since the completion of the Subscription Agreement.

• (iii) On 6 December, 2001, Giant Glory entered into a placing agreement with an independent third party to place 100,000,000 shares to the independent third party at a price of HK$0.32 each, representing a discount of 11.11% to the closing price of HK$0.36 per share quoted on the Stock Exchange on 5 December, 2001.

On the same date, Giant Glory entered into a subscription agreement with the Company to subscribe for 100,000,000 new shares of the Company at a price of HK$0.32 each. The net proceeds of approximately of HK$31,000,000 from the issue would be used partly for working capital and partly for future investment potential of the Group. These shares were issued under the general mandate granted to the directors at the SGM.

All the shares issued during the year rank pari passu with the then existing shares in all respects.

Warrants

All outstanding warrants lapsed on 8 December, 2000. There were no outstanding warrants at 31 December, 2000 and at 31 December, 2001.

Share Options

Pursuant to the share option scheme (the “Scheme) adopted by the Company on 8 October, 1992, the directors of the Company may, at any time within a period of ten years after 8 October, 1992, grant options to employees, including directors, of the Company or any of its subsidiaries to subscribe for shares in the Company at their discretion.

There were no options granted or exercised during the year or outstanding at the balance sheet date.

— 46 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

21. RESERVES

THE GROUP

Share premium Capital redemption reserve Negative goodwill Property revaluation reserve Investment property revaluation reserve Special capital reserve Acc HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2000 35,793 1,074 16,042 29,621 1,293 — Issue of shares, net of expenses 5,032 — — — — — Surplus arising on revaluation — — — 859 — — Net loss for the year — — — — — — At 1 January, 2001 40,825 1,074 16,042 30,480 1,293 — Issue of shares, net of expenses 27,427 — — — — — Deficit arising on revaluation — — — (7,009) (1,293) — Released upon disposal of subsidiaries — — (16,042) (17,976) — — Effect of reduction in share capital — — — — — 68,541 Net loss for the year — — — — — — At 31 December, 2001 68,252 1,074 — 5,495 — 68,541	Share premium Capital redemption reserve Negative goodwill Property revaluation reserve Investment property revaluation reserve Special capital reserve Acc HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2000 35,793 1,074 16,042 29,621 1,293 — Issue of shares, net of expenses 5,032 — — — — — Surplus arising on revaluation — — — 859 — — Net loss for the year — — — — — — At 1 January, 2001 40,825 1,074 16,042 30,480 1,293 — Issue of shares, net of expenses 27,427 — — — — — Deficit arising on revaluation — — — (7,009) (1,293) — Released upon disposal of subsidiaries — — (16,042) (17,976) — — Effect of reduction in share capital — — — — — 68,541 Net loss for the year — — — — — — At 31 December, 2001 68,252 1,074 — 5,495 — 68,541	Share premium Capital redemption reserve Negative goodwill Property revaluation reserve Investment property revaluation reserve Special capital reserve Acc HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2000 35,793 1,074 16,042 29,621 1,293 — Issue of shares, net of expenses 5,032 — — — — — Surplus arising on revaluation — — — 859 — — Net loss for the year — — — — — — At 1 January, 2001 40,825 1,074 16,042 30,480 1,293 — Issue of shares, net of expenses 27,427 — — — — — Deficit arising on revaluation — — — (7,009) (1,293) — Released upon disposal of subsidiaries — — (16,042) (17,976) — — Effect of reduction in share capital — — — — — 68,541 Net loss for the year — — — — — — At 31 December, 2001 68,252 1,074 — 5,495 — 68,541	Share premium Capital redemption reserve Negative goodwill Property revaluation reserve Investment property revaluation reserve Special capital reserve Acc HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2000 35,793 1,074 16,042 29,621 1,293 — Issue of shares, net of expenses 5,032 — — — — — Surplus arising on revaluation — — — 859 — — Net loss for the year — — — — — — At 1 January, 2001 40,825 1,074 16,042 30,480 1,293 — Issue of shares, net of expenses 27,427 — — — — — Deficit arising on revaluation — — — (7,009) (1,293) — Released upon disposal of subsidiaries — — (16,042) (17,976) — — Effect of reduction in share capital — — — — — 68,541 Net loss for the year — — — — — — At 31 December, 2001 68,252 1,074 — 5,495 — 68,541	Share premium Capital redemption reserve Negative goodwill Property revaluation reserve Investment property revaluation reserve Special capital reserve Acc HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2000 35,793 1,074 16,042 29,621 1,293 — Issue of shares, net of expenses 5,032 — — — — — Surplus arising on revaluation — — — 859 — — Net loss for the year — — — — — — At 1 January, 2001 40,825 1,074 16,042 30,480 1,293 — Issue of shares, net of expenses 27,427 — — — — — Deficit arising on revaluation — — — (7,009) (1,293) — Released upon disposal of subsidiaries — — (16,042) (17,976) — — Effect of reduction in share capital — — — — — 68,541 Net loss for the year — — — — — — At 31 December, 2001 68,252 1,074 — 5,495 — 68,541	Share premium Capital redemption reserve Negative goodwill Property revaluation reserve Investment property revaluation reserve Special capital reserve Acc HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2000 35,793 1,074 16,042 29,621 1,293 — Issue of shares, net of expenses 5,032 — — — — — Surplus arising on revaluation — — — 859 — — Net loss for the year — — — — — — At 1 January, 2001 40,825 1,074 16,042 30,480 1,293 — Issue of shares, net of expenses 27,427 — — — — — Deficit arising on revaluation — — — (7,009) (1,293) — Released upon disposal of subsidiaries — — (16,042) (17,976) — — Effect of reduction in share capital — — — — — 68,541 Net loss for the year — — — — — — At 31 December, 2001 68,252 1,074 — 5,495 — 68,541	Share premium Capital redemption reserve Negative goodwill Property revaluation reserve Investment property revaluation reserve Special capital reserve Acc HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2000 35,793 1,074 16,042 29,621 1,293 — Issue of shares, net of expenses 5,032 — — — — — Surplus arising on revaluation — — — 859 — — Net loss for the year — — — — — — At 1 January, 2001 40,825 1,074 16,042 30,480 1,293 — Issue of shares, net of expenses 27,427 — — — — — Deficit arising on revaluation — — — (7,009) (1,293) — Released upon disposal of subsidiaries — — (16,042) (17,976) — — Effect of reduction in share capital — — — — — 68,541 Net loss for the year — — — — — — At 31 December, 2001 68,252 1,074 — 5,495 — 68,541	umulated losses Total HK$’000 HK$’000 (106,532) (22,709) — 5,032 — 859 (39,020) (39,020)	umulated losses Total HK$’000 HK$’000 (106,532) (22,709) — 5,032 — 859 (39,020) (39,020)
	40,825 27,427 — — — —	1,074 — — — — —	16,042 — — (16,042) — —	30,480 — (7,009) (17,976) — —	1,293 — (1,293) — — —	— — — — 68,541 —	(145,552) — — — — (56,664)	(55,838) 27,427 (8,302) (34,018) 68,541 (56,664)
	68,252	1,074	—	5,495	—	68,541	(202,216)	(58,854)

THE COMPANY

Share premium Capital redemption reserve Special capital reserve Contributed surplus Accumulated losses HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2000 35,793 1,074 — 77,001 (98,885) Issue of shares, net of expenses 5,032 — — — — Net loss for the year — — — — (3,418) At 1 January, 2001 40,825 1,074 — 77,001 (102,303) Issue of shares, net of expenses 27,427 — — — — Effect of reduction in share capital — — 68,541 — — Net loss for the year — — — — (159,770) At 31 December, 2001 68,252 1,074 68,541 77,001 (262,073)	Share premium Capital redemption reserve Special capital reserve Contributed surplus Accumulated losses HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2000 35,793 1,074 — 77,001 (98,885) Issue of shares, net of expenses 5,032 — — — — Net loss for the year — — — — (3,418) At 1 January, 2001 40,825 1,074 — 77,001 (102,303) Issue of shares, net of expenses 27,427 — — — — Effect of reduction in share capital — — 68,541 — — Net loss for the year — — — — (159,770) At 31 December, 2001 68,252 1,074 68,541 77,001 (262,073)	Share premium Capital redemption reserve Special capital reserve Contributed surplus Accumulated losses HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2000 35,793 1,074 — 77,001 (98,885) Issue of shares, net of expenses 5,032 — — — — Net loss for the year — — — — (3,418) At 1 January, 2001 40,825 1,074 — 77,001 (102,303) Issue of shares, net of expenses 27,427 — — — — Effect of reduction in share capital — — 68,541 — — Net loss for the year — — — — (159,770) At 31 December, 2001 68,252 1,074 68,541 77,001 (262,073)	Share premium Capital redemption reserve Special capital reserve Contributed surplus Accumulated losses HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2000 35,793 1,074 — 77,001 (98,885) Issue of shares, net of expenses 5,032 — — — — Net loss for the year — — — — (3,418) At 1 January, 2001 40,825 1,074 — 77,001 (102,303) Issue of shares, net of expenses 27,427 — — — — Effect of reduction in share capital — — 68,541 — — Net loss for the year — — — — (159,770) At 31 December, 2001 68,252 1,074 68,541 77,001 (262,073)	Share premium Capital redemption reserve Special capital reserve Contributed surplus Accumulated losses HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2000 35,793 1,074 — 77,001 (98,885) Issue of shares, net of expenses 5,032 — — — — Net loss for the year — — — — (3,418) At 1 January, 2001 40,825 1,074 — 77,001 (102,303) Issue of shares, net of expenses 27,427 — — — — Effect of reduction in share capital — — 68,541 — — Net loss for the year — — — — (159,770) At 31 December, 2001 68,252 1,074 68,541 77,001 (262,073)	Share premium Capital redemption reserve Special capital reserve Contributed surplus Accumulated losses HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2000 35,793 1,074 — 77,001 (98,885) Issue of shares, net of expenses 5,032 — — — — Net loss for the year — — — — (3,418) At 1 January, 2001 40,825 1,074 — 77,001 (102,303) Issue of shares, net of expenses 27,427 — — — — Effect of reduction in share capital — — 68,541 — — Net loss for the year — — — — (159,770) At 31 December, 2001 68,252 1,074 68,541 77,001 (262,073)	Total HK$’000 14,983 5,032 (3,418)
	40,825 27,427 — —	1,074 — — —	— — 68,541 —	77,001 — — —	(102,303) — — (159,770)	16,597 27,427 68,541 (159,770)
	68,252	1,074	68,541	77,001	(262,073)	(47,205)

The special capital reserve of the Group and the Company represents the credit arising from the effect of reduction in share capital during the year.

— 47 —

Shanghai Century Holdings Limited

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

At 31 December, 2001, the property revaluation reserve of the Group is attributable to those properties previously held as land and buildings which were subsequently reclassified as investment properties. Property revaluation reserve was frozen upon the transfer of the relevant land and buildings to investment properties until the disposal or retirement of the relevant properties. Upon the disposal or retirement of the relevant properties, the frozen property reserve attributable to such properties will be transferred to accumulated losses.

The contributed surplus of the Company represents the difference between the nominal value of the share capital issued by the Company and the underlying net assets of subsidiaries which were acquired by the Company pursuant to a group reorganisation in the previous year.

Under the Companies Act 1981 of Bermuda (as amended), contributed surplus is available for distribution to shareholders. However, a company cannot declare or pay a dividend, or make a distribution out of contributed surplus, if:

• (a) the company is, or would after the payment be, unable to pay its liabilities as they become due; or

• (b) the realisable value of the company’s assets would thereby be less than the aggregate of its liabilities and its issued share capital and share premium accounts.

At 31 December, 2001, the Company has no reserve available for distribution (2000: Nil).

22. RECONCILIATION OF LOSS FROM OPERATIONS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES

Loss from operations Interest income Depreciation Loss on disposal of property, plant and equipment Deficit arising on revaluation of properties Write off of advance to an associate Decrease in inventories Increase in trade and other receivables (Decrease) increase in trade and other payables Net cash outflow from operating activities	2001 HK$’000 (82,920) (329) 2,940 229 84,041 — 324 (19,493) (13,176) (28,384)	2000 HK$’000 (18,402) (178) 3,722 353 — 36 1,401 (7,233) 3,880 (16,421)

— 48 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

23. DISPOSAL OF SUBSIDIARIES

Net assets disposed of: Property, plant and equipment Investment properties Properties held for resale Inventories Trade and other receivables Bank balances and cash Trade and other payables Bank borrowings Capital reserve released Property revaluation reserve released Gain on disposal Total consideration Satisfied by: Cash Amounts due to related companies Net cash outflow arising on disposal: Cash consideration Bank balances and cash disposed of	2001 HK$’000 20,279 80,100 20,943 978 5,192 103 (7,661) (99,991)	2000 HK$’000 — — — — — — — —
	19,943 (16,042) (17,976) 29,075	— — — —
	15,000	—
	1,000 14,000	— —
	15,000	—
	1,000 (103)	— —
	897	—

The subsidiaries disposed of during the year contributed HK$2,298,000 (2000: HK$4,410,000) to the Group’s turnover and accounted for HK$80,341,000 (2000: HK$2,039,000) of the Group’s loss from operations.

The subsidiaries disposed of during the year accounted for HK$15,384,000 of the Group’s net operating cash outflow, paid HK$5,881,000 in respect of the net returns on investment and servicing of finance, paid no taxation, utilised HK$3,093,000 for investing activities and raised HK$6,910,000 in respect of financing activities.

— 49 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

24. ANALYSIS OF CHANGES IN FINANCING DURING THE YEAR

		Amounts		Obligations
		due to	Bank and	under
	Share capital	related	mortgage	finance	Minority
	and premium	companies	loans	leases	interests
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
At 1 January, 2000	54,136	49,959	129,878	7	—
Proceeds from issue of shares	64,081	—	—	—	—
Share issue expenses incurred	(1,235)	—	—	—	—
Net cash inflow (outflow)	—	1,848	—	(7)	—
Repayment of bank and mortgage loans	—	—	(27,545)	—	—
At 1 January, 2001	116,982	51,807	102,333	—	—
Disposal of subsidiaries	—	—	(99,991)	—	—
Proceeds from issue of shares	102,000	—	—	—	—
Share issue expenses incurred	(2,573)	—	—	—	—
Transferred to special capital reserve
on capital reduction	(68,541)	—	—	—	—
Net cash outflow	—	(37,807)	—	—	—
Repayment of bank and mortgage loans	—	—	(2,342)	—	—
Amount satisfied as part of consideration
for disposal of subsidiaries	—	(14,000)	—	—	—
Loss shared by a minority
shareholder (Note)	—	—	—	—	(4,513)
At 31 December, 2001	147,868	—	—	—	(4,513)

Note: Pursuant to an agreement entered into between the Group and the minority shareholder during the year, the minority shareholder shall be solely responsible for the operating losses of certain non-wholly owned subsidiaries of the Group for a period of twelve months, details of which are set out in note 29(c).

25. MAJOR NON-CASH TRANSACTIONS

During the year, the Group disposed of certain subsidiaries for a consideration of HK$15,000,000, of which HK$14,000,000 was satisfied by reducing the amounts due to related companies.

— 50 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

26. DEFERRED TAXATION

At the balance sheet date, the major components of the unrecognised deferred tax asset are analysed as follows:

Tax effect of timing differences attributable to: Excess of tax allowances over depreciation Tax losses	THE GROUP 2001 2000 HK$’000 HK$’000 (564) (2,016) 20,265 16,912 19,701 14,896	THE COMPANY 2001 2000 HK$’000 HK$’000 (34) (1) 1,992 1,569 1,958 1,568

No deferred tax asset has been recognised in the financial statements as it is uncertain that the amount will be realised in the foreseeable future.

The major components of the unrecognised deferred tax credit for the year are analysed as follows:

Tax effect of timing differences attributable to: (Shortfall) excess of tax allowances over depreciation Tax losses arising	THE GROUP 2001 2000 HK$’000 HK$’000 (1,452) 1,119 (3,353) (1,148) (4,805) (29)	THE COMPANY 2001 2000 HK$’000 HK$’000 33 4 (423) (551) (390) (547)

No deferred taxation is provided on the surplus on the revaluation of properties situated in Hong Kong as future profits arising on the disposal of these assets would not be subject to taxation. The revaluation surplus therefore does not constitute a timing difference for taxation purpose.

27. RETIREMENT BENEFITS SCHEMES

Before 1 December, 2000, the Group operated a defined contribution retirement scheme for qualified employees in Hong Kong. Where there are employees who leave the scheme prior to vesting fully the contributions, the contributions payable by the Group are reduced by the amount of forfeited contributions.

With effect from 1 December, 2000, the Group has joined a mandatory provident fund scheme (“MPF Scheme”) for all qualifying employees of its Hong Kong subsidiaries. The assets of the MPF Scheme are held separately from those of the Group in funds under the control of trustees.

The total costs charged to the income statement of HK$700,000 (2000: HK$96,000) represents contributions payables to the schemes by the Group at rates specified in the rules of the schemes.

— 51 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

28. OPERATING LEASE ARRANGEMENTS

The Group as lessee

Minimum lease payments under operating lease of the Group recognised in the income statement during the year in respect of:

Premises Other assets	THE GROUP 2001 2000 HK$’000 HK$’000 1,295 1,216 154 145 1,449 1,361	THE GROUP 2001 2000 HK$’000 HK$’000 1,295 1,216 154 145 1,449 1,361
		1,361

At the balance sheet date, the Group and the Company had commitments for future minimum lease payments in respect of rented premises under non-cancellable operating leases which fall due as follows:

	**THE **	GROUP	**THE **	COMPANY
	2001	2000	2001	2000
	HK$’000	HK$’000	HK$’000	HK$’000
Operating leases which expire:
Within one year	1,251	145	1,156	—
In the second to fifth year inclusive	893	73	893	—
	2,144	218	2,049	—

Operating lease payments in respect of rented premises represent rentals payable by the Group for certain of its offices. Leases are either negotiated by the Group or former subsidiaries of the Group for an average term of two years.

At the balance sheet date, the Group and the Company had no commitments for future minimum lease payments in respect of other assets under non-cancellable operating leases.

The Group as lessor

At the balance sheet date, the Company had contracted with tenants for the following future minimum lease payments:

Within one year In the second to fifth year inclusive	2001 HK$’000 — — —	2000 HK$’000 2,032 1,094
		3,126

— 52 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

29. CONNECTED AND RELATED PARTY TRANSACTIONS AND BALANCES

Other than the Subscription Agreement as disclosed in note 20(ii), the Group also entered into a disposal agreement (the “Disposal Agreement”) and a management agreement (the “Management Agreement”) with SCIT on 18 June, 2001 in respect of the Financial Restructuring. Since SCIT was the then controlling shareholder of the Company, these transactions constitute connected transactions under the Rules Governing the Listing of Securities on the Stock Exchange.

• (a) Pursuant to the Disposal Agreement completed on 3 September, 2001, the Group disposed of its entire interest in certain subsidiaries engaged in property investment and 49% equity interest in certain subsidiaries engaged in Travel Business to SCIT for a consideration of HK$15,000,000, of which HK$14,000,000 was utilised to repay the amounts due to SCIT and its group companies (“SCIT Group”).

• (b) In accordance with the Subscription Agreement, SCIT granted an option to the Group, at an exercise price of HK$8,000,000, which can exercise the option to require SCIT to acquire the remaining 51% equity interest held by the Group in those subsidiaries engaged in Travel Business (“Put Option”). The Put Option is exercisable within 365 days from the completion date of the Disposal Agreement.

• (c) Pursuant to the Management Agreement, SCIT is required to provide the Group with management services for those subsidiaries engaged in Travel Business for a term of six years from the completion date of the Disposal Agreement. Under the Management Agreement, the Group is required to pay an annual management fee, as determined in the Management Agreement, to SCIT.

During the year, the Group paid a management fee of HK$2,000,000 to SCIT. For the year ended 31 December, 2000, the Group paid management fee of HK$2,000,000 to SCIT Group which was based on actual level of services provided to the Group.

Under the Management Agreement, SCIT shall unconditionally and irrevocably undertake with the Group for the provision of working capital to the Group’s subsidiaries that are engaged in the Travel Business and be solely responsible for their operating losses for a period of twelve months from the completion date of the Disposal Agreement. For each of the remaining periods, the Company is required to provide working capital to those subsidiaries engaged in Travel Business. The maximum amount required to provide by the Company is determined in the Management Agreement and shall be in proportion to its equity interest in those subsidiaries.

During the year, the Group paid interest expense of HK$5,711,000 (2000: HK$7,261,000) on advances made by SCIT Group. Pursuant to the Management Agreement, the advances made by SCIT Group carry interest at rates ranging from 2% above HIBOR to 1.75% above the Hong Kong prime lending rate.

In addition to the above, the Group had the following significant transactions and balances with related parties during the year:

Related parties	Nature of transactions/balances	Notes	2001	2000
			HK$’000	HK$’000
SCIT Group	Sale of air tickets	(i)	3,031	3,722
	Rental expenses	(ii)	111	—
	Trade receivables	(iii)	3,051	1,338
	Amounts due to related companies	(iv)	—	51,807

— 53 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes:

• (i) These transactions were carried out at market price.

• (ii) These transactions were carried out in accordance with the terms as agreed by both parties.

• (iii) The amounts are unsecured, interest free and repayable on demand.

• (iv) The amounts was unsecured, carried interest at rates ranging from 0-2% above the Hong Kong prime lending rate and was full repaid upon the completion of the Financial Restructuring during the year.

30. PLEDGE OF ASSETS

At 31 December, 2001, the Group pledged its bank deposits of HK$8,715,000 (2000:Nil) to a bank to secure certain credit facilities granted to the Group.

At 31 December, 2000, certain properties of the Group with an aggregate net book value of HK$175,900,000 were pledged to banks to secure banking facilities granted to the Group. During the year, all of these pledges were released.

31. CONTINGENT LIABILITIES

• (a) At 31 December, 2000, the Company had a corporate guarantee in respect of the banking facilities granted to a former associate in the amount of US$3 million (equivalent to approximately HK$23.3 million). Such facilities were also secured by an irrecoverable standby letter of credit issued by a bank established in the People’s Republic of China (the “PRC”) and guaranteed by a former director of the Company and three other parties. At 31 December, 2000, there was an outstanding legal claim originally lodged in March, 1999 by the bank against the Company and the three other parties in respect of the outstanding borrowings of the former associate of approximately HK$19 million. A provision of HK$4,445,000 was made in previous year in respect of this claim.

Upon the completion of the Subscription Agreement as disclosed in note 20(ii), SCIT unconditionally and irrevocably undertakes all of the Company’s liabilities, excluding the amounts due to SCIT Group, and contingent liabilities to the extent that existed at the completion date of the Subscription Agreement. Accordingly, the directors do not consider the Company has any exposure to this claim and the provision of HK$4,445,000 was written back during the year.

• (b) At 31 December, 2000, there was an outstanding litigation in respect of a claim made by a third party against the Group for HK$3 million syndication fee in connection with the arrangement of a proposed HK$30 million loan to the Group. The directors considered the conditions of the loan agreement had not been fully complied with by the third party and that the HK$3 million was not payable. Accordingly, no provision had been made in the financial statements.

During the year, the Group and the third party jointly applied for a consent order and the case was settled without liability incurred.

• (c) At 31 December, 2000, the Company had corporate guarantees totalling HK$146,790,000 to banks for facilities granted to certain subsidiaries. During the year, all of these guarantees were released.

Other than as disclosed above, in the opinion of the directors, the Group and the Company had no significant contingent liabilities or outstanding litigation as at 31 December, 2001.

— 54 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

32. PRINCIPAL SUBSIDIARIES

				Proportion of	Proportion of
	Place of		Paid up	nominal value of
	incorporation/	Class of	issued share	**issued **	capital	Principal
Name of subsidiary	operation	share held	capital	held by the Group		activities
				Directly	Indirectly
Four Seas Corporate	Hong Kong	Ordinary	HK$100	—	51%	Provision of
Management Limited						corporate
						management
						services
Four Seas Tours	Hong Kong	Ordinary	HK$3,000,000	—	51%	Sale of air tickets
Limited						and provision of
						other travel
						related services
Four Seas Travel	Hong Kong	Ordinary	HK21	100%	—	Investment holding
Investments Limited
Hong Kong Four Seas	Hong Kong	Ordinary	HK$1,800,000	—	51%	Sale of air tickets
Tours Limited			Deferred			and provision of
			HK$1,200,000*			other travel
						related services
Gainfield Holdings	Hong Kong	Ordinary	HK8,000,000	—	51%	Investment holding
Limited

• The deferred shares practically carry minimal rights to dividend and no rights to receive notice of or to attend or vote at any general meeting of the company. On winding up, the holders of the deferred shares are entitled out of the remaining assets of the company after a sum of HK$50,000,000,000 has been distributed amongst the holders of the ordinary shares of the company.

The above list the subsidiaries which, in the opinion of the directors, materially affect the results or assets of the Group. To give details of other subsidiaries would, in the opinion of the directors, results in particulars of excessive length.

None of the subsidiaries had any debt securities subsisting at the end of the year or at any time during the year.

33. POST BALANCE SHEET EVENT

On 25 March, 2002, Best East Development Limited (“Best East”), a newly set up wholly owned subsidiary of the Company entered into an agreement (“Capital Injection Agreement”) with (“ ”) and a brother of Mr. Dai Zhi Kang, a director of the Company. Pursuant to the Capital Injection Agreement, Best East has conditionally agreed to inject RMB20,000,000 (equivalent to approximately HK$18,692,000) as additional registered capital into (“ ”), a limited liability company established in the PRC. is principally engaged in property development and property management services in the PRC and its registered capital is owned as to 25% by and 75% by the brother of Mr. Dai Zhi Kang.

— 55 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

b. Unaudited consolidated financial statements

The following unaudited financial statements of the Group are extracted from pages 2 to 11 of the interim report of the Company for the six months ended 30 June, 2002.

CONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 30 June, 2002

Notes Turnover 3 Cost of sales Gross profit Other income Administrative expenses Deficit arising on revaluation of properties Loss from operations 4 Finance costs Loss before minority interests Minority interests Net loss for the period Loss per share Basic 7	Six months ended 30 June, 2002 2001 HK$’000 HK$’000 (Unaudited) (Unaudited) 430,356 333,878 (414,071) (319,346) 16,285 14,532 975 492 (25,282) (17,657) — (84,041) (8,022) (86,674) (591) (8,778) (8,613) (95,452) 75 — (8,538) (95,452) (0.21 cents) (25.07 cents)	Six months ended 30 June, 2002 2001 HK$’000 HK$’000 (Unaudited) (Unaudited) 430,356 333,878 (414,071) (319,346) 16,285 14,532 975 492 (25,282) (17,657) — (84,041) (8,022) (86,674) (591) (8,778) (8,613) (95,452) 75 — (8,538) (95,452) (0.21 cents) (25.07 cents)
	16,285 975 (25,282) — (8,022) (591) (8,613) 75	14,532 492 (17,657 (84,041
		(86,674 (8,778
		(95,452 —
	(8,538) (0.21 cents)

— 56 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONDENSED CONSOLIDATED BALANCE SHEET

At 30 June, 2002

		30 June,	31 December,
		2002	2001
	Notes	HK$’000	HK$’000
		(Unaudited)	(Audited)
Non-current assets
Property, plant and equipment		2,244	2,889
Investment properties	8	2,100	2,100
		4,344	4,989
Current assets
Trade and other receivables	9	59,052	54,402
Amounts due from related companies	13	1,888	—
Pledged bank deposits		10,126	8,715
Bank balances and cash		132,064	27,648
		203,130	90,765
Current liabilities
Trade and other payables	10	88,902	51,940
Bank overdrafts		56	27,565
		88,958	79,505
Net current assets		114,172	11,260
Total assets less current liabilities		118,516	16,249
Minority interests		(4,588)	(4,513)
		123,104	20,762
Capital and reserves
Share capital	11	86,616	79,616
Reserves		36,488	(58,854)
		123,104	20,762

— 57 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June, 2002

Share capital Share premium Capital redemption reserve Negative goodwill Property revaluation reserve Investment property revaluation reserve Special capital reserve Accumulated losses Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2001 76,157 40,825 1,074 16,042 30,480 1,293 — (145,552) 20,319 Net loss not recognised in the income statement — deficit arising on revaluation of properties — — — — (7,009) (1,293) — — (8,302) Net loss for the period — — — — — — — (95,452) (95,452) At 30 June, 2001 76,157 40,825 1,074 16,042 23,471 — — (241,004) (83,435) Released upon disposal of subsidiaries — — — (16,042) (17,976) — — — (34,018) Issue of shares, net of expenses 72,000 27,427 — — — — — — 99,427 Effect of reduction in share capital (68,541) — — — — — 68,541 — — Net profit for the period — — — — — — — 38,788 38,788 At 31 December, 2001 79,616 68,252 1,074 — 5,495 — 68,541 (202,216) 20,762 Issue of shares, net of expenses 7,000 103,880 — — — — — — 110,880 Net loss for the period — — — — — — — (8,538) (8,538) At 30 June, 2002 86,616 172,132 1,074 — 5,495 — 68,541 (210,754) 123,104	Share capital Share premium Capital redemption reserve Negative goodwill Property revaluation reserve Investment property revaluation reserve Special capital reserve Accumulated losses Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2001 76,157 40,825 1,074 16,042 30,480 1,293 — (145,552) 20,319 Net loss not recognised in the income statement — deficit arising on revaluation of properties — — — — (7,009) (1,293) — — (8,302) Net loss for the period — — — — — — — (95,452) (95,452) At 30 June, 2001 76,157 40,825 1,074 16,042 23,471 — — (241,004) (83,435) Released upon disposal of subsidiaries — — — (16,042) (17,976) — — — (34,018) Issue of shares, net of expenses 72,000 27,427 — — — — — — 99,427 Effect of reduction in share capital (68,541) — — — — — 68,541 — — Net profit for the period — — — — — — — 38,788 38,788 At 31 December, 2001 79,616 68,252 1,074 — 5,495 — 68,541 (202,216) 20,762 Issue of shares, net of expenses 7,000 103,880 — — — — — — 110,880 Net loss for the period — — — — — — — (8,538) (8,538) At 30 June, 2002 86,616 172,132 1,074 — 5,495 — 68,541 (210,754) 123,104	Share capital Share premium Capital redemption reserve Negative goodwill Property revaluation reserve Investment property revaluation reserve Special capital reserve Accumulated losses Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2001 76,157 40,825 1,074 16,042 30,480 1,293 — (145,552) 20,319 Net loss not recognised in the income statement — deficit arising on revaluation of properties — — — — (7,009) (1,293) — — (8,302) Net loss for the period — — — — — — — (95,452) (95,452) At 30 June, 2001 76,157 40,825 1,074 16,042 23,471 — — (241,004) (83,435) Released upon disposal of subsidiaries — — — (16,042) (17,976) — — — (34,018) Issue of shares, net of expenses 72,000 27,427 — — — — — — 99,427 Effect of reduction in share capital (68,541) — — — — — 68,541 — — Net profit for the period — — — — — — — 38,788 38,788 At 31 December, 2001 79,616 68,252 1,074 — 5,495 — 68,541 (202,216) 20,762 Issue of shares, net of expenses 7,000 103,880 — — — — — — 110,880 Net loss for the period — — — — — — — (8,538) (8,538) At 30 June, 2002 86,616 172,132 1,074 — 5,495 — 68,541 (210,754) 123,104	Share capital Share premium Capital redemption reserve Negative goodwill Property revaluation reserve Investment property revaluation reserve Special capital reserve Accumulated losses Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2001 76,157 40,825 1,074 16,042 30,480 1,293 — (145,552) 20,319 Net loss not recognised in the income statement — deficit arising on revaluation of properties — — — — (7,009) (1,293) — — (8,302) Net loss for the period — — — — — — — (95,452) (95,452) At 30 June, 2001 76,157 40,825 1,074 16,042 23,471 — — (241,004) (83,435) Released upon disposal of subsidiaries — — — (16,042) (17,976) — — — (34,018) Issue of shares, net of expenses 72,000 27,427 — — — — — — 99,427 Effect of reduction in share capital (68,541) — — — — — 68,541 — — Net profit for the period — — — — — — — 38,788 38,788 At 31 December, 2001 79,616 68,252 1,074 — 5,495 — 68,541 (202,216) 20,762 Issue of shares, net of expenses 7,000 103,880 — — — — — — 110,880 Net loss for the period — — — — — — — (8,538) (8,538) At 30 June, 2002 86,616 172,132 1,074 — 5,495 — 68,541 (210,754) 123,104	Share capital Share premium Capital redemption reserve Negative goodwill Property revaluation reserve Investment property revaluation reserve Special capital reserve Accumulated losses Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2001 76,157 40,825 1,074 16,042 30,480 1,293 — (145,552) 20,319 Net loss not recognised in the income statement — deficit arising on revaluation of properties — — — — (7,009) (1,293) — — (8,302) Net loss for the period — — — — — — — (95,452) (95,452) At 30 June, 2001 76,157 40,825 1,074 16,042 23,471 — — (241,004) (83,435) Released upon disposal of subsidiaries — — — (16,042) (17,976) — — — (34,018) Issue of shares, net of expenses 72,000 27,427 — — — — — — 99,427 Effect of reduction in share capital (68,541) — — — — — 68,541 — — Net profit for the period — — — — — — — 38,788 38,788 At 31 December, 2001 79,616 68,252 1,074 — 5,495 — 68,541 (202,216) 20,762 Issue of shares, net of expenses 7,000 103,880 — — — — — — 110,880 Net loss for the period — — — — — — — (8,538) (8,538) At 30 June, 2002 86,616 172,132 1,074 — 5,495 — 68,541 (210,754) 123,104	Share capital Share premium Capital redemption reserve Negative goodwill Property revaluation reserve Investment property revaluation reserve Special capital reserve Accumulated losses Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2001 76,157 40,825 1,074 16,042 30,480 1,293 — (145,552) 20,319 Net loss not recognised in the income statement — deficit arising on revaluation of properties — — — — (7,009) (1,293) — — (8,302) Net loss for the period — — — — — — — (95,452) (95,452) At 30 June, 2001 76,157 40,825 1,074 16,042 23,471 — — (241,004) (83,435) Released upon disposal of subsidiaries — — — (16,042) (17,976) — — — (34,018) Issue of shares, net of expenses 72,000 27,427 — — — — — — 99,427 Effect of reduction in share capital (68,541) — — — — — 68,541 — — Net profit for the period — — — — — — — 38,788 38,788 At 31 December, 2001 79,616 68,252 1,074 — 5,495 — 68,541 (202,216) 20,762 Issue of shares, net of expenses 7,000 103,880 — — — — — — 110,880 Net loss for the period — — — — — — — (8,538) (8,538) At 30 June, 2002 86,616 172,132 1,074 — 5,495 — 68,541 (210,754) 123,104	Share capital Share premium Capital redemption reserve Negative goodwill Property revaluation reserve Investment property revaluation reserve Special capital reserve Accumulated losses Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2001 76,157 40,825 1,074 16,042 30,480 1,293 — (145,552) 20,319 Net loss not recognised in the income statement — deficit arising on revaluation of properties — — — — (7,009) (1,293) — — (8,302) Net loss for the period — — — — — — — (95,452) (95,452) At 30 June, 2001 76,157 40,825 1,074 16,042 23,471 — — (241,004) (83,435) Released upon disposal of subsidiaries — — — (16,042) (17,976) — — — (34,018) Issue of shares, net of expenses 72,000 27,427 — — — — — — 99,427 Effect of reduction in share capital (68,541) — — — — — 68,541 — — Net profit for the period — — — — — — — 38,788 38,788 At 31 December, 2001 79,616 68,252 1,074 — 5,495 — 68,541 (202,216) 20,762 Issue of shares, net of expenses 7,000 103,880 — — — — — — 110,880 Net loss for the period — — — — — — — (8,538) (8,538) At 30 June, 2002 86,616 172,132 1,074 — 5,495 — 68,541 (210,754) 123,104	Share capital Share premium Capital redemption reserve Negative goodwill Property revaluation reserve Investment property revaluation reserve Special capital reserve Accumulated losses Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2001 76,157 40,825 1,074 16,042 30,480 1,293 — (145,552) 20,319 Net loss not recognised in the income statement — deficit arising on revaluation of properties — — — — (7,009) (1,293) — — (8,302) Net loss for the period — — — — — — — (95,452) (95,452) At 30 June, 2001 76,157 40,825 1,074 16,042 23,471 — — (241,004) (83,435) Released upon disposal of subsidiaries — — — (16,042) (17,976) — — — (34,018) Issue of shares, net of expenses 72,000 27,427 — — — — — — 99,427 Effect of reduction in share capital (68,541) — — — — — 68,541 — — Net profit for the period — — — — — — — 38,788 38,788 At 31 December, 2001 79,616 68,252 1,074 — 5,495 — 68,541 (202,216) 20,762 Issue of shares, net of expenses 7,000 103,880 — — — — — — 110,880 Net loss for the period — — — — — — — (8,538) (8,538) At 30 June, 2002 86,616 172,132 1,074 — 5,495 — 68,541 (210,754) 123,104	Share capital Share premium Capital redemption reserve Negative goodwill Property revaluation reserve Investment property revaluation reserve Special capital reserve Accumulated losses Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2001 76,157 40,825 1,074 16,042 30,480 1,293 — (145,552) 20,319 Net loss not recognised in the income statement — deficit arising on revaluation of properties — — — — (7,009) (1,293) — — (8,302) Net loss for the period — — — — — — — (95,452) (95,452) At 30 June, 2001 76,157 40,825 1,074 16,042 23,471 — — (241,004) (83,435) Released upon disposal of subsidiaries — — — (16,042) (17,976) — — — (34,018) Issue of shares, net of expenses 72,000 27,427 — — — — — — 99,427 Effect of reduction in share capital (68,541) — — — — — 68,541 — — Net profit for the period — — — — — — — 38,788 38,788 At 31 December, 2001 79,616 68,252 1,074 — 5,495 — 68,541 (202,216) 20,762 Issue of shares, net of expenses 7,000 103,880 — — — — — — 110,880 Net loss for the period — — — — — — — (8,538) (8,538) At 30 June, 2002 86,616 172,132 1,074 — 5,495 — 68,541 (210,754) 123,104	Share capital Share premium Capital redemption reserve Negative goodwill Property revaluation reserve Investment property revaluation reserve Special capital reserve Accumulated losses Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January, 2001 76,157 40,825 1,074 16,042 30,480 1,293 — (145,552) 20,319 Net loss not recognised in the income statement — deficit arising on revaluation of properties — — — — (7,009) (1,293) — — (8,302) Net loss for the period — — — — — — — (95,452) (95,452) At 30 June, 2001 76,157 40,825 1,074 16,042 23,471 — — (241,004) (83,435) Released upon disposal of subsidiaries — — — (16,042) (17,976) — — — (34,018) Issue of shares, net of expenses 72,000 27,427 — — — — — — 99,427 Effect of reduction in share capital (68,541) — — — — — 68,541 — — Net profit for the period — — — — — — — 38,788 38,788 At 31 December, 2001 79,616 68,252 1,074 — 5,495 — 68,541 (202,216) 20,762 Issue of shares, net of expenses 7,000 103,880 — — — — — — 110,880 Net loss for the period — — — — — — — (8,538) (8,538) At 30 June, 2002 86,616 172,132 1,074 — 5,495 — 68,541 (210,754) 123,104
	76,157 — 72,000 (68,541) — 79,616 7,000 —	40,825 — 27,427 — — 68,252 103,880 —	1,074 — — — — 1,074 — —	16,042 (16,042) — — — — — —	23,471 (17,976) — — — 5,495 — —	— — — — — — — —	— — — 68,541 — 68,541 — —	(241,004) — — — 38,788 (202,216) — (8,538)	(83,435) (34,018) 99,427 — 38,788
									20,762 110,880 (8,538)
	86,616	172,132	1,074	—	5,495	—	68,541	(210,754)	123,104

— 58 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 30 June, 2002

	Six months ended	Six months ended	Six months ended
	**30 **	June,
	2002		2001
	HK$’000	HK$’000
	(Unaudited)	(Unaudited)
Net cash from operating activities	21,360		24,751
Net cash used in investing activities	(1,547)		(232)
Net cash from (used in) financing activities	112,112		(12,849)
Net increase in cash and cash equivalents	131,925		11,670
Cash and cash equivalents at 1 January	83		(11,606)
Cash and cash equivalents at 30 June	132,008		64
Analysis of the balances of cash and cash equivalents
Bank balances and cash	132,064		800
Bank overdrafts	(56)		(736)
	132,008		64

— 59 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30 June, 2002

1. BASIS OF PREPARATION

The condensed financial statements have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and with Statement of Standard Accounting Practice (“SSAP”) 25 “Interim financial reporting” issued by the Hong Kong Society of Accountants.

2. PRINCIPAL ACCOUNTING POLICIES

The condensed financial statements have been prepared under the historical cost convention, as modified for the revaluation of investment properties.

The accounting policies adopted are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31 December, 2001, except as described below.

In the current period, the Group has adopted, for the first time, a number of revised and new SSAPs as follows:

SSAP 1 (Revised) Presentation of financial statements SSAP 11 (Revised) Foreign currency translation SSAP 15 (Revised) Cash flow statements SSAP 34 Employee benefits

The adoption of these revised and new SSAPs has resulted in the adoption of the following revised and new accounting policies and changes in the presentation of cash flow statement and the statement of changes in equity.

SSAP 11 (Revised) has eliminated the choice of translating the income statements of overseas subsidiaries at the closing rate for the period. They are now required to be translated at an average rate. Accordingly, on consolidation, the assets and liabilities of the Group’s overseas subsidiary are translated at the exchange rate prevailing on the balance sheet date. Income and expense items are translated at the average exchange rate for the period. Exchange differences arising, if any, are classified as equity and transferred to the Group’s translation reserve. Such translation differences are recognised as income or expense in the period in which the Group’s overseas subsidiary is disposed of.

Under SSAP 15 (Revised), cash flows are now classified under three headings including operating, investing and financing activities. Interests and dividends paid which were previously presented under a separate heading are now classified as operating and financing cash flows respectively, whereas interests and dividends received are now classified as investing cash flows. Cash flows arising from taxes on income are now classified as operating activities, unless they can be separately identified with investing and financing activities.

SSAP 34 introduces measurement rulesfor employee benefits, including retirement benefit plans. The principal effect of the implementation of SSAP 34 is in connection with the recognition of costs for defined benefit retirement plan which is not applicable to the Group. Accordingly, the adoption of SSAP 34 has no significant financial impact on the Group.

The adoption of these revised and new accounting policies had no significant effect on the results for the current or prior accounting periods. Accordingly, no prior period adjustment is required. However, certain comparative amounts have been restated to have a consistent presentation.

— 60 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

3. SEGMENT INFORMATION

An analysis of the Group’s consolidated turnover and attributable loss from operations by business segments is as follows:

Business segments

For the six months ended 30 June, 2002

Sales of air tickets Property investment HK$’000 HK$’000 REVENUE External sales 430,356 — SEGMENT RESULT (1,350) (135) Unallocated other income Unallocated corporate expenses Loss from operations	Other activities Consolidated Total HK$’000 HK$’000 — 430,356 — (1,485) 67 (6,604) (8,022)	Other activities Consolidated Total HK$’000 HK$’000 — 430,356 — (1,485) 67 (6,604) (8,022)
		67 (6,604

For the six months ended 30 June, 2001

Sales of air tickets Property investment HK$’000 HK$’000 REVENUE External sales 331,456 2,187 Inter-segment sales — 411 331,456 2,598 SEGMENT RESULT (1,692) (82,069) Unallocated other income Unallocated corporate expenses Loss from operations	Other activities Eliminations Consolidated Total HK$’000 HK$’000 HK$’000 235 — 333,878 — (411) — 235 (411) 333,878 (480) — (84,241) 18 (2,451) (86,674)

No analysis of the Group’s turnover and attributable loss from operations by geographic segment is presented as the Group’s turnover and loss from operations are mainly derived from the Hong Kong market.

— 61 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

4. LOSS FROM OPERATIONS

Loss from operations for the current period has been arrived at after charging depreciation of HK$805,000 (2001: HK$1,709,000).

5. TAXATION

No provision for Hong Kong Profits Tax has been made as the Company and its subsidiaries had no assessable profit for the period.

There was no significant unprovided deferred taxation for the period or at the balance sheet date.

6. DIVIDEND

There was no dividend paid during the period.

7. LOSS PER SHARE

The calculation of the basic loss per share is based on the net loss for the six months ended 30 June, 2002 of HK$8,538,000 (six months ended 30 June, 2001: HK$95,452,000) and on the weighted average number of 4,021,390,293 (six months ended 30 June, 2001: 380,782,558) shares in issue during the period.

The comparative number of shares in issue during the six months ended 30 June, 2001 has been adjusted for the effect of consolidation of the Company’s shares on 29 August, 2001 as set out in the Group’s annual financial statements for the year ended 31 December, 2001.

There were no dilutive potential ordinary shares in issue during the six months ended 30 June, 2002 and 30 June, 2001.

8. INVESTMENT PROPERTIES

At 30 June, 2002, the directors considered the carrying amount of the Group’s investment properties carried at revalued amount and estimated that the carrying amount did not differ significantly from that which would be determined using the fair value at that date. Consequently, no revaluation surplus or deficit has been recognised in the current period.

The investment properties were vacant during the current period.

9. TRADE AND OTHER RECEIVABLES

At 30 June, 2002, included in trade and other receivables are trade receivables of HK$52,041,000 (31.12.2001: HK$49,414,000).

The Group grants a credit period ranging from 30 to 60 days on average to its customers.

— 62 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The following is an aged analysis of trade receivables at the balance sheet date:

0-30 days 31-60 days Over 60 days	30 June, 2002 31 December, 2001 HK$’000 HK$’000 46,085 41,043 2,474 6,473 3,482 1,898 52,041 49,414	30 June, 2002 31 December, 2001 HK$’000 HK$’000 46,085 41,043 2,474 6,473 3,482 1,898 52,041 49,414
		49,414

10. TRADE AND OTHER PAYABLES

At 30 June, 2002, included in trade and other payables are trade payables of HK$75,115,000 (31 December, 2001: HK$40,763,000).

The following is an aged analysis of trade payables at the balance sheet date:

0-30 days 31-60 days Over 60 days	30 June, 2002 31 December, 2001 HK$’000 HK$’000 72,866 39,470 889 761 1,360 532 75,115 40,763	30 June, 2002 31 December, 2001 HK$’000 HK$’000 72,866 39,470 889 761 1,360 532 75,115 40,763
		40,763

11. SHARE CAPITAL

Number of shares Ordinary shares of HK$0.02 each Issued and fully paid: Balance at 1 January, 2002 3,980,782,558 Issue of shares 350,000,000 Balance at 30 June, 2002 4,330,782,558	Amount HK$’000 79,616 7,000
	86,616

Pursuant to a conditional placing agreement entered into between the Company and an independent placing agent on 24 May, 2002 (the “Placement”), the Company issued 350,000,000 new shares of HK$0.02 each at a placing price of HK$0.32 per new share to certain independent third parties. The net proceeds from the Placement of approximately HK$111 million will be utilised partly for the Group’s working capital and partly for potential investments.

The new shares issued under the Placement rank pari passu in all respects with the then existing issued shares.

— 63 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

12. CAPITAL COMMITMENT

At 30 June, 2002, the Group had commitment in respect of capital contribution of approximately HK$18,692,000 (31 December, 2001: Nil) in an investment, contracted for but not provided in the financial statements.

13. CONNECTED AND RELATED PARTY TRANSACTIONS AND BALANCES

During the six months ended 30 June, 2001, the Group had certain transactions with related parties and, other than those as disclosed in the Group’s annual financial statements for the year ended 31 December, 2001, the Group also had the following transaction and balances with related parties:

• (a) On 25 March, 2002, the Group entered into an agreement (“Capital Injection Agreement”) with a brother of Mr. Dai Zhi Kang and (“ ”) in which Mr. Dai Zhi Kang has a beneficial interest. Mr. Dai Zhi Kang is a director of the Company and has a beneficial interest in the Company. Pursuant to the Capital Injection Agreement, the Group has conditionally agreed to inject RMB20,000,000 (equivalent to approximately HK$18,692,000 as additional capital into (“ ”) in which the brother of Mr. Dai Zhi Kang and owned 75% and 25% of its registered capital respectively. is a limited liability company established in the People’s Republic of China (the “PRC”) and is principally engaged in property development and property management services in the PRC. The transaction was completed in August 2002 and the registered capital of is owned as to 25% by the Group.

• (b) As 30 June, 2001, the amounts due from related companies represent the balances of operating funds due from certain group companies of a minority shareholder of the Company’s subsidiaries in connection with the management agreement as set out in the Group’s annual financial statements for year ended 31 December, 2001. The amounts are unsecured, interest-free and are repayable on demand.

14. POST BALANCE SHEET EVENT

On 12 August, 2002, the Group entered into a joint venture agreement with an independent third party to establish a joint venture (“Joint Venture”) in the PRC which will be principally engaged in travel related business in the PRC, including golf and tourist resort management and other related services. Pursuant to the joint venture agreement, the Group agreed to contribute RMB18,200,000 (equivalent to approximately HK$17,010,000) in the Joint Venture. Upon completion of this transaction, the Group will own 91% of the registered capital of the Joint Venture. The transaction has not yet been completed as of the date of this report.

3. INDEBTEDNESS STATEMENT

At the close of business on 31 August, 2002, being the Latest Practicable Date for the purpose of ascertaining certain financial information relating to this indebtedness statement prior to printing of this circular, the Group had total outstanding debt of approximately HK$70,022,000 comprising unsecured trade creditors of approximately HK$67,949,000 and amount due to related companies of approximately HK$2,073,000 which are unsecured, non-interest bearing and repayable on demand.

Save for the above, the Group does not the have any outstanding borrowings, pledge of assets and contingent liabilities.

4. WORKING CAPITAL

The Director are of the opinion that in the absence of unforeseen circumstances, the Group will have sufficient working capital for its present requirements.

— 64 —

Shanghai Century Holdings Limited

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

5. MATERIAL CHANGE

The Directors are not aware of any material adverse change in the financial or trading position or contingent liabilities of the Group since 31 December, 2001, being the date to which the latest published audited financial statements of the Company were made up.

6. IMPLICATION UNDER PRACTICE NOTE 19 OF THE LISTING RULES

As disclosed in the accountants’ report of Shanghai Zendai Land as set out in Appendix II to this circular, Shanghai Zendai Land had made advances of an aggregate amount of approximately RMB58,339,000 (equivalent to approximately HK$54,524,000) to , an associate of Mr. Dai Zhi Chang, the elder brother of Mr. Dai Zhi Kang, an executive Director, since November 2001. The advances being short-term financing to are unsecured, non-interest bearing and have no fixed terms of repayment. As at the Latest Practicable Date, the registered capital of is beneficially owned as to 18.75% by Shanghai Zendai Investment, 56.25% by Mr. Dai Zhi Chang, the elder brother of Mr. Dai Zhi Kang and the remaining 25% by Best East Developments Limited, a wholly owned subsidiary of the Company.

Following the Completion, Shanghai Zendai Land will become a subsidiary of the Company and the aggregate advances made by Shanghai Zendai Land to will therefore represent approximately 263% of the Group’s audited consolidated net assets value of approximately HK$20.76 million as at 31 December, 2001. The advances also represent approximately 42% of the Group’s unaudited pro forma adjusted consolidated net tangible assets as shown in paragraph 7 of this appendix. As such, the Company will be subject to the disclosure obligation under Practice Note 19 of the Listing Rules regarding such advances and an announcement will be made to set out further details as required under the Listing Rules immediately upon the despatch of this document.

However, has undertaken to the Group for the repayment of the aforesaid advances within two months after the Completion. In addition, Shanghai Zendai Investment Management has guaranteed the repayment of the aforesaid advances by to Shanghai Zendai Land in case of failing to repay the advances within the time specified.

Save for the above disclosed, the Directors have confirmed that as the Latest Practicable Date, they were not aware of any circumstances which would give rise to a disclosure requirement under the Practice Note 19 of the Listing Rules.

— 65 —

Shanghai Century Holdings Limited

APPENDIX I FINANCIAL INFORMATION ON THE GROUP

7. PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP FOLLOWING THE COMPLETION OF THE SHARE PURCHASE

The following statement of unaudited pro forma adjusted consolidated net tangible assets of the Group is prepared based on the net tangible assets of the Group as stated in the unaudited consolidated financial statements of the Group as at 30 June, 2002 and adjusted as follows:

			HK$’000	HK$’000
Unaudited consolidated net tangible assets as at 30 June, 2002 Capital injection for 91% interest in Share of net assets value of			17,010	123,104
Cash injection			(17,010)	—
Acquisition of 65% interest in Shanghai Zendai Land
Share of pro forma net assets value of Shanghai Zendai Land
to be acquired			71,455
Considerations			(65,422)	6,033
Unaudited pro forma adjusted consolidated net tangible assets				129,137

— 66 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

The following is the text of a report, prepared for the purpose of inclusion in this circular, received from the reporting accountants, KLL Associates CPA Limited, Certified Public Accountants, Hong Kong.

==> picture [227 x 66] intentionally omitted <==

Suite 1303

Shanghai Industrial Investment Building, 60 Hennessy Road,

Wanchai, Hong Kong

8 November, 2002

The Directors

SHANGHAI ZENDAI REAL ESTATE COMPANY LIMITED

(incorporated in the People’s Republic of China with limited liability)

Dear Sirs,

We set out below our report on the financial information (“Financial Information”) regarding Shanghai Zendai Real Estate Company Limited (the “Company”) for inclusion in the circular of Shanghai Century Holdings Limited dated 8 November, 2002 in connection with the proposed acquisition of a 65% interest in the registered and paid up capital of the Company.

The Company was incorporated as a limited liability company in the People’s Republic of China (the “PRC”) on August 31, 1999. The Company is mainly in the business of property development since the date of its incorporation.

The accounts of the Company were prepared in accordance with the applicable accounting principles and financial regulations in the PRC for each of the period from August 31, 1999 (date of incorporation) to December 31, 1999, two years ended December 31, 2001 and the 8 months period ended August 31, 2002 (“Relevant Periods”) and were audited by the PRC auditors, Shanghai Zhonghua Certified Public Accountants Co., Limited. For the purpose of this report, we have undertaken our own independent audit, in accordance with the Statements of Auditing Standards issued by the Hong Kong Society of Accountants (“HKSA”), of the accounts of the Company for the Relevant Periods.

We have examined the Financial Information and have carried out such additional procedures where are necessary, in accordance with the Auditing Guideline “Prospectuses and the reporting accountant” issued by the HKSA.

The Financial Information has been prepared based on the audited accounts of the Company. The directors of the Company are responsible for preparing these accounts which give a true and fair view. In preparing these accounts, it is fundamental that appropriate accounting policies are selected and applied consistently.

The directors of the Company are responsible for the Financial Information. It is our responsibility to form an independent opinion on the results and cash flows of the Company for the Relevant Periods and the balance sheets of the Company as at December 31, 1999, 2000 and 2001 and August 31, 2002.

— 67 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

In our opinion, the Financial Information, for the purpose of this report gives a true and fair view of the results and cash flows of the Company for the Relevant Periods and of the balance sheets of the Company as at December 31, 1999, 2000, 2001 and August 31, 2002.

FINANCIAL INFORMATION

I. INCOME STATEMENTS

The following is a summary of the income statements of the Company for the Relevant Periods, prepared on the basis set out in Section V below:

		Period from
		August 31,
		1999 (Date of			8 months
		incorporation) to	Year ended	Year ended	period ended
		December 31,	December 31,	December 31,	August 31,
	Notes	1999	2000	2001	2002
		RMB’000	RMB’000	RMB’000	RMB’000
Turnover	3	—	—	35,733	—
Cost of sales		—	—	(25,773)	—
Gross profits		—	—	9,960	—
Other revenue		—	—	—	274
Selling and promotional
expenses		—	—	(4,255)	(5,268)
General and
administrative expenses		(366)	(4,327)	(6,742)	(6,142)
Loss from operation	4	(366)	(4,327)	(1,037)	(11,136)
Finance cost	5	—	—	(416)	—
Loss before taxation		(366)	(4,327)	(1,453)	(11,136)
Taxation	6	—	—	(1,160)	—
Loss for the period/year		(366)	(4,327)	(2,613)	(11,136)

— 68 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

II. BALANCE SHEETS

The following is a summary of the balance sheets of the Company as at the end of the Relevant Periods prepared on the basis set out in Section V below:

Notes As at December 31, 1999 As at December 31, 2000 As at December 31, 2001 As at August 31, 2002 RMB’000 RMB’000 RMB’000 RMB’000 NON-CURRENT ASSETS Property, plant and equipment 9 — 1,141 3,583 3,313 Land and property held for/under development for sale 10 10,566 62,973 222,970 357,569 10,566 64,114 226,553 360,882 CURRENT ASSETS Accounts receivable 11 — — 1,739 1,841 Prepayments, deposits and other receivable 12 36,808 7,694 100,207 193,283 Amount due from a related company 13 — — — 58,339 Amount due from an equity owner 14 — — 783 718 Interests in subsidiaries 15 — 70,832 25,860 — Interest in an associated company 16 — — 120,040 — Bank balances and cash 17 2,423 9,619 76,709 15,871 Restricted cash 18 — — 45,000 45,000 Investment in securities 19 — — 5,000 2,111 39,231 88,145 375,338 317,163	Notes As at December 31, 1999 As at December 31, 2000 As at December 31, 2001 As at August 31, 2002 RMB’000 RMB’000 RMB’000 RMB’000 NON-CURRENT ASSETS Property, plant and equipment 9 — 1,141 3,583 3,313 Land and property held for/under development for sale 10 10,566 62,973 222,970 357,569 10,566 64,114 226,553 360,882 CURRENT ASSETS Accounts receivable 11 — — 1,739 1,841 Prepayments, deposits and other receivable 12 36,808 7,694 100,207 193,283 Amount due from a related company 13 — — — 58,339 Amount due from an equity owner 14 — — 783 718 Interests in subsidiaries 15 — 70,832 25,860 — Interest in an associated company 16 — — 120,040 — Bank balances and cash 17 2,423 9,619 76,709 15,871 Restricted cash 18 — — 45,000 45,000 Investment in securities 19 — — 5,000 2,111 39,231 88,145 375,338 317,163	Notes As at December 31, 1999 As at December 31, 2000 As at December 31, 2001 As at August 31, 2002 RMB’000 RMB’000 RMB’000 RMB’000 NON-CURRENT ASSETS Property, plant and equipment 9 — 1,141 3,583 3,313 Land and property held for/under development for sale 10 10,566 62,973 222,970 357,569 10,566 64,114 226,553 360,882 CURRENT ASSETS Accounts receivable 11 — — 1,739 1,841 Prepayments, deposits and other receivable 12 36,808 7,694 100,207 193,283 Amount due from a related company 13 — — — 58,339 Amount due from an equity owner 14 — — 783 718 Interests in subsidiaries 15 — 70,832 25,860 — Interest in an associated company 16 — — 120,040 — Bank balances and cash 17 2,423 9,619 76,709 15,871 Restricted cash 18 — — 45,000 45,000 Investment in securities 19 — — 5,000 2,111 39,231 88,145 375,338 317,163	Notes As at December 31, 1999 As at December 31, 2000 As at December 31, 2001 As at August 31, 2002 RMB’000 RMB’000 RMB’000 RMB’000 NON-CURRENT ASSETS Property, plant and equipment 9 — 1,141 3,583 3,313 Land and property held for/under development for sale 10 10,566 62,973 222,970 357,569 10,566 64,114 226,553 360,882 CURRENT ASSETS Accounts receivable 11 — — 1,739 1,841 Prepayments, deposits and other receivable 12 36,808 7,694 100,207 193,283 Amount due from a related company 13 — — — 58,339 Amount due from an equity owner 14 — — 783 718 Interests in subsidiaries 15 — 70,832 25,860 — Interest in an associated company 16 — — 120,040 — Bank balances and cash 17 2,423 9,619 76,709 15,871 Restricted cash 18 — — 45,000 45,000 Investment in securities 19 — — 5,000 2,111 39,231 88,145 375,338 317,163	Notes As at December 31, 1999 As at December 31, 2000 As at December 31, 2001 As at August 31, 2002 RMB’000 RMB’000 RMB’000 RMB’000 NON-CURRENT ASSETS Property, plant and equipment 9 — 1,141 3,583 3,313 Land and property held for/under development for sale 10 10,566 62,973 222,970 357,569 10,566 64,114 226,553 360,882 CURRENT ASSETS Accounts receivable 11 — — 1,739 1,841 Prepayments, deposits and other receivable 12 36,808 7,694 100,207 193,283 Amount due from a related company 13 — — — 58,339 Amount due from an equity owner 14 — — 783 718 Interests in subsidiaries 15 — 70,832 25,860 — Interest in an associated company 16 — — 120,040 — Bank balances and cash 17 2,423 9,619 76,709 15,871 Restricted cash 18 — — 45,000 45,000 Investment in securities 19 — — 5,000 2,111 39,231 88,145 375,338 317,163
	10,566 — 36,808 — — — — 2,423 — — 39,231	64,114 — 7,694 — — 70,832 — 9,619 — — 88,145	226,553 1,739 100,207 — 783 25,860 120,040 76,709 45,000 5,000 375,338	360,882
				1,841 193,283 58,339 718 — — 15,871 45,000 2,111
				317,163

— 69 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

		As at	As at	As at	As at
		December 31,	December 31,	December 31,	August 31,
	Notes	1999	2000	2001	2002
		RMB’000	RMB’000	RMB’000	RMB’000
CURRENT LIABILITIES
Accounts payable	20	—	—	9,150	8,319
Amounts due to related
companies	21	—	20,000	49,146	—
Amounts due to subsidiaries	15	—	—	67,443	—
Other payable and
accrued charges	22	40,663	66,952	208,298	414,168
Bank loan (secured)	23	—	20,000	174,000	154,000
Taxation		—	—	1,160	—
		40,663	106,952	509,197	576,487
NET CURRENT
LIABILITIES		(1,432)	(18,807)	(133,859)	(259,324)
TOTAL ASSETS LESS
CURRENT LIABILITIES		9,134	45,307	92,694	101,558
NON-CURRENT
LIABILITIES
Bank loan (secured)	23	—	—	—	20,000
NET ASSETS		9,134	45,307	92,694	81,558
CAPITAL AND RESERVES
Paid-up capital	24	9,500	50,000	100,000	100,000
Reserves		(366)	(4,693)	(7,306)	(18,442)
		9,134	45,307	92,694	81,558

— 70 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

III. CASH FLOW STATEMENT

The following is a summary of the cash flow statement of the Company for the Relevant Periods, prepared on the basis set out in Section V below:

		Period from
		August 31,
		1999 (Date of			8 months
		incorporation) to	Year ended	Year ended	period ended
		December 31,	December 31,	December 31,	August 31,
	Notes	1999	2000	2001	2002
		RMB’000	RMB’000	RMB’000	RMB’000
Net cash outflow from
operating activities	25(a)	(7,077)	(27,970)	(68,598)	(101,341)
Taxation
PRC income tax paid		—	—	—	(1,160)
Investing activities
Interest expense		—	—	(416)	—
Purchase of fixed assets		—	(1,234)	(2,896)	(326)
Investment in
subsidiaries		—	(24,100)	—	—
Investment in an
associated company		—	—	(15,000)	—
Disposal of subsidiaries		—	—	—	24,100
Disposal of an
associated company		—	—	—	15,000
Increase in restricted
cash		—	—	(45,000)	—
Investment in securities		—	—	(5,000)	2,889
Net cash (outflow)/inflow
from investing
activities		—	(25,334)	(68,312)	41,663
Net cash outflow before
financing		(7,077)	(53,304)	(136,910)	(60,838)

— 71 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

		Period from
		August 31,
		1999 (Date of			8 months
		incorporation) to	Year ended	Year ended	period ended
		December 31,	December 31,	December 31,	August 31,
	Notes	1999	2000	2001	2002
		RMB’000	RMB’000	RMB’000	RMB’000
Financing	25(b)
New bank loan raised		—	20,000	154,000	—
Increase in fully paid
up capital		9,500	40,500	50,000	—
Net cash inflow from
financing		9,500	60,500	204,000	—
Increase/(decrease) in
cash and cash
equivalents		2,423	7,196	67,090	(60,838)
Cash and cash equivalents
at beginning of the
period/year		—	2,423	9,619	76,709
Cash and cash equivalents
at end of the
period/year		2,423	9,619	76,709	15,871
Analysis of the balances
of cash and cash
equivalents
Bank balances and cash		2,423	9,619	76,709	15,871

— 72 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

IV. STATEMENT OF CHANGES IN EQUITY

	Paid-up
	capital	Accumulated
	Note 24	(losses)	Total
	RMB’000	RMB’000	RMB’000
Balance at August 31, 1999	9,500	—	9,500
Net loss for the period	—	(366)	(366)
Balance at December 31, 1999	9,500	(366)	9,134
Net loss for the year	—	(4,327)	(4,327)
Increase in fully paid-up capital	40,500	—	40,500
Balance at December 31, 2000	50,000	(4,693)	45,307
Net loss for the year	—	(2,613)	(2,613)
Increase in fully paid up capital	50,000	—	50,000
Balance at December 31, 2001	100,000	(7,306)	92,694
Net loss for the period	—	(11,136)	(11,136)
Balance at August 31, 2002	100,000	(18,442)	81,558

— 73 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

V. NOTES TO THE FINANCIAL STATEMENTS

1. GENERAL

The Company was incorporated as a limited liability company in the PRC on August 31, 1999. The Company is mainly in the business of property development since the date of its incorporation.

2. PRINCIPAL ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of Financial Information set out in this report are as set out below. These policies conform with Statements of Standard Accounting Practice issued by the Hong Kong Society of Accountants and accounting principles generally accepted in Hong Kong. The Financial Information in this report is prepared under the historical cost convention.

a) Interests in associated companies

An associated company is a company, other than a subsidiary, if 20% or more of its voting issued shares or equity interests is held, directly or indirectly, by the Company for long term and over which the Company is in a position to exercise significant influence in management, including participation in commercial and financial policy decisions. The results of associates are accounted for by the Company on the basis of dividends received and receivable during the year. Investments in associates are included in the Company’s balance sheet at fair value. Unrealised gains and losses are dealt with in equity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously dealt with in equity is included in the net profit or loss for the period.

b) Interests in subsidiaries

A company is a subsidiary if more than 50% of its voting issued shares or equity interests is held, directly or indirectly, by the Company for long term or if the composition of its board of directors is controlled by the Company. Investments in subsidiaries are included in the Company’s balance sheet at fair value. Unrealised gains and losses are dealt with in equity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is included in the net profit or loss for the period.

c) Related companies

Companies are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial or operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence.

d) Property, plant and equipment

Property, plant and equipment are stated at cost less depreciation and accumulated impairment losses. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its present working condition and location for its intended use. Expenditure incurred after the asset has been put into operation, such as repairs and maintenance and overhaul costs, is charged to the income statement in the year in which it is incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of the asset, the expenditure is capitalised as an additional cost of the asset.

Depreciation is provided to write off the cost of property, plant and equipment over their estimated useful lives using the straight line method, at the following rates per annum:

Furniture, fixtures and equipment 20% Motor vehicles 20%

— 74 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

e) Land and property held for/under development for sale

Land and property held for/under development for sale are stated at cost which comprises land at cost, development and construction expenditures, borrowing costs capitalised and other direct costs attributable to the development less impairment losses.

f) Deferred taxation

Deferred taxation is accounted for at the current taxation rate in respect of timing differences between profit as computed for taxation purposes and profit as stated in the accounts to the extent that a liability to be payable or recoverable in the foreseeable future.

g) Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of them to get ready for its intended use or sale are capitalised as part of cost of that asset. All other borrowing costs are charged to the income statement in the year in which they are incurred.

h) Segment reporting

In accordance with the Company’s internal financial reporting the Company has determined that business segments be presented as the primary reporting format and geographical as the secondary reporting format.

Unallocated costs represent corporate expenses. Segment assets consist primarily of property, plant and equipment, other investments, properties held for/under development for sale, receivables and operating cash. Segment liabilities comprise operating liabilities and exclude items such as taxation and certain corporate borrowings. Capital expenditure comprises additions to the property, plant and equipment.

In respect of geographical segment reporting, sales are based on the country in which the operation is located. Total assets and capital expenditure are where the assets are located.

i) Impairment

At each balance sheet date, the Company reviews the carrying amounts of its tangible asset to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Impairment losses are recognized as an expense immediately, unless the relevant asset is carried a re-valued amount under another accounting standard, in which case the impairment loss is treated as revaluation decrease under that accounting standard.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized as income immediately, unless the relevant asset is carried at a re-valued amount under another accounting standard, in which case the reversal of the impairment loss is treated as a revaluation increase under that other accounting standard.

— 75 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

3. TURNOVER AND SEGMENT INFORMATION

Turnover derived from the Company’s principal activity comprises proceeds from sale of properties (excluding proceeds on development properties sold prior to their completion which are included in receipt in advance under current liabilities).

No business and geographic segment information has been presented as the Company conduct their single line of business in the PRC and more than 90% of the total assets are located in the PRC.

4. LOSS FROM OPERATION

	Period from
	August 31,
	1999 (Date of			8 months
	incorporation) to	Year ended	Year ended	period ended
	December 31,	December 31,	December 31,	August 31,
	1999	2000	2001	2002
	RMB’000	RMB’000	RMB’000	RMB’000
The operating loss is stated after charging:
Depreciation of property, plant and equipment	—	93	454	581
Staff cost	—	812	1,908	2,199
Auditors’ remuneration	—	—	—	110
Operating lease rentals of land and buildings	—	286	1,320	492
Loss on disposal of property, plant and equipment	—	—	—	15
Cost of properties sold	—	—	25,773	—

5. FINANCE COSTS

	Period from
	August 31,
	1999 (Date of			8 months
	incorporation) to	Year ended	Year ended	period ended
	December 31,	December 31,	December 31,	August 31,
	1999	2000	2001	2002
	RMB’000	RMB’000	RMB’000	RMB’000
Interest on bank loans wholly repayable
within five years	—	10	4,045	4,981
Less: Portion capitalized	—	(10)	(3,629)	(4,981)
	—	—	416	—

— 76 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

6. TAXATION

							Period from
							August 31,
							1999 (Date of			8 months
							incorporation) to	Year ended	Year ended	period ended
							December 31,	December 31,	December 31,	August 31,
							1999	2000	2001	2002
							RMB’000	RMB’000	RMB’000	RMB’000
The	charge	comprises	provision	for	the	year	—	—	1,160	—

The PRC income tax is based on the statutory rate of 15% (2001: 15%) of the assessable income for the company as determined in accordance with the relevant PRC income tax rules and regulations during the Relevant Periods. No provision for taxation has been made for the period from August 31, 1999 to December 31 1999, year ended December 31, 2000 and 8 months period ended August 31, 2002 since the Company did not earn any assessable profits . Any taxation regarding the land and property were capitalized to land and property held for/under development for sale.

7. EARNINIGS PER SHARE

No earnings per share is presented as there were no shares in issue during the Relevant Periods.

8. DIRECTORS’ AND SENIOR MANAGEMENT’S EMOLUMENTS

(a) Details of the emoluments paid and payable to the directors during the Relevant Periods are as follows:

	Period from
	August 31,
	1999 (Date of			8 months
	incorporation) to	Year ended	Year ended	period ended
	December 31,	December 31,	December 31,	August 31,
	1999	2000	2001	2002
	RMB’000	RMB’000	RMB’000	RMB’000
Fees	—	—	—	—
Basic salaries, housing benefits,
other allowances and benefits in kind	—	—	—	—
	—	—	—	—

— 77 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

(b) The emoluments of the five highest emoluments individuals were as follows:

				Period from
				August 31,
				1999 (Date of			8 months
				incorporation) to	Year ended	Year ended	period ended
				December 31,	December 31,	December 31,	August 31,
				1999	2000	2001	2002
				RMB’000	RMB’000	RMB’000	RMB’000
Salaries	and	other	benefits	25	180	332	500

Their emoluments were within the following bands:

				Period from
				August 31,
				1999 (Date of			8 months
				incorporation) to	Year ended	Year ended	period ended
				December 31,	December 31,	December 31,	August 31,
				1999	2000	2001	2002
RMB	nil	to	RMB200,000	5	5	5	5

(c) During the Relevant Periods, no directors waived any emoluments and no emoluments have been paid by the Company to the directors or the five highest paid individuals as an inducement to join the Company, or as compensation for loss of office.

— 78 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

9. PROPERTY, PLANT AND EQUIPMENT

Furnitures, fixtures and equipment RMB’000 COST At August 31, 1999 and December 31, 1999 — Additions 504 At December 31, 2000 504 Additions 372 At December 31, 2001 876 Additions 57 Disposal (24) At August 31, 2002 909 ACCUMULATED DEPRECIATION At August 31, 1999 and December 31, 1999 — Provided for the year 34 At December 31, 2000 34 Provided for the year 106 At December 31, 2001 140 Provided for the period 137 Written back (9) At August 31, 2002 268 NET BOOK VALUE At August 31, 2002 641 At December 31, 2001 736 At December 31, 2000 470 At December 31, 1999 — At August 31, 1999 —	Furnitures, fixtures and equipment RMB’000 COST At August 31, 1999 and December 31, 1999 — Additions 504 At December 31, 2000 504 Additions 372 At December 31, 2001 876 Additions 57 Disposal (24) At August 31, 2002 909 ACCUMULATED DEPRECIATION At August 31, 1999 and December 31, 1999 — Provided for the year 34 At December 31, 2000 34 Provided for the year 106 At December 31, 2001 140 Provided for the period 137 Written back (9) At August 31, 2002 268 NET BOOK VALUE At August 31, 2002 641 At December 31, 2001 736 At December 31, 2000 470 At December 31, 1999 — At August 31, 1999 —	Motor vehicles RMB’000 — 730	Total RMB’000 — 1,234 1,234 2,896 4,130 326 (24) 4,432 — 93 93 454 547 581 (9) 1,119 3,313 3,583 1,141 — —
	504 372 876 57 (24)	730 2,524 3,254 269 —	1,234 2,896
			4,130 326 (24
	909	3,523
	— 34 34 106 140 137 (9)	— 59 59 348 407 444 —	— 93
			93 454
			547 581 (9
	268 641 736 470 — —	851 2,672 2,847 671 — —

— 79 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

10. LAND AND PROPERTY HELD FOR/UNDER DEVELOPMENT FOR SALE

At August 31, 1999 Additions At December 31, 1999 Addition At December 31, 2000 Addition At December 31, 2001 Addition At August 31, 2002	Land Construction in progress RMB’000 RMB’000 — — — 10,566	Land Construction in progress RMB’000 RMB’000 — — — 10,566	Total RMB’000 — 10,566
	— 27,830 27,830 — 27,830 —	10,566 24,577 35,143 159,997 195,140 134,599	10,566 52,407
			62,973 159,997
			222,970 134,599
	27,830	329,739	357,569

The land were located in the PRC and held under long-term leases. The Company has pledged the land and construction in progress having a net book value of approximately RMB60,000,000 to secure general banking facilities granted to the Company.

11. ACCOUNTS RECEIVABLE

	As at	As at	As at	As at
	December 31,	December 31,	December 31,	August 31,
	1999	2000	2001	2002
	RMB’000	RMB’000	RMB’000	RMB’000
Within 30 days	—	—	—	—
31 - 60 days	—	—	—	—
61 - 90 days	—	—	—	—
90 - 180 days	—	—	—	—
180 - 365 days	—	—	1,739	102
Over 1 year	—	—	—	1,739
	—	—	1,739	1,841

Consideration in respect of sold properties are payable by the purchasers pursuant to the terms of the sale and purchase agreements.

— 80 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

12. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

	At as	At as	As at	As at
	December 31,	December 31,	December 31,	August 31,
	1999	2000	2001	2002
	RMB’000	RMB’000	RMB’000	RMB’000
Prepayment (Note)	36,808	7,694	88,984	188,644
Deposits and other receivables	—	—	11,223	4,639
	36,808	7,694	100,207	193,283

Note: It represents the deposit for acquisition of land and construction contracts.

13. AMOUNT DUE FROM A RELATED COMPANY

Amounts due from a related company disclosed pursuant to Section 161B of the Hong Kong Companies Ordinance are as follows:

	As at	As at	As at	As at
	December 31,	December 31,	December 31,	August 31,
Name	1999	2000	2001	2002
	RMB’000	RMB’000	RMB’000	RMB’000
Shanghai New Century Shui Qing Mu Hua
Property Development Company Limited
(“New Century”) (Notes)	—	—	105,040	58,339
Maximum amount outstanding during the period/year	ended:
	December 31,	December 31,	December 31,	August 31,
	1999	2000	2001	2002
	RMB’000	RMB’000	RMB’000	RMB’000
Shanghai New Century Shui Qing Mu Hua Property
Development Company Limited	—	—	105,040	105,040

Notes:

1. The director of New Century, Mr. Dai Zhi Chang is a brother of Mr. Dai Zhi Feng, a director of the Company.

2. New Century was an associated company of the Company as at December 31, 2001. The amount due from New Century of RMB105,040,000 at December 31, 2001 was shown in the balance sheet as interests in an associated company as at December 31, 2001.

— 81 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

14. AMOUNT DUE FROM AN EQUITY OWNER

As at	As at	As at	As at
December 31,	December 31,	December 31,	August 31,
1999	2000	2001	2002
RMB’000	RMB’000	RMB’000	RMB’000
—	—	783	718

The advance is unsecured, non-interest bearing and has no fixed repayment terms.

15. INTERESTS IN SUBSIDIARIES

As at December 31, As at December 31, As at December 31, As at August 31, 1999 2000 2001 2002 RMB’000 RMB’000 RMB’000 RMB’000 Unlisted investments, at cost — 24,100 24,100 — Amounts due from subsidiaries — 46,732 1,760 — — 70,832 25,860 — Amounts due to subsidiaries — — (67,443) — — 70,832 (41,583) —	As at December 31, As at December 31, As at December 31, As at August 31, 1999 2000 2001 2002 RMB’000 RMB’000 RMB’000 RMB’000 Unlisted investments, at cost — 24,100 24,100 — Amounts due from subsidiaries — 46,732 1,760 — — 70,832 25,860 — Amounts due to subsidiaries — — (67,443) — — 70,832 (41,583) —	As at December 31, As at December 31, As at December 31, As at August 31, 1999 2000 2001 2002 RMB’000 RMB’000 RMB’000 RMB’000 Unlisted investments, at cost — 24,100 24,100 — Amounts due from subsidiaries — 46,732 1,760 — — 70,832 25,860 — Amounts due to subsidiaries — — (67,443) — — 70,832 (41,583) —	As at December 31, As at December 31, As at December 31, As at August 31, 1999 2000 2001 2002 RMB’000 RMB’000 RMB’000 RMB’000 Unlisted investments, at cost — 24,100 24,100 — Amounts due from subsidiaries — 46,732 1,760 — — 70,832 25,860 — Amounts due to subsidiaries — — (67,443) — — 70,832 (41,583) —	As at December 31, As at December 31, As at December 31, As at August 31, 1999 2000 2001 2002 RMB’000 RMB’000 RMB’000 RMB’000 Unlisted investments, at cost — 24,100 24,100 — Amounts due from subsidiaries — 46,732 1,760 — — 70,832 25,860 — Amounts due to subsidiaries — — (67,443) — — 70,832 (41,583) —
	— —	70,832 —	25,860 (67,443)	— —
	—	70,832	(41,583)	—

Details of the subsidiaries of the Company are as follows:

					Percentage of
			Place of		registered capital
			registration	Registered	held by the
**Name **	**of **	subsidiary	and operation	capital	Company	Principal activities
			The PRC The PRC The PRC	RMB’000 30,000 2,000 2,000	70% direct holding 75% direct holding 80% direct holding	Property development Property management Property development

The amounts due from/(to) subsidiaries are unsecured, interest-free and have no fixed repayment terms.

The interests in subsidiaries have not been consolidated because the investments were acquired and held exclusively with a view to its subsequent disposal in the near future. The investments are therefore accounted for as other investments under SSAP 24, and are carried at fair value.

— 82 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

16. INTERESTS IN AN ASSOCIATED COMPANY

		**As **	at	As at		As at	**As **	at
		December 31,		December 31,	December 31,		August 31,
		1999		2000		2001	2002
		RMB’000		RMB’000		RMB’000	RMB’000
Unlisted investments, at cost			—	—		15,000		—
Amount due from an associated company			—	—		105,040		—
			—	—		120,040		—
Details of the associated company	is as follows:
				Percentage of
	Place of			registered capital
	registration	Registered		held by the
Name of associated company	and operation	capital		Company		Principal activities
		RMB’000
Shanghai New Century Shui Qing	The PRC	80,000		25% direct holding		Property development
Mu Hua Property Development
Company Limited

The amount due from subsidiaries is unsecured, interest-free and has no fixed repayment terms.

The interests in associated company has not been accounted for using the equity method of accounting because the investment was acquired and held exclusively with a view to its subsequent disposal in the near future. The investment is therefore accounted for as other investment under SSAP 24, and is carried at fair value.

17. BANK BALANCES AND CASH

The Company’s bank balances and cash were denominated in Renminbi and deposited with banks in the PRC. The conversion of these Renminbi denominated balances into foreign currencies is subject to the rules and regulations of foreign exchanges control promulgated by the PRC government.

18. RESTRICTED CASH

The amount represents deposits pledged with a bank as securities against the issuance of letters of credit by the bank on

behalf.

— 83 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

19. INVESTMENT IN SECURITIES

		As at	As at	As at	As at
		December 31,	December 31,	December 31,	August 31,
		1999	2000	2001	2002
		RMB’000	RMB’000	RMB’000	RMB’000
	Equity securities:
	Local unlisted shares, at cost	—	—	5,000	100
	PRC listed shares, at cost and at market value	—	—	—	2,011
		—	—	5,000	2,111
20.	ACCOUNTS PAYABLES
		As at	As at	As at	As at
		December 31,	December 31,	December 31,	August 31,
		1999	2000	2001	2002
		RMB’000	RMB’000	RMB’000	RMB’000

Within 30 days 31 - 60 days — 61 - 90 days — 91 - 180 days — 181 - 365 days — Over 1 year — — The amount represents the unsettled balance for the subcontractors.	— — — — — —	— — — 9,150 — 9,150	— — — 8,319 —
			8,319

21. AMOUNTS DUE TO RELATED COMPANIES The amounts are unsecured, and interest free and have no fixed repayment terms.

22. OTHER PAYABLE AND ACCRUED CHARGES

	As at	As at	As at	As at
	December 31,	December 31,	December 31,	August 31,
	1999	2000	2001	2002
	RMB’000	RMB’000	RMB’000	RMB’000
Receipt in advance (Notes)	40,663	66,952	162,566	367,473
Accrued charges	—	—	732	1,695
Bills payable	—	—	45,000	45,000
	40,663	66,952	208,298	414,168

— 84 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

Notes:

1. The amounts represent the receipt in advance from purchasers for the acquisition of properties.

2. Mr. Dai Zhi Kang, a director of the Company, has entered into agreements to purchase the properties developed by the Company. Included in the receipt in advance, RMB5,000,000 and RMB20,587,000 as at December 31, 2001 and August 31, 2002 respectively, represent the prepayment made by Mr. Dai Zhi Kang for the purchase of properties.

23. BANK LOANS (SECURED)

	As at	As at	As at	As at
	December 31,	December 31,	December 31,	August 31,
	1999	2000	2001	2002
	RMB’000	RMB’000	RMB’000	RMB’000
Bank loans repayable over the following periods:
Secured (Note)
Within one year classified as current liabilities	—	20,000	174,000	154,000
Two to five years classified as non-current
liabilities	—	—	—	20,000
	—	20,000	174,000	174,000

Note:

The Company’s land and property held for/under development for sale have been pledged to its bankers to secure the bank borrowings of RMB60,000,000 granted to the Company in 2001 and 2002.

The loans of RMB114,000,000 in 2001 and 2002 were guaranteed by , a related company.

24. PAID-UP CAPITAL

					As at	As at	As at	As at
					December 31,	December 31,	December 31,	August 31,
					1999	2000	2001	2002
					RMB’000	RMB’000	RMB’000	RMB’000
Registered	and	fully	paid-up	capital	9,500	50,000	100,000	100,000

The Company was incorporated with a registered capital of RMB9,500,000 on August 31, 1999. The registered capital of the Company was increased from RMB9,500,000 to RMB50,000,000 on July 8, 2000. On the same date, RMB40,500,000 was fully paid up by the equity owners.

On February 5, 2001, the registered capital of the Company was increased from RMB50,000,000 to RMB100,000,000. RMB50,000,000 was fully paid up by the equity owners on March 9, 2001.

— 85 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

25. NOTES TO THE CASH FLOW STATEMENT

(a) Reconciliation of operating loss to net cash outflow from operating activities:

	Period from
	August 31,
	1999 (Date of			8 months
	incorporation) to	Year ended	Year ended	period ended
	December 31,	December 31,	December 31,	August 31,
	1999	2000	2001	2002
	RMB’000	RMB’000	RMB’000	RMB’000
Operating loss	(366)	(4,327)	(1,453)	(11,136)
Depreciation	—	93	454	581
Interest expenses	—	—	416	—
Decrease/(increase) in prepayments
and other receivables	(36,808)	29,114	(92,513)	(93,076)
Increase in other payables and accrued
charges	40,663	26,289	141,346	205,870
Increase in land and property held
for/under development for sale	(10,566)	(52,407)	(159,997)	(134,599)
Increase in accounts receivables	—	—	(1,739)	(102)
Increase/(decrease) in accounts
payable	—	—	9,150	(831)
(Increase)/decrease in amount due
from the equity owner	—	—	(783)	65
(Increase)/decrease in amount due
from subsidiaries	—	(46,732)	44,972	1,760
(Increase)/decrease in amount due
from associated company	—	—	(105,040)	105,040
Increase/(decrease) in amount due
to related companies	—	20,000	29,146	(49,146)
Increase in amount due from
a related company	—	—	—	(58,339)
Increase/(decrease) in amounts
due to subsidiaries	—	—	67,443	(67,443)
Loss on disposal of property,
plant and equipment	—	—	—	15
Net cash outflow from operating
activities	(7,077)	(27,970)	(68,598)	(101,341)

— 86 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

(b) Analysis of changes in financing during the Relevant Periods:

Balance at August 31, 1999 Cash inflow from financing Balance at December 31, 1999 Cash inflow from financing Balance at December 31, 2000 Cash inflow from financing Balance at December 31, 2001 and at August 31, 2002	Paid-up capital Bank loans RMB’000 RMB’000 — — 9,500 —	Paid-up capital Bank loans RMB’000 RMB’000 — — 9,500 —
	9,500 40,500 50,000 50,000	— 20,000
		20,000 154,000
	100,000	174,000

• (c) Major non-cash transactions

During the period ended August 31, 2002, no material non-cash transactions.

26. RELATED PARTY TRANSACTIONS

Apart from those disclosed in other notes to this report, the Company had the following significant transactions with related companies during the Relevant Periods:

		Period from
		August 31,
		1999 (Date of				8 months
		incorporation) to	Year ended	Year ended	period ended
		December 31,	December 31,	December 31,	August 31,
	Notes	1999	2000	2001		2002
		RMB’000	RMB’000	RMB’000		RMB’000
Disposal of investment in subsidiaries	1	—	—	—		24,100
Disposal of investment in
associated company	2	—	—	—		1,500
Disposal of investment in securities	2	—	—	—		5,000

1. The Company disposed the investment in subsidiaries to Shanghai New Century Shui Qing Mu Hua Property Development Company Limited, which is beneficially owned by Mr. Dai Zhi Chang, the brother of Mr. Dai Zhi Feng, a director of the Company. The consideration of disposal was based on cost of investment RMB24,100,000.

2. The Company disposed the investment in an associated company and securities to which is an existing equity owner of the Company. The consideration of disposal was based on cost of investment RMB1,500,000 and RMB5,000,000 respectively.

— 87 —

Shanghai Century Holdings Limited

APPENDIX II ACCOUNTANTS’ REPORT ON SHANGHAI ZENDAI LAND

27. DEFERRED TAXATION

No provision for deferred taxation has been made in the financial statements since there is no material timing differences.

28. COMMITMENTS

					8 months
		As at	As at	Year ended	period ended
		December 31,	December 31,	December 31,	August 31,
		1999	2000	2001	2002
		RMB’000	RMB’000	RMB’000	RMB’000
a)	Capital commitments for land interests
	contracted but not recognised	—	—	110,513	212,332
b)	Commitments in respect of property
	development projects contracted but not
	recognised	—	3,079	94,219	610,632
c)	Operating leases which expire within one
	year	—	—	—	300

29. CONTINGENT LIABILITIES

The Company did not has any significant contingent liabilities at the respective balance sheet dates.

30. SUBSEQUENT EVENT

No material events took place subsequent to August 31, 2002.

31. SUBSEQUENT ACCOUNTS

No audited accounts have been prepared for the Company in respect of any period subsequent to August 31, 2002 and save as disclosed in this report, no dividend or other distribution has been declared, make or paid by the Company in respect of any period subsequent to August 31, 2002.

Yours faithfully, KLL Associates CPA Limited Lee Ka Leung, Daniel P.C. No. P01220

— 88 —

Shanghai Century Holdings Limited

APPENDIX III FINANCIAL INFORMATION ON SHANGHAI ZENDAI LAND

• Pro forma statement of unaudited adjusted net tangible assets of Shanghai Zendai Land at August

• 31, 2002

	RMB’000
Audited net assets of Shanghai Zendai Land as at August 31, 2002	81,558
Add: Net surplus after taxation on revaluation of land and property held
for/under development for sales of Shanghai Zendai Land as at
September 30, 2002 (Note 1)	36,066
Unaudited net assets of Shanghai Zendai Land after revaluation (Note 2)	117,624

• Note 1 : This represents the net surplus after taxation on revaluation of the land and properties held for/under development for sales of Shanghai Zendai Land of approximately RMB36,066,000. The calculation is based on the open market value of the properties as at September 30, 2002, performed by BMI Appraisals Limited on the basis as disclosed in the valuation reports set out in Appendix IV to this circular.

• Note 2 : This value is equivalent to approximately HK$109,931,000.

— 89 —

Shanghai Century Holdings Limited

PROPERTY VALUATION

APPENDIX IV

The following is the text of a letter, a summary of value and a valuation certificate, prepared for the purpose of incorporation in this circular received from BMI Appraisals Limited, an independent valuer, in connection with its valuation as at 30th September, 2002 of the property interest of the Group.

==> picture [48 x 47] intentionally omitted <==

==> picture [225 x 71] intentionally omitted <==

8 November, 2002

The Directors Shanghai Century Holdings Limited 26/F., Cosco Tower 183 Queen’s Road Central Hong Kong

Dear Sirs,

We refer to your instructions for us to value the property interest of Shanghai Zendai Real Estate Company Limited ( ) (referred to as the “Shanghai Zendai Land”) located in the People’s Republic of China (referred to as the “PRC”). We confirm that we have carried out an inspection, made relevant enquiries and obtained such further information, as we consider necessary for the purpose of providing you with our opinion of the open market value of such property interest as at 30th September, 2002 (the “date of valuation”).

BASIS OF VALUATION

Our valuation of the property interest is our opinion of the open market value which we would define as intended to mean “the best price at which the sale of an interest in a property might reasonably be expected to have been completed unconditionally for cash consideration on the date of valuation, assuming:

• (a) a willing seller;

• (b) that, prior to the date of valuation, there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the interest, for the agreement of the price and terms and for the completion of the sale;

• (c) that the state of the market, level of values and other circumstances were, on any earlier assumed date of exchange of contracts, the same as on the date of valuation;

• (d) that no account is taken of any additional bid by a prospective purchaser with a special interest; and

— 90 —

Shanghai Century Holdings Limited

PROPERTY VALUATION

APPENDIX IV

• (e) that both parties to the transaction had acted knowledgeably, prudently and without compulsion.”

VALUATION METHODOLOGY

In valuing the property which is held by the Shanghai Zendai Land and is currently under construction, we have assumed that it will be developed and completed in accordance with Shanghai Zendai Land’s latest development proposal. In arriving at our opinion of value, we have valued it by the Direct Comparison Approach by making reference to comparable transactions in the locality and have taken into account the land price, construction costs, professional fees and other relevant costs already spent and the remainder to be expended to complete the development.

TITLE INVESTIGATION

We have been provided with copies of title documents and have been advised by Shanghai Zendai Land that no further relevant documents have been produced. Moreover, due to the nature of the land registration system in the PRC, we have not been able to examine the original documents to verify ownership or to ascertain the existence of any amendment documents, which may not appear on the copies handed to us. Therefore, in the course of our valuation, we have relied on the advice and information given by the Shanghai Zendai Land and its PRC legal advisers in the legal opinion regarding the titles of such PRC property.

VALUATION ASSUMPTIONS

Our valuation has also been made on the assumption that the property interest is sold in the open market without the benefit of a deferred terms contract, leaseback, joint venture, management agreement or any similar arrangement which would serve to affect the value of the property interest. In addition, no account has been taken of any option or right of pre-emption concerning or effecting the sale of the property interest and no forced sale situation in any manner is assumed in our valuation.

In valuing the property interest, we have assumed that Shanghai Zendai Land has valid and enforceable title to the property interest which is freely transferable, and has free and uninterrupted right to use the same, for the whole of the unexpired term granted subject to the payment of annual Government rent payable has been fully settled.

We have assumed that all consents, approvals and licenses from the relevant government authorities for the property being held under development have been granted without onerous conditions or undue delay, which might affect its value.

VALUATION CONSIDERATIONS

We have inspected the exterior and wherever possible, the interior of the property included within the attached valuation certificate. During the course of our inspection, we did not note any serious defects. However, no structural survey has been made and we are therefore unable to report as to whether the property is free from rot, infestation or other defects. No tests were carried out to any of its services.

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Shanghai Century Holdings Limited

PROPERTY VALUATION

APPENDIX IV

We have relied to a considerable extent on the information provided by Shanghai Zendai Land and have accepted advice on such matters as planning approvals, statutory notices, easements, tenures, particulars of occupancy, site / floor areas, identification of the property and all other relevant matters.

We have had no reason to doubt the truth and accuracy of the information provided to us by Shanghai Zendai Land. Shanghai Zendai Land has also advised us that no material facts have been omitted from the information to reach an informed view, and have no reason to suspect that any material information has been withheld.

We have not carried out detailed on-site measurements to verify the correctness of the site / floor areas in respect of the property but have assumed that the site / floor areas shown on the documents handed to us are correct. Dimensions, measurements and areas included in the valuation certificate are based on information contained in the documents provided to us by Shanghai Zendai Land and are therefore only approximations.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on the property or for any expenses or taxation, which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property is free from encumbrances, restrictions and outgoings of any onerous nature, which could affect its value.

Our valuation has been prepared in accordance with the Hong Kong Guidance Notes on the Valuation of Property Assets (2nd Edition) published by the Hong Kong Institute of Surveyors in March 2000.

Our valuation has been prepared under the generally accepted valuation procedures and is in compliance with the Listing Rules of The Stock Exchange of Hong Kong Limited.

REMARKS

Unless otherwise stated, all money amounts stated are in Renminbi.

Our Summary of Value and Valuation Certificate are attached herewith.

Yours faithfully, For and on behalf of

BMI APPRAISALS LIMITED

Tony C.H. Cheng

BSc. MUD MRICS AHKIS MCIArb AFA MIIM Director

Note: Tony C.H. Cheng is a Chartered Surveyor who has over 10 years’ experience in valuations of properties in Hong Kong and about 10 years’ experience in valuations of properties in over 30 cities in the People’s Republic of China, including the city where the property concerned is located and the Asia-Pacific region.

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Shanghai Century Holdings Limited

PROPERTY VALUATION

APPENDIX IV

SUMMARY OF VALUE

			Open Market Value in
			existing state as at
No.	Property		30th September, 2002
			RMB
1.	Unsold portion of Phase I and whole of Phase II of the		400,000,000
	Development Project known as Zheng Da Jia Yuan located	at
	Pu Xing Street 39 Square 4 - 6 Qiu, Pu Dong New District,
	Shanghai, the PRC
		Total:	400,000,000

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Shanghai Century Holdings Limited

PROPERTY VALUATION

APPENDIX IV

VALUATION CERTIFICATE

Open Market Value Particulars of in existing state as at No. Property Description and tenure occupancy 30th September, 2002 RMB 1. Unsold portion of The subject development, known as Zheng Da 50 units of 400,000,000 Phase I and whole Jia Yuan, is a large-scale residential Phase I were of Phase II of the development project to be developed under 4 sold whereas Development phases (referred to as Phase I, II, III and IV) on the 750 Project known as 3 contiguous land parcels (referred to as Land remaining units Zheng Da Jia Yuan Parcels 1, 2 and 3). are under final located at Pu Xing decoration. Street 39 Square Land Parcel 1 is a rectangular-shaped piece of 4 - 6 Qiu, Pu Dong leveled land with a site area of about 171,758 Phase II is New District, sq.m. upon which Phases 1 and 2 are being currently under Shanghai, the PRC constructed. construction. Phase 1, having an apportioned site area of about 22,923 sq.m., comprises 800 residential units with a total gross floor area of about 93,350.82 sq.m. and 14 commercial units with a total gross floor area of about 8,586.85 sq.m.. Phase 2, having an apportioned site area of about 148,835 sq.m., comprises 811 residential units with a total gross floor area of about 82,433.46 sq.m..

The property under consideration comprises the unsold portion of Phase 1 with 750 residential units having a total gross floor area of about 82,712.62 sq.m., all the 14 commercial untis having a total gross floor area of about 8,586.85 sq.m. and the whole of Phase 2 with 811 residential units having a total gross floor area of 82,433.46 sq.m..

The land use rights of Phases I and II have been granted for a term of 70 years commencing on 18th April, 2000 and expiring on 17th April, 2070.

Notes:

• (1) Pursuant to a State-owned Land Use Rights Transfer Contract entered into between and Shanghai Zendai Real Estate Company Limited ( ) (referred to as “Shanghai Zendai Land”) dated 12th April, 2000, the former has agreed to transfer the latter land use rights of the property with a total site area of approximately 453,691sq.m. and a total permitted gross floor area of approximately 544,429 sq.m. at a consideration of RMB73,500,000 for residential purposes. Other salient development terms and conditions are listed as below:

a. Development Use b. Categorization of Land Parcels

: Residential

: The property comprise 3 land parcels (referred to Land Parcels 1, 2 and 3 respectively) and their respective site areas are 171,758 sq.m., 195,589 sq.m., and 86,343sq.m..

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Shanghai Century Holdings Limited

PROPERTY VALUATION

APPENDIX IV

• c. Land Use Rights Transfer Premium : Land Parcel 1: RMB27,830,000 Land Parcel 2: RMB31,680,000 Land Parcel 3: RMB13,990,000

• d. Building covenant : The approved scheme shall be developed to not less than 60% of the permitted gross floor area within 2 years from the date of obtaining the necessary building design and master planning approvals of the scheme.

• (2) Pursuant to 3 Real Estate Title Certificates, Lu Fang De Pu Zi (2001) Di Nos. 115119, 115120 and 115121 issued by Shanghai Real Estate Resources Administration Bureau dated 23rd October, 2001, Land Parcel 1 with a total site area of 171,758 sq.m. is owned by Shanghai Zendai Land from 18th April, 2000 to 17th April, 2070 for residential purposes.

• (3) Pursuant to 4 Construction Works Planning Permission Certificates, Lu Pu Jian (00) Nos. 354 and 426; and Lu Pu Jian (01) Nos. 482 and 484, issued by Shanghai Pu Dong New District Development Planning Bureau dated 16th October, 2000, 11th December, 2000, 12th December, 2001 and 12th December, 2001 respectively, the development is permitted to be constructed by Shanghai Zendai Land for residential purposes.

• (4) Pursuant to a Pre-sale Permit, Lu Fang De Pu (2002) Yu Zi No. 27 issued by Shanghai Pu Dong New District Land Construction Bureau dated 30th January, 2002, Shanghai Zendai Land is permitted to pre-sale the residential units in Zheng Da Jia Yuan.

• (5) As per information provided by Shanghai Zendai Land, the development details of Phases I and II of the project are summarized as follows:

a.	Existing stage of development	:	Phase I is about 95% completed whereas Phase II is about
			70% completed.
b.	Estimated completion date	:	Phases I and II of the project is estimated to be completed at
			the end of 2002.
c.	Estimated cost of carrying out/	:	The total cost of development for Phases I and II of the
	completing the development		project is estimated to be approximately RMB550,000,000
			out of which an amount of approximately RMB380,000,000
			has been expended up to the date of valuation. The total cost
			to complete the remaining portion of Phases I and II is
			estimated to be approximately RMB170,000,000.
d.	Estimated capital value after	:	The capital value of the unsold portion of Phase I and whole
	completion		of Phase II of the project upon completion is estimated to be
			about RMB650,000,000.
e.	Site coverage of the development	:	The site coverage of the proposed development shall not
			exceed 25%.
f.	Plot Ratio of the development	:	The plot ratio of the proposed development shall not exceed
			1.4.
g.	Height Restriction	:	The height of the proposed development is restricted to be 10
			to 33 metres.

• (6) According to the opinion given by the PRC legal adviser to Shanghai Zendai Land, the property is legally vested in Shanghai Zendai Land.

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Shanghai Century Holdings Limited

APPENDIX IV

PROPERTY VALUATION

• (7) The status of title and grant of major approvals provided by Shanghai Zendai Land is as follows:

State-owned Land Use Rights Transfer Contract Yes Real Estate Title Certificates Yes Construction Works Planning Permission Certificates Yes Pre-sale Permit Yes Business License Yes

• (8) We have prepared our valuation on the following assumptions:

• a. Shanghai Zendai Land is in possession of a proper legal title to the property and is entitled to transfer the property with its residual term of land use rights at no extra land premium or other onerous payment payable to the government;

• b. All land premium and other costs of ancillary utility services have been settled in full;

• c. The design and construction of the property are in compliance with the local planning regulations and have been approved by the relevant government authorities; and

• d. The property may be disposed of freely to both local and overseas purchasers.

• (9) We have not taken into account any tax liability in our valuation.

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Shanghai Century Holdings Limited

GENERAL INFORMATION

APPENDIX V

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 responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable inquires, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

DIRECTORS’ INTERESTS IN SECURITIES

As at the Latest Practicable Date, the interests of the Directors and their associates in the share capital, warrants and options of the Company and its associated corporations within the meaning of the SDI Ordinance which have been notified to the Company and the Stock Exchange pursuant to Section 28 of the SDI Ordinance (including interests which they are deemed or taken to have under Section 31 of, or Part I of the Schedule to, the SDI Ordinance) or which are required pursuant to Section 29 of the SDI Ordinance to be entered in the register referred to therein, or which are required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Listed Companies contained in the Listing Rules, were as follows:

	Personal	Family	Corporate	Other
Name of Director	interests	interests	interests	interests
Mr. He Xuechu	10,000,000		1,600,000,000
			(note 1)
Mr. Dai Zhi Kang			1,600,000,000
			(note 2)

Notes:

1. This represents the interest held by Giant Glory Assets Limited, a company owned as to 40% by Mr. He Xuechu.

2. This represents the interest held by Giant Glory Assets Limited, a company owned as to 36% by Mr. Dai Zhi Kang.

Save as disclosed in this circular, as at the Latest Practicable Date, none of the Directors had any personal, family, corporate or other interest in the Shares or other securities of the Company or any of its associated corporations (within the meaning of the SDI Ordinance) which will have to be notified to the Company and the Stock Exchange pursuant to Section 28 of the SDI Ordinance (including interests which any such Director is taken or deemed to have under Section 31 of, or Part I of the Schedule to, the SDI Ordinance); or which is required, pursuant to Section 29 of the SDI Ordinance, to be entered in the register referred to therein, or which is required, pursuant to the Model Code for Securities Transaction by Directors of Listed Companies in the Listing Rules, to be notified to the Company and the Stock Exchange.

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Shanghai Century Holdings Limited

GENERAL INFORMATION

APPENDIX V

Save as disclosed in the section headed “Service contract” below, none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group since 31 December, 2001, being the date of the Company’s latest published audited accounts and which was significant in relation to the business of the Group.

Save as disclosed herein, none of the Directors nor experts named under the section headed “Experts” is interested, directly or indirectly, in any assets which had since 31 December, 2001 (being the date to which the latest published audited financial statements of the Company were made up) been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as is known to, or can be ascertained after reasonable enquiry by, the Directors, each of the following shareholder was, directly or indirectly, interested in 10% or more of issued share capital carrying of the Company as recorded in the register referred to be kept under Section 16 of the SDI Ordinance.

	Number of		Percentage of
Name of shareholder	ordinary shares		share capital
			(%)
Giant Glory	1,600,000,000		36.95
Mr. He Xuechu	1,610,000,000	(note 1)	37.18
Mr. Dai Zhi Kang	1,600,000,000	(note 2)	36.95
Peak Smart Holdings Limited	1,000,000,000		23.09
Mr. Yang Yonggen	1,000,000,000	(note 3)	23.09

Notes:

1. The interest disclosed herein being the corporate interests of Mr. He Xuechu as referred to in note (1) under the section headed “Directors’ interest in securities” above and the personal interests of Mr. He Xuechu.

2. The interest disclosed herein being the corporate interests of Mr. Dai Zhi Kang as referred to in note (2) under the section headed “Directors’ interest in securities” above.

3. 1,000,000,000 shares are held by Peak Smart Holdings Limited, a company which is 100% owned by Mr. Yang Yonggen.

4. Save as disclosed herein, no other person was recorded in the register kept pursuant to Section 16 of the SDI Ordinance as having, directly or indirectly, an interest of 10% or more of the issued share capital of the Company as at the Latest Practicable Date.

MATERIAL CHANGE

The Directors are not aware of any material adverse change in the financial or trading position or contingent liabilities of the Group since 31 December, 2001, being the date to which the latest published audited financial statements of the Company were made up.

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Shanghai Century Holdings Limited

GENERAL INFORMATION

APPENDIX V

LITIGATION

So far as the Directors are aware, neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration 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 of its subsidiaries.

SERVICE CONTRACT

As at the Latest Practicable Date, there is no service contract between any Directors or proposed Directors and members of the Group which does not expire or is not determinable by the employer within one year without payment of compensation other than statutory compensation.

SUMMARY OF MATERIAL CONTRACTS

The following contracts (not being contracts in the ordinary course of business) have been entered into by members of the Group within the two years immediately preceding the Latest Practicable Date:

1. a subscription agreement dated 18 June, 2001 entered into between Giant Glory, the Company and South China Information and Technology Limited (as amended and supplemented by the agreement between Giant Glory, the Company and South China Information and Technology Limited dated 27 June, 2001) in relation to the subscription by Giant Glory and the issue by the Company of 3,500,000,000 new Shares of the Company and the conditional grant of the right by South China Information and Technology Limited to the Company to require South China Information and Technology Limited to acquire the remaining 51% interest in each of Four Seas Travel (BVI) Limited, Four Seas (BVI) Limited, Four Seas Corporate Management Limited, Hong Kong Four Seas Tours Limited, Gainfield Holdings Limited and Four Seas Corporate Services Limited following completion of a disposal agreement dated 18 June, 2001 entered into between Four Seas Travel and South China Information and Technology Limited at a consideration of HK$8,000,000;

2. a supplemental agreement dated 27 June, 2001 entered into between Giant Glory, the Company and South China Information and Technology Limited amending the subscription agreement dated 18 June, 2001 entered into between Giant Glory, the Company and South China Information and Technology Limited;

3. a disposal agreement dated 18 June, 2001 entered into between Four Seas Travel and South China Information and Technology Limited in relation to the disposal of the entire issued share capital of each of Four Seas Properties (BVI) Limited, Four Seas Investments (BVI) Limited, Four Seas China (BVI) Limited, Four Seas Travel Investments (China) Limited, Four Seas Capital Limited and HKFS Tours Limited and 49% of the issued share capital in each of Four Seas Travel (BVI) Limited, Four Seas (BVI) Limited, Four Seas Corporate Management Limited, Hong Kong Four Seas Tours Limited, Gainfield Holdings Limited and Four Seas Corporate Services Limited;

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Shanghai Century Holdings Limited

GENERAL INFORMATION

APPENDIX V

1. a management agreement dated 18 June, 2001 entered into between the Company, Four Seas Travel (BVI) Limited, Four Seas (BVI) Limited, Four Seas Corporate Management Limited, Hong Kong Four Seas Tours Limited, Gainfield Holdings Limited and Four Seas Corporate Services Limited and South China Information and Technology Limited in relation to the appointment of South China Information and Technology Limited as a manager to provide management services to the Four Seas Travel (BVI) Limited, Four Seas (BVI) Limited, Four Seas Corporate Management Limited, Hong Kong Four Seas, Gainfield Holdings Limited and Four Seas Corporate Services Limited for a fee for a term of six years;

2. joint venture deeds in relation to each of Four Seas Travel (BVI) Limited, Four Seas (BVI) Limited, Four Seas Corporate Management Limited, Hong Kong Four Seas Tours Limited, Gainfield Holdings Limited and Four Seas Corporate Services Limited entered into by the respective shareholders thereof, South China Information and Technology Limited and each of Four Seas Travel (BVI) Limited, Four Seas (BVI) Limited, Four Seas Corporate Management Limited, Hong Kong Four Seas Tours Limited, Gainfield Holdings Limited and Four Seas Corporate Services Limited regulating the operation and management of each of such companies with effect from completion of the disposal agreement dated 18 June, 2001 entered into between Four Seas Travel and South China Information and Technology Limited;

3. a subscription agreement dated 6 December, 2001 entered into between Giant Glory and the Company relating to subscription of 100,000,000 new Shares of the Company by Giant Glory;

4. a conditional capital injection agreement dated 25 March, 2002 in relation to the injection of RMB20,000,000 (equivalent to approximately HK$18,692,000) by Best East Developments Limited, a wholly owned subsidiary of the Company, as additional registered capital to entered into between Best East Developments Limited, Shanghai Zendai Land and Mr. Dai Zhi Chang;

5. a conditional placing agreement dated 24 May, 2002 entered into by the Company and Shenyin Wanguo Capital (H.K.) Limited in relation to the placing of 350,000,000 new Shares by the Company; and

6. a joint venture agreement dated 12 August, 2002 entered into between Victory Gateway Limited, a wholly owned subsidiary of the Company, and for the establishment of a sino-foreign equity joint venture in the PRC named (Shanghai Binhai Golf And Tourist Resort Company

Limited) which is now owned as to 91% by Victory Gateway Limited and 9% by .

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Shanghai Century Holdings Limited

GENERAL INFORMATION

APPENDIX V

EXPERTS

The following are the qualifications of the professional advisers whose opinions or advice are contained in this circular:

Kingsway

Registered investment adviser

KLL Associates CPA Limited Certified public accountants

BMI Professional valuer

None of Kingsway, KLL Associates CPA Limited and BMI has any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

CONSENT

Kingsway, KLL Associates CPA Limited and BMI have given and have not withdrawn their respective written consent to the issue of this circular with the inclusion of their respective letters and/or reports and/or and references to their names, as the case may be, in the form and context in which they respectively appear.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the head office and principal place of business in Hong Kong of the Company at 26/F., COSCO Tower, 183 Queen’s Road Central, Hong Kong, up to and including 26 November, 2002:

• (a) the memorandum of association and bye-laws of the Company;

• (b) the Share Purchase Agreement;

• (c) the letter from the Independent Board Committee, the text of which is set out on page 12 of this circular;

• (d) the letter from Kingsway to the Independent Board Committee dated 8 November, 2002, the text of which is set out on pages 13 to 22 of this circular;

• (e) the accountants’ report on Shanghai Zendai Land as set out in Appendix II to this circular;

• (f) the audited accounts of the Shanghai Zendai Land for the periods from 31 August, 1999 (date of incorporation) to 31 December, 1999, two years ended 31 December, 2001 and the 8 months ended 31 August, 2002;

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Shanghai Century Holdings Limited

GENERAL INFORMATION

APPENDIX V

• (g) the valuation certificate and report dated 8 November, 2002 from BMI, the texts of which is set out in Appendix IV to this circular;

• (h) the financial statements of the Company for the two years ended 31 December, 2001;

• (i) the interim report of the Company for the six months ended 30 June, 2002;

• (j) the written consent of Kingsway, KLL Associates CPA Limited and BMI as referred to under the section headed “Experts” above; and

• (k) the material contracts referred to in the section headed “Summary of Material Contracts” in this Appendix.

MISCELLANEOUS

• (a) The secretary of the Company is Mr. Tso Shiu Kei Vincent, a solicitor of the High Court of the Hong Kong Special Administrative Region.

• (b) The registered office of the Company is at Cedar House, 41 Cedar Avenue, Hamilton HM12, Bermuda and its head office and principal place of business in Hong Kong is at 26/F., COSCO Tower, 183 Queen’s Road Central, Hong Kong.

• (c) The share registrar and transfer office of the Company in Hong Kong is Secretaries Limited at 5th Floor, Wing On Centre, 111 Connaught Road, Central, Hong Kong.

• (d) The English text of this circular and the form of proxy shall prevail over the Chinese text.

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Shanghai Century Holdings Limited

NOTICE OF SPECIAL GENERAL MEETING

**Shanghai Century Holdings Limited ***

(Incorporated in Bermuda with limited liability)

(the “Company”)

NOTICE IS HEREBY GIVEN that a special general meeting of the Company will be held at 26/F., COSCO Tower, 183 Queen’s Road Central, Hong Kong at 10:00 a.m. on 26 November, 2002 to consider and, if thought fit, pass with or without amendment, the following resolution which will be proposed as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“THAT

• (i) the agreement dated 29 September, 2002 (the “Share Purchase Agreement”) and entered into between Ample Century Limited (“Ample Century”), a wholly owned subsidiary of the Company as purchaser, Mr. Huang Su Dong, Mr. Zhu Nan Song and Mr. Dai Zhi Feng together as vendors and (Shanghai Zendai Investment Development Company Limited) as covenantor for the acquisition of a 65% interest in (Shanghai Zendai Real Estate Company Limited) by Ample Century, a

• copy of which has been produced to the meeting marked “A” and has been signed by the Chairman of the meeting for the purpose of identification; and

• (ii) upon completion of the Share Purchase Agreement, the unsecured, non-interest bearing advances of an aggregate amount of approximately RMB58 million (equivalent to HK$54.2 million) made by (Shanghai Zendai Real Estate Company Limited) to (Shanghai New Century Shui Qing Mu Hua Property Development Company Limited) and repayable within 2 months from the completion of the Share Purchase Agreement (the “Advances”);

both be and are hereby confirmed, ratified and approved; and any one director of the Company be and is hereby authorized on behalf of the Company:

• (a) to sign, seal, execute, perfect and deliver all such documents and do all such deeds, acts, matters and things as he may in his discretion consider necessary or desirable for the purpose of or in connection with the implementation of and giving effect to the Share Purchase Agreement and the transactions contemplated therein and the Advances;

• (b) to complete the transactions contemplated in the Share Purchase Agreement with such changes as such director of the Company may consider necessary, desirable and expedient; and

• For identification purpose only

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Shanghai Century Holdings Limited

NOTICE OF SPECIAL GENERAL MEETING

• (c) to affix, and witness the affixing of, the Common Seal of the Company to the Share Purchase Agreement and all such other documents where required for and on behalf of the Company as he in his absolute discretion deems fit in connection with the transactions contemplated therein.”

By Order of the Board of Shanghai Century Holdings Limited Dai Zhi Kang Executive Director

Hong Kong, 8 November, 2002.

Principal place of business in Hong Kong:

26/F., COSCO Tower 183 Queen’s Road Central Hong Kong

Registered office:

Cedar House 41 Cedar Avenue Hamilton HM12 Bermuda

Notes:

• (a) Any member entitled to attend and vote at a meeting of the Company is entitled to appoint another person as his proxy to attend and, vote instead of him. A proxy need not be a member of the Company.

• (b) To be valid, a form of proxy and the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power of attorney or authority must be deposited at the Company’s branch share registrar in Hong Kong, Secretaries Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong not less than 48 hours before the time fixed for the holding of the meeting or any adjournment(s) thereof.

• (c) A form of proxy for use at the above meeting is enclosed herewith.

• (d) Where there are joint holders of a share of the Company, any one of such holders may vote at the meeting either personally or by proxy in respect of such share as if he was solely entitled thereto, but if more than one of such holders be present at the meeting personally or by proxy, that one of such holders so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.

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Shanghai Century Holdings Limited