Tomson Group Limited — Capital/Financing Update 2002

Jul 29, 2002

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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CHINA STRATEGIC HOLDINGS LIMITED

(Incorporated in Hong Kong with limited liability)

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CHINA LAND GROUP LIMITED

(Incorporated in Bermuda with limited liability)

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ANANDA WING ON TRAVEL (HOLDINGS) LIMITED (Incorporated in Bermuda with limited liability)

DISCLOSEABLE TRANSACTION FOR CHINA STRATEGIC Deemed disposal of China Land CONNECTED TRANSACTION FOR CHINA STRATEGIC Proposed acquisition of Rosedale Hotel Group Limited by China Land

MAJOR TRANSACTIONS FOR CHINA STRATEGIC Proposed acquisition of Ananda Wing On’s entire interest in Shropshire Property Limited by China Land Proposed acquisition of Rosedale Hotel Group Limited by China Land Proposed acquisition of Makerston Limited by China Land

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MAJOR TRANSACTIONS FOR CHINA LAND DISCLOSEABLE AND CONNECTED TRANSACTIONS FOR ANANDA WING ON AND

Proposed acquisition of Ananda Wing On’s entire interest

in Shropshire Property Limited Proposed acquisition of Rosedale Hotel Group Limited Proposed acquisition of Makerston Limited CONNECTED TRANSACTIONS FOR CHINA LAND

Proposed subscription of new shares in China Land Proposed acquisition of Ananda Wing On’s entire interest in Shropshire Property Limited by China Land and issue of new shares in China Land

Proposed subscription of new shares by Ananda Wing On Proposed acquisition of Ananda Wing On’s entire interest in Shropshire Property Limited and issue of new shares

Proposed placing of new shares in China Land Proposed increase in authorised share capital of China Land and general mandates to issue and repurchase shares Proposed change of name of China Land

Financial adviser

CORPORATE FINANCE, LIMITED

SUMMARY

Introduction

The directors of China Strategic Holdings Limited, Ananda Wing On Travel (Holdings) Limited and China Land Group Limited are pleased to announce jointly that China Strategic is proposing an extensive group reorganisation (the “proposals”), the principal elements of which are as follows:

Subscription

Subscription agreement

On 22nd July, 2002, China Land entered into a subscription agreement with Ananda Wing On in relation to a subscription of 1,000,000,000 subscription shares in China Land by Ananda Wing On at an issue price of HK$0.30 per subscription share amounting in aggregate to a total consideration of HK$300 million. The completion of the subscription agreement is conditional upon the fulfillment, or waiver by the relevant parties, of the conditions set out under the section headed “Conditions of the transactions” below.

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Placing

Placing agreement

On 22nd July, 2002, China Land entered into a placing agreement with the placing agent, BNP Paribas Peregrine Securities Limited, which is an independent third party not connected with any of the directors, chief executive, substantial shareholders of China Land or any of their respective associates, in relation to the placing, on a best efforts basis of 1,333,333,333 new shares in China Land at an issue price of HK$0.30 per placing share amounting in aggregate to a total proceeds of about HK$400 million. The completion of the placing agreement is conditional upon the fulfillment, or waiver by the relevant parties, of the conditions set out under the section headed “Conditions of the transactions” below.

The placing agent has the right to terminate the placing agreement if, at any time after it has given China Land instructions for the issue of the shares placed by it but before 9:30 a.m. on the settlement date, (i) there develops, occurs or comes into effect any material adverse change in conditions of local, national or international securities markets or there has been instigated any litigation or legal proceedings by any third party against a member of the China Land group, which in the reasonable opinion of the placing agent is or is likely to be materially adverse to the China Land group, as a whole, or would materially prejudice the success of the placing; or (ii) it comes to the notice of the placing agent that any of the representations, warranties or undertakings of China Land contained in the placing agreement is untrue or inaccurate, breached or not complied with in any material respect; or (iii) it comes to the notice of the placing agent that there has been any material adverse change in the business or financial or trading position of the China Land group.

Acquisitions and disposals

First sale and purchase agreement

On 22nd July, 2002, China Land entered into a conditional sale and purchase agreement with Ananda Wing On to acquire from Ananda Wing On the entire issued share capital of, and the shareholder’s loan of about HK$44.4 million to, Shropshire Property Limited for a consideration of about HK$110 million. The consideration will be satisfied by the issue of 366,666,666 new shares in China Land at HK$0.30 per consideration share. This represents about HK$99 million based on the closing price of HK$0.27 per share as quoted on the Stock Exchange on 22nd July, 2002, being the last trading day immediately before suspension and pending the release of this announcement. Shropshire has the right to acquire 60% interest in Luoyang Golden Gulf Hotel Co., Ltd.. The principal asset of Luoyang Golden Gulf Hotel Co. is Golden Gulf Hotel located in Luoyang, the PRC. The completion of the first sale and

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purchase agreement is conditional upon the fulfillment, or waiver by the relevant parties, of the conditions set out under the section headed “Conditions of the transactions” below.

Second sale and purchase agreement

On 22nd July, 2002, China Land entered into another conditional sale and purchase agreement with Paul Y. - ITC Construction Holdings Limited to acquire from Paul Y. - ITC the entire issued share capital of, and the shareholder’s loan of about HK$482.5 million to, Rosedale Hotel Group Limited which indirectly owns Best Western Rosedale on the Park for a cash consideration of HK$250 million. The completion of the second sale and purchase agreement is conditional upon the fulfillment, or waiver by the relevant parties, of the conditions set out under the section headed “Conditions of the transactions” below.

Third sale and purchase agreement

On 22nd July, 2002, Clever Basin Holdings Limited, a wholly owned subsidiary of China Land entered into a conditional sale and purchase agreement with Hutchison Hotels Holdings (International) Limited to acquire from Hutchison Hotels Holdings the entire issued share capital of, and the shareholder’s loan of about HK$605.6 million to, Makerston Limited, which holds a 95% indirect interest in Beijing Harbour Plaza Co., Ltd. for a total consideration of HK$515 million. The consideration will be satisfied on completion by cash in the amount of HK$150 million and issue of a promissory note for the principal amount of HK$365 million. The principal asset of Beijing Harbour Plaza Co. is Beijing Harbour Plaza Hotel. The completion of the third sale and purchase agreement is conditional upon the approval of the shareholders of China Land at a special general meeting and the conditions precedent of the transactions contemplated by the subscription agreement and the placing agreement having been fulfilled or waived, other than the conditions relating to the simultaneous completion of the subscription agreement and the placing agreement.

Upon completion of the subscription agreement, the placing agreement and the first, second and third sale and purchase agreements and assuming no further issue of shares by China Land other than mentioned herein, the subscription shares, the placing shares and the consideration shares represent about 198.2% of the existing issued share capital of, and about 66.5% of the issued share capital of China Land as enlarged by the subscription shares, the placing shares and the consideration shares.

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Increase in authorised share capital

The board of directors of China Land proposes, subject to among other things, the approval by the shareholders of China Land at a special general meeting, to increase the authorised share capital of China Land from US$60 million to US$380 million by the creation of 16,000,000,000 shares of US$0.02 each.

General mandates to issue and repurchase shares

At the special general meeting of China Land, an ordinary resolution will be proposed to grant to the directors the general mandates to issue and repurchase shares.

Change of name of China Land

A special resolution will be proposed at the special general meeting of China Land that, subject to the completion of the subscription agreement, the placing agreement, the first, second and third sale and purchase agreements and the approval of the Registrar of Companies in Bermuda, the name of China Land will be changed in order to reflect the principal business of China Land in hotel operations and investments and other leisure-related businesses after the proposals. A further announcement will be made on the proposed change of the new company name of China Land as soon as practicable.

Takeovers Code implication of the proposals

Under rule 26 of the Takeovers Code, upon completion of the subscription agreement and the first sale and purchase agreement, Ananda Wing On and parties acting in concert with it would be obliged to make a mandatory general offer for all the issued shares in China Land other than those already owned or agreed to be acquired by Ananda Wing On and parties acting in concert with it. Completion of the subscription agreement and the first sale and purchase agreement will result in Ananda Wing On holding about 33.6% of the issued share capital of China Land as enlarged by the subscription shares, the placing shares and the consideration shares.

An application will be made by Ananda Wing On to the Takeovers Executive to grant a waiver to Ananda Wing On from the requirements of the Takeovers Code to make a mandatory general offer to the shareholders of China Land. If such waiver is not obtained from the Takeovers Executive, the subscription agreement, the placing agreement and the first, second and third sale and purchase agreements will not proceed.

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Circulars and general meetings

China Land

The subscription of shares in China Land by Ananda Wing On and the acquisition of the entire issued share capital of, and the shareholder’s loan to Shropshire from Ananda Wing On constitute connected transactions for China Land under the Listing Rules of the Stock Exchange since Ananda Wing On is an associate of the controlling shareholder of China Land. The acquisition of the entire issued share capital of, and the shareholder’s loan to Shropshire together with the acquisitions of Beijing Harbour Plaza Hotel through the acquisition of the entire issued share capital of, and the shareholder’s loan to Makerston by China Land from Hutchison Hotels Holdings and Best Western Rosedale on the Park through the acquisition of the entire issued share captial of, and the shareholder’s loan to Rosedale Hotel Group by China Land from Paul Y. - ITC constitute major transactions for China Land under the Listing Rules. These transactions together with, the placing agreement, proposed increase in authorised share capital, proposed change of name and the grant to the directors of the general mandates to issue and repurchase shares are all subject to approval by the shareholders of China Land. The controlling shareholder of China Land and its associates shall abstain from voting on the resolutions regarding the subscription agreement, the placing agreement and the first, second and third sale and purchase agreements at the special general meeting.

Accordingly, a circular containing, among other things, details of these transactions will be despatched to the shareholders of China Land as soon as practicable. An independent financial adviser will be appointed to advise an independent committee of the board of directors of China Land on the fairness and reasonableness of the subscription under the subscription agreement, the placing agreement and the acquisitions under the first, second and third sale and purchase agreements.

Ananda Wing On

The disposal of Ananda Wing On’s entire interest in and the shareholder’s loan to Shropshire, and the subscription of shares in China Land under the subscription agreement constitute discloseable and connected transactions for Ananda Wing On under the Listing Rules of the Stock Exchange since China Land is a subsidiary of an indirect controlling shareholder of Ananda Wing On. These transactions are subject to approval by the independent shareholders of Ananda Wing On who are entitled to vote at the special general meeting. The controlling shareholder of Ananda Wing On and its associates shall abstain from voting on the resolutions regarding the subscription agreement and the disposal under the first sale and purchase agreement. Accordingly, a circular containing, among other things, details of these transactions will be despatched to the shareholders of Ananda Wing On as soon as practicable. An

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independent financial adviser will be appointed to advise an independent committee of the board of directors of Ananda Wing On on the fairness and reasonableness of the subscription agreement and the disposal under the first sale and purchase agreement.

China Strategic

The acquisition of Best Western Rosedale on the Park through the acquisition of Rosedale Hotel Group by China Land from Paul Y. - ITC constitutes a connected transaction for China Strategic under the Listing Rules since Paul Y. - ITC is a substantial shareholder of China Strategic and China Land is a subsidiary of China Strategic. The deemed disposal of China Land as a result of the subscription agreement constitutes a discloseable transaction for China Strategic under the Listing Rules. The first, second and third sale and purchase agreements constitute major transactions for China Strategic under the Listing Rules. A circular containing, among other things, details of these transactions will be despatched to the shareholders of China Strategic as soon as practicable. Paul Y. - ITC and its associates shall abstain from voting on the resolution regarding the acquisitions under the first, second and third sale and purchase agreements. An independent financial adviser will be appointed to advise an independent committee of the board of directors of China Strategic on the fairness and reasonableness of the acquisitions under the first, second and third sale and purchase agreements.

General

Trading in the shares of China Land and Ananda Wing On, and China Strategic were suspended temporarily at the request of China Land and Ananda Wing On, and China Strategic from 9:30 a.m. and 10:00 a.m. respectively on Tuesday, 23rd July, 2002 pending the publication of this announcement. Application will be made to the Stock Exchange for the resumption of trading in the respective shares, with effect from 9:30 a.m. on Monday, 29th July, 2002.

INTRODUCTION

The directors of China Strategic Holdings Limited, Ananda Wing On Travel (Holdings) Limited and China Land Group Limited are pleased to announce jointly that China Strategic is proposing an extensive group reorganisation (the “proposals”), the principal elements of which are as follows:

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SUBSCRIPTION The subscription agreement

Date: 22nd July, 2002

Parties: China Land and Ananda Wing On

Under the subscription agreement, Ananda Wing On or a wholly owned subsidiary nominated by it will subscribe for an aggregate of 1,000,000,000 new shares in China Land at a subscription price of HK$0.30 per subscription share and the aggregate subscription price payable to China Land by Ananda Wing On for the subscription shares shall be HK$300 million. The subscription price represents:

• a premium of about 11.1% to the closing price of HK$0.27 per share as quoted on the Stock Exchange on 22nd July, 2002, being the trading day immediately before suspension and pending the release of this announcement;

• a premium of about 4.5% to the average closing price of about HK$0.287 per share over the 10 trading days up to and including 22nd July, 2002, being the trading day immediately before suspension and pending the release of this announcement; and

• a discount of about 34.8% to the audited consolidated net tangible asset value per share of about HK$0.46 as at 31st December, 2001, being the date of its latest audited financial statements.

Subject to the fulfillment, or waiver by the relevant parties, of the conditions set out under the section headed “Conditions of the transactions” below, an aggregate of 1,000,000,000 new shares in China Land, representing about 73.4% of the existing issued share capital of, and about 24.6% of the issued share capital of China Land as enlarged by the subscription shares, the placing shares and the consideration shares, will be issued to Ananda Wing On or a wholly owned subsidiary nominated by it. The subscription shares, when fully paid, will rank pari passu in all respects with all shares in issue or to be issued on or prior to the date of completion.

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PLACING The placing agreement

Date: 22nd July, 2002

Parties: China Land and BNP Paribas Peregrine Securities Limited

Under the placing agreement, subject to the fulfillment, or waiver by the relevant parties, of the conditions set out under the section headed “Conditions of the transactions” below, the placing agent, BNP Paribas Peregrine, which is an independent third party not connected with any of the directors, chief executive, substantial shareholders of China Land or any of their respective associates, has agreed to procure, on a best efforts basis, subscribers for 1,333,333,333 new shares in China Land at a placing price of HK$0.30 per placing share. The placees, which will not be less than six professional and, or institutional investors, and parties acting in concert with them will be independent of and not connected with any directors, chief executive or substantial shareholders of China Land, China Strategic and Ananda Wing On or of their subsidiaries, any of their respective associates (as defined in the Listing Rules of the Stock Exchange) or any parties acting in concert with them. The placing price is the same as the subscription price under the subscription agreement. A commission will be payable by China Land to the placing agent. The placing shares represent about 97.9% of the existing issued share capital of, and about 32.8% of the issued share capital of China Land as enlarged by the subscription shares, the placing shares and the consideration shares. The aggregate placing price payable to China Land for the placing shares shall be about HK$400 million, on the assumption that all the 1,333,333,333 placing shares are successfully placed pursuant to the placing agreement. The placing shares, when fully paid, will rank pari passu in all respects with all shares in issue or to be issued on or prior to the date of completion.

The placing agent has the right to terminate the placing agreement if, at any time after it has given China Land instructions for the issue of the shares placed by it but before 9:30 a.m. on the settlement date, (i) there develops, occurs or comes into effect any material adverse change in conditions of local, national or international securities markets or there has been instigated any litigation or legal proceedings by any third party against a member of the China Land group, which in the reasonable opinion of the placing agent is or is likely to be materially adverse to the China Land group, as a whole, or would materially prejudice the success of the placing; or (ii) it comes to the notice of the placing agent that any of the representations, warranties or undertakings of China Land contained in the placing agreement is untrue or inaccurate, breached or not complied with in any material respect; or (iii) it comes to the notice of the placing agent that there has been any material adverse change in the business or financial or trading position of the China Land group.

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Reasons for the subscription and placing and use of proceeds

As described under the section headed “Reasons for the proposed acquisitions” below, it is intended that China Land will focus its principal business on hotel operations and investments and other leisure-related businesses upon completion of the proposals. The subscription and placing are intended to strengthen the financial position of China Land which will enable it to reduce borrowings and to provide funds for future expansion.

The maximum gross and net proceeds from the subscription and placing are estimated to amount to about HK$700 million and HK$693 million respectively. It is intended that the net proceeds will be used for: (i) approximately HK$414 million for completion of the second and third sale and purchase agreements as described below; (ii) approximately HK$250 million for future acquisitions of hotel and other leisure-related businesses; and (iii) the remaining balance of approximately HK$29 million for working capital.

ACQUISITIONS AND DISPOSALS

The first sale and purchase agreement

Date: 22nd July, 2002

Vendor: Ananda Wing On

Purchaser: China Land

Assets to be acquired and consideration

Subject to the fulfillment, or waiver by the relevant parties, of the conditions set out under the section headed “Conditions of the transactions” below, China Land will acquire from Ananda Wing On the entire issued share capital of and the shareholder’s loan of about HK$44.4 million to Shropshire Property Limited, which has the right to acquire 60% interest in Luoyang Golden Gulf Hotel Co., Ltd, for a consideration of about HK$110 million and it will be satisfied by the issue of 366,666,666 new shares in China Land at HK$0.30 per consideration share. The consideration shares represent about 26.9% of the existing issued share capital of, and about 9.0% of the issued share capital of China Land as enlarged by the subscription shares, the placing shares and the consideration shares. The principal asset of Luoyang Golden Gulf Hotel Co. is Golden Gulf Hotel located in Luoyang, the PRC.

The consideration under the first sale and purchase agreement was determined after arm’s length negotiation with reference to the unaudited net tangible asset value of Luoyang Golden Gulf Hotel Co. as at 31st December, 2001 was about RMB188.6 million which is equivalent to about HK$177.9 million.

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Information on Shropshire

On 22nd April, 2002, Golden Sun Limited, a wholly owned subsidiary of Ananda Wing On, acquired 4 ordinary shares, representing 40% interest in Shropshire from an independent third party and was granted a call option from the vendor pursuant to which Golden Sun is entitled to acquire the remaining 60% interest in Shropshire upon exercise of the call option. The call option was exercised simultaneously when Ananda Wing On entered into the first sale and purchase agreement on 22nd July, 2002 and the shares of 60% interest in Shropshire shall be transferred to Golden Sun within 14 days from the date thereof.

Shropshire is an investment holding company. As at 22nd April, 2002, the unaudited net tangible assets of Shropshire was HK$8,080, of which mainly included a deposit of about HK$10.8 million regarding the acquisition of Luoyang Golden Gulf Hotel Co. and a shareholder’s loan of about HK$10.8 million.

In June 2001, Shropshire has contracted with an independent third party in the PRC, which procures the sale of 60% equity interest in Luoyang Golden Gulf Hotel Co. to Shropshire. The remaining 40% equity interest in Luoyang Golden Gulf Hotel Co. is held as to 10% and 30% respectively by the said PRC party and another independent third party in the PRC. Under the terms of the agreement between Shropshire and the PRC party, the consideration for the acquisition of 60% interest in Luoyang Golden Gulf Hotel Co. is payable in four installments. As at the date of the first sale and purchase agreement, only the last of four installments, which is in the sum of HK$46,200,000 and is due on 31st December, 2002, remains payable by Shropshire pursuant to the agreement between Shropshire and the PRC party. Ananda Wing On has undertaken to China Land under the first sale and purchase agreement to pay such outstanding consideration of HK$46,200,000 on 31st December, 2002. The principal asset of Luoyang Golden Gulf Hotel Co. is a hotel known as Golden Gulf Hotel located in Luoyang, the PRC. The agreement provides that the PRC party must ensure that all regulatory approval regarding the acquisition of equity interest by Shropshire in Luoyang Golden Gulf Hotel Co. and the perfection of title of Luoyang Golden Gulf Hotel Co. in the hotel property must be fulfilled within 2 months after payment of the last payment which is 28th February, 2003. If the PRC party does not fulfil its obligations by that date, Shropshire has the right to elect to terminate the agreement and demand the PRC party for appropriate damages or extend the time limit for the fulfillment of such obligations, in each case, at the cost of the PRC party.

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Golden Gulf Hotel has been in operation for a period of about 3 years commencing from early 1999. It is a 25-storey building erected over a two-level basement. It comprises a total of 145 guestrooms of various classes, 39 office suites, a business centre, shops, a number of food and beverage outlets and entertainment facilities. The total gross floor area of Golden Gulf Hotel is approximately 21,948 square metres. The land use right of the land on which the hotel is erected is registered in the name of the PRC party and evidenced by a certificate for state-owned land use. The buildings erected are covered by a certificate for building ownership issued in the name of Luoyang Golden Gulf Hotel Co..

The following is a summary of the unaudited results of Luoyang Golden Gulf Hotel Co. for the two years ended 31st December, 2001.

Turnover Profit before taxation Taxation Profit after taxation	2001 RMB million HK$ million 17.4 16.4 0.7 0.6 – – 0.7 0.6	2000 RMB million HK$ million 19.7 18.6 3.2 3.0 – – 3.2 3.0	2000 RMB million HK$ million 19.7 18.6 3.2 3.0 – – 3.2 3.0
			3.0 –
			3.0

The unaudited net tangible assets of Luoyang Golden Gulf Hotel Co. as at 31st December, 2001 was about RMB188.6 million which is equivalent to about HK$177.9 million.

The second sale and purchase agreement

Date: 22nd July, 2002

Vendor: Paul Y. - ITC Construction Holdings Limited, whose shares are listed on the Stock Exchange

Purchaser: China Land

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Assets to be acquired and consideration

Subject to the fulfillment, or waiver by the relevant parties, of the conditions set out under the section headed “Conditions of the transactions” below, China Land will acquire from Paul Y. - ITC the entire issued share capital of and the shareholder’s loan of about HK$482.5 million to Rosedale Hotel Group Limited which indirectly owns Best Western Rosedale on the Park, for a cash consideration of HK$250 million. In addition, under the second sale and purchase agreement, a subsidiary of Paul Y. - ITC has advanced a sum of HK$7.16 million as repayment of a certain portion of a bank loan and Paul Y. - ITC has undertaken to further advance a sum of not more than HK$7.16 million to a subsidiary of Rosedale Hotel Group in this regard before completion. China Land has undertaken to Paul Y. - ITC to repay such sum being advanced of not more than HK$14.32 million to Paul Y. - ITC at completion. Paul Y. - ITC is also the existing guarantor in respect of certain bank loans and bank facilities, amounting to approximately HK$394.5 million, taken out by Rosedale Hotel Group. It is a term of the second sale and purchase agreement that China Land will indemnify Paul Y. - ITC of any loss it may suffer in relation to such loans and facilities for the period from completion of the second sale and purchase agreement to the earlier of (i) the date on which such guarantees are replaced by the guarantees provided by China Land or its nominee and (ii) the full repayment of the respective bank loans and bank facilities.

The consideration under the second sale and purchase agreement was determined after arm’s length negotiation with reference to the audited consolidated net tangible asset value of Rosedale Hotel Group and a shareholder’s loan of about HK$482.5 million.

The pro forma audited consolidated net tangible assets, excluding the shareholder’s loan, of Rosedale Hotel Group was about HK$260.1 million as at 31st March, 2002.

Information on Rosedale Hotel Group

Rosedale Hotel Group indirectly owns 100% interest of Best Western Rosedale on the Park, two hotel management companies, namely Rosedale Hotel Management Limited and Rosedale Hotel Management International Limited, which provide hotel and hospitability management services to: Best Western Rosedale on the Park; Rosedale Hotel & Suites[I] Guangzhou, a four-star hotel located in Guangzhou, the PRC; and a restaurant located adjacent to Best Western Rosedale on the Park known as Cheena.

Best Western Rosedale on the Park is located in Causeway Bay, Hong Kong. The hotel is a 30-storey building comprises 274 guest rooms of various classes, with dining and other facilities including two restaurants, a lounge and six fully equipped function rooms.

The pro forma audited consolidated net tangible assets, excluding the shareholder’s loan, of Rosedale Hotel Group was about HK$260.1 million as at 31st March, 2002.

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The following is a summary of pro forma audited consolidated results of Rosedale Hotel Group for the two years ended 31st March, 2002:

			2002	2001
		HK$ million		HK$ million
Turnover			64.9	5.0
Profit (loss) before taxation			17.4	(19.9)
Taxation			–	–
Profit (loss) after taxation			17.4	(19.9)
The third sale and purchase agreement
Date:	22nd July, 2002
Vendor:	Hutchison Hotels Holdings (International) Limited, a wholly owned
	subsidiary of Hutchison Whampoa Limited,		whose shares are listed on the
	Stock Exchange. Both the vendor and	its beneficial owner are independent
	of and not connected with any of the directors, chief executive or substantial
	shareholders of China Land and China Strategic or of			their subsidiaries,
	any of their respective associates, as defined in the Listing Rules, or any
	parties acting in concert with them.

Purchaser: Clever Basin Holdings Limited, a wholly owned subsidiary of China Land

Assets to be acquired and consideration

Subject to the fulfillment of the conditions of (i) the approval of the shareholders of China Land at a special general meeting and (ii) the conditions precedent of the transactions contemplated by the subscription agreement and the placing agreement having been fulfilled or waived, other than the conditions relating to the simultaneous completion of the subscription agreement and the placing agreement, Clever Basin will acquire from Hutchison Hotels Holdings the entire issued share capital of, and the shareholder’s loan of about HK$605.6 million to Makerston Limited which holds 95% indirect interest in Beijing Harbour Plaza Co. Ltd., for a total consideration of HK$515 million which will be satisfied by payment of cash in the amount of HK$150 million and issue of a promissory note for the principal amount of HK$365 million. It is the intention of the parties that the third sale and purchase agreement will be completed at the same time as the subscription agreement and the placing agreement.

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The consideration under the third sale and purchase agreement was determined after arm’s length negotiation with reference to the consolidated net liabilities of Makerston group and a shareholder’s loan of about HK$605.6 million.

The audited consolidated net assets of Makerston group as at 31st December, 2001, excluding the shareholder’s loan, was about HK$291.4 million.

Information on Makerston

Makerston owns 95% indirect interest of Beijing Harbour Plaza Co., a sino-foreign equity joint venture company established in the PRC for an operation period from 26th January, 1987 to 25th January, 2024. The remaining equity interest in Beijing Harbour Plaza Co. is held by an independent third party in the PRC.

The principal asset of Beijing Harbour Plaza Co. is Beijing Harbour Plaza Hotel located in Chao Yang District, Beijing, the PRC. Beijing Harbour Plaza Hotel, which began operation in April 1998, is a 20-storey building comprising 429 guestrooms and suites and dining and other facilities including a business centre, a fitness centre and multifunction rooms.

The following is a summary of the audited results of Makerston group for the two years ended 31st December, 2001:

ended 31st December, 2001:
	2001	2000
	HK$ million	HK$ million
Turnover	65.1	66.9
Loss before taxation	6.3	13.1
Taxation	–	–
Loss after taxation	6.3	13.1

The audited consolidated net liabilities of Makerston group as at 31st December, 2001 was about HK$105.4 million.

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Terms of the promissory note

The principal terms of the promissory note are set out below:

Issuer: Clever Basin, a wholly owned subsidiary of China Land Principal amount: HK$365 million Interest: HIBOR rate plus 2% per annum Maturity: The fifth anniversary of the date of issue of the promissory note, being the date of completion of the third sale and purchase agreement.

Security: The promissory note is to be secured by mortgages of the entire issued share capital of, and the shareholder’s loan to Makerston and its subsidiaries, including the mortgage of the 95% interest in Beijing Harbour Plaza Co., immediately after completion of the third sale and purchase agreement.

Guarantee: The promissory note will not be guaranteed by any third party.

Transferability: There is no restriction to the transfer of the promissory note by Hutchison Hotels Holdings.

Listing: No listing will be sought for the promissory note.

Conditions of the transactions

Completion of the subscription agreement, the placing agreement and the first and second sale and purchase agreements is conditional upon the following conditions being fulfilled or, where permitted, waived:

• (a) the approval by shareholders or independent shareholders, as the case may be, of China Land of the subscription agreement, the first, second and third sale and purchase agreements and the placing agreement and the transactions contemplated under each of the aforesaid agreements;

• (b) the approval by independent shareholders of Ananda Wing On of the subscription agreement, the first sale and purchase agreement and the transactions contemplated thereunder;

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• (c) the approval by independent shareholders of China Strategic of the second sale and purchase agreement and the transactions contemplated thereunder;

• (d) confirmation by the Takeovers Executive that the issue of subscription shares and consideration shares to Ananda Wing On will not of itself give rise to a mandatory general offer obligation; or alternatively, that the Takeovers Executive waives the request of Takeovers Code to make a mandatory general offer;

• (e) the Listing Committee of the Stock Exchange granting, subject to the usual conditions of allotment, a listing of, and permission to deal in, the subscription shares, the consideration shares and the placing shares;

• (f) all other consents, if any, of the Stock Exchange and, or, the SFC and, or, any other relevant governmental or regulatory authorities and other relevant third parties, including but not limited to the approval of the subscription agreement and the first sale and purchase agreement by the shareholders of China Strategic or other parties to the respective agreements, which are necessary and essential for the entering into and the implementation of each of the subscription agreement, the first, second and third sale and purchase agreements and the placing agreement and all transactions contemplated thereunder having been obtained;

• (g) the approval by shareholders of China Land to increase the authorised share capital of China Land;

• (h) the Bermuda Monetary Authority having approved the issue of the subscription shares, the consideration shares and the placing shares and the increase in authorised share capital of China Land, if necessary; and

• (i) simultaneous completion of each of the other agreements.

If the conditions for any of the subscription agreement, the placing agreement and the first and second sale and purchase agreements have not been fulfilled on or before 5:00 pm on 31st October, 2002 or such later date as may be agreed between the parties thereto, that agreement shall lapse. Any waiver of any condition to any agreement must be agreed by the parties to that agreement.

Under condition (d) as stated above, if either such confirmation or waiver is not obtained, the subscription agreement, the placing agreement and the first, second and third sale and purchase agreements will not proceed.

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As regards the conditions precedent for the completion of the third sale and purchase agreement, please refer to the sub-paragraph headed “Assets to be acquired and consideration” in the paragraph headed “The third sale and purchase agreement”. If the conditions for the third sale and purchase agreement are not fulfilled on or before 31st October, 2002 or such later date as may be agreed between the parties thereto, the third sale and purchase agreement shall lapse.

Under the Listing Rules, the subscription agreement, the placing agreement and the first, second and third sale and purchase agreements are subject to the independent shareholders’ approval of China Land.

Under the Listing Rules, the subscription agreement and the first sale and purchase agreement is subject to the independent shareholders’ approval of Ananda Wing On.

Under the Listing Rules, the first, second and third sale and purchase agreements are subject to the independent shareholders’ approval of China Strategic.

Details of the above approvals will be set out in their respective circulars.

Shareholding structure of China Land

The following charts summarise the shareholding structure of China Land before and after the completion of the subscription agreement, the placing agreement and the first, second and third sale and purchase agreements.

Immediately before the completion of the subscription agreement, the placing agreement and the first, second and third sale and purchase agreements.

==> picture [283 x 232] intentionally omitted <==

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

Paul Y. – ITC
14.55%
Public
China Strategic
shareholders
34.4% 65.6% 55.2%
China Enterprises
China Land
Limited
34.5%
Ananda Wing On
----- End of picture text -----

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Immediately after the completion of the subscription agreement, the placing agreement and the first, second and third sale and purchase agreements

==> picture [249 x 261] intentionally omitted <==

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

Paul Y. – ITC
14.55%
Public
shareholders China Strategic
44.4% 22.0% 55.2%
China Enterprises
Limited
34.5%
Ananda Wing On
33.6%
China Land
----- End of picture text -----**

• Listed on the Hong Kong Stock Exchange.

• ** Listed on the New York Stock Exchange.

In addition, Ananda Wing On has issued a convertible note to China Enterprises and has entered into subscription agreements dated 31st May, 2002. Upon full conversion of the outstanding convertible note and after completion of the prescribed subscriptions, and on the basis of no other issue of shares, China Enterprises’ shareholding in Ananda Wing On will further increase to approximately 38.4%.

INCREASE IN AUTHORISED SHARE CAPITAL

In order to enable the issue of the subscription shares, the consideration shares and the placing shares and to facilitate future expansion, China Land proposes to increase its authorised share capital from US$60 million to US$380 million by the creation of 16,000,000,000 shares of US$0.02 each.

The proposed increase in authorised share capital is conditional on, among other things, the passing of the necessary resolution by the shareholders of China Land at the special general meeting to approve the increase in authorised share capital.

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NATURE OF BUSINESS OF CHINA STRATEGIC

China Strategic is incorporated in Hong Kong with limited liability and its shares are listed on the Stock Exchange. China Strategic is an investment holding company and the subsidiaries of which are principally engaged in the business of tire manufacturing, manufacturing, retailing and distribution of Chinese medicine, western pharmaceuticals and health food, property development and investment, hotel operation and investment in infrastructure projects.

The following is a summary of audited consolidated results of China Strategic for the two years ended 31st December, 2001:

	2001	2000
	HK$ million	HK$ million
Turnover	3,234.4	3,158.1
Loss before taxation	592.7	724.1
Taxation	6.0	6.6
Loss after taxation	598.7	730.7

The consolidated net tangible assets of China Strategic was about HK$2,188 million as at 31st December, 2001.

NATURE OF BUSINESS OF CHINA LAND

China Land is incorporated in Bermuda with limited liability and its shares are listed on the Stock Exchange. China Land is an investment holding company and the subsidiaries of which are principally engaged in the business of property trading and development, hotel operations and toll road development.

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The following is a summary of audited consolidated results of China Land for the two years ended 31st December, 2001:

	2001	2000
	HK$ million	HK$ million
Turnover	114.9	69.7
Loss before taxation	393.8	584.0
Taxation	(0.1)	(1.2)
Loss after taxation	393.7	582.8

The consolidated net tangible assets of China Land was about HK$635 million as at 31st December, 2001.

NATURE OF BUSINESS OF ANANDA WING ON

Ananda Wing On is incorporated in Bermuda with limited liability and its shares are listed on the Stock Exchange. Ananda Wing On is an investment holding company and the subsidiaries of which are principally engaged in the business of providing package tours, travel, transportation and other related services.

REASONS FOR THE PROPOSED ACQUISITIONS

The directors of Ananda Wing On and China Strategic consider the investment and operation of hotel business would be managed more effectively under a separate listed company with expertise in this area of business. They also consider that China Land currently has a hotel operation in Guangzhou, namely Rosedale Hotel & Suites[I] Guangzhou, which has been under its management since 1992. Accordingly, the hotel interests currently held by China Strategic and its associates and substantial shareholders are proposed to be held under China Land, which upon completion of the proposals as described in this announcement, will focus its activities on hotel operations and investments and other leisure-related businesses. With China’s accession to World Trade Organisation and Beijing’s hosting of the 2008 Olympic Games, the directors of China Strategic, Ananda Wing On and China Land believe that the hotel and other leisure-related businesses in Hong Kong and the PRC has considerable potential. The directors of China Land also consider through the acquisition of further hotel properties it will be able to improve the operating efficiencies and occupancy rates of the hotel portfolio as a whole through better utilization of resources. The board of China Land is currently made up of eight directors, comprising six executive directors and two independent non-executive directors. At present, China Land has the intention to appoint directors with experiences in the management of

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hotel and other leisure-related businesses. A further announcement will be made as and when there is a change in the board of China Land. China Land has no present plans for the disposal or the cessation of its existing businesses, other than the hotel businesses. However, China Land would consider the realisation of its investments, if suitable opportunities to do so arise.

The Stock Exchange will also closely monitor all future acquisitions or disposals of assets by China Land and Ananda Wing On. The Stock Exchange has indicated that it has the discretion to require China Land and Ananda Wing On to issue a circular to its respective shareholders irrespective of the size of any proposed transactions, particularly when such proposed transactions represent a departure from the principal activities of China Land and Ananda Wing On. The Stock Exchange also has the power to aggregate a series of transactions of China Land and Ananda Wing On and any such transactions may result in China Land and Ananda Wing On being treated as if they were new listing applicants.

GENERAL MANDATES TO ISSUE SHARES AND REPURCHASE SHARES

At the special general meeting, an ordinary resolution will be proposed to the shareholders of China Land to grant to the directors of China Land, a general mandate to allot, issue and deal with shares up to a maximum of 20% of the aggregate nominal amount of the issued share capital of China Land in order to increase flexibility for raising capital to facilitate future expansion of the China Land group as the directors of China Land consider appropriate. It is also intended that an ordinary resolution will be put to the shareholders of China Land at the special general meeting granting the directors a general mandate authorising the repurchase by China Land on the Stock Exchange of up to 10% of the issued share capital of China Land as enlarged by the issue of the subscription shares, the placing shares and the consideration shares (the “repurchase mandate”). The repurchase mandate will remain effective until the earliest of (i) the conclusion of next annual general meeting of China Land or (ii) revocation by an ordinary resolution of the shareholders of China Land in general meeting or (iii) the expiration of the period within which the next annual general meeting of China Land is required to be held pursuant to the Bye-Laws of China Land or any applicable law.

CHANGE OF NAME OF CHINA LAND

A special resolution will be proposed at the special general meeting that subject to the completion of the subscription agreement, the placing agreement, the first, second and third sale and purchase agreements and the approval of the Registrar of Companies in Bermuda, the name of China Land will be changed in order to reflect the principal business of China Land in hotel operations and investments and other leisure-related businesses after the proposals. A further announcement will be made on the proposed change of the new company name of China Land as soon as practicable.

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EXPECTED DATE OF COMPLETION

Three business days after the satisfaction, or waiver, of all conditions precedent by the relevant parties or such later date as agreed between the parties to the respective agreements.

TAKEOVERS CODE IMPLICATION

Under rule 26 of the Takeovers Code, upon completion of the subscription agreement and the first sale and purchase agreement, Ananda Wing On and parties acting in concert with it would be obliged to make a mandatory general offer for all the issued shares in China Land other than those already owned or agreed to be acquired by Ananda Wing On and parties acting in concert with it. Completion of the subscription agreement and the first sale and purchase agreement will result in Ananda Wing On holding about 33.6% of the issued share capital of China Land as enlarged by the subscription shares, the placing shares and the consideration shares.

An application will be made by Ananda Wing On to the Takeovers Executive to grant a waiver to Ananda Wing On from the requirements of the Takeovers Code to make a mandatory general offer to the shareholders of China Land. If such waiver is not obtained, the subscription agreement, the placing agreement and the first, second and third sale and purchase agreements will not proceed.

CIRCULARS AND GENERAL MEETINGS

China Land

The subscription of shares in China Land by Ananda Wing On and the acquisition of the entire issued share capital of, and the shareholder’s loan to Shropshire from Ananda Wing On constitute connected transactions for China Land under the Listing Rules since Ananda Wing On is an associate of the controlling shareholder of China Land. The acquisition of the entire issued share capital of, and the shareholder’s loan to Shropshire together with the acquisitions of Beijing Harbour Plaza Hotel through the acquisition of the entire issued share capital of, and the shareholder’s loan to Makerston Limited by China Land from Hutchison Hotels Holdings and Best Western Rosedale on the Park through the acquisition of the entire issued share capital of, and the shareholder’s loan of Rosedale Hotel Group by China Land from Paul Y. - ITC constitute major transactions for China Land under the Listing Rules. These transactions together with the placing agreement, proposed increase in authorised share capital, proposed change of name and the grant to the directors of the general mandates to issue and repurchase shares are all subject to approval by shareholders of China Land. The controlling shareholder of China Land and its associates shall abstain from voting on the resolutions regarding the subscription agreement, placing agreement and the first, second and third sale and purchase agreements at the special general meeting.

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Accordingly, a circular containing, among other things, details of these transactions will be despatched to the shareholders of China Land as soon as practicable. An independent financial adviser will be appointed to advise an independent committee of the board of directors of China Land on the fairness and reasonableness of the subscription under the subscription agreement, the placing agreement and the acquisitions under the first, second and third sale and purchase agreements.

Ananda Wing On

The disposal of Ananda Wing On’s entire interest in Shropshire and the subscription of shares in China Land under the subscription agreement constitute discloseable and connected transactions for Ananda Wing On under the Listing Rules since China Land is a subsidiary of an indirect controlling shareholder of Ananda Wing On. The controlling shareholder of Ananda Wing On and its associates shall abstain from voting on the resolutions regarding the subscription agreement and the disposal under the first sale and purchase agreement. Accordingly, a circular containing, among other things, details of these transactions will be despatched to the shareholders of Ananda Wing On as soon as practicable. An independent financial adviser will be appointed to advise an independent committee of the board of directors of Ananda Wing On on the fairness and reasonableness of the subscription agreement and the disposal under the first sale and purchase agreement.

China Strategic

The acquisition of Best Western Rosedale on the Park through the acquisition of Rosedale Hotel Group by China Land from Paul Y. - ITC constitutes a connected transaction for China Strategic under the Listing Rules since Paul Y.- ITC is a substantial shareholder of China Strategic and China Land is a subsidiary of China Strategic. The deemed disposal of China Land as a result of the subscription agreement constitutes a discloseable transaction for China Strategic under the Listing Rules. The first, second and third sale and purchase agreements constitute major transactions for China Strategic under the Listing Rules. A circular containing, among other things, details of these transactions will be despatched to the shareholders of China Strategic as soon as practicable. Paul Y. - ITC and its associates shall abstain from voting on the resolution regarding the acquisitions under the first, second and third sale and purchase agreements. An independent financial adviser will be appointed to advise an independent committee of the board of directors of China Strategic on the fairness and reasonableness of the acquisitions under the first, second and third sale and purchase agreements.

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General

Application will be made by China Land to the Stock Exchange for the listing of, and permission to deal in, the subscription shares, the consideration shares and the placing shares. Trading in the shares of China Land and Ananda Wing On; and China Strategic were suspended temporarily at the request of China Land and Ananda Wing On; and China Strategic from 9:30 a.m. and 10:00 a.m. respectively on Tuesday, 23rd July, 2002 pending the publication of this announcement. Application will be made to the Stock Exchange for the resumption of trading in the shares, with effect from 9:30 a.m. on Monday, 29th July, 2002.

By Order of the Board CHINA STRATEGIC HOLDINGS LIMITED

Lien Kait Long

Executive director

By Order of the Board	By Order of the Board
CHINA LAND GROUP LIMITED	ANANDA WING ON TRAVEL
Chan Kwok Hung	(HOLDINGS) LIMITED
Chairman	Lui Siu Tsuen, Richard
	Executive director

Hong Kong, 26th July, 2002

The directors of China Strategic jointly and severally accept full responsibility for the accuracy of the information contained in this announcement except as it relates to China Land and Ananda Wing On and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed in this announcement except as it relates to China Land and Ananda Wing On have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.

The directors of China Land jointly and severally accept full responsibility for the accuracy of the information contained in this announcement except as it relates to China Strategic and Ananda Wing On and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed in this announcement except as it relates to China Strategic and Ananda Wing On have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.

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The directors of Ananda Wing On jointly and severally accept full responsibility for the accuracy of the information contained in this announcement except as it relates to China Strategic and China Land and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed in this announcement except as it relates to China Strategic and China Land have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.

Please also refer to the published version of this announcement in The Standard.

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