Water Oasis Group Limited - Proxy Solicitation & Information Statement 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Shenzhen Expressway Company Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

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

==> picture [244 x 85] intentionally omitted <==

SHENZHEN EXPRESSWAY COMPANY LIMITED

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 548)

CONNECTED AND DISCLOSEABLE TRANSACTIONS

Independent Financial Adviser to the Independent Board Committee

SOUTH CHINA CAPITAL LIMITED

A letter from the Independent Board Committee is set out on page 14 of this circular. A letter from South China, the independent financial adviser, is set out on pages 15 to 26 of this circular.

A notice convening an extraordinary general meeting of Shenzhen Expressway Company Limited (the “Company”) to be held at the meeting room of the Company at 19/F, Tower A, United Plaza, No.5022 Binhe Road North, Shenzhen, the People’s Republic of China at 10.00 a.m. on 14 June 2004 (Monday) is set out on pages 32 to 34 of this circular. A form of proxy is also enclosed. Whether or not you intend to attend the said meeting, you are requested to complete the proxy form in accordance with the instructions printed thereon and return the same to the registrar of H Shares of the Company, Hong Kong Registrars Limited, at Rooms 1901-5, 19th Floor Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event, not less than 24 hours before the holding of the extraordinary general meeting. Completion and return of the proxy form will not preclude you from subsequently attending and voting at the extraordinary general meeting or any adjourned meeting(s) should you so wish.

26 April 2004

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter From The Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
The Acquisition Agreement I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Information on YM Expressway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
The Acquisition Agreement II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Information on JZ Expressway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Major changes to the Acquisition Agreement II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Reasons for the Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Information on the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Information on GD Expressway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Information on GD Highway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Connected Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Independent Board Committee/Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . .	12
Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Letter from South China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Appendix — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32

— i —

DEFINITIONS

==> picture [456 x 635] intentionally omitted <==

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

||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|“Acquisition|I”|The|acquisition|and|transfer|of|a|25%|equity|interest|in|YM|
|Expressway|under|the|Acquisition|Agreement|I|
|“Acquisition|II”|The|acquisition|and|transfer|of|a|25%|equity|interest|in|JZ|
|Expressway|under|the|Acquisition|Agreement|II|
|“Acquisitions”|Acquisition|I|and|Acquisition|II|
|“Acquisition|Agreement|I”|The|agreement|entered|into|between|the|Company|and|GD|
|Expressway|on|5|March|2004|for|the|acquisition|of|a|25%|
|equity|interest|in|YM|Expressway|
|“Acquisition|Agreement|II”|The|agreement|entered|into|between|the|Company|and|GD|
|Highway|on|7|April|2004|for|the|acquisition|of|a|25%|equity|
|interest|in|JZ|Expressway|
|“Acquisition|Agreements”|Acquisition|Agreement|I|and|Acquisition|Agreement|II|
|“associate(s)”|has|the|same|meaning|as|ascribed|thereto|in|the|Listing|Rules|
|“Company”|(Shenzhen|Expressway|Company|
|Limited),|a|joint|stock|limited|company|incorporated|in|the|
|PRC|with|limited|liability,|the|H|shares|of|which|are|listed|on|
|the|Stock|Exchange|and|A|Shares|of|which|are|listed|on|the|
|Shanghai|Stock|Exchange|
|“Directors”|the|directors|of|the|Company|
|“GD|Communications|Group”|(Guangdong|Communications|Group|
|Company),|a|company|incorporated|in|the|PRC|with|limited|
|liability|
|“GD|Expressway”|(Guangdong|Expressway|Company|
|Limited),|a|company|incorporated|in|the|PRC|with|limited|
|liability|
|“GD|Highway”|(Guangdong|Province|Highway|
|Construction|Company|Limited),|a|company|incorporated|in|
|the|PRC|with|limited|liability|
|“GD|Roads|Company”|(Guangdong|Roads|and|Bridges|
|Construction|Development|Company|Limited),|a|company|
|incorporated|in|the|PRC|with|limited|liability|
|“GD|Transportation”|(Guangdong|Transportation|
|Investment|Company|Limited),|a|company|incorporated|in|the|
|PRC|with|limited|liability|
|“Group”|the|Company|and|its|subsidiaries|

----- End of picture text -----

— 1 —

DEFINITIONS

==> picture [456 x 619] intentionally omitted <==

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

|||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|“Hong|Kong”|Hong|Kong|Special|Administrative|Region|of|the|PRC|
|“HK$”|Hong|Kong|dollars|
|“Independent|Board|Committee”|An|independent|committee|of|the|Directors|comprising|the|
|independent|Directors,|namely|Denis|Ho|Pak|Cho,|Li|Zhi|
|Zheng,|Zhang|Zhi|Xue|and|James|K.L.|Poon|
|“Independent|Shareholders”|Shareholders|other|than|GD|Roads|Company|and|its|
|associates|
|“Jianghe|Project”|the|project|for|the|construction|of|Jianghe|Expressway|Phase|
|II|(|)|which|has|a|length|of|6.44|km|from|
|Lilesicun|of|Jiangmun|City|(|)|to|the|westbound|
|of|Tiansha|River|(|)|
|“JZ|Expressway”|(Jiangzhong|Expressway|Company|
|Limited),|a|company|incorporated|in|the|PRC|with|limited|
|liability|
|“Latest|Practicable|Date”|23|April|2004,|being|the|latest|practicable|date|before|the|
|printing|of|this|circular|for|ascertaining|information|in|this|
|circular|
|“Listing|Rules”|the|Rules|Governing|the|Listing|of|Securities|on|the|Stock|
|Exchange|
|“Projects”|Zhongjiang|Project,|Jianghe|Project|and|Yangmao|Project|
|“PRC”|the|People’s|Republic|of|China|
|“RMB”|Renminbi,|the|lawful|currency|of|the|PRC|
|“SFO”|Securities|and|Futures|Ordinance|(Chapter|571|of|the|Laws|of|
|Hong|Kong)|
|“Shareholders”|holder(s)|of|shares|of|the|Company|
|“Shen|Guang|Hui”|(Shenzhen|Shen|Guang|Hui|Highway|
|Development|Company|Limited),|a|substantial|shareholder|of|
|the|Company|holding|20.99%|of|the|Company|under|the|
|supervision|of|Shenzhen|Roads|Bureau|
|“South|China”|South|China|Capital|Limited,|a|deeded|licensed|corporation|
|under|the|SFO|permitted|to|engage|in|types|4,|6|and|9|of|the|
|regulated|activities|as|defined|in|the|SFO),|being|the|
|independent|financial|adviser|to|the|Independent|Board|
|Committee|

----- End of picture text -----

— 2 —

DEFINITIONS

==> picture [456 x 342] intentionally omitted <==

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

||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|“Stock|Exchange”|The|Stock|Exchange|of|Hong|Kong|Limited|
|“Xin|Tong|Chan”|(Xin|Tong|Chan|Development|
|(Shenzhen|Company|Limited),|a|substantial|shareholder|of|
|the|Company|holding|30.03%|of|the|equity|interest|of|the|
|Company|under|the|indirect|supervision|of|Shenzhen|
|Municipal|Government|
|“Yangmao|Project”|the|project|for|the|construction|of|the|Yangmao|Expressway|
|(|)|which|has|a|length|of|79.76|km|from|Yangdong|
|of|Yangjiang|City|(|)|to|Dianbai|of|Maoming|City|
|(|)|and|is|a|section|of|the|national|main|
|road|from|Tongjiang|to|Sanya|Expressway|
|(|)|
|“YM|Expressway”|(Yangmao|Expressway|Company|Limited),|
|a|company|incorporated|in|the|PRC|with|limited|liability|
|“YUE”|(Yue|Expressway|Development|
|Company|Limited),|a|company|incorporated|in|the|PRC|with|
|limited|liability|
|“Zhongjiang|Project”|the|project|for|the|construction|of|the|Zhongjiang|Expressway|
|(|)|which|has|a|length|of|32.382|km|from|Xinlong|
|of|Zhongshan|City|(|)|to|Sicun|of|Jiangmen|City|
|(|)|

----- End of picture text -----

Note: For the purpose of this circular, the exchange rate between HK$ and RMB of HK$1 to RMB1.06 has been used for illustrative purpose.

— 3 —

LETTER FROM THE BOARD

==> picture [244 x 82] intentionally omitted <==

SHENZHEN EXPRESSWAY COMPANY LIMITED

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 548)

Directors : Chen Chao Wu Ya De Zhang Rong Xing Zhong Shan Qun Tao Hong Lin Xiang Ke Zhang Yang Clifton Chiu Chi Cheong

Independent Directors :

Denis Ho Pak Cho Li Zhi Zheng Zhang Zhi Xue James K.L. Poon

Legal Address : 19/F., Tower A United Plaza 5022 Binhe Road North Shenzhen 518026 PRC Place of business in Hong Kong: Suites 2911-2912 29th Floor Two International Finance Centre No. 8 Finance Street Central Hong Kong

26 April 2004

To Shareholders

Dear Sirs or Madams,

CONNECTED AND DISCLOSEABLE TRANSACTIONS

INTRODUCTION

The Directors announced on 8 March 2004 that (1) the Company as purchaser and GD Expressway as vendor entered into the Acquisition Agreement I for the acquisition of a 25% equity interest in YM Expressway; and (2) the Company as purchaser and GD Highway as vendor had reached agreement in principle and was about to enter into the Acquisition Agreement II for the acquisition of a 25% equity interest in JZ Expressway as soon as possible. The Directors further announced on 7 April 2004 that the Company as Purchaser and GD Highway as vendor entered into the Acquisition Agreement II.

— 4 —

LETTER FROM THE BOARD

The Acquisitions constitute connected transactions and the Acquisition II constitutes a discloseable transaction for the Company under Chapter 14 and 14A of the Listing Rules and are therefore subject to approval of the Independent Shareholders.

The purpose of this circular is to provide you with information relating to the details of the Acquisition Agreements, to set out the recommendation from the Independent Board Committee and the letter of advice from South China.

BACKGROUND

Pursuant to the “Notice of Pre-approval procedures for investment in Guangdong Province Expressway Projects” issued by GD Communications Group (the parent company of one of the promoters of the Company, GD Roads Company), 29 expressway projects are being put on the market for investment by private investors.

GD Communications Group is inviting tenders for equity interests in the 29 expressway projects from investors. The relevant asset holding companies in GD Communications Group will then enter into acquisition agreements with those investors which are awarded with the relevant tender.

The subject matters of the Acquisitions, being equity interests in each of YM Expressway and JZ Expressway respectively, are two of the aforesaid expressway projects.

THE ACQUISITION AGREEMENT I

Date : 5 March 2004 Parties Vendor : GD Expressway Purchaser : the Company

Assets to be acquired

25% equity interest in YM Expressway

Consideration and Payment

Consideration for the Acquisition I is RMB271,680,000 (equivalent to approximately HK$256,300,000). A deposit of RMB1,000,000 (equivalent to approximately HK$943,000) has been paid by the Company to GD Expressway. The balance of the consideration, i.e. RMB270,680,000 (equivalent to approximately HK$255,300,000) shall be payable by the Company to GD Expressway within 5 working days from the effective date of the Acquisition Agreement I, i.e. the date when the Acquisition Agreement I becomes effective upon fulfillment of the conditions as described below.

— 5 —

LETTER FROM THE BOARD

The consideration of the Acquisition I has been determined on the basis of the shareholders’ investments of RMB225,510,000 (equivalent to approximately HK$212,700,000) attributable to such 25% equity interest in YM Expressway plus a premium of RMB46,170,000 (equivalent to approximately HK$43,600,000) and shall be satisfied by the Company’s internal source of funds.

Effective Date

The Acquisition Agreement I shall become effective upon fulfillment of the following conditions:

(i) obtaining of approval by GD Expressway from the GD Communications Group in relation to the Acquisition I; and
(ii) obtaining of approval by the Shareholders in general meeting of the Company of the Acquisition I.

INFORMATION ON YM EXPRESSWAY

YM Expressway is a subsidiary of Guangdong Communications Group. One of the 29 expressway projects offered by Guangdong Communications Group comprises 25% equity interest in YM Expressway, the subject matter of the Acquisition I.

Registered Capital and Shareholding Structure

YM Expressway was incorporated on 23 July 2002 in the PRC. The registered capital of YM Expressway is RMB200,000,000 (equivalent to approximately HK$189,000,000) which has already been fully paid up. Set out below is the shareholding structure of YM Expressway before and after completion of the Acquisition I.

Before completion of the Acquisition I:

==> picture [133 x 32] intentionally omitted <==

==> picture [99 x 119] intentionally omitted <==

==> picture [99 x 62] intentionally omitted <==

==> picture [99 x 32] intentionally omitted <==

— 6 —

LETTER FROM THE BOARD

After completion of the Acquisition I:

==> picture [133 x 32] intentionally omitted <==

==> picture [346 x 185] intentionally omitted <==

As YM Expressway is in its initial stage of investment, it has not recorded any profit since its incorporation. As at 30 September 2003, the net asset value of YM Expressway is RMB237,000,000 (equivalent to approximately HK$223,585,000).

Scope of Business

YM Expressway is a project company incorporated to carry out the fund raising, construction, operation and management of the project of Yangmao Expressway ( ). The Company is entitled to appoint two directors on the board of directors of YM Expressway which is comprised of a total of 7 directors. As per the approved preliminary estimated project costs of Yangmao Project, its total investment is estimated to be RMB2,577,000,000 (equivalent to approximately HK$2,431,132,000), out of which RMB960,000,000 (equivalent to approximately HK$905,660,377) shall be funded by the shareholders of YM Expressway by way of registered capital of RMB200,000,000 (equivalent to approximately HK$189,000,000) and capital reserve fund of RMB760,000,000 (equivalent to approximately HK$716,981,000). The difference between the total investment amount of RMB2,577,000,000 (equivalent to approximately HK$2,431,132,000) and the shareholders’ funds of RMB960,000,000 (equivalent to approximately HK$905,660,377) shall be funded by way of bank finance. Two PRC banks have already committed to provide such finance to YM Expressway. As stipulated in the Acquisition Agreement I, besides the payment of the consideration for its 25% equity interest in YM Expressway, the Company will have to bear its 25% sharing in the additional project cost (which is estimated to be approximately RMB60 million) of YM Expressway arising from the change of design. Depending on the final decision on the method of financing this additional project cost, if the entire additional cost is to be financed solely by shareholders’ fund, the Company would have to inject capital of approximately RMB15,000,000 (equivalent to approximately HK$14,151,000) in future. The construction of the Yangmao Project is expected to be completed by the end of 2004.

— 7 —

LETTER FROM THE BOARD

THE ACQUISITION AGREEMENT II

JZ Expressway is an indirect subsidiary of Guangdong Communications Group. One of the 29 expressway projects offered by Guangdong Communications Group comprises 25% equity interest in JZ Expressway, the subject matter of the Acquisitions II. The Company submitted the bid on 15 December 2003, finalised and entered into the Acquisition Agreement II with GD Highway on 7 April 2004 on the terms set out below.

Date : 7 April 2004 Parties Vendor : GD Highway Purchaser : the Company

Assets to be acquired

25% equity interest in JZ Expressway

Consideration and Payment

Consideration for the Acquisition II is RMB169,500,000 (equivalent to approximately HK$159,906,000) which shall be payable by the Company to GD Highway within 5 days from the effective date of the Acquisition Agreement II, i.e. the date when the Acquisition Agreement II becomes effective upon fulfillment of the conditions as described below. Completion of the Acquisition II shall fall upon the date of payment of the consideration in full.

If the Company fails to effect payment of the consideration before 16 June 2004, a penalty of RMB1,000,000 (equivalent to approximately HK$943,000) shall become payable to GD Highway which shall be deducted from the deposit of RMB1,000,000 (equivalent to approximately HK$943,000) paid.

The consideration of the Acquisition II has been determined on the basis of the shareholders’ investments of RMB138,820,000 (equivalent to HK$130,962,264) in JZ Expressway attributable to such 25% equity interest plus a premium of RMB30,680,000 (equivalent to approximately HK$28,943,000) and shall be satisfied by the Company’s internal source of funds.

Effective Date

The Acquisition Agreement II shall become effective upon fulfillment of the following conditions:

(i) obtaining of approval by the supervising authority in relation to the Acquisition II; and
(ii) obtaining of approval by the Shareholders in general meeting of the Company of the Acquisition II.

— 8 —

LETTER FROM THE BOARD

INFORMATION ON JZ EXPRESSWAY

Registered Capital and Shareholding Structure

JZ Expressway was incorporated on 26 August 2002 in the PRC. The registered capital of JZ Expressway is RMB343,520,000 (equivalent to approximately HK$324,000,000) which has already been fully paid up. Set out below is the shareholding structure of JZ Expressway before and after completion of the Acquisition II.

Before completion of the Acquisition II:

==> picture [346 x 181] intentionally omitted <==

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

GD Communications Group
100% 37.77% 100%
GD Highway YUE GD Roads Company
85% 15%
2.96%
JZ Expressway The Company
----- End of picture text -----

After completion of the Acquisition II:

==> picture [346 x 233] intentionally omitted <==

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

GD Communications Group
100% 37.77% 100%
GD Highway YUE GD Roads Company
2.96%
The Company
60% 15%
25%
JZ Expressway
----- End of picture text -----

— 9 —

LETTER FROM THE BOARD

As JZ Expressway is in its initial stage of investment, it has not recorded any profit since its incorporation. As at 31 December 2003, the net asset value of JZ Expressway is RMB555,280,000 (equivalent to approximately HK$523,849,000).

Scope of Business

JZ Expressway is a project company incorporated to carry out the fund raising, planning, design, construction and operational management of the projects of Zhongjiang Expressway ( ) and Jianghe Expressway Phase II ( ) and the ancillary facilities and services facilities for the enhancement of the economic development of the Pearl River Delta region ( ) in the Guangdong Province. The Company shall be entitled to appoint two directors on the board of directors of JZ Expressway which is comprised of a total of 11 directors. As per the approved preliminary estimated project costs of the Zhongjiang Project and the Jianghe Project, its total investment is estimated to be RMB3,172,490,000, (equivalent to approximately HK$2,992,292,000), out of which RMB1,110,372,000 (equivalent to approximately HK$1,047,520,000) shall be funded by the shareholders of JZ Expressway. The difference between the total investment amount of RMB3,172,490,000, (equivalent to approximately HK$2,992,292,000) and the shareholders’ funds of RMB1,110,372,000 (equivalent to approximately HK$1,047,520,000) shall be funded by way of bank finance. Three PRC banks have already committed to provide such finance to JZ Expressway. For illustrative purpose, based on the total estimated project costs to be funded by the shareholders of JZ Expressway and the portion of shareholders fund to be paid up by the Company in accordance to the Acquisition Agreement II, it is estimated that the Company may need to further inject an additional capital of RMB138,773,000 (equivalent to approximately HK$130,918,000) (being 25% x RMB1,110,372,000 � RMB138,820,000) into JZ Expressway. The construction of the Zhongjiang Project and the Jianghe Project is expected to be completed by the end of 2005.

— 10 —

LETTER FROM THE BOARD

MAJOR CHANGES TO THE ACQUISITION AGREEMENT II

The parties have renegotiated on the Acquisition Agreement II and have revised some terms and conditions therein. Set out below are the major changes to the Acquisition Agreement II when compared to the draft as depicted in the announcement dated 8 March 2004:

Acquisition Agreement II as depicted in the announcement dated 8 March 2004

Final Acquisition Agreement II as signed and depicted in the announcement dated 7 April 2004

Consideration RMB167,500,000 (equivalent to approximately HK$158,019,000)
RMB169,500,000 (equivalent to approximately HK$159,906,000)
Payment Terms The consideration less deposit, The consideration, i.e. i.e. RMB166,500,000 (equivalent RMB169,500,000 (equivalent to to approximately approximately HK$159,906,000) HK$156,000,000) shall be shall be payable within 5 days payable within 5 working days from the effective date of the from the effective date of the Acquisition Agreement II. Acquisition Agreement II.
Penalty N/A If the Company fails to effect

If the Company fails to effect payment of the consideration before 16 June 2004, a penalty of RMB1,000,000 (equivalent to approximately HK$943,000) shall become payable to GD Highway.

Conditions on which the (1) obtaining of approval by Acquisition Agreement shall GD Highway from GD become effective Communications Group in relation to the Acquisition II; and
(1) obtaining of approval by the Company from the supervising authority* in relation to the Acquisition II; and
(2) obtaining of approval by the Shareholders in general meeting of the Company of the Acquisition II
(2) obtaining of approval by the Shareholders in general meeting of the Company of the Acquisition II

Estimated Total Investment RMB3,231,070,000 RMB3,172,490,000 of Zhongjiang Project and (equivalent to approximately (equivalent to approximately Jianghe Project HK$3,048,179,245) HK$2,992,292,000)

* GD Communications Group is the supervising authority for approving the Acquisition II.

— 11 —

LETTER FROM THE BOARD

REASONS FOR THE ACQUISITIONS

The participation in the fund raising, planning, design, construction and operational management of expressways is the ordinary and usual course of business of the Company. The Directors believe that entering into the Acquisition Agreements will allow the Company to participate in the Projects via its shareholdings in JZ Expressway and YM Expressway, hence will further consolidate the Company’s participation in the investment, construction and operational management of toll highways and expressways in Shenzhen, the Pearl River Delta region as well as other regions of the Guangdong Province.

INFORMATION ON THE COMPANY

The Company is principally engaged in the investment, construction, operation and management of toll highways and expressways in the PRC.

INFORMATION ON GD EXPRESSWAY

GD Expressway is principally engaged in the investment, construction, operation and management of toll highways and expressways in the PRC.

INFORMATION ON GD HIGHWAY

GD Highway is principally engaged in the investment, construction, operation and management of toll highways and expressways in the PRC.

CONNECTED TRANSACTIONS

Since GD Highway and GD Expressway are associates of GD Roads Company, which is the promoter of the Company, they are connected persons of the Company and the Acquisitions constitute connected transactions of the Company which are subject to disclosure and Shareholders’ approval requirements.

Apart from GD Roads Company and its associates, no director, supervisor, chief executive, substantial shareholders of the Company and/or its subsidiaries or any of their respective associates is interested in the Acquisitions Agreements. GD Roads Company and its associates are required to refrain from voting in shareholders’ meeting accordingly.

INDEPENDENT BOARD COMMITTEE/INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Acquisitions. South China is appointed as the independent financial adviser advising the Independent Board Committee whether the Acquisitions are fair and reasonable so far as the Independent Shareholders and the Company are concerned.

— 12 —

LETTER FROM THE BOARD

EXTRAORDINARY GENERAL MEETING

The extraordinary general meeting will be held at the meeting room of the Company at 19/F, Tower A, United Plaza, No.5022 Binhe Road North, Shenzhen, the People’s Republic of China at 10.00 a.m. on 14 June 2004 (Monday), a notice of which is set out on pages 32 to 34 of this circular. Ordinary resolutions will be proposed at the extraordinary general meeting for the Independent Shareholders to approve by poll the Acquisition Agreements and the Acquisitions contemplated thereunder.

Enclosed is a form of proxy for use at the extraordinary general meeting. Whether or not you intend to attend the said meeting, you are requested to complete the proxy form in accordance with the instructions printed thereon and return the same to the registrar of H Shares of the Company, Hong Kong Registrars Limited, at Rooms 1901-5, 19th Floor Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event, not less than 24 hours before the holding of the extraordinary general meeting. Completion and return of the proxy form will not preclude you from subsequently attending and voting at the extraordinary general meeting or any adjourned meeting(s) should you so wish.

RECOMMENDATION

The Directors consider that the Acquisitions are fair and reasonable and in the interests of the Shareholders as a whole and accordingly recommend that all Independent Shareholders should vote in favour of the resolutions to be proposed at the extraordinary general meeting to approve the Acquisition Agreements and the Acquisitions contemplated thereunder.

ADDITIONAL INFORMATION

Your attention is drawn to the letter from the Independent Board Committee, the letter of advice from South China, and the information set out in the appendix of this circular.

By order of the Board, Shenzhen Expressway Company Limited Chen Chao Chairman

— 13 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [244 x 82] intentionally omitted <==

SHENZHEN EXPRESSWAY COMPANY LIMITED

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 548)

To the Independent Shareholders

26 April 2004

Dear Sirs or Madams,

CONNECTED AND DISCLOSEABLE TRANSACTIONS

We have been appointed as members of the Independent Board Committee to advise the Independent Shareholders in respect of the Acquisitions, details of which are set out in the letter from the Board in the circular dated 26 April 2004 (the “Circular”) to the Shareholders. Unless the context otherwise requires, terms defined in the Circular shall have the same meanings when used in this letter.

Your attention is drawn to the advice of South China in respect of the Acquisitions as set out in the letter from South China in the Circular.

Recommendation

Having taken into account the advice of South China, we consider that the Acquisitions are in the interests of the Company and the Independent Shareholders and the terms of the Agreements as a whole are fair and reasonable so far as the Company and the Independent Shareholders are concerned. We therefore recommend that the Independent Shareholders vote in favour of the resolutions to be proposed at the extraordinary general meeting to approve the Acquisition Agreements and the Acquisitions contemplated thereunder.

Yours faithfully, Denis Ho Pak Cho Li Zhi Zheng Zhang Zhi Xue

James K.L. Poon

Independent Board Committee

— 14 —

LETTER FROM SOUTH CHINA

The following is the text of the letter of advice from South China to the Independent Board Committee dated 26 April 2004 for incorporation in this circular.

==> picture [64 x 38] intentionally omitted <==

South China Capital Limited 28th Floor, Bank of China Tower No. 1 Garden Road Central Hong Kong

26 April 2004

To the Independent Board Committee Shenzhen Expressway Company Limited 19/F., Tower A United Plaza 5022 Binhe Road North Shenzhen 518026 PRC

Dear Sirs,

CONNECTED AND DISCLOSEABLE TRANSACTIONS

INTRODUCTION

We refer to our appointment to advise the Independent Board Committee in respect of the Acquisitions, details of which are set out in the circular of the Company dated 26 April 2004 to the Shareholders (the “Circular”), of which this letter forms part. Terms used in this letter have the same meanings as defined in the Circular unless the context otherwise requires.

On 5 March 2004, the Company as purchaser, entered into the Acquisition Agreement I with GD Expressway (the associate of GD Roads Company) as vendor, for the acquisition of a 25% equity interest in YM Expressway. Pursuant to the Acquisition Agreement I, the Company agreed to acquire from GD Expressway its 25% equity interest in YM Expressway and GD Expressway agreed to transfer its 25% equity interest in YM Expressway to the Company. The consideration involved is RMB271,680,000 (equivalent to approximately HK$256,300,000).

Further, on 7 April 2004, the Company as purchaser, entered into the Acquisition Agreement II with GD Highway (the associate of GD Roads Company) as vendor, for the acquisition of a 25% equity interest in JZ Expressway. Pursuant to the Acquisition Agreement II, the Company agreed to acquire from GD Highway its 25% equity interest in JZ Expressway and GD Highway agreed to transfer its 25% equity interest in JZ Expressway to the Company. The consideration involved is RMB169,500,000 (equivalent to approximately HK$159,906,000).

— 15 —

LETTER FROM SOUTH CHINA

Since GD Highway and GD Expressway are associates of GD Roads Company, which is the promoter of the Company, they are connected persons of the Company and the Acquisitions constitute connected transactions of the Company which are subject to the disclosure and Independent Shareholders’ approval requirements as required under the Listing Rules.

Apart from GD Roads Company and its associates, no director, supervisor, chief executive, substantial shareholder of the Company and/or its subsidiaries or any of their respective associates is interested in the Acquisition Agreements. GD Roads Company and its associates are required to refrain from voting in the Shareholders’ meeting accordingly.

The Independent Board Committee, comprising Messrs. Denis Ho Pak Cho, Li Zhi Zheng, Zhang Zhi Xue and James K.L. Poon has been established to advise as to the fairness and reasonableness of the terms of the Acquisitions. South China, an independent financial adviser, has been retained to advise the Independent Board Committee as to whether or not the Acquisition Agreements are fair and reasonable so far as the Independent Shareholders are concerned.

In formulating our recommendation, we have relied on the accuracy of the information and facts supplied to us by the Company, its Directors and management. We have reviewed, among others, (i) the terms of the Acquisition Agreements, (ii) the audited financial statements of YM Expressway for the year ended 31 December 2003, (iii) the audited financial statements of JZ Expressway for the year ended 31 December 2003, (iv) the investment proposal and the subsequent supplementary proposal on the YM Expressway prepared by the Company in November 2003 and January 2004 respectively, (v) the investment proposal and the subsequent supplementary proposals on the JZ Expressway prepared by the Company in August 2003, November 2003 and January 2004 respectively, (vi) the traffic flow

forecast prepared by Guangdong Province Traffic Consulting Service Centre ( ) and Guangzhou Zhong Jiao Traffic Technical Service Co., Limited ( ) in November 2003, (vii) the traffic flow forecast prepared by Zhong Jiao Di Yi Highway Investigation Design Research Centre ( ) in August 2003, (viii) the due diligence report prepared by Shenzhen Pan-China Schinda Certified Public Accountants on YM Expressway ( ) dated 18 September 2003, (ix) the due diligence report prepared by Shenzhen Pan-China Schinda Certified Public Accountants on JZ Expressway ( ) dated 31 October 2003 and (x) the 2003 annual report of the Company. We have also discussed with the management of the Company their plans and prospects for the Company business in which the Company operates. We have also assumed that all statements of belief and intention made by the Directors in the Circular were reasonably made after due enquiry. We have assumed that all information, representations and opinions made or referred to in the Circular were true, accurate and complete at the time they were made and continued to be true so at the date of this letter. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Company and its Directors and management and have been advised by the Directors that no material facts have been omitted from the information provided and referred to in the Circular.

— 16 —

LETTER FROM SOUTH CHINA

We consider that we have been provided with, and we have reviewed, sufficient information to reach an informed view and to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our recommendation. We have not, however, conducted any form of in-depth investigation into the business affairs, financial position or future prospects of the Company, YM Expressway and JZ Expressway nor have we carried out any independent verification of the information supplied.

BACKGROUND

Pursuant to the ‘Notice of Pre-approval procedures for investment in Guangdong Province Expressway Projects’ issued by GD Communications Group (the parent company of one of the promoters of the Company, GD Roads Company), 29 expressway projects are being put on the market for investment by private investors.

Pursuant to an announcement dated 8 March 2004, the Directors announced that (1) the Company as purchaser and GD Expressway as vendor, entered into the Acquisition Agreement I for the acquisition of 25% equity interest in YM Expressway on 5 March 2004; and (2) the Company as purchaser and GD Highway as vendor had reached agreement in principle and was about to enter into Acquisition Agreement II for the acquisition of a 25% equity interest in JZ Expressway as soon as possible.

Further to the above mentioned announcement, the Directors announced on 7 April 2004 that the Company as purchaser and GD Highway as vendor entered into the Acquisition Agreement II on 7 April 2004.

Further details of the terms of the Acquisition Agreements are contained in the letter from the Board of the Circular.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion, we have taken into consideration the following principal factors and reasons:

Reasons for and benefits of the Acquisitions
I. Business of YM Expressway

YM Expressway is a project company incorporated under the laws of the PRC on 23 July 2002, its scope of business includes the fund raising, construction, operation and management of the project of Yangmao Expressway ( ). The construction of the Yangmao Project commenced in December 2002 and is expected to be completed by the end of 2004.

— 17 —

LETTER FROM SOUTH CHINA

II. Business of JZ Expressway

JZ Expressway is a project company incorporated under the laws of the PRC on 26 August 2002, its scope of business includes the fund raising, planning, design, construction, operation and management of the projects of Zhongjiang Expressway ( ) and Jianghe Expressway Phase II ( ) and the ancillary facilities and services facilities for the enhancement of the economic development of the Pearl River Delta region ( ) in the Guangdong Province ( ). The construction of the Zhongjiang Project and the Jianghe Project is expected to be completed by the end of 2005.

III. Business of the Company

The Company is principally engaged in the investment, construction, operation and management of toll highways and expressways in the PRC.

IV. Benefits of Acquisition I

Upon completion of Acquisition I, YM Expressway will become a 25% associated company of the Company. The Acquisition I will expand the Company’s asset base and match the key aspect of the business growth of the Company.

The Yangmao Expressway ( ) is a four lane expressway with a length of 79.76 km extending from Yangdong of Yangjiang City ( ) to Dianbai of Maoming City ( ) and is the only remaining section of the national main road from Tongjiang to Sanya Expressway ( ) to be completed. It runs parallel to the coastal line of the Pearl River Delta region ( ) in Guangdong Province ( ) and the national road G325. The Yangmao Expressway will connect the Maozhan Expressway ( ) in the west and Kaiping-Yangjiang Expressway ( ) in the east. It will be an important traffic connection between Maoming City ( ), Zhanjiang City ( ), Hainan Province ( ) and Guangxi Province ( ) and a major constituent of the key traffic vein in the western Guangdong Province ( ).

The Directors anticipated that the Acquisition I will bring the following benefits to the Company:

a. High growth potential

The Directors believe that as Yangmao Expressway ( ) is the remaining intersection of the traffic expressway route from Guangzhou City ( ) to Zhanjiang City ( ) under the national main road from Tongjiang to Sanya Expressway ( ) under construction, in view of the satisfactory traffic volume gained by other sections of the route, the traffic flow of the Yangmao Expressway ( ) is promising.

— 18 —

LETTER FROM SOUTH CHINA

b. High return

According to the investment proposal prepared by the Company in November 2003, the Directors anticipated that YM Expressway will generate positive cashflow in 2005 immediately after the completion of the Yangmao Project and make profit in 2007 onwards. According to the supplementary investment proposal commissioned by the Company in January 2004, based on the consideration of RMB271,680,000 (equivalent to approximately HK$256,300,000), the internal rate of return of the Acquisition I ranged from approximately 8.13% to 15.85% with the payback period of 12 to 16 years. In view of the fact that the return on equity recorded by the Company for the five years ended 31 December 2003 ranged from approximately 6.37% to 14.79%, averaging at approximately 9.02% during the period as quoted by Reuters, the investment return of the Acquisition I is in line with or higher than the Company’s long-term investment return.

c. Company’s internal growth and long term strategy

We note from the Company’s 2003 annual report that the Company will actively develop expressways planned for the Pearl River Delta region ( ) in Guangdong Province ( ) by capitalizing on the opportunities arising from the sales by Guangdong Province ( ) of its shareholding in expressways which are either already constructed, under construction or being planned. The Directors considered that through further acquisition of quality projects with high return in Guangdong Province ( ), the Company can enhance its profitability and maintain a sustainable and healthy development. The Acquisition I has laid down the platform for future cooperation between the GD Roads Company and the Company.

V. Benefits of Acquisition II

Upon completion of Acquisition II, JZ Expressway will become a 25% associated company of the Company. The Acquisition II will expand the Company’s asset base and match the key aspect of the business growth of the Company.

The Zhongjiang Expressway ( ) is a four lane expressway with a length of 32.382 km extending from Xinlong of Zhongshan City ( ) to Sicun of Jiangmen City ( ). The Jianghe Expressway Phase II ( ) is a four lane expressway with a length is 6.44 km from Lilesicun of Jiangmun City ( ) to the westbound of Tiansha River ( ). The Zhongjiang Expressway ( ) and the Jianghe Expressway Phase II ( ) will be the important connection between Jianghe Expressway Phase I ( ), Jingzhu Expressway Guangzhu section ( ), Humen Bridge ( ), Changhu Expressway ( ) and the major expressways for the eastern and western area of Guangdong Province ( ). The operation of the Zhongjiang Expressway ( ) and Jianghe Expressways Phase II ( ) will shorten the traffic distance between the eastern and western wings of the Pearl River Delta region ( ) by approximately 60 km. It completes an efficient expressway networks with the Guangzhang Expressway ( ), Guangzhu Expressway ( ) and GuangzhouShenzhen Superhighway ( ).

— 19 —

LETTER FROM SOUTH CHINA

The Directors anticipated that the Acquisition II will bring the following benefits to the Company:

a. Company’s internal growth and long-term strategy

We concur with the Directors’ view that similar to the Acquisition I, the Acquisition II has laid down and further establish the platform for future cooperation between the GD Roads Company and the Company, which is believed to facilitate the future growth of the Company in Guangdong Province ( ) as mentioned in the point IV c above.

b. Reasonable return for long-term investment

According to the supplementary investment proposal prepared by the Company in January 2004, based on the consideration of RMB169,500,000 (equivalent to approximately HK$159,906,000), the internal rate of return of the Acquisition II is approximately 8.91% with the payback period of 15 years. While the range of the return on equity recorded by the Company for the five years ended 31 December 2003 ranged from approximately 6.37% to 14.79%, averaging at approximately 9.02% during the period as quoted by Reuters, the investment return of the Acquisition II is in line with the Company’s long-term investment return.

Also, the JZ Expressway has reached an understanding with the Guangdong Province Traffic Bureau ( ) to expand the Zhongjiang Expressway ( ) and the Jianghe Expressway Phase II ( ) into a six lane expressway, which would bring benefits to the Company in terms of a better internal rate of return and a shorter payback period.

c. High growth potential

The Directors believe that as Zhongjiang Expressway ( ) and Jianghe Expressway Phase II ( ) are the only traffic expressways which connect Zhongshan City ( ) to Jiangmen City ( ) and are the major intersection of Tongsan Expressway Guangjiang section ( ) and Jingzhu Expressway Guangzhu section ( ), in view of the uniqueness in the geographical location without substitution, the traffic flow of Zhongjiang Expressway ( ) and Jianghe Expressway Phase II ( ) is promising.

We have reviewed the methodology, bases and assumptions underlying the traffic flow forecasts prepared by the independent traffic consultants and the investment proposals commissioned by the Company, we have also conducted discussions with respective traffic consultants and management of the Company in this respect. We note that the traffic forecasts were conducted for a period of over 20 years from the expected date of respective expressways open to traffic, which is in compliance with relevant PRC requirements for issuing a traffic forecast report. We consider that such traffic forecasts and projections provide a reasonable basis for the Directors’ opinion that the Acquisitions will enhance the growth potential to the revenue

— 20 —

LETTER FROM SOUTH CHINA

of the Group. Based on the above, the Directors believe and we concur, that the Acquisitions are in line with the Company’s principal business and is consistent with the Group’s long-term growth strategy. The Acquisitions will also bring synergy effect as well as growth potential to the Company’s business.

2. Basis of consideration and valuation

I. Acquisition I

The consideration involved in Acquisition I is RMB271,680,000 (equivalent to approximately HK$256,300,000). The consideration of the Acquisition I has been determined on the basis of the shareholders’ investments of RMB225,510,000 (equivalent to approximately HK$212,745,000) attributable to such 25% equity interest in YM Expressway plus a premium of RMB46,170,000 (equivalent to approximately HK$43,555,000).

We note from the tender guideline of YM Expressway issued by GD Expressway ( ) dated 20 October 2003 that GD Expressway requested the purchaser of the 25% equity interest in YM Expressway should offer a price not less than the shareholders’ investments of RMB225,510,000 (equivalent to approximately HK$212,745,000) attributable to such 25% equity interest in YM Expressway in order to cover the investment cost of GD Expressway. As a result of the tendering process and the accomplishment of the Company to outbid other rivals, the Company must offer a consideration entailing with a justifiable premium plus the shareholders’ investment cost of RMB225,510,000 (equivalent to approximately HK$212,745,000).

Based on the representation of the Directors, the Company has primarily based on the projected internal rate of return of the Acquisition I to determine the consideration for the Acquisition I. The Company has engaged Guangdong Province Traffic Consulting Service Centre ( ) and Guangzhou Zhong Jiao Traffic Technical Service Co., Limited ( ), both of which are independent traffic consultant companies possessing grade A qualification in engineering consulting ( ), to prepare a report in November 2003 to forecast the traffic flow of YM Expressway ( ) is a section of this expressway (the “Traffic Flow Forecast I”).

Based on the figures of the Traffic Flow Forecast I, the Company has prepared a supplementary investment proposal in January 2004. With reference to such investment proposal and based on the consideration of RMB271,680,000 (equivalent to approximately HK$256,300,000), the corresponding internal rate of return of the Acquisition I is approximately 10.54% with a payback period of 15 years. If the Company has adopted the highest traffic volume scenario stated in the Traffic Flow Forecast I to perform the analysis, the internal rate of return will be 15.85% with a payback period of 12 years. On the contrary, if the Company adopts the low-end traffic volume scenario stated in the Traffic Flow Forecast I to perform the analysis, the internal rate of return will be 8.13% and the payback period is 16 years.

— 21 —

LETTER FROM SOUTH CHINA

Given the above analysis, the internal rate of return of the Acquisition I ranged from approximately 8.13% to 15.85% with payback period ranging from 12 to 16 years which falls within or higher than the range of the return on equity recorded by the Company for the five years ended 31 December 2003 which ranged from approximately 6.37% to 14.79%, averaging at approximately 9.02% during the period as quoted by Reuters.

II. Acquisition II

The consideration involved in Acquisition II is RMB169,500,000 (equivalent to approximately HK$159,906,000). The consideration of the Acquisition II has been determined on the basis of the shareholders’ investments of RMB138,820,000 (equivalent to approximately HK$130,963,000) attributable to such 25% equity interest in JZ Expressway plus a premium of RMB30,680,000 (equivalent to approximately HK$28,943,000).

As stated in the tender guideline of Zhongjiang Expressway and Jianghe Expressway Phase II issued by GD Highway ( ) dated 25 November 2003, GD Expressway requested the purchaser of the 25% equity interest in JZ Expressway should offer a price not less than the sum of the shareholders’ investments of RMB138,820,000 (equivalent to approximately HK$130,963,000) and the interest generated from the shareholders’ investment of RMB10,246,600 (equivalent to HK$9,666,000), which is RMB149,066,600 (equivalent to approximately HK$140,629,000) attributable to such 25% equity interest and interest generated from the shareholders’ loan in JZ Expressway in order to cover the investment cost already paid by GD Highway. As a result of the tendering process and the accomplishment of the Company to outbid other rivals, the Company must therefore offer a consideration aggregating a justifiable premium plus the shareholders’ investment cost of RMB149,066,600 (equivalent to approximately HK$140,629,000).

Based on the representation of the Directors, the Company has primarily based on the projected internal rate of return of the Acquisition II to determine the consideration for the Acquisition II. The Company has engaged an independent traffic consultant namely Zhong Jiao Di Yi Highway Investigation Design Research Centre ( ), which possess grade A qualification in engineering consulting ( ), to prepare a report in August 2003 to forecast the traffic flow of Zhongjiang Expressway ( ) and Jianghe Expressway Phase II ( ) (the “Traffic Flow Forecast II”).

According to a supplementary investment proposal prepared by the Company in January 2004 and based on the consideration of RMB169,500,000 (equivalent to approximately HK$159,906,000), the corresponding internal rate of return of the Acquisition II is approximately 8.91% with a payback period of 15 years.

Given the above figures, the internal rate of return of the Acquisition II falls within the range of the return on equity recorded by the Company for the five years ended 31 December 2003 ranged from approximately 6.37% to 14.79%, averaging at approximately 9.02% during the period as quoted by Reuters.

— 22 —

LETTER FROM SOUTH CHINA

As stated earlier, we have reviewed the methodology, bases and assumptions underlying the Traffic Flow Forecast I, the Traffic Flow Forecast II and the investment proposals adopted by the independent traffic consultants and the Company in preparing such reports, we have also conducted discussions with respective traffic consultants and management of the Company in this respect. The premium over the shareholders’ investment costs as included in the total consideration is to some extent subjective due to the tender process and the uncertainty on the successfulness of the bid. In our view, the respective total consideration of the Acquisition I and Acquisition II will form a reasonable parameter for assessing the fairness and reasonableness of the consideration. As disclosed in the 2003 annual report of the Company, we note that more than 85% of the capital structure of the Company composed of Shareholders’ equity and return on equity is an appropriate estimate of the cost of capital of the Company as a whole. Likewise, the internal rates of return of the Acquisitions also represent the minimum internal required rate of returns by the Company in investing in the projects. The justification of the consideration can be examined by the comparison between the projected internal rates of return of the Acquisitions, which represent the projected minimum rates of return generated by the Acquisitions and the return on equity of the Company, which represents the cost of capital of the Company, so as to consider whether the projected internal rate of returns generated by the Acquisitions are sufficient to cover the cost of capital in investing in the Acquisitions by the Company. According to the analysis and comparisons as stated above, the projected internal rates of return for both Acquisition I and Acquisition II are either within or better than the track record of the Company. Coupled with the benefits and synergy effect to be derived from the Acquisitions, we therefore concur with the views of the Directors that consideration to be paid by the Company for the Acquisitions to be fair and reasonable so far as the Company and the Independent Shareholders are concerned.

3. Funding for the Acquisitions

The consideration for the Acquisitions will be paid by the Company’s internal resources. As discussed below, the Directors are of the view that based on the latest financial position of the Group and the cashflow expected to be derived from its existing operations, the Company will be able to finance the Acquisitions entirely from internal resources. Based on the financial information provided to us, our discussions with Directors and the bases and assumption upon which Directors have arrived at such view, we consider such view is fair and reasonable.

Estimated financial impacts of the Acquisitions on the Company
I. As disclosed in the Company’s 2003 annual report, the Group had cash and cash equivalents of approximately RMB1,274,818,000 (equivalent to approximately HK$1,202,658,000) as at 31 December 2003. As mentioned above, the Directors have advised us that they consider that based on the latest financial position of the Group and the cashflow expected to be derived from its existing operations, the Company will be able to finance the Acquisitions from its internal resources.
II. Based on the total borrowings of the Group of approximately RMB76,177,000 (equivalent to approximately HK$71,865,000) and cash and cash equivalents held by the Group of approximately RMB1,274,818,000 (equivalent to approximately HK$1,202,658,000) as at

— 23 —

LETTER FROM SOUTH CHINA

31 December 2003, the Group had a net cash position of approximately RMB1,198,641,000 (equivalent to approximately HK$1,130,793,000) as at 31 December 2003. As the Acquisition I would require only RMB271,680,000 (equivalent to approximately HK$256,300,000) and Acquisition II would require only RMB169,500,000 (equivalent to approximately HK$159,906,000), the Directors have considered that the Group has sufficient capital to pay for the Acquisitions. Based on the financial information provided to us, our discussions with the Directors and the bases and assumptions upon which the Directors have arrived at such view, we consider that such view is fair and reasonable. According to the supplementary investment proposal prepared by the Company in January 2004 on Yangmao Expressway ( ), the projected annual maintenance and operation cost of the Yangmao Expressway ( ) is approximately RMB16.5 million in 2005 and increasing at approximately 3% per annum thereafter, this will be sufficiently funded by the cash flows generated from the toll revenue. According to the investment proposal prepared by the Company in January 2004 on JZ Expressway, the projected annual maintenance and operation cost of the Zhongjiang Expressway ( ) and Jianghe Expressway Phase II ( ) is approximately RMB15 million in 2006 and increasing at approximately 3% per annum thereafter, this will be sufficiently funded by the cash flows generated from the toll revenue. We have reviewed the computation of the annual operation and maintenance costs as stated in the investment proposals. Considering the above, Yangmao Expressway ( ), Zhongjiang Expressway ( ) and Jianghe Expressway Phase II ( ) will not require the provision of additional working capital by their respective then shareholders.

III. The Group’s net tangible assets were approximately RMB6,631,840,000 (equivalent to approximately HK$6,256,453,000) as at 31 December 2003. As the Acquisitions will be financed by internal resources and does not involve the issue of new Shares, it will not have any impact on the net tangible assets of the Company.
IV. The Directors have confirmed to us that the 25% equity interest in both YM Expressway and JZ Expressway will be equity accounted for in the financial statements of the Group and there would not be any material impact on the Group’s profit and loss account immediately following completion of the Acquisitions.
V. The implied rate of return for the Acquisition I is approximately 10.54%, based on the consideration of RMB271,680,000 (equivalent to approximately HK$256,300,000) while the implied rate of return for the Acquisition II is approximately 8.91%, based on the consideration of RMB169,500,000 (equivalent to approximately HK$159,906,000). Given that corporate fixed deposits at banks in China currently can yield a maximum of 1.98% per annum only and the Company’s long-term borrowing cost at less than 6% per annum, we are of the view that the Acquisitions will enhance the earnings of the Company in the long term. We agree with the views held by the Directors that the income base will broaden thereby improve the profitability of the Company upon opening of the captioned expressways to traffic.
VI. As no new Shares will be issued by the Company for the Acquisitions, the existing percentage shareholding of the Shareholders will remain unchanged.

— 24 —

LETTER FROM SOUTH CHINA

5. Risk Factors

The Independent Shareholders should recognize that there are various risk factors affecting the Acquisitions, in particular, the following principal risk factors:

I. Toll road operations of YM Expressway and JZ Expressway

The operation of YM Expressway and JZ Expressway may be adversely interrupted or otherwise affected by a variety of events, such as serious traffic accidents, natural disasters and other unforeseen circumstances. If the operations of YM Expressway and JZ Expressway are interrupted in whole or in part for any extended period as a result of any such events, the income of YM Expressway and JZ Expressway and thus the Company, will be adversely affected.

II. Traffic volumes of YM Expressway and JZ Expressway

The Traffic Flow Forecast I and Traffic Flow Forecast II have been made subject to certain bases and assumption, and have been prepared using such analytical methods and models as were considered appropriate by Guangdong Province Traffic Consulting Service Centre ( ) and Guangzhou Zhong Jiao Traffic Technical Service Co., Limited ( ) in November 2003 and Zhong Jiao Di Yi Highway Investigation Design Research Centre ( ) in August 2003 respectively. However, it should be noted that traffic volumes, and thus toll revenues, can be affected by a number of factors including the quality and proximity of alternative roads, weather conditions, fuel prices, number of vehicles, environmental regulations, taxation and general economic conditions.

III. Toll rates

The right to receive toll fees from users of toll roads in Guangdong Province ( ) requires the approval of Guangdong Provincial Government ( ) from time to time. It should, however, be noted that no assurance can be given that any future applications for increase of toll rates will be approved by Guangdong Provincial Government ( ) or that Guangdong Provincial Government ( ) will not require a toll reduction.

IV. Construction risks

The constructions of (1) Yangmao Expressway ( ); and (2) Zhongjiang Expressway ( ) and Jianghe Expressway Phase II ( ) are expected to complete by the end of 2004 and 2005 respectively. Considerable capital expenditure is required for most road projects during the construction period. The construction period and the capital required to complete the expressways may be affected by various factors, including the shortage of construction materials, equipment and labour, bad weather conditions, natural disasters, disputes with workers or contractors, accidents, changes in government policies and other unforeseen difficulties or circumstances. Delay may result if any such protection may be affected by factors such as the ability of the other parties to the contracts to perform their respective obligations thereunder. The Company may need to inject capital to YM Expressway and JZ Expressway in future in accordance to its shareholding percentage in YM Expressway and JZ Expressway respectively. For illustrative purposes, based on the total estimated project costs to

— 25 —

LETTER FROM SOUTH CHINA

be funded by the shareholders of JZ Expressway and the portion of shareholders’ fund to be paid up by the Company in accordance to the Acquisition Agreement II, the Company may need to inject capital to JZ Expressway in future amounting to approximately RMB138.8 million. As for YM Expressway, as stipulated in the Acquisition Agreement I, besides the payment of the consideration for its 25% equity interest in YM Expressway, the Company will have to bear its 25% sharing in the additional project cost (which is estimated to be approximately RMB60 million) of YM Expressway arising from the change of design. Depending on the final decision on the method of financing this additional project cost, if the entire additional cost is to be financed solely by Shareholders’ fund, the Company would have to inject capital of approximately RMB15 million in the future.

V. Delay capital injection risk

A deposit of RMB1,000,000 (equivalent to approximately HK943,000) has been paid by the Company to GD Expressway. The balance of the consideration, i.e. RMB270,680,000 (equivalent to approximately HK$255,300,000) shall be payable by the Company to GD Expressway within 5 working days from the effective date of Acquisition Agreement I, i.e. that date when the Acquisition Agreement I becomes effective upon fulfillment of the conditions as described in the Acquisition Agreement I. However, the other two shareholders of the YM Expressway, i.e. GD Expressway and GD Transportation will only inject all their share of capital by the end of 2004. Should GD Expressway and GD Transportation delay to inject the funds, it may involve further works or negotiations for the Company to collect the payments from the other two shareholders though penalties will be imposed on such delay.

VI. Contractual risk

Although the Company has engaged accountants and lawyers to perform due diligence works in YM Expressway and JZ Expressway for reviewing their financials and legal positions and concluded no material problems exists for YM Expressway and JZ Expressway, the Company still faces the risk to fulfill its share of the contractual obligations of YM Expressway and JZ Expressway committed before the completion of the Acquisitions.

RECOMMENDATION

Having taken into account the information and representations provided to us and the above principal factors and the terms of the Acquisition Agreements, we are of the opinion that the terms of the Acquisition Agreements, including the consideration, are fair and reasonable so far as the Company and the Independent Shareholders are concerned and the Acquisitions are in the interests of the Company and the Independent Shareholders. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the extraordinary general meeting to approve the Acquisition Agreements and the transactions contemplated thereunder.

Yours faithfully, For and on behalf of

South China Capital Limited Richard Howard Gorges Managing Director

— 26 —

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information relating to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular concerning the Company and confirm, after having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts concerning the Company not contained herein the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

(a) As at the Latest Practicable Date, the interests and short positions of the Directors or supervisors of the Company 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 were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interest or short positions which they are taken or deemed to have under such provisions of the SFO) or which are required to be entered into the register maintained by the Company under section 352 of the SFO or which were required to be notified to the Company and the Stock Exchange, pursuant to the Model Code for Securities Transaction by Directors of Listed Companies were as follows:

Units in the share appreciation right scheme granted by the Company and collectively held by the senior management and management staff of the Company are 5,501,400. The following Directors and supervisor of the Company may or may not be granted by the Company part of the receipts from the exercise of such units as incentive, subject to the approval of Human Resources and Nomination Committee of the Company:

Name	Number of units involved	Exercise price	Time of Exercise
Wu Ya De	2,750,700 (Note 3)	Note 1	16 March 2004
(Director)	2,750,700 (Note 3)	Note 2	16 March 2005
Zhang Rong Xing	2,750,700 (Note 3)	Note 1	16 March 2004
(Director)	2,750,700 (Note 3)	Note 2	16 March 2005
Yi Ai Guo	2,750,700 (Note 3)	Note 1	16 March 2004
(Supervisor)	2,750,700 (Note 3)	Note 2	16 March 2005

Notes:

The receipts from exercise of the units represent the difference between RMB3.456 per unit and the arithmetic average of the closing price of the listed shares of the Company during the period of 16 March 2003 to 15 March 2004.

— 27 —

GENERAL INFORMATION

APPENDIX

The receipts from exercise of the units represent the difference between RMB3.456 per unit and the arithmetic average of the closing price of the listed shares of the Company during the period of 16 March 2004 to 15 March 2005.
Represents the units collectively held by the management and the management staff of the Company from the relevant time of exercise.

The aforesaid units were granted under the share appreciation right scheme approved by the Shareholders on 6 March 2001 and amended by the Shareholders on 30 October 2003. After the amendment, the units granted under such scheme are held by the senior management and management staff of the Company instead of by individuals. The time and the price of the exercise are amended so that the receipts from exercise of the units represent the difference between issued price and the arithmetic average of the closing price of the listed shares of the Company during the period of exercise. The receipts from exercise of the units shall be applied as a special incentive fund and distributed by the Company according to proposals put forward by the Human Resources and Nomination Committee of the Company.

(b) Save as disclosed herein:
(i) as at the Latest Practicable Date, none of the Directors or supervisors or chief executive is interested 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 require notification to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO) or which are required to be entered into the register maintained by the Company under section 352 of the SFO 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.
(ii) none of the Directors has any direct or indirect interest in any assets which have been, since 31 December 2003, being the date to which the latest published audited accounts of the Group were made up, 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;
(iii) none of the Directors is materially interested in any contract or arrangement entered into by any member of the Group which contract or arrangement is subsisting at the date of this circular and which is significant in relation to the business of the Group.

— 28 —

GENERAL INFORMATION

APPENDIX

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as is known to any Directors or chief executive of the Company and their respective associates, the following parties had an interest or short positions in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:

				Approximate
				percentage in	Approximate
Name of		Number of		the relevant	percentage in
Substantial	Class of	Shares		class of share	the total issued
Shareholder	Shares	interested	Capacity	capital	share capital
Sumitomo Life	H Shares	61,814,000(L)	Interest of a	8.26%	2.83%
Insurance			controlled
Company			corporation
(Note 1)
Xin Tong Chan	Legal Person	654,780,000(L)	Beneficial	45.68%	30.03%
	Shares (State		owner
	owned)
Shen Guang Hui	Legal Person	457,780,000(L)	Beneficial	31.94%	20.99%
	Shares		owner

(L) — Long Position (P) — Lending Pool

Note 1. Pursuant to the Corporate Substantial Shareholder Notice filed by Sumitomo Life Insurance Company on 26 February 2004, Sumitomo Life Insurance Company indirectly holds an aggregate 61,814,000 H Shares in the following manner:

Sumitomo Life Insurance Company holds 100% shareholdings of Sumitomo Mitsui Asset Management Company, Limited, which directly holds 61,814,000 H Shares.

4. MATERIAL ADVERSE CHANGES

The Directors are not aware of any material adverse changes in the financial or trading position of the Group since 31 December 2003, the date to which the latest published audited consolidated accounts of the Group were made up.

— 29 —

GENERAL INFORMATION

APPENDIX

5. EXPERT

(a) The following are the qualifications of the expert who has given opinion or advice contained in this circular:

Name

Qualification

South China a deemed licensed corporation under the SFO permitted to engage in types 4, 6 and 9 of the regulated activities as defined in the SFO
(b) South China does not have any shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.
(c) South China has given and has not withdrawn its written consent to the issue of this circular, with inclusion of its letter and references to its name in the form and context in which it appears.
(d) South China does not have, or has had, direct or indirect interest in any assets which have been acquired or disposed of by, or leased to, or which are proposed to be acquired or disposed of by, or leased to, the Company or any of its subsidiaries since 31 December 2003, the date to which the latest published audited accounts of the Group were made up.
(e) The letter of advice from South China dated 26 April 2004 is given on pages 15 to 26 for incorporation herein.

6. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any of the Company or its subsidiaries other than contracts expiring or terminable by the relevant employer within one year without the payment of compensation other than statutory compensation.

7. LITIGATION

As at the Latest Practicable Date, the Company does not have any litigation or claims of material importance pending or threatened against any member of the group other than those disclosed earlier in the Company’s 2003 annual report.

8. MISCELLANEOUS

(a) The legal address of the Company is situated at 19/F., Tower A, United Plaza, 5022 Binhe Road North, Shenzhen 518026, PRC. Its place of business in Hong Kong is at Suites 2911 - 2912, 29th Floor, Two International Finance Centre, No. 8 Finance Street, Central, Hong Kong.

— 30 —

GENERAL INFORMATION

APPENDIX

(b) The share registrars of the Company in Hong Kong is Hong Kong Registrars Limited at Rooms 1901-1905, Hopewell Centre, 19th Floor, 183 Queen’s Road East, Hong Kong.
(c) The company secretary of the Company is Director Zhang Rong Xing. He holds a masters degree in mechanical engineering.
(d) The chief financial officer of the Company is Gong Tao Tao. She is a certified public accountant and certified public valuer of China.
(e) The English text of this circular shall prevail over the Chinese version for the purposes of interpretation.

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours of Messrs. Loong & Yeung, the Company’s solicitors at the solicitors’ office at Suites 2911-2912, 29th Floor, Two International Finance Centre, No. 8 Finance Street, Central, Hong Kong up to and including 12 May 2004:

(a) the Acquisition Agreements;
(b) this circular.

— 31 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [244 x 82] intentionally omitted <==

SHENZHEN EXPRESSWAY COMPANY LIMITED

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 548)

NOTICE OF FIRST EXTRAORDINARY GENERAL MEETING 2004

NOTICE IS HEREBY GIVEN that First Extraordinary General Meeting 2004 (the “EGM”) of Shenzhen Expressway Company Limited (the “Company”) will be held at the meeting room of the Company at 19/F, Tower A, United Plaza, No.5022 Binhe Road North, Shenzhen, the People’s Republic of China on 14 June 2004 (Monday), at 10:00 a.m. for the following purposes:

To consider and if thought fit, pass the following resolutions with or without amendments as ordinary resolutions:

“ THAT
(a) the agreement dated 5 March 2004 (the “Agreement I”) between the Company as purchaser and Guangdong Expressway Company Limited as vendor in relation to the sale and purchase of 25% equity interest in Yangmao Expressway Company Limited, a copy of which has been produced to this meeting marked “A” and initialed by the Chairman of this meeting for the purpose of identification, and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified;
(b) the directors of the Company be and are hereby authorized to do all such things and acts and execute such documents which they consider necessary or expedient for the implementation of and give effect to the Agreement I.”
“ THAT
(a) the agreement dated 7 April 2004 (the “Agreement II”) between the Company as purchaser and Guangdong Province Highway Construction Company Limited as vendor in relation to the sale and purchase of 25% equity interest in Jiangzhong Expressway Company Limited, a copy of which has been produced to this meeting marked “B” and initialed by the Chairman of this meeting for the purpose of identification, and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified;

— 32 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

(b) the directors of the Company be and are hereby authorized to do all such things and acts and execute such documents which they consider necessary or expedient for the implementation of and give effect to the Agreement II.”

By Order of the Board

Zhang Rong Xing

Director & Company Secretary

Shenzhen, the PRC, 26 April 2004

Notes :

1. Eligibility for attending the EGM

Shareholders of the Company whose names appear on the registers of shareholders of the Company at the close of business on 14 May 2004 shall have the right to attend the EGM after complying the necessary registration procedures.

Registration procedures for attending the EGM
i. Shareholders intending to attend the EGM should deliver to the Company, on or before 25 May 2004, either in person, by post or by fax, the reply slip (together with any required registration documents) for attending the EGM.
ii. Register of H Shareholders of the Company will be closed from 15 May 2004 to 14 June 2004 (both days inclusive), during which period no transfer of H Shares will be registered. Holders of H Shares of the Company who intend to attend the EGM must deliver their instruments of transfer together with the relevant share certificates to Hong Kong Registrars Limited (“HKRL”), the registrar of H Shares of the Company, at or before 4:00 p.m. on 14 May 2004.
Proxy
i. Shareholders entitled to attend and vote at the EGM are entitled to appoint, in written form, one or more proxies (whether a shareholder or not) to attend and vote on his behalf.
ii. A proxy should be appointed by written instrument signed by the appointor or his attorney. If the written instrument is signed by the attorney of the appointor, the written authorization or other authorization documents of such attorney should be notarized. In order to be valid, for shareholders of domestic capital shares, the written authorization or authorization documents which have been notarized together with the completed proxy form must be delivered to the Company 24 hours before the time of the holding of the EGM. In order to be valid, for shareholders of H Shares, the above documents must be delivered to HKRL within the same period.

— 33 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

iii. If a shareholder appoints one or more proxies, the proxies shall not have the right to vote individually on a show of hands.
iv. Shareholder or his proxy should produce identity proof when attending the EGM.

4. Poll

Article 70 of the Articles of the Company is extracted as follows:

“Unless a poll is demanded by the following person before or after any vote by show of hands, a general meeting shall be voted by show of hands:

(1) The chairman of the meeting;
(2) At least 2 shareholders entitled to vote present in person or by proxy;
(3) One or more shareholders present in person or by proxy representing in aggregate 10% or more of all shares carrying the right to vote at the meeting....”

5. Other business

i. The duration of the EGM is expected not to exceed one day. Shareholders who attend the EGM shall arrange for food and accommodation at their own cost.
ii. Address of Hong Kong Registrars Limited:

Rooms 1901-5, 19th Floor

Hopewell Centre 183 Queen’s Road East

Wanchai Hong Kong

iii. Address of the Company:

19/F, Tower A, United Plaza No. 5022 Binhe Road North Shenzhen, 518026 PRC Telephone: (86) 755-82945880 Facsimile: (86) 755-82910496/82710696

— 34 —

==> picture [244 x 85] intentionally omitted <==

SHENZHEN EXPRESSWAY COMPANY LIMITED

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

Proxy Form for the First Extraordinary General Meeting 2004

Number of Shares related to Domestic Capital	Number of Shares related to Domestic Capital	Number of Shares related to Domestic Capital
this proxy form (note1)		Shares/H Shares
		(Delete the inappropriate)

I/We (note 2) :

being the registered holder(s) of the Company’s ordinary shares: Domestic Capital shares

/H Shares now appoint

of (note 3) or failing him the Chairman of the Meeting as my/our proxy to attend and vote for me/us on the resolutions in accordance with the instruction below and on my/our behalf at the First Extraordinary General Meeting 2004 (“General Meeting”) to be convened and held at the meeting room of the Company on 19th Floor, Tower A, United Plaza, No.5022 Binhe Road North, Shenzhen, the People’s Republic of China on Monday (14 June 2004), at 10:00 a.m. In the absence of any indication, the proxy may vote for or against the resolutions at his own discretion (note 6) .

For (note 4) Against (note 4)

Ordinary Resolution No.1 Ordinary Resolution No.2

Date: , 2004 Signature (note 5) :

Notes:

Please insert the number of shares registered in your name(s) relating to this form; if no number is inserted, this form of proxy will be deemed to relate to all the shares in the capital of the Company registered in your name(s).
Full name(s) and address(es) to be inserted in BLOCK CAPITALS.
Please insert the name and address of your proxy; if they are left blank, the Chairman of the General Meeting will act as your proxy. One or more proxies, who may not be a shareholder of the Company, may be appointed to attend and vote in the General Meeting.
ATTENTION: If you wish to vote FOR the Resolution, please indicate with a “�” in the appropriate space under “For”. If you wish to vote AGAINST the Resolution, please indicate with a “�” in the appropriate space under “Against”. In the absence of any such indication, the proxy will vote or abstain at his discretion.
The proxy form must be under the hand of you or attorney duly authorised in writing in that behalf. If the appointor is a corporation, this form must be under its common seal or under the hand of any director or agent duly appointed in that behalf.
This proxy form together with the power of attorney, or other authority, if any, under which it is signed, or a notarially certified copy of that power of authority or other authority, must be deposited at the registered office of the Company not less than 24 hours before the time appointed for the General Meeting (in respect of holders of Domestic Shares) or Hong Kong Registrars Limited at Rooms 1901-5, 19th Floor Hopewell Centre, 183 Queen’ Road East, Wanchai, Hong Kong (in respect of holders of H Shares).
Where there are joint holders of any share of the Company, any one of such holders may vote at the General Meeting, either personally or by proxy, in respect of such share as if he were solely entitled thereto provided that. If more than one of such joint holders be present at the meeting personally or by proxy, the person whose name stands first on the register of shareholders in respect of such share shall alone be entitled to vote in respect thereof.
Completion and return of the form of proxy will not preclude a shareholder from attending and voting in person at the General Meeting if he so wishes. In the event that he attends the meeting, his form of proxy will be deemed to have been revoked.

==> picture [244 x 85] intentionally omitted <==

SHENZHEN EXPRESSWAY COMPANY LIMITED

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

SHAREHOLDER’S REPLY SLIP FOR FIRST EXTRAORDINARY GENERAL MEETING 2004

I (or unit):

of:

being the holder(s) of the Company’s shares:

Domestic Capital shares: /H Shares:

Telephone: Facsimile:

I am willing to attend (or appoint

as my proxy to attend on my/our behalf) the First Extraordinary General Meeting 2004 to be convened and held at the meeting room of the Company on 19th Floor, Tower A, United Plaza, No.5022 Binhe Road North, Shenzhen City on Monday, 14 June 2004 at 10:00 a.m., and hereby serve a written reply to the Company.

Shareholder:

Date:

Notes:

Shareholders may make a copy of, complete and deliver the reply slip, to the Company.
The reply slip has to be delivered to the registered address of the Company by Tuesday, 25 May 2004. In case of postal delivery, the delivery date will be the date of the postal chop.
Shareholders of domestic capital shares shall stamp on the reply slip a chop of their respective units.

AI assistant

Water Oasis Group Limited — Proxy Solicitation & Information Statement 2004

49733_rns_2004-04-27_07b4fb2b-e723-4a4c-81f3-96858e961c20.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

SHENZHEN EXPRESSWAY COMPANY LIMITED

(Stock Code: 548)

CONNECTED AND DISCLOSEABLE TRANSACTIONS

Independent Financial Adviser to the Independent Board Committee

SOUTH CHINA CAPITAL LIMITED

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

LETTER FROM THE BOARD

SHENZHEN EXPRESSWAY COMPANY LIMITED

(Stock Code: 548)

CONNECTED AND DISCLOSEABLE TRANSACTIONS

INTRODUCTION

LETTER FROM THE BOARD

BACKGROUND

THE ACQUISITION AGREEMENT I

Assets to be acquired

Consideration and Payment

LETTER FROM THE BOARD

Effective Date

INFORMATION ON YM EXPRESSWAY

Registered Capital and Shareholding Structure

LETTER FROM THE BOARD

Scope of Business

LETTER FROM THE BOARD

THE ACQUISITION AGREEMENT II

Assets to be acquired

Consideration and Payment

Effective Date

INFORMATION ON JZ EXPRESSWAY

Registered Capital and Shareholding Structure

LETTER FROM THE BOARD

Scope of Business

MAJOR CHANGES TO THE ACQUISITION AGREEMENT II

LETTER FROM THE BOARD

REASONS FOR THE ACQUISITIONS

INFORMATION ON THE COMPANY

INFORMATION ON GD EXPRESSWAY

INFORMATION ON GD HIGHWAY

CONNECTED TRANSACTIONS

INDEPENDENT BOARD COMMITTEE/INDEPENDENT FINANCIAL ADVISER

EXTRAORDINARY GENERAL MEETING

RECOMMENDATION

ADDITIONAL INFORMATION

SHENZHEN EXPRESSWAY COMPANY LIMITED

(Stock Code: 548)

CONNECTED AND DISCLOSEABLE TRANSACTIONS

Recommendation

James K.L. Poon

LETTER FROM SOUTH CHINA

CONNECTED AND DISCLOSEABLE TRANSACTIONS

INTRODUCTION

LETTER FROM SOUTH CHINA

LETTER FROM SOUTH CHINA

BACKGROUND

PRINCIPAL FACTORS AND REASONS CONSIDERED

LETTER FROM SOUTH CHINA

II. Business of JZ Expressway

III. Business of the Company

IV. Benefits of Acquisition I

a. High growth potential

b. High return

c. Company’s internal growth and long term strategy

V. Benefits of Acquisition II

a. Company’s internal growth and long-term strategy

b. Reasonable return for long-term investment

c. High growth potential

LETTER FROM SOUTH CHINA

2. Basis of consideration and valuation

I. Acquisition I

LETTER FROM SOUTH CHINA

II. Acquisition II

LETTER FROM SOUTH CHINA

3. Funding for the Acquisitions

LETTER FROM SOUTH CHINA

Water Oasis Group Limited Proxy Solicitation & Information Statement 2004