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 Zendai Property 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 Zendai Property 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 ZENDAI PROPERTY LIMITED 上海証大房地產有限公司[*]

(formerly known as Shanghai Century Holdings Limited 上海世紀控股有限公司 )

(Incorporated in Bermuda with limited liability)

(Stock Code: 755)

MAJOR AND CONNECTED TRANSACTION

PURCHASE OF FURTHER INTEREST IN A SINO-FOREIGN EQUITY JOINT VENTURE IN THE PRC

Financial adviser to Shanghai Zendai Property Limited

Shenyin Wanguo Capital (H.K.) Limited

Independent financial adviser to the Independent Board Committee and the Independent Shareholders of Shanghai Zendai Property Limited

A letter from the Independent Board Committee is set out on pages 16 to 17 of this circular. A letter from SHKIL, the independent financial adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 18 to 25 of this circular.

A notice convening the Special General Meeting of Shanghai Zendai Property Limited to be held at Unit 6108, The Center, 99 Queen’s Road Central, Hong Kong on Friday, 3 September, 2004 at 10:00 a.m. is set out on pages 111 to 112 of this circular. Whether or not you are able to attend and vote at the Special General Meeting, please complete and return the enclosed proxy form in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Secretaries Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, 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.

For identification purpose only

17 August, 2004

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Financial and trading prospects of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Major and connected transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
The Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
The Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Letter from SHKIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Appendix I – Financial information on the Group. . . . . . . . . . . . . . . . . . . . . . .	26
Appendix II – Financial information on Zendai Delta Land. . . . . . . . . . . . . . .	59
Appendix III – Unaudited pro forma financial
information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	89
Appendix IV – Valuation report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	95
Appendix V – General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	104
Notice of SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	111

– i –

DEFINITIONS

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

“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
“Best East”	Best East Developments Limited, a company incorporated
	in the British Virgin Islands with limited liability and is
	a wholly-owned subsidiary of the Company
“Board”	the executive directors of the Company
“Business Day”	a day (other than a Saturday or Sunday) on which banks
	are generally open for ordinary business in Hong Kong
“Company”	Shanghai Zendai Property Limited (formerly known as
	Shanghai Century Holdings 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 on the fifth (5th) Business Day following the
	fulfillment of all the Conditions (or such other date as
	the parties to the Share Purchase Agreement may
	otherwise agree)
“Conditions”	conditions under the Share Purchase Agreement
“Director(s)”	the director(s) of the Company
“Giant Glory”	Giant Glory Assets Limited, a limited company
	incorporated in the British Virgin Islands and is the
	controlling shareholder of the Company holding
	approximately 54.40% of the entire issued share capital
	of the Company as at the Latest Practicable Date
“Group”	the Company and its subsidiaries
“Hong Kong”	Hong Kong Special Administrative Region of the PRC

– 1 –

DEFINITIONS

“Independent Board Committee”	the independent board committee of the Company
	comprising Messrs Lo Mun Lam, Raymond and Lai Chik
	Fan, both being independent non-executive Directors
“Independent Shareholders”	Shareholders other than Mr. Dai Zhikang, Giant Glory
	and their respective associates
“Latest Practicable Date”	16 August, 2004, 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”	戴志祥(Dai Zhi Chang), who beneficially owns 100%
	interest in the Vendor and is a brother of Mr. Dai
	Zhikang, an executive Director and the chairman of the
	Company
“New Joint Venture Agreements”	new agreements to be entered into between the Vendor,
	Shanghai Zendai Investment, Best East and Shanghai
	Zendai Land in respect of the change in the shareholding
	structure of Zendai Delta Land, 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
“Sallmanns”	Sallmanns (Far East) Limited, an independent property
	valuer not connected with any of the directors, chief
	executive or substantial shareholders of the Company,
	its subsidiaries or any of their respective associates
“SFO”	the Securities and Futures Ordinance (Chapter 571 of
	the Laws of Hong Kong)
“SGM”	the special general meeting of the Company to be
	convened and held on Friday, 3 September, 2004 at 10:00
	a.m. at Unit 6108, The Center, 99 Queen’s Road Central,
	Hong Kong, notice of which is set out on pages 111 to
	112 of this circular

– 2 –

DEFINITIONS

“Shanghai Zendai Investment” 上海証大投資發展有限公司 (Shanghai Zendai Investment Development Company Limited), a company established in the PRC with limited liability, which is beneficially owned as to approximately 65.67% by Mr. Dai Zhikang, an executive Director and the chairman of the Company, approximately 19.33% by Mr. Dai, and approximately 15.0% by Mr. Zhu Nansong, an executive Director, as at the Latest Practicable Date
“Shanghai Zendai Land” 上海証大置業有限公司 (Shanghai Zendai Real Estate Company Limited), a sino-foreign equity joint venture established in the PRC with limited liability, which is beneficially owned as to 80% by Ample Century and 20% by Shanghai Zendai Investment as at the Latest Practicable Date
“Share(s)” share(s) of HK$0.02 each in the capital of the Company
“Share Purchase” the proposed conditional acquisition of 24% interest in the registered capital of Zendai Delta Land pursuant to the terms and conditions of the Share Purchase Agreement
“Share Purchase Agreement” a conditional agreement dated 23 July, 2004 (in Chinese) entered into between Shanghai Zendai Land and the Vendor in connection with the acquisition of 24% interest in the registered capital of Zendai Delta Land by Shanghai Zendai Land
“Shareholders” registered holder(s) of the Shares issued for the time being
“SHKIL” Sun Hung Kai International Limited, a deemed licensed corporation to carry out types 1, 4, 6 and 9 regulated activities under the SFO
“Stock Exchange” The Stock Exchange of Hong Kong Limited “Vendor” 上海黎升商貿行 , a company established in the PRC with limited liability, the principal activities of which is investment holding, is wholly owned by Mr. Dai as at the Latest Practicable Date

– 3 –

DEFINITIONS

“Zendai Delta Land” 上海証大三角洲置業有限公司 (Shanghai Zendai Delta Land Company Limited), formerly known as 上海新世紀水清木華房地產開發有限公司 (Shanghai New Century Shui Qing Mu Hua Property Development Company Limited), a sino-foreign equity joint venture established in the PRC with limited liability in August 2002 with registered capital of RMB80,000,000 (equivalent to approximately HK$75,472,000), and is beneficially owned as to 25% by Best East, 56.25% by the Vendor and the remaining 18.75% by Shanghai Zendai Investment prior to the Completion

“HK$” Hong Kong dollars, the lawful currency of Hong Kong “RMB” Renminbi, the lawful currency of the PRC “%” per cent.

For the purpose of this circular, unless otherwise specifies, conversion of Renminbi into Hong Kong dollars is based on the approximate exchange rate of RMB1.06 = HK$1.00.

– 4 –

LETTER FROM THE BOARD

SHANGHAI ZENDAI PROPERTY LIMITED 上海証大房地產有限公司[*]

(formerly known as Shanghai Century Holdings Limited 上海世紀控股有限公司[)]

(Incorporated in Bermuda with limited liability)

(Stock Code: 755)

Executive Directors: Dai Zhikang Zhu Nansong Zhang Wei Zhao Hangsheng Tang Jian

Independent Non-executive Directors: Lai Chik Fan Lo Mun Lam, Raymond

Registered office: Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

Principal place of business in Hong Kong: Unit 6108, The Center 99 Queen’s Road Central Hong Kong

17 August, 2004

To the Shareholders

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTION

PURCHASE OF FURTHER INTEREST IN A SINO-FOREIGN EQUITY JOINT VENTURE IN THE PRC

INTRODUCTION

The Board announced that on 23 July, 2004, Shanghai Zendai Land, a 80% owned subsidiary of the Company, had entered into the Share Purchase Agreement with the Vendor pursuant to which Shanghai Zendai Land had conditionally agreed to purchase a 24% interest in the registered capital of Zendai Delta Land for a consideration of RMB81,000,000 (equivalent to approximately HK$76,415,000) in cash from the Vendor, which is to be satisfied by the Group’s internal resources.

* For identification purpose only

– 5 –

LETTER FROM THE BOARD

Zendai Delta Land is a sino-foreign equity joint venture established in the PRC principally engaging in property development and property management services in the PRC. Currently, the registered capital of Zendai Delta Land is owned as to 25% by Best East, a wholly-owned subsidiary of the Company, 56.25% by the Vendor and the remaining 18.75% by Shanghai Zendai Investment. Upon Completion, the registered capital of Zendai Delta Land will be owned as to 24% by Shanghai Zendai Land, 25% by Best East, 32.25% by the Vendor and the remaining 18.75% by Shanghai Zendai Investment. The Share Purchase is conditional and is subject to conditions set out under “Conditions of the Share Purchase” below.

Having considered the reasons set out under “Reasons for the Proposed Share Purchase” below, the Board considers that the terms and conditions of the Share Purchase Agreement are fair and reasonable and are in the interests of the Group and the Shareholders as a whole.

Currently, Mr. Dai Zhikang, being an executive Director and the chairman of the Company, holds the entire interest in the issued share capital of Giant Glory. Giant Glory is the controlling shareholder of the Company and is holding approximately 54.40% interest in the entire issued share capital of the Company as at the Latest Practicable Date. As Mr. Dai, the sole owner of the Vendor, is the brother of Mr. Dai Zhikang, 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. Voting at the SGM will be taken by poll. In addition, the Share Purchase also constitutes a major transaction for the Company under the Listing Rules.

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. SHKIL has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders. The recommendation of the Independent Board Committee and the advice of SHKIL 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, to set out the advice of SHKIL to the Independent Board Committee and the Independent Shareholders, and the recommendation of the Independent Board Committee in respect of the proposed Share Purchase as well as to give you notice of the SGM at which the ordinary resolution will be proposed to approve the proposed Share Purchase.

– 6 –

LETTER FROM THE BOARD

A. The Share Purchase Agreement dated 23 July, 2004

On 23 July, 2004, Shanghai Zendai Land, a 80% owned subsidiary of the Company, had entered into the Share Purchase Agreement with the Vendor pursuant to which Shanghai Zendai Land had conditionally agreed to purchase a 24% interest in the registered capital of Zendai Delta Land for a consideration of RMB81,000,000 (equivalent to approximately HK$76,415,000) in cash from the Vendor. Currently, the registered capital of Zendai Delta Land is owned as to 25% by Best East, a wholly-owned subsidiary of the Company, 56.25% by the Vendor and the remaining 18.75% by Shanghai Zendai Investment.

1. Parties to the Share Purchase Agreement

a. Shanghai Zendai Land; and
b. the Vendor.

2. Consideration and payment terms

The total consideration for the Share Purchase of RMB81,000,000 (equivalent to approximately HK$76,415,000) was arrived at after arms’ length negotiations and on normal commercial terms between the parties to the Share Purchase Agreement and with reference to (i) the audited net assets of Zendai Delta Land of approximately RMB101,299,000 (equivalent to approximately HK$95,565,000) as at 31 December, 2003 (prepared in accordance with generally accepted accounting principles in Hong Kong); (ii) the business prospects of Zendai Delta Land regarding the development of 水清木華 (Shui Qing Mu Hua); (iii) the preliminary valuation of the property interest of 水清木華 (Shui Qing Mu Hua) owned by Zendai Delta Land of approximately RMB1,363,800,000 (equivalent to approximately HK$1,286,604,000), as at 30 April, 2004, as valued by Sallmanns; and (iv) the future prospects of the property market in Shanghai, the PRC.

The aforesaid total consideration for the Share Purchase will be satisfied by the internal resources of the Group and will be payable upon Completion.

– 7 –

LETTER FROM THE BOARD

Existing shareholding structure of Zendai Delta Land

==> picture [283 x 143] intentionally omitted <==

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

The Company
100%
Shanghai Zendai
The Vendor Best East
Investment
18.75% 56.25% 25%
Zendai Delta Land
----- End of picture text -----

Shareholding structure of Zendai Delta Land immediately upon Completion

==> picture [367 x 203] intentionally omitted <==

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

The Company
100%
Ample Century 100%
80%
Shanghai Zendai
Shanghai Zendai Land The Vendor Best East
Investment
18.75% 24% 32.25% 25%
Zendai Delta Land
----- End of picture text -----

Upon Completion, the registered capital of Zendai Delta Land will be owned as to 24% by Shanghai Zendai Land, 25% by Best East, 32.25% by the Vendor and the remaining 18.75% by Shanghai Zendai Investment. As such, the Company will be indirectly interested in 49% of the registered capital of Zendai Delta Land upon Completion.

– 8 –

LETTER FROM THE BOARD

3. Conditions of the Share Purchase

The Share Purchase is conditional upon, among other things, the following conditions being satisfied on or before 30 October, 2004 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 the Vendor, Best East, Shanghai Zendai Investment and Shanghai Zendai Land;
(c) the permissions and approvals in respect of the Share Purchase and the New Joint Venture Agreements having been obtained by Shanghai Zendai Land and/or Zendai Delta Land (as the case may be) from the relevant PRC governmental authorities, including but not limited to the new approval certificate and business license for Zendai Delta Land, and such permissions and approvals do not contain any condition which is not acceptable to Shanghai Zendai Land;
(d) the obtaining of all necessary consents and approvals by Shanghai Zendai Land and/or Zendai Delta Land (as the case may be) from all relevant regulatory authorities in the PRC with regard to all the transactions contemplated in the Share Purchase Agreement; and
(e) the obtaining of a legal opinion by Shanghai Zendai Land issued by licensed PRC legal advisers on PRC securities laws, confirming:
(i) the legality and effect of the Share Purchase Agreement and the New Joint Venture Agreements upon signing;
(ii) the completion of all necessary procedures and obtaining of all necessary approvals regarding the change of shareholding structure of Zendai Delta Land;
(iii) no change in the permitted scope of business of Zendai Delta Land after its change of shareholding structure; and
(iv) all other matters reasonably requested by Shanghai Zendai Land.

– 9 –

LETTER FROM THE BOARD

4. Completion of the Share Purchase

Completion of the Share Purchase will take place on the fifth Business Days after the satisfaction of all the Conditions or the waiver (except condition (a) above which cannot be waived) from Shanghai Zendai Land on the Conditions. If the Conditions are not satisfied on or 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.

B. Information on Zendai Delta Land

Zendai Delta Land is a sino-foreign equity joint venture established in the PRC with limited liability in August 2002. Zendai Delta Land is principally engaged in property development and property management services and is currently developing a residential property project named “水清木華” (Shui Qing Mu Hua) in Shanghai, the PRC. The registered capital of Zendai Delta Land is RMB80,000,000 (equivalent to approximately HK$75,472,000) and is owned as to 25% by Best East, 56.25% by the Vendor and the remaining 18.75% by Shanghai Zendai Investment as at the Latest Practicable Date. According to the Board, the original costs of investment contributed by Mr. Dai, Shanghai Zendai Investment and Best East for their respective 56.25%, 18.75% and 25% interest in the registered capital of Zendai Delta Land was approximately RMB45,000,000 (equivalent to approximately HK$42,453,000), RMB15,000,000 (equivalent to approximately HK$14,151,000) and RMB20,000,000 (equivalent to approximately HK$18,868,000) respectively.

Currently, 水清木華 (Shui Qing Mu Hua) is the only property project developing by Zendai Delta Land. 水清木華 (Shui Qing Mu Hua) comprises the development of three parcels of land located at Lian Yang Residential Area, Pudong New District, Shanghai, the PRC, which is located adjacent to the 世紀公園 (Century Park) and is in close proximity to 陸家嘴 (Lujiazui), with a total site area of approximately 181,411 square metres. 水清木華 (Shui Qing Mu Hua) is a large-scale residential real estate development divided into two phases comprising the development of both apartment blocks in Phase I and villas in Phase II targeting the middle to high-end market. The construction of Phase I apartment development of 水清木華 (Shui Qing Mu Hua) with a total of 855 residential units was completed in various stages between 2002 and the first quarter of 2004. As advised by the management of Zendai Delta Land, sale of Phase I of 水清木華 (Shui Qing Mu Hua) was commenced in 2003 and recorded satisfactory results. Up to 31 May, 2004, 344 residential units of Phase I of 水清木華 (Shui Qing Mu Hua) have been sold and another 397 residential units of Phase I of 水清木華 (Shui Qing Mu Hua) are held under pre-sale contracts. The construction of Phase II of 水清木華 (Shui Qing Mu Hua), which is planned to be developed into 50 villas and a clubhouse with a planned total gross floor area of approximately 28,766 square metres, is scheduled to be completed in the second quarter of 2005.

– 10 –

LETTER FROM THE BOARD

As at 31 May, 2004, the open market value of the property interest of 水清木華 (Shui Qing Mu Hua) owned by Zendai Delta Land was approximately RMB1,363,800,000 (equivalent to approximately HK$1,286,604,000) as valued by Sallmanns. Details of which can be referred to in the valuation report of Zendai Delta Land as set out in Appendix IV to this circular.

According to the accountants’ report of Zendai Delta Land as set out in Appendix II to this circular, Zendai Delta Land recorded audited profit before taxation and audited profit after taxation and minority interests of approximately RMB102,826,000 (equivalent to approximately HK$97,006,000) and approximately RMB87,018,000 (equivalent to approximately HK$82,092,000) respectively for the three months ended 31 March, 2004. As at 31 March, 2004, the audited net assets of Zendai Delta Land was approximately RMB188,317,000 (equivalent to approximately HK$177,658,000). For the year ended 31 December, 2003, Zendai Delta Land recorded an audited net loss of approximately RMB7,149,000 (equivalent to approximately HK$6,744,000). The audited net assets of Zendai Delta Land as at 31 December, 2003 was approximately RMB101,299,000 (equivalent to approximately HK$95,565,000). For the year ended 31 December 2002, Zendai Delta Land recorded audited profit before taxation and audited profit after taxation and minority interests of approximately RMB93,032,000 (equivalent to approximately HK$87,766,000) and approximately RMB37,901,000 (equivalent to approximately HK$35,756,000) respectively. The audited net assets of Zendai Delta Land as at 31 December, 2002 was approximately RMB108,448,000 (equivalent to approximately HK$102,309,000).

For the year ended 31 December, 2003, net loss recorded by Zendai Delta Land was mainly attributable to the increase in distribution costs in promoting the sale of Phase I of 水清木華 (Shui Qing Mu Hua) during its first launch in 2003. For the three months ended 31 March, 2004, the increase in net profit of Zendai Delta Land was mainly attributable to the satisfactory results in the sale of Phase I of 水清木華 (Shui Qing Mu Hua) during the period.

Currently, the board of directors of Zendai Delta Land consists of four directors and one of which was appointed by the Group. Upon Completion, the Board anticipated that the board of directors of Zendai Delta Land will consist of four members and two of which will be appointed by the Group.

C. Reasons for the proposed Share Purchase

The Group is principally engaged in property investment and development in Shanghai and its surrounding areas. Since 2002, the Group has been successfully adjusting its business portfolio to focus on property development and has achieved a sound reputation in the property market in Shanghai, the PRC, one of the fastest growing financial centers in Asia. Given the prospects for the property market in Shanghai, the PRC, the Board is of the view that the demand for high-end properties are promising and is conducive to the Group’s property business. In light of satisfactory market responses receiving from the sales of Phase I of 水清木華 (Shui Qing Mu Hua) as mentioned in the sub-section headed “Information on Zendai Delta Land” above, the Board is optimistic about the prospects of Phase II of 水清木華 (Shui Qing Mu Hua) which are now under development.

– 11 –

LETTER FROM THE BOARD

Based on the pro forma statement of adjusted net tangible assets of the Group as set out in Appendix III to this circular, the audited consolidated net tangible assets of the Group as at 31 December, 2003 were approximately HK$233,481,000 and the pro forma unaudited adjusted consolidated net tangible assets of the Group upon Completion were approximately HK$374,532,000.

The purchase of a further 24% interest in the registered capital of Zendai Delta Land by the Group at a total consideration of RMB81,000,000 (equivalent to approximately HK$76,415,000) under the Share Purchase is the result of arm’s length negotiations and on normal commercial terms between the parties to the Share Purchase Agreement and with reference to the basis of consideration as set out in the sub-section headed “Consideration and payment terms” above. Therefore, the Board considers that the terms of the Share Purchase Agreement are fair and reasonable and are in the interests of the Group and the Shareholders as a whole. The Board does not have any present intention to acquire any further interests in the registered capital of Zendai Delta Land.

FINANCIAL AND TRADING PROSPECTS OF THE GROUP

As set out in the annual report of the Company for the year ended 31 December, 2003, the audited consolidated turnover of the Group for the year ended 31 December, 2003 was approximately HK$336 million. Net profit attributable to Shareholders reached approximately HK$34 million for the year ended 31 December, 2003.

According to 上海統計年鑑 2004 (Shanghai Statistical Yearbook 2004), the property price index in Shanghai increased by approximately 20% in 2003 as compared with the previous year, in which the residential property price index rose by approximately 21%. The Board believes that Shanghai’s residential market would continue to prosper in future as a result of the anticipated economic growth of Shanghai, the PRC, one of the fastest growing financial centres in Asia.

Besides, the Group has been participating in the development of its flagship residential property project named 証大家園 (Zendai Jia Yuan) in Shanghai through Shanghai Zendai Land. Leveraging on the extensive experience of the Group’s management in the investment in and development of property development projects in the PRC and the future prospects of the property market in Shanghai, the PRC, the Group will continue to focus on its propertyrelated business in the PRC.

– 12 –

LETTER FROM THE BOARD

MAJOR AND CONNECTED TRANSACTION

Currently, Mr. Dai Zhikang is an executive Director and the chairman of the Company and holds the entire interest in the issued share capital of Giant Glory. Giant Glory is the controlling shareholder of the Company and is holding approximately 54.40% interest in the entire issued share capital of the Company as at the Latest Practicable Date. As Mr. Dai, the sole owner of the Vendor, is the brother of Mr. Dai Zhikang, 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. Voting at the SGM will be taken by poll. In view of Mr. Dai Zhikang’s relationship with Mr. Dai, Mr. Dai Zhikang, 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. To the best knowledge and so far as is known by the Directors, there are no voting trust or other agreement or arrangement or understanding entered into by or binding upon any Shareholder, or any obligation or entitlement of any Shareholder as at the Latest Practicable Date, whereby any Shareholder has or may have temporarily or permanently passed control over the exercise of any voting right in respect of his shares in the Company to a third party, either generally or on a case-by-case basis; and there is no discrepancy between any Shareholder’s beneficial shareholding interest in the capital of the Company as disclosed herein by which any Shareholder will control or will be entitled to exercise control over the voting right.

In addition, the Share Purchase also constitutes a major transaction for the Company under the Listing Rules.

THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee, comprising Messrs Lo Mun Lam, Raymond and Lai Chik Fan, 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. SHKIL has been appointed as independent financial adviser to advise the Independent Board Committee and the Independent Shareholders on the same.

THE SPECIAL GENERAL MEETING

A notice convening the SGM at which the ordinary resolution will be proposed to approve the Share Purchase Agreement and the transactions contemplated therein is set out on pages 111 to 112 of this circular.

– 13 –

LETTER FROM THE BOARD

A form of proxy for use at the SGM is enclosed with this circular. Whether or not the Shareholders intend to be present at the SGM, they are requested to complete the enclosed form of proxy and return it to the office of the Company’s branch share registrars, Secretaries Limited, at Ground Floor, BEA Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time fixed for holding of the SGM. Completion and delivery of the enclosed form of proxy will not prevent the Shareholders from attending, and voting at the SGM if they so wish.

Pursuant to the Bye-laws, a poll may be demanded in relation to any resolution put to the vote of the SGM before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll:

(a) by the chairman of the meeting; or
(b) by at least three Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorized representative or by proxy for the time being entitled to vote at the meeting; or
(c) by any Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorized representative or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting; or
(d) by any Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorized representative or by proxy and holding shares in the Company conferring a right to attend and vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

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 as set out on pages 16 to 17 of this circular; and (ii) the letter from SHKIL containing its advice to the Independent Board Committee and the Independent Shareholders in respect of the terms of the proposed Share Purchase and the transactions contemplated therein as well as the principal factors and reasons taken into account in arriving at its advice as set out on pages 18 to 25 of this circular.

– 14 –

LETTER FROM THE BOARD

The Independent Board Committee has considered the terms of the proposed Share Purchase and the transactions contemplated therein as well as the advice given by SHKIL and is of the opinion that the proposed Share Purchase and the transactions contemplated therein 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, as a whole, are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, the Board 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.

ADDITIONAL INFORMATION

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

Yours faithfully, By Order of the Board Dai Zhikang Chairman

– 15 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

SHANGHAI ZENDAI PROPERTY LIMITED 上海証大房地產有限公司[*]

(formerly known as Shanghai Century Holdings Limited 上海世紀控股有限公司[)]

(Incorporated in Bermuda with limited liability)

(Stock Code: 755)

Unit 6108, The Center 99 Queen’s Road Central Hong Kong

17 August, 2004

To the Independent Shareholders

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTION

PURCHASE OF FURTHER INTEREST IN A SINO-FOREIGN EQUITY JOINT VENTURE IN THE PRC

We refer to the circular dated 17 August, 2004 (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 transactions contemplated therein, details of which are set out in the text of the letter from the Board as set out on pages 5 to 15 of the Circular.

We wish to draw your attention to the letter from SHKIL as set out on pages 18 to 25 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 together with the principal factors and reasons for its advice.

* For identification purpose only

– 16 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account the advice of SHKIL, we consider that the proposed Share Purchase and the transactions contemplated therein 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, 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 at the SGM.

Yours faithfully, For and on behalf of

The Independent Board Committee Lo Mun Lam Raymond Lai Chik Fan Independent Non-executive Directors

– 17 –

LETTER FROM SHKIL

==> picture [38 x 38] intentionally omitted <==

Shanghai Zendai Property Limited Unit 6108, The Center 99 Queen’s Road Central Hong Kong

17 August, 2004

To the Independent Board Committee

and Independent Shareholders

Dear Sirs,

MAJOR AND CONNECTED TRANSACTION

We refer to our engagement under which Sun Hung Kai International Limited (“Sun Hung Kai”) has been appointed as the independent financial adviser to advise the Independent Board Committee and Independent Shareholders in relation to the terms of the Share Purchase Agreement. Terms defined in the circular of the Company to the Shareholders dated 17 August, 2004 (the “Circular”), of which this letter forms part, bear the same meanings herein unless the context otherwise requires.

On 27 July, 2004, the Board announced that Shanghai Zendai Land, a 80% owned subsidiary of the Company, entered into the Share Purchase Agreement with the Vendor pursuant to which Shanghai Zendai Land conditionally agreed to purchase a 24% interest in the registered capital of Zendai Delta Land for a consideration of RMB81,000,000 (equivalent to approximately HK$76,415,000) in cash from the Vendor.

As at the Latest Practicable Date, Mr. Dai Zhikang, being an executive Director and the chairman of the Company, holds the entire interest share capital of Giant Glory. Giant Glory is the controlling shareholder of the Company and is holding approximately 54.40% interest in the entire issued share capital of the Company. As Mr. Dai Zhi Chang, the sole owner of the Vendor, is the brother of Mr. Dai Zhikang, 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 by poll. In addition, the Share Purchase also constitutes a major transaction for the Company under the Listing Rules.

In view of Mr. Dai Zhikang’s relationship with Mr. Dai Zhi Chang, Mr. Dai Zhikang, 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.

– 18 –

LETTER FROM SHKIL

In formulating our opinion and recommendation, we have relied on the statements, information, opinions, representations and facts supplied to us by the Company and its advisers. We have assumed that all information and representations contained or referred to in the Circular or otherwise supplied to us by the Company were true at the time they were made and continue to be true as at the date of the Circular. We have 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 and accuracy of the information and facts 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.

We note that Sallmanns (Far East) Limited has confirmed that the valuation of the property interests of Zendai Delta Land was conducted in compliance with all the requirements contained in Chapter 5 and Practice Note 12 from the Listing Rules and the Hong Kong Guidance Notes on the Valuation of Property Assets (2nd Edition) published by the Hong Institute of Surveyors in March 2000 and therefore, we consider that it is reasonable to take the view that the valuation prepared by Sallmanns (Far East) Limited is fair and reasonable.

We consider that we have been provided with sufficient information to reach an informed view regarding the terms of the Share Purchase Agreement, 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 recommendations. 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 businesses, operational aspects, financial standing and affairs of the Group or the companies to be acquired by the Group.

PRINCIPAL FACTORS TAKEN INTO ACCOUNT

Background to and reasons for the Share Purchase Agreement

The Group is principally engaged in property investment and development in Shanghai and its surrounding areas. Since 2002, the Group has been successfully adjusting its business portfolio to focus on property development and has achieved a sound reputation in Shanghai, the PRC, one of the fastest growing financial centers in Asia. Given the prospects for the property market in Shanghai, the PRC, the Board is of the view that demand for high-end properties are promising and is conducive to the Group’s property business. In light of satisfactory market responses receiving from the sales of Phase I of 水清木華 (Shui Qing Mu Hua), the Board is optimistic about the prospects of Phase II of 水清木華 (Shui Qing Mu Hua) which are now under development. The business of 水清木華 (Shui Qing Mu Hua) is in line with the core business of the Group.

– 19 –

LETTER FROM SHKIL

Currently, the Company, through Best East, holds an indirect 25% interest in the registered capital of Zendai Delta Land. Upon Completion, the Company will be indirectly interested in 49% of the registered capital of Zendai Delta Land and the said equity interests held by the Group will continue to be carried as an investment in its financial statements. Given the future prospects for the property market in Shanghai and the business prospects of 水清木華 (Shui Qing Mu Hua), the Board considers that the Share Purchase will enable the Group to strengthen future contribution brought about by 水清木華 (Shui Qing Mu Hua) through its increased equity participation in Zendai Delta Land upon Completion. The purchase of a 24% interest in the registered capital of Zendai Delta Land by the Group at a total consideration of RMB81,000,000 (equivalent to approximately HK$76,415,000) under the Share Purchase is the result of arm’s length negotiations and on normal commercial terms between the parties to the Share Purchase Agreement and with reference to the basis of consideration as set out in the sub-section headed “Consideration” below. Therefore, the Board considers that the terms of the Share Purchase Agreement are fair and reasonable and are in the interests of the Group and the Shareholders as a whole. The Board does not have any present intention to acquire any further interests in the registered capital of Zendai Delta Land.

Information of Zendai Delta Land

Zendai Delta Land is principally engaged in property development and property management services and is currently developing a residential property project named “水清木華 ” (Shui Qing Mu Hua) in Shanghai, the PRC. Currently, the registered capital of Zendai Delta Land is RMB80,000,000 (equivalent to approximately HK$75,472,000) and is owned as to 25% by Best East, 56.25% by the Vendor and the remaining 18.75% by Shanghai Zendai Investment. According to the Board, the original costs of investment contributed by Mr. Dai Zhi Chang, Shanghai Zendai Investment and Best East for their respective 56.25%, 18.75% and 25% interest in the registered capital of Zendai Delta Land was approximately RMB45,000,000 (equivalent to approximately HK$42,453,000), RMB15,000,000 (equivalent to approximately HK$14,151,000) and RMB20,000,000 (equivalent to approximately HK$18,868,000).

水清木華 (Shui Qing Mu Hua) comprises the development of three parcels of land located at Lian Yang Residential Area, Pudong New District, Shanghai, the PRC, which is located adjacent to the 世紀公園 (Century Park) and is in close proximity to 陸家嘴 (Lujiazui), with a total site area of approximately 181,411 square metres. 水清木華 (Shui Qing Mu Hua) is a large-scale residential real estate development divided into two phases comprising the development of both apartment blocks in Phase I and villas in Phase II targeting the middle to high-end market. The construction of Phase I apartment development of 水清木華 (Shui Qing Mu Hua) with a total of 855 residential units was completed in various stages between 2002 and the first quarter of 2004. As stated in the “Letter from the Board”, sale of Phase I of 水清木華 (Shui Qing Mu Hua) was commenced in 2003 and recorded satisfactory results.

– 20 –

LETTER FROM SHKIL

According to the audited accounts of Zendai Delta Land for the year ended 31 December, 2003 (prepared in accordance with generally accepted accounting principles in Hong Kong), Zendai Delta Land recorded an audited net loss of approximately RMB7,149,000 (equivalent to approximately HK$6,744,000). The net loss in the year ended 31 December, 2003 was mainly attributable to the increase in distribution costs in promoting the sale of Phase I of 水清木華 (Shui Qing Mu Hua) during the first launch in 2003. The audited net assets of Zendai Delta Land as at 31 December, 2003 was approximately RMB101,299,000 (equivalent to approximately HK$95,565,000). According to the audited accounts of Zendai Delta Land for the year ended 31 December, 2002 (prepared in accordance with generally accepted accounting principles in Hong Kong), Zendai Delta Land recorded an audited profit before and audited profit after taxation and minority interests of approximately RMB93,032,000 (equivalent to approximately HK$87,766,000) and approximately RMB37,901,000 (equivalent to approximately HK$35,756,000) respectively. The audited net assets of Zendai Delta Land as at 31 December, 2002 was approximately RMB108,448,000 (equivalent to approximately HK$102,309,000).

Consideration

The total consideration for the Share Purchase of RMB81,000,000 (equivalent to approximately HK$76,415,000) was arrived at after arms’ length negotiation and on normal commercial terms between the parties to the Share Purchase Agreement and with reference to (i) the audited net assets of Zendai Delta Land of approximately RMB101,299,000 (equivalent to approximately HK$95,565,000) as at 31 December, 2003 (prepared in accordance with generally accepted accounting principles in Hong Kong); (ii) the business prospects of Zendai Delta Land regarding the development of 水清木華 (Shui Qing Mu Hua); (iii) the preliminary valuation of the property interest of 水清木華 (Shui Qing Mu Hua) owned by Zendai Delta Land of approximately RMB1,363,800,000 (equivalent to approximately HK$1,286,604,000) as at 30 April, 2004 (which was subsequently updated to 31 May, 2004), as valued by Sallmanns (Far East) Limited, an independent valuer; and (iv) the future prospects of the property market in Shanghai, the PRC.

The aforesaid total consideration for the Share Purchase will be satisfied by the internal resources of the Group upon Completion.

– 21 –

LETTER FROM SHKIL

As stated in the accountants’ report of Zendai Delta Land as set out in Appendix II to the Circular, the audited net assets of Zendai Delta Land as at 31 March, 2004 was approximately RMB188,317,000 (equivalent to approximately HK$177,658,000). The net assets of Zendai Delta Land increased from approximately RMB101,299,000 as at 31 December, 2003 to approximately RMB188,317,000 as at 31 March, 2004, which was mainly attributable to the net profits of approximately RMB87,018,000 recorded by Zendai Delta Land during the three months ended 31 March, 2004. The consideration of RMB81,000,000 (equivalent to approximately HK$76,415,000) is approximately 1.79 times to the 24% attributable interest of the audited net assets of Zendai Delta Land of approximately RMB45,196,080 as at 31 March, 2004.

Nevertheless, we note that the property interest of 水清木華 (Shui Qing Mu Hua) owned by Zendai Delta Land was valued by Sallmanns (Far East) Limited, an independent property valuer, at approximately RMB1,363,800,000 as at 31 May, 2004, which exceeds the book value of 水清木華 (Shui Qing Mu Hua) of approximately RMB585,556,000 (equivalent to approximately HK$552,411,000) as at 31 March, 2004 by RMB778,244,000. As such, the book value of 水清木華 (Shui Qing Mu Hua) as at 31 March, 2004 represents a significant discount of approximately 57.1% to the above valuation.

In addition, (a) the Group is principally engaged in property investment and development in Shanghai and its surroundings areas; (b) the Board considers that the Share Purchase will enable the Group to strengthen future contribution brought about by 水清木華 (Shui Qing Mu Hua) through its increased equity participation in Zendai Delta Land upon Completion; (c) the Board is of the view that demand for high-end properties are promising and is conducive to the Group’s property business; (d) in light of satisfactory market responses receiving from the sales of Phase I of 水清木華 (Shui Qing Mu Hua), the Board is optimistic about the prospects of Phase II of 水清木華 (Shui Qing Mu Hua) which are now under development.

As advised by the Directors, up to 31 May, 2004, 344 residential units (out of total 855 residential units) of Phase I of 水清木華 (Shui Qing Mu Hua) have been sold and another 397 residential units of Phase I of 水清木華 (Shui Qing Mu Hua) are held under pre-sale contracts. The construction of Phase II of 水清木華 (Shui Qing Mu Hua), which is planned to be developed into 50 villas and a clubhouse with a planned total gross floor area of approximately 28,766 sq.m., is scheduled to be completed in the second quarter of 2005. According to 上海統計年鑑 2004 (Shanghai Statistical Yearbook 2004), the property price index in Shanghai increased by approximately 20% in 2003 as compared with the previous year, in which the residential property price index rose by approximately 21%. The Board believes that Shanghai’s residential property market would continue to prosper in future as a result of the anticipated economic growth of Shanghai, the PRC, one of the fastest growing financial centres in Asia. Based on the market response of Phase I of 水清木華 (Shui Qing Mu Hua) and the prospects of Shanghai’s residential property market, we concur with the Board’s view that the prospects of Phase II of 水清木華 (Shui Qing Mu Hua) is optimistic.

– 22 –

LETTER FROM SHKIL

Given the promising prospects of Phase II of 水清木華 (Shui Qing Mu Hua), we consider the basis of determining the consideration of the Share Purchase Agreement to be fair and reasonable.

Payment terms

The total consideration of RMB81,000,000 (equivalent to approximately HK$76,415,000) payable by Shanghai Zendai Land under the Share Purchase Agreement will be payable by Shanghai Zendai Land in cash to the Vendor. The cash consideration will be funded by the Group’s internal resources.

As advised by the Directors, as at 30 June, 2004, the bank balances and cash of the Group exceeded RMB400 million.

In addition, the Directors are of the opinion that, following the additional investment in Zendai Delta Land and taking into account the credit facilities and internal resources available to the Group, the Group will have sufficient working capital for its present requirements.

Based on the above, we are of the view that the payment terms of the Share Purchase Agreement has no material adverse impact to the cashflow position of the Group.

Financial effects

Earnings

The Group’s net profit for the year ended 31 December, 2003 were approximately HK$34,089,000. Upon completion of the Share Purchase, the Group’s indirect interest in Zendai Delta Land will increase from 25% to 49%. An additional 24% interest in Zendai Delta Land’s net profit will be taken into account by the Group due to the Share Purchase. The 49% indirect interest in the registered capital of Zendai Delta Land held by the Group upon completion of the Share Purchase Agreement will continue to be equity accounted for by the Group in its financial statements.

As stated in the “Financial information on Zendai Delta Land” as set out in Appendix II to the Circular, Zendai Delta Land recorded a net loss of approximately RMB7,149,000 (equivalent to approximately HK$6,744,000) and a net profit of approximately RMB87,018,000 (equivalent to approximately HK$82,092,000) for year ended 31 December, 2003 and the three months ended 31 March, 2004 respectively. Net loss recorded by Zendai Delta Land in 31 December, 2003 was mainly attributable to the increase in distribution costs in promotion the sale of Phase I of 水清木華 (Shui Qing Mu Hua) during the first launch in the year. The increase in net profit in the three months ended 31 March, 2004 was mainly attributable to the satisfactory sale of Phase I of 水清木華 (Shui Qing Mu Hua) during the period.

– 23 –

LETTER FROM SHKIL

As stated in the “Pro forma adjusted net tangible assets” set out in Appendix III to the Circular, the amount of negative goodwill (“Negative Goodwill”) arising from the Share Purchase is approximately HK$141,051,000. According to the Group’s accounting policy, negative goodwill is recognised as income on a straight line basis over the remaining average useful life of the asset acquired. Accordingly, the Negative Goodwill is to be amortized over a period of eight years under the Company’s accounting policy and approximately HK$17,631,375 will be credited to the profit and loss account of the Group on an annual basis after completion of the Share Purchase.

The Board is of the view that demand for high-end properties are promising and is conducive to the Group’s property business and the Board also considers that the Share Purchase enable the Group to strengthen future contribution brought about by 水清木華 (Shui Qing Mu Hua) through its increased equity participation in Zendai Delta Land upon Completion. We consider such strengthening of future contribution to be in the interest of the Company and the Shareholders as a whole. The Share Purchase allows the Group to further participate in the future potential earnings of Zendai Delta Land. Given the promising prospects of Phase II of 水清木華 (Shui Qing Mu Hua), we consider the Share Purchase is in the interests of the Group and the Shareholders.

Net tangibles assets

As at 31 December, 2003, the audited net assets and net tangible assets of the Group amounted to approximately HK$171,934,000 and HK$233,481,000 respectively. As stated in the “Pro forma adjusted net tangible assets” set out in Appendix III to the Circular, a Negative Goodwill of approximately HK$141,051,000 (representing approximately 60.4% of the net tangible assets as at 31 December, 2003) will arise from the Share Purchase. The pro forma adjusted net tangible assets of the Group will be approximately HK$374,532,000 upon Completion.

Based on the above, we consider that the Share Purchase does not adversely affect the Group’s net tangible assets.

Funding of the consideration

As at 31 December, 2003, the Group has bank balance and cash of approximately HK$98.8 million. As advised by the Directors, as at 30 June, 2004, the bank balances and cash of the Group exceeded RMB400 million. As stated in the “Letter from the Board”, the cash consideration in the amount of RMB81,000,000 (equivalent to approximately HK$76,415,000) will be funded by the Group’s internal resources. As the consideration is payable in cash and no issue of Shares is involved, the Share Purchase will have no dilutive effect on the Shareholders’ shareholdings in the Company.

– 24 –

LETTER FROM SHKIL

RECOMMENDATION

Having considered the above principal factors and reasons and the terms of the Share Purchase Agreement, we consider the terms of the Share Purchase Agreement to be fair and reasonable so far as the Independent Shareholders are concerned and are in the interest of the Company and the Shareholders of as a whole. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the SGM to approve the Share Purchase Agreement.

Yours faithfully, For and on behalf of

SUN HUNG KAI INTERNATIONAL LIMITED Eric Shum

Director

– 25 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

1. SUMMARY OF AUDITED FINANCIAL STATEMENTS

Set out below is a summary of the audited consolidated income statements of the Group for each of the three years ended 31 December, 2003 and the audited consolidated balance sheets of the Group as at 31 December, 2003, 31 December, 2002 and 31 December, 2001 as extracted from the annual reports of the Company for the relevant years. Unqualified opinion was given by the auditors of the Group for the past three financial years.

CONSOLIDATED INCOME STATEMENT

2003 HK$’000 Turnover 336,219 Cost of sales (246,990) Gross profit 89,229 Other revenue 3,469 Distribution costs (6,930) Administrative expenses (19,405) Deficit arising on properties revaluation – Profit/(loss) from operations 66,363 Finance costs (7) Release of negative goodwill to income 12,871 Share of results of associates (1,713) Gain on disposal of subsidiaries – Write back of provision for a guarantee in respect of a former associate – Profit/(loss) before taxation 77,514 Taxation (12,992) Profit/(loss) before minority interests 64,522 Minority interests (30,433) Net profit/(loss) for the year 34,089 Earnings/(loss) per share Basic HK0.8 cents	Continuing operation HK$’000 – – – 1,015 – (11,697) – (10,682) – – 18,362 – – 7,680 (5,524) 2,156 – 2,156	For the year ended 31 December, 2002 Discontinued Continuing operation Total operation HK$’000 HK$’000 HK$’000 869,439 869,439 – (837,064) (837,064) – 32,375 32,375 – 3,083 4,098 26 – – – (30,939) (42,636) (2,551) – – – 4,519 (6,163) (2,525) (1,195) (1,195) – – – – – 18,362 – 11,755 11,755 – – – – 15,079 22,759 (2,525) 317 (5,207) – 15,396 17,552 (2,525) (5,751) (5,751) – 9,645 11,801 (2,525) HK0.3 cents	2001 Discontinued operation HK$’000 677,767 (654,429) 23,338 8,054 – (27,746) (84,041) (80,395) (11,777) – – 29,075 4,445 (58,652) – (58,652) 4,513 (54,139)	Total HK$’000 677,767 (654,429) 23,338 8,080 – (30,297) (84,041) (82,920) (11,777) – – 29,075 4,445 (61,177) – (61,177) 4,513 (56,664) HK(3.7 cents)

– 26 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONSOLIDATED BALANCE SHEET

Non-current assets Property, plant and equipment Investment properties Goodwill Negative goodwill Interests in associates Investment in securities Current assets Properties for sale Trade and other receivables Deposits for property development Advance for investment Investment in securities Restricted cash Bank balances and cash Current liabilities Trade and other payables Receipts in advances Amount due to a related company Amount due to a director Shareholder’s loan Taxation Bank loans – secured Net current assets Total assets less current liabilities	As at 31 December, 2003 2002 2001 HK$’000 HK$’000 HK$’000 3,954 361 2,889 – – 2,100 673 – – (64,469) – – 30,895 32,621 – – 12,564 – (28,947) 45,546 4,989 409,617 – – 33,047 70,082 54,402 291,153 – – 47,170 – – 3,914 – – 500 – 8,715 98,771 22,477 27,648 884,172 92,559 90,765 69,817 260 51,940 192,256 – – 4,882 – – 1,981 – – 30,000 – – 3,782 – – 150,943 – 27,565 453,661 260 79,505 430,511 92,299 11,260 401,564 137,845 16,249	As at 31 December, 2003 2002 2001 HK$’000 HK$’000 HK$’000 3,954 361 2,889 – – 2,100 673 – – (64,469) – – 30,895 32,621 – – 12,564 – (28,947) 45,546 4,989 409,617 – – 33,047 70,082 54,402 291,153 – – 47,170 – – 3,914 – – 500 – 8,715 98,771 22,477 27,648 884,172 92,559 90,765 69,817 260 51,940 192,256 – – 4,882 – – 1,981 – – 30,000 – – 3,782 – – 150,943 – 27,565 453,661 260 79,505 430,511 92,299 11,260 401,564 137,845 16,249
		4,989
		– 54,402 – – – 8,715 27,648
		90,765
		51,940 – – – – – 27,565
		79,505
		11,260
		16,249

– 27 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Non-current liabilities Bank loans – secured Deferred taxation Minority interests Net assets Capital and reserves Share capital Reserves	As at 31 December, 2003 2002 2001 HK$’000 HK$’000 HK$’000 94,340 – – 12,110 – – 106,450 – – 123,180 – (4,513) 171,934 137,845 20,762 86,616 86,616 79,616 85,318 51,229 (58,854) 171,934 137,845 20,762

– 28 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2 AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2003

Set out below is the audited financial statements of the Group for the year ended 31 December, 2003, which is extracted from the annual report of the Group for the year ended 31 December, 2003.

CONSOLIDATED INCOME STATEMENT

YEAR ENDED DECEMBER 31, 2003

Notes Turnover 4 Cost of sales Gross profit Other revenue Distribution costs Administrative expenses Profit/(loss) from operations 6 Finance costs 7 Release of negative goodwill to income Share of results of associates Gain on disposal of subsidiaries Profit before taxation Taxation 9 Profit before minority interests Minority interests Net profit for the year Earnings per share 11 Basic	2003 HK$’000 336,219 (246,990) 89,229 3,469 (6,930) (19,405) 66,363 (7) 12,871 (1,713) – 77,514 (12,992) 64,522 (30,433) 34,089 HK0.8 cents	For the year ended 31 December, 2002 Continuing Discontinued operation operation Total HK$’000 HK$’000 HK$’000 – 869,439 869,439 – (837,064) (837,064) – 32,375 32,375 1,015 3,083 4,098 – – – (11,697) (30,939) (42,636) (10,682) 4,519 (6,163) – (1,195) (1,195) – – – 18,362 – 18,362 – 11,755 11,755 7,680 15,079 22,759 (5,524) 317 (5,207) 2,156 15,396 17,552 – (5,751) (5,751) 2,156 9,645 11,801 HK0.3 cents

The discontinued operation for the year ended 31 December, 2002 represented the operation of Travel Business which was disposed of on 13 December, 2002, details of which is set out in note 29 to the financial statements.

– 29 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONSOLIDATED BALANCE SHEET

AT 31 DECEMBER, 2003

Notes Non-current assets Property, plant and equipment 12 Goodwill 13 Negative goodwill 14 Interests in associates 16 Investment in securities 17 Current assets Properties for sale 18 Trade and other receivables 19 Deposits for property development Advance for investment 20 Investment in securities 17 Restricted cash 21 Bank balances and cash Current liabilities Trade and other payables 22 Receipts in advances Amount due to a related company 23 Amount due to a director 23 Shareholder’s loan 23 Taxation Bank loans – secured 24 Net current assets Total assets less current liabilities	2003 HK$’000 3,954 673 (64,469) 30,895 – (28,947) 409,617 33,047 291,153 47,170 3,914 500 98,771 884,172 69,817 192,256 4,882 1,981 30,000 3,782 150,943 453,661 430,511 401,564	2002 HK$’000 361 – – 32,621 12,564
		45,546
		– 70,082 – – – – 22,477
		92,559
		260 – – – – – –
		260
		92,299
		137,845

– 30 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes Non-current liabilities Bank loans – secured 24 Deferred taxation 25 Minority interests Net assets Capital and reserves Share capital 26 Reserves 27	2003 HK$’000 94,340 12,110 106,450 123,180 171,934 86,616 85,318 171,934	2002 HK$’000 – –
		–
		–
		137,845

		86,616 51,229
		137,845

– 31 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

BALANCE SHEET

AT 31 DECEMBER, 2003

Notes Non-current assets Property, plant and equipment 12 Interests in subsidiaries 15 Amount due from an associate 16 Current assets Other receivables Bank balances and cash Current liabilities Other payables Shareholder’s loan 23 Net current (liabilities)/assets Net assets Capital and reserves Share capital 26 Reserves 27	2003 HK$’000 189 114,928 1,522 116,639 360 27,149 27,509 549 30,000 30,549 (3,040) 113,599 86,616 26,983 113,599	2002 HK$’000 361 101,043 –
		101,404
		1,174 22,402
		23,576
		260 –
		260
		23,316
		124,720

		86,616 38,104
		124,720

– 32 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

YEAR ENDED 31 DECEMBER, 2003

At 1 January, 2002 Issue of shares, net of expenses Released upon disposal of subsidiaries Net profit for the year At 1 January, 2003 Net profit for the year At 31 December, 2003 Attributable to: – The Company and subsidiaries – Associates At 31 December, 2003	Share capital HK$’000 79,616 7,000 – – 86,616 – 86,616 86,616 – 86,616	Share premium HK$’000 68,252 103,777 – – 172,029 – 172,029 172,029 – 172,029	Capital redemption reserve HK$’000 1,074 – – – 1,074 – 1,074 1,074 – 1,074	Special capital reserves HK$’000 68,541 – – – 68,541 – 68,541 68,541 – 68,541	Property revaluation Accumulated reserve losses HK$’000 HK$’000 5,495 (202,216) – – (5,495) – – 11,801 – (190,415) – 34,089 – (156,326) – (167,197) – 10,871 – (156,326)	Total HK$’000 20,762 110,777 (5,495) 11,801 137,845 34,089 171,934 161,063 10,871 171,934

Note: Special capital reserve represents the credit arising from the effect of reduction in share capital in the previous year.

– 33 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONSOLIDATED CASH FLOW STATEMENT

YEAR ENDED 31 DECEMBER, 2003

OPERATING ACTIVITIES Profit before taxation Adjustment for: Interest income Dividend income Interest expense Depreciation Loss on disposal of property, plant and equipment Gain on disposal of investment in securities Unrealised holding loss on investment in securities Share of results of associates Amortisation of goodwill Release of negative goodwill to income Gain on disposal of subsidiaries Operating cash flows before working capital changes Increase in properties for sale Decrease/(increase) in trade and other receivables Increase in investment in securities Decrease in trade and other payables Decrease in receipts in advances Increase in amount due from an associate Increase in amount due to a related company Increase in amount due to a director Net cash used in operations Interest received Interest paid Overseas tax paid Hong Kong profits tax refunded Net cash used in operating activities	2003 HK$’000 77,514 (1,406) (311) 7 909 472 (119) 61 1,713 75 (12,871) – 66,044 (24,952) 5,703 – (136,930) (40,513) (241) 4,882 1,981 (124,026) 1,406 (7) (11,406) – (134,033)	2002 HK$’000 22,759 (596) – 1,195 1,427 183 – – (18,362) – – (11,755) (5,149) – (75,505) (12,564) (2,504) – (509) 7,500 – (88,731) 596 (1,195) – 317 (89,013)

– 34 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes INVESTING ACTIVITIES Dividend income Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Proceeds from disposal of investment in securities Acquisition of subsidiaries (net of cash and cash equivalent acquired) 28 Proceeds from disposal of subsidiaries (net of cash and cash equivalents disposed of) 29 Decrease in pledged bank deposits Investment in associates Net cash from investing activities FINANCING ACTIVITIES Increase in shareholders’ loan Increase in bank loans Repayment of bank loans Net proceeds from issue of shares Net cash from financing activities INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents, beginning of year CASH AND CASH EQUIVALENTS, END OF YEAR ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Bank balances and cash	2003 HK$’000 311 (2,346) 759 8,708 111,574 – – – 119,006 30,000 132,075 (70,754) – 91,321 76,294 22,477 98,771 98,771	2002 HK$’000 – (1,526) – – – 12,715 8,715 (19,274) 630 – – – 110,777 110,777 22,394 83 22,477 22,477

– 35 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

YEAR ENDED 31 DECEMBER, 2003

1. GENERAL

The Company is incorporated in Bermuda as an exempted company with limited liability. The shares of the Company are listed on the Stock Exchange. Its ultimate holding company is Giant Glory Assets Limited, a company incorporated in the British Virgin Islands.

The Company acts as an investment holding company. The principal activities of its subsidiaries are set out in note 36.

2. ADOPTION OF STATEMENTS OF STANDARD ACCOUNTING PRACTICE (“SSAP”)

In the current year, the Group has adopted SSAP 12 (Revised) “Income Taxes” issued by the Hong Kong Society of Accountants for the first time. The principal effect of the implementation of SSAP 12 (Revised) is in relation to deferred tax. In previous years, partial provision was made for deferred tax using the income statement liability method, i.e. a liability was recognised in respect of timing differences arising, except where those timing differences were not expected to reverse in the foreseeable future. SSAP 12 (Revised) requires the adoption of a balance sheet liability method, whereby deferred tax is recognised in respect of all temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, with limited exceptions. In the absence of any specific transitional requirements in SSAP12 (Revised), the new accounting policy has been applied retrospectively. The adoption of this standard has had no material effect on the results for the prior accounting periods. Accordingly, no prior period adjustment has been required.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared under the historical cost convention.

The financial statements have been prepared in accordance with accounting principles generally accepted in Hong Kong. The principal accounting policies adopted are as follows:

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.

All significant intercompany transactions and balances within the Group have been eliminated on consolidation.

Investments in subsidiaries

Investments in subsidiaries are included in the Company’s balance sheet at cost less any identified impairment loss. The results of the subsidiaries are accounted for by the Company on the basis of dividends received or receivable.

Interests in associates

The consolidated income statement includes the Group’s share of the post-acquisition results of its associates for the year. In the consolidated balance sheet, interests in associates are stated at the Group’s share of the net assets of the associates plus goodwill on acquisition in so far as it has not already been amortised, less any identified impairment loss.

– 36 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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 or associate at the date of acquisition.

Goodwill is capitalised and amortised on a straight-line basis over its useful economic life. Goodwill arising on the acquisition of an associate is included within the carrying amount of the associate. Goodwill arising on the acquisition of subsidiaries is presented separately in the balance sheet.

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 or associate at the date of acquisition over the cost of acquisition.

Negative goodwill is presented as deduction from assets. To the extent that such negative goodwill is attributable to losses or expenses anticipated at the date of acquisition, it is released to income 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 in income immediately.

Negative goodwill arising on the acquisition of subsidiaries is presented separately in the balance sheet as a deduction from assets.

Properties for sale

Completed properties and properties under development held for sale are stated at the lower of cost and net realisable value. Cost includes the cost of land, development expenditure, borrowing costs capitalised in accordance with the Group’s accounting policy, and other attributable expenses. Net realisable value is determined by management based on prevailing market conditions.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, where appropriate.

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:

Motor vehicles	20%
Leasehold improvements	20%
Furniture and equipment	20%

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

Investment in securities

Investments in securities are recognised on a trade date basis and are initially measured at cost.

Investments other than held-to-maturity debt securities are classified as investment securities or other investments.

Investment securities, which are securities held for an identified long-term strategic purpose, are measured at subsequent reporting dates at cost, as reduced by any impairment loss that is other than temporary.

Other investments are measured at fair value, with unrealised gains and losses included in net profit or loss for the year.

– 37 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Impairment

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible 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 loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount under another SSAP, in which case the impairment loss is treated as revaluation decrease under that SSAP.

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 under another SSAP, in which case the reversal of the impairment loss is treated as a revaluation increase under that SSAP.

Capitalisation of borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of those assets. Capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs capitalised.

All other borrowing costs are recognised as an expense in the year in which they are incurred.

Taxation

Taxation represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income and expense that are taxable or deductible in other years. And it further excludes income statement items that are never taxable and deductible.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition other than in a business combination of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

– 38 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Operating leases

Rentals payable under operating leases are charged to the income statement on a straight-line basis over the term of the relevant lease.

Retirement benefit scheme contributions

Payments to retirement benefit schemes are charged as an expense as they fall due.

Foreign currencies

Transactions in currencies other than Hong Kong dollars are translated at the rates ruling on the dates of the transactions or at the contracted settlement rate. Monetary assets and liabilities denominated in currencies other than Hong Kong dollars are re-translated at the rates ruling on the balance sheet date. Profits and losses arising on exchange are dealt with in the income statement.

On consolidation, the assets and liabilities of overseas operations which are denominated in currencies other than Hong Kong dollars are translated at the rates ruling on the balance sheet date. Income and expense items are translated at the average exchange rate for the year. Exchange differences arising, if any, are classified as equity and transferred to the Group’s exchange reserve. Such translation differences are recognised as income or as expenses in the year in which the operation is disposed of.

Related parties

Parties 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 and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities.

Revenue recognition

Sales of properties

Income from sales of properties is recognised upon the execution of a binding sales agreement or upon the issuance of an occupation permit/completion certificate by the relevant authority, whichever is the later. Deposits received from forward sales of properties are carried in the balance sheet under current liabilities.

Sales for air tickets

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

Provision of travel related services

Service fee income is recognised when the services have been provided to the customers.

Dividend income

Dividend income from investments is recognised when the Group’s rights to receive payment have been established.

Interest income

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

– 39 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

4. TURNOVER

Turnover represents the aggregate of proceeds from sales of properties and amounts received and receivable for air tickets sold and the provision of the other travel related services, less allowances, to outside customers.

Turnover is analysed as follows:

Sales of properties Sales of air tickets, including incentive commission from airlines, and revenue from other travel related services	2003 Total HK$’000 317,533 18,686 336,219	Continuing operation HK$’000 – – –	2002 Discontinued operation HK$’000 – 869,439 869,439	Total HK$’000 – 869,439
				869,439

5. BUSINESS AND GEOGRAPHICAL SEGMENTS

(a) Business segment

For the year ended 31 December, 2003, over 90% of the Group’s revenue and assets are attributable to the sales of properties. For the year ended 31 December, 2002, all the Group’s revenue and assets are attributable to the sales of air tickets and travel related business.

(b) Geographical segment

For the year ended 31 December, 2003, over 90% of the Group’s business was derived from activities in the PRC and more than 90% of the Group’s total assets are located in the PRC as at 31 December, 2003.

For the year ended 31 December, 2002, all of the Group’s business was derived from activities in Hong Kong and all of the Group’s total assets are located in Hong Kong as at 31 December, 2002.

– 40 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

6. PROFIT/(LOSS) FROM OPERATIONS

2003 Total HK$’000 Profit/(loss) from operations has been arrived at after charging: Auditors’ remuneration 260 Depreciation 909 Staff costs, excluding directors’ emoluments and retirement benefits scheme contributions 5,146 Loss on disposal of property, plant and equipment 472 Directors’ emoluments_(note 8) 1,480 Retirement benefit scheme contribution, excluding directors’ 190 Unrealised holding loss on investment in securities 61 Amortisation of goodwill (included in administrative expenses) 75 and after crediting: Gain on disposal of investment in securities (119) Interest income (1,406) Dividend income (311) FINANCE COSTS 2003 Total _HK$’000 Interest on: Bank loans and overdraft 12,391 Amounts due to related companies – 12,391 _Less:_Amount capitalised in properties for sale (12,384) 7	Continuing operation HK$’000 403 200 841 – 2,704 28 – – – (460) – 2002 Continuing operation HK$’000 – – – – –	2002 Discontinued operation HK$’000 240 1,227 19,715 183 – 821 – – – (136) – Discontinued operation HK$’000 121 1,074 1,195 – 1,195	Total HK$’000 643 1,427 20,556 183 2,704 849 – – – (596) – Total HK$’000 121 1,074 1,195 – 1,195

7. FINANCE COSTS

– 41 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

8. 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	2003 Total HK$’000 – 260 260 1,200 20 1,220 1,480	Continuing operation HK$’000 – 208 208 2,472 24 2,496 2,704	2002 Discontinued operation HK$’000 – – – – – – –	Total HK$’000 – 208
				208
				2,472 24
				2,496
				2,704

The emoluments of the directors are within the following bands:

	2003	2002
	Number	of directors
Nil-HK$1,000,000	8	9
HK$1,000,001-HK$1,500,000	1	–

During the year ended 31 December, 2003, no directors waived any emoluments (2002: Nil).

Five highest paid individuals’ emoluments

During the year, the five highest paid individuals included one director (2002: four), details of whose emoluments are set out above. The emoluments of the remaining four (2002: one) individuals were as follows:

Salaries and other benefits Retirement benefits scheme contributions	2003 Total HK$’000 1,320 47 1,367	Continuing operation HK$’000 248 8 256	2002 Discontinued operation HK$’000 – – –	Total HK$’000 248 8
				256

The emoluments of the remaining individuals are within the emoluments band of less than HK$1,000,000.

– 42 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

9. TAXATION

Current tax Hong Kong Other jurisdictions Over provision in prior years Deferred tax_(note 25)_ Taxation attributable to the Group Share of taxation attributable to associates	2003 Total HK$’000 – 15,160 15,160 – (2,422) 12,738 254 12,992	Continuing operation HK$’000 – – – – – – 5,524 5,524	2002 Discontinued operation HK$’000 – – – (317) – (317) – (317)	Total HK$’000 – – – (317) – (317) 5,524 5,207

No provision for Hong Kong Profits Tax has been made as the Group made no assessable profit in Hong Kong for the year.

Taxation arising in other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.

The taxation charge for the year reconciled to the profit per the income statement is as follows:

Profit before tax Tax at the applicable PRC enterprise income tax rate of 15% (2002: Hong Kong Profits tax rate of 16%) Tax effect of expenses that are not deductible in determining taxable profit Tax effect of income that is not taxable in determining taxable profit Effect of different tax rates of associates operating in other jurisdiction Over provision in prior years Taxation for the year	The Group 2003 2002 HK$’000 HK$’000 77,514 22,759 11,627 3,641 3,360 918 (1,995) (1,881) – 2,846 – (317) 12,992 5,207

10. DIVIDENDS

No dividend was paid or proposed during 2003, nor has any dividend been proposed since the balance sheet date (2002: Nil).

– 43 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

11. EARNINGS PER SHARE

The calculation of the basic earning per share is based on the net profit for the year of HK$34,089,000 (2002: HK$11,801,000) and on the weighted average number of 4,330,782,558 (2002: 4,193,659,270) ordinary shares in issue during the year.

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

12. PROPERTY, PLANT AND EQUIPMENT

THE GROUP

COST At 1 January, 2003 Acquisition of subsidiaries Additions Disposals At 31 December, 2003 DEPRECIATION At 1 January, 2003 Acquisition of subsidiaries Provided for the year Eliminated on disposals At 31 December, 2003 NET BOOK VALUES At 31 December, 2003 At 31 December, 2002 THE COMPANY COST At 1 January, 2003 Additions Disposals At 31 December, 2003 DEPRECIATION At 1 January, 2003 Provided for the year Eliminated on disposals At 31 December, 2003 NET BOOK VALUES At 31 December, 2003 At 31 December, 2002	Motor Leasehold Furniture vehicles improvements and equipment HK$’000 HK$’000 HK$’000 – 185 463 3,670 33 1,216 1,444 287 615 (2,057) (147) (305) 3,057 358 1,989 – 150 137 1,078 14 440 696 20 193 (1,004) (142) (132) 770 42 638 2,287 316 1,351 – 35 326 Leasehold Furniture improvements and equipment HK$’000 HK$’000 185 463 – 52 (148) (305) 37 210 150 137 3 42 (142) (132) 11 47 26 163 35 326	Total HK$’000 648 4,919 2,346 (2,509) 5,404 287 1,532 909 (1,278) 1,450 3,954 361 Total HK$’000 648 52 (453) 247 287 45 (274) 58 189 361

– 44 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

13. GOODWILL

COST Arising on acquisition of a subsidiary during the year and at 31 December, 2003 AMORTISATION Charge for the year and at 31 December, 2003 NET BOOK VALUE At 31 December, 2003 At 31 December, 2002 Goodwill on consolidation is amortised on a straight-line basis over 10 years. NEGATIVE GOODWILL GROSS AMOUNT Arising on acquisition of subsidiaries during the year and at 31 December, 2003 RELEASED TO INCOME Released in the year and at 31 December, 2003 CARRYING AMOUNT At 31 December, 2003 At 31 December, 2002	The Group HK$’000 748 (75)
	673

	–

	The Group HK$’000 77,340 (12,871)
	64,469

	–

14. NEGATIVE GOODWILL

Negative goodwill is released to income on a straight-line basis over 5 years, the remaining average useful life of the depreciable assets acquired.

15. INTERESTS IN SUBSIDIARIES

Unlisted shares, at cost Amounts due from subsidiaries	The Company 2003 2002 HK$’000 HK$’000 1 1 114,927 101,042 114,928 101,043	The Company 2003 2002 HK$’000 HK$’000 1 1 114,927 101,042 114,928 101,043
		101,043

Particulars of the Company’s subsidiaries at 31 December, 2003 are set out in note 36.

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 for repayment within twelve months from the balance sheet date and the amounts are therefore shown as non-current.

– 45 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

16. INTERESTS IN ASSOCIATES

Share of net assets Unamortised goodwill arising on acquisition of associates Amount due from an associate	The 2003 HK$’000 27,896 2,249 30,145 750 30,895	Group 2002 HK$’000 29,582 2,530 32,112 509 32,621	The Company 2003 2002 HK$’000 HK$’000 – – – – – – 1,522 – 1,522 –	The Company 2003 2002 HK$’000 HK$’000 – – – – – – 1,522 – 1,522 –
				– –
				–

Particulars of the Group’s principal associates at 31 December, 2003 are set out in note 37. The amount due from an associate is unsecured, interest free and has no fixed repayment term. In the opinion of the directors, the Company will not demand for repayment within twelve months from the balance sheet date and the amount is therefore shown as non-current.

Goodwill arising on the acquisition of associates is amortised on a straight-line basis over 10 years.

17. INVESTMENT IN SECURITIES

Equity securities listed in Hong Kong Market value of the listed securities Carrying amount analysed for reporting purposes as: Current Non-current	The Other investment 2003 2002 HK$’000 HK$’000 3,914 – 3,914 – 3,914 – – –	Group Investment securities 2003 2002 HK$’000 HK$’000 – 12,564 – 11,260 – – – 12,564	Group Investment securities 2003 2002 HK$’000 HK$’000 – 12,564 – 11,260 – – – 12,564

			11,260

			– 12,564

18. PROPERTIES FOR SALE

Properties for sale – Completed – Under development	The Group 2003 2002 HK$’000 HK$’000 4,408 – 405,209 – 409,617 –	The Group 2003 2002 HK$’000 HK$’000 4,408 – 405,209 – 409,617 –
		–

The properties for sale are carried at cost and pledged to banks to secure bank loans granted to the Group.

– 46 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

19. TRADE AND OTHER RECEIVABLES

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

Included in trade and other receivables of the Group are trade receivables of HK$18,982,000 (2002: Nil). The ageing analysis at the balance sheet date is as follows:

0-30 days 31-60 days 61-90 days 91-180 days 181-360 days Over 360 days	The Group 2003 2002 HK$’000 HK$’000 10,556 – 5,503 – 1,210 – 1,361 – 116 – 236 – 18,982 –	The Group 2003 2002 HK$’000 HK$’000 10,556 – 5,503 – 1,210 – 1,361 – 116 – 236 – 18,982 –
		–

20. ADVANCE FOR INVESTMENT

Advance for investment represents the payment made to an independent third party for certain proposed investments. The amount has been fully repaid after the balance sheet date.

21. RESTRICTED CASH

The amount represents deposit pledged with the government of Macau Special Administrative Region for provision of travel related services.

22. TRADE AND OTHER PAYABLES

Included in trade and other payables of the Group are trade payables of HK$61,272,000 (2002: HK$Nil). The ageing analysis at the balance sheet date is as follows:

0-30 days 31-60 days 61-90 days 91-180 days 181-360 days Over 360 days	The Group 2003 2002 HK$’000 HK$’000 6,496 – 250 – 59 – 54,272 76 119 61,272 –	The Group 2003 2002 HK$’000 HK$’000 6,496 – 250 – 59 – 54,272 76 119 61,272 –
		–

23. AMOUNT DUE TO A RELATED COMPANY/A DIRECTOR/SHAREHOLDER’S LOAN

The amounts are unsecured, non-interest bearing and have no fixed repayment term.

– 47 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

24. BANK LOANS – SECURED

Secured bank loans repayable: On demand or within one year More than one year but not exceeding two years _Less:_Amount due within one year shown under current liabilities Amount due after one year	The Group 2003 2002 HK$’000 HK$’000 150,943 – 94,340 – 245,283 – (150,943) – 94,340 –	The Group 2003 2002 HK$’000 HK$’000 150,943 – 94,340 – 245,283 – (150,943) – 94,340 –
		– –
		–

25. DEFERRED TAX

The following are the major deferred tax liabilities recognised by the Group and movements thereon during the year:

At 1 January Acquisition of a subsidiary Credit to income for the year_(note 9)_ At 31 December	The Group Revaluation of properties for sale 2003 2002 HK$’000 HK$’000 – – 14,532 – (2,422) – 12,110 –	The Group Revaluation of properties for sale 2003 2002 HK$’000 HK$’000 – – 14,532 – (2,422) – 12,110 –
		–

26. SHARE CAPITAL

Number of shares Ordinary shares of HK$0.02 each Authorised: Balance at 31 December, 2002 and 2003 10,000,000,000 Issued and fully paid: Balance at 31 December, 2002 and 2003 4,330,782,558	Amount HK$’000 200,000

	86,616

Share option scheme

The Company has adopted a share option scheme on 18 July, 2002, (the “Share Option Scheme”), for the primary purpose of providing incentives to eligible participants. Details of the Share Option Scheme is as follows:

On 18 July, 2002, the Company adopted the Share Option Scheme which will expire on 17 July, 2012. Pursuant to the terms of the Share Option Scheme, the Company may grant options to eligible participants (including directors, shareholders, eligible employees, suppliers and customers of the Company or its subsidiaries) to subscribe for shares in the Company at a consideration of HK$1. The subscription price for the shares under the Share Option Scheme shall be a price determined by the directors of the

– 48 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Company being at least the higher of the closing price of the shares as stated in the Stock Exchange’s daily quotation sheets on the date of grant, or the average closing price of the shares as stated in the Stock Exchange’s daily quotation sheets for the five business days immediately preceding the date of grant. Options granted are exercisable at any time during a period to be notified by the board of directors of the Company but limited to a maximum period of ten years after the date the options are granted. Options granted should be accepted within 28 days from the date of offer.

The maximum number of shares which may be issued upon exercise of all options to be granted under the Share Option Scheme and any other scheme shall not exceed 10% of the shares in issue at the date on which the Share Option Scheme becomes unconditional (the “Scheme Limit”).

The Scheme Limit may be refreshed at any time by the approval of the shareholders in general meeting provided that the total number of shares which may be issued upon exercise of all options to be granted under Share Option Scheme and any other share option schemes must not exceed 10% of the shares in issue at the date of such shareholder’s approval. For the avoidance of doubt, options previously granted under the Share Option Scheme and any other share option schemes (including those outstanding, cancelled, lapsed in accordance with the Share Option Scheme and any other share option schemes of the Company or exercised options) will not be counted for the purpose of calculating the refreshed 10%.

The Company may, by the approval of the shareholders in general meeting, grant options beyond the 10% limit provided that the options in excess of the 10% limit are granted only to participants specifically identified by the Company before shareholders’ approval is sought.

Unless approved by the shareholders as set out herein, the total number of shares issued and to be issued upon exercise of the options granted to each participant (including both exercised and outstanding options) in any twelve month period must not exceed 1% of the shares of the Company in issue. Where any further grant of options to a participant would result in the shares issued and to be issued upon exercise of all options granted and to be granted to such person (including exercised, cancelled and outstanding options) in the twelve month period up to and including the date of such further grant representing in aggregate over 1% of the shares in issue, such further grant must be separately approved by the shareholders in general meeting with such participant and his associates abstaining from voting.

However, the overall limit on the number of shares which may be issued upon exercise of all options granted under all share option schemes of the Company must not exceed 30% of the shares in issue from time to time.

At the date of this report, no share option has been granted to any participant under the scheme.

27. RESERVES

The Group

Share premium HK$’000 At 1 January, 2002 68,252 Issue of share, net of expenses 103,777 Release upon disposal of subsidiaries – Net profit for the year – At 31 December, 2002 172,029 Net profit for the year – At 31 December, 2003 172,029	Capital redemption reserve HK$’000 1,074 – – – 1,074 – 1,074	Special capital reserve (Note a) HK$’000 68,541 – – – 68,541 – 68,541	Property revaluation reserve HK$’000 5,495 – (5,495) – – – –	Accumulated losses HK$’000 (202,216) – – 11,801 (190,415) 34,089 (156,326)	Total HK$’000 (58,854) 103,777 (5,495) 11,801 51,229 34,089 85,318

– 49 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The Company

Share premium HK$’000 At 1 January, 2002 68,252 Issue of share, net of expenses 103,777 Release upon disposal of subsidiaries – Net loss for the year – At 31 December, 2002 172,029 Net loss for the year – At 31 December, 2003 172,029	Capital redemption reserve HK$’000 1,074 – – – 1,074 – 1,074	Special capital reserve (Note a) HK$’000 68,541 – – – 68,541 – 68,541	Contributed surplus (Note b) HK$’000 77,001 – (77,001) – – – –	Accumulated losses HK$’000 (262,073) – 77,001 (18,468) (203,540) (11,121) (214,661)	Total HK$’000 (47,205) 103,777 – (18,468) 38,104 (11,121) 26,983

Notes:

(a) The special capital reserve of the Group and the Company represents the credit arising from the effect of reduction in share capital in the previous year.
(b) 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), contribution surplus is available for distribution to shareholders. However, a company cannot declare or pay dividend, or make a distribution out of contributed surplus, if:

(1) the company is, or would after the payment be, unable to pay its liabilities as they become due; or
(2) 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.

All the contributed surplus has been transferred to the accumulated losses as a result of disposal of subsidiaries during the year 2002.

At 31 December, 2003, the Company has no reserve available for distribution (2002: Nil).

– 50 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

28. ACQUISITION OF SUBSIDIARIES

Net assets acquired Negative goodwill Property, plant and equipment Other investment Properties for sale Restricted cash Bank balances and cash Trade and other receivables Bank loans- secured Trade and other payables Receipts in advance Taxation Deferred taxation Minority interests Negative goodwill Goodwill Total consideration Net inflow of cash and cash equivalents in connection with the acquisition of subsidiaries: Cash consideration Bank balances and cash acquired Net cash inflow arising on acquisition	2003 HK$’000 (280) 3,387 47,170 384,665 500 204,942 259,821 (183,962) (206,487) (232,769) (28) (14,532) 262,427 (92,747) (77,060) 748 93,368 (93,368) 204,942 111,574	2002 HK$’000 – – – – – – – – – – – –
		– – – –
		–

		– –
		–

The subsidiaries acquired during the year ended 31 December, 2003 contributed HK$336,219,000 to the Group’s turnover, and HK$76,371,000 to the Group’s profit from operations.

– 51 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

29. DISPOSAL OF SUBSIDIARIES

During the year ended 31 December, 2002 the Group disposed the subsidiaries which engaged in the Travel Business. The net assets of the subsidiaries at the date of disposal were as follows:

Net assets disposed of: Property, plant and equipment Investment properties Trade and other receivables Bank balances and cash Trade and other payables Bank borrowings Minority interests Net assets Property revaluation reserve released Gain on disposal Total consideration Cash Amounts due to related companies Net cash inflow arising on disposal: Cash consideration Bank balances and cash disposed of Bank borrowing disposed of	2003 HK$’000 – – – – – – – – – – – – – – – – – –	2002 HK$’000 2,444 2,100 59,825 16,932 (49,176) (29,147) (1,238) 1,740 (5,495) 11,755 8,000 500 7,500 8,000 500 (16,932) 29,147 12,715

The impact of the disposed subsidiaries on the Group’s results for the year ended 31 December, 2002 was disclosed under the heading of “discontinued operation” in the consolidated income statement.

30. RETIREMENT BENEFITS SCHEMES

The Group operates a mandatory provident fund (the “MPF”) scheme for all eligible employees in Hong Kong. The assets of the MPF scheme are held separately from those of the Group, in funds under the control of trustees. The retirement benefit cost charged to the consolidated income statement represents contributions payable to the MPF scheme by the Group at rates specified in the rules of the MPF scheme.

The Group contributed to a local Municipal Government retirement scheme to all qualified employees in the PRC. The employer and its employees are each required to make contributions to the scheme at the rates specified in the rules. The only obligation of the Group with respect to retirement scheme is to make the required contributions under the scheme. No forfeited contribution is available to reduce the contribution payable in the future years. The retirement benefit scheme contributions arising from the PRC Municipal Government retirement scheme charged to the income statement represent contributions paid or payable by the Group at rates specified in the rules of the scheme.

– 52 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

31. OPERATING LEASE COMMITMENTS

The Group and the Company 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 2003 2002 HK$’000 HK$’000 661 2,957 – 174 661 3,131	The Group 2003 2002 HK$’000 HK$’000 661 2,957 – 174 661 3,131
		3,131

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:

Operating leases which expire: Within one year In the second to fifth year inclusive	The 2003 HK$’000 1,340 522 1,862	Group 2002 HK$’000 1,101 63 1,164	The Company 2003 2002 HK$’000 HK$’000 558 1,101 129 63 687 1,164	The Company 2003 2002 HK$’000 HK$’000 558 1,101 129 63 687 1,164
				1,164

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

32. OTHER COMMITMENTS

At 31 December, 2003, the Group had contracted commitments not provided for in the financial statements in respect of property development expenditure amounted to HK$268,232,000 (2002: Nil).

The Company had no significant commitment at the balance sheet date.

33. CONNECTED AND RELATED PARTIES TRANSACTIONS AND BALANCES

(a) On 29 September, 2002, the Group entered into an agreement (“Share Purchase Agreement”) to purchase 65% interest in Shanghai Zendai Real Estate Company Limited. The agreement was made between the Group, the shareholders of Shanghai Zendai Real Estate Company Limited and 上海証大投資發展有限公司 (the “Vendors”) of which Mr. Dai Zhikang has a beneficial interest in the Company.

Pursuant to the Share Purchase Agreement, the Group has conditionally agreed to purchase 65% interest in Shanghai Zendai Real Estate Company Limited for a total consideration of RMB70,000,000 (equivalent to approximately HK$66,848,000) from the Vendors. The transaction was completed in February 2003 and the registered capital of Shanghai Zendai Real Estate Company Limited is owned as to 65% by the Group.

(b) Balance with related parties as at 31 December, 2003 are set out in note 23 to the financial statements.

– 53 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

34. CONTINGENT LIABILITIES

The Group and the Company had no significant contingent liabilities or outstanding litigation as at 31 December, 2003.

35. POST BALANCE SHEET EVENT

On 30 January, 2004, the Company entered into a subscription agreement, pursuant to which an investor has agreed to subscribe for and the Company has agreed to allot and issue 300 million new shares at a subscription price of approximately HK$0.1333 per subscription share. The net proceeds of the subscription of about HK$39,700,000 are intended to be used as to approximately HK$9,700,000 for working capital and as to approximately HK$30,000,000 for funding potential investment projects in property related businesses as and when suitable opportunities arise.

36. SUBSIDIARIES

Particulars of the Company’s subsidiaries as at 31 December, 2003 are as follows:

				Proportion	Proportion
	Place of			of nominal
	incorporations/		Issued share	value of issued
	establishment	capital/paid-up		capital held
Name of subsidiary	and operations	registered capital		by the Group		Principal activities
				Directly	Indirectly
Best East Developments	The British Virgin	Islands	US$1	100%	–	Investment holding
Limited
Ample Century Limited	The British Virgin	Islands	US$1	100%	–	Investment holding
Victory Gateway Limited	The British Virgin	Islands	US$1	100%	–	Investment holding
Myway Developments Limited	The British Virgin	Islands	US$1	100%	–	Investment holding
Shanghai Zendai Real Estate	The PRC	RMB100,000,000		–	65%	Property
Company Limited						development
上海証大置業有限公司
上海証大高爾夫旅遊	The PRC	RMB20,000,000		–	91%	Not yet commence
度假村有限公司						business
Wah Kong Travel Limited	Hong Kong		HK$1,250,000	–	60%	Sales of air tickets
						and provision of
						travel related
						services
Wa Kong-Tourism and	Macau	MOP1,000,000		–	60%	Sales of air tickets
Travel Agency Limited						and provision of
						travel related
						services
上海証大藝中房地產	The PRC	RMB10,000,000		–	39%	Not yet commence
開發有限公司 (Note)						business

Note: 上海証大藝中房地產開發有限公司 is a 60% subsidiary of Shanghai Zendai Real Estate Company Limited.

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

year.

– 54 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

37. PRINCIPAL ASSOCIATES

Particulars of the Group’s principal associates as at 31 December, 2003 are as follows:

			Proportion of
			nominal value of
	Place of	Paid-up	issued capital
	establishment	registered	indirectly held
Name of associate	and operations	capital	by the Group	Principal activities
上海証大三角洲	The PRC	RMB80,000,000	25%	Property development
置業有限公司
浙江証大房地產	The PRC	RMB30,000,000	17.5%	Property management
開發有限公司_(Note)_				and development

Note: 浙江証大房地產開發有限公司 is a 70% subsidiary of 上海証大三角洲置業有限公司 .

The above table lists the associates of the Group which, in the opinion of the directors, materially affected the results or assets of the Group. To give details of other associates would, in the opinion of the directors, result in particulars of excessive length.

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

year.

3. ADDITIONAL FINANCIAL INFORMATION

Set out below is additional financial information of the Group for the year ended 31 December, 2003, which is prepared based on information extracted from the annual report of the Group for the year ended 31 December, 2003.

Liquidity, financial resources, capital structure and gearing

At 31 December, 2003, the Group had a healthy financial position with net assets amounted to approximately HK$172 million (2002: HK$138 million). Net current assets increased from approximately HK$92 million in 2002 to approximately HK$431 million, with current ratio of approximately 1.95 times (2002: 356 times).

The Group adopts relatively prudent financial policy and closely monitors its cash flow. At 31 December, 2003, the Group has consolidated bank loans of approximately HK$245 million (denominated in Renminbi and at fixed interest rate), in which HK$151 million is repayable within one year and HK$94 million is repayable more than one year but not exceeding two years. The Group also has shareholder’s loan of HK$30 million, amount due to a related company and a director of approximately HK$4.9 million and HK$2 million, respectively. The Group did not have any committed borrowing facilities. At 31 December, 2003, the Group’s bank balances and cash are approximately HK$98.8 million, in which 72% was denominated in Renminbi, with the others denominated in Hong Kong dollars.

– 55 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The gearing ratio of the Group was 1.64 times (basis: total of amount due to a related company, amount due to a director, shareholder’s loan and bank loans divided by shareholders’ funds). The Group did not have any borrowing as at 31 December, 2002. The increase in gearing reflected the Group’s financing requirement to match the accelerated development pace.

Segmental information

For the year ended 31 December, 2003, over 90% of the Group’s revenue and assets are attributable to the development and sales of properties in the PRC.

Foreign currency exposure

As most of the Group’s monetary assets and liabilities are denominated in Renminbi, the exchange rate risks of the Group is considered to be minimal.

Employees

As at 31 December, 2003, the Group employed approximately 200 employees in Hong Kong and the PRC. They were remunerated according to the nature of the job and market conditions. Other staff benefits include a mandatory provident fund scheme, local Municipal Government retirement scheme, insurance and medical insurance.

Major acquisition

On 28 February, 2003, the Group’s acquisition of 65% of the issued capital of Shanghai Zendai Real Estate Company Limited, for cash consideration of approximately HK$66.8 million had been completed. The identifiable net assets acquired was approximately HK$143.9 million and negative goodwill of approximately HK$77.1 million was created from the acquisition.

Charges on assets

At 31 December, 2003, the Group’s properties for sale of approximately HK$409.6 million has been pledged to banks to secure bank loans granted to the Group.

Contingent liabilities

At 31 December, 2003, the Group had no significant contingent liabilities or outstanding litigation.

– 56 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

4. INDEBTEDNESS

Borrowings

As at the close of business on 30 June, 2004, being the latest practicable date for the purposes of this indebtedness statement, the Group had outstanding secured bank loans of approximately HK$481,132,000, which comprise secured long-term bank loans of about HK$452,830,000 (repayable in the second year from 30 June, 2004) and secured short-term bank loans of about HK$28,302,000. The Group did not have any committed borrowing facilities.

Debt securities

As at the close of business on 30 June, 2004, the Group had no debt securities issued outstanding, or authorised or otherwise created but unissued.

Mortgages, charges and security

As at the close of business on 30 June, 2004, all of the Group’s properties for sale are pledged to banks to secure bank loans granted to the Group.

Other commitment

As at the close of business on 30 June, 2004, the Group had contracted commitments not provided for in the financial statements in respect of property development expenditure amounted to HK$210,210,000.

Contingent liabilities

As at 30 June, 2004, the Group had no significant contingent liabilities or outstanding litigation.

Disclaimer

Save as aforesaid and apart from any intra-group liabilities, the Group did not, as at the close of business on 30 June, 2004, have any outstanding loan capital issued and outstanding or agreed to be issued, bank overdrafts, shares or debentures, mortgages loans, or other similar indebtedness or any finance lease commitments, hire purchase commitments, liabilities under acceptances, acceptance credits or any guarantees or other material contingent liabilities.

5. WORKING CAPITAL

The Directors are of the opinion that, following the additional investment in Zendai Delta Land and taking into account the credit facilities and internal resources available to the Group, the Group will have sufficient working capital for its present requirement.

– 57 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

6. MATERIAL CHANGES

The Directors, are not aware of any material adverse change in the financial or trading position of the Group since 31 December, 2003, the date to which the latest published annual report of the Group was made up.

– 58 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA 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 [166 x 49] intentionally omitted <==

17 August, 2004

The Directors

Shanghai Zendai Property Limited 上海証大三角州置業有限公司

Dear Sirs,

We set out below our report on the financial information (the “Financial Information”) regarding上海証大三角州置業有限公司 (formerly known as 上海新世紀水清木華房地產開發有限公司 ) (“Zendai Delta Land”) and its subsidiaries (hereinafter collectively referred to as “Zendai Delta Group”) for the three years ended 31 December, 2001, 2002 and 2003 and the three months ended 31 March, 2004 (the “Relevant Periods”) for inclusion in the circular of Shanghai Zendai Property Limited dated 17 August, 2004 (the “Circular”) for the major and connected transaction in relation to the proposed acquisition of additional 24% interests in Zendai Delta Land pursuant to the sale and purchase agreement dated 23 July, 2004 between 上海証大置業有限公司 (“Shanghai Zendai Land”), a 80% owned subsidiary of Shanghai Zendai Property Limited, and 上海黎升商貿行 .

Zendai Delta Land was established in the People’s Republic of China (the “PRC”) on 12 July, 2000 as a limited liability company. On August 2002, Zendai Delta Land was transformed into a sino-foreign equity joint venture, with an operating period of sixty-six years. The principal activities of Zendai Delta Group are property development and provision of consultancy service to property agents in the PRC.

– 59 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

As at the date of this report, Zendai Delta Land has the following subsidiaries:

		Paid-in	Percentage of	Percentage of
	Place and date of	registered	equity attributable
Subsidiaries	establishment	capital	to Zendai	Delta Land	Principal activities
			Directly	Indirectly
浙江証大房地產開發	PRC	RMB30,000,000	70%	–	Property development
有限公司	18 June, 1994
（「浙江証大房地產」）
浙江世紀暢通房地產	PRC	RMB5,000,000	–	56%	Provision of
經營服務有限公司	30 October, 2002				consultancy service
（「世紀暢通」）					to property agents

All subsidiaries are established as limited liability companies in the PRC with operating period of twenty years.

All companies comprising Zendai Delta Group have adopted 31 December as their financial year end date. The statutory financial statements of Zendai Delta Group for the Relevant Periods were prepared in accordance with the relevant PRC accounting rules and regulations and the auditors were as follows:

Company	Financial period	Auditors
Zendai Delta Land	For the years ended	Shanghai Zhonghua Certified
	31 December, 2001, 2002	Public Accountants
	and 2003	Certified Public Accountants
		registered in the PRC
Subsidiaries
浙江証大房地產	For the years ended	Zhejiang Zhonghui Certified
	31 December, 2002 and 2003	Public Accountants
		Certified Public Accountants
		registered in the PRC
世紀暢通	For the year ended	Unaudited
	31 December, 2002
	For the year ended	Zhejiang Zhonghui Certified
	31 December, 2003	Public Accountants
		Certified Public Accountants
		registered in the PRC

– 60 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

For the purpose of this report, we have undertaken independent audit procedures in accordance with Statements of Auditing Standard issued by the Hong Kong Society of Accountants (“HKSA”) on the consolidated financial statements of Zendai Delta Group for the Relevant Periods (“Underlying Financial Statements”), which were prepared in accordance with the Hong Kong Financial Reporting Standards. We have also examined the Underlying Financial Statements for the Relevant Periods in accordance with the Auditing Guidelines “Prospectuses and the Reporting Accountant” as recommended by the HKSA.

The Financial Information for the Relevant Periods set out in this report has been prepared based on the Underlying Financial Statements. The directors of Zendai Delta Land are responsible for preparing the Underlying Financial Statements which give a true and fair view. In preparing the Underlying Financial Statements, it is fundamental that appropriate accounting policies are selected and applied consistently.

The Financial Information are the responsibility of the directors of Zendai Delta Land who approved for their issue. It is our responsibility to form an independent opinion, based on our examination, on the Financial Information and to report our opinion.

In our opinion, the Financial Information, for the purpose of this report, gives a true and fair view of the state of affairs of Zendai Delta Group and Zendai Delta Land as at 31 December, 2001, 2002 and 2003 and at 31 March, 2004, and of the consolidated results and cash flows of Zendai Delta Group for the Relevant Periods.

– 61 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

FINANCIAL INFORMATION

Set out below is the financial information of Zendai Delta Group for the Relevant Periods.

Consolidated Income Statement

Notes
Turnover
2
Cost of sales
Gross profit
Other revenue
Distribution costs
Administrative expenses
Profit/(loss) from operations
4
Finance costs
5
Share of results of associates
Profit/(loss) before taxation
Taxation
7
Profit/(loss) before minority interests
Minority interests
Net profit/(loss) for the period/year

Three
months
ended
31 March,
Year ended 31 December,
2004
2003
2002
2001
RMB’000
RMB’000
RMB’000
RMB’000
383,809
175,272
427,255
–
(276,758)
(134,998)
(314,010)
–
107,051
40,274
113,245
–
4,246
2,086
714
–
(2,510)
(27,355)
(5,741)
(4,886)
(5,886)
(19,033)
(13,850)
(3,336)
102,901
(4,028)
94,368
(8,222)
(20)
(2,381)
(836)
–
(55)
(36)
(500)
–
102,826
(6,445)
93,032
(8,222)
(15,894)
(1,075)
(33,460)
–
86,932
(7,520)
59,572
(8,222)
86
371
(21,671)
–
87,018
(7,149)
37,901
(8,222)

– 62 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

Consolidated Balance Sheet

Notes Non-current assets Property, plant and equipment 10 Land and property held under development for sale Goodwill 11 Intangible asset 12 Interests in associates 14 Investment in securities 15 Loan receivable 16 Current assets Properties for sale 17 Deposits for property development Deposits and other receivables Other investments 18 Amounts due from related companies 19 Amounts due from shareholders 20 Amount due from a director 21 Tax recoverable Pledged bank deposit 22 Bank balances and cash Current liabilities Trade and other payables 23 Receipts in advances Amount due to an investee 24 Amounts due to related companies 24 Shareholder’s loan 24 Taxation Bank loans 25 Net current assets/(liabilities) Total assets less current liabilities Non-current liability Bank loans 25 Minority interests Net assets Capital and reserve Paid-in capital 26 Reserve	At 31 March, 2004 RMB’000 17,193 – 6,239 3,778 17,254 1,000 27,425 72,889 591,640 307,306 52,483 1,300 12,251 64,173 – – – 60,594 1,089,747 72,600 523,018 532 78,367 – 7,038 150,000 831,555 258,192 331,081 130,000 12,764 188,317 80,000 108,317 188,317	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 17,631 17,148 1,131 – – 288,594 6,440 7,245 – 3,829 2,000 – 22,401 21,317 500 1,000 1,000 – 27,481 22,880 – 78,782 71,590 290,225 748,430 545,223 – 164,881 112,813 68,557 77,932 21,194 1,640 500 1,000 – 5,900 23,640 40 177,016 135,421 – – 500 – 2,624 – – 5,000 – – 69,355 139,618 26,214 1,251,638 979,409 96,451 61,789 114,672 44,248 728,279 219,278 – – – – 61,388 72,202 66,190 – 44,379 110,691 80 33,799 – 199,735 325,000 50,000 1,051,271 809,330 271,129 200,367 170,079 (174,678) 279,149 241,669 115,547 150,000 105,000 65,000 27,850 28,221 – 101,299 108,448 50,547 80,000 80,000 60,000 21,299 28,448 (9,453) 101,299 108,448 50,547

– 63 –

FINANCIAL INFORMATION ON ZENDAI DELTA LAND

APPENDIX II

Balance Sheet

Notes Non-current assets Property, plant and equipment 10 Land and property held under development for sale Interests in subsidiaries 13 Interests in associates 14 Current assets Properties for sale 17 Deposits for property development Deposits and other receivables Other investments 18 Amounts due from related companies 19 Amounts due from shareholders 20 Amount due from a director 21 Tax recoverable Bank balances and cash Current liabilities Trade and other payables 23 Receipts in advances Amounts due to related companies 24 Shareholder’s loan 24 Taxation Bank loans 25 Net current assets/(liabilities) Total assets less current liabilities Non-current liability Bank loans 25 Net assets Capital and reserve Paid-in capital 26 Reserve 27	At 31 March, 2004 RMB’000 5,163 – 41,998 19,434 66,595 585,556 307,215 46,020 500 10,880 25,884 – – 56,134 1,032,189 59,051 517,615 60,344 – 6,693 150,000 793,703 238,486 305,081 130,000 175,081 80,000 95,081 175,081	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 5,342 4,778 1,131 – – 288,594 57,006 21,000 – 19,171 19,528 500 81,519 45,306 290,225 735,820 499,960 – 164,789 111,199 68,557 71,510 15,959 1,640 500 500 – 5,900 22,422 40 41,576 6 – – 500 – 2,624 – – 67,370 123,289 26,214 1,090,089 773,835 96,451 48,634 94,298 44,248 715,909 178,945 – 9,387 62,831 66,190 – 44,378 110,691 – – – 195,000 275,000 50,000 968,930 655,452 271,129 121,159 118,383 (174,678) 202,678 163,689 115,547 150,000 105,000 65,000 52,678 58,689 50,547 80,000 80,000 60,000 (27,322) (21,311) (9,453) 52,678 58,689 50,547

– 64 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

Consolidated Statement of Changes in Equity

At 1 January, 2001 Capital contribution Net loss for the year At 31 December, 2001 Capital contribution Net profit for the year At 31 December, 2002 Net loss for the year At 31 December, 2003 Net profit for the period At 31 March, 2004 Attributable to: Zendai Delta Land and its subsidiaries at 31 December, 2001 – Zendai Delta Land and its subsidiaries – Associates At 31 December, 2002 – Zendai Delta Land and its subsidiaries – Associates At 31 December, 2003 – Zendai Delta Land and its subsidiaries – Associates At 31 March, 2004	(Accumulated losses)/ Paid-in retained capital profits RMB’000 RMB’000 15,000 (1,231) 45,000 – – (8,222) 60,000 (9,453) 20,000 – – 37,901 80,000 28,448 – (7,149) 80,000 21,299 – 87,018 80,000 108,317 (9,453) 28,948 (500) 28,448 21,835 (536) 21,299 108,908 (591) 108,317	Total RMB’000 13,769 45,000 (8,222) 50,547 20,000 37,901 108,448 (7,149) 101,299 87,018 188,317

– 65 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

Consolidated Cash Flow Statement

OPERATING ACTIVITIES Profit/(loss) before taxation Adjustment for: Interest income Interest expense Depreciation Loss on disposal of property, plant and equipment Gain on disposal of other investments Share of results of associates Amortisation of goodwill Amortisation of intangible asset Operating profit/(loss) before working capital changes Decrease/(increase) in properties for sale Increase in deposits for property development Decrease/(increase) in deposits and other receivables (Increase)/decrease in amounts due from related companies Decrease/(increase) in amounts due from shareholders Decrease/(increase) in amount due from a director Decrease/(increase) in net amounts due from associates Decrease/(increase) in loan receivable Increase/(decrease) in trade and other payables (Decrease)/increase in receipts in advances Increase in amount due to an investee Increase/(decrease) in amounts due to related companies Net cash from/(used in) operations Interest received Interest paid PRC tax paid Dividends paid to a minority shareholder of a subsidiary Net cash from/(used in) operating activities	Three months ended 31 March, 2004 RMB’000 102,826 (150) 20 415 17 – 55 201 51 103,435 156,790 (142,425) 25,449 (6,351) 112,843 – 5,092 56 10,811 (205,261) 532 16,979 77,950 150 (20) (6,312) (15,000) 56,768	Year 2003 RMB’000 (6,445) (1,391) 2,381 1,462 435 (28) 36 805 171 (2,574) (203,207) (52,068) (56,738) 17,740 (41,595) 500 (1,120) (4,601) (52,883) 509,001 – (10,814) 101,641 1,391 (2,381) (37,418) – 63,233	ended 31 December, 2002 2001 RMB’000 RMB’000 93,032 (8,222) (111) – 836 – 660 106 4,378 – – – 500 – 805 – – – 100,100 (8,116) 74,961 (285,290) (44,256) (29,314) (1,253) – 120,355 – (135,421) – (500) – (24,145) – (7,619) – 54,703 44,149 (245,927) – – – 3,408 79,150 (105,594) (199,421) 111 – (836) – (293) – – – (106,612) (199,421)

– 66 –

FINANCIAL INFORMATION ON ZENDAI DELTA LAND

APPENDIX II

Note
INVESTING ACTIVITIES
Purchase of property, plant and equipment
Proceeds from disposal of property,
plant and equipment
Purchase of intangible asset
Acquisition of investment in an associate
Purchase of other investments
Proceeds from disposal of other investments
Acquisition of subsidiaries
(net of cash and cash equivalent acquired)
28
Decrease/(increase) in pledged bank deposit
Net cash from/(used in) investing activities
FINANCING ACTIVITIES
(Decrease)/increase in shareholder’s loan
Increase in bank loans
Repayment of bank loans
Proceeds from capital contribution
Net cash (used in)/from financing activities
(DECREASE)/INCREASE IN CASH
AND CASH EQUIVALENTS
Cash and cash equivalents, beginning of year
CASH AND CASH EQUIVALENTS,
END OF PERIOD/YEAR
ANALYSIS OF THE BALANCES OF
CASH AND CASH EQUIVALENTS
Bank balances and cash

Three
months
ended
31 March,
Year ended 31 December,
2004
2003
2002
2001
RMB’000
RMB’000
RMB’000
RMB’000
(112)
(2,380)
(15,450)
(896)
118
–
–
–
–
(2,000)
(2,000)
–
–
–
(400)
(500)
(800)
–
(1,000)
–
–
528
–
–
–
–
(9,822)
–
5,000
(5,000)
–
–
4,206
(8,852)
(28,672)
(1,396)
–
(44,379)
(66,312)
66,353
–
244,735
345,000
115,000
(69,735)
(325,000)
(50,000)
–
–
–
20,000
45,000
(69,735)
(124,644)
248,688
226,353
(8,761)
(70,263)
113,404
25,536
69,355
139,618
26,214
678
60,594
69,355
139,618
26,214
60,594
69,355
139,618
26,214

– 67 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

Notes to the Financial Information

1. SIGNIFICANT ACCOUNTING POLICIES

The Financial Information have been prepared under the historical cost convention.

The Financial Information have been prepared in accordance with accounting principles generally accepted in Hong Kong. The principal accounting policies adopted are as follows:

Basis of consolidation

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

All significant intercompany transactions and balances within Zendai Delta Group have been eliminated on consolidation.

Investments in subsidiaries

Investments in subsidiaries are included in Zendai Delta Land’s balance sheet at cost less any identified impairment loss. The results of the subsidiaries are accounted for by Zendai Delta Land on the basis of dividends received or receivable.

Interests in associates

The consolidated income statement includes Zendai Delta Group’s share of the post-acquisition results of its associates for the year. In the consolidated balance sheet, interests in associates are stated at Zendai Delta Group’s share of the net assets of the associates plus goodwill on acquisition in so far as it has not already been amortised, less any identified impairment loss.

Goodwill

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

Intangible asset

Intangible asset is measured initially at purchase cost and are amortised on a straight-line basis over its estimated useful lives.

Properties for sale

Completed properties and properties under development held for sale are stated at the lower of cost and net realisable value. Cost includes the cost of land, development expenditure, borrowing costs capitalised in accordance with Zendai Delta Group’s accounting policy, and other attributable expenses. Net realisable value is determined by management based on prevailing market conditions.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, where appropriate.

– 68 –

FINANCIAL INFORMATION ON ZENDAI DELTA LAND

APPENDIX II

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:

Building 5% Motor vehicles 20% Furniture and equipment 20%

Investments in securities

Investments in securities are recognised on a trade date basis and are initially measured at cost.

Investments other than held-to-maturity debt securities are classified as investment securities or other investments.

Other investments are measured at fair value, with unrealised gains and losses included in net profit or loss for the year.

Impairment

At each balance sheet date, Zendai Delta Group reviews the carrying amounts of its tangible and intangible 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 loss is recognised as an expense immediately.

Capitalisation of borrowing costs

All other borrowing costs are recognised as an expense in the year in which they are incurred.

Taxation

Taxation represents the sum of the tax currently payable and deferred tax.

– 69 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition other than in a business combination of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where Zendai Delta Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Operating leases

Rentals payable under operating leases are charged to the income statement on a straight-line basis over the term of the relevant lease.

Retirement benefit scheme contributions

Payments to state-managed retirement benefit schemes are charged as an expense as they fall due.

Foreign currencies

Transactions in currencies other than Renminbi are initially recorded at the rates of exchange prevailing on the dates of the transactions. Monetary assets and liabilities denominated in currencies other than Renminbi are re-translated at the rates prevailing on the balance sheet date. Profits and losses arising on exchange are dealt with in the income statement.

Related parties

Revenue recognition

Sales of properties

Interest income

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

Provision of consultancy service

Service fee income is recognised when the services have been provided to the customers.

– 70 –

FINANCIAL INFORMATION ON ZENDAI DELTA LAND

APPENDIX II

2. TURNOVER

Turnover represents the aggregate of proceeds from sales of properties and amounts received and receivable for provision of consultancy services, less allowances, to outside customers.

Zendai Delta Group’s turnover is analysed as follows:

Sales of properties Consultancy service income	Three months ended 31 March, 2004 RMB’000 383,375 434 383,809	Year 2003 RMB’000 174,234 1,038 175,272	ended 31 December, 2002 2001 RMB’000 RMB’000 427,255 – – – 427,255 –	ended 31 December, 2002 2001 RMB’000 RMB’000 427,255 – – – 427,255 –
				–

3. SEGMENTAL INFORMATION

No analysis of Zendai Delta Group’s segmental information by business or geographical segments is presented as over 90% of Zendai Delta Group’s revenue is attributable to the sales of properties in the PRC. All identifiable assets of Zendai Delta Group are located in the PRC.

4. PROFIT/(LOSS) FROM OPERATIONS

ZENDAI DELTA GROUP

	Three
	months
	ended
	31 March,	Year	ended 31 December,
	2004	2003	2002	2001
	RMB’000	RMB’000	RMB’000	RMB’000
Profit/(loss) from operations has been
arrived at after charging:
Auditors’ remuneration	–	92	130	15
Depreciation	415	1,462	660	106
Staff costs, excluding directors’ emoluments
and retirement benefits scheme contributions	4,200	5,347	5,120	565
Loss on disposal of property, plant and equipment	17	435	4,378	–
Directors’ emoluments_(Note 6)_	–	370	561	–
Retirement benefits scheme contribution,
excluding directors’	32	177	119	46
Amortisation of goodwill
(included in administrative expenses)	201	805	805	–
Amortisation of intangible asset
(included in administrative expenses)	51	171	–	–
and after crediting:
Gain on disposal of other investments	–	28	–	–
Interest income	150	1,391	111	–

– 71 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

5. FINANCE COSTS

ZENDAI DELTA GROUP

Interest on: Bank loans Amounts due to related companies Amount due to a shareholder _Less:_Amount capitalised in properties for sale	Three months ended 31 March, 2004 RMB’000 4,461 – – 4,461 (4,441) 20	Year 2003 RMB’000 25,846 – – 25,846 (23,465) 2,381	ended 31 December, 2002 2001 RMB’000 RMB’000 15,154 835 – 190 – 4,749 15,154 5,774 (14,318) (5,774 836 –	ended 31 December, 2002 2001 RMB’000 RMB’000 15,154 835 – 190 – 4,749 15,154 5,774 (14,318) (5,774 836 –
				5,774 (5,774
				–

6. DIRECTORS’ AND HIGHEST PAID INDIVIDUALS’ EMOLUMENTS

Directors’ emoluments

ZENDAI DELTA GROUP

Fees Other emoluments: Salaries and other benefits Retirement benefits scheme contributions Total emoluments	Three months ended 31 March, 2004 RMB’000 – – – –	Year 2003 RMB’000 – 366 4 370	ended 31 December, 2002 2001 RMB’000 RMB’000 – – 557 – 4 – 561 –	ended 31 December, 2002 2001 RMB’000 RMB’000 – – 557 – 4 – 561 –
				– –
				–

The emoluments of the directors were within the following bands:

ZENDAI DELTA GROUP

		Number of directors	Number of directors
	Three
	months
	ended
	31 March,	Year ended 31		December,
	2004	2003	2002		2001
Nil to HK$1,000,000 (approximately
RMB1,060,000)	–	1		2	–

During the Relevant Periods, no emoluments were paid to any of the directors as an inducement to join or upon joining or as compensation for loss of office. None of the directors waived any emoluments during the Relevant Periods.

– 72 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

Five highest paid individuals’ emoluments

The five highest paid individuals for the Relevant Periods included nil (2003: one, 2002: two, 2001: nil) director, details of whose emoluments are set out above. The emoluments of the remaining five (2003: four, 2002: three, 2001: five) individuals were as follows:

Salaries and other benefits Retirement benefits scheme contributions	Three months ended 31 March, 2004 RMB’000 255 6 261	Year 2003 RMB’000 1,243 12 1,255	ended 31 December, 2002 2001 RMB’000 RMB’000 1,211 223 7 18 1,218 241	ended 31 December, 2002 2001 RMB’000 RMB’000 1,211 223 7 18 1,218 241
				241

The emoluments of the remaining individuals were within the following band:

Number of individuals

	Three
	months
	ended
	31 March,	Year ended 31 December,
	2004	2003	2002	2001
Nil to HK$1,000,000 (approximately
RMB1,060,000)	5	4	3	5

During the Relevant Periods, no emoluments of the five highest paid individuals were incurred as an inducement to join or upon joining or as compensation for loss of office.

7. TAXATION

No provision for Hong Kong Profits Tax has been made as Zendai Delta Group made no assessable profit in Hong Kong for the Relevant Periods.

Pursuant to the relevant laws and regulations in the PRC, Zendai Delta Land is subject to an enterprise income tax of 15% and its subsidiaries are subject to enterprise income tax of 33%.

Zendai Delta Group did not have significant unprovided deferred taxation in respect of each of the Relevant Periods.

– 73 –

FINANCIAL INFORMATION ON ZENDAI DELTA LAND

APPENDIX II

The taxation charge for the period/year can be reconciled to the profit/(loss) before taxation per the income statement as follows:

ZENDAI DELTA GROUP

Profit/(loss) before taxation Tax at the PRC Enterprise income tax rate of 15% Tax effect of different taxation rates in subsidiaries Tax effect of tax loss not recognised Taxation for the period/year	Three months ended 31 March, 2004 RMB’000 102,826 15,424 (48) 518 15,894	Year 2003 RMB’000 (6,445) (967) 60 1,982 1,075	ended 31 December, 2002 2001 RMB’000 RMB’000 93,032 (8,222) 13,955 (1,233) 16,746 – 2,759 1,233 33,460 –

8. DIVIDENDS

During the Relevant Periods, no dividends were paid or declared by Zendai Delta Land.

9. EARNINGS PER SHARE

Earnings per share had not been presented as such information is not meaningful for the purpose of this report.

– 74 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

10. PROPERTY, PLANT AND EQUIPMENT

ZENDAI DELTA GROUP

COST At 1 January, 2001 Additions At 31 December, 2001 Acquisitions of subsidiaries Additions Disposals At 31 December, 2002 Additions Disposals At 31 December, 2003 Additions Disposals At 31 March, 2004 DEPRECIATION At 1 January, 2001 Provided for the year At 31 December, 2001 Acquisitions of subsidiaries Provided for the year Eliminated on disposals At 31 December, 2002 Provided for the year Eliminated on disposals At 31 December, 2003 Provided for the period Eliminated on disposals At 31 March, 2004 NET BOOK VALUES At 31 March, 2004 At 31 December, 2003 At 31 December, 2002 At 31 December, 2001	Building RMB’000 – – – 4,854 11,064 (4,854) 11,064 – – 11,064 – – 11,064 – – – 1,098 89 (1,098) 89 537 – 626 110 – 736 10,328 10,438 10,975 –	Motor vehicles RMB’000 340 689 1,029 2,792 431 (873) 3,379 850 (486) 3,743 – (340) 3,403 5 90 95 1,279 389 (262) 1,501 369 (176) 1,694 101 (205) 1,590 1,813 2,049 1,878 934	Furniture and equipment RMB’000 7 207 214 962 3,955 (27) 5,104 1,530 (328) 6,306 112 – 6,418 1 16 17 626 182 (16) 809 556 (203) 1,162 204 – 1,366 5,052 5,144 4,295 197	Total RMB’000 347 896 1,243 8,608 15,450 (5,754) 19,547 2,380 (814) 21,113 112 (340) 20,885 6 106 112 3,003 660 (1,376) 2,399 1,462 (379) 3,482 415 (205) 3,692 17,193 17,631 17,148 1,131

– 75 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

ZENDAI DELTA LAND

COST At 1 January, 2001 Additions At 31 December, 2001 Additions At 31 December, 2002 Additions Disposals At 31 December, 2003 Additions Disposals At 31 March, 2004 DEPRECIATION At 1 January, 2001 Provided for the year At 31 December, 2001 Provided for the year At 31 December, 2002 Provided for the year Eliminated on disposals At 31 December, 2003 Provided for the period Eliminated on disposals At 31 March, 2004 NET BOOK VALUES At 31 March, 2004 At 31 December, 2003 At 31 December, 2002 At 31 December, 2001	Motor vehicles RMB’000 340 689 1,029 – 1,029 319 (486) 862 – (340) 522 5 90 95 200 295 109 (176) 228 34 (205) 57 465 634 734 934	Furniture and equipment RMB’000 7 207 214 3,931 4,145 1,089 – 5,234 112 – 5,346 1 16 17 84 101 425 – 526 122 – 648 4,698 4,708 4,044 197	Total RMB’000 347 896 1,243 3,931 5,174 1,408 (486) 6,096 112 (340) 5,868 6 106 112 284 396 534 (176) 754 156 (205) 705 5,163 5,342 4,778 1,131

– 76 –

FINANCIAL INFORMATION ON ZENDAI DELTA LAND

APPENDIX II

11. GOODWILL

ZENDAI DELTA GROUP


ZENDAI DELTA GROUP COST Arising on acquisition of a subsidiary during the year 2002 and at 31 December, 2002 and 2003 and 31 March, 2004 AMORTISATION Charge for the year 2002 and at 31 December, 2002 Charge for the year 2003 At 31 December, 2003 Charge for the period from 1 January, 2004 to 31 March, 2004 At 31 March, 2004 CARRYING AMOUNT At 31 March, 2004 At 31 December, 2003 At 31 December, 2002	RMB’000 8,050

	805
	805
	1,610 201
	1,811

	6,239

	6,440

	7,245

Goodwill on consolidation is amortised on a straight-line basis over 10 years.

12. INTANGIBLE ASSET

ZENDAI DELTA GROUP


ZENDAI DELTA GROUP COST Additions during the year 2002 and at 31 December, 2002 Additions during the year 2003 At 31 December, 2003 and at 31 March, 2004 AMORTISATION Charge for the year 2003 and at 31 December, 2003 Charge of the period from 1 January, 2004 to 31 March, 2004 At 31 March, 2004 CARRYING AMOUNT At 31 March, 2004 At 31 December, 2003 At 31 December, 2002	Trademark RMB’000 2,000 2,000
	4,000

	171 51
	222

	3,778

	3,829

	2,000

Intangible asset is amortised on a straight-line basis over its useful lives of 20 years.

– 77 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

13. INTERESTS IN SUBSIDIARIES

ZENDAI DELTA LAND

Unlisted investments at cost Amounts due from subsidiaries	At 31 March, 2004 RMB’000 21,000 20,998 41,998	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 21,000 21,000 – 36,006 – – 57,006 21,000 –	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 21,000 21,000 – 36,006 – – 57,006 21,000 –
			–

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

Particulars of Zendai Delta Land’s subsidiaries as at 31 December, 2002 and 2003 and at 31 March, 2004 are as follows:

			Proportion of
	Place of		paid-in registered
	establishment	Paid-in registered	capital held by
Name of subsidiary	and operations	capital	Zendai Delta Land	Principal activities
			Directly Indirectly
浙江証大房地產	PRC	RMB30,000,000	70% –	Property management
				and development
世紀暢通	PRC	RMB5,000,000	– 56%	Provision of
				consultancy service
				to property agents

All subsidiaries are established as limited liability companies in the PRC with operating period of 20 years.

14. INTERESTS IN ASSOCIATES

Unlisted investment, at cost Share of net assets Amounts due from associates Amounts due to associates	ZENDAI DELTA GROUP At 31 March, At 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 – – – – 1,606 1,661 1,697 500	ZENDAI DELTA GROUP At 31 March, At 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 – – – – 1,606 1,661 1,697 500	ZENDAI DELTA GROUP At 31 March, At 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 – – – – 1,606 1,661 1,697 500	ZENDAI DELTA GROUP At 31 March, At 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 – – – – 1,606 1,661 1,697 500	At 31 March, 2004 RMB’000 – –	ZENDAI DELTA LAND At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 – – 500 – – –	ZENDAI DELTA LAND At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 – – 500 – – –	ZENDAI DELTA LAND At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 – – 500 – – –
	1,606 1,661 19,434 20,740 (3,786) –		1,697 19,620 –	500 – –	– 19,434 –	– 19,171 –	– 19,528 –	500 – –
	17,254	22,401	21,317	500	19,434	19,171	19,528	500

The amounts due from/to associates are unsecured, interest-free and have no fixed repayment term. In the opinion of the directors, Zendai Delta Land will not demand for repayment within twelve months from the balance sheet date and the amounts are therefore shown as non-current.

– 78 –

APPENDIX II

FINANCIAL INFORMATION ON ZENDAI DELTA LAND

Particulars of Zendai Delta Group’s associates as at 31 December, 2002 and 2003 and at 31 March, 2004 are as follows:

	Place of		Percentage of	Percentage of
	establishment	Paid-in registered	equity interest held
Name of associate	and operations	capital	by Zendai	Delta Group		Principal activities
			Directly	Indirectly
上海証大物業管理	PRC	RMB2,000,000	25%		–	Property management
有限公司
浙江雛英文化有限公司	PRC	RMB800,000	–		35%	Trading of infant products
浙江原創顧問有限公司	PRC	RMB500,000	–		28%	Consultancy
杭州德家地產代理	PRC	RMB2,000,000	–		14%	Property agent
有限公司(Formerly
known as浙江証大房
地產代理有限公司)

Note: 杭州德家地產代理有限公司 is a 20% associate of 浙江証大房地產 .

All associates are established as limited liability companies in the PRC with operating period of 10 to 20

years.

15. INVESTMENTS IN SECURITIES

ZENDAI DELTA GROUP

		Investment securities	Investment securities
	At
	31 March,		At 31 December,
	2004	2003	2002	2001
	RMB’000	RMB’000	RMB’000	RMB’000
Unlisted investment, at cost	1,000	1,000	1,000	–

16. LOAN RECEIVABLE

The amount represents amount due from an investee. The amount is unsecured, interest-free and has no fixed repayment term. In the opinion of the directors, Zendai Delta Land will not demand for repayment within twelve months from the balance sheet date and the amount is therefore shown as non-current.

– 79 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

17. PROPERTIES FOR SALE

ZENDAI DELTA GROUP

Properties for sale – Completed – Under development	At 31 March, 2004 RMB’000 30,424 561,216 591,640	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 287,824 45,264 – 460,606 499,959 – 748,430 545,223 –	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 287,824 45,264 – 460,606 499,959 – 748,430 545,223 –
			–

ZENDAI DELTA LAND

Properties for sale – Completed – Under development	At 31 March, 2004 RMB’000 24,340 561,216 585,556	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 275,213 – – 460,607 499,960 – 735,820 499,960 –	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 275,213 – – 460,607 499,960 – 735,820 499,960 –
			–

The properties for sale are carried at cost and pledged to banks to secure bank loans granted to Zendai Delta Group.

18. OTHER INVESTMENTS

ZENDAI DELTA GROUP At 31 March, At 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 Open-ended mutual funds, stated at quoted market price 500 500 1,000 – Unlisted investment, at cost_(Note)_ 800 – – – 1,300 500 1,000 –	ZENDAI DELTA GROUP At 31 March, At 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 Open-ended mutual funds, stated at quoted market price 500 500 1,000 – Unlisted investment, at cost_(Note)_ 800 – – – 1,300 500 1,000 –	ZENDAI DELTA GROUP At 31 March, At 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 Open-ended mutual funds, stated at quoted market price 500 500 1,000 – Unlisted investment, at cost_(Note)_ 800 – – – 1,300 500 1,000 –	ZENDAI DELTA GROUP At 31 March, At 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 Open-ended mutual funds, stated at quoted market price 500 500 1,000 – Unlisted investment, at cost_(Note)_ 800 – – – 1,300 500 1,000 –	ZENDAI DELTA GROUP At 31 March, At 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 Open-ended mutual funds, stated at quoted market price 500 500 1,000 – Unlisted investment, at cost_(Note)_ 800 – – – 1,300 500 1,000 –	At 31 March, 2004 RMB’000 500 –	ZENDAI DELTA LAND At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 500 500 – – – –	ZENDAI DELTA LAND At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 500 500 – – – –	ZENDAI DELTA LAND At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 500 500 – – – –
	1,300	500	1,000	–	500	500	500	–

Note: The amount represents the 80% interest in the registered capital of 杭州世紀暢想房地產代理有限公司（「世紀暢想」）, a private company established in the PRC, held by 世紀暢通. The financial statements of 世紀暢想 have not been accounted for because 世紀暢想 was established exclusively with a view to be disposed to an independent third party in the near future. Accordingly, the investment has been accounted for as other investments. The investment has been disposed to an independent third party subsequent to the balance sheet date.

– 80 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

19. AMOUNTS DUE FROM RELATED COMPANIES

ZENDAI DELTA GROUP

Name of related company 浙江証大房地產 (Note) 上海証大高爾夫旅遊度假村有限公司上海証大投資管理有限公司上海加來房地產開發公司浙江証大物業管理有限公司上海世紀控股有限公司上海証大文化發展公司証大藝術中心有限公司証大酒店管理有限公司嘉善証大房地產開發有限公司上海証大置業有限公司上海証大商城房地產公司浙江原創顧問有限公司	At 31 March, 2004 RMB’000 – – 9,500 – 1,300 – 366 591 – – 70 423 1	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 – – 40 – 45 – – 5,000 – – 15,396 – – 1,157 – – 1,616 – 366 365 – 2 – – 532 – – 5,000 – – – 61 – – – – – – –	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 – – 40 – 45 – – 5,000 – – 15,396 – – 1,157 – – 1,616 – 366 365 – 2 – – 532 – – 5,000 – – – 61 – – – – – – –	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 – – 40 – 45 – – 5,000 – – 15,396 – – 1,157 – – 1,616 – 366 365 – 2 – – 532 – – 5,000 – – – 61 – – – – – – –	Maximum amount outstanding during the three months ended 31 March, year ended 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 – – 40 40 – 45 45 – 9,500 5,016 141,313 – – 67,658 15,396 – 1,300 1,157 2,485 – – 1,990 1,616 – 366 366 365 – 591 21 – – 532 532 – – 5,000 5,008 – – 70 61 53,564 – 423 – – – 1 – – –	Maximum amount outstanding during the three months ended 31 March, year ended 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 – – 40 40 – 45 45 – 9,500 5,016 141,313 – – 67,658 15,396 – 1,300 1,157 2,485 – – 1,990 1,616 – 366 366 365 – 591 21 – – 532 532 – – 5,000 5,008 – – 70 61 53,564 – 423 – – – 1 – – –	Maximum amount outstanding during the three months ended 31 March, year ended 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 – – 40 40 – 45 45 – 9,500 5,016 141,313 – – 67,658 15,396 – 1,300 1,157 2,485 – – 1,990 1,616 – 366 366 365 – 591 21 – – 532 532 – – 5,000 5,008 – – 70 61 53,564 – 423 – – – 1 – – –	Maximum amount outstanding during the three months ended 31 March, year ended 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 – – 40 40 – 45 45 – 9,500 5,016 141,313 – – 67,658 15,396 – 1,300 1,157 2,485 – – 1,990 1,616 – 366 366 365 – 591 21 – – 532 532 – – 5,000 5,008 – – 70 61 53,564 – 423 – – – 1 – – –
	12,251	5,900	23,640	40

ZENDAI DELTA LAND

Name of related company 浙江証大房地產 (Note) 上海証大高爾夫旅遊度假村有限公司上海証大投資管理有限公司上海加來房地產開發公司上海世紀控股有限公司上海証大文化發展公司証大藝術中心有限公司証大酒店管理有限公司嘉善証大房地產開發有限公司上海証大商城房地產公司	At 31 March, 2004 RMB’000 – – 9,500 – – 366 591 – – 423	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 – – 40 – 45 – – 5,000 – – 15,396 – – 1,616 – 366 365 – 2 – – 532 – – 5,000 – – – – –	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 – – 40 – 45 – – 5,000 – – 15,396 – – 1,616 – 366 365 – 2 – – 532 – – 5,000 – – – – –	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 – – 40 – 45 – – 5,000 – – 15,396 – – 1,616 – 366 365 – 2 – – 532 – – 5,000 – – – – –	Maximum amount outstanding during the three months ended 31 March, year ended 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 – – 40 40 – 45 45 – 9,500 5,016 141,313 – – 67,658 15,396 – – 1,990 1,616 – 366 366 365 – 591 21 – – 532 532 – – 5,000 5,008 – – 423 5,000 – –	Maximum amount outstanding during the three months ended 31 March, year ended 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 – – 40 40 – 45 45 – 9,500 5,016 141,313 – – 67,658 15,396 – – 1,990 1,616 – 366 366 365 – 591 21 – – 532 532 – – 5,000 5,008 – – 423 5,000 – –	Maximum amount outstanding during the three months ended 31 March, year ended 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 – – 40 40 – 45 45 – 9,500 5,016 141,313 – – 67,658 15,396 – – 1,990 1,616 – 366 366 365 – 591 21 – – 532 532 – – 5,000 5,008 – – 423 5,000 – –	Maximum amount outstanding during the three months ended 31 March, year ended 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 – – 40 40 – 45 45 – 9,500 5,016 141,313 – – 67,658 15,396 – – 1,990 1,616 – 366 366 365 – 591 21 – – 532 532 – – 5,000 5,008 – – 423 5,000 – –
	10,880	5,900	22,422	40

Mr. Dai Zhikang, a director of Zendai Delta Land, have beneficial interests in the above companies. The amounts are unsecured, interest-free and repayable on demand.

Note: 浙江証大房地產 is a related company of Zendai Delta Group during the year ended 31 December, 2001. It becomes subsidiary of Zendai Delta Land after Zendai Delta Land acquired its 70% paidin capital during the year ended 31 December, 2002.

– 81 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

20. AMOUNTS DUE FROM SHAREHOLDERS

ZENDAI DELTA GROUP

Name of shareholders 上海黎升商貿行上海証大投資發展有限公司	At 31 March, 2004 RMB’000 7 64,166	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 7 6 – 177,009 135,415 –	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 7 6 – 177,009 135,415 –	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 7 6 – 177,009 135,415 –	Maximum amount outstanding during the three months ended 31 March, year ended 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 7 7 6 – 181,010 178,513 141,454 –	Maximum amount outstanding during the three months ended 31 March, year ended 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 7 7 6 – 181,010 178,513 141,454 –	Maximum amount outstanding during the three months ended 31 March, year ended 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 7 7 6 – 181,010 178,513 141,454 –	Maximum amount outstanding during the three months ended 31 March, year ended 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 7 7 6 – 181,010 178,513 141,454 –
	64,173	177,016	135,421	–

ZENDAI DELTA LAND

Name of shareholders 上海黎升商貿行上海証大投資發展有限公司	At 31 March, 2004 RMB’000 7 25,877	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 7 6 – 41,569 – –	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 7 6 – 41,569 – –	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 7 6 – 41,569 – –	Maximum amount outstanding during the three months ended 31 March, year ended 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 7 7 6 – 45,570 43,072 – –	Maximum amount outstanding during the three months ended 31 March, year ended 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 7 7 6 – 45,570 43,072 – –	Maximum amount outstanding during the three months ended 31 March, year ended 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 7 7 6 – 45,570 43,072 – –	Maximum amount outstanding during the three months ended 31 March, year ended 31 December, 2004 2003 2002 2001 RMB’000 RMB’000 RMB’000 RMB’000 7 7 6 – 45,570 43,072 – –
	25,884	41,576	6	–

The amounts are unsecured, interest-free and repayable on demand. The amount due from 上海証大投資發展有限公司 was fully repaid subsequent to the balance sheet date.

21. AMOUNT DUE FROM A DIRECTOR

ZENDAI DELTA GROUP AND ZENDAI DELTA LAND

	At
	31 March,		At 31 December,
Name of director	2004	2003	2002	2001
	RMB’000	RMB’000	RMB’000	RMB’000
Mr. Huang Su Dong	–	–	500	–

The amount is unsecured, interest-free and repayable on demand.

22. PLEDGED BANK DEPOSIT

The amount represents deposit pledged to a bank to secure a short term bank loan granted to Zendai Delta

Group.

– 82 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

23. TRADE AND OTHER PAYABLES

Included in Zendai Delta Group’s trade and other payables are trade payables of RMB1,538,000, RMB2,598,000, RMB8,251,000 and nil at 31 March, 2004, 31 December, 2003, 2002 and 2001, respectively, and their aging analysis is as follows:

ZENDAI DELTA GROUP

0 – 30 days 31 – 60 days 61 – 90 days 91 – 180 days 181 – 360 days Over 360 days	At 31 March, 2004 RMB’000 288 – – 260 – 990 1,538	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 260 – – – 3,826 – – – – – 3,535 – 1,000 250 – 1,338 640 – 2,598 8,251 –	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 260 – – – 3,826 – – – – – 3,535 – 1,000 250 – 1,338 640 – 2,598 8,251 –
			–

Included in Zendai Delta Land’s trade and other payables are trade payables of RMB187,000, RMB1,050,000, RMB50,000 and nil at 31 March, 2004, 31 December, 2003, 2002 and 2001, respectively, and their aging analysis is as follows:

ZENDAI DELTA LAND

0 – 30 days 31 – 60 days 61 – 90 days 91 – 180 days 181 – 360 days Over 360 days	At 31 March, 2004 RMB’000 137 – – – – 50 187	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 – – – – – – – – – – – – 1,000 50 – 50 – – 1,050 50 –	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 – – – – – – – – – – – – 1,000 50 – 50 – – 1,050 50 –
			–

24. AMOUNT(S) DUE TO AN INVESTEE/RELATED COMPANIES AND SHAREHOLDER’S LOAN

The amounts are unsecured and repayable on demand. Except for the amount due to a related company of approximately HK$66 million as at 31 December, 2001, which bore interest at the then prevailing commercial loan interest rates in the PRC, the other balances are interest-free.

– 83 –

FINANCIAL INFORMATION ON ZENDAI DELTA LAND

APPENDIX II

25. BANK LOANS

ZENDAI DELTA GROUP

Bank loans are repayable as follows: On demand or within one year More than one year but not exceeding two years _Less:_Amount due within one year shown under current liabilities Amount due after one year Bank loans were secured as follows: Secured Unsecured ZENDAI DELTA LAND Bank loans are repayable as follows: On demand or within one year More than one year but not exceeding two years _Less:_Amount due within one year shown under current liabilities Amount due after one year Bank loans were secured as follows: Secured Unsecured	At 31 March, 2004 RMB’000 150,000 130,000 280,000 (150,000) 130,000 235,000 45,000 280,000 At 31 March, 2004 RMB’000 150,000 130,000 280,000 (150,000) 130,000 235,000 45,000 280,000	At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 199,735 325,000 50,000 150,000 105,000 65,000 349,735 430,000 115,000 (199,735) (325,000) (50,000) 150,000 105,000 65,000 304,735 345,000 50,000 45,000 85,000 65,000 349,735 430,000 115,000 At 31 December, 2003 2002 2001 RMB’000 RMB’000 RMB’000 195,000 275,000 50,000 150,000 105,000 65,000 345,000 380,000 115,000 (195,000) (275,000) (50,000) 150,000 105,000 65,000 300,000 335,000 50,000 45,000 45,000 65,000 345,000 380,000 115,000

– 84 –

FINANCIAL INFORMATION ON ZENDAI DELTA LAND

APPENDIX II

26. PAID-IN CAPITAL

Registered capital At 1 January, 2001 Increase during the year At 31 December, 2001 Increase during the year Balance at 31 December, 2002 and 2003 and 31 March, 2004 Paid-in capital At 1 January, 2001 Capital contribution during the year At 31 December, 2001 Capital contribution the year Balance at 31 December, 2002 and 2003 and 31 March, 2004	RMB’000 15,000 45,000
	60,000 20,000
	80,000

	15,000 45,000
	60,000 20,000
	80,000

27. RESERVE

ZENDAI DELTA LAND

At 1 January, 2001 Net loss for the year At 31 December, 2001 Net loss for the year At 31 December, 2002 Net loss for the year At 31 December, 2003 Net profit for the period At 31 March, 2004	Accumulated losses RMB’000 (1,231) (8,222)
	(9,453) (11,858)
	(21,311) (6,011)
	(27,322) 122,403
	95,081

Details of movement in the reserves of the Group during the Relevant Periods are set out in the Consolidated Statement of Changes in Equity on page 65.

– 85 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

28. ACQUISITION OF SUBSIDIARIES

Three months ended 31 March, 2004 RMB’000 Net assets acquired: Property, plant and equipment – Interests in associates – Investment in securities – Loan receivable – Properties for sale – Deposits and other receivables – Amounts due from related companies – Bank balances and cash – Trade and other payables – Receipts in advance – Amounts due to related companies – Taxation – Bank loans – secured – – Minority interests – Goodwill – Total consideration – Net inflow of cash and cash equivalents in connection with the acquisition of subsidiaries: Cash consideration – Bank balances and cash acquired – Net cash used in acquisition –	Year 2003 RMB’000 – – – – – – – – – – – – – – – – – – – –	ended 31 December, 2002 2001 RMB’000 RMB’000 5,605 – (3,228) – 1,000 – 15,261 – 331,590 – 18,301 – 143,955 – 15,178 – (15,721) – (465,205) – (2,604) – (632) – (20,000) – 23,500 – (6,550) – 8,050 – 25,000 – (25,000) – 15,178 – (9,822) –	ended 31 December, 2002 2001 RMB’000 RMB’000 5,605 – (3,228) – 1,000 – 15,261 – 331,590 – 18,301 – 143,955 – 15,178 – (15,721) – (465,205) – (2,604) – (632) – (20,000) – 23,500 – (6,550) – 8,050 – 25,000 – (25,000) – 15,178 – (9,822) –
			– – –
			–

			– –
			–

The subsidiaries acquired during the year ended 31 December, 2002 contributed RMB427,255,000 to Zendai Delta Group’s turnover, and RMB106,532,000 to Zendai Delta Group’s profit from operations.

29. RETIREMENT BENEFITS SCHEMES

The employees of Zendai Delta Group in the PRC are members of the state-managed retirement benefits schemes operated by the government of the PRC. Zendai Delta Land and its subsidiaries are each required to contribute certain percentage of their payroll costs to the retirement benefits schemes to finance the scheme. The only obligation of Zendai Delta Group with respect to the retirement benefits schemes is to make the specified contributions under the scheme.

– 86 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

30. OPERATING LEASE COMMITMENTS

Zendai Delta Group and Zendai Delta Land as lessee

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

Premises Other assets	Three months ended 31 March, 2004 RMB’000 149 – 149	Year 2003 RMB’000 1,846 – 1,846	ended 31 December, 2002 2001 RMB’000 RMB’000 1,240 152 30 – 1,270 152	ended 31 December, 2002 2001 RMB’000 RMB’000 1,240 152 30 – 1,270 152
				152

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

ZENDAI DELTA GROUP AND ZENDAI DELTA LAND

		At
		31 March,		At 31 December,
		2004	2003	2002	2001
		RMB’000	RMB’000	RMB’000	RMB’000
Operating	leases which expire:
Within	one year	725	1,297	535	139

Operating lease payments in respect of rented premises represent rentals payable by Zendai Delta Group and Zendai Delta Land for certain of its offices. Leases are negotiated for an average term of two years.

31. COMMITMENTS

At 31 December, 2001, 2002 and 2003 and at 31 March, 2004, Zendai Delta Group and Zendai Delta Land had contracted commitments not provided for in the financial statements in respect of acquisition of land and property development expenditure amounted to RMB353,114,000, RMB314,091,000, RMB166,565,000 and RMB115,304,000 respectively.

32. RELATED PARTIES TRANSACTIONS

During the Relevant Periods, Zendai Delta Group entered into the following transactions with its related parties:

	Three
	months
	ended
	31 March,	Year	ended 31 December,
	2004	2003	2002	2001
	RMB’000	RMB’000	RMB’000	RMB’000
Loan interest paid to:
a related company	–	–	–	190
a shareholder	–	–	–	4,749

The interest is charged at the then prevailing commercial loan interest rates in the PRC.

– 87 –

APPENDIX II FINANCIAL INFORMATION ON ZENDAI DELTA LAND

33. CONTINGENT LIABILITIES

At 31 December, 2001, 2002 and 2003 and at 31 March, 2004, Zendai Delta Group and Zendai Delta Land had no significant contingent liabilities or outstanding litigation.

34. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared for Zendai Delta Land or its subsidiaries in respect of any period subsequent to 31 March, 2004, and no dividend or other distribution has been declared or paid by Zendai Delta Land or its subsidiaries subsequent to 31 March, 2004.

Yours faithfully,

KLL Associates CPA Limited Lee Ka Leung, Daniel

Practising Certificate Number P01220 Hong Kong

– 88 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX III

1. PRO FORMA STATEMENT OF ADJUSTED ASSETS AND LIABILITIES

Set out below is the statement of the pro forma adjusted assets and liabilities of the Group upon Completion, which has been prepared in accordance with Rule 4.29 of the Listing Rules. The statement has been prepared for the purpose of providing information in relation to the Share Purchase and for illustrative purpose only and because of its nature, it may not give a true picture of the financial position of the Group.

The following statement is based on the audited consolidated balance sheet of the Group as at 31 December, 2003 as extracted from the Company’s annual report for the year ended 31 December, 2003, and the audited consolidated balance sheet of Zendai Delta Land and its subsidiaries (the “Zendai Delta Group”) as at 31 March, 2004 as extracted from the accountants’ report on the Zendai Delta Group as set out in Appendix II to this circular, and adjusted as described below:

		Adjustment
		on acquisition
		of 24%		Pro forma
		interest in the		adjusted
	The Group	registered		balances
	as at	capital		of the
	31 December,	of Zendai	Group upon
	2003	Delta Land	Completion
				(Note 2)
	HK$’000	HK$’000		HK$’000
Non-current assets
Interests in associates, excluded
unamortised goodwill arising
on acquisition of associates	28,646	217,466		246,112
Other tangible assets	3,954	–		3,954
Intangible assets	(61,547)	(141,051)(Note 1)		(202,598)
	(28,947)			47,468
Current assets	884,172	(76,415)		807,757
Current liabilities	453,661			453,661
Net current assets	430,511			354,096
Total assets less liabilities	401,564			401,564
Non-current liabilities	106,450			106,450
Minority interests	123,180			123,180
Net assets	171,934			171,934

Notes:

The adjustment reflects the negative goodwill arising from the acquisition of 24% interest in Zendai Delta Land, after taking into account the surplus on revaluation of properties for sales of Zendai Delta Land base on the value of the properties for sales as at 31 May, 2004 as set out in Appendix IV of this circular.
No adjustments were made to reflect the effects of
(i) the issue of new Shares as announced on 30 January, 2004; and
(ii) the acquisition of 15% interest in Shanghai Zendai Land as disclosed in the circular of the Company dated 12 June, 2004.

– 89 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX III

2. PRO FORMA ADJUSTED NET TANGIBLE ASSETS

Set out below is the statement of the pro forma adjusted net tangible assets of the Group upon Completion, which has been prepared in accordance with Rule 4.29 of the Listing Rules. The statement has been prepared for the purpose of providing information in relation to the Share Purchase and for illustrative purpose only and because of its nature, it may not give a true picture of the financial position of the Group.

The following statement is based on the audited consolidated net tangible assets of the Group as at 31 December, 2003, and adjusted as described below:

Audited consolidated net assets of the Group as at 31 December, 2003
Exclude: Intangible assets of the Group as at 31 December, 2003
Unamortised goodwill arising on acquisition of associates
as at 31 December, 2003
Audited consolidated net tangible assets of the Group
as at 31 December, 2003
Add: Negative goodwill arising from the acquisition of 24% interest in
Zendai Delta Land, after taking into account the surplus on
revaluation of properties for sales of Zendai Delta Land
base on the value of the properties for sales as at
31 May, 2004 as set out in Appendix IV of this circular
Pro forma unaudited adjusted net tangible assets of the Group
upon Completion
Pro forma adjusted net tangible asset value per Share immediately
following Completion (Based on 4,630,782,558 Shares in issue
as at the Latest Practicable Date)

HK$’000
171,934
63,796
(2,249)
233,481
141,051
374,532
HK$0.08

– 90 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX III

3. COMFORT LETTERS

(a) Letter on unaudited pro forma statement of adjusted assets and liabilities of the Group after the Share Purchase

==> picture [166 x 49] intentionally omitted <==

17 August, 2004

The Directors

Shanghai Zendai Property Limited

Dear Sirs,

We report on the pro forma financial information (“Pro Forma Financial Information”) of Shanghai Zendai Property Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) set out in Section 1 of Appendix III to the circular dated 17 August, 2004 (the “Circular”) in relation to the acquisition of 24% interest in the registered capital of 上海証大三角洲置業有限公司 (the “Acquisition”), which has been prepared, as if the Acquisition had been completed as at 31 December, 2003 for illustrative purpose only, to provide information about how the Acquisition might have affected the relevant financial information presented.

Responsibilities

It is the responsibility solely of the directors of the Company to prepare the Pro Forma Financial Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

It is our responsibility to form an opinion, as required by paragraph 4.29 of the Listing Rules, on the Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

– 91 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX III

Basis of opinion

We conducted our work in accordance with the Statements of Investment Circular Reporting Standards and Bulletin 1998/8 “Reporting on pro forma financial information pursuant to the Listing Rules” issued by the Auditing Practices Board in the United Kingdom, where applicable. Our work, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Pro Forma Financial Information with the directors of the Company.

Our work did not constitute an audit or a review in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants, and accordingly we do not express such assurance on the Pro Forma Financial Information.

The Pro Forma Financial Information has been prepared in the basis set out in Section 1 of Appendix III of the Circular for illustrative purposes only and, because of its nature, it may not be indicative of the financial position of:

the Group had the Acquisition been completed at 31 December, 2003 or
the Group at any future date.

Opinion

In our opinion:
(a) the Pro Forma Financial Information has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the Pro Forma Financial Information as disclosed pursuant to paragraph 4.29 of the Listing Rules.

Yours faithfully,

KLL Associates CPA Limited

Lee Ka Leung, Daniel

Practising Certificate Number P01220 Hong Kong

– 92 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX III

(b) Letter on unaudited pro forma statement of adjusted net tangible assets of the Group after the Share Purchase

==> picture [166 x 49] intentionally omitted <==

17 August, 2004

The Directors

Shanghai Zendai Property Limited

Dear Sirs,

We report on the pro forma adjusted net tangible assets (“Pro Forma Adjusted NTA”) of Shanghai Zendai Property Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) set out in Section 2 of Appendix III to the circular dated 17 August, 2004 (the “Circular”) in relation to the acquisition of 24% interest in the registered capital of 上海証大三角洲置業有限公司 , which has been prepared to provide information about how the proposed transaction might have affected the financial information presented.

Responsibilities

It is the responsibility solely of the directors of the Company to prepare the Pro Forma Adjusted NTA in accordance with paragraph 29 of Chapter 4 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

It is our responsibility to form an opinion on the Pro Forma Adjusted NTA and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Pro Forma Adjusted NTA beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

Basis of opinion

We conducted our work in accordance with the Statements of Investment Circular Reporting Standards and Bulletin 1998/8 “Reporting on pro forma financial information pursuant to the Listing Rules” issued by the Auditing Practices Board in the United Kingdom. Our work, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted net tangible assets with the source documents, considering the evidence supporting the adjustments and discussing the Pro Forma Adjusted NTA with the directors of the Company.

– 93 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX III

Our work does not constitute an audit or review made in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants, and accordingly, we do not express any such assurance on the Pro Forma Adjusted NTA.

The Pro Forma Adjusted NTA has been prepared in accordance with the basis set out in Section 2 of Appendix III to the Circular for illustrative purposes only and, because of its nature, it may not give an indicative financial position of the Group as at 31 December, 2003 or at any future date.

Opinion

In our opinion:

(a) the Pro Forma Adjusted NTA has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Group, and
(c) the adjustments are appropriate for the purposes of the Pro Forma Adjusted NTA as disclosed pursuant to paragraph 29 of Chapter 4 of the Listing Rules.

Yours faithfully,

KLL Associates CPA Limited Lee Ka Leung, Daniel

Practising Certificate Number P01220 Hong Kong

– 94 –

VALUATION REPORT

APPENDIX IV

The following is the text of a letter from Sallmanns (Far East) Limited, an independent property valuer, in connection with their opinion of the value of the property interest as at 31 May, 2004.

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22nd Floor, Siu On Centre 188 Lockhart Road Wanchai, Hong Kong Tel: (852) 2169 6000 Fax: (852) 2528 5079

17 August 2004

The Board of Directors Shanghai Zendai Property Limited (formerly known as Shanghai Century Holdings Limited) Unit 6108 The Centre 99 Queen’s Road Central Hong Kong

Dear Sirs,

In accordance with your instructions to value the property interests of Shanghai Zendai Delta Land Company Limited (referred to as the “Company”) and its subsidiaries (hereinafter together referred to as the “Group”) in the People’s Republic of China (the “PRC”), we confirm that we have carried out inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the capital values of the property interests as at 31 May, 2004 (the “date of valuation”).

Our valuation of the property interests represent the open market value which we would define as intended to mean “an opinion of the best price at which the sale of an interest in the property would 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;

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APPENDIX IV

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

We have valued the property interest no. 1 of Group I by direct comparison approach assuming sale of the property interest in its existing state with the benefit of immediate vacant possession and by making reference to comparable sale transactions as available in the relevant market.

Where, due to the nature of the building, there are no market sales comparables readily available, the property interest no. 2 has been valued on the basis of its depreciated replacement cost.

Depreciated replacement cost is defined as “the aggregate amount of the value of the land for the existing use or a notional replacement site in the same locality, and the gross replacement cost of the buildings and other site works, from which appropriate deductions may then be made to allow for age, condition, economic or functional obsolescence and environmental factors etc; all of these might result in the existing property being worth less to the undertaking in occupation than would a new replacement.” This opinion of value does not necessarily represent the amount that might be realized from the disposal of the subject property in the open market, and this basis has been used due to the lack of an established market upon which to base comparable transactions. However, this approach generally furnishes the most reliable indication of value for property without a known used market.

Our valuation has been made on the assumption that the seller sells the property interests on the open market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the value of the property interests.

We have assumed that transferable land use rights in respect of the property interests for their respective specific terms at nominal annual land use fees have been granted and that any premium payable have already been fully settled. We have assumed that the Group has an enforceable title to the property interests and has free and uninterrupted rights to use, occupy or assign the property interests for the whole of the respective unexpired terms as granted.

We have also assumed that all consents, approvals and licenses from the relevant government authorities for the development of the properties have been granted without onerous conditions or undue delay, which might affect their values.

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VALUATION REPORT

No allowance has been made in our report for any charges, mortgages or amounts owing on any of the property interests valued nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property interests are free from encumbrances, restrictions and outgoings of an onerous nature, which could affect their values.

In valuing the property interests, we have complied with all the requirements contained in Chapter 5 and Practice Note 12 to the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited and the Hong Kong Guidance Notes on the Valuation of Property Assets (2nd Edition) published by the Hong Kong Institute of Surveyors in March 2000.

We have relied to a very considerable extent on the information given by the Group and have accepted advice given to us on such matters as tenure, planning approvals, statutory notices, easements, particulars of occupancy, lettings, and all other relevant matters.

We have been shown copies of various title documents including the Land Use Rights Certificates, Real Estate Title Certificates and official plans relating to the property interests and have made relevant enquiries. Where possible, we have examined the original documents to verify the existing title to the property interests in the PRC or any material encumbrances that might be attached to the property interests. We have relied on the advice given by the Company concerning the validity of the Group’s title to the property interests in the PRC.

We have not carried out detailed site measurements to verify the correctness of the site areas in respect of the properties but have assumed that the site areas shown on the documents and official site plans handed to us are correct. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations. No on-site measurement has been taken.

We have inspected the exterior and, where possible, the interior of the properties. However, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report whether the properties are free of rot, infestation or any other structural defects. No tests were carried out on any of the services.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Group. We have also sought confirmation from the Group that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to reach an informed view, and we have no reason to suspect that any material information has been withheld.

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APPENDIX IV

Unless otherwise stated, all monetary figures stated in this report are in Renminbi (RMB).

Our valuations are summarised below and the valuation certificates are attached.

Yours faithfully, for and on behalf of

Sallmanns (Far East) Limited Paul L. Brown

B.Sc. FRICS FHKIS

Director

Note: Paul L. Brown is a Chartered Surveyor who has 21 years’ experience in the valuation of properties in the PRC and 24 years of property valuation experience in Hong Kong, the United Kingdom and the Asia-Pacific region.

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APPENDIX IV

SUMMARY OF VALUE

Group I – Property interest owned and held for Sales by the Group in the PRC

No.	Property	Capital Value
		in existing state
		as at
		31 May, 2004
		RMB
1.	The remaining portion of	1,363,800,000
	Shui Qing Mu Hua Garden
	Lian Yang Residential Area
	Pudong New District
	Shanghai
	The PRC

Group II – Property interest owned and occupied by the Group in the PRC

No. Property 2. A composite building Hupan Garden 176 Wenhua Road West Lake District Hengzhou City Zhejiang Province The PRC Total:	Capital Value in existing state as at 31 May, 2004 RMB 10,200,000
	1,374,000,000

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APPENDIX IV

VALUATION CERTIFICATE

Property interest owned and held for Sales by the Group in the PRC

Description and tenure

Property

The remaining portion of The subject property is a large Shui Qing Mu Hua scale residential development Garden known as Shui Qing Mu Hua. Lian Yang Residential Area The property comprises 3 Pudong New District parcels of land (referred to as Shanghai Land Parcel Nos. 1, 2 and 3) The PRC with a total site area of approximately 181,411 sq.m. on which is constructed the remaining portion of Phase I (medium-to-high-rise apartment blocks) and Phase II (villa development) with approximate gross floor area as follows.

The subject property is a large scale residential development known as Shui Qing Mu Hua.

Descriptions Phase I – Apartments Residential (Held under Pre-Sale Contracts) Residential (Unsold) Commercial Total Phase II – Villas Villas (Detached Houses) Club House Total	GFA Sq.m. (approx.) 64,407 19,391 2,700
	86,498

	26,766 2,000
	28,766

Capital Value in existing state Particulars of as at occupancy 31 May, 2004 RMB As advised by the Group, 1,363,800,000 the particulars of occupancy of the property are as set out below:

For Phase I apartment development, 397 residential units are held under pre-sale contracts whilst the remaining 114 residential units, 420 car-parking spaces and commercial floors are open for sale.

Phase II is currently under construction.

Phase I was completed in various stages between 2002 and the 1st quarter of 2004.

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APPENDIX IV

Capital Value in existing state Particulars of as at Property Description and tenure occupancy 31 May, 2004 RMB Phase II is planned to be developed into 50 villas and a clubhouse with a planned total gross floor area of approximately 28,766 sq.m. and scheduled to be completed in the 2nd quarter of 2005. The land use rights were granted for a common term of 70 years from 25 October 2001 to 24 October 2071 in respect of Land Parcel Nos. 1 and 2; and from 16 June 2001 to 17 June 2071 in respect of Land Parcel No. 3.

Notes:

Pursuant to a Real Estate Title Certificate, Hu Fang Di Pu Zi (2001) Di No. 067904 issued by Shanghai Housing and Land Resources Bureau (上海市房屋土地資源管理局 ) on 2 July 2001, the ownership rights of a parcel of land with site area of approximately 107,739 sq.m. are held by Shanghai New Century Shui Qing Mu Hua Property Development Limited (now known as Shanghai Zendai Delta Land Company Limited).
Pursuant to 2 Real Estate Title Certificates, Hu Fang Di Pu Zi (2003) Di Nos. 090192 and 090193, both issued by Shanghai Housing and Land Resources Bureau (上海市房屋土地資源管理局 ) on 25 August 2003, the ownership rights of two parcels of land with site areas of approximately 36,681 sq.m. and 36,991 sq.m. respectively are held by Shanghai Zendai Delta Land Company Limited.
Pursuant to a Construction Land and Planning Permission Certificate, Hu Pu Di (03) No. 014 issued by Shanghai Pudong New District Planning and Management Bureau (上海市浦東新區規劃管理局 ) on 13 February 2003, the development is approved.
Pursuant to a Construction Works and Planning Permission Certificate, Hu Pu Jian (04) No. 078 issued by Shanghai Pudong New District Planning and Management Bureau on 5 April 2004, the development with a gross floor area of 8,320 sq.m. is approved.
Pursuant to a Construction Works Commencement Permission Certificate Nos. 0202PD0305D01/ 310224200207100201, issued by Shanghai Pudong District Construction Bureau (上海市浦東新區建設局 ) on 19 April 2004, the construction works were permitted to commence.
In the course of our valuation, we have taken into account the total consideration of the residential units being held under pre-sale contracts and all the remaining unsold units and car parking spaces of Phase I development. As advised by the Group, some 397 residential units of Phase I development are held under the pre-sale contracts with the total consideration of approximately RMB670,902,900.

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APPENDIX IV

We have prepared our valuation on the following assumptions:
(i) Shanghai Zendai Delta Land Company Limited (formerly known as Shanghai New Century Shui Qing Mu Hua Property Development Company Limited) is in possession of a proper legal title to the property and is entitled to transfer the property with the residual term of its land use rights without payment of an extra land premium or other onerous payment to the government;
(ii) All land premium and other costs of ancillary utility services have been settled in full;
(iii) 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
(iv) The property may be disposed of freely to both local and overseas purchasers.
For reference purposes, the breakdown of the value is set out below:

RMB

Apartments : 943,800,000 Villa : 420,000,000 Total : 1,363,800,000

As confirmed by the Company, the construction cost of the villas is estimated to be approximately RMB427 million, of which some RMB222.5 million has been incurred as at the date of valuation.
For reference purposes, the estimated capital value after Completion is about RMB800 million.
We have been provided with a legal opinion to the property interest by the PRC legal adviser of Shanghai Zendai Property Limited, which, contains, inter alia, that Shanghai Zendai Delta Land Company Limited legally owns the land use rights and building ownership title of the property.
In the course of the valuation, we have not taken into consideration any tax liability. As advised by the Group, the property is subject to business tax of 5% and stamp duty of 0.05% on the transacted price when the property is transferred.

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APPENDIX IV

VALUATION CERTIFICATE

Group II – Property interest owned and occupied by the Group in the PRC

				Capital Value
				in existing state
			Particulars of	as at
	Property	Description and tenure	occupancy	31 May, 2004
				RMB
2.	A composite building	The property comprises a 5	The property is	10,200,000
	Hupan Garden	storey composite building in a	currently occupied
	176 Wenhua Road	residential development	by the Group for
	West Lake District	completed in about 2001.	office and clubhouse
	Hengzhou City		purposes.
	Zhejiang Province	The clubhouse has a total
	The PRC	gross floor area of
		approximately 3,244.67 sq.m.
		The land use rights were
		granted for a term expiring on
		8 November 2044 for multiple
		uses.

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Hanxi Guo Yong (2002) Zi Di No. 011454 issued by the People’s Government of Hanzhou City in 2002, the land use rights of a parcel of land were granted to Zhejiang Zendai Real Estate Development Co., Ltd. (浙江証大房地產開發有限公司), a 70% owned subsidiary of the Company, for a term expiring on 8 November 2044 for multiple uses.
Pursuant to a Real Estate Title Certificate, Han Fang Quan Zheng Xi Zi Di No. 0022391 issued by Hanzhou Housing Management Bureau (杭州房產管理局 ) on 13 June 2002, the ownership rights of a 5-storey composite building with a total gross floor area of approximately 3,244.67 sq.m. are held by Zhejiang Zendai Real Estate Development Co., Ltd.
We have been provided with a legal opinion to the property interest by the PRC legal adviser of Shanghai Zendai Property Limited, which, contains, inter alia, that Zhejiang Zendai Real Estate Development Co., Ltd. legally owns the land use rights and building ownership title of the property.
In the course of the valuation, we have not taken into consideration any tax liability. As advised by the Group, the property is subject to business tax of 5% and stamp duty of 0.05% on the transacted price when the property is transferred.

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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 OR SHORT POSITIONS IN SHARES AND OPTIONS

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executives of the Company in the Shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which are required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 & 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provision of SFO); or which are required pursuant to Section 352 of the SFO 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 Directors of Listed Companies were as follows:

			Approximate
	Number of	Capacity and	Percentage of
Name of Director	Ordinary Shares	Nature of Interest	Issued Share Capital
Mr. Dai Zhikang	2,519,080,000	Corporate Interest	54.40%
		(Note)

Note: All of these interests represent long positions. Mr. Dai Zhikang is the beneficial owner of the entire issued share capital of Giant Glory, and is therefore deemed to be interested in the 2,519,080,000 Shares held by Giant Glory pursuant to the SFO.

Save as disclosed above, as at the Latest Practicable Date, none of other Directors or chief executives of the Company had any interests and short positions in the Shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which are required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 & 8 of Part XV of the SFO (including interests and short positions which any such Director is taken or deemed to have under such provisions of SFO); or which is required, pursuant to Section 352 of the SFO, 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 to be notified to the Company and the Stock Exchange.

None of the Directors was materially interested in any contract or arrangement entered into by any member of the Group subsisting at the Latest Practicable Date which was significant in relation to the business of the Group.

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GENERAL INFORMATION

APPENDIX V

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, 2003 (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 the Directors or chief executive of the Company, the person (other than a Director or chief executive of the Company) who had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO was:

				Approximate
				Percentage
				of Issued
Name	Capacity		Number of Shares	Share Capital
Giant Glory	Beneficial owner	(Note 1)	2,519,080,000	54.40%
Mr. Dai Zhikang	Interest held by	(Note 1)	2,519,080,000	54.40%
	controlled
	corporation
Honour Great	Beneficial owner	(Note 2)	464,355,000	10.03%
Holdings Limited
Ms. Liu Lijuan	Interest held by	(Note 2)	464,355,000	10.03%
(劉麗娟)	controlled
	corporation
Genuine Assets	Beneficial owner	(Note 3)	300,000,000	6.48%
Limited
Ms. Huang Jin	Interest held by	(Note 3)	300,000,000	6.48%
(黃瑾)	controlled
	corporation

Notes:

This represents the deemed interest of Mr. Dai Zhikang as referred to in the note under the section headed “Directors’ interests or short positions in Shares and Options” above.
Ms. Liu Lijuan is the beneficial owner of the entire issued share capital of Honour Great Holdings Limited and therefore is deemed to be interested in the 464,355,000 Shares held by Honour Great Holdings Limited pursuant to the SFO.
Ms. Huang Jin is the beneficial owner of the entire issued share capital of Genuine Assets Limited and therefore is deemed to be interested in the 300,000,000 Shares held by Genuine Assets Limited pursuant to the SFO.
Save as disclosed herein, no other person was recorded in the register kept pursuant to Section 336 of the SFO as having, directly or indirectly, an interest of 5% or more of the issued share capital of the Company as at the Latest Practicable Date.

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GENERAL INFORMATION

APPENDIX V

All the interests stated above represent long positions. As at the Latest Practicable Date, no short positions were recorded in the register kept by the Company under Section 336 of the SFO.

Save as disclosed herein, the Directors and the chief executive of the Company are not aware of any person (other than a Director or the chief executive of the Company or a member of the Group) who had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group or had any options in respect of such capital 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, 2003, being the date to which the latest published audited financial statements of the Company were made up.

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.

COMPETING INTEREST

Shanghai Zendai Investment is beneficially owned as to approximately 65.67% by Mr. Dai Zhikang, an executive Director and the chairman of the Company, approximately 19.33% by Mr. Dai, and approximately 15.0% by Mr. Zhu Nansong, an executive Director, as at the Latest Practicable Date. Mr. Dai Zhikang and Mr. Zhu Nansong, both are executive Directors, are also directors of Shanghai Zendai Investment.

Shanghai Zendai Investment is principally engaged in investment management and property related business and, as at the Latest Practicable Date, interested in 18.75% of the registered capital of Zendai Delta Land. In view of the nature of business of Shanghai Zendai

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GENERAL INFORMATION

APPENDIX V

Investment and its interest in the registered capital of Zendai Delta Land, the business of Shanghai Zendai Investment may potentially compete with the Group’s business. The Share Purchase, which renders the Group interested in 49% of the registered capital of Zendai Delta Land and entitled to appoint one more director to the board of directors of Zendai Delta Land upon Completion, would help to avoid such potential competition.

Save as disclosed above, as at the Latest Practicable Date, so far as the Directors are aware of, none of themselves or their respective associates have any interest in a business which competes or may compete with the business of the Group.

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:

the Share Purchase Agreement;
a conditional sale and purchase agreement dated 15 May, 2004 entered into between Ample Century Limited, a wholly owned subsidiary of the Company, and Shanghai Zendai Investment in connection with the acquisition of a further 15% interest in the registered capital of Shanghai Zendai Land by Ample Century Limited for a total consideration of RMB36,000,000 (equivalent to approximately HK$33,962,000);
a subscription agreement dated 30 January, 2004 entered into between the Company and Genuine Assets Limited and 黃瑾 (Huang Jin), pursuant to which Genuine Assets Limited has agreed to subscribe for and the Company has agreed to allot and issue 300 million new Shares at a subscription price of approximately HK$0.1333 per subscription share;
a deed of novation dated 13 December, 2002 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, Full Sino Profits Limited and South China Strategic Limited pursuant to which the rights and obligations of the Company under a management agreement dated 18 June, 2001 and a deed of novation dated 28 June, 2002 were novated to South China Strategic Limited;
a sale and purchase agreement dated 13 December, 2002 entered into between the Company and Full Sino Profits Limited for the disposal of the entire issued share capital of Four Seas Travel Investments Limited, a wholly owned subsidiary of the Company immediate before completion of the sale and purchase agreement, for a consideration of HK$8 million;

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APPENDIX V

a conditional sale and purchase agreement dated 29 September, 2002 entered into between Ample Century Limited, a wholly owned subsidiary of the Company, as the purchaser and Mr. Huang Su Dong, Mr. Zhu Nan Song and Mr. Dai Zhi Feng as the vendors in connection with the acquisition of a 65% interest in Shanghai Zendai Land by Ample Century Limited for a total consideration of RMB70,000,000 (equivalent to approximately HK$65,422,000); and
a joint venture agreement dated 12 August, 2002 entered into between Victory Gateway Limited, a wholly owned subsidiary of the Company, and 上海濱海高爾夫俱樂部有限公司 for the establishment of a sino-foreign equity joint venture in the PRC named 上海水清木華酒店管理有限公司 (Shanghai Shui Qing Mu Hua Hotel Management Company Limited) (formerly known as 上海濱海高爾夫旅遊度假村有限公司 (Shanghai Binhai Golf And Tourist Resort Company Limited)) which is owned as to 91% by Victory Gateway Limited and 9% by 上海濱海高爾夫俱樂部有限公司 .

EXPERTS

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

SHKIL A deemed licensed corporation to carry out types 1, 4, 6 and 9 regulated activities under the SFO KLL Associates CPA Limited Certified public accountants Sallmanns Professional property surveyors and valuers

None of SHKIL, KLL Associates CPA Limited and Sallmanns 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

SHKIL, KLL Associates CPA Limited and Sallmanns 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 references to their names, as the case may be, in the form and context in which they respectively appear.

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GENERAL INFORMATION

APPENDIX V

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 Unit 6108, The Center, 99 Queen’s Road Central, Hong Kong, up to and including 3 September, 2004:

(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 pages 16 to 17 of this circular;
(d) the letter from SHKIL to the Independent Board Committee dated 17 August, 2004, the text of which is set out on pages 18 to 25 of this circular;
(e) the valuation certificates and report dated 17 August, 2004 from Sallmanns, the texts of which is set out in Appendix IV to this circular;
(f) the consolidated audited accounts of the Group for the two years ended 31 December, 2003;
(g) the accountants’ report on Zendai Delta Land, the text of which is set out in Appendix II to this circular;
(h) the unaudited pro forma financial information of the Group, the text of which is set out in Appendix III to this circular;
(i) the comfort letters from KLL Associates CPA Limited, text of which is set out in Appendix III to this circular;
(j) the material contracts referred to in the section headed “Material contracts” in this Appendix;
(k) the written consent of SHKIL, KLL Associates CPA Limited and Sallmanns as referred to under the section headed “Experts” in this Appendix; and
(l) a copy of a circular of the Company dated 12 June, 2004 in relation to a discloseable and connected transaction.

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GENERAL INFORMATION

APPENDIX V

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 Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda and its head office and principal place of business in Hong Kong is at Unit 6108, The Center, 99 Queen’s Road Central, Hong Kong.
(c) The share registrar and transfer office of the Company in Hong Kong is Secretaries Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.
(d) The English text of this circular and the form of proxy shall prevail over the Chinese text.

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NOTICE OF SGM

SHANGHAI ZENDAI PROPERTY LIMITED 上海証大房地產有限公司[*]

(formerly known as Shanghai Century Holdings Limited 上海世紀控股有限公司[)]

(Incorporated in Bermuda with limited liability)

(Stock Code: 755)

NOTICE IS HEREBY GIVEN that the Special General Meeting of Shanghai Zendai Property Limited (“Company”) will be held at Unit 6108, 61/F, The Center, 99 Queen’s Road Central, Hong Kong on Friday, 3 September, 2004 at 10:00 a.m. (or an adjournment thereof) for the purpose of considering and, if thought fit, passing, with or without modification, the following resolution:

As Ordinary Resolution of the Company:

“ THAT the agreement dated 23 July, 2004 (the “Share Purchase Agreement”) and entered into between 上海証大置業有限公司 (Shanghai Zendai Real Estate Company Limited) (“Shanghai Zendai Land”), a subsidiary of the Company as purchaser and 上海黎升商貿行 as vendor for the acquisition of a 24% interest in the registered capital of 上海証大三角洲置業有限公司 (Shanghai Zendai Delta Land Company Limited) (formerly known as 上海新世紀水清木華房地產開發有限公司(Shanghai New Century Shui Qing Mu Hua Property Development Company Limited)) by Shanghai Zendai Land, 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, 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;
(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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NOTICE OF SGM

(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 ZENDAI PROPERTY LIMITED Dai Zhikang

Chairman

Hong Kong, 17 August, 2004

Registered office: Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

Principal place of business in Hong Kong:

Unit 6108, The Center 99 Queen’s Road Central Hong Kong

Notes:

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.
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 Ground Floor, BEA Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not less than 48 hours before the time fixed for the holding of the meeting or any adjournment(s) thereof.
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.
As at the date hereof, the executive Directors are Mr. Dai Zhikang, Mr. Zhu Nansong, Mr. Zhang Wei, Mr. Zhao Hangsheng and Mr. Tang Jian. The independent non-executive Directors are Mr. Lai Chik Fan and Mr. Lo Mun Lam, Raymand.

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AI assistant

Snack Empire Holdings Limited — Proxy Solicitation & Information Statement 2004

50208_rns_2004-08-18_087b6761-a9a6-4e96-9e3c-db858ed08b19.pdf

SHANGHAI ZENDAI PROPERTY LIMITED 上海証大房地產有限公司[*]

MAJOR AND CONNECTED TRANSACTION

Shenyin Wanguo Capital (H.K.) Limited

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

SHANGHAI ZENDAI PROPERTY LIMITED 上海証大房地產有限公司[*]

MAJOR AND CONNECTED TRANSACTION

PURCHASE OF FURTHER INTEREST IN A SINO-FOREIGN EQUITY JOINT VENTURE IN THE PRC

INTRODUCTION

LETTER FROM THE BOARD

A. The Share Purchase Agreement dated 23 July, 2004

Existing shareholding structure of Zendai Delta Land

Shareholding structure of Zendai Delta Land immediately upon Completion

LETTER FROM THE BOARD

B. Information on Zendai Delta Land

LETTER FROM THE BOARD

C. Reasons for the proposed Share Purchase

LETTER FROM THE BOARD

FINANCIAL AND TRADING PROSPECTS OF THE GROUP

MAJOR AND CONNECTED TRANSACTION

THE INDEPENDENT BOARD COMMITTEE

THE SPECIAL GENERAL MEETING

LETTER FROM THE BOARD

RECOMMENDATION

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

SHANGHAI ZENDAI PROPERTY LIMITED 上海証大房地產有限公司[*]

MAJOR AND CONNECTED TRANSACTION

PURCHASE OF FURTHER INTEREST IN A SINO-FOREIGN EQUITY JOINT VENTURE IN THE PRC

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Yours faithfully, For and on behalf of

MAJOR AND CONNECTED TRANSACTION

LETTER FROM SHKIL

PRINCIPAL FACTORS TAKEN INTO ACCOUNT

Background to and reasons for the Share Purchase Agreement

LETTER FROM SHKIL

Information of Zendai Delta Land

LETTER FROM SHKIL

Consideration

LETTER FROM SHKIL

LETTER FROM SHKIL

Payment terms

Financial effects

Earnings

LETTER FROM SHKIL

Net tangibles assets

Funding of the consideration

LETTER FROM SHKIL

RECOMMENDATION

SUN HUNG KAI INTERNATIONAL LIMITED Eric Shum

1. SUMMARY OF AUDITED FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED BALANCE SHEET

2 AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2003

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED BALANCE SHEET

BALANCE SHEET

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED CASH FLOW STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

1. GENERAL

2. ADOPTION OF STATEMENTS OF STANDARD ACCOUNTING PRACTICE (“SSAP”)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

Investments in subsidiaries

Interests in associates

Goodwill

Negative goodwill

Properties for sale

Property, plant and equipment

Investment in securities

Impairment

Capitalisation of borrowing costs

Taxation

Snack Empire Holdings Limited Proxy Solicitation & Information Statement 2004