SHUI on COMPANY LIMITED (Incorporated in the British Virgin Islands with Limited Liability) (Stock Code: 983)

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Shui On Construction and Materials Limited, you should at once hand this Sch 1 document, together with the accompanying Form of Approval and Acceptance to the purchaser(s) or transferee(s) or to the bank, licensed securities dealer or registered institution in securities, or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s). This document should be read in conjunction with the accompanying Form of Approval and Acceptance and Form of Option Offer Acceptance, the contents of which form part of the terms and conditions of the Partial Offer and the Option Offer. Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.

* SHUI ON COMPANY LIMITED (Incorporated in the British Virgin Islands with limited liability) (Stock code: 983)

VOLUNTARY CONDITIONAL PARTIAL CASH OFFER AND OPTION OFFER BY MERRILL LYNCH (ASIA PACIFIC) LIMITED ON BEHALF OF SHUI ON COMPANY LIMITED TO ACQUIRE Sch 1-1 54,000,000 OFFER SHARES IN THE ISSUED SHARE CAPITAL OF SHUI ON CONSTRUCTION AND MATERIALS LIMITED FROM THE QUALIFYING SHAREHOLDERS AND TO CANCEL SHARE OPTIONS ENTITLING HOLDERS THEREOF TO SUBSCRIBE FOR UP TO 4,317,121 SHARES FROM THE QUALIFYING OPTIONHOLDERS

Financial advisor to the Offeror

Merrill Lynch (Asia Pacific) Limited

Independent financial advisor to the independent board committee of the Company

Anglo Chinese Corporate Finance, Limited

A letter from the Board is set out on pages 6 to 14 of this document. A letter from Merrill Lynch containing, among other things, details of the terms of the Partial Offer and the Option Offer is set out on pages 15 to 31 of this document. A letter from the Independent Board Committee to the Qualifying Shareholders and the Qualifying Optionholders containing its recommendations in respect of the Partial Offer and the Option Offer is set out on pages 32 and 33 of this document. A letter from Anglo Chinese containing its advice to the Independent Board Committee in respect of the Partial Offer and the Option Offer is set out on pages 34 to 64 of this document. The procedures for acceptance and other related information are set out in Appendix I to this document and in the accompanying Form of Approval and Acceptance and Form of Option Offer Acceptance. Acceptances should be received by the Share Registrar (with respect to the Partial Offer) and the Company Secretary (with respect to the Option Offer) no later than 4:00 p.m. on Monday, 30 May 2011, being the First Closing Date (or such other time and/or date as the Offeror may determine and announce in accordance with the Takeovers Code). Custodians, nominees and trustees who would, or otherwise intend to, forward this document and/or the accompanying Form of Approval and Acceptance to any jurisdiction outside Hong Kong should read carefully the paragraphs headed “Overseas Shareholders and Overseas Optionholders” in the Letter from Merrill Lynch and in Appendix I to this document. * For identification purpose only 9 May 2011 CONTENTS

Page

Expected timetable ...... ii

Definitions ...... 1

Letter from the Board ...... 6

Letter from Merrill Lynch ...... 15

Letter from the Independent Board Committee ...... 32

Letter from Anglo Chinese ...... 34

Appendix I — Further terms of the Partial Offer and the Option Offer ...... 65

Appendix II — Financial information of the Group ...... 82

Appendix III — Property valuation report ...... 184

Appendix IV — General information ...... 210

Appendix V — Financial information of the Offeror ...... 233

—i— EXPECTED TIMETABLE

The timetable set out below is indicative only and may be subject to change. Any changes to the timetable will be jointly announced by the Offeror and the Company.

Partial Offer and Option Offer open for approval and acceptance...... Monday, 9 May 2011

Latest time and date for approval and acceptance of the Partial Offer and the Option Offer on the First Closing Date (Note 1) ...... 4:00 p.m. on Monday, 30 May 2011

First Closing Date (Note 1) ...... Monday, 30 May 2011

Announcement on the results of the Partial Offer and the Option Offer as at the First Closing Date to be posted on the website of the Stock Exchange (Note 2) ...... nolater than 7:00 p.m. on Monday, 30 May 2011

Latest time and date for acceptance of the Partial Offer and the Option Offer assuming that the Partial Offer and the Option Offer become or are declared unconditional in all respects on the First Closing Date (Note 3) ...... 4:00 p.m. on Monday, 13 June 2011

Final Closing Date (Note 3) ...... Monday, 13 June 2011

Announcement on the results of the Partial Offer and the Option Offer as at the Final Closing Date to be posted on the website of the Stock Exchange (Note 2)...... nolater than 7:00 p.m. on Monday, 13 June 2011

Latest date for posting of remittances for amounts due under the Partial Offer and the Option Offer in respect of valid acceptances received on or before 4:00 p.m. on Monday, 13 June 2011 and taken up by the Offeror (Note 4) ...... Thursday, 23 June 2011

Latest date by which the Partial Offer and the Option Offer can become unconditional Sch 1-8 in all respects ...... Friday, 8 July 2011

Notes: 1. In order to approve and accept the Partial Offer, Qualifying Shareholders are required to submit the duly completed Form of Approval and Acceptance to the Share Registrar on or before 4:00 p.m. on Monday, 30 May 2011, being the First Closing Date (or such other time and/or date as the Offeror may determine and announce in accordance with the Takeovers Code). In order to accept the Option Offer, Qualifying Optionholders are required to submit the duly completed. Form of Option Offer Acceptance to the Company Secretary on or before 4:00 p.m. on the Final Closing Date. If on a closing day, valid acceptances received exceed 54,000,000 Offer Shares and approval of the Partial Offer from

—ii— EXPECTED TIMETABLE

Qualifying Shareholders holding over 50% of the Shares not held by the Offeror and parties acting in concert with it are received, the Offeror must declare the Partial Offer and the Option Offer unconditional in all respects and comply with Sch 1-15(i) Rule 15.3 of the Takeovers Code for the Partial Offer and the Option Offer to remain open for acceptance for 14 days thereafter. If all conditions are fulfilled prior to the First Closing Date, the Offeror may also declare the Partial Offer and the Option Offer unconditional in all respects at such time prior to the First Closing Date, provided that the Offeror fully complies with Rule 15.1 and Rule 15.3 of the Takeovers Code. The Offeror cannot extend the Final Closing Date to a day beyond the 14th day after the First Closing Date pursuant to Rule 28.4 of the Takeovers Code.

2. The announcement on the results of the Partial Offer and the Option Offer will be jointly issued by the Offeror and the Company and posted on the Stock Exchange’s website by 7:00 p.m. on the day when the Partial Offer and the Option Offer have become or been declared unconditional in all respects (if such date is prior to the First Closing Date) or on the First Closing Date, as the case may be, and on the Final Closing Date. Such announcement will comply with the disclosure requirements under Rule 19.1 and Note 7 to Rule 19 of the Takeovers Code and will include, amongst other things, the results of the Partial Offer and the Option Offer and details of the way in which each Accepting Shareholder’s and Accepting Optionholder’s pro rata entitlement was determined. In any announcement of an extension of the Partial Offer and the Option Offer, either the next closing date must be stated or, if the Partial Offer and the Option Offer have become or been declared unconditional in all respects, a statement will be made that the Partial Offer and the Option Offer will remain open for acceptance for 14 days thereafter in accordance with the Takeovers Code.

3. Pursuant to Rule 15.3 and Rule 28.4 of the Takeovers Code, the Final Closing Date should be 14 days after the date on which the Partial Offer is declared unconditional.

4. Remittances in respect of the Offer Shares tendered for acceptance and taken up by the Offeror under the Partial Offer (after deducting seller’s ad valorem stamp duty) and remittances in respect of the Share Options tendered and taken up by the Offeror for cancellation under the Option Offer will be posted to the relevant Accepting Shareholders and Accepting Optionholders by ordinary post at their own risk as soon as possible, but in any event within 10 days following the Final Closing Date.

All references to times and dates in the Composite Offer Document refer to Hong Kong times and dates.

— iii — DEFINITIONS

In the Composite Offer Document, unless the context otherwise requires, the following expressions shall have the following meanings:

“Accepting Shareholder(s)” Qualifying Shareholder(s) accepting the Partial Offer

“Accepting Optionholder(s)” Qualifying Optionholder(s) accepting the Option Offer

“acting in concert” has the meaning ascribed to it under the Takeovers Code

“Anglo Chinese” Anglo Chinese Corporate Finance, Limited, a licensed corporation under the SFO to conduct Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO, which is the independent financial advisor to the Independent Board Committee in respect of the Partial Offer and the Option Offer

“Announcement on Pre-Conditions” the announcement issued jointly by the Offeror and the Company dated 21 April 2011 in relation to the satisfaction of all the pre-conditions to the Partial Offer and the Option Offer

“associate(s)” has the meaning ascribed to it under the Takeovers Code

“Board” the board of Directors

“Business Day” a day (other than Saturdays, Sundays and public holidays) on which banks are open for business in Hong Kong

“CCASS” the Central Clearing and Settlement System established and operated by Hong Kong Securities Clearing Company Limited

“Company” Shui On Construction and Materials Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the main board of the Stock Exchange

“Company Secretary” the company secretary of the Company

“Composite Offer Document” this composite offer document in respect of the Partial Offer and the Option Offer jointly issued by the Offeror and the Company in accordance with the Takeovers Code

—1— DEFINITIONS

“Conditions” the conditions as set out under the paragraph headed “Conditions of the Partial Offer and the Option Offer” in the Letter from Merrill Lynch on pages 15 to 31 of this Composite Offer Document to which the Partial Offer and Option Offer are subject

“Director(s)” the director(s) of the Company

“Executive” the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director

“Final Closing Date” the 14th day after the earlier of the date on which the Partial Offer and the Option Offer are declared unconditional in all respects and the First Closing Date, but in any case at least 21 days from the date of this Composite Offer Document

“First Closing Date” the first closing date of the Partial Offer and the Option Offer as set out in the section headed “Expected Timetable” in this Composite Offer Document, or such later date as may be extended by the Offeror in accordance with the Takeovers Code

“Form of Approval and Acceptance” the form of approval and acceptance in respect of the Partial Offer accompanying this Composite Offer Document

“Form of Option Offer Acceptance” the form of acceptance in respect of the Option Offer accompanying this Composite Offer Document

“Group” the Company and its subsidiaries from time to time

“HK$” Hong Kong dollar(s), the lawful currency of Hong Kong

“Hong Kong” the Hong Kong Special Administrative Region of the PRC

“Independent Board Committee” an independent committee of the Board, comprising Ms. Li Hoi Lun, Helen, Mr. Gerrit Jan de Nys, Mr. David Gordon Eldon, Mr. Chan Kay Cheung and Mr. Tsang Kwok Tai, Moses, being all the independent non-executive Directors who have no interest in the Partial Offer or the Option Offer, which has been established by the Company to advise the Qualifying Shareholders and the Qualifying Optionholders in respect of the Partial Offer and the Option Offer

“In-the-money Share Option(s)” Share Option(s) which have an exercise price equal to, or lower than, the Offer Price

—2— DEFINITIONS

“Last Trading Day” 20 January 2011, being the last full trading day of the Shares on the Stock Exchange prior to suspension of trading in the Shares with effect from 9:30 a.m. on 21 January 2011, pending the issue of the first joint announcement dated 28 January 2011 on the then possible proposed Partial Offer and Option Offer by the Offeror and the Company

“Latest Practicable Date” 6 May 2011, being the latest practicable date prior to the despatch of this Composite Offer Document for the purpose of ascertaining certain information contained herein

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

“Macau” the Macau Special Administrative Region of the PRC

“Maximum Grant Acceptance” the maximum number of Shares underlying the Share Options in respect of each Option Class to be taken up by the Offeror for cancellation under the Option Offer

“Merrill Lynch” Merrill Lynch (Asia Pacific) Limited, a registered institution under the SFO, registered to conduct Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 7 (providing automated trading services) regulated activities under the SFO, which is the financial advisor to the Offeror in respect of the Partial Offer and the Option Offer

“Offer Period” has the meaning ascribed to it under the Takeovers Code and commencing from 28 January 2011, being the date of the first joint announcement issued by the Offeror and the Company in relation to the then possible proposed Partial Offer and Option Offer

“Offer Price” HK$12.00 per Offer Share

“Offer Share(s)” the Share(s) which are the subject of the Partial Offer, being 54,000,000 in number

“Offeror” Shui On Company Limited, a company incorporated in the British Virgin Islands with limited liability, which is wholly owned by the Bosrich Unit Trust. The Bosrich Unit Trust is the property of a discretionary trust, of which Mr. Lo Hong Sui, Vincent is the founder and one of the discretionary beneficiaries

—3— DEFINITIONS

“Option Class” the category of Share Options by virtue of the date of grant of the Share Options

“Option Offer” the voluntary conditional cash offer made by Merrill Lynch for and on behalf of the Offeror to take up from the Qualifying Optionholders for cancellation Share Options entitling the Qualifying Optionholders to subscribe for up to 4,317,121 Shares in accordance with the Takeovers Code on the basis set out in this Composite Offer Document and the accompanying Form of Option Offer Acceptance

“Option Offer Price” HK$12.00 less the exercise price in respect of the relevant Share Option for each underlying Share of the In-the-money Share Options or HK$0.01 for each underlying Share of the Out-of-the-money Share Options

“Optionholder(s)” holder(s) of the Share Option(s)

“Out-of-the-money Share Option(s)” Share Option(s) which have an exercise price above the Offer Price

“Partial Offer” the voluntary conditional partial cash offer made by Merrill Lynch for and on behalf of the Offeror to acquire 54,000,000 Offer Shares at the Offer Price in cash from the Qualifying Shareholders in accordance with the Takeovers Code on the basis set out in this Composite Offer Document and the accompanying Form of Approval and Acceptance

“PRC” the People’s Republic of China (which, for the purpose of this Composite Offer Document, excludes Hong Kong, Macau and Taiwan)

“Qualifying Optionholder(s)” Optionholder(s), other than the Offeror and parties acting in concert with it

“Qualifying Shareholder(s)” Shareholder(s), other than the Offeror and parties acting in concert with it

“Register” the register of members of the Company

“Relevant Period” the period commencing on 28 July 2010 (being the date falling six months prior to 28 January 2011, the commencement date of the Offer Period) and up to the Latest Practicable Date

“Savills” Savills Valuation and Professional Services Limited

“SFC” the Securities and Futures Commission of Hong Kong

—4— DEFINITIONS

“SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

“Share(s)” ordinary share(s) of HK$1.00 each in the share capital of the Company

“Share Option(s)” share option(s) granted by the Company pursuant to the Share Option Scheme, entitling the Optionholder(s) to subscribe for new Share(s)

“Share Option Scheme” the share option scheme adopted by the Company on 27 August 2002

“Share Registrar” Tricor Standard Limited, being the Hong Kong branch share registrar and transfer office of the Company, whose address is situated at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong

“Shareholder(s)” the holder(s) of the Share(s)

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Substantial Shareholder(s)” Shareholders who have an interest representing 5% or more of the issued share capital of the Company, in accordance with Part XV of the SFO

“Takeovers Code” the Hong Kong Code on Takeovers and Mergers

“%” per cent.

In the event of inconsistency, the English text of this Composite Offer Document shall prevail over the Chinese text.

—5— LETTER FROM THE BOARD

(Incorporated in Bermuda with limited liability) (Stock code: 983)

Executive Directors: Registered office: Sch.II(1) Mr. Lo Hong Sui, Vincent Clarendon House, Mr. Choi Yuk Keung, Lawrence 2 Church Street, Mr. Wong Yuet Leung, Frankie Hamilton HM 11, Mr. Wong Kun To, Philip Bermuda Mr. Wong Fook Lam, Raymond Head office and principal place of Independent non-executive Directors: business in Hong Kong: Mr. Gerrit Jan de Nys 34th Floor, Ms. Li Hoi Lun, Helen Shui On Centre, Mr. David Gordon Eldon 6-8 Harbour Road, Mr. Chan Kay Cheung Hong Kong Mr. Tsang Kwok Tai, Moses

9 May 2011

To the Qualifying Shareholders and the Qualifying Optionholders

Dear Sir or Madam,

VOLUNTARY CONDITIONAL PARTIAL CASH OFFER AND OPTION OFFER BY MERRILL LYNCH (ASIA PACIFIC) LIMITED ON BEHALF OF SHUI ON COMPANY LIMITED TO ACQUIRE 54,000,000 OFFER SHARES IN THE ISSUED SHARE CAPITAL OF SHUI ON CONSTRUCTION AND MATERIALS LIMITED FROM THE QUALIFYING SHAREHOLDERS AND TO CANCEL SHARE OPTIONS ENTITLING HOLDERS THEREOF TO SUBSCRIBE FOR UP TO 4,317,121 SHARES FROM THE QUALIFYING OPTIONHOLDERS

INTRODUCTION

* For identification purpose only

—6— LETTER FROM THE BOARD

Offeror recently became aware that Mrs. Chan Lo Hung Suen, Annie and Ms. Lo Wai Duen, Gwen, who are sisters of Mr. Lo Hong Sui, Vincent, have interests in the Shares and they are presumed to be acting in concert with the Offeror under the Takeovers Code. Further details of their interests in the Shares are disclosed in the paragraph headed “Effect of the Partial Offer and the Option Offer on the Shareholding Structure of the Company” in this letter. In addition, pursuant to the exercise of certain Share Options as announced by the Company on 28 April 2011 and 3 May 2011, there were changes to the number of Shares held by the Qualifying Shareholders and the number of Shares underlying the Share Options held by the Qualifying Optionholders. Accordingly, the number of Shares underlying the Share Options subject to the Option Offer has been revised to 4,317,121. The making of the Partial Offer and the Option Offer is subject to two pre-conditions: (i) the granting of the consent of the Executive for the Partial Offer pursuant to Rule 28.1 of the Takeovers Code; and (ii) the granting of a ruling by the Executive confirming the rebuttal of the presumption that Penta Investment Advisers Limited is a party acting in concert with the Offeror under class (1) of the definition of acting in concert under the Takeovers Code. On 21 April 2011, the Offeror and the Company jointly announced that all the pre-conditions to the making of the Partial Offer and the Option Offer have been fulfilled.

The Independent Board Committee, comprising Ms. Li Hoi Lun, Helen, Mr. Gerrit Jan de Nys, Mr. David Gordon Eldon, Mr. Chan Kay Cheung and Mr. Tsang Kwok Tai, Moses, has been formed to advise the Qualifying Shareholders and the Qualifying Optionholders in respect of the Partial Offer and the Option Offer and Anglo Chinese has been appointed as the independent financial advisor to advise the Independent Board Committee in respect of the Partial Offer and the Option Offer. The appointment of Anglo Chinese has been approved by the Independent Board Committee.

The purpose of the Composite Offer Document, of which this letter forms a part, is to provide you with, among other things, (i) the information relating to the Group, the Partial Offer and the Option Offer; (ii) the Letter from Merrill Lynch containing details of the Partial Offer and the Option Offer; (iii) the Letter from the Independent Board Committee containing its recommendation and advice to the Qualifying Shareholders and the Qualifying Optionholders in respect of the Partial Offer and the Option Offer; and (iv) the Letter from Anglo Chinese containing its advice to the Independent Board Committee in respect of the Partial Offer and the Option Offer.

THE PARTIAL OFFER AND THE OPTION OFFER

Merrill Lynch, for and on behalf of the Offeror, is conditionally making the Partial Offer to acquire 54,000,000 Offer Shares from the Qualifying Shareholders, and the Option Offer to cancel Share Options entitling holders thereof to subscribe for up to 4,317,121 new Shares issuable upon the exercise of such Share Options from the Qualifying Optionholders on the following basis:

For each Offer Share ...... HK$12.00

For each underlying Share of the HK$12.00 less the exercise price in respect In-the-money Share Options ...... of the relevant Share Option

For each underlying Share of the Out-of-the-money Share Options ...... HK$0.01

—7— LETTER FROM THE BOARD

Pursuant to Rule 28.5 of the Takeovers Code, the Partial Offer is conditional upon:

(i) acceptances being received in respect of a minimum of 54,000,000 Offer Shares for the Partial Sch 1-8 Offer; and

(ii) approval of the Partial Offer by the Qualifying Shareholders who are registered as Shareholders in the Register on or before the First Closing Date (unless the First Closing Date is extended in accordance with the Takeovers Code), holding over 50% of the Shares not held by the Offeror and parties acting in concert with it, signified by completing a separate box on the Form of Approval and Acceptance, specifying the number of Shares in respect of which the Partial Offer is approved.

The Option Offer will only become unconditional if the Partial Offer becomes unconditional in all respects. The conditions to the Partial Offer and the Option Offer cannot be waived by the Offeror.

Further details of the Partial Offer and the Option Offer are set out in the Letter from Merrill Lynch on pages 15 to 31 of the Composite Offer Document, Appendix I to the Composite Offer Document and the accompanying Form of Approval and Acceptance and Form of Option Offer Acceptance.

As at the Latest Practicable Date, the total number of issued Shares was 489,297,786 Shares, among which, 183,919,300 Shares were held by the Offeror and parties acting in concert with it. There were Share Options held by certain Directors and eligible employees of the Group, entitling them to subscribe for a total of 37,514,000 new Shares (representing approximately 7.12% of the issued share capital of the Company as enlarged by the issue of new Shares pursuant to the exercise of all outstanding Share Options), among which the Share Options held by the Offeror and parties acting in concert with it entitled them to subscribe for a total of 13,100,000 new Shares (representing approximately 2.49% of the issued share capital of the Company as enlarged by the issue of the new Shares pursuant to the exercise of all outstanding Share Options) and the remaining were held by the Qualifying Optionholders, entitling them to subscribe for a total of 24,414,000 new Shares (representing approximately 4.63% of the issued share capital of the Company as enlarged by the issue of the new Shares pursuant to the exercise of all outstanding Share Options). Mr. Wong Kun To, Philip and Mr. Wong Fook Lam, Raymond have each signed an irrevocable undertaking to (i) approve the Partial Offer; and (ii) not to tender any Shares or Share Options they held and procure that no Shares in which they are interested for the purpose of the SFO will be tendered for acceptance of the Partial Offer or the Option Offer.

The Company may grant new Share Options pursuant to the Share Option Scheme from time to time and has obtained a consent from the Offeror in respect of a further grant of Share Options entitling holders thereof to subscribe for up to 7,320,000 Shares on the basis that the holders of these new Share Options would execute undertakings to the Offeror not to accept the Option Offer in respect of the new Share Options. A waiver has also been obtained from the Executive of the Shareholders’ approval requirement applicable to this new grant under Rule 4 of the Takeovers Code. The Company will comply with the applicable requirements of the Listing Rules and the Takeovers Code if and when the new Share Options are granted.

—8— LETTER FROM THE BOARD

EFFECT OF ACCEPTING THE PARTIAL OFFER AND THE OPTION OFFER

By validly accepting the Partial Offer, the Qualifying Shareholders will sell their tendered Offer Shares which are finally taken up by the Offeror, free from all encumbrances and together with all rights and benefits at any time accruing thereto including all rights to any dividends or other distributions declared, made or paid on or after the Final Closing Date. Any dividends or other distributions declared, made or paid before the Final Closing Date will be paid by the Company to the Shareholders who are qualified for such dividends or distributions.

The Board has recommended a final dividend of HK$0.40 per Share for the year ended 31 December 2010, subject to the approval by the Shareholders at the annual general meeting of the Company to be held on 16 June 2011. By validly accepting the Partial Offer, Qualifying Shareholders will sell their tendered Offer Shares with the right to the aforesaid final dividend to the Offeror if the Partial Offer is closed on or before 16 June 2011 and the Shareholders approve such dividend.

If the Shareholders approve the aforesaid final dividend, it will be payable to the Shareholders whose names appear on the Register on 16 June 2011, except for the dividend attributable to the Offer Shares in respect of which the Partial Offer has been accepted by a Qualifying Shareholder and agreed to be taken up by the Offeror, and in the event that the formalities for the registration of the Offer Shares under the name of the Offeror could not be completed and the name of the Offeror in respect of such Offer Shares has not been entered into the Register on or before 16 June 2011, in order to implement the terms of the Partial Offer, such Qualifying Shareholder, by accepting the Partial Offer regarding his/her Offer Shares, is deemed to have instructed and authorised the Company and the Share Registrar to direct the payment of such amount of dividend to the Offeror. Any dividend attributable to the remaining Shares held by such Qualifying Shareholder following the completion of the Partial Offer will be paid to him/her in the same manner in which the final dividend will be paid to the other Shareholders. It is expected that subject to the approval of the final dividend by the Shareholders, the Company will arrange for the payment of the final dividend to the Shareholders on 6 July 2011.

For the avoidance of doubt, if the Partial Offer and the Option Offer proceed in accordance with the expected timetable as set out on page ii, the Offeror will be entitled to the aforesaid final dividend.

By validly accepting the Option Offer, Qualifying Optionholders will tender their Share Options for cancellation which are finally taken up by the Offeror and such tendered and finally taken up Share Options will be cancelled on the Final Closing Date.

The formulae for determining the number of Offer Shares to be taken up by the Offeror from each Qualifying Shareholder and the number of Shares underlying the Share Options to be taken up for cancellation by the Offeror from each Qualifying Optionholder are set out in the Letter from Merrill Lynch on pages 15 to 31 of the Composite Offer Document.

STAMP DUTY IMPLICATIONS

—9— LETTER FROM THE BOARD the Qualifying Shareholders who accept the Partial Offer. The relevant amount of stamp duty payable by the Qualifying Shareholders will be deducted from the consideration payable to the Qualifying Shareholders under the Partial Offer. The Offeror will bear its own portion of buyer’s ad valorem stamp duty at the rate of HK$1.00 for every HK$1,000.00 (or part thereof) of the market value of the tendered Offer Shares finally taken up by the Offeror or the consideration payable in respect of relevant acceptances of the Partial Offer, whichever is the higher, and will be responsible to account to the Stamp Office of Hong Kong for all the stamp duty payable for sale and purchase of the Offer Shares which are finally taken up by the Offeror under the Partial Offer. No stamp duty is payable in connection with the Option Offer.

TOTAL CONSIDERATION

Assuming full acceptance of the Partial Offer, the cash consideration payable by the Offeror at the Offer Price of HK$12.00 per Offer Share will amount to HK$648,000,000. Based on the number of outstanding Share Options as at the Latest Practicable Date and the terms of the Option Offer set out in this Composite Offer Document, assuming full acceptance of the Option Offer, the cash consideration payable by the Offeror for the Option Offer at the Option Offer Price will not exceed HK$2,222,176 in any event. Assuming full acceptance of the Partial Offer and the Option Offer, the total cash consideration payable by the Offeror for the Partial Offer and the Option Offer will amount to no more than HK$650,222,176. The Partial Offer and the Option Offer will be funded by a loan from Mr. Lo Hong Sui, Vincent (being the controlling shareholder of the Offeror) to the Offeror. No interest is payable on the loan, nor is the repayment or security for any liability (contingent or otherwise) dependent to any extent on the business of the Company.

THE INTENTIONS OF THE OFFEROR IN RELATION TO THE GROUP

Your attention is drawn to the paragraph headed “Intentions of the Offeror and Maintaining the Listing Status of the Company” in the Letter from Merrill Lynch on pages 15 to 31 of this Composite Offer Document.

The Board notes that the Offeror (i) intends to continue the existing businesses of the Group; (ii) has Sch.II Note6to(1) no intention to introduce any major changes to the existing business strategies and operations of the Group; (iii) intends that the employment of the employees of the Group will be continued; (iv) intends that there will be no material change in the deployment of financial resources or fixed assets of the Group; and (v) intends to maintain the listing status of the Company on the Stock Exchange upon the completion of the Partial Offer and the Option Offer.

The Board acknowledges the intentions of the Offeror in respect of the Group. In particular, the Directors consider that the successful implementation of the Partial Offer and the Option Offer would allow Mr. Lo Hong Sui, Vincent, currently a Substantial Shareholder and the Chairman of the Company, to reinforce his commitment and dedication to the Group. The Offeror considers that the Group’s principal businesses in the PRC are meeting expectation, taking into consideration that these businesses face considerable challenges posed from the PRC domestic competitors and recent government policy measures. The Offeror and Mr. Lo Hong Sui, Vincent, a Substantial Shareholder and the Chairman of the Company, have full confidence in the future growth potential of the Group’s principal businesses in the PRC, Hong Kong and Macau. This confidence is evidenced by the fact that the Offer Price is at a premium over the closing price of the Shares on the Last Trading Day.

—10— LETTER FROM THE BOARD

The Board also understands that the Offeror has no intention to privatise the Company but would like to reinforce his commitment and dedication to the Group which the Board considers as most welcoming.

EFFECT OF THE PARTIAL OFFER AND THE OPTION OFFER ON THE SHAREHOLDING Sch 1-4(i) STRUCTURE OF THE COMPANY

The table below shows the shareholding structure of the Company as at the Latest Practicable Date and immediately after completion of the Partial Offer and the Option Offer on the assumptions that: (i) excluding Mr. Wong Kun To, Philip and Mr. Wong Fook Lam, Raymond who have undertaken to the Offeror that they will not accept the Partial Offer and the Option Offer and will procure that no Shares in which they are interested for the purpose of the SFO will be tendered for acceptance under the Partial Offer, the Partial Offer and the Option Offer have been accepted in full by the Qualifying Shareholders and the Qualifying Optionholders; and (ii) no additional Shares will be issued or repurchased by the Company from the Latest Practicable Date up to and including the date of completion of the Partial Offer and the Option Offer:

Immediately after completion of the As at the Latest Partial Offer and Name of Shareholders Practicable Date the Option Offer Sch 1-2 Number Approx Number Approx of Shares % of Shares %

Mr. Lo Hong Sui, Vincent and the Offeror (Notes 1 and 2) 182,293,000 37.26 236,293,000 48.29

Other parties acting in concert with the Offeror Sch 1-4(ii) Mr. Wong Yuet Leung, Frankie (Notes 3, 4 and 5) 800,000 0.16 800,000 0.16 Mr. Choi Yuk Keung, Lawrence (Notes 3 and 6) 540,000 0.11 540,000 0.11 Sch 1-4(iii) Mrs. Chan Lo Hung Suen, Annie (Notes 7 and 9) 274,300 0.06 274,300 0.06 Ms. Lo Wai Duen, Gwen (Notes 8 and 9) 12,000 0.002 12,000 0.002 1,626,300 0.33 1,626,300 0.33

Subtotal for Mr. Lo Hong Sui, Vincent, the Offeror and parties acting in concert with the Offeror 183,919,300 37.59 237,919,300 48.62

Mr. Wong Fook Lam, Raymond (Notes 3 and 10) 32,000 0.01 32,000 0.01 Mr. Wong Kun To, Philip (Notes 3, 11 and 12) 72,533 0.01 72,533 0.01 Penta Investment Advisers Limited (Note 13) 108,462,499 22.17 89,276,535 18.25 Other Qualifying Shareholders 196,811,454 40.22 161,997,418 33.11 Qualifying Shareholders 305,378,486 62.41 251,378,486 51.38

Total 489,297,786 100.00 489,297,786 100.00

—11— LETTER FROM THE BOARD

Notes:

1. These interests comprise 181,981,000 Shares beneficially owned by the Offeror and 312,000 Shares beneficially owned Sch 1-2 Sch 1-4 by Ms. Loletta Chu (“Mrs. Lo”), the spouse of Mr. Lo Hong Sui, Vincent. Of the 181,981,000 Shares beneficially owned by the Offeror, 166,148,000 Shares are held by the Offeror itself and 15,833,000 Shares are held by Shui On Finance Company Limited, an indirect wholly-owned subsidiary of the Offeror. The Offeror is owned by the Bosrich Unit Trust, the trustee of which is Bosrich Holdings (PTC) Inc. (“Bosrich”). The Bosrich Unit Trust is the property of a discretionary trust, of which Mr. Lo Hong Sui, Vincent is one of the discretionary beneficiaries (with other discretionary beneficiaries being family members of Mr. Lo Hong Sui, Vincent) and the founder of the trust, and HSBC International Trustee Limited (“HSBC Trustee”) is the trustee. Accordingly, Mr. Lo Hong Sui, Vincent, HSBC Trustee and Bosrich are deemed to be interested in 181,981,000 Shares under the SFO.

2. 312,000 Shares are beneficially owned by Mrs. Lo. Under the SFO, Mr. Lo Hong Sui, Vincent is deemed to be interested in such Shares and both Mr. Lo Hong Sui, Vincent and Mrs. Lo are also deemed to be interested in 181,981,000 Shares mentioned in note 1 above.

3. Each of Mr. Wong Yuet Leung, Frankie, Mr. Choi Yuk Keung, Lawrence, Mr. Wong Fook Lam, Raymond and Mr. Wong Kun To, Philip holds interests in the Share Options granted by the Company under the Share Option Scheme, full details of which are set out in paragraph 3(b)(iii) in Appendix IV to this Composite Offer Document.

4. Mr. Wong Yuet Leung, Frankie also holds a call option granted by the Offeror in respect of 1,600,000 Shares as part of the incentive reward to his services to the Company.

5. Mr. Wong Yuet Leung, Frankie, a director of the Company and various members of the Group, is also an executive director of the Offeror.

6. Mr. Choi Yuk Keung, Lawrence, a director of the Company and various members of the Group, is also an executive director of the Offeror.

7. These Shares are held by Maxiflow Global Limited, in which Mrs. Chan Lo Hung Suen, Annie, who is a sister of Mr. Lo Hong Sui, Vincent, has a beneficial interest.

8. These Shares are beneficially owned by Ms. Lo Wai Duen, Gwen, who is a sister of Mr. Lo Hong Sui, Vincent.

9. Please refer to Appendix IV to this Composite Offer Document for the information on dealings in the Shares by Mrs. Chan Lo Hung Suen, Annie and Ms. Lo Wai Duen, Gwen.

11. These Shares are beneficially owned by the spouse of Mr. Wong Kun To, Philip. Under the SFO, he is deemed to be interested in such Shares.

12. Mr. Wong Kun To, Philip, a director of the Company, holds no directorship in the Offeror or any of its subsidiaries. Save for his directorship held in the Company and various members of the Group, Mr. Wong Kun To, Philip has no other relationship or connection with the Offeror.

13. These Shares are held by Penta Master Fund, Limited, Penta Asia Domestic Partners, L.P., Penta Asia Long/Short Fund, Ltd. and other funds and managed accounts of which Penta Investment Advisers Limited is the investment adviser. Mr. John Zwaanstra is the sole beneficial owner of Penta Investment Advisers Limited.

In the event that the Partial Offer and the Option Offer are declared unconditional in all respects, the interests of the Offeror and parties acting in concert with it in the issued share capital of the Company would increase from approximately 37.59% as at the Latest Practicable Date to no more than approximately 48.62% immediately upon completion of the Partial Offer and the Option Offer. Shareholders should note that if the Partial Offer is completed, neither the Offeror nor parties acting in concert with it or those who subsequently become parties acting in concert with the Offeror (where applicable) may, during the 12-month period immediately following the end of the Offer Period, acquire any voting rights in the Company under Rule 28.3 of the Takeovers

—12— LETTER FROM THE BOARD

Code. Thereafter, the Offeror may increase its interest in the voting rights of the Company to up to approximately 50.62% (i.e. more than 50%) without incurring any obligation to make a general offer in the immediately following 12 months, and thereafter be free to acquire further Shares without incurring any obligation to make a general offer.

INFORMATION ON THE GROUP

The Company is an investment holding company incorporated in Bermuda with limited liability, the Shares of which are listed on the main board of the Stock Exchange. The subsidiaries of the Company are principally engaged in property development, asset management, cement production and construction businesses in the PRC, Hong Kong and Macau.

GENERAL

Your attention is drawn to the Letter from Merrill Lynch and to Appendix I to this Composite Offer Document, the accompanying Form of Approval and Acceptance and the Form of Option Offer Acceptance for the principal terms and the acceptance and settlement procedures of the Partial Offer and the Option Offer.

Your attention is also drawn to the Letter from the Independent Board Committee as set out on pages 32 and 33 of this Composite Offer Document as well as the Letter from Anglo Chinese as set out on pages 34 to 64 of this Composite Offer Document which contains, among other things, Anglo Chinese’s advice to the Independent Board Committee in respect of the Partial Offer and the Option Offer and the principal factors and reasons considered by it in arriving at such advice.

Your attention is further drawn to the general information as set out in Appendix IV to this Composite Offer Document.

The Partial Offer may or may not become unconditional, depending on the number of acceptances and approvals by the Qualifying Shareholders received by the Offeror. The Option Offer may or may not become unconditional, depending on whether the Partial Offer becomes unconditional in all respects. Shareholders, Optionholders and potential investors of the Company are advised to exercise extreme caution when dealing in the securities of the Company, and if they are in any doubt about their position, they should consult their professional advisors. If the Partial Offer and the Option Offer are declared unconditional in all respects before the First Closing Date, the Offeror will publish an announcement on the Stock Exchange’s website by 7:00 p.m. on the same day to inform the Shareholders and Optionholders that the Partial Offer and the Option Offer have become or been declared unconditional in all respects. Such announcement will comply with the disclosure requirements under Rule 19.1 and Note 7 to Rule 19 of the Takeovers Code and will include, amongst other things, the results of the Partial Offer and the Option Offer and details of the way in which each Accepting Shareholder’s and Accepting Optionholder’s pro-rata entitlement was determined. If the Partial Offer and the Option Offer are not previously declared unconditional in all respects, the Offeror will publish

—13— LETTER FROM THE BOARD an announcement on the Stock Exchange’s website by 7:00 p.m. on the First Closing Date to inform the Shareholders and the Optionholders the results of the Partial Offer and the Option Offer and as to whether or not the Partial Offer and the Option Offer have been revised or extended, have expired or have become or been declared unconditional.

INTERESTED PARTIES

Mr. Lo Hong Sui, Vincent, a Substantial Shareholder and the Chairman of the Company, is the founder Sch 1-4(ii) and one of the beneficiaries of a discretionary trust which in turn holds the Bosrich Unit Trust, holder of the entire issued share capital of the Offeror, and is also a director of the Offeror. Each of Mr. Choi Yuk Keung, Lawrence and Mr. Wong Yuet Leung, Frankie, a Director who also has an interest in the Shares and the Share Options, is also a director of the Offeror. Accordingly, neither Mr. Lo Hong Sui, Vincent, Mr. Choi Yuk Keung, Lawrence nor Mr. Wong Yuet Leung, Frankie has joined with the rest of the Board in giving their views on the Partial Offer or the Option Offer, or the recommendations to the Qualifying Shareholders and Qualifying Optionholders as set out in this letter.

RECOMMENDATION OF THE BOARD

Having taken into account the terms of the Partial Offer and the Option Offer and the advice of Anglo Q10 Sch.II(1) Chinese, the Independent Board Committee considers that the terms of the Partial Offer and the Option Offer are fair and reasonable so far as the Qualifying Shareholders and the Qualifying Optionholders are concerned. Your attention is drawn to the Letter from the Independent Board Committee and the Letter from Anglo Chinese, which form part of this Composite Offer Document.

Yours faithfully For and on behalf of the Board of Shui On Construction and Materials Limited Wong Kun To, Philip Managing Director and Chief Executive Officer

—14— LETTER FROM MERRILL LYNCH

9 May 2011

To the Qualifying Shareholders and the Qualifying Optionholders

Dear Sir or Madam,

INTRODUCTION

On 28 January 2011 and 1 February 2011, the Offeror and the Company jointly announced that Merrill Lynch, for and on behalf of the Offeror, intended to make a possible proposed voluntary conditional partial cash offer to acquire 54,000,000 Offer Shares from the Qualifying Shareholders at the Offer Price of HK$12.00 per Offer Share and extend an appropriate offer to the Qualifying Optionholders to cancel Share Options entitling holders thereof to subscribe for up to 4,364,973 new Shares issuable upon the exercise of such Share Options. The Offeror recently became aware that Mrs. Chan Lo Hung Suen, Annie and Ms. Lo Wai Duen, Gwen, who are sisters of Mr. Lo Hong Sui, Vincent, have interests in the Shares and they are presumed to be acting in concert with the Offeror under the Takeovers Code. Further details of their interests in the Shares are disclosed in the paragraph headed “Effect of the Partial Offer and the Option Offer on the Shareholding Structure of the Company” in the Letter from the Board. In addition, pursuant to the exercise of certain Share Options as announced by the Company on 28 April 2011 and 3 May 2011, there were changes to the number of Shares held by the Qualifying Shareholders and the number of Shares underlying the Share Options held by the Qualifying Optionholders. Accordingly, the number of Shares underlying the Share Options subject to the Option Offer has been revised to 4,317,121. The making of the Partial Offer and the Option Offer is subject to two pre-conditions: (i) the granting of the consent of the Executive for the Partial Offer pursuant to Rule 28.1 of the Takeovers Code; and (ii) the granting of a ruling by the Executive confirming the rebuttal of the presumption that Penta Investment Advisers Limited is a party acting in concert with the Offeror under class (1) of the definition of acting in concert under the Takeovers Code. On 21 April 2011, the Offeror and the Company jointly announced that all the pre-conditions to the making of the Partial Offer and the Option Offer have been fulfilled.

—15— LETTER FROM MERRILL LYNCH

The purpose of this letter is to provide you with, among other things, the terms of the Partial Offer and the Option Offer. Further details of the terms and conditions of the Partial Offer and the Option Offer are set out in Appendix I to this Composite Offer Document, the accompanying Form of Approval and Acceptance and Form of Option Offer Acceptance.

Your attention is drawn to the Letter from the Board as set out on pages 6 to 14 of this Composite Offer Document. You are also strongly advised to read the Letter from the Independent Board Committee as set out on pages 32 and 33 of the Composite Offer Document which contains its recommendation to the Qualifying Shareholders and the Qualifying Optionholders in respect of the Partial Offer and the Option Offer, and the Letter from Anglo Chinese as set out on pages 34 to 64 of the Composite Offer Document containing its advice to the Independent Board Committee in respect of the Partial Offer and the Option Offer.

TERMS OF THE PARTIAL OFFER AND THE OPTION OFFER

The Partial Offer and the Option Offer are made on the terms set out below:

(a) Offer Price and Option Offer Price

For each Offer Share ...... HK$12.00

For each underlying Share of the HK$12.00 less the exercise price in respect In-the-money Share Options ...... of the relevant Share Option

For each underlying Share of the Out-of-the-money Share Options...... HK$0.01

(b) Conditions of the Partial Offer and the Option Offer

Pursuant to Rule 28.5 of the Takeovers Code, the Partial Offer is conditional upon:

(i) acceptances being received in respect of a minimum of 54,000,000 Offer Shares for the Partial Offer; and

—16— LETTER FROM MERRILL LYNCH

The Option Offer will only become unconditional if the Partial Offer becomes unconditional in all respects. The conditions to the Partial Offer and the Option Offer cannot be waived by the Offeror.

The Share Options that are duly tendered by the Accepting Optionholders and taken up by the Offeror for cancellation under the Option Offer will be cancelled. Further, the Option Offer will be made on the basis that acceptance of the Option Offer by any person will constitute a warranty by such person or persons to the Offeror that the Share Options are still outstanding, free from all third party rights, liens, charges, equities, adverse interests and encumbrances and are to be cancelled and renounced together with all rights attaching thereto as at the date of the Announcement on Pre-Conditions or subsequently becoming attaching to them.

In the event that valid acceptances are received for less than 54,000,000 Offer Shares or the approval of the Partial Offer received from Qualifying Shareholders held less than 50% of the Shares held by all the Qualifying Shareholders by the First Closing Date, unless the First Closing Date is extended in accordance with the Takeovers Code, the Partial Offer and the Option Offer will not proceed and will immediately lapse.

In the event that valid acceptances are received for not less than 54,000,000 Offer Shares and approval of the Partial Offer from Qualifying Shareholders holding over 50% of the Shares not held by the Offeror and parties acting in concert with it are received on or prior to the First Closing Date, the Offeror will declare the Partial Offer and the Option Offer unconditional in all respects on or prior to the First Closing Date. The Option Offer will only be declared unconditional when the Partial Offer is declared unconditional in all respects.

Pursuant to Rule 15.3 of the Takeovers Code, the Final Closing Date would be the 14th day after Sch 1-15(i) the earlier of the date on which the Partial Offer and the Option Offer are declared unconditional in all respects and the First Closing Date, but in any event the Final Closing Date will be at least 21 days from the date of this Composite Offer Document.

The Offeror cannot extend the Final Closing Date to a day beyond the 14th day after the First Closing Date pursuant to Rule 28.4 of the Takeovers Code.

Whether or not the Qualifying Shareholders accept the Partial Offer, they may approve the Sch 1-15(i) Partial Offer AND specify the number of Shares in respect of which they approve the Partial Offer in the accompanying Form of Approval and Acceptance. Each Share shall be entitled to ONE vote only. Multiple votes in respect of the same Share will not be taken into account in counting the approval of the Partial Offer.

Warning: The Partial Offer and the Option Offer may or may not become unconditional. Completion of the Partial Offer and the Option Offer is a possibility only. Shareholders, Optionholders and potential investors of the Company are advised to exercise extreme caution when dealing in the securities of the Company, and if they are in any doubt about their position, they should consult their professional advisors.

—17— LETTER FROM MERRILL LYNCH

VALUE OF THE PARTIAL OFFER

The Offer Price of HK$12.00 represents:

(i) a premium of approximately 24.35% over the closing price of HK$9.65 per Share as quoted on Sch 1-10(c) the Stock Exchange on the Last Trading Day;

(ii) a premium of approximately 25.84% over the average closing price of HK$9.536 per Share as quoted on the Stock Exchange for the last 5 consecutive trading days up to and including the Last Trading Day;

(iii) a premium of approximately 27.17% over the average closing price of HK$9.436 per Share as quoted on the Stock Exchange for the last 10 consecutive trading days up to and including the Last Trading Day;

(iv) a premium of approximately 31.46% over the average closing price of HK$9.128 per Share as quoted on the Stock Exchange for the last 30 consecutive trading days up to and including the Last Trading Day;

(v) a premium of approximately 16.50% over the closing price of HK$10.30 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and

(vi) a discount of approximately 36.24% to the audited consolidated net asset value of the Group attributable to the Shareholders of approximately HK$18.82 per Share as at 31 December 2010.

As at the Latest Practicable Date, the Company has 489,297,786 Shares in issue. The Partial Offer for 54,000,000 Offer Shares is being valued at HK$648,000,000 based on the Offer Price of HK$12.00 per Offer Share. On the basis of the Offer Price of HK$12.00 per Offer Share, the entire issued share capital of the Company is valued at HK$5,871,573,432.

HIGHEST AND LOWEST CLOSING PRICES OF THE SHARES

The highest and lowest closing prices of the Shares as quoted on the Stock Exchange during the Relevant Period, were HK$11.12 per Share on 7 February 2011 and HK$8.77 per Share on 28 December 2010.

TOTAL CONSIDERATION FOR THE PARTIAL OFFER AND THE OPTION OFFER AND FINANCIAL RESOURCES OF THE OFFEROR

Assuming full acceptance of the Partial Offer, the cash consideration payable by the Offeror at the Sch 1-7 Sch 1-12 Offer Price of HK$12.00 per Offer Share will amount to HK$648,000,000. Based on the number of Note 3 Sch 1-12(b) outstanding Share Options as at the Latest Practicable Date and the terms of the Option Offer set out in this Composite Offer Document, assuming full acceptance of the Option Offer, the cash consideration payable by the Offeror for the Option Offer at the Option Offer Price will not exceed

—18— LETTER FROM MERRILL LYNCH

HK$2,222,176 in any event. Assuming full acceptance of the Partial Offer and the Option Offer, the total cash consideration payable by the Offeror for the Partial Offer and the Option Offer will amount to no more than HK$650,222,176. The Partial Offer and the Option Offer will be funded by a loan from Mr. Lo Hong Sui, Vincent (being the controlling shareholder of the Offeror) to the Offeror.

Merrill Lynch, the financial advisor to the Offeror in relation to the Partial Offer and the Option Offer, Sch 1-11 is satisfied that sufficient financial resources are available to the Offeror to satisfy payment of the cash consideration on acceptance of the Partial Offer and the Option Offer in full.

OTHER TERMS OF THE PARTIAL OFFER AND THE OPTION OFFER

The maximum number of Shares to be taken up by the Offeror pursuant to the Partial Offer is 54,000,000 Shares, representing approximately 11.04% of the issued share capital of the Company of 489,164,786 Shares and approximately 17.69% of the Shares held by Qualifying Shareholders (being 305,245,486 Shares) as at 28 January 2011. The Offeror recently became aware that Mrs. Chan Lo Hung Suen, Annie and Ms. Lo Wai Duen, Gwen, who are sisters of Mr. Lo Hong Sui, Vincent, have interests in the Shares of the Company and they are presumed to be acting in concert with the Offeror under the Takeovers Code. Further details of their interests in the Shares are disclosed in the paragraph headed “Effect of the Partial Offer and the Option Offer on the Shareholding Structure of the Company” in the Letter from the Board in this Composite Offer Document. In addition, pursuant to the exercise of certain Share Options as announced by the Company on 28 April 2011 and 3 May 2011, there were changes to the number of Shares held by the Qualifying Shareholders and the number of Shares underlying the Share Options held by the Qualifying Optionholders. Accordingly, the number of Shares underlying the Share Options subject to the Option Offer has been revised to 4,317,121. Based on the shareholding table as set out in the section headed “Effect of the Partial Offer and the Option Offer on the Shareholding Structure of the Company” in the Letter from the Board in this Composite Offer Document, these 54,000,000 Shares also represent 11.04% and 17.68% of the issued share capital of the Company of 489,297,786 Shares and of the Shares held by the Qualifying Shareholders (being 305,378,486 Shares), respectively, as at the Latest Practicable Date. According to the announcement made by the Company on 3 May 2011 pursuant to Rule 3.8 of the Takeovers Code, the issued share capital of the Company has been increased to 489,297,786 due to the exercise of certain Share Options.

Qualifying Shareholders may accept the Partial Offer in respect of some or all of the Offer Shares held by them. If valid acceptances are received for 54,000,000 Offer Shares, all Offer Shares validly accepted will be taken up. If valid acceptances are received for more than 54,000,000 Offer Shares, the total number of Offer Shares taken up by the Offeror from each Qualifying Shareholder will be determined by the total number of Offer Shares tendered for acceptance in accordance with the following formula:

A C ן B

A: 54,000,000 Offer Shares (being the total number of Offer Shares for which the Partial Offer is made)

—19— LETTER FROM MERRILL LYNCH

B: Total number of Offer Shares tendered by all the Qualifying Shareholders under the Partial Offer

C: Number of Offer Shares tendered by the relevant individual Qualifying Shareholder under the Partial Offer

As a result, it is possible that if a Qualifying Shareholder tenders all his Offer Shares to the Offeror under the Partial Offer, not all of such Offer Shares will be taken up. Fractions of Offer Shares will not be taken up under the Partial Offer and, accordingly, the number of Shares that the Offeror will take up from each Qualifying Shareholder in accordance with the above formula will be rounded up or down to the nearest whole number at the discretion of the Offeror.

The Shares are currently traded in board lots of 2,000 Shares each. Such board lot size will not be changed as a result of the implementation of the Partial Offer. According to the above formula, an Accepting Shareholder may, as a result of the Partial Offer, hold odd lots of the Shares.

Further to the joint announcements issued on 28 January 2011 and 1 February 2011 in which a general mechanism and basis for the Option Offer has been stated, the detailed mechanism and basis of the Option Offer are further set out below.

Qualifying Optionholders may accept the Option Offer in respect of some or all of the Share Options held by them. The Share Options will be categorised in different categories (each an “Option Class”) by virtue of the date of grant of the Share Options. The maximum number of Shares underlying the Share Options to be taken up by the Offeror in each Option Class (“Maximum Grant Acceptance”) (“X”) will be determined in accordance with the following formula:

D F ן =X E

D: Total number of Shares underlying the Share Options held by all the Qualifying Optionholders under the Option Class

E: Total number of Shares underlying the Share Options held by all the Qualifying Optionholders

F: 4,317,121, being the maximum number of Shares underlying the Share Options to be taken up for cancellation by the Offeror under the Option Offer

—20— LETTER FROM MERRILL LYNCH

Set out below is a table of the outstanding Share Options as at the Latest Practicable Date and the Maximum Grant Acceptance applicable to each Option Class:

Option Offer Number of new Number of new Price per Shares issuable Shares issuable Share Option Class Exercise upon exercise upon exercise underlying (categorised by price per of Share of Share Options Maximum the Share the date of grant of Share Options by all by all Qualifying Grant Options the Share Options) (HK$) Optionholders Optionholders Acceptance (HK$)

01/08/06 14.00 3,128,000 1,128,000 199,464 0.01 14/06/07 20.96 3,254,000 2,504,000 442,782 0.01 07/05/08 19.76 6,490,000 2,740,000 484,513 0.01 09/04/09 7.63 6,682,000 2,682,000 474,257 4.37 05/06/09 11.90 6,990,000 6,990,000 1,236,040 0.10 12/04/10 12.22 10,970,000 8,370,000 1,480,065 0.01 Total 37,514,000 24,414,000 4,317,121

Further details of the outstanding Share Options, including the exercise periods of the Share Options are set out in Appendix IV to this Composite Offer Document. In respect of each Option Class, if valid acceptances are received for no more than the Maximum Grant Acceptance applicable to that Option Class, all Share Options tendered in respect of that Option Class will be taken up by the Offeror and cancelled on the Final Closing Date. In respect of each Option Class, if valid acceptances are received for more than the relevant Maximum Grant Acceptance, the total number of Shares underlying the Share Options tendered by the relevant individual Qualifying Optionholder to be taken up by the Offeror and cancelled on the Final Closing Date in respect of the relevant Option Class (“V”) will be determined in accordance with the following formula:

X Z ן =V Y

X: Maximum Grant Acceptance for the relevant Option Class

Y: Total number of Shares underlying the Share Options of the relevant Option Class tendered by all Qualifying Optionholders

Z: Number of Shares underlying the Share Options of the relevant Option Class tendered by the relevant individual Qualifying Optionholder

Where the Offeror is only taking up part but not all of the Share Options tendered by a Qualifying Optionholder under any Option Class, and the Share Options within the relevant Option Class have different exercise periods, the Share Options to be taken up by the Offeror and cancelled on the Final Closing Date in respect of the Share Options with different exercise periods within the relevant Option Class will be determined on a pro-rata basis in accordance with the following formula:

T V ן U

—21— LETTER FROM MERRILL LYNCH

T: Total number of Shares underlying the Share Options held by the relevant individual Qualifying Optionholder under the respective exercise period within the relevant Option Class

U: Total number of Shares underlying the Share Options held by the relevant individual Qualifying Optionholder within the relevant Option Class

V: Total number of Shares underlying the Share Options tendered by the relevant individual Qualifying Optionholder to be taken up by the Offeror and cancelled on the Final Closing Date under the relevant Option Class

Qualifying Optionholders will have the right to elect how many Shares underlying the Share Options under each Option Class to tender for acceptance under the Option Offer. In the Form of Option Offer Acceptance, Qualifying Optionholders will be requested to indicate the date of grant of the Option Class and the number of Shares underlying the Share Options they wish to tender under that Option Class. If the Qualifying Optionholder accepts the Option Offer in respect of a particular Option Class, the Qualifying Optionholder will be deemed to have tendered such Share Options proportional to the Share Options he/she holds for each exercise period within that Option Class.

If a Qualifying Optionholder wants to tender any or all of their Share Options under any given Option Class, he/she must enclose all the corresponding certificates for the Share Options for all exercise periods under that Option Class as the Offeror will apply a pro-rata mechanism across the Share Options for all exercise periods on a pro-rata basis granted under that Option Class. In other words, Qualifying Optionholders cannot choose which exercise period of Share Options under the same Option Class to tender. Failure to attach all the corresponding certificates for the Share Options under the same Option Class so tendered would render the acceptance of the Option Offer null and void.

For the ease of understanding, below is a simple illustration of how the mechanism of the Option Offer works for a Qualifying Optionholder:

Assuming a Qualifying Optionholder holds one class of Share Options granted on 9 April 2009 with a total of 50,000 underlying Shares under three exercise periods.

If such a Qualifying Optionholder tenders his/her Share Option entitling holders thereof to subscribe for 10,000 Shares and if valid acceptances are received for less than the relevant Maximum Grant Acceptance for this Option Class (i.e. 474,257 Shares underlying the Share Option with reference to the table on page 21), then his/her tendered Share Option for all such underlying Shares will be taken up on a pro-rata basis among the three exercise periods (“Scenario A”). On the other hand, assuming Share Options entitling holders thereof to subscribe for 1,000,000 Shares are tendered by all Qualifying Optionholders which is more than the relevant Maximum Grant Acceptance for this Option Class, the Offeror will take up from such Qualifying Optionholder only 4,743 underlying Shares (i.e. 474,257 divided by 1,000,000 multiplied by 10,000). The 4,743 Shares underlying the taken up Share Option will be divided on a pro-rata basis across the three exercise periods (“Scenario B”).

—22— LETTER FROM MERRILL LYNCH

The assumed number of Shares underlying the Share Option granted on 9 April 2009 held by such Qualifying Optionholder and the number of Shares issuable upon exercise of the Share Option taken up by the Offeror for cancellation from such Qualifying Optionholder under the abovementioned scenarios are set out in the table below:

Number of Shares underlying the Share Option taken up by the Offeror for cancellation from such Qualifying Optionholder under different scenarios Scenario B: Valid acceptances are received for Share Assumed number of Scenario A: Valid Options with Shares underlying the acceptances are 1,000,000 underlying Share Option granted received for less than Shares, more than on 9 April 2009 held the relevant the relevant by such Qualifying Maximum Grant Maximum Grant Exercise period Optionholder Acceptance Acceptance

09/04/11 - 08/04/14 10,000 2,000 949 09/04/12 - 08/04/14 20,000 4,000 1,897 09/04/13 - 08/04/14 20,000 4,000 1,897 Total 50,000 10,000 4,743

Share Options that are not tendered for acceptance under the Option Offer will not be deemed to have lapsed after the closing of the Option Offer.

Fractions of underlying Shares of Share Options will not be taken up under the Option Offer and, accordingly, the number of underlying Shares of Share Options that the Offeror will take up from each Qualifying Optionholder in accordance with the above formula will be rounded up or down to the nearest whole number at the discretion of the Offeror.

The Partial Offer and the Option Offer are made in compliance with the Takeovers Code.

EFFECT OF ACCEPTING THE PARTIAL OFFER AND THE OPTION OFFER

The Board has recommended a final dividend of HK$0.40 per Share for the year ended 31 December 2010, subject to the approval by the Shareholders at the annual general meeting of the Company to

—23— LETTER FROM MERRILL LYNCH be held on 16 June 2011. By validly accepting the Partial Offer, Qualifying Shareholders will sell their tendered Offer Shares with the right to the aforesaid final dividend to the Offeror if the Partial Offer is closed on or before 16 June 2011 and the Shareholders approve such dividend.

If the Shareholders approve the aforesaid final dividend, it will be payable to the Shareholders whose names appear on the Register on 16 June 2011, except for the dividend attributable to the Offer Shares in respect of which the Partial Offer has been accepted by a Qualifying Shareholder and agreed to be taken up by the Offeror and in the event that the formalities for the registration of the Offer Shares under the name of the Offeror could not be completed and the name of the Offeror in respect of such Offer Shares has not been entered into the Register on or before 16 June 2011, in order to implement the terms of the Partial Offer, such Qualifying Shareholder, by accepting the Partial Offer regarding his/her Offer Shares, is deemed to have instructed and authorised the Company and the Share Registrar to direct the payment of such amount of dividend to the Offeror. Any dividend attributable to the remaining Shares held by such Qualifying Shareholder following the completion of the Partial Offer will be paid to him/her in the same manner in which the final dividend will be paid to the other Shareholders. It is expected that subject to the approval of the final dividend by the Shareholders, the Company will arrange for the payment of the final dividend to the Shareholders on 6 July 2011.

PROCEDURE FOR ACCEPTANCE AND APPROVAL

Whether a Qualifying Shareholder accepts the Partial Offer or not, he/she is strongly recommended to provide his/her decision on the approval of the Partial Offer by completing Box A in the accompanying Form of Approval and Acceptance.

If the Partial Offer and Option Offer are declared unconditional in all respects, the Partial Offer and the Option Offer will be open for 14 days after the date on which the Partial Offer is declared unconditional in all respects in accordance with Rule 15.1 and Rule 15.3 of the Takeovers Code, and in any event the Final Closing Date will be at least 21 days from the date of this Composite Offer Document. The Offeror reserves the right to extend or revise the First Closing Date in accordance with the Takeovers Code. The Offeror cannot extend the Final Closing Date to a day beyond the 14th day after the First Closing Date pursuant to Rule 28.4 of the Takeovers Code.

In order to accept and/or approve the Partial Offer, Qualifying Shareholders should complete and return the accompanying Form of Approval and Acceptance to the Share Registrar in accordance with the instructions printed in this Composite Offer Document and on the Form of Approval and Acceptance. The instructions in the Composite Offer Document should be read together with the instructions on the Form of Approval and Acceptance (which instructions form part of the terms of the Partial Offer).

Qualifying Shareholders are required to submit the duly completed Form of Approval and Acceptance, together with the Share certificate(s), transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) (if applicable) for the exact

—24— LETTER FROM MERRILL LYNCH number of Shares in respect of which the relevant Qualifying Shareholder wishes to accept the Partial Offer, by post or by hand to the Share Registrar, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, in an envelope marked “Shui On Construction and Materials Limited — Partial Offer” as soon as possible after receipt of the Form of Approval and Acceptance but in any event so as to reach the Share Registrar by no later than 4:00 p.m. (Hong Kong time) on Monday, 30 May 2011, being the First Closing Date, or such other time and/or date as the Offeror may, subject to the Takeovers Code, decide and announce. In accordance with Rule 15.1 and Rule 15.3 of the Takeovers Code, when the Partial Offer is declared unconditional in all respects, the Partial Offer will be open for acceptance for 14 days after the date on which the Partial Offer is declared unconditional in all respects. The Offeror cannot extend the Final Closing Date to a day beyond the 14th day after the First Closing Date pursuant to Rule 28.4 of the Takeovers Code.

No acknowledgement of receipt of any Form of Approval and Acceptance, Share certificate(s), transfer receipt(s) or other document(s) of title (and/or any indemnity or indemnities in respect thereof) will be given.

Only one Form of Approval and Acceptance will be accepted from each Qualifying Shareholder by the Share Registrar. Tenders duly received will become irrevocable and cannot be withdrawn after the Partial Offer has been declared unconditional as to acceptances except in the circumstances as described in the section headed “Irrevocable Acceptances” under Appendix I to this Composite Offer Document.

Whether or not the Qualifying Shareholders accept the Partial Offer, they may approve the Partial Offer AND specify the number of Shares in respect of which they approve the Partial Offer in the accompanying Form of Approval and Acceptance. Each Share shall be entitled to ONE vote only. Multiple votes in respect of the same Share will not be taken into account in counting the approval of the Partial Offer. Only ONE Form of Approval and Acceptance will be accepted from each Qualifying Shareholder by the Share Registrar and only ONE vote for each Share may be cast. If a Qualifying Shareholder has put a tick “ߛ” to indicate his/her approval of the Partial Offer on the Form of Approval and Acceptance but no number of Shares in respect of such approval is specified or any other information in the Form of Approval and Acceptance is missing, incomplete or erroneous, the approval and the acceptance of the Partial Offer by such Shareholder will not be considered as valid until such missing, incomplete or erroneous information has been completed and rectified in such Form of Approval and Acceptance. Qualifying Shareholders may vote in respect of the total number of Shares held by him/her even though he/she does not intend to accept the Partial Offer and/or the number of Shares voted may be more than the number of Shares tendered for acceptance.

To accept the Option Offer, Qualifying Optionholders should complete and sign the accompanying Form of Option Offer Acceptance in accordance with the instructions printed on it, which instructions form part of the terms of the Option Offer.

The completed and signed Form of Option Offer Acceptance should then be forwarded, together with all the relevant certificate(s) of the Share Options under the Option Class the Qualifying Optionholder intends to tender, stating the number of Shares underlying the Share Options in respect of which the Qualifying Optionholder intends to accept the Option Offer for those Share Options in respect of the

—25— LETTER FROM MERRILL LYNCH same Option Class, by post or by hand to the Company Secretary at 13th Floor, New Kowloon Plaza, 38 Tai Kok Tsui Road, Kowloon, Hong Kong in an envelope marked “Shui On Construction and Materials Limited — Option Offer”, as soon as possible after receipt of this Composite Offer Document and in any event no later than 4:00 p.m. on the Final Closing Date or such later time and/or date as the Offeror may determine and announce with the consent of the Executive. If the number of Shares underlying the Share Options as evidenced in the relevant certificate(s) of the Share Options tendered is less than the number of Shares underlying the Share Options stated in the Form of Option Offer Acceptance, or the Qualifying Optionholder fails to submit all the certificate(s) of the Share Options tendered for acceptance within the same Option Class, his/her acceptance would be invalid. Acceptance will only be valid if the Share Options tendered by the Qualifying Optionholder have not lapsed as at the Final Closing Date.

NOMINEE REGISTRATION OF SHARES

To ensure equality of treatment of all Qualifying Shareholders, those Qualifying Shareholders who hold Shares as nominees for more than one beneficial owner should, as far as practicable, treat the holding of each beneficial owner separately. In order for beneficial owners of Shares whose investments are registered in nominee names (including those whose interests in Shares are held through CCASS) to approve and/or accept the Partial Offer, it is essential that they provide instructions to their nominees of their intentions with regard to the Partial Offer.

INFORMATION ON THE OFFEROR

The Offeror is an investment holding company incorporated in the British Virgin Islands with limited Sch 1-12 Note 2 liability, which is wholly owned by the Bosrich Unit Trust. The Bosrich Unit Trust is the property of a discretionary trust, of which Mr. Lo Hong Sui, Vincent is a discretionary beneficiary and the founder of the trust. Mr. Lo Hong Sui, Vincent is also the Chairman and an executive director of the Offeror.

REASONS FOR THE PARTIAL OFFER

The Offeror, together with parties acting in concert with it, held approximately 38% of the issued share capital of the Company as at the Latest Practicable Date and would like to increase this shareholding. Sch 1-5 Prior to the privatisation of China Central Properties Limited, a then associated company of the Company, in 2009, the Offeror, together with parties acting in concert with it, originally owned approximately 57% of the issued share capital of the Company. Pursuant to the privatisation, 165,780,547 new Shares were issued as part of the consideration, which resulted in a dilution to the shareholding of the Offeror and parties acting in concert with it to approximately 38% immediately after the privatisation. The Offeror, together with parties acting in concert with it, believe that by increasing his shareholding in the Company, which may result from the Partial Offer, Mr. Lo Hong Sui, Vincent is demonstrating to Shareholders his commitment and dedication to the Group.

The Offeror considers that the Group’s principal businesses in the PRC are meeting expectation, taking into consideration that these businesses face considerable challenges posed from domestic competitors in the PRC and recent government policy measures. The Offeror and Mr. Lo Hong Sui,

—26— LETTER FROM MERRILL LYNCH

Vincent, a Substantial Shareholder and the Chairman of the Company, have full confidence in the future growth potential of the Group’s principal businesses in the PRC, Hong Kong and Macau. This confidence is evidenced by the fact that the Offer Price is at a premium over the closing price of the Shares on the Last Trading Day as abovementioned.

At the same time, the Offeror recognises that the Shares were, in general, relatively thinly traded in 2010. The Partial Offer would offer an opportunity to those Qualifying Shareholders who wish to realise part of their investment to do so at a premium over the current share price without having to incur the brokerage fees, transaction levies and trading fees which are customarily payable when disposing of shares in the open market, whilst retaining the balance of their equity interest in the Company in order to participate in the future growth of the Group.

Through the Partial Offer, subject to any exercise of Share Options by any Optionholders after the Latest Practicable Date, the interests of the Offeror and parties acting in concert with it in the voting rights of the Company will increase from approximately 37.59% to no more than approximately 48.62%.

The Offeror has no intention to privatise the Company and therefore has decided to proceed with the Partial Offer instead of a general offer.

INTENTIONS OF THE OFFEROR AND MAINTAINING THE LISTING STATUS OF THE COMPANY

The Offeror intends to continue the existing businesses of the Group and does not intend to introduce Sch 1-3(i) Sch 1-3(ii) any major changes to the existing business strategies and operations of the Group. The Offeror also Sch 1-3(iii) Sch 1-3(iv) intends that the employment of the employees of the Group will be continued and there will be no material change in the deployment of financial resources or fixed assets of the Group.

The Offeror intends to maintain the listing status of the Company on the Stock Exchange upon the completion of the Partial Offer. As at the Latest Practicable Date, the Company has a public float of approximately 40.22% of the entire issued share capital of the Company. Assuming full acceptances of the Partial Offer by all the Qualifying Shareholders subject to any exercise of Share Options by any Optionholders, the Company will have a public float of not less than approximately 33.11% of the entire issued share capital of the Company immediately following the completion of the Partial Offer and the Option Offer and accordingly the number of Shares in public hands will continue to meet the public float requirement under Rule 8.08 of the Listing Rules. The Offeror does not intend to avail Sch 1-9 itself of any powers of compulsory acquisition.

OVERSEAS SHAREHOLDERS AND OVERSEAS OPTIONHOLDERS

This Composite Offer Document will not be filed under the applicable securities or equivalent legislation or rules of any jurisdiction other than Hong Kong.

Based on the Register, there are 23 overseas Shareholders holding 472,475 Shares with registered addresses in the PRC, the United Kingdom, Jersey, Malaysia and New Zealand, which are jurisdictions outside Hong Kong, as at the Latest Practicable Date.

—27— LETTER FROM MERRILL LYNCH

The making of the Partial Offer and the Option Offer to Qualifying Shareholders and Qualifying Optionholders who are citizens, residents or nationals of jurisdictions outside Hong Kong may be subject to the laws of the relevant jurisdictions. Such relevant Qualifying Shareholders and Qualifying Optionholders may be prohibited or affected by laws of the relevant jurisdictions and it is the responsibility of each relevant Qualifying Shareholder who wishes to accept the Partial Offer and each relevant Qualifying Optionholder who wishes to accept the Option Offer to satisfy himself/herself as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental approvals, exchange control approvals or other consents, or filing and registration requirements which may be required in compliance with all necessary formalities or legal requirements and the payment of any transfer or other taxes due in such relevant jurisdictions.

Any acceptance of the Partial Offer and the Option Offer by any Qualifying Shareholder and any Qualifying Optionholder will be deemed to constitute a representation and warranty from such Qualifying Shareholder and Qualifying Optionholder to the Company that he/she has fully observed all applicable legal and other requirements and that the Partial Offer and/or the Option Offer may be accepted by him/her lawfully under the laws of the relevant jurisdiction. The Qualifying Shareholders and Qualifying Optionholders should consult their professional advisors if in doubt.

STAMP DUTY IMPLICATIONS

Seller’s ad valorem stamp duty at the rate of HK$1.00 for every HK$1,000.00 (or part thereof) of the market value of the tendered Offer Shares finally taken up by the Offeror or the value of the Sch 1-6A consideration arising on acceptance of the Partial Offer, whichever is the higher, will be payable by the Qualifying Shareholders who accept the Partial Offer. The relevant amount of stamp duty payable by the Qualifying Shareholders will be deducted from the consideration payable to the Qualifying Shareholders under the Partial Offer. The Offeror will bear its own portion of buyer’s ad valorem stamp duty at the rate of HK$1.00 for every HK$1,000.00 (or part thereof) of the market value of the tendered Offer Shares finally taken up by the Offeror or the consideration payable in respect of relevant acceptances of the Partial Offer whichever is the higher, and will be responsible to account to the Stamp Office of Hong Kong for all the stamp duty payable for sale and purchase of the Offer Shares which are finally taken up by the Offeror under the Partial Offer. No stamp duty is payable in connection with the Option Offer.

ODD LOTS

The Shares are currently traded in board lots of 2,000 Shares each. Such board lot size will not be changed as a result of the implementation of the Partial Offer and the Option Offer.

As set out in the section headed “Other Terms of the Partial Offer and the Option Offer” in this letter, an Accepting Shareholder may, as a result of accepting the Partial Offer, hold odd lots of the Shares.

For this purpose, BOCI Securities Limited, whose address is at 18/F Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong (Contact person: Mr. Law, Pak Hong Passe; telephone number: (852) 2718 9663) has been appointed by the Offeror as the designated broker to match sales and

—28— LETTER FROM MERRILL LYNCH purchases of odd lot holdings of Shares in the market, on a best effort basis, for a period of six weeks from the close of the Partial Offer to enable Accepting Shareholders to dispose of their odd lots or to top up their odd lots to whole board lots of 2,000 Shares. Shareholders should note that the matching of odd lots is not guaranteed.

An Accepting Optionholder may, as a result of accepting the Option Offer, hold Share Options entitling him/her to subscribe for odd lots of the Shares. Pursuant to the terms of the Share Option Scheme, Share Options are not transferable and no matching sales or purchases of the resultant odd lot holdings of the Share Options will be arranged.

RESPONSIBILITY FOR DOCUMENTS

All communications, notices, Forms of Option Offer Acceptance, Forms of Approval and Acceptance, Share certificates, Share Option certificates, transfer receipts, other documents of title (and/or any indemnity or indemnities in respect thereof) and remittances to be delivered or sent by, to or from any Shareholder or Optionholder will be delivered or sent by, to and from them, or their designated agents, at their own risks and none of the Offeror, the Company, Merrill Lynch, the Share Registrar or any of their respective directors or any other person involved in the Partial Offer and the Option Offer accepts any liability for any loss or any other liabilities whatsoever which may arise as a result.

SETTLEMENT

Provided that the Partial Offer becomes unconditional in all respects and a duly completed Form of Approval and Acceptance, accompanied by the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) (if applicable) are received by the Share Registrar by no later than 4:00 p.m. on Monday, 13 June 2011, being the Final Closing Date (or such other time and/or date as the Offeror may, subject to the Takeovers Code, decide and announce) and are in order in all respects and in accordance with the Takeovers Code, the Share Registrar will send to the relevant Accepting Shareholder by ordinary post, at his/her own risks, a remittance for the amount due to him/her under the Partial Offer and (if applicable) any Share certificate(s) and/or any transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities in respect thereof) for Shares not taken up or, if applicable, Share certificate(s) in respect of the balance of such Shares (taking account of any scaling down of his/her acceptance, stamp duty and the fees payable to the Share Registrar in respect of lost or unavailable Share certificates) in accordance with the authority and provisions contained in the Form of Approval and Acceptance as soon as possible but in any event within 10 days following the Final Closing Date. Settlement of the consideration to which any Accepting Shareholder is entitled under the Partial Offer will be implemented in full in accordance with the terms of the Partial Offer (save with respect to payment of seller’s ad valorem stamp duty) without regard to any lien, right of set-off, counterclaim, or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such Accepting Shareholder.

If the Partial Offer does not become unconditional in all respects, the Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any indemnity or indemnities in respect thereof) (as the case may be) will be returned and/or sent to each Accepting Shareholder (by ordinary post, at that Accepting Shareholder’s own risk) as soon as possible but in any event within

—29— LETTER FROM MERRILL LYNCH

10 days following the lapse of the Partial Offer. Where such Accepting Shareholder has sent one or more transfer receipt(s) and in the meantime one or more Share certificate(s) has/have been collected on that Accepting Shareholder’s behalf in respect thereof, that Accepting Shareholder will be sent (by ordinary post, at that Accepting Shareholder’s own risk) such Share certificate(s) in lieu of the transfer receipt(s).

If the Shares tendered by an Accepting Shareholder have not been taken up by the Offeror in full, the Share certificate(s) or transfer receipt(s) or other document(s) of title (and/or any indemnity or indemnities in respect thereof) (as the case may be) in respect of the balance of such Shares or a replaced certificate therefor will be returned or sent to him/her by ordinary post at his/her own risk as soon as possible but in any event within 10 days following the Final Closing Date.

Provided that a valid Form of Option Offer Acceptance and the relevant certificate(s) of the Share Options are complete and in good order in all respects and have been received by the Company Secretary no later than the latest time for acceptance (i.e. the Final Closing Date, or such later time and/or date as the Offeror may announce with the consent of the Executive), a cheque for the amount due to each Qualifying Optionholder in respect of the Share Options surrendered by him/her under the Option Offer and the certificate(s) of the Share Options which are not successfully tendered and/or accepted under the Option Offer will be despatched to the Qualifying Optionholder by ordinary post at his/her own risk as soon as possible but in any event within 10 days following the Final Closing Date. If the Partial Offer does not become unconditional in all respects, the certificate(s) of the Share Option(s) tendered will be returned and/or sent to each Accepting Optionholder as soon as possible but in any event within 10 days following the lapse of the Partial Offer.

Settlement of the consideration to which any Qualifying Shareholder or Qualifying Optionholder is Sch 1-31 entitled under the Partial Offer or the Option Offer (as the case may be) will be implemented in full in accordance with the terms of the Partial Offer and the Option Offer (save in respect of the payment of seller’s ad valorem stamp duty) without regard to any lien, right of set-off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such Qualifying Shareholder or Qualifying Optionholder, as the case may be.

CONSENT FROM THE EXECUTIVE

Pursuant to 28.1 of the Takeovers Code, the Executive has consented to the Offeror making the Partial Offer.

TAX IMPLICATIONS

Qualifying Shareholders and Qualifying Optionholders are recommended to consult their own professional advisors if they are in any doubt as to the taxation implications of their acceptance of the Partial Offer and the Option Offer. It is emphasized that none of the Company and the Offeror, their ultimate beneficial owners and parties acting in concert with any of them, Merrill Lynch, Anglo Chinese, the Share Registrar or any of their respective directors or any persons involved in the Partial Offer and the Option Offer accepts responsibility for any taxation effects on, or liabilities of, any person or persons as a result of their acceptance of the Partial Offer and the Option Offer.

—30— LETTER FROM MERRILL LYNCH

GENERAL

In accordance with Rule 3.8 of the Takeovers Code, associates of the Company and the Offeror are hereby reminded to disclose their dealings in any securities of the Company pursuant to the requirements of the Takeovers Code.

Pursuant to Note 11 of Rule 22 of the Takeovers Code, stockbrokers, banks and others who deal in relevant securities on behalf of clients have a general duty to ensure, so far as they are able, that those clients are aware of the disclosure obligations attaching to associates and (including shareholders holding 5% or more of any class of relevant securities under class (6) of the definition of associates under the Takeovers Code) other persons under Rule 22 of the Takeovers Code and that those clients are willing to comply with them. Principal traders and dealers who deal directly with investors should, in appropriate cases, likewise draw attention to the relevant Rules of the Takeovers Code. However, this does not apply when the total value of dealings (excluding stamp duty and commission) in any relevant security undertaken for a client during any seven day period is less than HK$1,000,000. This dispensation does not alter the obligation of principals, associates and other persons themselves to initiate disclosure of their own dealings, whatever total value is involved. Intermediaries are expected to co-operate with the Executive in its dealings enquiries. Therefore, those who deal in relevant securities should appreciate that stockbrokers and other intermediates will supply the Executive with relevant information in those dealings, including identities of clients, as part of that co-operation.

Further details on the terms and conditions of the Partial Offer and the Option Offer including, amongst other things, procedures for acceptance and settlement, acceptance period and taxation matters, are set out in Appendix I to this Composite Offer Document, the accompanying Form of Approval and Acceptance and Form of Option Offer Acceptance.

Qualifying Shareholders and Qualifying Optionholders are strongly advised to consider carefully the information as contained in the Letter from the Board, the recommendation as contained in the Letter from the Independent Board Committee and the advice of Anglo Chinese as contained in the Letter from Anglo Chinese in this Composite Offer Document, and to consult their professional advisors as they see fit.

Your attention is also drawn to the information as set out in the appendices to this Composite Offer Document which form part of this Composite Offer Document.

Yours faithfully For and on behalf of Merrill Lynch (Asia Pacific) Limited Lee Chen Kwok, John Lee Pui Hang, Julian Managing Director Managing Director

—31— LETTER FROM THE INDEPENDENT BOARD COMMITTEE

(Incorporated in Bermuda with limited liability) (Stock code: 983)

The Independent Board Committee: Registered office: Ms. Li Hoi Lun, Helen Clarendon House, Mr. Gerrit Jan de Nys 2 Church Street, Mr. David Gordon Eldon Hamilton HM 11, Mr. Chan Kay Cheung Bermuda Mr. Tsang Kwok Tai, Moses Head office and principal place of business in Hong Kong: 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong

9 May 2011

To the Qualifying Shareholders and the Qualifying Optionholders

Dear Sir or Madam,

We refer to the composite offer document issued jointly by the Company and the Offeror to the Qualifying Shareholders and the Qualifying Optionholders dated 9 May 2011 (the “Composite Offer Document”) of which this letter forms a part. Unless the context otherwise requires, terms defined in the Composite Offer Document have the same meanings when used in this letter.

We have been appointed as members of the Independent Board Committee to consider and to make a recommendation to you (i) as to whether or not the Partial Offer and the Option Offer are fair and reasonable and (ii) as to the approval and acceptance of the Partial Offer and the Option Offer, taking into account the advice from Anglo Chinese, the independent financial advisor to the Independent Board Committee.

* For identification purpose only

—32— LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Your attention is drawn to the Letter from the Board as set out on pages 6 to 14 of the Composite Offer Document, the Letter from Merrill Lynch as set out on pages 15 to 31 of the Composite Offer Document and Appendix I to the Composite Offer Document containing detailed terms of the Partial Offer and the Option Offer, and the Letter from Anglo Chinese as set out on pages 34 to 64 of the Composite Offer Document, which contains its advice and recommendation to us in respect of the Partial Offer and the Option Offer, as well as the principal factors and reasons for its advice and recommendation.

Having considered the factors and reasons considered by, and the opinion of Anglo Chinese as stated in the aforementioned letter of advice, we are of the opinion that the terms of the Partial Offer and the Option Offer are fair and reasonable so far as the Qualifying Shareholders and the Qualifying Optionholders are concerned. We recommend that (i) Qualifying Shareholders approve the Partial Offer; (ii) Qualifying Shareholders accept the Partial Offer; and (iii) Qualifying Optionholders who hold In-the-money Share Options accept the Option Offer.

Yours faithfully, For and on behalf of Independent Board Committee Shui On Construction and Materials Limited Li Hoi Lun, Helen Chairman

—33— LETTER FROM ANGLO CHINESE

The following is the text of the letter from Anglo Chinese to the Independent Board Committee which Sch.II(1) has been prepared for the purpose of inclusion in the Composite Offer Document.

ANGLO CHINESE CORPORATE FINANCE, LIMITED www.anglochinesegroup.com

[O-SVVY;^V,_JOHUNL:X\HYL *VUUH\NO[7SHJL*LU[YHS/VUN2VUN

The Independent Board Committee Shui On Construction and Materials Limited 34th Floor, Shui On Centre 6-8 Harbour Road Hong Kong

9 May, 2011

Dear Sirs,

VOLUNTARY CONDITIONAL PARTIAL CASH OFFER AND OPTION OFFER BY MERRILL LYNCH (ASIA PACIFIC) LIMITED ON BEHALF OF SHUI ON COMPANY LIMITED TO ACQUIRE 54,000,000 OFFER SHARES IN THE ISSUED SHARE CAPITAL OF SHUI ON CONSTRUCTION AND MATERIALS LIMITED FROM QUALIFYING SHAREHOLDERS AND TO CANCEL SHARE OPTIONS ENTITLING HOLDERS THEREOF TO SUBSCRIBE FOR UP TO 4,317,121 SHARES FROM THE QUALIFYING OPTIONHOLDERS

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee in relation to the Partial Offer and the Option Offer (together, the “Offers”). Details of the Offers are contained in the Composite Offer Document from the Offeror and the Company dated 9 May, 2011 of which this letter forms a part. Expressions used in this letter have the same meanings as defined in the Composite Offer Document, unless the context requires otherwise.

In accordance with Rule 2.1 of the Takeovers Code, an Independent Board Committee comprising Ms. Li Hoi Lun, Helen, Mr. Gerrit Jan de Nys, Mr. David Gordon Eldon, Mr. Chan Kay Cheung and Mr. Tsang Kwok Tai, Moses has been formed to consider the terms of the Partial Offer and the Option Offer and advise the Qualifying Shareholders and the Qualifying Optionholders in respect of them.

Anglo Chinese has been appointed by the Company to advise the Independent Board Committee in respect of the Offers, and our appointment has been approved by the Independent Board Committee.

—34— LETTER FROM ANGLO CHINESE

In formulating our advice and recommendation, we have assumed that the information and representations contained in or referred to in the Composite Offer Document were true and accurate at the time they were made and we have relied on the Directors to ensure that the information in and the content of the Composite Offer Document is true and accurate in all respects and may be relied upon and continue to be relied upon as at the date of the dispatch of the Composite Offer Document. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided by the Directors for the Composite Offer Document and the Directors have collectively and individually accepted full responsibility for the accuracy of the information contained in it and have confirmed, having made all reasonable enquiries that to the best of their knowledge and belief there are no other facts the omission of which would make any statement in the Composite Offer Document misleading. We have not conducted an independent investigation into the affairs of the Group or verified any of the information that we have considered or that has been provided to us.

We consider that we have reviewed sufficient information to reach an informed view on the Offers and to justify our reliance on the accuracy of the information contained in the Composite Offer Document and to provide a reasonable basis for our advice and recommendation.

Apart from normal professional fees for our services to the Company in connection with this appointment, no arrangement exists whereby Anglo Chinese will receive any benefits from the Group or any of its associates.

PRINCIPAL FACTORS

We have set out below the principal factors that we have taken into account in arriving at our advice to the Independent Board Committee.

Background

The Company is an investment holding company incorporated with limited liability in Bermuda. The Company was listed on The Stock Exchange of Hong Kong Limited (“Stock Exchange”) in February, 1997 and Shares in the Company are publicly traded on the Stock Exchange where the Company had a stock market capitalisation of approximately HK$5,040 million as at the Latest Practicable Date. The Company’s investments comprise the Group, which is principally engaged in property development and investment in The People’s Republic of China, other than the Hong Kong and Macau SARs (“Mainland China”) with an emphasis on distressed and special situations as well as knowledge community developments, the manufacture of cement in Mainland China and construction, interior fit out and refurbishment in Mainland China, Hong Kong and Macau. The Group also makes venture capital investments and has an investment in Shui On Land Limited (“SOL”), a property development company in Mainland China controlled by the Offeror and parties acting in concert with it, in terms of the Takeovers Code.

—35— LETTER FROM ANGLO CHINESE

The Shui On group of companies was established in Hong Kong in 1971.

On 28th January, 2011, the Offeror and the Company jointly announced that Merrill Lynch, on behalf of the Offeror, intends to make a voluntary, conditional, cash Partial Offer and a voluntary, conditional, cash Option Offer to cancel Share Options held by Qualifying Optionholders (“First Announcement”).

On 1st February, 2011, 28th February, 2011, 29th March, 2011, and 21st April, 2011, further joint announcements were made by the Offeror and the Company to clarify and update the status of the proposed Partial Offer and the satisfaction of the pre-conditions to the Partial Offer.

The Offeror has made the Option Offer as an appropriate offer to the Qualifying Optionholders pursuant to Rule 13.1 of the Takeovers Code and accordingly the Composite Offer Document has also been sent to Qualifying Optionholders.

In formulating our advice and recommendation in respect of the Partial Offer and the Option Offer we have reviewed and considered, amongst other things, the nature and make up of the Group’s business, the terms of the Offers, the number of Shares and Share Options held by the Offeror and parties acting in concert with it before and after the Offers, the value of the Offers when compared to the prices of Shares prior to the Offers having been made, the financial condition of the Company and the Group, as evidenced by the audited financial statements for the years ended 31st December, 2010, 2009 and 2008 and the interim reports for the six months ended 30th June, 2010 and 30th June, 2009, property valuations from Savills Valuation and Professional Services Limited dated 9 May, 2011, conditions prevailing in the Hong Kong Stock Market and valuations prevailing for companies in the Hong Kong Stock Market, which we consider are comparable to some degree, premia paid if any in other partial offers and offers generally in Hong Kong in recent years and other factors for Qualifying Shareholders and Qualifying Optionholders to consider in accepting the Offers.

In considering the financial condition of the Group and the recent financial performance of the Group, we have had regard for earnings before interest, tax, depreciation and amortisation (“EBITDA”), enterprise value, earnings, dividends and net asset value and for the future prospects of the Group.

We have not considered the consequences for taxation for any Qualifying Shareholders or Qualifying Optionholders who elect to accept the Partial Offer or the Option Offer because this will depend upon each person’s individual circumstances and Qualifying Shareholders and Qualifying Optionholders are therefore recommended to consult their own professional advisers if Qualifying Shareholders or Qualifying Optionholders are in doubt about the taxation implications for them arising from accepting either the Partial Offer or the Option Offer.

THE PARTIAL OFFER AND THE OPTION OFFER

Merrill Lynch will make the Offers on behalf of the Offeror, a party affiliated and acting in concert with the Chairman of the Company, Mr. Lo Hong Sui, Vincent, in terms of the Offers set out in the Composite Offer Document. The Offers comprise the following principal elements.

—36— LETTER FROM ANGLO CHINESE

The principal terms and conditions of the Partial Offer and the Option Offer to acquire 54,000,000 Offer Shares from Qualifying Shareholders, equivalent to approximately 11.04 per cent of the issued Shares in the Company as at the Latest Practicable Date comprising 489,297,786 Shares and approximately 17.68 per cent of Shares held by Qualifying Shareholders, and Share Options entitling holders thereof to subscribe for up to 4,317,121 Shares from Qualifying Optionholders, equivalent to approximately 17.48 per cent of Shares falling to be issued on exercise of all outstanding Share Options held by Qualifying Optionholders as at 28th January, 2011, being the date of the First Announcement.

For each Offer Share : HK$12.00 in cash For each underlying Share of the : HK$12.00 less the exercise price of the relevant In-the-money Share Options Share Option For each underlying Share of the : HK$0.01 in cash Out-of-the-money Share Options

The Partial Offer is conditional upon acceptances being received for a minimum of 54,000,000 Offer Shares and approval of the Partial Offer by Qualifying Shareholders who are registered Shareholders in the register of members of the Company on or before the First Closing Date, unless extended in terms of the Takeovers Code, holding over 50 per cent of the Shares not held by the Offeror and parties acting in concert with it.

The Option Offer is conditional upon the Partial Offer becoming unconditional in all respects.

The Option Offer is for Share Options to subscribe for up to a maximum of 4,317,121 Shares. If valid acceptances to the Option Offer are received in excess of this amount, the Share Options will be taken up on a pro rata basis by Option Class and exercise periods within each Option Class and adjusted for the actual acceptances received as described in detail in the Letter from Merrill Lynch which forms part of the Composite Offer Document. All Share Options taken up by the Offeror under the Option Offer will be cancelled on the Final Closing Date.

As at the Latest Practicable Date, Share Options outstanding held by certain Directors and eligible employees of the Group entitled these Optionholders to subscribe for a total of 37,514,000 new Shares, representing approximately 7.12 per cent of the issued share capital of the Company as enlarged by the issue of Shares falling to be issued to these Optionholders, of which the Offeror and parties acting in concert with it, not being Qualifying Optionholders, are entitled to subscribe for a total of 13,100,000 Shares, representing approximately 2.49 per cent of the issued share capital of the Company as enlarged by the issue of the Shares falling to be issued to them under all outstanding Share Options.

Share Options held by Qualifying Optionholders are entitled to subscribe for a total of 24,414,000 new Shares, representing approximately 4.63 per cent of the issued share capital of the Company as enlarged by the issue of new Shares falling to be issued to them under all outstanding Share Options.

—37— LETTER FROM ANGLO CHINESE

Under the Share Option Scheme, the Company may grant new Share Options from time to time. The Company has obtained consent from the Offeror and the applicable waiver from the SFC in respect of a further grant of new Share Options to subscribe for up to 7,320,000 new Shares in aggregate. If granted, the holders of these new Share Options will undertake not to accept the Option Offer with respect to these securities.

Penta Investment Advisers Limited has irrevocably committed on behalf of its funds and managed accounts to approve the Partial Offer in relation to 108,462,499 Shares owned by such funds and managed accounts, while, Messrs. Wong Kun To, Philip and Wong Fook Lam, Raymond, both being Directors and Qualifying Shareholders, have irrevocably undertaken to approve the Partial Offer but not to tender any Shares or Share Options they hold and procure that no Shares in which they are interested in for the purpose of the SFO, for acceptance under the Partial Offer and the Option Offer.

Table 1 - Summary of Shares and Share Options held

Existing Shares in issue as at the Latest Practicable Date 489,297,786 Existing Shares in issue held by Qualifying Shareholders 305,378,486 Existing Shares held by Qualifying Shareholders subject to the Partial Offer 54,000,000 Share Options held by Qualifying Optionholders 24,414,000 Share Options held by the Offeror and parties acting in concert with it who are not Qualifying Optionholders and who hold Share Options for which no offer is made 13,100,000 Maximum number of Shares falling to be issued from the exercise of Share Options held by Qualifying Optionholders subject to the Option Offer 4,317,121

The effects of the Partial Offer and the Option Offer on the shareholding structure of the Company

As at the Latest Practicable Date, shareholdings in the Company can be summarised as follows before the Offers and upon completion of the Offers, assuming full acceptance thereof.

Table 2 - The effects of the Offers on the shareholding structure of the Company

Before the Offers

Mr. Lo Hong Sui, Vincent and the Offeror Parties acting in concert Qualifying Shareholders (notes 2 and 3)

182,293,000 (37.26%) 1,626,300 (0.33%) 305,378,486 (62.41%) Shares Shares Shares

the Company

—38— LETTER FROM ANGLO CHINESE

After the Offers assuming full acceptance thereof

Mr. Lo Hong Sui, Vincent and the Offeror Parties acting in concert Qualifying Shareholders (notes 2 and 3)

236,293,000 (48.29%) 1,626,300 (0.33%) 251,378,486 (51.38%) Shares Shares Shares

the Company

Notes:

Immediately after completion of the Partial Offer and Option Offer and Immediately after cancellation of Share As at the Latest completion of the Options accepted under the Practicable Date Partial Offer Option Offer (fully diluted)

Mr. Lo Hong Sui, Vincent and the Offeror (notes 2 and 3) 182,293,000 37.26% 236,293,000 48.29% Other parties acting in concert with the Offeror 1,626,300 0.33% 1,626,300 0.33% Mrs. Chan Lo Hung Suen, Annie (note 4) 274,300 0.06% 274,300 0.06% Ms. Lo Wai Duen, Gwen (note 5) 12,000 0.002% 12,000 0.002% Mr. Wong Yuet Leung, Frankie (notes 6, 7 and 8) 800,000 0.16% 800,000 0.16% Mr. Choi Yuk Keung, Lawrence (notes 6 and 9) 540,000 0.11% 540,000 0.11% Subtotal 183,919,300 37.59% 237,919,300 48.62% 251,019,300 48.04% Mr. Wong Fook Lam, Raymond (notes 6 and 10) 32,000 0.01% 32,000 0.01% Mr. Wong Kun To, Philip (notes 6, 11 and 12) 72,533 0.01% 72,533 0.01% Penta Investment Advisers Limited (note 13) 108,462,499 22.17% 89,276,535 18.25% Other Qualifying Shareholders 196,811,454 40.22% 161,997,418 33.11% Qualifying Shareholders 305,378,486 62.41% 251,378,486 51.38% 271,475,365 51.96% Total 489,297,786 100.00% 489,297,786 100.00% 522,494,665 100.00%

—39— LETTER FROM ANGLO CHINESE

2. These interests comprise 181,981,000 Shares beneficially owned by the Offeror and 312,000 Shares beneficially owned by Ms. Loletta Chu (“Mrs. Lo”), the spouse of Mr. Lo Hong Sui, Vincent. Of the 181,981,000 Shares beneficially owned by the Offeror, 166,148,000 Shares are held by the Offeror itself and 15,833,000 Shares are held by Shui On Finance Company Limited, an indirect wholly-owned subsidiary of the Offeror. The Offeror is owned by the Bosrich Unit Trust, the trustee of which is Bosrich Holdings (PTC) Inc. (“Bosrich”). The Bosrich Unit Trust is the property of a discretionary trust, of which Mr. Lo Hong Sui, Vincent is one of the discretionary beneficiaries (with other discretionary beneficiaries being family members of Mr. Lo Hong Sui, Vincent) and the founder of the trust, and HSBC International Trustee Limited (“HSBC Trustee”) is the trustee. Accordingly, Mr. Lo Hong Sui, Vincent, HSBC Trustee and Bosrich are deemed to be interested in 181,981,000 Shares under the SFO.

3. 312,000 Shares are beneficially owned by Mrs. Lo. Under the SFO, Mr. Lo Hong Sui, Vincent is deemed to be interested in such Shares and both Mr. Lo Hong Sui, Vincent and Mrs. Lo are also deemed to be interested in 181,981,000 Shares mentioned in note 2 above.

4. These Shares are held by Maxiflow Global Limited, in which Mrs. Chan Lo Hung Suen, Annie, who is a sister of Mr. Lo Hong Sui, Vincent, has a beneficial interest.

5. These Shares are beneficially owned by Ms. Lo Wai Duen, Gwen, who is a sister of Mr. Lo Hong Sui, Vincent.

6. Each of Mr. Wong Yuet Leung, Frankie, Mr. Choi Yuk Keung, Lawrence, Mr. Wong Fook Lam, Raymond and Mr. Wong Kun To, Philip holds interests in the Share Options granted by the Company under the Share Option Scheme, full details of which are set out in paragraph 3(b)(iii) in Appendix IV to the Composite Offer Document.

7. Mr. Wong Yuet Leung, Frankie also holds a call option granted by the Offeror in respect of 1,600,000 Shares as part of the incentive reward to his services to the Company.

8. Mr. Wong Yuet Leung, Frankie, a director of the Company and various members of the Group, is also an executive director of the Offeror.

9. Mr. Choi Yuk Keung, Lawrence, a director of the Company and various members of the Group, is also an executive director of the Offeror.

10. Mr. Wong Fook Lam, Raymond, a director of the Company and various members of the Group, is also a director of certain subsidiaries of the Offeror, including Shui On Finance Company Limited. Mr. Wong Fook Lam, Raymond has irrevocably undertaken to approve the Partial Offer but not to tender any Shares or Share Options he hold and procure that no Shares in which he is interested in for the purpose of the SFO, for acceptance under the Partial Offer and the Option Offer. Save as aforesaid, Mr. Wong Fook Lam, Raymond is unrelated to and unconnected with the Offeror.

11. These Shares are beneficially owned by the spouse of Mr. Wong Kun To, Philip. Under the SFO, he is deemed to be interested in such Shares. Mr. Wong Kun To, Philip has irrevocably undertaken to approve the Partial Offer but not to tender any Shares or Share Options he hold and procure that no Shares in which he is interested in for the purpose of the SFO, for acceptance under the Partial Offer and the Option Offer.

12. Mr. Wong Kun To, Philip, a director of the Company, holds no directorship in the Offeror and any of its subsidiaries. Save for his directorship held in the Company and various members of the Group, Mr. Wong Kun To, Philip has no other relationship or connection with the Offeror.

13. These Shares represent the interests of Penta Master Fund, Limited, Penta Asia Domestic Partners, L.P., Penta Asia Long/Short Fund, Ltd. and other funds and managed accounts of which Penta Investment Advisers Limited is the investment adviser. Mr. John Zwaanstra is the sole beneficial owner of Penta Investment Advisers Limited.

Source: Composite Offer Document

—40— LETTER FROM ANGLO CHINESE

It is evident from the table above that the Offeror and parties acting in concert with it already have control of the Company in terms of the Takeovers Code and upon completion of the Offers will, following 12 months after completion of the Offers and assuming full acceptance thereof, be able to acquire further Shares in terms of the Takeovers Code at will and acquire statutory control of the Company, comprising more than 50 per cent of its issued Shares, without making any further offers to Shareholders or Optionholders.

Under Rule 26.1 of the Takeovers Code, a person holding not less than 30 per cent, but not more than 50 per cent, of the voting rights of a company will trigger a mandatory general offer in terms of the Takeovers Code if that person acquires 2 per cent or more from the lowest percentage holding of that person within a 12 month period prior to purchasing shares. Following the closing of the Partial Offer, assuming it is approved and accepted by Qualifying Shareholders, the Offeror and its concert parties will hold 48.62 per cent of the voting rights of the Company, which will allow the Offeror to acquire an additional 1.38 per cent or more after 12 months’ time and thereby gain statutory control over the Company without any obligation to make a further general offer to Qualifying Shareholders for the shareholding each Qualifying Shareholder may have retained following the conclusion of the Partial Offer (assuming Qualifying Shareholders accept the Partial Offer).

Accepting Shareholders and Accepting Optionholders should read carefully the formula for determining the number of Offer Shares to be taken up by the Offeror from each Qualifying Shareholder and the number of Share Options to be taken up by the Offeror from each Qualifying Optionholder which are set out in the Letter from Merrill Lynch on pages 15 to 31 of the Composite Offer Document.

Total consideration payable, assuming full acceptance of the Partial Offer and the Option Offer

The aggregate total cash consideration payable is no more than HK$650,222,176, consisting of HK$648,000,000 under the Partial Offer and up to HK$2,222,176 under the Option Offer, which has no effect on the Company or the Group since the consideration will be paid by the Offeror to Accepting Shareholders and Accepting Optionholders.

—41— LETTER FROM ANGLO CHINESE

PRINCIPAL FACTORS TO CONSIDER IN ASSESSING THE MERITS OF THE OFFERS

The nature of the Group’s business

The Group is primarily engaged in the following business in Mainland China which is its selected key area of operation:

— property development and investment in property or property development companies in Mainland China with an emphasis on distressed and special situations as well as knowledge community developments, such as the Group’s interests in Dalian Tiandi which is positioned to benefit from the Central Government’s intention to nurture Dalian as a major knowledge hub in the world and a software development and outsourcing centre in Mainland China;

— cement manufacturing and sales through a 45 per cent shareholding in a joint venture with Lafarge S.A. and other cement operations in Mainland China with a leadership position in South West China; and

— construction and interior fit out and refurbishment through Shui On Building Contractors Limited and Shui On Construction Company Limited in Hong Kong and 70 per cent owned Shui On Construction Co., Ltd. in Mainland China and 94 per cent owned interior fit out specialists, Pat Davie Limited in Hong Kong, Macau and Mainland China.

In addition, the Group invests in venture capital in Hong Kong and Mainland China and has an investment in SOL, a related company controlled by the Offeror, comprising approximately 2.6 per cent of SOL’s issued shares with a stock market value as of 31st December, 2010 of HK$514 million and as of the Latest Practicable Date of HK$477 million.

In the year ended 31st December, 2009 and particularly in the following year ended 31st December, 2010 the Group increased its emphasis on investment in and development of property in Mainland China and adjusted its mix of assets and liabilities by acquiring in June, 2009 the 57.12 per cent interest in China Central Properties Limited not owned by the Group satisfied by the payment of approximately HK$135 million in cash and the issue of 165.8 million new Shares in the Company, representing approximately 34 per cent of the then issued share capital of the Company, at an average price of HK$11.74 per Share, and in June, 2010 selling a holding of approximately 6.3 per cent of the issued shares in SOL for HK$1,080 million for approximately HK$3.41 per SOL share, such that the Group now holds 137,469,656 shares in SOL.

The effect of these two transactions was transformational in increasing the Group’s assets and its equity base and its assets in Mainland China property such that the overall effect of these transactions was to increase the scale of the Group’s active investments and its emphasis on property investment and development in distressed and special situations projects in Mainland China.

—42— LETTER FROM ANGLO CHINESE

The make up of the Group’s business

As at 31st December, 2008, 2009 and 2010, the make up of the Group’s business is illustrated in the bar charts set out below.

Table3-Total segment revenue for the three years ended 31st December, 2008, 2009 and 2010

6000

5000

4000

3000

(HK$ million) 2000

1000

0 Construction Cement Cement Property Others and building operations - operations - maintenance Through LSOC Other cement operations 2008 2009 2010

Source: Company’s financial reports

—43— LETTER FROM ANGLO CHINESE

Table 4 - Reportable segment results for the three years ended 31st December, 2008, 2009 and 2010

1600

1200

800

400 (HK$ million)

0 Construction Cement Cement Property and building operations - operations - maintenance Through LSOC Other cement Others operations -400

2008 2009 2010

Source: Company’s financial reports

—44— LETTER FROM ANGLO CHINESE

The Group operates in three principal geographic areas: the Hong Kong and Macau SARs and Mainland China. For the three years ended 31st December, 2008, 2009 and 2010 the revenues arising from external customers were:

Table 5a - Geographic segment revenue from external customers for the three years ended 31st December, 2008, 2009 and 2010

5000

4500 PRC*

4000 Hong Kong 3500

3000

2500 Hong Kong Hong Kong 2000 (HK$ million) 1500 PRC* 1000 PRC*

500

0 2 0 0 8 2 0 0 9 2 0 1 0

Source: Company’s financial reports

* excluding Hong Kong (but includes Macau)

—45— LETTER FROM ANGLO CHINESE and, the distribution of the Group’s non current assets was:

Table 5b - Geographical distribution of the Group’s non current assets as at 31st December, 2008, 2009 and 2010

3,000

2,500 PRC*

2,000

1,500 (HK$ million) 1,000 PRC*

500

Hong Kong PRC* Hong Kong Hong Kong 0 2 0 0 8 2 0 0 9 2 0 1 0

Source: Company’s financial reports

* excluding Hong Kong (but includes Macau)

—46— LETTER FROM ANGLO CHINESE

Table6-Total assets by business segment as at 31st December, 2008, 2009 and 2010

14000

12000

10000

8000

6000 (HK$ million) 4000

2000

0 Construction Cement Property Investment in Others and building operations SOL shares maintenance 2008 2009 2010

Source: Company’s financial reports

Note. The tables 3 to 6 above are derived from the figures and reproduced here on the assumptions set out in the notes to the Group’s consolidated financial statements.

The make up of the Group is such that it is, in essence, a conglomerate with its principal business in Mainland China property development and investment in distressed and special situations as well as knowledge community developments, construction and building maintenance principally in Hong Kong, Macau and Mainland China, and a large but minority investment in cement manufacturing, principally in South West China.

Share price performance

We have considered the market price of Shares since 1st January, 2006 and the value of the Offers relative to the past share price performance in that period. We have also considered the performance of Shares in that period relative to the Hang Seng Index (“HSI”), the Shanghai Composite Index (“SHCOMP”), the Hang Seng Composite Index (“HSCI”), the Hang Seng Composite Properties and Construction Index (“HSCIPC”) and the Hang Seng Composite Small Cap Index (“HSSI”) over this period.

—47— LETTER FROM ANGLO CHINESE

Table 7 - Share price chart since 1st January, 2006 until the Latest Practicable Date

SOCAM 30 50-Day Moving Average 200-Day Moving Average 25

15 (HK$)

0 2006 2007 2008 2009 2010 2011

Source: Bloomberg

In the period, the market price of Shares reached a high of HK$32.60 per Share on 7th November, 2007 and a low of HK$3.18 per Share on 20th November, 2008, with respect to the number of Shares in issue then.

The market price of Shares has been below the Offer Price since 16th April, 2010 and remains below the Offer Price as at the Latest Practicable Date, having traded below that price since the First Announcement on 28th January, 2011.

Value of the Partial Offer

The Offer Price of HK$12.00 per Offer Share represents: i. a premium of approximately 24.35 per cent over the closing price of HK$9.65 per Share as quoted on the Stock Exchange on the Last Trading Day; ii. a premium of approximately 25.84 per cent over the average closing price of HK$9.54 per Share as quoted on the Stock Exchange for the last 5 consecutive trading days up to and including the Last Trading Day; iii. a premium of approximately 27.17 per cent over the average closing price of HK$9.44 per Share as quoted on the Stock Exchange for the last 10 consecutive trading days up to and including the Last Trading Day;

—48— LETTER FROM ANGLO CHINESE iv. a premium of approximately 31.46 per cent over the average closing price of HK$9.13 per Share as quoted on the Stock Exchange for the last 30 consecutive trading days up to and including the Last Trading Day; v. a premium of approximately 27.61 per cent over the average closing price of HK$9.40 per Share as quoted on the Stock Exchange for the last 90 consecutive trading days up to and including the Last Trading Day; vi. a premium of approximately 16.50 per cent over the closing price of HK$10.30 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and vii. a discount of approximately 36.24 per cent to the audited consolidated net asset value of the Group attributable to Shareholders of approximately HK$18.82 per Share as at 31st December, 2010.

As at the Latest Practicable Date, the Company has 489,297,786 Shares in issue. The Partial Offer for 54,000,000 Offer Shares is valued at HK$648,000,000, based on the Offer Price of HK$12.00 per Offer Share. On the basis of the Offer Price of HK$12.00 per Offer Share, the entire issued share capital of the Company is valued at approximately HK$5,871.6 million.

Highest and lowest closing prices of the Shares

The highest and lowest closing prices of the Shares as quoted on the Stock Exchange during the Relevant Period from 28th July, 2010, being the date falling six months prior to 28th January, 2011, being the date of the First Announcement, up to and including the Latest Practicable Date, were HK$11.12 per Share on 7th February, 2011 and HK$8.77 per Share on 28th December, 2010.

Total consideration for the Partial Offer and the Option Offer and financial resources of the Offeror

Assuming full acceptance of the Partial Offer, the cash consideration payable by the Offeror will amount to HK$648,000,000. Assuming full acceptance of the Option Offer, the cash consideration payable by the Offeror for the Option Offer will not exceed HK$2,222,176 in any event. Assuming full acceptance of the Offers, the total cash consideration payable by the Offeror will amount to no more than HK$650,222,176.

Merrill Lynch is satisfied that sufficient financial resources are available to the Offeror to satisfy payment of the cash consideration on full acceptance of the Offers.

—49— LETTER FROM ANGLO CHINESE

Table 8 - Share price chart since 1st January, 2006 showing the relative strength of the Share price versus indices which we consider to be relevant

600%

500%

400%

300% SHCOMP

200% HSCI HSI HSCIPC HSSI 100% Shares

0% 2006 2007 2008 2009 2010 2011

Source: Bloomberg

—50— LETTER FROM ANGLO CHINESE

This chart shows that the Share price has underperformed these indices materially from 1st January, 2006 until the Latest Practicable Date.

Table 9 - Share price chart since 1st January, 2010 showing the relative strength of the Share price against the same indices

140%

130%

120% HSI

HSSI 110% HSCI HSCIPC

100%

90% SHCOMP Shares

80%

70%

60% 01/2010 05/2010 09/2010 01/2011 05/2011

Source: Bloomberg

—51— LETTER FROM ANGLO CHINESE

This chart highlights the underperformance described above since 1st January, 2010 until the Latest Practicable Date.

The liquidity in the Company’s Shares

Set out below is table 10 showing the average daily turnover by number of Shares traded in each month from 1st January, 2006 until the Latest Practicable Date (pro rata for the last month and for January, 2011 when trading in Shares was suspended).

Table 10 - Average daily turnover in Shares each month since 1st January, 2006

3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

0 2006 2007 2008 2009 2010 2011

Note: Shares were suspended for 6 trading days in January, 2011

Source: Bloomberg

—52— LETTER FROM ANGLO CHINESE

The average daily number of Shares traded made up the following percentages of the average weighted number of Shares in issue and held by the public (being Shareholders other than the Offeror and parties acting in concert with it) in the years ended 31st December, 2008, 31st December, 2009 and 31st December, 2010. Since the date of the First Announcement, the average daily number of Shares traded has been as follows:

Table 11 - Average daily turnover in Share in each year

From the First Announcement to the Last Practicable 12 months ended 31st December Date 2008 2009 2010

Average number of Shares traded per day 641,850 1,571,462 564,465 597,578 As a percentage of average weighted number of Shares in issue 0.20% 0.47% 0.12% 0.12% As a percentage of Shares held by the public as at 31st December 0.50% 0.52% 0.18% 0.20%

Offer Shares 54,000,000 Offer Shares as a percentage of all Shares held by Qualifying Shareholders as at the Latest Practicable Date 17.68%

The value of the Group and implied values for Shares based on the financial statements for the three years ended 31st December, 2008, 2009 and 2010

We have reviewed the consolidated financial statements of the Group for the three years ended 31st December, 2008, 2009 and 2010 and examined the financial condition of the Group and its net asset value per Share, its earnings per Share and its dividend per Share on an audited basis for the three years ended 31st December, 2008, 2009 and 2010.

As a conglomerate, comprising three separate lines of business, albeit with commercial logic between them, we believe the stock market will look to enterprise value and EBITDA (earnings before interest, taxation, depreciation and amortisation), net asset value per Share and dividend yield to derive valuation models for Shares using either a discounted cash flow approach to the Group and its prospects or a sum of the parts addition of the value of the Group’s three principal businesses: property, construction and cement, adjusted for the Group’s peripheral assets and financial condition.

—53— LETTER FROM ANGLO CHINESE

In our opinion, shares of companies which are conglomerate in nature and of a similar size to the Group, tend to trade at a discount to net asset value per share, calculated on this basis, of 50 per cent or more, as comparable company valuations below indicate in the sector headed “small cap conglomerate sector”.

Net asset value

On the basis of the reported carrying values of assets and liabilities in the books of the Group, the net asset value per Share was as follows.

31st December, 2008 31st December, 2009 31st December, 2010

HK$15.53 per Share HK$18.45 per Share HK$18.82 per Share

Therefore, the Offers are priced substantially below the reported net asset value of the Group per Share, calculated on this basis but in line with the small cap conglomerate sector selected by us below.

Dividend yield

Dividends paid and declared (including the HK$0.40 per Share final dividend recommended by the Board but not yet declared and paid for the year ended 31st December, 2010) have been for the year ended:

31st December, 2008 31st December, 2009 31st December, 2010

HK$0.20 per Share HK$0.35 per Share HK$0.60 per Share implying a dividend yield on the Offer Price of HK$12 per Share of five per cent in 2010, which is in line with the small cap conglomerate sector selected by us below.

—54— LETTER FROM ANGLO CHINESE

Table 12 - Share price to book value per Share since 1st January, 2006

3.00

2.50

2.00

1.50 (Times)

1.00

0.50

0.00 2006 2007 2008 2009 2010 2011

Source: Company’s reports (2006-2010) and monthly return of the Company (31st December, 2010) The price to book value ratio per Share for the Company has declined substantially in recent years.

Earnings and price earnings ratio

Earnings per Share in the last three years ended 31st December have been:

31st December, 2008 31st December, 2009 31st December, 2010

Basic HK$1.75 HK$1.96 HK$1.85 Fully Diluted HK$1.08 HK$1.84 HK$1.84

We do not find the price earnings multiple on its own to be a useful valuation tool because reported earnings are subject to many variables, which are often not obvious or transparent for investors. However, the earnings of the Group attributable to Shareholders have improved in the year ended 31st December, 2010, rising from HK$807 million in the year ended 31st December, 2009 to HK$903 million in the year ended 31st December, 2010. Nonetheless, more Shares were in issue or subject to options in the year ended 31st December, 2010 and so earnings per Share fell in basic terms to HK$1.85 per Share from HK$1.96 but were flat at HK$1.84 on a fully diluted basis.

Accordingly, on a fully diluted basis the implied price earnings multiple at the Offer Price is approximately 6.52 times, which is not high when considered against a consensus price earnings multiple for the HSI constituents of 12.47 times1 for the year ended 31st December, 2010 but is in line with the small cap conglomerate sector selected by us below.

1 Source: Bloomberg

—55— LETTER FROM ANGLO CHINESE

Enterprise value/EBITDA

As at 31st December, 2008, 2009 and 2010, this ratio has been:

31st December, 2008 31st December, 2009 31st December, 2010

8.68x 10.75x 7.27x

Financial condition of the Group

We have considered and reviewed the audited financial statements of the Group for the last three completed years and note the following developments that we believe are relevant to a consideration of the merits of the Offers.

Earnings before interest, tax and depreciation have risen to HK$998 million in the year ended 31st December, 2009 and to HK$1,267 million in the year ended 31st December, 2010 following a fall to HK$721 million from HK$980 million in the year ended 31st December, 2008 as a result of the global financial crash in markets, which took place then and turnover and activity has increased markedly. Net profit attributable to Shareholders was HK$562 million in the year ended 31st December, 2008, HK$807 million in the following year and HK$903 million in the year ended 31st December, 2010.

The increase in activity resulting from the privatisation of China Central Properties Limited and the sale of shares in SOL referred to above is reflected in an expansion of the balance sheet from total assets of approximately HK$11,536 million as at 31st December, 2008, to HK$21,048 million as at 31st December, 2010 with improving liquidity, as represented by the relationship between current assets and current liabilities being as at 31st December, 2008, total current assets of HK$2,843 million and total current liabilities of HK$5,327 million versus total current assets of HK$10,630 million and total current liabilities of HK$6,053 million as at 31st December, 2010.

The Group highlights net gearing as a measure of financial leverage which is described as the relationship between bank borrowings net of cash held, divided by shareholders’ equity.

On this basis, the Group’s reported net gearing as at the end of the last three financial years has been:

31st December, 2008 31st December, 2009 31st December, 2010

84 per cent 53 per cent 51 per cent

On the basis of the relationship between reported total equity and reported total liabilities, the Group’s financial leverage before contingent liabilities has been:

31st December, 2008 31st December, 2009 31st December, 2010

1.28x 1.06x 1.27x

—56— LETTER FROM ANGLO CHINESE

Reported contingent liabilities have been:

31st December, 2008 31st December, 2009 31st December, 2010

HK$488 million HK$1,173 million HK$1,697 million

On this basis the Group is consistently leveraged but has recovered well in 2009 and 2010 from the global financial crisis in 2008.

Future prospects of the Group and the intentions of the Offeror

Falling margins on rising turnover in the year to 31st December, 2010 and the management discussion and analysis in the annual report of the Group for the year ended 31st December, 2010 illustrate margin pressures in construction and cement being offset by profits on the sale of property investments and it is not possible to forecast here or to comment accurately on the prospects of the Group, which will reflect to a material extent developments in its major markets and elsewhere.

Qualifying Shareholders and Qualifying Optionholders should review the share price chart of table 7 on page 48 for a perspective on values previously ascribed to Shares in the past when making an assessment of the merits of these Offers and carefully review these Offers in the context of the nature of and make up of the Group’s business and its growth in profits and liquidity since 2007 and 2008.

It is particularly noteworthy that the Offeror has chosen to make the Offers to rebuild its interest in the Group, which was reduced from approximately 57 per cent in 2009 as a result of the issue of approximately 165.8 million new Shares to privatise China Central Properties Limited, then an associate of the Group.

The Offeror and Mr. Lo Hong Sui, Vincent, the Chairman of the Company and a substantial shareholder in it have affirmed their confidence in the prospects of the Group and the Offeror is prepared to invest approximately HK$650 million at a premium to the prevailing market price, which we believe might be a source of encouragement and confidence for members of the Company in current market conditions.

The Hong Kong Stock Market and Companies that we believe are comparable to some degree

The Hong Kong Stock Market, as measured by the Hang Seng Index and the stock market in Mainland China, as represented by the Shanghai Composite Index have both rebounded substantially from the lows in 2008 caused by the global financial crisis in stock markets and Shares have underperformed this rally as tables 8 and 9 on pages 50 and 51 illustrate when measured against these and other indices.

Set out below is data on companies which we find comparable to some degree by virtue of being in one or more of the same lines of business as the Company. Accordingly, we have divided this data into four sectors: three that comprise the make up of the Group’s business: property development, construction and building maintenance, and cement in Mainland China and one comprising smaller conglomerates publicly traded in Hong Kong of a comparable size and scope.

—57— LETTER FROM ANGLO CHINESE

In selecting these companies we have had regard for size and lines of business and the geography of them but the comparisons are not and cannot be exact due to variations in year end dates, different locations of assets or businesses and a different mix of holding structures for assets, different levels of financial leverage and of risks. The first three sectors taken separately are less indicative of value in our opinion, than the fourth sector comprising a small cap conglomerate sector and we believe that a comparison with this sector is useful in assessing the merits of the Partial Offer and the Option Offer.

Table 13a - Comparables — Property development sector

Market P/E trailing Price/ EV/ Net Dividend cap 12 months book EBITDA Sales income yield ROE Ticker Company (HK$m) (x) (x) (x) (HK$m) (HK$m) (%) (%)

272 Shui On Land Ltd 18,084 5.3 0.6 6.8 5,601 3,225 3.2 12.1 1238 Powerlong Real Estate Holdings Ltd 9,479 2.7 0.7 2.4 5,088 3,393 3.1 31.0 2337 Shanghai Forte Land Co 8,802 4.2 1.0 3.8 9,932 2,021 — 26.0 1918 Sunac China Holdings Ltd 7,950 0.2 1.4 3.1 7,638 1,770 — 51.1 1777 Fantasia Holdings Group Co Ltd 5,995 6.0 1.1 4.5 5,133 927 3.3 19.5 1966 China SCE Property Holdings Ltd 5,706 4.9 1.3 4.6 4,743 1,086 4.5 36.6 1628 Yuzhou Properties Co 6,024 5.2 1.1 4.0 4,897 1,106 4.4 23.3 2868 Beijing Capital Land Ltd 5,498 4.9 0.9 4.2 7,453 1,054 8.1 18.6 983 Shui On Construction and 5,872 6.5 0.6 7.8 8,044 903 5.0 9.9 Materials Ltd 672 Zhong An Real Estate Ltd 3,810 8.2 0.7 7.4 1,428 436 — 8.5 337 SPG Land Holdings Ltd 3,458 3.2 0.7 3.5 4,903 1,022 2.4 21.8 3883 China Aoyuan Property Group Ltd 3,344 8.7 0.5 3.2 2,803 369 3.1 5.5 2118 Tian Shan Development Holdings 1,770 6.2 n/a 5.2 1,331 229 — 23.5 Ltd

Min 1,770 0.2 0.5 2.4 1,331 229 — 5.5 Average 6,599 5.1 0.9 4.6 5,307 1,349 2.8 22.1 Median 5,872 5.2 0.8 4.2 5,088 1,054 3.1 21.8 Max 18,084 8.7 1.4 7.8 9,932 3,393 8.1 51.1

Source: Bloomberg and Company’s financial reports, as at Latest Practicable Date (with EV/EBITDA recalculated to exclude restricted cash in the enterprise value)

—58— LETTER FROM ANGLO CHINESE

Table 13b - Comparables — Construction and building maintenance sector

Market P/E trailing Price/ EV/ Net Dividend cap 12 months book EBITDA Sales income yield ROE Ticker Company (HK$m) (x) (x) (x) (HK$m) (HK$m) (%) (%)

983 Shui On Construction and 5,872 6.5 0.6 7.8 8,044 903 5.0 9.9 Materials Ltd 2355 Baoye Group Co Ltd 3,547 5.6 0.8 1.8 13,839 606 3.6 14.8 15 Vantage International Holdings Ltd 1,332 5.9 2.0 7.0 2,055 192 — 37.4 610 Wai Kee Holdings Ltd 1,325 6.4 0.3 6.8 734 206 6.0 5.1 687 Tysan Holdings Ltd 1,401 6.4 0.9 1.8 2,135 271 3.1 20.2 404 Hsin Chong Construction Group Ltd 1,098 8.0 1.6 1.3 3,848 136 3.7 23.0 711 Chun Wo Development Holdings Ltd 504 85.0 0.4 25.1 2,606 31 0.9 2.4 896 Hanison Construction Holdings Ltd 527 3.3 0.6 7.3 884 109 3.5 15.6

Min 504 3.3 0.3 1.3 734 31 — 2.4 Average 1,950 15.9 0.9 7.4 4,268 307 3.2 16.0 Median 1,328 6.4 0.7 6.9 2,370 199 3.5 15.2 Max 5,872 85.0 2.0 25.1 13,839 903 6.0 37.4

Source: Bloomberg and Company’s financial reports, as at Latest Practicable Date (with EV/EBITDA recalculated to exclude restricted cash in the enterprise value)

Table 13c - Comparables — Cement sector

Market P/E trailing EV/ Net Dividend cap 12 months Price/ EBITDA Sales income yield ROE Ticker Company (HK$m) (x) book (x) (x) (HK$m) (HK$m) (%) (%)

691 China Shanshui Cement Group Ltd 24,105 20.7 3.5 11.2 13,608 1,124 1.7 18.1 1136 TCC International Holdings Ltd 14,666 17.6 1.4 12.2 8,126 784 1.1 9.3 743 Asia Cement China Holdings Corp 9,353 15.3 1.1 9.6 6,552 586 2.0 7.2 983 Shui On Construction and 5,872 6.5 0.6 7.8 8,044 903 5.0 9.9 Materials Ltd

Min 5,872 6.5 0.6 7.8 6,552 586 1.1 7.2 Average 13,499 15.0 1.7 10.2 9,082 849 2.4 11.1 Median 12,009 16.4 1.2 10.4 8,085 844 1.8 9.6 Max 24,105 20.7 3.5 12.2 13,608 1,124 5.0 18.1

Source: Bloomberg and Company’s financial reports, as at Latest Practicable Date (with EV/EBITDA recalculated to exclude restricted cash in the enterprise value)

—59— LETTER FROM ANGLO CHINESE

Table 13d - Comparables — Small cap conglomerate sector

Market P/E trailing Price/ EV/ Net Dividend cap 12 months book EBITDA Sales income yield ROE Ticker Company (HK$m) (x) (x) (x) (HK$m) (HK$m) (%) (%)

604 Shenzhen Investment Ltd 8,594 6.5 0.6 6.3 6,585 1,325 5.8 10.2 200 Melco International Development Ltd 8,418 nm 1.2 n/a 125 (209) — n/a 882 Tianjin Development Hldgs Ltd 6,106 nm 0.7 n/a 3,223 474 — 5.4 480 HKR International Ltd 6,063 3.2 0.5 3.1 1,840 1,841 4.2 17.3 983 Shui On Construction and 5,872 6.5 0.6 7.8 8,044 903 5.0 9.9 Materials Ltd 230 Minmetals Land Ltd 4,506 7.1 0.8 6.8 1,659 527 0.7 10.2 190 HKC Holdings Ltd 3,949 nm 0.3 (94.7) 499 (294) — (2.4) 258 Tomson Group Ltd 3,994 4.6 0.4 1.6 3,533 860 2.1 8.7 2355 Baoye Group Co Ltd 3,547 5.6 0.8 1.8 13,839 606 3.6 14.8 617 Paliburg Holdings Ltd 3,406 1.5 0.4 1.4 120 2,151 3.0 33.3 25 Chevalier International Holdings Ltd 2,853 3.5 0.7 5.5 3,934 378 7.3 10.8 129 Asia Standard International Group 2,164 0.8 0.3 1.8 1,865 2,383 1.1 40.0 610 Wai Kee Holdings Ltd 1,325 6.4 0.3 6.8 734 206 6.0 5.1 687 Tysan Holdings Ltd 1,401 6.4 0.9 1.8 2,135 271 3.1 20.2 404 Hsin Chong Construction Group Ltd 1,098 8.0 1.6 1.3 3,848 136 3.7 23.0 234 New Century Group Hong Kong Ltd 1,044 7.4 0.9 3.5 329 192 3.9 17.9 292 Asia Standard Hotel 984 3.1 0.4 4.2 594 435 2.0 21.0 758 Junefield Department Store Group 736 7.0 1.9 5.1 213 105 3.4 31.4 Ltd 216 Chinney Investment Ltd 645 5.5 0.3 5.9 1,042 276 4.3 14.1

Min 645 0.8 0.3 (94.7) 120 (294) — (2.4) Average 3,511 5.2 0.7 (1.8) 2,851 661 3.1 16.2 Median 3,406 6.0 0.6 3.5 1,840 435 3.4 14.4 Max 8,594 8.0 1.9 7.8 13,839 2,383 7.3 40.0

Source: Bloomberg and company financial reports, as at Latest Practicable Date (with EV/EBITDA recalculated to exclude restricted cash in the enterprise value)

Note: Company’s figures in tables 13a to 13d are calculated using the Offer Price of HK$12 per Share.

Premia paid in other partial offers

We have identified the following partial offers made in the last ten years and analysed the premia paid, if any. Given the different reasons for these transactions and the different businesses in which the relevant companies operated, we do not find this information useful in making our recommendation but, in our opinion, the premia offered are not out of line with the Offer Price.

—60— LETTER FROM ANGLO CHINESE

Table 14 - Other partial offers

Shares Premium/ held by Immediately (discount) the after the to offeror Offer partial offer Announcement Premium/ (discount) of offer price to reported before shares to if it is Date Offeree company average share price before the announcement NAV offer acquire successful

1 Day 5 Days 10 Days 1 Month

08-Apr-99 Dickson Concepts 41.9% 41.9% 31.0% 49.2% (63.2%) 51.90% 19.00% 70.90% 01-Nov-01 Wong Kong King 21.0% 30.4% 37.0% 44.2% (57.9%) 58.55% 24.91% 83.46% International 16-Jan-02 Wong’s International 10.6% 17.2% 15.4% 15.5% (24.0%) 59.35% 23.57% 82.92% 20-May-05 Qingling Motors 29.7% 14.3% 4.3% 16.4% (29.7%) 6.91% 13.09% 20.00% 12-Nov-07 Gold Peak Industries 17.9% 7.8% 7.0% 11.3% (46.9%) 31.97% 16.03% 48.00% 06-May-09 Royale Furniture (1.5%) (1.5%) (4.6%) (8.3%) (65.6%) 24.94% 26.06% 51.00%

Max 41.9% 41.9% 37.0% 49.2% (65.6%) Average 19.9% 18.4% 15.0% 21.4% (47.9%) Median 19.5% 15.8% 11.2% 16.0% (52.4%) Min (1.5%) (1.5%) (4.6%) (8.3%) (24.0%)

28-Jan-11 Shui On Construction 24.4% 25.8% 27.2% 31.5% (31.9%) and Materials Ltd

Source: The relevant company’s announcements and circulars

Based on our past experience and research in the Hong Kong market on the premia offered for control for publically traded companies measured against prices prevailing before the announcement of an offer, the Offer Price is, in our opinion, in line with the average premium paid in the Hong Kong market over an extended period of time and is an appropriate premium for the reasons given below.

Other matters for Qualifying Shareholders and Qualifying Optionholders to consider

Qualifying Shareholders and Qualifying Optionholders who wish to tender Shares or Share Options to the Partial Offer or the Option Offer should note that the Offers are made on the common pool method, which is described in detail in the Letter from Merrill Lynch on pages 15 to 31 of the Composite Offer Document and in the respective forms of acceptance.

Accepting Shareholders and Accepting Optionholders should have regard for realising existing odd lot holdings and avoiding creating residual odd lot holdings through accepting these offers. BOCI Securities Limited has been appointed by the Offeror to match sales and purchases of odd lot holdings of Shares in the market, on a best efforts basis, for a period of six weeks following the close of the Partial Offer to enable Qualifying Shareholders to dispose of their odd lots or to top up their odd lots to whole board lots as set out in the Composite Offer Document. Since the Share Options are not transferable, no matching sales or purchases will be arranged for any resultant odd lot holding of Share Options of Qualifying Optionholders.

—61— LETTER FROM ANGLO CHINESE

In our opinion, whilst it is not impossible for there to be an alternative offer for Shares prior to the Final Closing Date of the Partial Offer there is, in our opinion, very little prospect of any such alternative offer given the Offeror’s stated intentions not to privatise the Company and the level of control which the Offeror and parties acting in concert with it already holds.

Accepting Shareholders should note that they will not be entitled to the final dividend of HK$0.40 per Share for 2010, which is expected to be declared and be payable to Shareholders on the register of members on 16th June, 2011, if the Offers close on the Final Closing Date on 16th June, 2011 as described in the Letter from the Board which forms part of the Composite Offer Document.

CONCLUSIONS AND RECOMMENDATIONS

Conclusions and reasons for our recommendation

Having considered the foregoing, we consider the terms of the Partial Offer and the Option Offer fair and reasonable for the following principal reasons:

— although the Offer Price does not reflect the carrying value of the Group’s assets as reflected by the Group’s net asset value per Share of HK$17.47 per Share, on a fully diluted basis, the Offer Price is higher than the market price of Shares prevailing for about nine months prior to the date of the First Announcement and as at the Last Practicable Date, having not traded above the Offer Price since then;

— this history suggests to us that without the Partial Offer the Share price would be lower than it was on the Latest Practicable Date in view of the price performance of the Shares since the date of the First Announcement;

— the premium of the Offer Price over market prices prevailing prior to the date of the First Announcement is fair and reasonable where the Offeror already has control of the Company in terms of the Takeovers Code and where no competing offer is reasonably likely to be made;

— the offer price for a company of this size and conglomerate composition relative to its underlying net asset value and the other valuation measures discussed above means, in our opinion, that the discount of the Offer Price to the net asset value of the Group and the Offer Price generally is not unusual in the context of values prevailing in the small cap conglomerate sector in Hong Kong;

— in our opinion, the Offer Price is not out of line with the average premium paid in other offers made in Hong Kong in recent years;

—62— LETTER FROM ANGLO CHINESE

— the Partial Offer and the Option Offer permit Qualifying Shareholders in particular to sell a higher proportion of any large holding of Shares held by them in a single trade which may not normally be possible given average daily trading volumes in Shares (see table 11 on page 53) at or above the market price prevailing before the Offers were made and as at the Latest Practicable Date, and to do so without having to incur the brokerage fees, transaction levies and trading fees which are customarily payable when disposing of Shares in the open market, while retaining the balance of their investment in the Company if they believe in its future prospects; and

— in any event, Qualifying Shareholders and Qualifying Optionholders should take note that the market price of Shares may fall back to levels prior to the date of the First Announcement if the Offers do not become unconditional.

However it should be noted that a relatively small rise in the price of Shares overall of about 2.92 per cent above that prevailing as at the Latest Practicable Date would exceed the value of that part of the price attributable to the premium per Share offered by the Partial Offer, which is for only 17.68 per cent of all Shares held by Qualifying Shareholders, when that Share price rise is applied to all Shares held by Qualifying Shareholders and in such circumstances, Qualifying Shareholders would enjoy a higher market value for all their Shares than that contained in the Partial Offer for their Shares.

The position for Qualifying Optionholders will vary, depending upon the exercise price of their Share Options. For those Qualifying Optionholders who hold Out-of-the-money Share Options, they may wish to continue to hold their Share Options rather than accept the Option Offer as they will only receive a nominal HK$0.01 for each underlying Share under their Share Options.

On the other hand, Qualifying Shareholders who wish to sell all their Shares, or more than the minimum of 17.68 per cent of their holdings which may be taken up under the terms of the Partial Offer, should consider selling in the market if such Qualifying Shareholders believe that the Share price may fall back to the levels seen prior to the date of the First Announcement, following the close of the Offers, and if sufficient turnover in the Shares exists to dispose of their interests.

Recommendation

For the reasons set out above having considered the terms of the Partial Offer and the Option Offer we consider that the terms of the Offers are fair and reasonable so far as the Qualifying Shareholders and Qualifying Optionholders are concerned and having considered the factors set out in this letter and the reasons for our conclusions, we advise the Independent Board Committee to recommend that (i) Qualifying Shareholders approve the Partial Offer and the Option Offer; (ii) Qualifying Shareholders accept the Partial Offer; and (iii) Qualifying Optionholders who hold In-the-money Share Options accept the Option Offer.

—63— LETTER FROM ANGLO CHINESE

If Qualifying Shareholders and Qualifying Optionholders have the same level of confidence in the Company and its Share price as the Offeror, they may choose to hold their Shares or Share Options in view of the much higher price which the Shares once commanded in the past and the relative underperformance in the recovery in the price of Shares to date when measured against the recovery generally in prices of shares of listed companies in Hong Kong and Mainland China since the global financial crash in markets in 2008 and the recovery in the performance of the Group.

Yours faithfully, for and on behalf of Anglo Chinese Corporate Finance, Limited

Christopher J. Howe Managing Director

—64— APPENDIX I FURTHER TERMS OF THE PARTIAL OFFER AND THE OPTION OFFER

PROCEDURE FOR APPROVAL, ACCEPTANCE AND SETTLEMENT

1. General Procedure for Approval and Acceptance

1.1 Whether or not the Qualifying Shareholders accept the Partial Offer, they may approve the Partial Offer AND specify the number of Shares in respect of which they approve the Partial Offer in the accompanying Form of Approval and Acceptance. Each Share shall be entitled to ONE vote only. Multiple votes in respect of the same Share will not be taken into account in counting the approval of the Partial Offer. Only ONE Form of Approval and Acceptance will be accepted from each Qualifying Shareholder by the Share Registrar and only ONE vote for each Share may be cast. If a Qualifying Shareholder has put a tick “ߛ” to indicate his/her approval of the Partial Offer on the Form of Approval and Acceptance but no number of Shares in respect of such approval is specified or any other information in the Form of Approval and Acceptance is missing, incomplete or erroneous, the approval and the acceptance of the Partial Offer by such Shareholder will not be considered as valid until such missing, incomplete or erroneous information has been completed and rectified in such Form of Approval and Acceptance. Qualifying Shareholders may vote in respect of the total number of Shares held by him/her even though he/she does not intend to accept the Partial Offer and/or the number of Shares voted may be more than the number of Shares tendered for acceptance.

1.2 If the Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities in respect thereof) (if applicable) in respect of the Shares is/are in the name of the Qualifying Shareholder(s), and he/she wishes to accept the Partial Offer whether in full or in respect of part of his/her holding of Shares, he/she should complete and return the accompanying Form of Approval and Acceptance in accordance with the instructions printed in this Composite Offer Document and the instructions printed on the Form of Approval and Acceptance. The instructions in the Composite Offer Document should be read together with the instructions on the Form of Approval and Acceptance (which instructions form part of the terms of the Partial Offer).

1.3 In order to be valid, the completed Form of Approval and Acceptance should be forwarded, together with the Share certificate(s), transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) (if applicable) for the exact number of Shares in respect of which the relevant Qualifying Shareholder wishes to accept the Partial Offer, by post or by hand to the Share Registrar, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, in an envelope marked “Shui On Construction and Materials Limited — Partial Offer” as soon as possible after receipt of the Form of Approval and Acceptance but in any event so as to reach the Share Registrar by no later than 4:00 p.m. (Hong Kong time) on Monday, 30 May 2011, being the First Closing Date, or such other time and/or date as the Offeror may, subject to the Takeovers Code, decide and announce. In accordance with Rule 15.1 and Rule 15.3 of the Takeovers Code, when the Partial Offer is declared unconditional in all respects,

—65— APPENDIX I FURTHER TERMS OF THE PARTIAL OFFER AND THE OPTION OFFER

the Partial Offer will be open for acceptance for 14 days after the date on which the Partial Offer is declared unconditional in all respects. The Offeror cannot extend the Final Closing Date to a day beyond the 14th day after the First Closing Date pursuant to Rule 28.4 of the Takeovers Code.

1.4 Unless the Partial Offer is extended or revised in accordance with the Takeovers Code, no Form of Approval and Acceptance received after the Final Closing Date will be accepted.

1.5 If the Form of Approval and Acceptance is executed by a person other than the registered holder, appropriate evidence of authority (e.g. a grant of probate or certified copy of a power of attorney) to the satisfaction of the Share Registrar must be delivered to the Share Registrar with the completed Form of Approval and Acceptance.

1.6 No acknowledgement of receipt of any Form of Approval and Acceptance, Share certificate(s), transfer receipt(s) or other document(s) of title (and/or any indemnity or indemnities in respect thereof) (if applicable) will be given.

1.7 In relation to any acceptance(s) of the Partial Offer in respect of Shares held in CCASS, the Company reserves the right to make such alterations, additions or modifications to the terms of the Partial Offer as may be necessary or desirable to give effect to any purported acceptance of the Partial Offer, whether to comply with the facilities or requirements of CCASS or otherwise, provided such alterations, additions or modifications are consistent with the requirements of the Takeovers Code or are otherwise made with the Executive’s consent.

1.8 To accept the Option Offer, Qualifying Optionholders should complete and sign the accompanying Form of Option Offer Acceptance in accordance with the instructions printed thereon, which instructions form part of the terms of the Option Offer.

1.9 Only one Form of Option Offer Acceptance will be accepted from each Qualifying Optionholder by the Company Secretary.

1.10 The completed and signed Form of Option Offer Acceptance should then be forwarded, together with all the relevant certificate(s) of the Share Options under the Option Class the Qualifying Optionholder intends to tender, stating the number of Shares underlying the Share Options in respect of which the Qualifying Optionholder intends to accept the Option Offer for those Share Options in respect of the same Option Class, by post or by hand to the Company Secretary at 13th Floor, New Kowloon Plaza, 38 Tai Kok Tsui Road, Kowloon, Hong Kong in an envelope marked “Shui On Construction and Materials Limited — Option Offer”, as soon as possible after receipt of this Composite Offer Document and in any event no later than 4:00 p.m. on the Final Closing Date or such later time and/or date as the Offeror may determine and announce with the consent of the Executive. If the number of Shares underlying the Share Options as evidenced in the relevant certificate(s) of the Share Options tendered is less than the number of Shares underlying the Share Options stated in the Form of Option Offer Acceptance, or the

—66— APPENDIX I FURTHER TERMS OF THE PARTIAL OFFER AND THE OPTION OFFER

Qualifying Optionholder fails to submit all the certificate(s) of the Share Options tendered for acceptance within the same Option Class, his/her acceptance would be invalid. Acceptance will only be valid if the Share Options tendered by the Qualifying Optionholder have not lapsed as at the Final Closing Date.

1.11 Qualifying Optionholders may accept the Option Offer in respect of some or all of the Share Options held by them. The Share Options will be categorised in different categories (each an “Option Class”) by virtue of the date of grant of the Share Options. The maximum number of Shares underlying the Share Options to be taken up by the Offeror in each Option Class (“Maximum Grant Acceptance”) (“X”) will be determined in accordance with the following formula:

D F ן =X E

D: Total number of Shares underlying the Share Options held by all the Qualifying Optionholders under the Option Class

E: Total number of Shares underlying the Share Options held by all the Qualifying Optionholders

F: 4,317,121, being the maximum number of Shares underlying the Share Options to be taken up for cancellation by the Offeror under the Option Offer

Set out below is a table on the outstanding Share Options as at the Latest Practicable Date and the Maximum Grant Acceptance applicable to each Option Class:

Number of new Number of new Shares issuable Option Option Class Shares issuable upon exercise Offer Price (categorised by Exercise upon exercise of Share per Share the date of price per of Share Options by all Maximum underlying the grant of the Share Options by all Qualifying Grant Share Options Share Options) (HK$) Optionholders Optionholders Acceptance (HK$)

—67— APPENDIX I FURTHER TERMS OF THE PARTIAL OFFER AND THE OPTION OFFER

Further details of the outstanding Share Options, including the exercise periods of the Share Options are set out in “Appendix IV — General Information” in this Composite Offer Document. In respect of each Option Class, if valid acceptances are received for no more than the Maximum Grant Acceptance applicable to that Option Class, all Share Options tendered in respect of that Option Class will be taken up by the Offeror and cancelled on the Final Closing Date. In respect of each Option class, if valid acceptances are received for more than the relevant Maximum Grant Acceptance, the total number of Shares underlying the Share Options tendered by the relevant individual Qualifying Optionholder to be taken up by the Offeror and cancelled on the Final Closing Date in respect of the relevant Option Class (“V”) will be determined in accordance with the following formula:

X Z ן =V Y

X: Maximum Grant Acceptance for the relevant Option Class

Y: Total number of Shares underlying the Share Options of the relevant Option Class tendered by all Qualifying Optionholders

Z: Number of Shares underlying the Share Options of the relevant Option Class tendered by the relevant individual Qualifying Optionholder

T V ן U

T: Total number of Shares underlying the Share Options held by the relevant individual Qualifying Optionholder under the respective exercise period within the relevant Option Class

U: Total number of Shares underlying the Share Options held by the relevant individual Qualifying Optionholder within the relevant Option Class

—68— APPENDIX I FURTHER TERMS OF THE PARTIAL OFFER AND THE OPTION OFFER

to tender under that Option Class. If a Qualifying Optionholder accepts the Option Offer in respect of a particular Option Class, the Qualifying Optionholder will be deemed to have tendered such Share Options proportional to the Share Options he/she holds for each exercise period within that Option Class.

If a Qualifying Optionholder wants to tender any or all of his/her Share Options under any given Option Class, he/she must enclose all the corresponding certificates for the Share Options for all exercise periods under that Option Class as the Offeror will apply a pro-rata mechanism across the Share Options for all exercise periods on a pro-rata basis granted under that Option Class. In other words, Qualifying Optionholders cannot choose which exercise periods of Share Options under the same Option Class to tender. Failure to attach all the corresponding certificates for the Share Options under the same Option Class so tendered would render the acceptance of the Option Offer null and void.

2. Nominee Holdings

2.1 If the Share certificate(s), transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) (if applicable) in respect of a Qualifying Shareholder’s Share(s) is/are in the name of a nominee company or some name other than his/her own, and such Qualifying Shareholder wishes to approve and/or accept the Partial Offer (either in full or in respect of part of his/her holding(s) of Shares), he/she must either:

(i) lodge the Share certificate(s), transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) (if applicable) with the nominee company, or other nominee, with instructions authorising it to approve and/or accept the Partial Offer on his/her behalf and requesting it to deliver the Form of Approval and Acceptance duly completed together with the relevant Share certificate(s), transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) (if applicable) to the Share Registrar, within such deadline (which may be earlier than the deadline specified under the Partial Offer) as may be stipulated by the nominee; or

(ii) arrange for the Shares to be registered in his/her name by the Company through the Share Registrar, and send the Form of Approval and Acceptance duly completed and signed together with the relevant Share certificate(s), transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) (if applicable) to the Share Registrar before 4:00 p.m. on Monday, 30 May 2011, being the First Closing Date, or such other time and/or date as the Offeror may, subject to the Takeovers Code, decide and announce; or

(iii) where his/her Shares are deposited in CCASS via his/her licensed securities dealer/broker/custodian bank, instruct his/her licensed securities dealer/broker/ custodian bank to authorise HKSCC Nominees Limited to approve and/or accept the Partial Offer on his/her behalf on or before the deadline set by HKSCC Nominees

—69— APPENDIX I FURTHER TERMS OF THE PARTIAL OFFER AND THE OPTION OFFER

Limited or any other date as shall be determined by HKSCC Nominees Limited. In order to meet the deadline set by HKSCC Nominees Limited, that Qualifying Shareholder should check with his/her licensed securities dealer/broker/custodian bank for the timing on processing his/her instruction, and submit such instruction to his/her licensed securities dealer/broker/custodian bank as required by them; or

(iv) if the Shares have been lodged with his/her Investor Participant Account with CCASS, authorise his/her instruction via the CCASS Phone System or CCASS Internet System no later than one Business Day before the deadline set by HKSCC Nominees Limited or any other date as shall be determined by HKSCC Nominees Limited.

2.2 Qualifying Shareholders with such a nominee holding of Shares should ensure that they undertake the above applicable course of action promptly to allow their nominee(s) sufficient time to complete the acceptance procedure on his/her behalf before the First Closing Date, or such other time and/or date as the Offeror may, subject to the Takeovers Code, decide and announce.

3. Recent Transfers

If a Qualifying Shareholder has lodged transfer(s) of Shares for registration in his/her name and has not yet received the Share certificate(s) and wishes to approve and/or accept the Partial Offer, he/she should nevertheless complete and sign the Form of Approval and Acceptance and deliver it to the Share Registrar together with the transfer receipt(s) duly signed by him/her. Such action will be deemed to be an irrevocable authority to the Offeror and/or Merrill Lynch and/or any of their respective agent(s) or such other person(s) as any of them may direct for the purpose of collecting from the Company or the Share Registrar on his/her behalf the relevant Share certificate(s) when issued and to deliver such Share certificate(s), subject to the terms of the Partial Offer, as if it was/they were delivered to the Share Registrar with the Form of Approval and Acceptance.

4. Lost or Unavailable Share Certificates

4.1 If the Share certificate(s), transfer receipt(s) and/or any other document(s) of title is/are not readily available and/or is/are lost and a Qualifying Shareholder wishes to approve and/or accept the Partial Offer, the Form of Approval and Acceptance should nevertheless be completed, signed and delivered, together with a letter stating that he/she has lost one or more of his/her Share certificate(s) and/or transfer receipts and/or other document(s) of title or that it/they is/are not readily available, to the Share Registrar so as to reach the Share Registrar no later than 4:00 p.m. on Monday, 30 May 2011, being the First Closing Date. If the Qualifying Shareholder finds such document(s) or if it/they become available, the relevant Share certificate(s), transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) (if applicable) should be forwarded to the Share Registrar as soon as possible thereafter and in any event no later than 4:00 p.m. on Monday, 30 May 2011, being the First Closing Date.

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4.2 If a Qualifying Shareholder has lost his/her Share certificate(s), transfer receipt(s) and/or any other document(s) of title, he/she should write to the Share Registrar and request a letter of indemnity in respect of the lost Share certificate(s), transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) (as the case may be) which, when completed in accordance with the instructions given, should be returned, together with the Form of Approval and Acceptance and any Share certificate(s), transfer receipt(s) and/or any other document(s) of title which are available, to the Share Registrar either by post or by hand, so as to arrive not later than 4:00 p.m. on the First Closing Date. In such cases, the Qualifying Shareholder will be informed of the fees and/or expenses payable to the Share Registrar for which he/she will be responsible.

5. Additional Forms of Approval and Acceptance

If a Qualifying Shareholder has lost the accompanying Form of Approval and Acceptance or such original has become unusable, and requires a replacement of such form, he/she should write to the Share Registrar or visit the Share Registrar at its office and request an additional Form of Approval and Acceptance for completion by such Qualifying Shareholder. Alternatively, he/she could download it from the website of the Stock Exchange at www.hkexnews.hk or the website of the Company at www.socam.com.

6. Settlement

6.1 Provided that the Partial Offer becomes unconditional in all respects and a duly completed Form of Approval and Acceptance, accompanied by the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) (if applicable) are received by the Share Registrar by no later than 4:00 p.m. on Monday, 13 June 2011, being the Final Closing Date (or such other time and/or date as the Offeror may, subject to the Takeovers Code, decide and announce) and are in order in all respects and in accordance with the Takeovers Code, the Share Registrar will send to the relevant Accepting Shareholder by ordinary post, at his/her own risks, a remittance for the amount due to him/her under the Partial Offer and (if applicable) any Share certificate(s) and/or any transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities in respect thereof) (if applicable) for Shares not taken up or, if applicable, Share certificate(s) in respect of the balance of such Shares (taking account of any scaling down of his/her acceptance, stamp duty and the fees payable to the Share Registrar in respect of lost or unavailable Share certificates) in accordance with the authority and provisions contained in the Form of Approval and Acceptance as soon as possible but in any event within 10 days following the Final Closing Date. Settlement of the consideration to which any Accepting Shareholder is entitled under the Partial Offer will be implemented in full in accordance with the terms of the Partial Offer (save with respect to payment of seller’s ad valorem stamp duty) without regard to any lien, right of set-off, counterclaim, or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such Accepting Shareholder.

—71— APPENDIX I FURTHER TERMS OF THE PARTIAL OFFER AND THE OPTION OFFER

6.2 If the Partial Offer does not become unconditional in all respects, the Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) (as the case may be) will be returned and/or sent to each Accepting Shareholder (by ordinary post, at that Accepting Shareholder’s own risk) as soon as possible but in any event within 10 days of the lapse of the Partial Offer. Where such Accepting Shareholder has sent one or more transfer receipt(s) and in the meantime one or more Share certificate(s) has/have been collected on that Accepting Shareholder’s behalf in respect thereof, that Accepting Shareholder will be sent (by ordinary post, at that Accepting Shareholder’s own risk) such Share certificate(s) in lieu of the transfer receipt(s).

6.3 If the Shares tendered by an Accepting Shareholder have not been taken up by the Offeror in full, the Share certificate(s) or transfer receipt(s) or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) (as the case may be) in respect of the balance of such Shares or a replaced certificate therefor will be returned or sent to him/her by ordinary post at his/her own risk as soon as possible but in any event within 10 days following the Final Closing Date.

6.4 Provided that a valid Form of Option Offer Acceptance and the relevant certificate(s) of the Share Options are complete and in good order in all respects and have been received by the Company Secretary no later than the latest time for acceptance (i.e. the Final Closing Date, or such later time and/or date as the Offeror may announce with the consent of the Executive), a cheque for the amount due to each Qualifying Optionholder in respect of the Share Options surrendered by him/her under the Option Offer and the certificate in relation to the Share Options which are not successfully tendered and/or accepted under the Option Offer will be despatched to the Qualifying Optionholder by ordinary post at his/her own risk as soon as possible but in any event within 10 days following the Final Closing Date. If the Partial Offer does not become unconditional in all respects, the certificate(s) in relation to the Share Option(s) tendered will be returned and/or sent to each Accepting Optionholder as soon as possible but in any event within 10 days following the lapse of the Partial Offer.

6.5 Settlement of the consideration to which any Accepting Optionholder is entitled under the Sch 1-31 Option Offer will be implemented in full in accordance with the terms of the Option Offer without regard to any lien, right of set-off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such Accepting Optionholder.

7. New Shareholders

Any new Shareholder may collect a copy of the Composite Offer Document, together with a blank Form of Approval and Acceptance from the Share Registrar at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong during the period from the date of the Composite Offer Document to the Final Closing Date (both days inclusive), between 9:00 a.m. and 4:00 p.m.

—72— APPENDIX I FURTHER TERMS OF THE PARTIAL OFFER AND THE OPTION OFFER

(Hong Kong time) from Monday to Friday (other than public holidays). Such Shareholder may also contact the Share Registrar (through the enquiry general telephone line at 2980 1333) and request a copy of the Composite Offer Document and a blank Form of Approval and Acceptance (as appropriate) to be sent to his/her registered address as recorded in the Register.

8. Exercise of Share Options

A Qualifying Optionholder who wishes to approve and/or accept the Partial Offer may exercise the Share Options (to the extent exercisable) by completing, signing and delivering a notice for exercising the Share Options together with a cheque for payment of the subscription monies and the related certificates for the Share Options to the Company Secretary at 13th Floor, New Kowloon Plaza, 38 Tai Kok Tsui Road, Kowloon, Hong Kong 7 Business Days before the First Closing Date, or such other time and/or date as the Offeror may, subject to the Takeovers Code, decide and announce. The Qualifying Optionholder should at the same time complete and sign the Form of Approval and Acceptance and deliver it to the Share Registrar together with a copy set of the documents delivered to the Company Secretary for exercising the Share Options. Exercise of the Share Options are subject to the terms and conditions of the Share Option Scheme and the terms attaching to the grant of the relevant Share Options. Delivery of the completed and signed Form of Acceptance and Approval to the Share Registrar will not serve to complete the exercise of the Share Options but will only be deemed to be an irrevocable authority to the Offeror and/or Merrill Lynch and/or any of their respective agent(s) or such other person(s) as they may direct to collect from the Company or the Share Registrar on his/her behalf the relevant Share certificate(s) when issued on exercise of the Share Options as if it was/they were delivered to the Share Registrar with the form of Approval and Acceptance. If a Qualifying Optionholder fails to exercise his/her Share Options as aforesaid, there is no guarantee that the Company may issue the relevant Share certificate in respect of the Shares allotted pursuant to his/her exercise of the Share Option(s) to such Qualifying Optionholder in time for him/her to approve and to accept the Partial Offer as a Qualifying Shareholder of such Shares under the terms of the Partial Offer.

9. Lost certificates in respect of the Share Options

If the certificate(s) of the Share Option(s) is/are not readily available and/or is/are lost, and a Qualifying Optionholder wishes to accept the Option Offer or exercise the Share Option and approve and/or accept the Partial Offer, he/she must:

— if he/she wishes to accept the Option Offer, complete, sign and deliver the Form of Option Offer Acceptance and deliver the same to the Company Secretary together with a letter stating he/she has lost one or more of his/her certificates(s) and an indemnity (a form which is available from the Company Secretary) on or before the Final Closing Date.

— if he/she wishes to approve and/or accept the Partial Offer, exercise the Share Options to the extent exercisable as indicated in paragraph 8 in this Appendix above, but so that the relevant exercise notice, cheque for the subscription monies and the Form of Approval and Acceptance must reach the Company Secretary and the Share Registrar (as the case may be)

—73— APPENDIX I FURTHER TERMS OF THE PARTIAL OFFER AND THE OPTION OFFER

7 Business Days before the First Closing Date. He/she should at the same time deliver to the Company Secretary, together with a copy set to the Share Registrar, a letter stating that he/she has lost one or more of his/her certificates(s), and an indemnity to the Company in a form available from the Company Secretary.

10. Lapse of Share Options

Nothing in this Composite Offer Document nor the Option Offer will serve to extend the life of any Share Option which lapses under the Share Option Scheme. No exercise of Share Options nor acceptance of the Option Offer may be made in relation to any Share Option that has lapsed.

EFFECT OF ACCEPTANCE OF THE PARTIAL OFFER BY QUALIFYING SHAREHOLDERS AND THE OPTION OFFER BY QUALIFYING OPTIONHOLDERS

By validly accepting the Partial Offer, the Qualifying Shareholders will sell their tendered Offer Sch 1-6 Shares which are finally taken up by the Offeror, free from all encumbrances and together with all rights and benefits at any time accruing thereto including all rights to any dividends or other distributions declared, made or paid on or after the Final Closing Date. Any dividends or other distributions declared, made or paid before the Final Closing Date will be paid by the Company to the Shareholders who are qualified for such dividends or distributions.

—74— APPENDIX I FURTHER TERMS OF THE PARTIAL OFFER AND THE OPTION OFFER

A Qualifying Optionholder may exercise all or any part of the Share Options, to the extent exercisable, in accordance with the Share Option Scheme. Any Shares allotted as a result of the exercise of any Share Options will be subject to and be eligible to participate in approving and accepting the Partial Offer. He or she who has no intention to, or is not yet able to exercise any of his/her Share Options that has not yet vested, may accept the Option Offer in respect of their Share Options in accordance with its terms as set out in this Appendix and in the Letter from Merrill Lynch on pages 15 to 31 of the Composite Offer Document. Qualifying Optionholders who do nothing will continue to hold the Share Options in accordance with the terms of the Share Option Scheme.

Each Qualifying Shareholder or Qualifying Optionholder by whom, or on whose behalf, a Form of Approval and Acceptance or Form of Option Offer Acceptance (as the case may be) is executed irrevocably undertakes, represents, warrants and agrees to and with the Offeror and Merrill Lynch (so as to bind him/her, his/her personal representatives, heirs, successors and assigns) to the effect:

1. Irrevocable Acceptances

That the Form of Approval and Acceptance or Form of Option Offer Acceptance which has been Sch 1-15(i) duly completed and received by the Share Registrar or the Company Secretary respectively will constitute irrevocable acceptance of the Partial Offer or the Option Offer, except in the circumstances that the Executive requires that such Accepting Shareholder is granted a right to withdraw in accordance with Rule 19.2 of the Takeovers Code or in compliance with Rule 17 of the Takeovers Code. Rule 19.2 of the Takeovers Code relates to failure to announce the results of the Partial Offer as set out in the section headed “Announcements” in this Appendix and provides that the Executive may require that Accepting Shareholders be granted a right of withdrawal, on terms acceptable to the Executive, until the requirements of Rule 19 of the Takeovers Code can be met. Rule 17 of the Takeovers Code relates to the right of the Accepting Shareholder or Accepting Optionholder to withdraw his/her acceptance of the Partial Offer or the Option Offer after 21 days from the First Closing Date, if the Partial Offer has not by then become unconditional as to acceptances. The Offeror will make an announcement in the event such situation arises to advise on the right of withdrawal.

If the Partial Offer or the Option Offer is withdrawn with the consent of the Executive in accordance with the Takeovers Code, the Offeror shall, as soon as possible but in any event within 10 days thereof, return the relevant Share certificate(s) or certificates in respect the Share Options and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) (if applicable) in respect of such number of Shares or Share Options lodged with the Form of Approval and Acceptance or the Form of Option Offer Acceptance to the relevant Accepting Shareholder(s) or Accepting Optionholder(s) by ordinary post.

—75— APPENDIX I FURTHER TERMS OF THE PARTIAL OFFER AND THE OPTION OFFER

2. Execution

That the execution of the Form of Approval and Acceptance, subject to Rule 19.2 of the Takeovers Code, shall constitute an acceptance by the relevant Qualifying Shareholder of the Partial Offer in respect of the number of the Shares inserted in Box B of the Form of Approval and Acceptance and subject to the terms and conditions set out or referred to in this Composite Offer Document and the Form of Approval and Acceptance and that, once lodged, such acceptance shall be irrevocable, unless withdrawn in accordance with the Takeovers Code.

3. Representations and Warranties

(a) That he/she has full power and authority to tender, sell, assign and transfer all the Shares or Share Options (together with all rights accruing or attaching thereto) specified in such Form of Approval and Acceptance under the Partial Offer or the Form of Option Offer Acceptance under the Option Offer and that the Shares and the Share Options are free from all liens, charges, options, claims, equities, adverse interests, third party rights or encumbrances whatsoever and together with all rights accruing or attaching thereto, including, without limitation, the right to receive dividends and other distributions declared, made or paid, if any, on or after the Final Closing Date; and

(b) That if he/she is a resident or a citizen of a jurisdiction outside Hong Kong, he/she has fully observed any applicable legal or other requirements and that the Partial Offer may be accepted by him/her lawfully under the laws of the relevant jurisdiction.

4. Appointment and Authority

That the execution of the Form of Approval and Acceptance constitutes:

(a) the irrevocable appointment of any director or officer of the Offeror or Merrill Lynch, or such other person as any of them may direct, as such Qualifying Shareholder’s agent (“Agent”); and

(b) an irrevocable instruction to the Agent to complete and execute the Form of Approval and Acceptance and/or any other document at the Agent’s discretion on behalf of the person accepting the Partial Offer and to do any other acts or things (such as, among others, due execution of instruments of transfer to effect transfers of Offer Shares accepted by the Offeror pursuant to the Partial Offer to the Offeror and to tender the relevant Share certificate(s) for cancellation) as may in the opinion of the Agent be necessary, expedient or desirable for the purpose of the Offeror to acquire some or all of the Shares (as the Offeror may in its absolute discretion determine in accordance with the formula as set out in the paragraph headed “Other Terms of the Partial Offer and the Option Offer” in the Letter from Merrill Lynch in respect of which such person has accepted the Partial Offer).

—76— APPENDIX I FURTHER TERMS OF THE PARTIAL OFFER AND THE OPTION OFFER

5. Undertakings

That by executing the Form of Approval and Acceptance, he/she:

(a) agrees to ratify and confirm each and every act or thing which may be done or effected by the Offeror or any Agent in the proper exercise of its or his/her powers and/or authorities under the terms of the Partial Offer (such as, among others, acts or things effecting the transfer of Offer Shares accepted by the Offeror pursuant to the Partial Offer);

(b) undertakes to deliver to the Share Registrar the Share certificate(s), transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) (if applicable) in respect of the Shares for which the Partial Offer is accepted, or an indemnity or indemnities acceptable to the Offeror in lieu thereof, or to procure the delivery of such document(s) to the Share Registrar as soon as possible thereafter and, in any event, no later than 4:00 p.m. on Monday, 30 May 2011, being the First Closing Date (or such later date as the Offeror may, subject to the Takeovers Code, decide and announce);

(c) accepts that the provisions of the Form of Approval and Acceptance and the other terms and conditions in the Composite Offer Document are deemed to be incorporated into the terms and conditions of the Partial Offer;

(d) undertakes to execute any further documents, take any further action and give any further assurances which may be required in connection with his/her acceptance of the Partial Offer as the Offeror may consider to be necessary, expedient or desirable in accordance with the Takeovers Code, including, without limitation, to acquire any Shares in respect of which he/she has accepted the Partial Offer free from all liens, charges, options, claims, equities, adverse interests, third parties rights or encumbrances whatsoever and together with all rights accruing attaching thereto on or after the Final Closing Date and/or to perfect any of the authorities expressed to be given hereunder;

(e) authorises the Offeror or the Agent to procure the despatch by post of the consideration to which he/she is entitled at his/her risk to the address of the registered Shareholder or the first-named of joint registered Shareholders on the Register or, if different, to the name and address of the person as specified on the Form of Approval and Acceptance; and

(f) submits to the non-exclusive jurisdiction of the courts of Hong Kong in relation to all matters arising out of or in connection with the Partial Offer or the Form of Approval and Acceptance.

6. General

(a) Acceptance of the Partial Offer by any person or persons will be deemed to constitute a warranty by such person or persons to the Offeror and Merrill Lynch that the Shares acquired under the Partial Offer are fully paid and sold by any such person or persons free

—77— APPENDIX I FURTHER TERMS OF THE PARTIAL OFFER AND THE OPTION OFFER

from all liens, charges, options, claims, equities, adverse interests, third party rights or encumbrances whatsoever and together with all rights accruing or attaching thereto, including, without limitation, the right to receive dividends and other distributions declared, made or paid, if any, on or after the Final Closing Date.

(b) The Qualifying Shareholders may approve and/or accept the Partial Offer by completing the Form of Approval and Acceptance in accordance with the instructions set out in the Form of Approval and Acceptance (which constitute part of the terms of the Partial Offer). A Form of Approval and Acceptance may be rejected as invalid if the procedures contained in the Composite Offer Document and in the Form of Approval and Acceptance are not complied with.

(c) The Partial Offer and all acceptances of it, the Form of Approval and Acceptance and all contracts made pursuant to the Partial Offer, and all action taken or made or deemed to be taken or made pursuant to these terms will be governed by and construed in accordance with Hong Kong laws. Delivery of a Form of Approval and Acceptance will constitute submission to the non-exclusive jurisdiction of the Hong Kong courts.

(d) The failure of any person to receive the Composite Offer Document or the Form of Approval and Acceptance will not invalidate any aspect of the Partial Offer. Extra prints of Sch 1-15(ii) these documents are available to any Qualifying Shareholder at the office of the Share Registrar during the period from the date of the Composite Offer Document to the Final Closing Date (both days inclusive), between 9:00 a.m. and 4:00 p.m. (Hong Kong time) from Monday to Friday (other than public holidays), and on the Stock Exchange’s website at www.hkexnews.hk and the Company’s website at www.socam.com.

(e) The Offeror reserves the right, subject to any applicable law or regulatory requirements, to amend the Offer Price. In the event of such amendment (which will not, for the avoidance of doubt, include an alteration of the total number of Offer Shares), a supplemental document and new Form of Approval and Acceptance will be despatched to the Qualifying Shareholders. Any revised Partial Offer will be kept open for at least 14 days following the date on which the revised offer document is posted. If in the course of the Partial Offer, the Offeror revises the terms of the Partial Offer, all Qualifying Shareholders, whether they have accepted the Partial Offer or not, will be entitled to the revised terms.

(f) The right of acceptance of the Partial Offer is personal to the Qualifying Shareholders and is not capable of being assigned or renounced in favour of others or otherwise transferred by the Qualifying Shareholders.

(g) All questions as to the number of Offer Shares to be taken by the Offeror, the Offer Price to be paid therefor, or any alteration of such price in accordance with the terms contained herein, and the validity, form, eligibility (including the time of receipt) and acceptance for payment of any acceptance will be determined by the Offeror in its sole discretion, which determination will be final and binding on all of the parties (except as otherwise required under the applicable laws or by the Executive). The Offeror reserves the absolute right to

—78— APPENDIX I FURTHER TERMS OF THE PARTIAL OFFER AND THE OPTION OFFER

reject any or all acceptances it determines not to be in proper form or the acceptance or payment for which may, in the opinion of the Offeror, be unlawful. The Offeror also reserves the absolute right (provided that this is exercised consistently with the requirements of the Takeovers Code or otherwise with the Executive’s consent) to waive any of the terms or conditions of the Partial Offer set out in the paragraph headed “Conditions of the Partial Offer and the Option Offer” on page 16 of this Composite Offer Document, provided always that such waiver shall be in compliance with the Takeovers Code, except the Conditions, either generally or in a particular case and any defect or irregularity in the acceptance of any particular Share or any particular Shareholder thereof. An acceptance may be rejected as invalid unless all defects or irregularities have been cured or waived. In the event of a waiver, the consideration under the Partial Offer will not be dispatched until after the Form of Approval and Acceptance is completed in all respects and the Share certificate(s), and/or transfer receipt(s) and/or other documents of title (and/or any satisfactory indemnity or indemnities required in respect thereof) (if applicable) have been received. None of the Offeror, the Company, Merrill Lynch, the Share Registrar or any of their respective directors or any other person involved in the Partial Offer is or will be obliged to give notice of any defects or irregularities in acceptances and none of them will incur any liability for failure to give any such notice.

(h) All communications, notices, the Form(s) of Option Offer Acceptance, Form(s) of Approval and Acceptance, Share certificate(s), Share Option certificate(s), transfer receipt(s), other document(s) of title (and/or any indemnity or indemnities in respect thereof) and remittances to be delivered or sent by, to or from any Shareholders and Optionholders will be delivered or sent by, to and from them, or their designated agents, at their own risks and none of the Offeror, the Company, Merrill Lynch, the Share Registrar or any of their respective directors or any other person involved in the Partial Offer accepts any liability for any loss or any other liabilities whatsoever which may arise as a result.

OVERSEAS SHAREHOLDERS AND OVERSEAS OPTIONHOLDERS

The making of the Partial Offer and/or the Option Offer to Qualifying Shareholders and Qualifying Optionholders who are citizens, residents or nationals of jurisdictions outside Hong Kong may be subject to the laws of the relevant jurisdictions. Such relevant Qualifying Shareholders and Qualifying Optionholders may be prohibited or affected by laws of the relevant jurisdictions and it is the responsibility of each relevant Qualifying Shareholder who wishes to accept the Partial Offer and each relevant Qualifying Optionholder who wishes to accept the Option Offer to satisfy himself/herself as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental approvals, exchange control approvals or other consents, or filing and registration requirements which may be required in compliance with all necessary formalities or legal requirements and the payment of any transfer or other taxes due in such relevant jurisdictions.

—79— APPENDIX I FURTHER TERMS OF THE PARTIAL OFFER AND THE OPTION OFFER observed all applicable legal and other requirements and that the Partial Offer and/or the Option Offer may be accepted by him/her lawfully under the laws of the relevant jurisdiction. The Qualifying Shareholders and Qualifying Optionholders should consult their professional advisors if in doubt.

The Company shall give notice of any matter in relation to the Partial Offer and the Option Offer to the overseas Qualifying Shareholders and the overseas Qualifying Optionholders by issuing announcements or advertisements in accordance with its bye-laws and which, if so given, shall be deemed to have been sufficient for all effective purposes, despite any failure by any overseas Qualifying Shareholder or overseas Qualifying Optionholder to receive the same.

TAXATION

Qualifying Shareholders and Qualifying Optionholders are recommended to consult their own professional advisors if they are in any doubt as to the taxation implications of their acceptance of the Partial Offer and the Option Offer. It is emphasized that none of the Offeror, the Company, its ultimate beneficial owners and parties acting in concert with any of them, Merrill Lynch, Anglo Chinese, the Share Registrar or any of their respective directors or any persons involved in the Partial Offer and the Option Offer accepts responsibility for any taxation effects on, or liabilities of, any person or persons as a result of their acceptance of the Partial Offer and the Option Offer.

ANNOUNCEMENTS

The announcement on the results of the Partial Offer and the Option Offer will be issued by the Offeror on the website of the Stock Exchange by 7:00 p.m. on the day when the Partial Offer and the Option Offer has become or been declared unconditional in all respects (if such date is prior to the First Closing Date) or on the First Closing Date, as the case may be, and on the Final Closing Date. Such announcement will comply with the disclosure requirements under Rule 19.1 and Note 7 to Rule 19 of the Takeovers Code and will include, amongst other things, the results of the Partial Offer and the Option Offer, and details of the way in which each Accepting Shareholder’s and Accepting Optionholder’s pro-rata entitlement was determined. In any announcement of an extension of the Partial Offer and the Option Offer, either the next closing date must be stated or, if the Partial Offer and the Option Offer are unconditional in all respects, a statement may be made that the Partial Offer and the Option Offer will remain open for acceptance for 14 days thereafter in accordance with the Takeovers Code. The Offeror cannot extend the Final Closing Date to a day beyond the 14th day after the First Closing Date pursuant to Rule 28.4 of the Takeovers Code.

Each of the announcements shall specify the total number of Shares:-

(a) for which acceptances of the Partial Offer and the Option Offer have been received;

(b) held, controlled or directed by the Offeror or parties acting in concert with it before the Offer Period; and

—80— APPENDIX I FURTHER TERMS OF THE PARTIAL OFFER AND THE OPTION OFFER

Each of the announcements must include the level of acceptances or the number or percentage of Accepting Shareholders and Accepting Optionholders in compliance with Note 2 to Rule 19 of the Takeovers Code.

Each of the announcements must include the details of the way in which each of the Accepting Shareholder’s and Accepting Optionholder’s pro-rata entitlement was/is to be determined in compliance with Note 7 to Rule 19 of the Takeovers Code.

Each of the announcements must include details of any relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) of the Company which the Offeror or any parties acting in concert with it has borrowed or lent, save for any borrowed Shares which have been either on-lent or sold.

Each of the announcements shall include the percentages of the relevant classes of share capital of the Company, and the percentages of voting rights represented by these numbers.

As required under the Takeovers Code, all announcements in relation to the Partial Offer and the Option Offer, in respect of which the Executive and the Stock Exchange have confirmed that they have no further comments thereon, will be published on the websites of the SFC, the Stock Exchange and the Company.

INTERPRETATION

1. A reference in this Composite Offer Document to a Qualifying Shareholder includes a reference to a person(s) who, by reason of an acquisition or transfer of Shares or by reason of an exercise of the Share Options is entitled to execute a Form of Approval and Acceptance and in the event of more than one person executing a Form of Approval and Acceptance, the provisions of this Composite Offer Document apply to them jointly and severally.

2. A reference in this Composite Offer Document, the Form of Approval and Acceptance and the Form of Option Offer Acceptance to the masculine gender includes the feminine and neuter genders, and a reference to the singular includes the plural, and vice versa.

—81— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

1. SUMMARY OF FINANCIAL INFORMATION OF THE GROUP Sch.II(6)(a)(i),(viii)

Set out below is the summary of the financial information of the Group for three financial years ended 31 December 2010, as extracted from the annual reports of the Company for the three financial years ended 31 December 2010. The auditor of the Company has expressed an unqualified opinion on those financial statements in its reports dated 30 March 2010 and 30 March 2011 respectively.

(i) Consolidated income statements

2010 2009 2008 HK$ million HK$ million HK$ million

Turnover The Company and its subsidiaries 8,044 3,200 2,944 Share of jointly controlled entities/associates 2,986 3,197 3,689 11,030 6,397 6,633

Group turnover 8,044 3,200 2,944 Other income 200 149 133 Changes in inventories of finished goods, work in progress, contract work in progress and properties held for sale (2,598) 109 (17) Raw materials and consumables used (720) (651) (584) Staff costs (504) (485) (417) Depreciation and amortisation expenses (24) (15) (8) Subcontracting, external labour costs and other expenses (3,967) (2,291) (1,877) Dividend income from available-for-sale investments 60 8 67 Fair value changes on investment properties 422 46 27 Fair value changes on embedded derivatives — — (3) Convertible bonds issued by the Company — Fair value changes on embedded derivatives — 1 239 — Imputed interest expense — (28) (48) Interest on bank loans and overdrafts and other borrowing costs (249) (218) (181) Gain on disposal of available-for-sale investments 373 — 496 Fair value changes on financial assets carried at Q20 fair value through profit or loss — — 20 Impairment loss on available-for-sale investments — — (558) Loss on disposals of interests in jointly controlled entities — (4) (6) Discount on acquisition of a subsidiary — 648 —

—82— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

2010 2009 2008 HK$ million HK$ million HK$ million

Discount on deemed acquisition of interest in an associate — — 85 Share of results (excluding impairment loss) of jointly controlled entities 115 302 (78) Share of impairment loss of jointly controlled entities (70) (44) — Share of results of associates 16 101 350 Profit before taxation 1,098 828 584 Taxation (180) (16) (15) Profit for the year 918 812 569

Attributable to: Owners of the Company 903 807 562 Non-controlling interests 15 5 7 918 812 569

Dividends Paid 220 49 273 Proposed 196 122 —

Dividend per share Interim HK$0.20 HK$0.10 HK$0.20 Final HK$0.40 HK$0.25 —

Earnings per share Basic HK$1.85 HK$1.96 HK$1.75 Diluted HK$1.84 HK$1.84 HK$1.08

—83— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

(ii) Consolidated balance sheets

31 December 31 December 31 December 2010 2009 2008 HK$ million HK$ million HK$ million

Non-current Assets Investment properties 2,310 622 — Property, plant and equipment 89 59 29 Prepaid lease payments 43 43 44 Interests in jointly controlled entities 4,432 4,265 3,903 Available-for-sale investments 514 2,004 970 Interests in associates 425 332 2,430 Investment in convertible bonds — — 194 Club memberships 1 1 1 Amounts due from jointly controlled entities 1,624 1,008 554 Amounts due from associates 683 543 568 Defined benefit assets 22 — — Restricted bank deposits 275 — — 10,418 8,877 8,693

Current Assets Inventories 7 7 13 Prepaid lease payments 1 1 1 Properties held for sale 718 634 53 Properties under development for sale 3,267 4,806 186 Debtors, deposits and prepayments 1,730 948 644 Derivative financial instruments — — 13 Amounts due from customers for contract work 346 302 219 Amounts due from jointly controlled entities 459 437 481 Amounts due from associates 68 39 49 Amounts due from related companies 49 39 46 Taxation recoverable 4 3 — Pledged bank deposit 359 — 76 Restricted bank deposits 260 299 — Bank balances, deposits and cash 2,583 1,545 617 9,851 9,060 2,398 Assets classified as held for sale 779 704 445 10,630 9,764 2,843

—84— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

31 December 31 December 31 December 2010 2009 2008 HK$ million HK$ million HK$ million

Current Liabilities Creditors and accrued charges 2,028 1,403 868 Sales deposits received 406 312 — Amounts due to customers for contract work 154 124 132 Amounts due to jointly controlled entities 15 345 344 Amounts due to associates — — 28 Amounts due to related companies — — 2 Amounts due to non-controlling shareholders of subsidiaries 3 6 — Taxation payable 180 57 11 Derivative financial instruments — — 1 Bank borrowings due within one year 2,864 4,980 3,448 Convertible bonds — — 430 5,650 7,227 5,264 Liabilities associated with assets classified as held for sale 403 328 63 6,053 7,555 5,327 Net Current Assets (Liabilities) 4,577 2,209 (2,484) Total Assets Less Current Liabilities 14,995 11,086 6,209

Capital and Reserves Share capital 489 488 322 Reserves 8,715 8,515 4,677 Equity attributable to owners of the Company 9,204 9,003 4,999 Non-controlling interests 56 45 55 9,260 9,048 5,054 Non-current Liabilities Bank borrowings 5,335 1,660 1,070 Defined benefit liabilities — — 84 Deferred tax liabilities 400 378 1 5,735 2,038 1,155 14,995 11,086 6,209

—85— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

2. FINANCIAL STATEMENTS Sch.II(6)(a) (iv)

The following are the latest published audited consolidated financial statements of the Group for the year ended 31 December 2010 with the notes therein, as extracted from the 2010 annual report of the Company.

CONSOLIDATED INCOME STATEMENT For the year ended 31 December 2010

2010 2009 Notes HK$ million HK$ million

Turnover The Company and its subsidiaries 8,044 3,200 Share of jointly controlled entities/associates 2,986 3,197 11,030 6,397 Group turnover 7 8,044 3,200 Other income 8 200 149 Changes in inventories of finished goods, work in progress, contract work in progress and properties held for sale (2,598) 109 Raw materials and consumables used (720) (651) Staff costs (504) (485) Depreciation and amortisation expenses (24) (15) Subcontracting, external labour costs and other expenses (3,967) (2,291) Dividend income from available-for-sale investments 60 8 Fair value changes on investment properties 16 422 46 Convertible bonds issued by the Company — Fair value changes on embedded derivatives 9 — 1 — Imputed interest expense 10 — (28) Interest on bank loans and overdrafts and other borrowing costs 10 (249) (218) Gain on disposal of available-for-sale investments 20 373 — Loss on disposals of interests in jointly controlled entities — (4) Discount on acquisition of a subsidiary 39 — 648 Share of results (excluding impairment loss) of jointly controlled entities 7 115 302 Share of impairment loss of jointly controlled entities 7 (70) (44) Share of results of associates 7 16 101 Profit before taxation 1,098 828 Taxation 11 (180) (16) Profit for the year 13 918 812 Attributable to: Owners of the Company 903 807 Non-controlling interests 15 5 918 812 Earnings per share 15 Basic HK$1.85 HK$1.96 Diluted HK$1.84 HK$1.84

—86— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2010

2010 2009 HK$ million HK$ million

Profit for the year 918 812 Other comprehensive (expense) income (Loss) gain on fair value changes of available-for-sale investments (475) 1,034 Reclassification adjustments for amounts transferred to profit or loss: — upon disposal of available-for-sale investments (374) — — upon disposals of interests in jointly controlled entities — (7) — upon deregistration of subsidiaries — (9) — upon disposal of subsidiaries holding property inventories, net of deferred tax of HK$11 million (56) — Exchange differences arising on translation of foreign operations 373 26 Revaluation surplus attributable to the Group’s previously held interest in CCP (as defined hereinafter), net of deferred tax of HK$32 million — 95 Recognition of actuarial gain 12 81 Share of other comprehensive income of associates/jointly controlled entities — 47 Other comprehensive (expense) income for the year (520) 1,267 Total comprehensive income for the year 398 2,079

Total comprehensive income attributable to: Owners of the Company 382 2,080 Non-controlling interests 16 (1) 398 2,079

—87— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED BALANCE SHEET At 31 December 2010

2010 2009 Sch.II (6)(a)(ii) Notes HK$ million HK$ million

Non-current Assets Investment properties 16 2,310 622 Property, plant and equipment 17 89 59 Prepaid lease payments 18 43 43 Interests in jointly controlled entities 19 4,432 4,265 Available-for-sale investments 20 514 2,004 Interests in associates 21 425 332 Club memberships 1 1 Amounts due from jointly controlled entities 22 1,624 1,008 Amounts due from associates 23 683 543 Defined benefit assets 33 22 — Restricted bank deposits 28 275 — 10,418 8,877 Current Assets Inventories 24 7 7 Prepaid lease payments 18 1 1 Properties held for sale 25 718 634 Properties under development for sale 25 3,267 4,806 Debtors, deposits and prepayments 26 1,730 948 Amounts due from customers for contract work 24 346 302 Amounts due from jointly controlled entities 22 459 437 Amounts due from associates 23 68 39 Amounts due from related companies 27 49 39 Taxation recoverable 4 3 Pledged bank deposit 30 359 — Restricted bank deposits 28 260 299 Bank balances, deposits and cash 26 2,583 1,545 9,851 9,060 Assets classified as held for sale 29 779 704 10,630 9,764

—88— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

2010 2009 Sch.II (6)(a)(ii) Notes HK$ million HK$ million

Current Liabilities Creditors and accrued charges 30 2,028 1,403 Sales deposits received 406 312 Amounts due to customers for contract work 24 154 124 Amounts due to jointly controlled entities 22 15 345 Amounts due to non-controlling shareholders of subsidiaries 27 3 6 Taxation payable 180 57 Bank borrowings due within one year 31 2,864 4,980 5,650 7,227 Liabilities associated with assets classified as held for sale 29 403 328 6,053 7,555 Net Current Assets 4,577 2,209 Total Assets Less Current Liabilities 14,995 11,086

Capital and Reserves Share capital 32 489 488 Reserves 8,715 8,515 Equity attributable to owners of the Company 9,204 9,003 Non-controlling interests 56 45 9,260 9,048 Non-current Liabilities Bank borrowings 31 5,335 1,660 Deferred tax liabilities 34 400 378 5,735 2,038 14,995 11,086

—89— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2010

Attributable to owners of the Company

Share Contributed Share Actuarial Investment Other Non- Share premium Translation Surplus Retained Reserve option gain and revaluation reserve controlling Total capital account reserve (Note a) Goodwill profits funds reserve loss reserve (Note b) Total interests Equity HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million

At 1 January 2009 322 1,430 485 197 (3) 2,252 3 73 (117) — 357 4,999 55 5,054

Fair value changes of available-for-sale investments —————————1,034—1,034—1,034 Exchange differences arising on translation of financial statements of foreign operations — — 26————————26—26 Revaluation surplus attributable to the Group’s previously held interest in CCP, net of deferred tax ——————————9595—95 Recognition of actuarial gain ————————81——81—81 Share of other comprehensive income of associates ——————————4242—42 Share of other comprehensive income of a jointly controlled entity —————————— 5 5— 5 Deregistration of subsidiaries — — (3) ————————(3)(6)(9) Disposal of interests in jointly controlled entities — — (7) ————————(7)—(7) Profit for the year —————807—————8075812

Total comprehensive income (expense) for the year — — 16 — — 807 — — 81 1,034 142 2,080 (1) 2,079 Issue of shares upon acquisition of a subsidiary 166 1,762 —————————1,928—1,928 Issue of shares upon exercise of share options — 3————————— 3— 3 Recognition of share-based payments ———————42———42—42 Transfer upon exercise of share options — 1—————(1)—————— Dividends paid —————(49) —————(49) (7) (56) Other movements with non-controlling interests ————————————(2)(2)

At 31 December 2009 488 3,196 501 197 (3) 3,010 3 114 (36) 1,034 499 9,003 45 9,048

Fair value changes of available-for-sale investments —————————(475) — (475) — (475) Exchange differences arising on translation of financial statements of foreign operations — — 372 ————————3721373 Recognition of actuarial gain ————————12——12—12 Disposal of available-for-sale investments —————————(374) — (374) — (374) Disposal of subsidiaries holding property inventories — — (14) ———————(42)(56) — (56) Profit for the year —————903—————90315918

Total comprehensive income (expense) for the year — — 358 — — 903 — — 12 (849) (42) 382 16 398 Issue of shares upon exercise of share options 1 9—————(2)——— 8— 8 Disposal of a subsidiary ————————————(1)(1) Deemed disposal of interest in a subsidiary ——————————(3)(3)3— Recognition of share-based payments ———————34———34—34 Transfer upon lapse of share options —————13—(13)—————— Transfer to statutory reserve —————(1)1——————— Dividends paid —————(220) —————(220) (7) (227)

At 31 December 2010 489 3,205 859 197 (3) 3,705 4 133 (24) 185 454 9,204 56 9,260

—90— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Notes:

(a) The contributed surplus of the Group represents the difference between the nominal value of the shares of the acquired subsidiaries and the nominal value of the Company’s shares issued for the acquisition at the time of the group reorganisation prior to the listing of the Company’s shares in 1997.

(b) Other reserve of the Group mainly include (i) an amount of HK$231 million recognised in prior years, which arose when the Group entered into agreements with Shui On Company Limited (“SOCL”), the Company’s substantial shareholder, to co-invest in Shui On Land Limited during the year ended 31 March 2005; (ii) an amount of HK$102 million, which represents the Group’s share of compensation recognised by Lafarge Shui On Cement Limited in the form of donation in respect of losses in the earthquake in Sichuan during the year ended 31 December 2008; (iii) an amount of HK$42 million recognised during the year ended 31 December 2009, which represents the Group’s share of revaluation surplus of a then associate, China Central Properties Limited (“CCP”), arising from an acquisition achieved in stages by CCP; and (iv) an amount of HK$53 million, which represents the revaluation surplus of the Group’s 42.88% previously held interest in CCP, recognised upon the acquisition of the remaining 57.12% interest in CCP during the year ended 31 December 2009, net of the amount released during the current year as a result of disposal of property inventories (effected through direct sales or disposal of subsidiaries holding those property inventories).

—91— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED CASH FLOW STATEMENT Sch.II (6)(a)(iii) For the year ended 31 December 2010

2010 2009 HK$ million HK$ million

OPERATING ACTIVITIES Profit before taxation 1,098 828 Adjustments for: Impairment loss on properties — 10 Impairment loss recognised in respect of interests in jointly controlled entities 29 1 Loss on disposals of interests in jointly controlled entities — 4 Gain on disposal of assets classified as held for sale (7) — Discount on acquisition of a subsidiary — (648) Share of results (excluding impairment loss) of jointly controlled entities (115) (302) Share of impairment loss of jointly controlled entities 70 44 Share of results of associates (16) (101) Interest income (33) (32) Interest on bank loans and overdrafts and other borrowing costs 249 218 Imputed interest expense on convertible bonds issued by the Company — 28 Interest income from investment in convertible bonds — (11) Imputed interest income on loans to jointly controlled entities/associates (71) (48) Dividend income from available-for-sale investments (60) (8) Fair value changes on investment properties (422) (46) Fair value changes on embedded derivatives expired during the year (4) (1) Depreciation of property, plant and equipment 23 14 Amortisation of prepaid lease payments 1 1 Gain on disposal of property inventories through disposal of subsidiaries (220) — Gain on disposal of available-for-sale investments (373) — Unrealised gain on income from associates/jointly controlled entities 12 15 Share-based payment expense 34 42 Effect of exchange rate changes on inter-company balances (7) — Gain in relation to defined benefit scheme (4) (4)

—92— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

2010 2009 HK$ million HK$ million

Operating cash flows before movements in working capital 184 4 Increase in inventories (13) (20) Decrease in properties held for sale 233 17 Increase in properties under development for sale (392) (436) (Increase) decrease in debtors, deposits and prepayments (761) 138 Increase in amounts due from customers for contract work (42) (82) (Increase) decrease in amounts due from related companies (8) 7 (Increase) decrease in amounts due from associates (34) 16 Increase in amounts due from jointly controlled entities (24) (40) Increase in defined benefit scheme assets (6) (3) Increase in creditors and accrued charges 702 101 Increase in sales deposits received 94 312 Increase (decrease) in amounts due to customers for contract work 29 (9) Decrease in amounts due to jointly controlled entities (9) (3) Increase in amounts due to associates — 61 Decrease in amounts due to related companies — (2) (Decrease) increase in amounts due to non-controlling shareholders of subsidiaries (3) 3 Cash (used in) generated from operations (50) 64 Hong Kong Profits Tax paid (13) (15) Hong Kong Profits Tax refunded 1 — Income tax of other regions in the People’s Republic of China (“PRC”) paid (31) (16) NET CASH (USED IN) FROM OPERATING ACTIVITIES (93) 33 INVESTING ACTIVITIES Investments in jointly controlled entities (32) (54) Advance to jointly controlled entities (549) (215) Advance to associates (188) — Additions in property, plant and equipment (53) (28) Payment for construction of investment properties (99) (21) Purchase of property, plant and equipment for disposal groups classified as held for sale (16) (238) Dividends received from jointly controlled entities 24 29 Settlement of foreign exchange forward contracts — (39) Proceeds from disposal of available-for-sale investments 1,080 — Interest received 33 32 Proceeds from sales of property, plant and equipment and leasehold land 3 2 Dividends received from available-for-sale investments — 8 Net proceeds from disposal of subsidiaries holding property inventories (note) 1,675 —

—93— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

2010 2009 HK$ million HK$ million

Net proceeds from disposal of a jointly controlled entity — 33 Refund of deposits for disposal of held for sale assets (note 29) (302) — Acquisition of investment properties, property inventories and other assets and liabilities through acquisition of subsidiaries (470) (242) Net cash inflow on acquisition of CCP — 730 Increase in restricted bank deposits (236) (299) Pledged bank deposits (placed) refunded (359) 76 NET CASH FROM (USED IN) INVESTING ACTIVITIES 511 (226) FINANCING ACTIVITIES New bank loans raised 4,700 3,264 Increase in liabilities associated with assets held for sale 35 170 Net proceeds received on issue of shares 8 3 Redemption of convertible bonds issued by the Company — (458) Repayments of bank loans (3,568) (1,663) Interest paid (211) (195) Other borrowing costs paid (38) (23) Advance from jointly controlled entities — 81 Repayment to a related company (134) — Other movements with non-controlling shareholders of subsidiaries — (2) Dividends paid (220) (46) Dividends paid to non-controlling shareholders of subsidiaries (7) (7) NET CASH FROM FINANCING ACTIVITIES 565 1,124 NET INCREASE IN CASH AND CASH EQUIVALENTS 983 931 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 1,551 619 EFFECT OF FOREIGN EXCHANGE RATE CHANGES 61 1 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 2,595 1,551 ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Bank balances, deposits and cash 2,583 1,545 Bank balances, deposits and cash included in assets classified as held for sale (note 29) 12 6 2,595 1,551

Note: During the year ended 31 December 2010, the Group disposed of certain property inventories classified as properties under development for sale and properties held for sale under current assets, through disposals of equity interests in the subsidiaries holding these properties. According to HKAS 7 “Cash Flow Statements”, as such disposals were effected through disposals of subsidiaries, the aggregate net cash inflow of approximately HK$1,675 million arising therefrom was included in cash flows from investing activities, rather than operating activities.

—94— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Sch.II (6)(a)(vii) For the year ended 31 December 2010

1. GENERAL

The Company is incorporated in Bermuda as an exempted company with limited liability and its shares are listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). The addresses of the registered office and principal place of business of the Company are disclosed in Corporate Information in the annual report.

The principal activity of the Company is investment holding. Its subsidiaries, jointly controlled entities and associates are principally engaged in construction and contracting, renovation and fitting out, property development and investment, manufacturing and sales of cement, asset management and investment holding.

The consolidated financial statements are presented in Hong Kong dollars, which is also the functional currency of the Company.

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

In the current year, the Group has applied, for the first time, a number of new or revised standards, amendments and interpretations issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), which are effective for the Group’s financial period beginning on 1 January 2010.

HKFRSs (Amendments) Amendment to HKFRS 5 as part of Improvements to HKFRSs 2008 HKFRSs (Amendments) Improvements to HKFRSs 2009 HKAS 27 (Revised) Consolidated and Separate Financial Statements HKAS 39 (Amendment) Eligible Hedged Items HKFRS 1 (Amendment) Additional Exemptions for First-time Adopters HKFRS 1 (Revised) First-time Adoption of Hong Kong Financial Reporting Standards HKFRS 2 (Amendment) Group Cash-settled Share-based Payment Transactions HKFRS 3 (Revised) Business Combinations HK(IFRIC)-Int 17 Distributions of Non-cash Assets to Owners HK-Int 5 Presentation of Financial Statements — Classification by the Borrower of a Term Loan that Contains a Repayment on Demand Clause

HKFRS 3 (REVISED) BUSINESS COMBINATIONS AND HKAS 27 (REVISED) CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

The Group applies HKFRS 3 (Revised) Business Combinations prospectively to business combinations for which the acquisition date is on or after 1 January 2010. The requirements in

—95— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

HKAS 27 (Revised) Consolidated and Separate Financial Statements in relation to accounting for the Group’s changes in ownership interests in a subsidiary after control is obtained and for loss of control of a subsidiary are also applied prospectively by the Group on or after 1 January 2010.

The application of HKFRS 3 (Revised) and HKAS 27 (Revised) and other new and revised HKFRSs has had no material effect on the consolidated financial statements of the Group for the current or prior accounting years.

Results of the Group in future periods may be affected by future transactions to which HKFRS 3 (Revised) and HKAS 27 (Revised) and the consequential amendments to other HKFRSs are applicable.

3. POTENTIAL IMPACT ARISING ON THE NEW OR REVISED ACCOUNTING STANDARDS NOT YET EFFECTIVE

The Group has not early applied the following new and revised standards, amendments or interpretations that have been issued but are not yet effective.

HKFRSs (Amendments) Improvements to HKFRSs 20101 HKAS 24 (Revised) Related Party Disclosures2 HKAS 32 (Amendment) Classification of Right Issues3 HKFRS 1 (Amendment) Limited Exemption from Comparative HKFRS 7 Disclosures for First-time Adopters4 HKFRS 1 (Amendments) Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters5 HKFRS 7 (Amendments) Disclosures — Transfers of Financial Assets5 HKFRS 9 Financial Instruments6 HKAS 12 (Amendments) Deferred Tax: Recovery of Underlying Assets7 HK(IFRIC)-Int 14 (Amendment) Prepayments of a Minimum Funding Requirement2 HK(IFRIC)-Int 19 Extinguishing Financial Liabilities with Equity Instruments4

1 Effective for annual periods beginning on or after 1 July 2010 and 1 January 2011, as appropriate

2 Effective for annual periods beginning on or after 1 January 2011

3 Effective for annual periods beginning on or after 1 February 2010

4 Effective for annual periods beginning on or after 1 July 2010

5 Effective for annual periods beginning on or after 1 July 2011

6 Effective for annual periods beginning on or after 1 January 2013

7 Effective for annual periods beginning on or after 1 January 2012

HKFRS 9 Financial Instruments introduces new requirements for the classification and measurement of financial assets and will be effective from 1 January 2013, with earlier application permitted. The Standard requires all recognised financial assets that are within the scope of HKAS 39 Financial Instruments: Recognition and Measurement to be measured at either amortised cost or fair value. Specifically, debt investments that (i) are held within a business model whose objective is to collect the contractual cash flows and (ii) have contractual cash

—96— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost. All other debt investments and equity investments are measured at fair value. The application of HKFRS 9 might affect the classification and measurement of the Group’s financial assets.

Under the amendments to HKAS 12 titled Deferred Tax: Recovery of Underlying Assets, investment properties that are measured using the fair value model in accordance with HKAS 40 Investment Property are presumed to be recovered through sale, unless the presumption is rebutted in certain circumstances. The Directors of the Company are in the process of assessing the potential impact of these amendments.

HKAS 24 (as revised in 2009) Related Party Disclosures revises the definition of related parties. The disclosures regarding related party transactions and balances in the consolidated financial statements may be affected when the revised version of the Standard is applied in future accounting periods because counterparties that do not previously meet the definition of a related party may come within the scope of the revised Standard.

The Directors of the Company anticipate that the application of the other new and revised standards, amendments or interpretations will have no material impact on the results and financial position of the Group.

4. SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements have been prepared under the historical cost basis except for investment properties and certain financial instruments, which are measured at fair values, as explained in the accounting policies set out below.

The consolidated financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the HKICPA. In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Companies Ordinance.

BASIS OF CONSOLIDATION

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved when the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

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

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

—97— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

All inter-company transactions and balances within the Group are eliminated on consolidation.

Non-controlling interests in subsidiaries are presented separately from the Group’s equity therein.

Allocation of total comprehensive income to non-controlling interests

Total comprehensive income and expense of a subsidiary is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. Prior to 1 January 2010, losses applicable to the non-controlling interests in excess of the non-controlling interests in the subsidiary’s equity were allocated against the interests of the Group except to the extent that the non-controlling interests had a binding obligation and were able to make an additional investment to cover the losses.

BUSINESS COMBINATIONS

Business combinations on or after 1 January 2010

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition related costs are generally recognised in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except that:

— deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with HKAS 12 Income Taxes and HKAS 19 Employee Benefits respectively;

— liabilities or equity instruments related to share-based payment transactions of the acquiree or the replacement of an acquiree’s share-based payment transactions with share-based payment transactions of the Group are measured in accordance with HKFRS 2 Share-based Payment at the acquisition date; and

— assets (or disposal groups) that are classified as held for sale in accordance with HKFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after re-assessment, the net of the

—98— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at their fair value or another measurement basis required by another Standard.

Where the consideration the Group transfers in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and considered as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with the corresponding adjustments being made against goodwill or gain on bargain purchase. Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period about facts and circumstances that existed as of the acquisition date. Measurement period does not exceed one year from the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with HKAS 39 Financial Instruments: Recognition and Measurement, or HKAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss.

When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the Group obtains control), and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of.

Changes in the value of the previously held equity interest recognised in other comprehensive income and accumulated in equity before the acquisition date are reclassified to profit or loss when the Group obtains control over the acquiree.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for

—99— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

There was no business combination took place during the year ended 31 December 2010.

Business combinations prior to 1 January 2010

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under HKFRS 3 Business Combinations (2004) are recognised at their fair values at the acquisition date, except for non- current assets (or disposal groups) that are classified as held for sale in accordance with HKFRS 5 Non-current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

The non-controlling interest in the acquiree is initially measured at the non-controlling interests’ proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

Business combinations achieved in stages are accounted for individually, and goodwill or discount, as appropriate, arising from the acquisition at each stage is determined using the cost of the acquisition and fair value of the net identifiable assets acquired at each stage. Any adjustments to the fair value of the net identifiable assets attributable to the previously held equity interest are recognised in other comprehensive income and included in reserves.

INVESTMENTS IN ASSOCIATES AND JOINTLY CONTROLLED ENTITIES

An associate is an entity over which the investor has significant influence and that is neither a subsidiary nor an interest in a joint venture.

Joint venture arrangements that involve the establishment of a separate entity in which the venturers have joint control over the economic activity of the entity are referred to as a jointly controlled entity.

The results and assets and liabilities of associates and jointly controlled entities are incorporated in these consolidated financial statements using the equity method of accounting, except when

— 100 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

the investment is classified as held for sale (in which case it is accounted for under HKFRS 5 Non-current Assets Held for Sale and Discontinued Operations) or when the investment is designated at fair value through profit or loss upon initial recognition or is classified as held for trading (in which case it is accounted for under HKAS 39 Financial Instruments: Recognition and Measurement). Under the equity method, investments in associates and jointly controlled entities are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group’s share of profit or loss and other comprehensive income of the associates and the jointly controlled entities, less any identified impairment loss. When the Group’s share of losses equals or exceeds its interest in the associate or the jointly controlled entity (which includes any long-term interest that, in substance, forms part of the Group’s net investment in the associate or jointly controlled entity), the Group discontinues recognising its share of further losses except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or the jointly controlled entity.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate or the jointly controlled entity recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is not tested for impairment separately. Instead, the entire carrying amount of the investment is tested for impairment as a single asset. Any impairment loss recognised is not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment in the associate or jointly controlled entity. Any reversal of impairment loss is recognised to the extent that the recoverable amount of the investment subsequently increases.

Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss. A discount on acquisition arising on an acquisition of an associate or a jointly controlled entity (which is accounted for using the equity method) is included as income in the determination of the investor’s share of results of the associate or jointly controlled entity in the period in which the investment is acquired.

When a group entity transacts with an associate or a jointly controlled entity of the Group, profits or losses are eliminated to the extent of the Group’s interest in the associate or the jointly controlled entity.

NON-CURRENT ASSETS HELD FOR SALE

Non-current assets or disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition.

Non-current assets (or disposal groups) classified as held for sale are measured at the lower of the assets’ (or disposal groups’) previous carrying amount and fair value less costs to sell.

— 101 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

REVENUE RECOGNITION

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods sold and services provided in the normal course of business, net of discounts and sales related taxes.

Sales of properties

Revenue from the sale of properties in the ordinary course of business is recognised when properties are delivered, and when all the following criteria are met:

• the significant risks and rewards of ownership of the properties are transferred to buyers;

• neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the properties are retained;

• the amount of revenue can be measured reliably;

• it is probable that the economic benefits associated with the transaction will flow to the Group; and

• the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Payments received from purchasers prior to this stage are recorded as sales deposits received under current liabilities.

Others

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

Dividend income from investments including financial assets at fair value through profit or loss is recognised when the Group’s right to receive the relevant payment has been established.

Interest income from a financial asset including financial assets at fair value through profit or loss is accrued on a time basis by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Service income is recognised when services are provided.

— 102 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

CONSTRUCTION AND BUILDING MAINTENANCE CONTRACTS

Where the outcome of a construction and building maintenance contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date, as measured by the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.

Where the outcome of a construction and building maintenance contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that probably will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Where contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the surplus is shown as an amount due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus is shown as an amount due to customers for contract work. Amounts received before the related work is performed are included in the consolidated balance sheet, as a liability, as advances received. Amounts billed for work performed but not yet paid by the customer are included in the consolidated balance sheet under debtors, deposits and prepayments.

INVESTMENT PROPERTIES

Investment properties are properties (including properties under construction or development for future use as investment properties) held to earn rentals and/or for capital appreciation. On initial recognition, investment properties are measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are measured using the fair value model and stated at fair value at the balance sheet date. Gains or losses arising from changes in the fair value of investment properties are included as profit or loss for the period in which they arise.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated income statement in the year in which the item is derecognised.

— 103 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment including land and buildings held for use in the production or supply of goods or services, or for administrative purposes are stated at cost less subsequent accumulated depreciation and impairment losses.

Depreciation is provided to write off the cost of items of property, plant and equipment over their estimated useful lives and after taking into account their estimated residual value, if any, using the straight-line method. Both the useful life of an asset and its residual value, if any, are reviewed annually.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the consolidated income statement in the year in which the item is derecognised.

CLUB MEMBERSHIPS

On initial recognition, club memberships are stated at cost. After initial recognition, club memberships with indefinite useful lives are carried at cost less any subsequent accumulated impairment losses.

Club memberships are tested for impairment annually by comparing their carrying amounts with their recoverable amounts, irrespective of whether there is any indication that they may be impaired. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years.

INVENTORIES

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

— 104 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

PROPERTIES HELD FOR SALE

Properties held for sale are completed properties and are stated at the lower of cost and net realisable value. Costs relating to the development of properties, comprising prepaid lease payments for lands and development costs, are included in properties held for development for sale until such time when they are completed. Net realisable value represents the estimated selling price less all anticipated costs to be incurred in marketing and selling.

PROPERTIES UNDER DEVELOPMENT FOR SALE

Properties under development, which are intended to be held for sale, are measured at the lower of cost and net realisable value. Cost includes costs of land, development expenditure incurred, borrowing costs capitalised in accordance with the Group’s accounting policy and other direct costs attributable to such properties. These assets are recorded as current assets as they are expected to be realised in, or are intended for sale within the Group’s normal operating cycle. Net realisable value represents the estimated selling price less all anticipated costs of completion and costs to be incurred in marketing and selling. Upon completion, the assets are recorded as properties held for sale.

LEASEHOLD LAND AND BUILDING

The land and building elements of a lease of land and building are considered separately for the purpose of lease classification, unless the lease payments cannot be allocated reliably between the land and building elements, in which case, the entire lease is generally treated as a finance lease and accounted for as property, plant and equipment. To the extent the allocation of the lease payments can be made reliably, leasehold interests in land that are accounted for as operating leases are amortised over the lease term on a straight-line basis except for those that are classified and accounted for as investment properties under the fair value model.

BORROWING COSTS

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

All other borrowing costs are recognised in the consolidated income statement in the period in which they are incurred.

— 105 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

IMPAIRMENT OF ASSETS (OTHER THAN GOODWILL, CLUB MEMBERSHIPS WITH INDEFINITE USEFUL LIFE AND FINANCIAL ASSETS)

At each balance sheet date, the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

TAXATION

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

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

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

— 106 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rate (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is recognised in profit or loss, except when it relates to items that are recognised in other comprehensive income or directly in equity, in which case the deferred tax is also recognised in other comprehensive income or directly in equity respectively.

LEASING

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as lessor

Rental income from operating leases is recognised in the consolidated income statement on a straight-line basis over the term of the relevant lease.

The Group as lessee

Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the relevant lease term. Benefits received and receivable as an incentive to enter into an operating lease are recognised as a reduction of rental expense over the lease term on a straight-line basis.

FOREIGN CURRENCIES

In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recorded in the respective functional currency (i.e. the currency of the primary economic environment in which the entity operates) at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised as profit or loss in the period in which they arise. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included

— 107 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

as profit or loss for the period except for differences arising on the retranslation of non- monetary items in respect of which gains and losses are recognised directly in other comprehensive income, in which cases, the exchange differences are also recognised directly in other comprehensive income.

For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into the presentation currency of the Company (i.e. Hong Kong dollars) at the rate of exchange prevailing at the balance sheet date, and their income and expenses are translated at the average exchange rates for the year, unless exchange rates fluctuate significantly during the period, in which case, the exchange rates prevailing at the dates of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in translation reserve. Such exchange differences are recognised as profit or loss in the period in which the foreign operation is disposed of.

Goodwill and fair value adjustments on identifiable assets acquired arising on an acquisition of a foreign operation on or after 1 April 2005 are treated as assets and liabilities of that foreign operation and translated at the rate of exchange prevailing at the balance sheet date. Exchange differences arising are recognised in the translation reserve.

Goodwill and fair value adjustments on identifiable assets acquired arising on acquisitions of foreign operations prior to 1 April 2005 are treated as non-monetary foreign currency items of the acquirer and reported using the historical exchange rate prevailing at the date of the acquisition.

RETIREMENT BENEFITS COSTS

Payments to state-managed retirement benefit schemes and the Mandatory Provident Fund Scheme, which are defined contribution schemes, are charged as an expense when employees have rendered service entitling them to the contributions.

For the defined benefit retirement scheme, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at each balance sheet date. All actuarial gains and losses of defined benefit scheme are recognised immediately in other comprehensive income in the period in which they occur.

Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the benefits become vested.

The amount recognised in the consolidated balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the scheme.

— 108 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

FINANCIAL INSTRUMENTS

Financial assets and financial liabilities are recognised on the balance sheet when a group entity becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value.

Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets or financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets and financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets

The Group’s financial assets are classified into loans and receivables and available-for-sale financial assets. All purchases or sales of financial assets in the regular way are recognised and derecognised on a trade date basis. Purchases or sales in the regular way are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. The accounting policies adopted in respect of each category of financial assets are set out below.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset or, where appropriate, a shorter period to the net carrying amount on initial recognition.

Income is recognised on an effective interest basis for debt instruments.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. At each balance sheet date subsequent to initial recognition, loans and receivables (including trade debtors, amounts due from jointly controlled entities, associates and related companies, pledged bank deposits and bank balances, deposits and cash) are carried at amortised cost using the effective interest method, less any identified impairment loss (see the accounting policy on impairment loss on financial assets below).

— 109 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Available-for-sale investments

Available-for-sale investments are non-derivatives that are neither designated nor classified as financial assets at fair value through profit or loss, loans and receivables or held-to-maturity investments. At each balance sheet date subsequent to initial recognition, available-for-sale financial assets are measured at fair value. Changes in fair value are recognised in other comprehensive income and accumulated in investment revaluation reserve, until the financial asset is disposed of or is determined to be impaired, at which time, the cumulative gain or loss previously recognised in investment revaluation reserve is reclassified to profit or loss (see accounting policy on impairment loss on financial assets below).

Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for any impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial asset have been affected.

For an available-for-sale equity investment, a significant or prolonged decline in the fair value of that investment below its cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or

• default or delinquency in interest or principal payments; or

• it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For certain categories of financial asset, such as trade debtors, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio, observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, an impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate.

The carrying amounts of financial assets are reduced by impairment directly except for trade debtors, where the carrying amount is reduced through the use of an allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. When a debtor is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to profit or loss.

—110— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

For financial assets measured at amortised cost, if, in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Impairment losses on available-for-sale equity investments will not be reversed in profit or loss in subsequent periods. Any increase in fair value subsequent to impairment loss is recognised directly in equity. For available-for-sale debt investments, impairment losses are subsequently reversed if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

Financial liabilities and equity

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability or, where appropriate, a shorter period to the net carrying amount on initial recognition.

Interest expense is recognised on an effective interest basis.

Borrowings

Bank borrowings are subsequently measured at amortised cost, using the effective interest method.

Other financial liabilities

Other financial liabilities (including creditors, amounts due to jointly controlled entities and non-controlling shareholders of subsidiaries) are subsequently measured at amortised cost, using the effective interest method.

— 111 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Embedded derivatives

Derivatives embedded in non-derivative host contracts are treated as separate derivatives when their risk and characteristics are not closely related to those of the host contracts and the host contracts are not measured at fair value with changes in fair value recognised in profit or loss.

Derivatives (including embedded derivatives, which are separated from non-derivatives host contracts) that do not qualify for hedge accounting are deemed as financial assets/financial liabilities held for trading and are measured at fair value except for derivative instruments, which are linked to and must be settled by delivery of unquoted equity instruments whose fair value cannot be reliably measured and such derivative instruments are stated at cost less impairment, if applicable.

Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. A financial guarantee contract issued by the Group and not designated at fair value through profit or loss is recognised initially at its fair value less transaction costs that are directly attributable to the issue of the financial guarantee contract. Subsequent to initial recognition, the Group measures the financial guarantee contract at the higher of: (i) the amount determined in accordance with HKAS 37 Provisions, Contingent Liabilities and Contingent Assets; and (ii) the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with HKAS 18 Revenue.

Derecognition

Financial assets are derecognised when the rights to receive cash flows from the assets expire or, the financial assets are transferred and the Group has transferred substantially all the risks and rewards of ownership of the financial assets. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised directly in equity is recognised in profit or loss.

Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expires. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

—112— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

SHARE-BASED PAYMENT TRANSACTIONS

Share options granted to employees

The fair value of services received determined by reference to the fair value of share options granted at the grant date is expensed on a straight-line basis over the vesting period, with a corresponding increase in equity (share option reserve).

At each balance sheet date, for share options, which are conditional upon satisfying specified non-market performance vesting conditions, the Group revises its estimates of the number of options that are expected to vest ultimately. The impact of the revision of the original estimates during the vesting period, if any, is recognised in profit or loss over the remaining vesting period, with a corresponding adjustment to the share option reserve.

At the time when the share options are exercised, the amount previously recognised in the share option reserve will be transferred to share premium. When share options are forfeited after the vesting date or are still not exercised at the expiry date, the amount previously recognised in the share option reserve will be transferred to retained profits.

5. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, which are described in note 4, the Directors of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The key estimates and assumptions that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

CONSTRUCTION CONTRACTS

The Group recognises contract revenue and profit on a construction contract according to the management’s estimation of the total outcome of the project as well as the percentage of completion of construction works. Notwithstanding that the management reviews and revises the estimates of both contract revenue and costs for the construction contract as the contract progresses, the actual outcome of the contract in terms of its total revenue and costs may be higher or lower than the estimations and this will affect the revenue and profit recognised.

—113— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

INVESTMENT PROPERTIES

Investment properties are stated at fair value based on the valuation performed by independent professional valuers. In determining the fair value, the valuers have used a method of valuation, which involves certain estimates of market conditions. In relying on the valuation report, the Directors of the Company have exercised their judgement and are satisfied that the assumptions used in the valuation are reflective of the current market conditions. Changes to these assumptions would result in changes in the fair values of the Group’s investment properties and the corresponding adjustments to the amount of gain or loss reported in the consolidated income statement.

DETERMINATION OF NET REALISABLE VALUE OF PROPERTIES UNDER DEVELOPMENT FOR SALE AND PROPERTIES HELD FOR SALE

Properties under development for sale and properties held for sale are stated at the lower of cost and net realisable value. The net realisable value is the estimated selling price (based on the direct comparison method) less estimated selling expenses and estimated cost of completion (if any), which are determined based on best available information and valuation performed by independent professional valuers. Where there is any decrease in the estimated selling price arising from any changes to the property market conditions in the PRC, the loss will be recognised on the properties under development for sale and properties held for sale in the consolidated income statement.

IMPAIRMENT OF OTHER ASSETS

The Group reviews the carrying amounts of its assets at each balance sheet date to determine whether there is any indication that those assets have suffered an impairment loss. Management has exercised judgement to estimate the timing and future cash flows expected to be derived from the assets and ascertain their recoverable amounts. Where the recoverable amount of an asset is estimated to be less than its carrying amount, an impairment loss will be provided for such asset and recognised in the consolidated income statement.

As disclosed in note 26(a), at 31 December 2010, receivables of HK$235 million (2009: HK$231 million) are expected to be settled when the legal title of the property is transferred to the buyer, which is expected to take place within the next twelve months from the balance sheet date. In determining the recoverable amount of such a receivable, the management has exercised judgement in estimating the timing and future cash flows to be recovered and determined that no impairment was necessary at the balance sheet date. If the actual recoverable amount or timing of recovery are different from expectation, an impairment loss may arise.

FINANCIAL GUARANTEE CONTRACTS

As disclosed in note 41, at 31 December 2010, the Group has provided guarantees under financial guarantee contracts for an aggregate amount of HK$1,697 million (2009: HK$1,173 million). In determining whether provision should be recognised in respect of the Group’s financial guarantee contracts, the Directors of the Company exercise judgment in evaluation of the

—114— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

probability of resources outflow that will be required and the assessment of whether a reliable estimate can be made of the amount of the obligation. The Directors of the Company are of the opinion that it is not probable that outflow of resources will result from the financial guarantee contracts. Accordingly, no provision has been recognised in the consolidated balance sheet. Should the actual outcome be different from expected, provision for losses will be recognised in consolidated financial statements.

6. FINANCIAL INSTRUMENTS

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s major financial instruments include available-for-sale investments, debtors, amounts due from jointly controlled entities, associates and related companies, restricted bank deposits, pledged bank deposits, bank balances, creditors, amounts due to jointly controlled entities and non-controlling shareholders of subsidiaries and bank borrowings. Details of these financial instruments are disclosed in respective notes. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. The Group manages and monitors these exposures to ensure appropriate measures are implemented in a timely and effective manner.

Categories of financial instruments

2010 2009 HK$ million HK$ million

Financial assets Available-for-sale investments 514 2,004 Loans and receivables (including cash and cash equivalents) 8,080 4,829 Financial liabilities Amortised cost 9,831 7,975

(a) MARKET RISK

The Group is exposed primarily to the financial risks of changes in interest rates, foreign currency exchange rates and equity prices. There has been no change to the Group’s exposure to market risk or the manner in which it manages and measures the risk. Details of each type of market risk are described as follows:

(i) Interest rate risk

The Group is exposed to cash flow interest rate risk due to the fluctuation of the prevailing market interest rate on bank deposits and variable-rate borrowings. The Group currently does not use any derivative contracts to hedge its exposure to interest rate risk but would consider doing so in respect of significant exposure should the need arise.

—115— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

The Group’s exposure to interest rates on bank deposits and financial liabilities is detailed in the liquidity risk management section of this note. The Group’s cash flow interest rate risk is mainly concentrated on the fluctuation of Hong Kong Interbank Offer Rate (“HIBOR”) arising from the Group’s Hong Kong dollar denominated borrowings.

Interest rate sensitivity

The sensitivity analyses below have been determined based on the exposure to cash flow interest rate risk for variable-rate borrowings. The analysis is prepared assuming the amount of liability outstanding at the balance sheet date was outstanding for the whole year. An increase or decrease of 100 basis points (2009: 100 basis points) is used when reporting the interest rate risk internally and represents management’s assessment of the reasonably possible change in interest rates.

At the balance sheet date, if interest rates had been increased/decreased by 100 basis points (2009: 100 basis points) and all other variables were held constant, the Group’s profit for the year would decrease/increase by approximately HK$82 million for the year ended 31 December 2010 (2009: HK$67 million).

(ii) Foreign currency risk

Most of the Group’s financial assets and financial liabilities are denominated in Hong Kong dollars or Renminbi, which are the same as the functional currency of the relevant group entities. The Group has certain bank balances and cash, current accounts with jointly controlled entities and borrowings, which are denominated in foreign currencies and hence exposure to exchange rate fluctuations arises. The Group does not use any derivative contracts to hedge against its exposure to currency risk. The Group manages its foreign currency risk by closely monitoring the movement of the foreign currency rate.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities are as follows:

2010 2009 HK$ million HK$ million

Assets United States dollars 520 609 Hong Kong dollars 7 36 Liabilities United States dollars 277 — Hong Kong dollars 1,029 233

—116— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Foreign currency sensitivity

The Group’s foreign currency risk is mainly concentrated on the fluctuation among Renminbi, the United States dollars and Hong Kong dollars. The sensitivity analysis does not include those United States dollars denominated assets and liabilities when they are held by group entities having Hong Kong dollars as their functional currency since the exchange rates between United States dollars and Hong Kong dollars are pegged. The following table details the Group’s sensitivity to a 7% (2009: 7%) increase or decrease in the functional currencies of the relevant group entities against foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 7% (2009: 7%) change in foreign currency rates. A positive number indicates an increase in profit for the year where the foreign currencies strengthen against the functional currencies of the relevant group entities. For a 7% (2009: 7%) weakening of the foreign currencies against the functional currencies of the relevant group entities, there would be an equal and opposite impact on the profit.

2010 2009 HK$ million HK$ million

United States dollars 6 13 Hong Kong dollars (72) (14)

(iii) Other price risk

The Group is exposed to equity price risk through its available-for-sale investments. If the market price of the investments had been increased/decreased by 20% (2009: 20%), the Group’s reserve at 31 December 2010 would increase/decrease by approximately HK$103 million (2009: HK$401 million).

(b) CREDIT RISK

The Group’s maximum exposure to credit risk in the event of the counterparties’ failure to perform their obligations in relation to each class of recognised financial assets is the carrying amount of those assets as stated in the consolidated balance sheet and the amount of contingent liabilities in relation to financial guarantee issued by the Group as disclosed in note 41. In order to minimise credit risk, the Group has policies in place for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the Directors of the Company consider that the credit risk is significantly reduced.

—117— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

The Group has certain concentration of credit risk in respect of amounts due from jointly controlled entities and debtors, deposits and prepayments. At 31 December 2010, 43% (2009: 56%) of total amounts due from jointly controlled entities and 43% (2009: 24%) of total debtors, deposits and prepayments was due from one single jointly controlled entity and customer respectively. These counterparties have good credit standing and the amount due from the customer has been substantially settled subsequent to 31 December 2010. In addition, the Group has concentration of credit risk in respect of a counterparty. At 31 December 2010, other receivables of HK$235 million (2009: HK$231 million) were due from a counterparty and a guarantee of HK$637 million (2009: HK$615 million) was issued by the Company in respect of this counterparty. In order to reduce credit risk, the Group has procedures in place to monitor the credit standing of this counterparty and to ensure that follow-up action is taken to recover these debts. The Group also reviews the recoverable amounts of the relevant debts and the probability of default by the counterparty at each balance sheet date. The Directors of the Company considered that no provision for impairment loss is necessary at the balance sheet date. Except for the above, the Group has no other significant concentration of credit risk, with exposure spread over a number of counterparties and customers.

The credit risk on liquid funds should be limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies or state-owned banks in the PRC.

With respect to credit risk arising from amounts due from jointly controlled entities and associates, the Group’s exposure to credit risk arising from default of the counterparty is limited as the counterparties have sufficient net assets to repay its debts and a good history of repayment. The Group does not expect to incur a significant loss for uncollected amounts due from these jointly controlled entities and associates.

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt to equity ratio. There has been no change in the Group’s exposure to capital risk or the manner in which it manages and measures the risk.

The capital structure of the Group consists of debt, which includes borrowings and equity attributable to the owners of the Company, comprising issued share capital, reserves and retained profits.

The Directors of the Company review the capital structure periodically. As a part of this review, the Directors consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the Directors, the Group will adjust its overall capital structure through the issue of new shares, new debt or the redemption of existing debt.

—118— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

(d) LIQUIDITY RISK

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank and other borrowings. The Group also monitors the current and expected liquidity requirements and its compliance with lending covenants regularly to ensure it maintains sufficient working capital and adequate committed lines of funding to meet its liquidity requirement.

The following table details the Group’s contractual maturity for its financial liabilities as well as certain financial assets. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. For financial assets, the table reflects the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets.

The table includes both interest and principal cash flows.

Weighted average Total effective Less than 3 months undiscounted Carrying interest rate 3 months to 1 year 1-2 years 2-3 years cash flow amount % p.a. HK$ HK$ HK$ HK$ HK$ HK$ million million million million million million

At 31 December 2010 Bank deposits 0.93% 1,462 — — — 1,462 1,460 Trade and other payables — (1,357) (209) (66) — (1,632) (1,632) Borrowings (variable rate) 3.13% (640) (2,452) (3,875) (1,581) (8,548) (8,199) (535) (2,661) (3,941) (1,581) (8,718) (8,371)

Financial guarantee contracts (note) — (842) (505) — (350) (1,697) —

At 31 December 2009 Bank deposits 0.79% 599 — — — 599 598 Trade and other payables — (1,130) (138) (67) — (1,335) (1,335) Borrowings (variable rate) 4.08% (1,309) (3,856) (984) (744) (6,893) (6,640) (1,840) (3,994) (1,051) (744) (7,629) (7,377)

Financial guarantee contracts (note) — (668) — (505) — (1,173) —

Note: At the balance sheet date, the Group has provided financial guarantees to banks in respect of banking facilities granted to various parties (note 41). In the event of the failure of those parties to meet their obligations under these facilities, the Group may be required to pay up to the guaranteed amounts to the banks upon demand. Management does not consider that it is probable for the banks to claim the Group under these guarantees.

—119— APPENDIX II FINANCIAL INFORMATION OF THE GROUP

(e) FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of financial assets and financial liabilities are determined as follows:

• The fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets is determined with reference to quoted market prices.

• The fair value of other financial assets and financial liabilities is determined in accordance with generally accepted pricing models based on discounted cash flow analysis or using prices from observable current market transactions.

The Directors of the Company consider that the carrying amounts of the financial assets and financial liabilities recorded at amortised cost in the consolidated financial statements approximate to their fair values.

Fair value measurements recognised in the consolidated balance sheet

At 31 December 2010 and 31 December 2009, the only financial instrument of the Group that was measured subsequent to initial recognition at fair value is available-for-sale investments, of which the fair value was derived from quoted prices (unadjusted) in active market.

7. TURNOVER AND SEGMENT INFORMATION

Revenue of the Group represents the contract revenue and service income arising on construction and building maintenance contracts, amounts received and receivable for goods sold by the Group (less returns and allowances), revenue from sale of properties, fees from asset management and rental and leasing income for the year.

For management reporting purposes, the Group is currently organised into four operating divisions based on business nature — construction and building maintenance, cement operations, property and others. These divisions are the basis on which the Group reports to its chief operating decision makers, who are the Directors of the Company, for the purposes of resource allocation and assessment of segment performance.

— 120 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

(a) REPORTABLE SEGMENT REVENUE AND PROFIT OR LOSS

An analysis of the Group’s reportable segment revenue and segment results by operating segment is as follows:

For the year ended 31 December 2010

Cement operations

Construction Other and building Through cement maintenance LSOC# operations Property Others Total HK$ HK$ HK$ HK$ HK$ HK$ million million million million million million

REVENUE External sales of goods (note) — — — 3,135 6 3,141 External rental income — — — 38 — 38 External revenue from rendering of services — — — 52 1 53 Construction contract revenue 4,812 — — — — 4,812 Revenue from external customers 4,812 — — 3,225 7 8,044 Inter-segment revenue 267 — — — — 267 5,079 — — 3,225 7 8,311 Share of jointly controlled entities 4 2,657 325 — — 2,986 Total segment revenue 5,083 2,657 325 3,225 7 11,297

Inter-segment revenue is charged at mutually agreed prices. # LSOC denotes Lafarge Shui On Cement Limited, a jointly controlled entity of the Group. Reportable segment results 84 53 (57) 1,344 20 1,444

— 121 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Cement operations

Construction Other and building Through cement maintenance LSOC# operations Property Others Total HK$ HK$ HK$ HK$ HK$ HK$ million million million million million million

Segment results have been arrived at after crediting (charging): Depreciation and amortisation (4) — — (18) (1) (23) Interest income 3 — — 29 — 32 Imputed interest income on loans to jointly controlled entities/ associates — — — 71 — 71 Fair value changes on investment properties — — — 422 — 422 Dividend income from available-for-sale investments — — — 60 — 60 Impairment loss recognised in respect of interests in jointly controlled entities — — (29) — — (29) Gain on disposal of available-for-sale investments — — — 373 — 373 Share of results (excluding impairment loss) of jointly controlled entities Cement operations in — LSOC — 104 — — — 104 — Guizhou — — (9) — — (9) Venture capital investments — — — — 29 29 Property development — — — 44 — 44 Imputed interest expense — — — (51) — (51) Others (2) — — — — (2) 115 Share of impairment loss of jointly controlled entities — (59) (11) — — (70) Share of results of associates Property development — — — 36 — 36 Imputed interest expense — — — (20) — (20) 16

Note: Included in the Group’s property segment revenue for the year ended 31 December 2010 are sales of completed properties of HK$977 million (2009: HK$19 million) and sales of properties under development for sale of HK$2,158 million (2009: Nil).

— 122 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

For the year ended 31 December 2009

Cement operations Construction Other and building Through cement maintenance LSOC operations Property Others Total HK$ HK$ HK$ HK$ HK$ HK$ million million million million million million

REVENUE External sales of goods — — — 19 7 26 External revenue from rendering of services — — — 108 1 109 Construction contract revenue 3,065 — — — — 3,065 Revenue from external customers 3,065 — — 127 8 3,200 Inter-segment revenue 231 — — — — 231 3,296 — — 127 8 3,431 Share of jointly controlled entities 3 2,745 446 — — 3,194 Share of associates — — — 3 — 3 Total segment revenue 3,299 2,745 446 130 8 6,628

Inter-segment revenue is charged at mutually agreed prices. Reportable segment results 65 273 18 774 1 1,131 Segment results have been arrived at after crediting (charging): Depreciation and amortisation (4) — — (9) (2) (15) Interest income 2 — 1 27 — 30 Interest income from investment in convertible bonds — — — 11 — 11 Imputed interest income on loans to jointly controlled entities/ associates — — — 48 — 48 Fair value changes on investment properties — — — 46 — 46 Impairment loss on properties held for sale/properties under development for sale — — — (10) — (10) Dividend income from available-for-sale investments — — — 8 — 8 Impairment loss recognised in respect of interests in jointly controlled entities — — (1) — — (1) Loss on disposal of interests in jointly controlled entities — — (3) (1) — (4)

— 123 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Cement operations Construction Other and building Through cement maintenance LSOC operations Property Others Total HK$ HK$ HK$ HK$ HK$ HK$ million million million million million million

Discount on acquisition of a subsidiary — — — 648 — 648 Share of results (excluding impairment loss) of jointly controlled entities Cement operations in — LSOC — 309 — — — 309 — Guizhou — — 24 — — 24 Venture capital investments — — — — 10 10 Imputed interest expense — — — (35) — (35) Others (6) — — — — (6) 302 Share of impairment loss of jointly controlled entities — (44) — — — (44) Share of results of associates Property development — — — 114 — 114 Imputed interest expense — — — (13) — (13) 101

(b) REPORTABLE SEGMENT ASSETS AND LIABILITIES

An analysis of the Group’s reportable segment assets and liabilities by operating segment is as follows:

At 31 December 2010

Cement operations Construction Other and building Through cement maintenance LSOC operations Property Others Total HK$ HK$ HK$ HK$ HK$ HK$ million million million million million million

Reportable segment assets 1,654 3,947 1,463 13,169 1,695 21,928

Reportable segment liabilities 1,404 — 1,207 3,236 112 5,959

— 124 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

At 31 December 2009

Cement operations

Construction Other and building Through cement maintenance LSOC operations Property Others Total HK$ HK$ HK$ HK$ HK$ HK$ million million million million million million

Reportable segment assets 1,427 3,726 1,344 11,832 956 19,285

Reportable segment liabilities 1,103 328 832 1,660 148 4,071

Year ended 31 December 2010 2009 HK$ million HK$ million

Revenue Reportable segment revenue 11,297 6,628 Elimination of inter-segment revenue (267) (231) Elimination of share of revenue of jointly controlled entities (2,986) (3,194) Elimination of share of revenue of associates — (3) Consolidated turnover 8,044 3,200

Year ended 31 December 2010 2009 HK$ million HK$ million

Profit before taxation Reportable segment results 1,444 1,131 Unallocated other income 1 27 Convertible bonds issued by the Company — Fair value changes on embedded derivatives — 1 — Imputed interest expense — (28) Interest on bank loans and overdrafts and other borrowing costs (249) (218) Other unallocated corporate expenses (98) (85) Consolidated profit before taxation 1,098 828

— 125 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

At 31 December 2010 2009 HK$ million HK$ million

Assets Reportable segment assets 21,928 19,285 Elimination of inter-segment receivables (906) (647) Other unallocated assets 26 3 Consolidated total assets 21,048 18,641

At 31 December 2010 2009 HK$ million HK$ million

Liabilities Reportable segment liabilities 5,959 4,071 Elimination of inter-segment payables (906) (647) Unallocated liabilities — Bank borrowings 6,155 5,733 — Taxation and others 580 436 Consolidated total liabilities 11,788 9,593

(d) OTHER SEGMENT INFORMATION

At 31 December 2010

Cement operations Construction Other and building Through cement maintenance LSOC operations Property Others Total HK$ HK$ HK$ HK$ HK$ HK$ million million million million million million

Interests in jointly controlled entities and associates (22) 3,934 136 568 241 4,857 Capital expenditure 5 — — 151 — 156 Tax charges 15 — 1 164 — 180

— 126 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

At 31 December 2009

Cement operations

Construction Other and building Through cement maintenance LSOC operations Property Others Total HK$ HK$ HK$ HK$ HK$ HK$ million million million million million million

Interests in jointly controlled entities and associates (20) 3,723 178 486 230 4,597 Capital expenditure 5 — — 43 1 49 Tax charges 13 — — 2 1 16

(e) GEOGRAPHICAL INFORMATION

The Group operates in two principal geographical areas — Hong Kong and the PRC (excluding Hong Kong).

The Group’s revenue from external customers and information about its non-current assets by geographical location are detailed below:

Revenue from external customers* Non-current assets** 2010 2009 2010 2009 HK$ million HK$ million HK$ million HK$ million

Hong Kong 3,665 2,357 16 21 PRC (excluding Hong Kong) 4,379 843 2,427 704 8,044 3,200 2,443 725

* Revenue from external customers is attributed to countries/cities on the basis of geographical locations of the properties or operations.

** Non-current assets exclude available-for-sale investments, defined benefit assets, restricted bank deposits, interests in associates and jointly controlled entities, and amounts due from associates and jointly controlled entities.

(f) INFORMATION ABOUT MAJOR CUSTOMERS

Included in external revenue arising from construction and building maintenance of HK$4,812 million (2009: HK$3,065 million) is revenue of HK$1,318 million and HK$1,306 million, which arose from services provided to the Group’s largest and second largest customers respectively (2009: HK$1,021 million and HK$828 million from the Group’s largest and second largest customers respectively) contributing over 10% of the total turnover of the Group.

— 127 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

8. OTHER INCOME

2010 2009 HK$ million HK$ million

Included in other income are:

Gain on disposal of non-current assets classified as held for sale 7 — Interest income 33 32 Interest income from investment in convertible bonds — 11 Imputed interest income on loans to jointly controlled entities/associates 71 48

9. FAIR VALUE CHANGES ON EMBEDDED DERIVATIVES

2010 2009 HK$ million HK$ million

Net gain recognised on changes in fair values of embedded derivatives in convertible bonds issued by the Company — 1

10. FINANCE COSTS

2010 2009 HK$ million HK$ million

Interest on bank loans and overdrafts and other loans wholly repayable within 5 years 259 210 Other borrowing costs 38 23 Less: amounts capitalised (48) (15) 249 218 Imputed interest expense on convertible bonds issued by the Company — 28 249 246

— 128 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

11. TAXATION

2010 2009 HK$ million HK$ million

The charge comprises: Current taxation Hong Kong Profits Tax 12 10 PRC Enterprise Income Tax 134 9 PRC Land Appreciation Tax 14 11 160 30 Deferred taxation (note 34) 20 (14) 180 16

Hong Kong Profits Tax is calculated at 16.5% (2009: 16.5%) on the estimated assessable profits for the year.

PRC Enterprise Income Tax is calculated at 25% (2009: 25%) on the estimated assessable profits for the year.

PRC Land Appreciation Tax is levied at progressive rates ranging from 30% to 60% on the appreciation of land value, being the proceeds from sales of properties less deductible expenditure including amortisation of land use rights, borrowing costs, business taxes and all property development expenditure. The tax is incurred upon transfer of property ownership.

Details of the deferred taxation are set out in note 34.

— 129 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

The tax charge for the year can be reconciled to the profit before taxation per the consolidated income statement as follows:

2010 2009 HK$ million HK$ million

Profit before taxation 1,098 828

Tax at Hong Kong Profits Tax rate of 16.5% (2009: 16.5%) 181 137 Effect of share of results of jointly controlled entities (7) (43) Effect of share of results of associates (3) (17) Effect of different tax rates on operations in other jurisdictions 74 (5) PRC Land Appreciation Tax 14 11 Tax effect of PRC Land Appreciation Tax (2) (2) Tax effect of expenses not deductible for tax purposes 56 79 Tax effect of income not taxable for tax purposes (146) (160) Tax effect of tax losses not recognised 22 31 Tax effect of utilisation of tax losses previously not recognised (9) (17) Others — 2 Tax charge for the year 180 16

— 130 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

12. DIRECTORS’ EMOLUMENTS AND FIVE HIGHEST PAID EMPLOYEES

DIRECTORS

The emoluments paid or payable to each of the twelve (2009: eleven) Directors were as follows:

Salaries Retirement Share- and other benefit scheme based 2010 2009 Name of Directors Notes Fees benefits Bonuses* contributions payments Total Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Mr. Lo Hong Sui, Vincent 10 — — — — 10 10 Mr. Choi Yuk Keung, Lawrence 10 3,530 2,155 139 3,583 9,417 8,469 Mr. Wong Yuet Leung, Frankie 10 3,562 5,508 12 6,413 15,505 17,326 Mr. Wong Kun To, Philip (a) 10 4,310 2,182 191 3,952 10,645 3,912 Mr. Wong Fook Lam, Raymond (a) 10 3,275 2,000 126 1,389 6,800 2,151 Mr. Gerrit Jan de Nys (b) 386 — — — — 386 350 Ms. Li Hoi Lun, Helen (b) 399 — — — — 399 350 Mr. David Gordon Eldon (b) & (c) 345 — — — — 345 — Mr. Chan Kay Cheung (b) & (c) 412 — — — — 412 — Mr. Tsang Kwok Tai, Moses (b) & (c) 327 — — — — 327 — Professor Michael Enright (d) 143 — — — — 143 350 Mr. Anthony Griffiths (e) 180 — — — — 180 440 Mrs. Lowe Hoh Wai Wan, Vivien (f) — — — — — — 4,204 Ms. Lau Jeny (g) — — — — — — 3,022

Total 2,242 14,677 11,845 468 15,337 44,569 40,584

2009 1,543 16,026 10,744 286 11,985 40,584

* The bonuses are discretionary and are determined by reference to the Group’s and the Directors’ personal performances.

Notes:

(a) Mr. Wong Kun To, Philip and Mr. Wong Fook Lam, Raymond were appointed as Executive Directors on 1 July 2009.

(b) Independent Non-executive Directors.

(c) Mr. David Gordon Eldon, Mr. Chan Kay Cheung and Mr. Tsang Kwok Tai, Moses were appointed as Independent Non-executive Directors on 1 January 2010.

(d) Professor Michael Enright retired as a Non-executive Director at the annual general meeting held on 28 May 2010.

(e) Mr. Anthony Griffiths retired as an Independent Non-executive Director at the annual general meeting held on 28 May 2010.

(f) Mrs. Lowe Hoh Wai Wan, Vivien retired as an Executive Director on 1 December 2009.

(g) Ms. Lau Jeny resigned as an Executive Director on 1 June 2009.

— 131 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Of the five highest paid individuals in the Group, four (2009: three) are Directors of the Company whose emoluments are set out above. The emoluments of the remaining one (2009: two) highest paid employees were as follows:

2010 2009 HK$ million HK$ million

Salaries, bonuses and allowances 6 13 Retirement benefits scheme contributions — — Share based payments 1 4 717

Their emoluments were within the following bands:

2010 2009 No. of No. of employees employees

HK$6,500,001 to HK$7,000,000 1 — HK$8,000,001 to HK$8,500,000 — 2 12

One of the five highest paid individuals for the year ended 31 December 2009 was previously an employee and was appointed as an Executive Director of the Company during that year. His emoluments before his appointment as an Executive Director were set out below.

The emoluments of that employee before his appointment as an Executive Director were as follows:

2009 HK$ million

Salaries, bonuses and allowances 4 Retirement benefits scheme contributions — Share based payments 2 6

— 132 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

13. PROFIT FOR THE YEAR

2010 2009 HK$ million HK$ million

Profit for the year has been arrived at after charging (crediting):

Depreciation and amortisation: Prepaid lease payments 1 1 Property, plant and equipment 25 15 Less: amounts capitalised (2) (1) 24 15 Auditors’ remuneration 5 5 Operating lease payments in respect of rented premises 26 13 Cost of properties sold 2,622 9 Impairment loss on properties under development for sale/properties held for sale — 10 Impairment loss recognised in respect of interests in jointly controlled entities 29 1 Staff costs (including directors’ emoluments): Salaries, bonuses and allowances 474 443 Retirement benefits cost 10 5 Share-based payment expense 34 42 Less: amounts capitalised (14) (5) 504 485 Gross rental revenue from an investment property and car park spaces (45) (1) Less: direct rental outgoings 17 1 Net rental income (28) — Share of tax of jointly controlled entities (included in share of results of jointly controlled entities) 30 81 Share of tax of associates (included in share of results of associates) 17 16

— 133 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

14. DIVIDENDS

2010 2009 HK$ million HK$ million

Paid: Final dividend in respect of the year ended 31 December 2009: HK$0.25 per share 122 — Interim dividend in respect of the year ended 31 December 2010: HK$0.20 per share (2009: HK$0.10 per share) 98 49 220 49

Proposed: Final dividend in respect of the year ended 31 December 2010: HK$0.40 per share (2009: HK$0.25 per share) 196 122

The final dividend in respect of the year ended 31 December 2010 of HK$0.40 per share has been proposed by the Directors and is subject to approval by the shareholders at the forthcoming annual general meeting.

— 134 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

15. EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share attributable to the owners of the Company is based on the following data:

2010 2009 HK$ million HK$ million

Earnings:

Earnings for the purpose of basic earnings per share 903 807 Effect of dilutive potential ordinary shares from convertible bonds issued by the Company: Imputed interest expense — 28 Fair value changes on embedded derivatives — (1) Effect of dilutive potential ordinary shares of CCP: Interest income on convertible bonds — (11) Loss on early cancellation of convertible bonds — 44 Adjustment to the share of results of CCP based on dilution of its earnings per share — (83) Earnings for the purpose of diluted earnings per share 903 784

Number of shares: Million Million

Weighted average number of ordinary shares for the purpose of basic earnings per share 489 411 Effect of dilutive potential ordinary shares: Convertible bonds issued by the Company — 15 Share options 1 — Weighted average number of ordinary shares for the purpose of diluted earnings per share 490 426

Earnings per share: HK$ HK$

Basic 1.85 1.96 Diluted 1.84 1.84

The dilutive effect on the Group’s earnings and number of ordinary shares arising from the convertible bonds issued by the Company and the convertible bonds issued by CCP held by the Group had been accounted for in the calculation of diluted earnings per share for the year ended 31 December 2009. These convertible bonds were assumed to be converted into shares of the relevant issuer at the beginning of that year and, in particular, the accounting effects of such financial instruments were reversed in the determination of diluted earnings per share if their conversion had a dilutive effect on the earnings per share.

— 135 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

16. INVESTMENT PROPERTIES

2010 2009 HK$ million HK$ million

FAIR VALUE At the beginning of the year 622 — Exchange adjustments 72 — Acquisition of subsidiaries (notes 38 and 39) 1,095 555 Additions 99 21 Increase in fair value recognised 422 46 At the end of the year 2,310 622

The carrying amount of investment properties shown above comprises:

2010 2009 HK$ million HK$ million

Situated in the PRC: Completed and under long lease 1,494 — Under construction and under medium-term lease 816 622 2,310 622

All of the Group’s property interests (including properties under construction or development for future use as investment properties) held under operating leases to earn rentals or for capital appreciation purposes are measured using the fair value model and are classified and accounted for as investment properties.

The fair value of the Group’s investment properties at 31 December 2010 and 31 December 2009 has been arrived at on the basis of valuations carried out on that date by Savills Valuation and Professional Services Limited, an independent qualified professional valuer not connected to the Group that has appropriate qualifications and recent experience in the valuation of similar properties in relevant locations.

For completed investment properties, the valuations have been arrived by reference to the comparable market transactions as available in the market and where appropriate, on the basis of capitalisation of net income derived from the properties with allowances for reversionary income potential.

For investment properties under construction, the valuation has been arrived at using the direct comparison approach by making reference to the sales transactions or asking price evidences of comparable properties as available in the market with adjustments made to account for any differences and where appropriate, the basis of capitalisation of net income derived from the

— 136 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

properties with consideration of the prevailing market yield. The valuation has also taken into account various costs, such as construction cost, contingency cost, finance cost and professional fees that will be expended to complete the development as well as the developer’s profit to reflect the risks associated with the development of the properties and the quality of the completed developments.

17. PROPERTY, PLANT AND EQUIPMENT

Properties Equipment, Properties in other furniture in Hong regions of Plant and Motor and other Kong the PRC machinery vehicles assets Total HK$ HK$ HK$ HK$ HK$ HK$ million million million million million million

AT COST At 1 January 2009 4 3 49 19 50 125 Additions —1815428 Acquisition of CCP — — — 5 17 22 Disposals — — — (2) (1) (3) Reclassified as held for sale — (3) (1) — — (4) At 31 December 2009 4 18 49 27 70 168 Additions — 36 2 3 16 57 Disposals — — — (3) (3) (6) Exchange adjustments — 1 — — 1 2 At 31 December 2010 4 55 51 27 84 221 ACCUMULATED DEPRECIATION AND IMPAIRMENT At 1 January 2009 1 1 47 12 35 96 Charge for the year — 3 — 4 8 15 Reclassified as held for sale — (1) — — — (1) Eliminated on disposals — — — (1) — (1) At 31 December 2009 1 3 47 15 43 109 Charge for the year —5141525 Eliminated on disposals — — — (2) — (2) At 31 December 2010 1 8 48 17 58 132 CARRYING VALUES At 31 December 2010 3 47 3 10 26 89

At 31 December 2009 3 15 2 12 27 59

— 137 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

The above items of property, plant and equipment are depreciated on a straight-line basis at the following rates per annum:

Properties in Hong Kong and other regions of the 2.5% or remaining lease term, if shorter PRC (all are buildings located on land held under medium-term leases)

Plant and machinery 10-25%

Motor vehicles, equipment, furniture and other assets 20-50%

18. PREPAID LEASE PAYMENTS

2010 2009 HK$ million HK$ million

Leasehold land under medium-term lease: In Hong Kong 3 3 In other regions of the PRC 41 41 44 44

Analysed for reporting purposes as: Non-current 43 43 Current 1 1 44 44

Amortisation of prepaid lease payments amounting to HK$1 million (2009: HK$1 million) was charged to the consolidated income statement.

19. INTERESTS IN JOINTLY CONTROLLED ENTITIES

2010 2009 HK$ million HK$ million

Cost of unlisted investments in jointly controlled entities, net of impairment 3,749 3,745 Share of post-acquisition profits and other comprehensive income 766 601 Less: Assets held for sale (note 29) (83) (81) 4,432 4,265

Note: Goodwill of HK$136 million (2009: HK$122 million) is included in the cost of unlisted investments in jointly controlled entities. The goodwill arose from the contributions to a jointly controlled entity, Lafarge Shui On Cement Limited (“LSOC”).

Particulars of the principal jointly controlled entities are set out in note 45.

— 138 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

The summarised financial information in respect of the assets, liabilities, income and expenses of jointly controlled entities (excluding those held for sale in note 29) at and for each of the years ended 31 December 2010 and 31 December 2009 attributable to the Group’s interest is as follows:

2010 2009 HK$ million HK$ million

Current assets 6,008 4,093 Non-current assets 8,585 7,885 Current liabilities (5,817) (3,335) Non-current liabilities (3,697) (3,642) Non-controlling interests (901) (929) Income 4,364 4,539 Expenses (4,319) (4,281)

The summary of aggregate financial information of the Group’s significant jointly controlled entities, including LSOC, engaged in the manufacture and sale of cement, based on the financial statements prepared under the HKFRSs for the years ended 31 December 2010 and 31 December 2009, is as follows:

2010 2009 HK$ million HK$ million

Results for the year ended 31 December Turnover 8,563 8,796 Profit before taxation 151 797 Profit before taxation attributable to the Group 55 289

Financial position at 31 December Non-current assets 18,547 16,900 Current assets 6,278 5,325 Current liabilities (11,063) (6,635) Non-current liabilities (2,760) (4,951) Non-controlling interests (1,928) (1,970) Net assets 9,074 8,669

Net assets attributable to the Group 4,153 3,982 Reclassified as assets held for sale (note 29) (83) (81) 4,070 3,901

— 139 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

The Group has discontinued recognition of its share of loss of a jointly controlled entity in Nanjing because the Group’s share of losses of this jointly controlled entity in previous years has exceeded its investment cost. The amounts of the unrecognised share of losses of the jointly controlled entity, both for the year and cumulatively, are as follows:

2010 2009 HK$ million HK$ million

Unrecognised share of losses of the jointly controlled entity for the year ended 31 December (6) (8)

Accumulated unrecognised share of losses of the jointly controlled entity (39) (33)

20. AVAILABLE-FOR-SALE INVESTMENTS

2010 2009 HK$ million HK$ million

Available-for-sale investments comprise: Listed equity securities in Hong Kong (at market price) 514 2,004

Available-for-sale investments at 31 December 2010 and 31 December 2009 represent the Group’s equity interest in Shui On Land Limited (“SOL”). In June 2010, the Group disposed of 316.8 million SOL shares for a cash consideration of HK$1,080 million, representing approximately 6.3% equity interest in SOL, to a wholly-owned subsidiary of Shui On Company Limited (“SOCL”), a substantial shareholder of the Company. As a result, the Group recognised a gain on disposal of HK$373 million, net of transaction cost of HK$1 million, in the consolidated income statement for the year ended 31 December 2010. At 31 December 2010, the Group held a 2.6% (31 December 2009: 8.7%) equity interest in SOL.

In July and November 2010, 16,502,982 and 2,114,916 new shares of SOL were allotted to the Group, which represented the scrip shares in relation to the final dividend of SOL for the year ended 31 December 2009 and the interim dividend of SOL for the six months period ended 30 June 2010 respectively.

21. INTERESTS IN ASSOCIATES

2010 2009 HK$ million HK$ million

Cost of unlisted investments in associates 131 58 Share of post-acquisition profits and other comprehensive income 294 274 425 332

— 140 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Particulars of the principal associates are set out in note 46.

A summary of the financial information of the Group’s associates is as follows:

2010 2009 HK$ million HK$ million

Results for the year ended 31 December Turnover — 8 Profit for the year 147 301 Profit for the year attributable to the Group 16 101

2010 2009 HK$ million HK$ million

Financial position at 31 December Total assets 10,231 7,568 Total liabilities (8,034) (5,589) Non-controlling interests (894) (839) Net assets 1,303 1,140 Net assets attributable to the Group 425 332

22. AMOUNTS DUE FROM/TO JOINTLY CONTROLLED ENTITIES

2010 2009 HK$ million HK$ million

Amounts due from jointly controlled entities Non-current (note a) 1,624 1,008 Current (note b) 459 437 2,083 1,445 Amounts due to jointly controlled entities (note c) 15 345

Notes:

(a) The balances are unsecured, with no fixed terms of repayment and not expected to be recovered in the next twelve months from the balance sheet date. Out of the total balance, a total of HK$537 million bear interest at 3.73% per annum and the rest is carried at amortised cost using the effective interest rate of 2.9% to 4.8% (2009: 2.9% to 4.8%) per annum.

(b) The balances are unsecured and repayable on demand. Out of the total balance, a total of HK$14 million (2009: HK$13 million) bear interest from 0.08% to 5.56% (2009: 0.05% to 5.31%) per annum. The remaining balance is interest-free. In the opinion of the Directors of the Company, the balances will be recoverable in the twelve months from the balance sheet date.

— 141 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

23. AMOUNTS DUE FROM ASSOCIATES

2010 2009 HK$ million HK$ million

Amounts due from associates Non-current (note a) 683 543 Current (note b) 68 39 751 582

Notes: (a) The balances represent advances to associates for financing the development of Dalian Tiandi. The advances are unsecured and have no fixed terms of repayment. Pursuant to the joint venture agreement, other than an amount of HK$242 million (2009: HK$242 million), which bears interest at 5% per annum, the remaining amount is interest-free until the independent co-investor of the project has contributed its portion of the advances. Thereafter, all advances will bear interest at a rate of 5% per annum, subject to the joint venture partners’ approval. The amounts are carried at amortised cost using the effective interest rate of 4.8% (2009: 4.8%) per annum. (b) The balances are unsecured, interest-free and repayable on demand.

24. INVENTORIES AND CONTRACTS IN PROGRESS

2010 2009 HK$ million HK$ million

Inventories Work-in-progress 3 3 Finished goods 2 2 Spare parts 2 2 77

2010 2009 HK$ million HK$ million

Contracts in progress Costs incurred to date 9,557 7,154 Recognised profits less recognised losses 224 200 9,781 7,354 Less: Progress billings (9,589) (7,176) Net contract work 192 178

Represented by: Amounts due from customers for contract work 346 302 Amounts due to customers for contract work (154) (124) 192 178

— 142 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

25. PROPERTIES HELD FOR SALE/PROPERTIES UNDER DEVELOPMENT FOR SALE

The carrying values of properties held for sale and properties under development for sale are situated in the following locations:

2010 2009 HK$ million HK$ million

In Hong Kong 47 52 In other regions of the PRC (note) 3,938 5,388 3,985 5,440

Note: Properties under development for sale of HK$1,369 million at 31 December 2010 (2009: HK$2,431 million) represent the carrying value of the properties expected to be completed and available for sale after one year from the balance sheet date.

26. OTHER CURRENT ASSETS

DEBTORS, DEPOSITS AND PREPAYMENTS

2010 2009 HK$ million HK$ million

Trade debtors 1,120 321 Less: Allowance for doubtful debts (1) (1) 1,119 320 Retention receivable 152 133 Deposit for acquisition of a subsidiary — 23 Prepayments, deposits and other receivables (note a) 459 472 1,730 948

Notes:

(a) Included in prepayments, deposits and other receivables are receivables of HK$235 million (2009: HK$231 million) in relation to the disposal by CCP in 2008 of a subsidiary that held a property interest in the PRC. The amounts are unsecured and carry interest at prevailing market rates. In the opinion of the Directors of the Company, these receivables will be fully settled when the legal title to the property is transferred to the buyer, which is expected to take place within twelve months from the end of the reporting period.

(b) The Group maintains a defined credit policy to assess the credit quality of each counterparty. Collections are closely monitored to minimise any credit risk associated with trade debtors. The general credit term ranges from 30 to 90 days.

— 143 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

The following is an aged analysis of trade debtors (based on invoice date) net of allowance for doubtful debts at the balance sheet date:

2010 2009 HK$ million HK$ million

Debtors aged analysis: Within 90 days 1,097 300 Amounts past due but not impaired: 91 days to 180 days 6 2 181 days to 360 days 6 6 Over 360 days 10 12 22 20 1,119 320

Retention receivable is analysed as follows: Due within one year 103 73 Due after one year 49 60 152 133

Movement in the allowance for doubtful debts

2010 2009 HK$ million HK$ million

Balance at beginning/end of the year 1 1

BANK BALANCES, DEPOSITS AND CASH

Bank balances, deposits and cash comprise cash held by the Group and deposits with maturity of three months or less held with banks not restricted as to use. Bank balances carry interest at market rates, which range from 0.01% to 1.91% (2009: 0.01% to 2.00%) per annum.

27. AMOUNTS DUE FROM RELATED COMPANIES/AMOUNTS DUE TO NON- CONTROLLING SHAREHOLDERS OF SUBSIDIARIES

2010 2009 HK$ million HK$ million

Amounts due from related companies 49 39

Amounts due to non-controlling shareholders of subsidiaries 3 6

— 144 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

The related companies are subsidiaries or associates of SOCL.

The balances are unsecured, interest-free and repayable on demand.

28. RESTRICTED BANK DEPOSITS

Balances at 31 December 2010 represent custody deposits amounting to RMB455 million (HK$535 million) (2009: RMB263 million (HK$299 million)) placed with banks in relation to certain banking facility arrangements of the Group. The balances carry interest at market rates, which range from 0.36% to 1.91% (2009: 0.36% to 1.71%) per annum.

29. ASSETS CLASSIFIED AS HELD FOR SALE/LIABILITIES ASSOCIATED WITH ASSETS CLASSIFIED AS HELD FOR SALE

The Group has committed to disposing of certain jointly controlled entities and subsidiaries, relating to the cement operation not operated by LSOC. The assets and liabilities attributable to these companies have been treated as assets classified as held for sale and liabilities associated with assets classified as held for sale, and are presented separately in the consolidated balance sheet.

2010 2009 HK$ million HK$ million

Disposal of jointly controlled entities, comprising Interests in jointly controlled entities 83 81 Amounts due from jointly controlled entities 87 86 170 167

Disposal of subsidiaries Property, plant and equipment 479 135 Inventories 38 26 Debtors, deposits and prepayments 80 370 Bank balances, deposits and cash 12 6 609 537

Total assets classified as held for sale 779 704

Disposal of a subsidiary Amounts due to jointly controlled entities (130) (144) Creditors and accrued charges (61) (14) Bank borrowings (212) (170) Liabilities associated with assets classified as held for sale (403) (328)

— 145 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Note: In 2008, the Group entered into sale and purchase agreements (the “Agreements”) with LSOC to dispose of the Group’s equity interest in and the related shareholder’s loans to certain jointly controlled entities and a subsidiary (the “Disposal Group”), which are engaged in the production and sale of cement and concrete in Guizhou (the “LSOC Disposal”). The Group received deposits totalling HK$302 million from LSOC for the LSOC Disposal. At 31 December 2009, the LSOC Disposal has not been completed, pending fulfillment of certain conditions as stipulated in the Agreements.

These outstanding conditions in the Agreements remained unfulfilled during the year and, as agreed between the Group and LSOC, the Agreements lapsed. The Group refunded the deposits to LSOC and the assets and liabilities attributable to the Disposal Group ceased to be classified as held for sale during the year.

At 31 December 2010, the Group is committed to a plan to sell the Disposal Group and has initiated a programme to actively locate suitable buyers for it and complete the plan. The Directors of the Company consider that the carrying amount of the Group’s investment in these subsidiary and jointly controlled entities will be recovered principally through a sale transaction at market price and the sale is expected to be completed within twelve months from the date of classification. Accordingly, the assets and liabilities attributable to the Disposal Group are classified as held for sale at 31 December 2010.

30. CREDITORS AND ACCRUED CHARGES

The aged analysis of creditors (based on invoice date) of HK$590 million (2009: HK$455 million), which are included in the Group’s creditors and accrued charges, is as follows:

2010 2009 HK$ million HK$ million

Creditors aged analysis: Within 30 days 382 326 31 days to 90 days 169 95 91 days to 180 days 26 23 Over 180 days 13 11 590 455 Retention payable 275 205 Consideration payable in respect of acquisition of interest in a jointly controlled entity (note) 349 — Consideration payable in respect of acquisition of a subsidiary — 102 Provision for contract work 378 355 Other accruals and payables 436 286 2,028 1,403

Note: At 31 December 2010, bank deposits of HK$359 million were placed with a bank to secure standby documentary credits issued relating to the outstanding consideration of HK$349 million in respect of the acquisition of interest in a jointly controlled entity by the Group. The outstanding consideration was subsequently settled in January 2011.

— 146 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

The average credit period on purchases of certain goods is 3 months. The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.

31. BANK BORROWINGS

2010 2009 HK$ million HK$ million

Secured bank loans 3,259 2,905 Unsecured bank loans 4,940 3,735 8,199 6,640 Less: Amounts due within 12 months (2,864) (4,980) Amounts due for settlement after 12 months 5,335 1,660

Carrying amount repayable: Within one year 2,864 4,980 More than one year but not exceeding two years 3,770 940 More than two years but not exceeding five years 1,565 720 8,199 6,640

The carrying amount of the Group’s bank loans, all of which carry interest at variable market rates, is analysed as follows:

2010 2009 Denominated in Interest rate (per annum) HK$ million HK$ million

Renminbi 5.04% to 5.60% (2009: 5.40% to 7.56%) 1,022 681 Hong Kong dollars 1.59% to 3.84% (2009: 1.58% to 6.00%) 6,905 5,959 United States dollars 2.53% to 3.02% (2009: Nil) 272 — 8,199 6,640

— 147 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

The following assets were pledged to banks as security for certain banking facilities granted to the Group at the balance sheet date:

2010 2009 HK$ million HK$ million

Investment properties 1,957 311 Properties held for sale 390 532 Properties under development for sale 2,322 2,321 Amounts due from jointly controlled entities 69 69 4,738 3,233

Notes:

(a) Custody deposits amounting to RMB455 million (HK$535 million) at 31 December 2010 (2009: RMB263 million (HK$299 million)) were placed with banks in relation to certain banking facility arrangements entered into with the Group.

(b) In addition, certain equity interests in some subsidiaries and jointly controlled entities were also charged to banks as security for certain banking facilities granted to the Group at the balance sheet date.

32. SHARE CAPITAL

2010 2009 2010 2009 Number of Number of HK$ HK$ shares shares million million

Ordinary shares of HK$1 each: Authorised At the beginning and the end of the year 1,000,000,000 1,000,000,000 1,000 1,000 Issued and fully paid At the beginning of the year 488,096,786 321,901,239 488 322 Exercise of share options 1,068,000 415,000 1 — Acquisition of CCP — 165,780,547 — 166 At the end of the year 489,164,786 488,096,786 489 488

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

— 148 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

33. RETIREMENT BENEFIT PLANS

HONG KONG

The Group participates in both a defined benefit scheme (the “Scheme”), which is registered under the Occupational Retirement Schemes Ordinance and a Mandatory Provident Fund Scheme (the “MPF Scheme”), a defined contribution scheme, established under the Mandatory Provident Fund Schemes Ordinance in December 2000. The assets of the schemes are held separately from those of the Group and are invested in securities and funds under the control of trustees. Employees who were members of the Scheme prior to the establishment of the MPF Scheme were offered a choice of staying within the Scheme or switching to the MPF Scheme. All employees joining the Group on or after 1 December 2000 have been required to join the MPF Scheme.

Mandatory Provident Fund Scheme

For members of the MPF Scheme, contributions are made by the employee at 5% of relevant income and by the Group at rates ranging from 5% to 10% of the employee’s salary, depending on the employee’s length of service with the Group.

The Group’s contributions to the MPF Scheme charged to the consolidated income statement as staff cost during the year amounted to HK$10 million (2009: HK$9 million). The amount of employer’s voluntary contributions to MPF schemes forfeited for the year ended 31 December 2010 and 31 December 2009 was immaterial and was used to reduce the existing level of contributions.

Defined Benefit Scheme

Contributions to the Scheme are made by the members at 5% of their salaries and by the Group at rates, which are based on recommendations made by the actuary to the Scheme. The current employer contribution rate is 2% (31 December 2009: 2%) of the members’ salaries. Under the Scheme, a member is entitled to retirement benefits, which comprise the sum of any benefits transferred from another scheme and the greater of the sum of the employer’s scheduled contribution plus the member’s contribution (both contributions being calculated on the scheme salary of the member) accumulated with interest at a rate of no less than 6% per annum before 1 September 2003 and 1% per annum in respect of contributions made on or after 1 September 2003 or 1.8 times the final salary times the years of service in the Scheme on the attainment of the retirement age of 60. For members who joined the Scheme before 1997, the retirement age is 60 for male members and 55 for female members.

The most recent actuarial valuations of the Scheme assets and the present value of the defined benefit obligation were carried out at 31 December 2010 by Ms. Elaine Hwang of Towers Watson Hong Kong Limited (formerly known as Watson Wyatt Hong Kong Limited), who is a Fellow of the Society of Actuaries. The present value of the defined benefit obligations and the related current service cost were measured using the Projected Unit Credit Method.

— 149 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

The principal actuarial assumptions used at the balance sheet dates are as follows:

2010 2009

Discount rate 2.7% 2.6% Expected rate of return on Scheme assets 7.00% 7.25% Expected rate of salary increase 3.0% p.a. 3.0% p.a.

The overall expected rate of return is a weighted average of the expected returns of the various categories of Scheme assets held.

The actual return on Scheme assets for the year ended 31 December 2010 was a gain of HK$37 million (2009: HK$86 million).

Amounts recognised in the consolidated income statement for the year in respect of the Scheme are as follows:

Year ended 31 December 2010 2009 HK$ million HK$ million

Current service cost 12 13 Interest cost 8 4 Expected return on Scheme assets (24) (21) Net amount credited to consolidated income statement as staff costs (4) (4)

The amount included in the consolidated balance sheet arising from the Group’s obligations in respect of the Scheme is as follows:

2010 2009 HK$ million HK$ million

Present value of funded obligations (365) (350) Fair value of Scheme assets 387 350 Defined benefit assets included in the consolidated balance sheet 22 —

The Scheme assets included no shares of the Company (2009: Nil).

— 150 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Movements of the present value of funded obligations are as follows:

2010 2009 HK$ million HK$ million

At the beginning of the year 350 359 Current service cost 12 13 Interest cost 8 4 Employees’ contributions 6 6 Benefits paid (12) (28) Transfers — 12 Actuarial loss (gain) (note) 1 (16) At the end of the year 365 350

Note: Actuarial loss (gain) on funded obligations represents the difference between expected obligations and actual obligations at the end of the year. The expected obligations at the end of the year are the obligations at the beginning of the year increased with one more year of service. The actuarial loss (gain) is mainly due to increase/decrease of salary in the year being different from that assumed at the last actuarial valuation and the change of certain assumptions at the current actuarial valuation.

Movements of the fair value of Scheme assets are as follows:

2010 2009 HK$ million HK$ million

At the beginning of the year 350 275 Expected return on Scheme assets 24 21 Actuarial gain (note) 13 65 Employers’ contributions 6 3 Employees’ contributions 6 6 Benefits paid (12) (28) Transfers — 8 At the end of the year 387 350

Note: Actuarial gain (loss) on Scheme assets represents the difference between expected assets value and actual assets value at the end of the year. The expected assets value at the end of year is the asset value at the beginning of year adjusted by contributions, benefit payments and expected returns. The actuarial gain (loss) is due to the actual return being higher/lower than the assumed return at the last actuarial valuation.

— 151 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Additional disclosure in respect of the Scheme is as follows:

2010 2009 HK$ million HK$ million

Experience adjustment on Scheme liabilities (5) (9) Experience adjustment on Scheme assets 13 65

The major categories of Scheme assets as a percentage of total Scheme assets are as follows:

2010 2009

Equities 55.6% 52.2% Hedge funds 22.9% 25.5% Bonds and cash 21.5% 22.3% 100% 100%

The Group expects to make a contribution of HK$8 million (2009: HK$2 million) to the Scheme during the next financial year.

The Group recognises all actuarial gains and losses of the Scheme directly in the consolidated statement of comprehensive income. The amounts of the actuarial gains and losses recognised during the year and cumulatively, are as follows:

2010 2009 HK$ million HK$ million

Actuarial (loss) gain on present value of funded obligations (1) 16 Actuarial gain on fair value of Scheme assets 13 65 Net actuarial gains recognised 12 81 Accumulated amount of actuarial losses recognised in the actuarial gain and loss reserve (24) (36)

PRC

The employees of the Group’s subsidiaries in the PRC are members of state-managed retirement plans operated by the government of the PRC. The subsidiaries are required to contribute a specified percentage of payroll costs to the retirement plans to fund the benefits. The only obligation of the Group with respect to the retirement plans is to make the specified contributions.

No other post-retirement benefits are provided to the employees of the Group.

— 152 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

34. DEFERRED TAXATION

The following are the major deferred tax (liabilities) assets recognised by the Group and movements thereon during the current and prior years:

Accelerated Other tax Revaluation temporary depreciation of properties Tax losses differences Total HK$ million HK$ million HK$ million HK$ million HK$ million

At 1 January 2009 (1) — — — (1) Acquisition of subsidiaries — (391) — — (391) (Charge) credit to consolidated income statement (1) (12) 24 3 14

At 31 December 2009 (2) (403) 24 3 (378) Exchange adjustments — (3) 1 — (2) Credit (charge) to consolidated income statement 1 (19) — (2) (20) At 31 December 2010 (1) (425) 25 1 (400)

Notes:

(a) For the purposes of balance sheet presentation certain deferred tax assets and liabilities have been offset.

(b) At 31 December 2010, the Group had unused tax losses of HK$598 million (2009: HK$485 million) available to offset against future profits. A deferred tax asset has been recognised in respect of such tax losses amounting to HK$100 million (2009: HK$99 million). No deferred tax asset has been recognised in respect of the remaining tax losses of approximately HK$498 million (2009: HK$386 million) due to the unpredictability of future profit streams. Included in unrecognised tax losses at 31 December 2010 are tax losses of approximately HK$156 million (2009: HK$155 million) that will expire within 5 years from the year of originating. Other tax losses may be carried forward indefinitely.

(c) Under the tax regulations of the PRC, withholding tax is imposed on dividends declared in respect of profits earned by the Group’s PRC investees from 1 January 2008 onwards. Deferred taxation has not been provided for in the consolidated financial statements in respect of temporary differences attributable to profits earned by the Company’s PRC subsidiaries amounting to HK$180 million at 31 December 2010 (2009: HK$166 million) as the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

— 153 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

35. LEASE ARRANGEMENTS

AS LESSOR

Property rental income in respect of the investment properties and car park spaces earned during the year ended 31 December 2010 was HK$45 million (2009: HK$1 million).

At the balance sheet date, the Group had contracted with tenants for the following future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2010 2009 HK$ million HK$ million

Within one year 18 —

AS LESSEE

At the balance sheet date, the Group had commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2010 2009 HK$ million HK$ million

Within one year 12 19 In the second to fifth years inclusive 4 14 16 33

Operating lease payments represent rentals payable by the Group for certain of its office properties. Leases are negotiated for lease terms ranging from one to three years.

36. CAPITAL COMMITMENTS

(a) At 31 December 2010, the Group’s capital commitment in respect of acquisition and development costs for investment properties is as follows:

2010 2009 HK$ million HK$ million

Authorised but not contracted for 357 444 Contracted but not provided for 216 71

— 154 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

(b) In addition, the Group had other capital commitments in respect of certain investments not provided for in the financial statements amounting to approximately HK$9 million at 31 December 2010 (2009: HK$288 million).

(c) At 31 December 2010, the Group’s share of the capital commitments of its jointly controlled entities mainly in relation to long-lived assets is as follows:

2010 2009 HK$ million HK$ million

Authorised but not contracted for — — Contracted but not provided for 463 716

37. SHARE-BASED PAYMENTS

The principal terms of the share option scheme adopted by the Company on 27 August 2002 (the “Option Scheme”), which continues in force until the 10th anniversary of such date, are summarised below:

1. PURPOSE

(a) The Option Scheme is a share incentive scheme and was established to recognise and acknowledge the contributions, which eligible participants have made or may make to the Group.

(b) The Option Scheme provides eligible participants an opportunity to have a personal stake in the Company with a view to achieving the following objectives:

(i) motivating eligible participants to utilise their performance and efficiency for the benefit of the Group; and

(ii) attracting and retaining eligible participants whose contributions are or will be beneficial to the long term growth of the Group.

2. ELIGIBLE PARTICIPANTS

(a) The Board may at its discretion invite anyone belonging to any of the following classes of persons to take up options to subscribe for shares of the Company, subject to such conditions as the Board may think fit: any Director (whether Executive or Non-executive or Independent Non-executive), employee (whether full time or part time), officer, consultant, customer, supplier, agent, partner or adviser of or contractor to the Group or any invested entity and for the purpose of the Option Scheme, the options may be granted to any corporation wholly owned by any person mentioned in this paragraph.

— 155 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

(b) The eligibility of any of the above persons for the grant of any option is determined by the Board from time to time on the basis of his contribution to the development and growth of the Group. The Company is entitled to cancel any option granted to a grantee but not exercised if such grantee fails to meet the eligibility criteria determined by the Board after an option is granted but before it is exercised.

3. TOTAL NUMBER OF SHARES AVAILABLE FOR ISSUE UNDER THE OPTION SCHEME

(a) 10% limit

Subject to the following paragraph, the total number of shares, which may be issued upon exercise of all options to be granted under the Option Scheme and any other share option scheme of the Company must not in aggregate exceed 10% of the shares of the Company in issue at the date of approval of the Option Scheme (excluding options which have lapsed) (the “Scheme Mandate Limit”).

The Company may, from time to time, refresh the Scheme Mandate Limit by obtaining the approval of the shareholders in general meeting. The Company may also seek separate approval of the shareholders in general meeting for granting options beyond the Scheme Mandate Limit or the refreshed limit, provided that the options in excess of such limit are granted only to eligible participants specifically identified by the Company before such approval is sought.

(b) 30% limit

The overall limit on the number of shares, which may be issued upon exercise of all outstanding options granted and yet to be exercised under the Option Scheme and any other share option scheme of the Company must not exceed 30% of the shares of the Company in issue from time to time.

4. MAXIMUM ENTITLEMENT OF EACH PARTICIPANT

The total number of shares issued and to be issued upon exercise of the options granted to each participant (including both exercised and outstanding options) in any 12-month period must not exceed 1% of the shares of the Company in issue. Where any further grant of options to a grantee would result in the shares issued and to be issued upon exercise of all options granted and to be granted to such person (including exercised, cancelled and outstanding options) in the 12-month period up to and including the date of such further grant representing in aggregate over 1% of the shares of the Company in issue, such further grant must be separately approved by the shareholders in general meeting with such grantee and his associates abstaining from voting.

— 156 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

5. PERFORMANCE TARGET

The Option Scheme allows the Board, when offering the grant of any option, to impose any condition including any performance target, which must be met before the option shall vest and become exercisable.

6. MINIMUM PERIOD FOR WHICH AN OPTION MUST BE HELD

The Board may at its discretion when offering the grant of any option impose any minimum period for which an option must be held before it can be exercised.

7. EXERCISE PRICE

The exercise price is determined by the Board and shall be at least the highest of: (a) the closing price of a share as stated in the daily quotations sheet of the Stock Exchange on the date of grant; and (b) the average closing price of the shares as shown in the daily quotations sheets of the Stock Exchange for the five business days immediately preceding the date of grant; and (c) the nominal value of a share.

8. AMOUNT PAYABLE UPON ACCEPTANCE OF OPTION

HK$1.00 is payable by each eligible participant to the Company on acceptance of an offer of options, to be paid within 28 days from the date of the offer.

— 157 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

The following tables disclose details of the Company’s share options held by employees (including Directors) and movements in such holdings during the year.

Number of shares subject to options

Average Period during closing which share options reference Subscription At 1 Granted Exercised Cancelled Lapsed At 31 outstanding at price for price per January during during during during December 31 December 2010 exercise of Date of grant Grant share 2010 the year the year the year the year 2010 are exercisable options HK$ HK$ (Note)

29 July 2005 2 9.30 238,000 — (56,000) — (182,000) — 29 January 2006 11.52 to 28 July 2010 1 August 2006 3 14.00 3,248,000 — — — (120,000) 3,128,000 1 February 2007 — to 31 July 2011 3 January 2007 5 16.78 2,900,000 — — — (2,900,000) — 3 January 2010 — to 2 January 2017 14 June 2007 6 20.96 2,830,000 — — — (176,000) 2,654,000 14 December 2007 — to 13 June 2012 14 June 2007 7 20.96 600,000 ————600,000 14 December 2008 — to 13 June 2012 7 May 2008 9 19.76 3,440,000 — — — (200,000) 3,240,000 7 November 2008 — to 6 May 2013 7 May 2008 10 19.76 300,000 ————300,000 7 November 2009 — to 6 May 2013 7 May 2008 12 19.76 3,000,000 ————3,000,0007May2011 — to 6 May 2018 9 April 2009 13 7.63 4,661,000 — (762,000) — (54,000) 3,845,000 9 October 2009 10.65 to 8 April 2014 9 April 2009 14 7.63 3,250,000 — (250,000) — — 3,000,000 9 April 2012 9.88 to 8 April 2019 5 June 2009 15 11.90 5,752,000 — — — (1,268,000) 4,484,000 3 January 2010 — to 2 January 2012 5 June 2009 16 11.90 2,182,000 — — — (912,000) 1,270,000 1 July 2010 — to 13 June 2012 5 June 2009 17 11.90 1,236,000 ————1,236,0007May2011 — to 6 May 2013 12 April 2010 18 12.22 — 6,560,000 — — (20,000) 6,540,000 12 October 2010 — to 11 April 2015 12 April 2010 19 12.22 — 4,500,000 — — — 4,500,000 12 April 2013 — to 11 April 2020

33,637,000 11,060,000 (1,068,000) — (5,832,000) 37,797,000

Number of shares subject to options exercisable at the end of the year 16,001,000

— 158 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Number of shares subject to options

Average Period during closing which share options reference Subscription At 1 Granted Exercised Cancelled Lapsed At 31 outstanding at price for price per January during during during during December 31 December 2009 exercise of Date of grant Grant share 2009 the year the year the year the year 2009 are exercisable options HK$ HK$ (Note)

26 July 2004 1 7.25 88,000 — (88,000) — — — 26 January 2005 10.20 to 25 July 2009 29 July 2005 2 9.30 322,000 — (84,000) — — 238,000 29 January 2006 12.18 to 28 July 2010 1 August 2006 3 14.00 3,248,000 ————3,248,0001February2007 — to 31 July 2011 3 January 2007 4 16.78 8,800,000 — — (8,800,000) — — 3 January 2010 — to 2 January 2012 3 January 2007 5 16.78 3,525,000 — — — (625,000) 2,900,000 3 January 2010 — to 2 January 2017 14 June 2007 6 20.96 2,950,000 — — — (120,000) 2,830,000 14 December 2007 — to 13 June 2012 14 June 2007 7 20.96 600,000 ————600,000 14 December 2008 — to 13 June 2012 14 June 2007 8 20.96 4,200,000 — — (4,200,000) — — 1 July 2010 — to 13 June 2012 7 May 2008 9 19.76 3,440,000 ————3,440,0007November 2008 — to 6 May 2013 7 May 2008 10 19.76 300,000 ————300,000 7 November 2009 — to 6 May 2013 7 May 2008 11 19.76 3,000,000 — — (2,000,000) (1,000,000) — 7 May 2011 — to 6 May 2013 7 May 2008 12 19.76 4,750,000 — — — (1,750,000) 3,000,000 7 May 2011 — to 6 May 2018 9 April 2009 13 7.63 — 5,420,000 (243,000) — (516,000) 4,661,000 9 October 2009 12.17 to 8 April 2014 9 April 2009 14 7.63 — 5,000,000 — — (1,750,000) 3,250,000 9 April 2012 — to 8 April 2019 5 June 2009 15 11.90 — 5,752,000 — — — 5,752,000 3 January 2010 — to 2 January 2012 5 June 2009 16 11.90 — 2,182,000 — — — 2,182,000 1 July 2010 to 13 June 2012 5 June 2009 17 11.90 — 1,236,000 — — — 1,236,000 7 May 2011 — to 6 May 2013

35,223,000 19,590,000 (415,000) (15,000,000) (5,761,000) 33,637,000

Number of shares subject to options exercisable at the end of the year 6,959,000

Note:

The average closing reference price represented the average of the closing prices of the Company’s shares immediately before the dates on which the share options were exercised during the year, weighted by the number of shares subject to the options exercised.

— 159 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

The vesting conditions of the respective share option grants are as follows:

For Grants 1 to 3, 6, 9, 13 and 18:

20%: 6 months after the date of grant 20%: 1st anniversary of the date of grant 20%: 2nd anniversary of the date of grant 20%: 3rd anniversary of the date of grant 20%: 4th anniversary of the date of grant

For Grants 4, 11, 15 and 17:

Service Requirement All options might vest on 3 January 2010 (for Grant 4) or 7 May 2011 (for Grant 11) subject to the satisfaction of all the performance conditions.

Performance Hurdle All options might vest on vesting date depending on performance appraisal grading that includes 50% weight of Property Development team performance and 50% weight of individual performance, which the grantee would achieve in his/her performance appraisal during the financial years ended 31 December 2007, 2008 and 2009 (for Grant 4) or 2008, 2009 and 2010 (for Grant 11). Assessment of performance at each financial year end date will be applied for that year to 1/3 of the options granted respectively.

The vesting schedule is as follows:

Vested Portion of Performance Options

Superior 100% Superior minus 90% Good plus 75% Good 60%

Grants 4 and 11 were replaced by Grants 15 and 17 respectively on 5 June 2009. The replacement grants are exercisable at a lower exercise price and there is no change in the vesting conditions of the respective original share option grants.

For Grants 5, 12 and 14:

Vesting of the options is conditional upon the performance of the Company’s shares over the period from close of trading in Hong Kong on 3 January 2007 to 2 January 2010 (for Grant 5) or 1 January 2008 to 31 December 2010 (for Grant 12) or 1 January 2009 to 31 December 2011

— 160 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

(for Grant 14) (“Performance Period”). Vesting will only occur if the change in the total shareholder return (“TSR”) of the Company’s shares over the relevant Performance Period is (1) positive and (2) equal to or greater than the change in the total return index (“TRI”) of the Hang Seng Index (“HSI”) over the relevant Performance Period.

The vesting schedule is as follows:

Positive change in TSR of the Company compared to the Vested Portion change in the HSI TRI during the relevant Performance Period of Options

Less than the change in the HSI TRI 0% Equal to the change in the HSI TRI 30% For each percentage point up to 35% above the change in the HSI TRI 2% Higher than the change in the HSI TRI by 35% or above 100%

If the change in HSI TRI is negative compared to the positive change in TSR of the Company, full vesting will apply.

For Grants 8 and 16:

Service Requirement All options might vest on 1 July 2010 subject to the satisfaction of all the performance conditions.

Performance Hurdle All options might vest on vesting date depending on performance appraisal grading that includes 50% weight of Property Development team performance and 50% weight of individual performance, which the grantee would achieve in his/her performance appraisal during the financial periods ended 31 December 2007, 31 December 2008, 31 December 2009 and 30 June 2010. Assessment of performance at each financial period end date will be applied for that period to 1/6, 1/3, 1/3 and 1/6 of the options granted respectively.

The vesting schedule is as follows:

Vested Portion of Performance Options

Superior 100% Superior minus 90% Good plus 75% Good 60%

Grant 8 was replaced by Grant 16 on 5 June 2009. The replacement grant is exercisable at a lower exercise price and there is no change in the vesting conditions of the original share option grant.

— 161 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

For Grants 7 and 10:

Service Requirement Subject to the satisfaction of all the performance conditions, the options may vest in accordance with the following schedule: 40%: 18 months after the date of grant 20%: 2nd anniversary of the date of grant 20%: 3rd anniversary of the date of grant 20%: 4th anniversary of the date of grant

Performance Hurdle The vesting of these share options is subject to the satisfactory performance of the Property Development business as a whole during the next 18 months after the date of grant as assessed by the Company’s executive management.

For Grant 19:

Service Requirement All options may vest on 12 April 2013 subject to the satisfaction of all the performance conditions.

Performance Hurdle All options may vest on vesting date depending on the Group’s performance during the three years from 1 January 2010 to 31 December 2012 according to the performance measures comprising a range of specific performance criteria/targets that the grantees are required to achieve in the said 3-year performance period for creating shareholder value, which include return on equity, free cash flow and risk management, achievement of strategic goals, financial and operational performance targets.

The vesting schedule is as follows:

Vested Portion of Performance Options

Superior 100% Superior minus 90% Good plus (more or less achieving all targets) 75% Good 60% Good minus and below 0-35%

Intermediate vesting percentages may be determined at the discretion of the Board.

— 162 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

The fair values of services received in return for share options granted is measured by reference to the fair value of share options granted. Except for Grants 5, 12 and 14, which adopt the Monte Carlo model, the estimate of the fair value of the share options granted is measured based on the Binomial model. The inputs into the models were as follows:

Grant 1 Grant 2 Grant 3 Grant 4 Grant 5 Grant 6 Grant 7 Grant 8 Grant 9 Grant 10

26 July 29 July 1 August 3 January 3 January 14 June 14 June 14 June 7May 7May Date of grant 2004 2005 2006 2007 2007 2007 2007 2007 2008 2008 Average fair value HK$1.79 HK$2.27 HK$3.83 HK$4.39 HK$3.46 HK$5.72 HK$5.78 HK$5.85 HK$5.06 HK$5.09 Share price on the date of grant HK$7.30 HK$9.30 HK$14.00 HK$16.50 HK$16.50 HK$20.90 HK$20.90 HK$20.90 HK$19.28 HK$19.28 Exercise price HK$7.25 HK$9.30 HK$14.00 HK$16.78 HK$16.78 HK$20.96 HK$20.96 HK$20.96 HK$19.76 HK$19.76 Expected volatility 40% p.a. 40% p.a. 40% p.a. 40% p.a. 40% p.a. 40% p.a. 40% p.a. 40% p.a. 42% p.a. 42% p.a. Average expected life 3.82 years 3.81 years 4.21 years 4.53 years 3.48 years 4.17 years 3.48 years 4.52 years 4 years 4 years Average risk-free rate 3.25% p.a. 3.53% p.a. 4.40% p.a. 3.67% p.a. 3.62% p.a. 4.61% p.a. 4.62% p.a. 4.64% p.a. 2.35% p.a. 2.37% p.a. Expected dividend paid 5% p.a. 5% p.a. 5% p.a. 5% p.a. 5% p.a. 5% p.a. 5% p.a. 5% p.a. 5% p.a. 5% p.a. Rate of leaving service 2% p.a. 2% p.a. 2% p.a. 3% p.a. 0% p.a. 3% p.a. 3% p.a. 3% p.a. 3% p.a. 3% p.a. Expected volatility of HSI TRI n/a n/a n/a n/a 15% p.a. n/a n/a n/a n/a n/a Expected correlation between TSR of the Company and HSI TRI n/a n/a n/a n/a 35% p.a. n/a n/a n/a n/a n/a

Grant 11 Grant 12 Grant 13 Grant 14 Grant 15 Grant 16 Grant 17 Grant 18 Grant 19

7May 7 May 9 April 9 April 5 June 5 June 5 June 12 April 12 April Date of grant 2008 2008 2009 2009 2009 2009 2009 2010 2010 Average fair value HK$5.12 HK$3.03 HK$2.26 HK$2.16 HK$3.21 HK$3.42 HK$3.80 HK$4.33 HK$4.73 Share price on the date of grant HK$19.28 HK$19.28 HK$7.27 HK$7.27 HK$11.78 HK$11.78 HK$11.78 HK$12.22 HK$12.22 Exercise price HK$19.76 HK$19.76 HK$7.63 HK$7.63 HK$11.90 HK$11.90 HK$11.90 HK$12.22 HK$12.22 Expected volatility 42% p.a. 42% p.a. 52% p.a. 52% p.a. 55% p.a. 55% p.a. 55% p.a. 55% p.a. 48% p.a. Average expected life 4 years 4 years 5 years 5 years 2.1 years 2.6 years 3.5 years 5 years 10 years Average risk-free rate 2.40% p.a. 2.36% p.a. 1.56% p.a. 1.91% p.a. 1.10% p.a. 1.10% p.a. 1.10% p.a. 1.70% p.a. 2.64% p.a. Expected dividend paid 5% p.a. 5% p.a. 5% p.a. 5% p.a. 5% p.a. 5% p.a. 5% p.a. 4% p.a. 4% p.a. Rate of leaving service 3% p.a. n/a 3.5% p.a. n/a 3% p.a. 3% p.a. 3% p.a. 3% p.a. 0% p.a. Expected volatility of HSI TRI n/a 25% p.a. n/a 38% p.a. n/a n/a n/a n/a n/a Expected correlation between TSR of the Company and HSI TRI n/a 45% p.a. n/a 58% p.a. n/a n/a n/a n/a n/a

For grants in 2010, the expected volatility was determined by using the average historical volatility of the Company’s share price over last 4 years and 8 years before the grant date. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non transferability, exercise restrictions and behavioural considerations.

Total consideration received during the year from employees, including the Directors of the Company, for taking up the options granted was HK$115 (2009: HK$104).

The Group recognised a total expense of HK$34 million for the year ended 31 December 2010 (2009: HK$42 million) in relation to share options granted by the Company.

— 163 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

38. ACQUISITION OF ASSETS AND LIABILITIES THROUGH ACQUISITION OF SUBSIDIARIES

(a) In January 2010, the Group acquired the entire issued share capital of Dignitary Limited, which indirectly owns an investment property known as Tower 18 of the Lakeville Regency, located at the Luwan District of Shanghai. The assets acquired and liabilities assumed did not constitute a business as defined under HKFRS 3 Business Combinations and therefore, the acquisition was accounted for as assets acquisition.

The assets acquired and liabilities assumed in the transaction are as follows:

HK$ million

Investment property 1,095 Property, plant and equipment 3 Debtors, deposits and prepayments 2 Bank balances, deposits and cash 28 Creditors and accrued charges (11) Bank borrowings (587) Amount due to a related company (134) Net assets of the subsidiary acquired 396

Total consideration satisfied by: Cash consideration paid 363 Costs incurred in connection with the acquisition 33 396

Net cash outflow arising on acquisition: Cash consideration paid (363) Costs incurred in connection with the acquisition (33) Cash and cash equivalents acquired 28 (368)

(b) In November 2009, the Group acquired the remaining 51% shareholding in Chengdu Xianglong Real Estate Co., Ltd. (“Xianglong”), a then 49% jointly controlled entity of the Group. Following completion of the acquisition, Xianglong has become a wholly-owned subsidiary of the Group. This transaction had been reflected as a purchase of assets and liabilities.

— 164 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

The assets acquired and liabilities assumed in the transaction are as follows:

HK$ million

Investment property 283 Properties under development for sale 653 Debtors, deposits and prepayments 1 Amounts due from related companies 48 Amounts due to related companies (10) Deferred tax liabilities (63) Net assets of the subsidiary acquired 912 Transferred from interests in jointly controlled entities (568) Consideration 344 Total consideration satisfied by/net cash outflow arising on acquisition: Cash consideration paid — current year (102) Cash consideration paid — 2009 (242) (344)

39. ACQUISITION OF A SUBSIDIARY

In June 2009, the Company acquired the remaining 57.12% shareholding in CCP, which was previously a 42.88% associate of the Group, and became a wholly-owned subsidiary of the Group. Details of the transaction were set out in a circular of the Company dated 15 May 2009. The net assets acquired in this transaction and the discount on acquisition were as follows:

Acquiree’s carrying amounts Fair value before and other acquisition adjustments Fair value HK$ million HK$ million HK$ million (Note b)

Property, plant and equipment 22 — 22 Interests in jointly controlled entities 710 (40) 670 Investment properties — 272* 272 Properties held for sale 68 4 72 Properties under development for sale 4,117 (54)* 4,063 Loan to a related company 113 — 113 Other loan receivable 138 — 138 Debtors, deposits and prepayments 249 — 249 Amounts due from jointly controlled entities 365 — 365 Amounts due from related companies 168 — 168 Tax recoverable 1 — 1

— 165 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Acquiree’s carrying amounts Fair value before and other acquisition adjustments Fair value HK$ million HK$ million HK$ million (Note b)

Bank balances, deposits and cash 691 — 691 Creditors and accrued charges (341) — (341) Amounts due to jointly controlled entities (50) — (50) Amounts due to related companies (45) — (45) Loan from related companies (328) — (328) Foreign exchange forward contract (39) — (39) Taxation payable (44) — (44) Bank borrowings due within one year (260) — (260) Bank borrowings due over one year (261) — (261) Defined benefit scheme liabilities (3) — (3) Deferred tax liabilities (39) (289) (328) Net assets of subsidiary acquired 5,232 (107) 5,125 Transferred from interests in associates (2,223) Revaluation surplus, net of deferred tax of HK$32 million on previously held interest (95) Transaction costs (52) Carrying amount of convertible bonds of CCP held by the Group (218) Discount on acquisition (648) Net consideration 1,889 Net consideration satisfied by: Issue of new shares of the Company 1,928 Cash consideration paid 135 Proceeds received on early cancellation of convertible bonds of CCP (174) 1,889 Net cash inflow arising on acquisition: Cash consideration paid (135) Cash and cash equivalents acquired 691 Proceeds received on early cancellation of convertible bonds of CCP 174 730

* Included in these amounts is a reclassification adjustment of certain property interests (with fair value of HK$272 million) from properties under development for sale to investment properties, as the Group intends to hold such properties for rental income and capital appreciation rather than sale.

— 166 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Notes:

(a) A total of 165,780,547 new shares of the Company were issued and a total of £10.7 million (HK$135 million) cash was paid as consideration for the acquisition of the 57.12% equity interest in CCP. The fair value of the share consideration was determined based on the published prices of the Company’s share on the respective dates of exchange. In addition, as a condition to the acquisition, CCP cancelled early its convertible bonds at 90% of the principal amount in June 2009.

(b) The fair value of property interests held by CCP’s subsidiaries and jointly controlled entities are determined based on the valuation carried out by an independent valuer and determined by (i) direct comparison approach, making reference to the comparable sales transactions as available in the market; or (ii) capitalisation of net income derived from the properties located nearby, taking into account the construction costs that would be expended to complete the development to reflect the quality of the completed development, as appropriate.

40. DISPOSAL OF PROPERTY INVENTORIES THROUGH DISPOSAL OF SUBSIDIARIES

(a) During the year, the Group disposed of a property held for sale in Chengdu through the disposal of the equity interests in certain wholly-owned subsidiaries, which owned the property. The transaction has been accounted for as a sale of property inventory in the ordinary course of the Group’s property business.

The net assets disposed of in the transaction are as follows:

HK$ million

Property, plant and equipment 1 Property held for sale 504 Debtors, deposits and prepayments 3 Bank balances, deposits and cash 53 Creditors and accrued charges (8) Bank borrowings (183) Net assets disposed of 370

Gain on disposal 29 Costs incurred in connection with the disposal 18 417

Total consideration satisfied by: Cash consideration received 417

Net cash inflow arising on disposal: Cash consideration received 417 Costs incurred in connection with the disposal (18) Cash and cash equivalents disposed of (53) 346

— 167 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

(b) During the year, the Group disposed of a property under development for sale in Beijing through the disposal of the entire equity interests in a wholly-owned subsidiary, which owned the property. The transaction has been accounted for as a sale of property inventory in the ordinary course of the Group’s property business.

The net assets disposed of in the transaction are as follows:

HK$ million

Property under development for sale 874 Net assets disposed of 874

Gain on disposal 172 Costs incurred in connection with the disposal 37 1,083

Total consideration satisfied by: Cash consideration received 1,083

Net cash inflow arising on disposal: Cash consideration received 1,083 Costs incurred in connection with the disposal (37) 1,046

(c) During the year, the Group disposed of two properties under development for sale in Chongqing through the disposal of the entire equity interests in two wholly-owned subsidiaries, which owned the properties respectively. The transactions have been accounted for as a sale of property inventories in the ordinary course of the Group’s property business.

— 168 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

The aggregated net assets disposed of in the transactions are as follows:

HK$ million

Properties under development for sale 278 Net assets disposed of 278

Gain on disposal 19 Costs incurred in connection with the disposal 4 Exchange differences in respect of the net assets of the subsidiary reclassified from equity to profit or loss upon disposal of the subsidiary (14) 287 Total consideration satisfied by: Cash consideration received 287 Net cash inflow arising on disposal: Cash consideration received 287 Costs incurred in connection with the disposal (4) 283

41. CONTINGENT LIABILITIES

At 31 December 2010, the Group had the following contingent liabilities, which have not been provided for in the consolidated financial statements:

(a) Standby documentary credit arranged with a bank amounting to HK$216 million (2009: HK$216 million) to secure a bank loan granted to a subsidiary of an associate.

(b) Guarantees issued in favour of banks amounting to RMB174 million (HK$205 million) (2009: RMB47 million (HK$53 million)) in respect of mortgage facilities granted by the banks to the buyers of the Group’s property inventories.

(c) Effective share of guarantees issued in favour of banks amounting to HK$639 million (2009: HK$289 million) to secure bank loans granted to certain jointly controlled entities.

(d) Guarantees issued in favour of a bank for a loan granted to a former wholly-owned subsidiary of CCP (the “Former Subsidiary”) with an outstanding amount of RMB542 million (HK$637 million) at 31 December 2010 (2009: RMB542 million (HK$615 million)). The acquirer of the Former Subsidiary has agreed to procure the repayment of the bank loan and this obligation is guaranteed by the parent company of such acquirer.

In the opinion of the Directors of the Company, the fair values of the financial guarantee contracts of the Group are insignificant at initial recognition and the Directors consider that the possibility of the default of the parties involved is remote. Accordingly, no value has been recognised in the consolidated balance sheet.

— 169 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

42. MATERIAL RELATED PARTY TRANSACTIONS

(a) During the year, the Group had the following transactions with SOCL and its subsidiaries and associates other than those of the Group (“SOCL Private Group”).

Nature of transactions 2010 2009 HK$ million HK$ million

Income recognised: Management and information system services 1 1 Construction work 565 223 Cost and expenses recognised: Rental expenses 6 1 Interest expense 8 2

The outstanding balances with SOCL Private Group at the balance sheet date are disclosed in note 27.

(b) During the year, the Group had the following transactions with jointly controlled entities.

Nature of transactions 2010 2009 HK$ million HK$ million

Income recognised: Interest income 1 1 Imputed interest income 51 35 Management fee 56 52 Cost and expenses recognised: Construction/subcontracting work 7 4 Interest expense 1 1

The outstanding balances with jointly controlled entities at the balance sheet date are disclosed in note 22.

Nature of transactions 2010 2009 HK$ million HK$ million

Income recognised: Interest income 12 22 Imputed interest income 20 13 Management fee 16 79 Interest income on convertible bonds — 11 Construction/subcontracting work 40 99

— 170 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

The outstanding balances with associates at the balance sheet date are disclosed in note 23.

(d) The Group is licensed by Shui On Holdings Limited, a wholly-owned subsidiary of SOCL, to use the trademark, trade name of “Shui On”, “瑞安” and/or the Seagull devices on a non-exclusive, royalty-free basis for an unlimited period of time.

(e) During the year, the Group disposed of HK$1,080 million worth of SOL shares to a wholly-owned subsidiary of SOCL (note 20).

(f) In connection with the acquisition of an investment property in January 2010 (see note 38(a)), the Group assumed from the seller an amount due to a wholly-owned subsidiary of SOL of approximately US$17.2 million (HK$134 million), which is unsecured and bears interest at 8% per annum. During the year ended 31 December 2010, the Group incurred interest expense of approximately HK$8 million on such payable. The amount, inclusive of interest, were repaid during the year.

(g) During the year, the Group received dividend income amounting to HK$24 million (2009: HK$22 million) from certain jointly controlled entities.

(h) During the year ended 31 December 2009, the Group was granted unsecured interest bearing short-term loans totalling HK$200 million from a wholly-owned subsidiary of SOCL, and incurred interest on such loans amounting to HK$2 million. The loans, inclusive of interest, were repaid in 2009.

(i) Disclosures of the remuneration of Directors and other members of key management during the year under HKAS 24 Related Party Disclosures, were as follows:

2010 2009 HK$ million HK$ million

Fees 2 2 Salaries and other benefits 41 38 Bonuses 18 21 Retirement benefit scheme contributions 1 1 Share-based payments 21 23 83 85

The remuneration of Executive Directors is determined by the Remuneration Committee having regard to the performance of each individual. The Remuneration Committee also determines the guiding principles applicable to the remuneration of key executives who are not Directors. In both cases, the Remuneration Committee has regard to market trends.

— 171 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

43. SUBSEQUENT EVENTS

(a) On 19 January 2011, the Group entered into an agreement with independent third parties in relation to the formation of a joint venture to undertake knowledge community projects in the PRC. Pursuant to the agreement and conditional to the completion of certain matters by the joint venture partners, the Group will contribute up to 75% of the registered capital of the joint venture company (the “JV Company”) in stages in an aggregate amount of approximately RMB1,839 million (HK$2,161 million), subject to adjustment, by injecting into the JV Company cash and a piece of land located in Nanjing which the Group intends to acquire. The formation of the joint venture was approved by the shareholders of the Company at the special general meeting held on 28 February 2011. Details of this transaction are set out in a circular of the Company dated 9 February 2011.

(b) In March 2011, the Group reached an agreement to acquire two land parcels located in Zunyi, Guizhou, the PRC, which were owned and occupied by a jointly controlled entity of the Group for its cement operation, at an aggregate consideration of approximately RMB313 million (HK$373 million).

44. PARTICULARS OF PRINCIPAL SUBSIDIARIES

The Directors are of the opinion that a complete list of the particulars of all subsidiaries will be of excessive length and therefore the following list contains only the particulars of subsidiaries at 31 December 2010 and 2009, which principally affect the results or assets of the Group. All the companies listed below were incorporated and are operating in Hong Kong except as otherwise indicated.

Percentage of issued share/ registered capital Issued and fully paid share held by the Company Subsidiaries capital/registered capital Directly Indirectly Principal activities

Construction and building maintenance business

Dynamic Mark Limited 100 ordinary shares of HK$1 each — 80% Supply of metal gates 3,000,000 non-voting deferred shares of HK$1 each

P.D. (Contractors) Limited 1,000,000 ordinary shares of HK$1 each — 94% Renovation work

Pacific Extend Limited 10,000 ordinary shares of HK$1 each — 67% Maintenance contractor 6,000 special shares of HK$1 each

Pat Davie Limited 2,600,100 ordinary shares of HK$1 each — 94% Interior decoration, 100,000 non-voting deferred shares of fitting out, design HK$10 each and contracting 6,800,000 non-voting deferred shares of HK$1 each

Pat Davie (Macau) Limited## Two quotas of total face value of — 94% Interior decoration, MOP1,000,000 fitting out, design and contracting

— 172 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Percentage of issued share/ registered capital Issued and fully paid share held by the Company Subsidiaries capital/registered capital Directly Indirectly Principal activities

Panyu Dynamic Mark Steel and Registered and paid up capital — 64% Steel fabrication Aluminium Engineering Co. HK$4,000,000 Ltd.**@

Shui Fai Metal Works 10,000 ordinary shares of HK$1 each — 55% Sales and installation of Engineering Company wallform and other Limited metal works

Shui On Building Contractors 117,000,100 ordinary shares of HK$1 — 100% Building construction Limited each and maintenance 33,000,100 non-voting deferred shares of HK$1 each 50,000 non-voting deferred shares of HK$1,000 each

Shui On Construction Company 100 ordinary shares of HK$1 each — 100% Building construction Limited 69,000,000 non-voting deferred shares of HK$1 each 1,030,000 non-voting deferred shares of HK$100 each

Shui On Contractors Limited* 1 share of US$1 100% — Investment holding

Shui On Plant and Equipment 16,611,000 ordinary shares of HK$1 — 100% Owning and leasing of Services Limited each plant and machinery 45,389,000 non-voting deferred shares and structural steel of HK$1 each construction work

Shui On Construction Co., Registered and paid up capital — 70% Building construction Ltd.**@ RMB50,000,000 and maintenance

Cement operations

Asia No.1 Material Supply 100 ordinary shares of HK$100 each — 100% Holding of a quarry Limited 1,000 non-voting deferred shares of right HK$100 each

Glorycrest Holdings Limited* 1 share of US$1 — 100% Investment holding

Shui On Building Materials 100 ordinary shares of HK$1 each — 100% Investment holding and Limited 1,000,000 non-voting deferred shares of sale of construction HK$1 each materials

Shui On Cement (Guizhou) 100,000 shares of US$1 each — 100% Investment holding Limited*

Shui On Materials Limited* 1 share of US$1 100% — Investment holding

貴州瑞安水泥發展管理 Registered and paid up capital — 100% Provision of 有限公司**+ US$670,000 consultancy services (Guizhou Shui On Cement Development Management Co. Ltd.)

Middleton Investments 2 ordinary shares of US$1 each — 100% Investment holding Limited***

— 173 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Percentage of issued share/ registered capital Issued and fully paid share held by the Company Subsidiaries capital/registered capital Directly Indirectly Principal activities

Tinsley Holdings Limited*** 2 ordinary shares of US$1 each — 100% Investment holding

Top Bright Investments 2 ordinary shares of US$1 each — 100% Investment holding Limited***

Winway Holdings Limited*** 2 ordinary shares of US$1 each — 100% Investment holding

Fortune Smooth Investments 1 share of US$1 — 100% Investment holding Limited*

Wayly Holdings Limited* 1 share of US$1 — 100% Investment holding

貴州凱里瑞安建材有限公司**+ Registered and paid up capital — 100% Manufacture and sale of (Guizhou Kaili Rui An Jian RMB139,660,500 cement and related Cai Co., Ltd.) construction material products

Property business

Jade City International Limited 2 ordinary shares of HK$1 each — 100% Property holding

New Rainbow Investments 1 share of US$1 100% — Investment holding Limited*

Brilliance Investments 1 share of US$1 100% — Investment holding Limited*

Main Zone Group Limited* 1 share of US$1 100% — Investment holding

China Central Properties 281,193,011 shares of GBP0.01 each 57.12% 42.88% Investment holding Limited^

Shui On China Central 1 share of US$1 — 100% Investment holding Properties Limited*

Dalian Shengyuan Real Estate Registered and paid up capital — 100% Investment holding Consulting Co., Ltd.**+ RMB50,000,000

北京億達房地產開發有限公司** Registered and paid up capital — 100% Property development (Beijing Yida Real Estate RMB30,000,000 Development Co., Ltd.)

北京超騰投資管理有限公司** Registered and paid up capital — 100% Property investment (Beijing Chaoteng RMB10,000,000 Investment Management Co., Ltd.)

Chengdu Shui On Huiyuan Registered and paid up capital — 100% Property development Property Co., Ltd.**+ US$21,000,000

Chongqing Fengde Land Registered and paid up capital — 100% Investment holding Limited**+ US$35,896,300

重慶豐德尊鼎實業有限公司** Registered and paid up capital — 100% Property development (Chongqing Fengde Zunding RMB80,000,000 Co., Ltd.)

— 174 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Percentage of issued share/ registered capital Issued and fully paid share held by the Company Subsidiaries capital/registered capital Directly Indirectly Principal activities

重慶豐德豪門實業有限公司** Registered and paid up capital — 100% Property development (Chongqing Fengde Haomen RMB10,000,000 Co., Ltd.)

Chongqing Hui Zheng Registered and paid up capital — 100% Property development Properties Co., Ltd.**+ US$75,000,000

Honest Joy Investments 100 shares of US$1 each — 100% Investment holding Limited*

Pacific Hill Limited 1 ordinary share of HK$1 — 100% Investment holding

Qingdao Zhongcheng Yinchu Registered and paid up capital — 100% Property development Development Co., Ltd.**+ HK$400,000,000

Shenyang Hua Hui Properties Registered and paid up capital — 100% Property development Co., Ltd.**+ US$70,000,000

Chengdu Xianglong Real Estate Registered and paid up capital — 100% Property development Co., Ltd.**+ RMB300,000,000

廣州英發房地產開發有限公司**+ Registered and paid up capital — 100% Property development (Guangzhou infotach US$64,700,000 Property Development Co., Ltd.)

SOCAM Asset Management 1 share of US$1 100% — Investment holding Limited*

SOCAM Asset Management 1 ordinary share of HK$1 — 100% Provision of (HK) Limited management services

Beijing SOCAM Real Estate Registered and paid up capital — 100% Provision of Consulting Co., Ltd.**+ RMB800,000 consultancy services

Shui On Project Management 1 share of US$1 — 100% Investment holding (China) Limited*

Trillion Earn Limited 1 ordinary share of HK$1 — 100% Investment holding

High Spirit Project 1 ordinary share of HK$1 — 100% Project management Management Consultancy consultancy services Limited

Park Wealth Investments 1 share of US$1 100% — Investment holding Limited*

Poly Edge Enterprises Limited* 1 share of US$1 100% — Investment holding

Max Clear Holdings Limited* 1 share of US$1 100% — Provision of management services

Dalian Zhong Hui Construction Registered and paid up capital — 100% Wholesale of Materials Co., Ltd.**+ US$32,000,000 construction materials

— 175 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Percentage of issued share/ registered capital Issued and fully paid share held by the Company Subsidiaries capital/registered capital Directly Indirectly Principal activities

Dalian Jiasheng Science & Registered capital US$6,000,000 and — 100% Software and hardware Technology Development paid up capital US$1,200,000 development and Co., Ltd.**+ technical consultancy services

Dalian Jiarui Science & Registered and paid up capital — 100% Software and hardware Technology Development US$10,000,000 development and Co., Ltd.**+ technical consultancy services

Other businesses

Asia Materials Limited 2 ordinary shares of HK$1 each — 100% Trading

Rise Huge International 1 share of US$1 100% — Investment holding Limited*

Gold Honour Holdings 1 share of US$1 100% — Investment holding Limited*

Lamma Rock Products Limited 100 ordinary shares of HK$10 each — 100% Investment holding 3,500,000 non-voting deferred shares of HK$10 each

T H Industrial Management 2,740 ordinary shares of US$1 each — 100% Investment holding Limited#

Prelude Group Limited* 2,000 ordinary shares of US$1 each — 100% Investment holding

Chongqing Yugang Foreign Registered and paid up capital — 100% Provision of investment Investment Consulting RMB800,000 consultation Limited**

* Incorporated in the British Virgin Islands

** Registered and operated in other regions of the PRC

*** Incorporated in Mauritius

# Incorporated in the Bahamas

## Incorporated in Macau Special Administrative Region of the PRC

+ Wholly-foreign owned enterprises

^ Incorporated in Isle of Man

@ Equity joint venture

None of the subsidiaries had any debt securities subsisting at 31 December 2010 or at any time during the year.

Note: Chengdu Shui On Huida Property Co., Ltd., Chongqing TH Holding Management Company Limited, Chongqing T.H. White Cement Co., Ltd. and 重慶豐德南洋實業有限公司, indirectly held subsidiaries of the Company, were disposed of during the year.

— 176 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

45. PARTICULARS OF PRINCIPAL JOINTLY CONTROLLED ENTITIES

The Directors are of the opinion that a complete list of the particulars of all jointly controlled entities will be of excessive length and therefore the following list contains only the particulars of principal jointly controlled entities of the Group at 31 December 2010 and 2009. All the companies listed below were incorporated and are operating in Hong Kong except otherwise indicated.

Effective percentage of issued share/ registered Indirect jointly controlled Issued and paid up share capital held entities capital/registered capital by the Group Principal activities Notes

Construction and building maintenance business

Brisfull Limited 5,000,000 ordinary shares of 50% Sale and installation of HK$1 each aluminium window products

Super Race Limited 420,000 ordinary shares of 50% Supply of sink units and HK$1 each cooking benches

鶴山超合預制件有限公司**@ Registered capital 50% Manufacture of sink units 1 (Heshan Chaohe Yizhi Jian US$1,284,600 and paid up and cooking benches Co. Ltd.) capital US$484,600

Cement operations

Beijing Chinefarge Cement Co., Registered and paid up capital 29.25% Production and sales of 3 Ltd.**@ RMB315,000,000 cement and cement related products

Beijing Shunfa Lafarge Cement Registered and paid up capital 31.5% Production and sales of 3 Co., Ltd.**@ RMB150,000,000 cement and cement related products

Beijing Yicheng Lafarge Registered and paid up capital 34.52% Production and sales of Concrete Co., Ltd.**@ RMB30,340,000 concrete

Chongqing TH New Building Registered and paid up capital 33.75% Production and sales of Materials Co., Ltd.**@ RMB41,500,000 cement and cement related products

Chongqing TH Diwei Cement Registered and paid up capital 36% Production and sales of Co., Ltd.**@ RMB61,680,000 cement and cement related products

Chongqing TH Fuling Cement Registered and paid up capital 45% Production and sales of Co., Ltd.**+ RMB44,000,000 cement and cement related products

Chongqing TH Special Cement Registered and paid up capital 36% Production and sales of Co. Ltd.**@ RMB210,000,000 cement and cement related products

— 177 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Effective percentage of issued share/ registered Indirect jointly controlled Issued and paid up share capital held entities capital/registered capital by the Group Principal activities Notes

Chongqing Lafarge Shui On Registered and paid up capital 33.3% Production and sales of Cantian Cement Co., Ltd.**@ RMB270,000,000 cement and cement related products

Guangan TH Cement Co., Registered and paid up capital 45% Production and sales of Ltd.**+ RMB110,000,000 cement and cement related products

Guizhou Bijie Shui On Cement Registered and paid up capital 80% Manufacture and sale of 1 Co., Ltd.**@ RMB48,000,000 cement

Guizhou Dingxiao Shui On Registered and paid up capital 44.05% Production and sales of Cement Co., Ltd.**@ RMB264,256,751 cement and cement related products

Zunyi Sancha Lafarge Shui On Registered and paid up capital 45% Production and sales of Cement Co., Ltd.**+ RMB234,433,010 cement and cement related products

Guizhou Kaili Ken On Concrete Registered and paid up capital 75% Supply of ready mixed 1 Co., Ltd.**@ RMB10,000,000 concrete

貴州凱里瑞安水泥有限公司**@ Registered and paid up capital 90% Manufacture and sale of 1 (Guizhou Kaili Shui On RMB60,000,000 cement Cement Co. Ltd.)

貴州六礦瑞安水泥有限公司**@ Registered and paid up capital 40.16% Manufacture and sale of (Guizhou Liu Kuang Shui On RMB233,950,000 cement Cement Co. Ltd.)

Guizhou Shuicheng Shui On Registered and paid up capital 31.5% Production and sales of Cement Co., Ltd.**@ RMB200,000,000 cement and cement related products

貴州遵義瑞安水泥有限公司**@ Registered and paid up capital 80% Manufacture and sale of 1 (Guizhou Zunyi Shui On RMB92,000,000 cement Cement Co. Ltd.)

Lafarge Chongqing Cement Co., Registered and paid up capital 35.73% Production and sales of Ltd.**@ RMB340,000,000 cement and cement related products

Lafarge Dujiangyan Cement Co., Registered and paid up capital 33.75% Production and sales of Ltd.**@ RMB856,839,300 cement and cement related products

Nanchong T.H. Cement Co., Registered and paid up capital 45% Manufacture and sale of Ltd.**+ RMB15,000,000 cement

Lafarge Shui On Cement Limited 2,089,199 ordinary shares of 45% Investment holding HK$1 each

— 178 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Effective percentage of issued share/ registered Indirect jointly controlled Issued and paid up share capital held entities capital/registered capital by the Group Principal activities Notes

Nanjing Jiangnan Cement Co., Registered and paid up capital 60% Manufacture and trading 1 Ltd.**@ RMB120,000,000 of cement

Panzhihua Jinsha Cement Co., Registered and paid up capital 36% Production and sales of Ltd.** RMB10,000,000 cement and cement related products

Yunnan Shui On Construction Registered and paid up capital 36% Investment holding Materials Investment Holding RMB1,000,000,000 Co., Ltd.**@

Yunnan State Assets Cement Registered and paid up capital 36% Production and sales of Chuxiong Co., Ltd.** RMB32,600,000 cement and cement related products

Yunnan State Assets Cement Registered and paid up capital 36% Production and sales of Dongjun Co., Ltd.** RMB260,000,000 cement and cement related products

Yunnan State Assets Cement Registered and paid up capital 36% Production and sales of Haikou Co., Ltd** RMB54,556,806 cement and cement related products

Yunnan State Assets Cement Registered and paid up capital 36% Production and sales of Honghe Co., Ltd.** RMB263,785,829 cement and cement related products

Yunnan State Assets Cement Registered and paid up capital 36% Production and sales of Jianchuan Co., Ltd.** RMB122,483,913 cement and cement related products

Yunnan State Assets Cement Registered and paid up capital 36% Production and sales of Kunming Co., Ltd.** RMB130,375,098 cement and cement related products

Property business

Broad Wise Limited* 100 shares of US$1 each 80% Investment holding 2

瀋陽中匯達房地產有限公司**+ Registered and paid up capital 80% Property development 2 (Shenyang Zhong Hui Da US$149,400,000 Properties Co., Ltd.)

Eagle Fit Limited* 200 shares of US$1 each 52.5% Investment holding 2

Lead Wealthy Investments 100 ordinary shares of HK$1 70% Investment holding 2, 4 Limited each

Shanghai 21st Century Real Registered and paid up capital 50.93% Property development 2, 4 Estate Co., Ltd.** US$76,000,000

— 179 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

Effective percentage of issued share/ registered Indirect jointly controlled Issued and paid up share capital held entities capital/registered capital by the Group Principal activities Notes

Prime Asset Investment Limited 1 ordinary share of HK$1 52.5% Investment holding 2

北京啓夏房地產開發有限公司**+ Registered and paid up capital 52.5% Property development 2 (Beijing Qi Xia Real Estate US$91,000,000 Development Co., Ltd.)

Other businesses

The Yangtze Ventures Limited# 1,000 ordinary shares of 65.5% Venture capital 2 HK$0.1 each investments

The Yangtze Ventures II Limited# 1,000 ordinary shares of 75.4% Venture capital 2 HK$0.1 each investments

On Capital China Fund Series A# 13,923 participating shares of 66.81% Venture capital 2 US$0.01 each investments

On Capital China Fund Series B# 8,418 participating shares of 61.54% Venture capital 2 US$0.01 each investments

* Incorporated in the British Virgin Islands

** Registered and operated in other regions of the PRC

# Incorporated in the Cayman Islands

+ Wholly-foreign owned enterprises

@ Equity joint venture

Notes:

1. The Group is under contractual arrangements to jointly control these entities with PRC partners. Accordingly, the Directors consider they are jointly controlled entities.

2. The respective boards of directors of these entities are jointly controlled by the Group and other investors. Accordingly, the Directors consider they are jointly controlled entities.

3. These companies were disposed of during the year ended 31 December 2010.

4. These companies were acquired/established by the Group during the year ended 31 December 2010.

— 180 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

46. PARTICULARS OF PRINCIPAL ASSOCIATES

The Directors are of the opinion that a complete list of the particulars of all associates will be of excessive length and therefore the following list contains only the particulars of principal associates of the Group at 31 December 2010 and 2009.

Effective percentage of issued share/ Issued and paid registered up share capital/ capital held by Indirect associates registered capital the Group Principal activities

Richcoast Group Limited* 780 shares of US$1 each 28.2% Investment holding

Dalian Qiantong Science & Technology Registered and paid up 22% Software development Development Co., Ltd.**@ capital RMB800,000,000

Dalian Ruisheng Software Development Registered and paid up 22% Software development Co., Ltd.**@ capital RMB800,000,000

Dalian Delan Software Development Registered and paid up 22% Software development Co., Ltd.**@ capital RMB300,000,000

Dalian Jiadao Science & Technology Registered and paid up 22% Software development Development Co., Ltd.**@ capital RMB300,000,000

大連軟件園瑞安發展有限公司** Registered and paid up 22% Software development (Dalian Software Park Shui On capital RMB600,000,000 Fazhan Co., Ltd.)

大連軟件園瑞安開發有限公司** Registered and paid up 22% Software development (Dalian Software Park Shui On capital RMB600,000,000 Kaifa Co., Ltd.)

* Incorporated in the British Virgin Islands

** Registered and operated in other regions of the PRC

@ Equity joint venture

— 181 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

3. INDEBTEDNESS

Borrowings

At 31 March 2011, being the latest practicable date for the purpose of this statement of Sch.II(7) indebtedness, the Group had total borrowings amounting to approximately HK$8,395 million, details of which are as follows:

HK$ million

Bank loans 8,385 Advance from a jointly controlled entity 10 8,395

Secured 3,381 Unsecured 5,014 8,395

Mortgages and charges

At 31 March 2011, the Group’s secured borrowings were secured by certain of the Group’s bank deposits, investment properties, properties under development for sale, properties held for sale, benefits accrued to the relevant investment properties and equity interests in certain subsidiaries and jointly controlled entities.

Contingent liabilities

At 31 March 2011, the Group had the following material contingent liabilities:

(a) Standby documentary credit arranged with a bank amounting to HK$216 million to secure a bank loan granted to a subsidiary of an associate.

(b) Guarantees issued in favour of banks amounting to RMB173 million (equivalent to approximately HK$206 million) in respect of mortgage facilities granted by the banks to the buyers of the Group’s property inventories.

(c) Effective share of guarantees issued in favour of banks amounting to HK$639 million to secure bank loans granted to certain jointly controlled entities.

— 182 — APPENDIX II FINANCIAL INFORMATION OF THE GROUP

(d) Effective share of a guarantee issued in favour of a joint venture (the “Joint Venture”, which was formed between an associate and an independent third party (the “Joint Venture Partner”)) and the Joint Venture Partner for an amount not exceeding RMB110 million (equivalent to approximately HK$131 million) in respect of certain payment obligations to the Joint Venture and the Joint Venture Partner.

(e) Guarantees issued in favour of a bank for a loan granted to a former wholly-owned subsidiary (the “Former Subsidiary”) with an outstanding amount of RMB542 million (equivalent to approximately HK$644 million). The acquirer of the Former Subsidiary has agreed to procure the repayment of the bank loan and this obligation is guaranteed by the parent company of such acquirer.

Other liabilities

Save as disclosed above and apart from intra-group liabilities and normal trade payables, at the close of business on 31 March 2011, the Group did not have any outstanding loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances, debentures, mortgages, charges, finance lease commitments, guarantees or other material contingent liabilities.

The Directors have confirmed that there has been no material change in terms of the Group’s contingent liabilities and indebtedness during the period from 31 March 2011 to the Latest Practicable Date.

4. MATERIAL CHANGE

The Directors have confirmed that there has been no material change in the Group’s financial or Sch.II(6)(a)(v) trading position or outlook since 31 December 2010, the date to which the latest published audited financial statements of the Group were made up to the Latest Practicable Date.

— 183 — APPENDIX III PROPERTY VALUATION REPORT

The following is the text of a letter, summary of values and valuation certificates prepared for the purpose of incorporation in this Composite Offer Document received from Savills Valuation and Professional Services Limited, an independent property valuer, in connection with their valuations as of 28 February 2011 of the properties of the Group.

The Directors Shui On Construction and Materials Limited 34th Floor, Shui On Centre 6-8 Harbour Road Wanchai Hong Kong

9 May 2011

Dear Sirs,

In accordance with the instructions from Shui On Construction and Materials Limited (the “Company”) for us to value the properties held by the Company and its subsidiaries (collectively the “SOCAM Group”) in the People’s Republic of China (the “PRC”) and Hong Kong, we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of values of such properties as at 28 February 2011 (“Valuation Date”) for public circular purpose.

Our valuation of each of the properties is our opinion of its market value which we would define as intended to mean “the estimated amount for which a property should exchange on the Valuation Date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing where in the parties had each acted knowledgeably, prudently and without compulsion”.

The market value is the best price reasonably obtainable in the market by the seller and the most advantageous price reasonably obtainable in the market by the buyer. This estimate specifically excludes an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and lease back arrangements, joint ventures, management agreements, special considerations or concessions granted by any one associated with the sale, or any element of special value. The market value of a property is also estimated without regard to costs of sale and purchase, and without offset for any associated taxes.

— 184 — APPENDIX III PROPERTY VALUATION REPORT

In valuing the property in Group I which is held for sale by the SOCAM Group in the PRC and the properties in Groups V and VI which are held by the SOCAM Group for owner-occupation and sale respectively in Hong Kong, we have adopted the “Direct Comparison Approach” by making reference to the comparable market transactions as available in the markets.

In valuing the property in Group II, which is held by the SOCAM Group for investment in the PRC, we have made reference to the comparable market transactions as available in the market and where appropriate, on the basis of capitalization of net incomes as shown on the schedules handed to us with due allowance for reversionary income potential of the property.

The properties in Group III are held by the SOCAM Group for owner-occupation in the PRC. In valuing Property 3 in Group III, due to the nature of the buildings and structures that were constructed, there are no readily identifiable market comparables, and the buildings and structures cannot be valued on the basis of direct comparison. They have therefore been valued on the basis of their depreciated replacement costs. We would define “depreciated replacement cost” to be our opinion of the land value in its existing use and an estimate of the new replacement costs of the buildings and structures, including professional fees and finance charges, from which deductions are then made to allow for age, condition and functional obsolescence. The depreciated replacement cost approach generally provides the most reliable indication of value for property in the absence of a known market based on market sales. In valuing Property 4 in Group III, we have adopted the “Direct Comparison Approach” by making reference to comparable market transactions as available in the market.

In valuing the properties in Group IV, which are held under development by the SOCAM Group in the PRC, we have valued such properties on the basis that they will be developed and completed in accordance with the SOCAM Group’s latest development proposals provided to us. In arriving at our opinion of values, we have adopted the “Direct Comparison Approach” by making reference to the comparable sale transactions as available in the market and have taken into account the construction costs that will be expended to complete the development to reflect the quality of the completed development.

We have been provided with copies of extracts of title documents relating to the properties. However, we have not searched the original documents to ascertain the existence of any amendments which may not appear on the copies handed to us. We have relied to a very considerable extent on information given by the SOCAM Group and its PRC legal adviser, Zhong Lun Law Firm, regarding to the titles to the properties. We have also accepted advice given to us on such matters as planning approvals, statutory notices, easements, tenure, development proposals, outstanding construction costs to be expended, estimated completion dates, particulars of occupancy, site and floor areas and all other relevant matters. Dimensions, measurements and areas included in the valuation certificates are based

— 185 — APPENDIX III PROPERTY VALUATION REPORT on information contained in the documents provided to us and are therefore only approximations. No on-site measurements have been made. We have had no reason to doubt the truth and accuracy of the information provided to us by the SOCAM Group, which is material to our valuation. We have also advised by the SOCAM Group that no material facts have been omitted from the information provided.

We have inspected the exterior of the properties. During the course of our inspection, we did not note any serious defects. However, no structural survey has been made and we are therefore unable to report that the properties are free from rot, infestation or any other structural defect. No tests were carried out to any of the services. We have not carried out investigations on site to determine the suitability of the ground conditions and the services for any development. Our valuation is prepared on the assumption that these aspects are satisfactory and no extraordinary expenses or delay will be incurred during the development periods.

No allowance has been made in our valuation for any charges, mortgages or amounts owing neither on any property nor for any expenses or taxation which maybe incurred in effecting a sale.

Our valuation is prepared in compliance with the requirements set out in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited and Rule 11 of the Code on Takeovers and Mergers, and in accordance with the Valuation Standards on Properties (First Edition 2005) published by The Hong Kong Institute of Surveyors.

For the purpose of compliance with Rule 11.3 if the Code on Takeovers and Mergers and as advised by the Company, the potential tax liabilities which may arise from the sale of the properties include:

(a) profits tax on the profit from the sale of the property at rates of 16.5% for properties in Hong Kong and 25% for properties in the PRC; and

(b) land value appreciation tax on properties in the PRC at progressive tax rates ranging from 30% to 60% on the appreciation in property value in the range from not more than 50% to more than 200%.

As at the time of this circular, the Company has confirmed that certain properties held by the SOCAM Group for sale and under development in Groups I, IV and VI are intended to be sold after completion of development. Hence, the likelihood of any potential tax liability of these properties being crystallized is high. For the properties held by the SOCAM Group for owner occupation and for investment in Groups II, III and V, the likelihood of the potential tax liability being crystallized is considered remote as we are advised that the SOCAM Group has no intention to dispose of such properties.

— 186 — APPENDIX III PROPERTY VALUATION REPORT

Unless otherwise stated, all valuation amounts stated in this report are in Hong Kong Dollars (HK$). The exchange rate used in our valuation is HK$1 to RMB0.842 which was prevailing as at the Valuation Date and there has been no significant fluctuation in such exchange rate between that date and the date of this letter.

Our summary of values and valuation certificates are attached.

Yours faithfully, For and on behalf of Savills Valuation and Professional Services Limited AnthonyCKLau MHKIS MRICS RPS(GP) Director

Note: Mr. Anthony C K Lau is a qualified valuer and has over 18 years’ post qualification experience of valuing properties in both Hong Kong and the PRC.

— 187 — APPENDIX III PROPERTY VALUATION REPORT

SUMMARY OF VALUES

Capital value in existing state as at No. Property 28 February 2011 (HK$)

GroupI—Property held by the SOCAM Group for sale in the PRC

1. Various residential, office and retail 1,083,000,000 units and car parking spaces and other ancillary facilities of Creative Concepts Center, No. 388 Xinhua Road, Yuzhong District, Chongqing, PRC

Sub-total: 1,083,000,000

Group II — Property held by the SOCAM Group for investment in the PRC

2. Shama Luxe, 1,555,000,000 No.18 of 168 Nong Shunchang Road, Luwan District, Shanghai, PRC

Sub-total: 1,555,000,000

Group III — Properties held by the SOCAM Group for owner-occupation in the PRC

3. An industrial complex located at 27,200,000 Xikou Road, Xikou Town, Huaying, Sichuan Province, PRC

— 188 — APPENDIX III PROPERTY VALUATION REPORT

Capital value in existing state as at No. Property 28 February 2011 (HK$)

4. Two parcels of land located at 41,700,000 Shuanghe Town, Huaying, Sichuan Province, PRC

Sub-total: 68,900,000

Group IV — Properties held by the SOCAM Group under development in the PRC

5. Chengdu Orient Home Project, 1,132,000,000 No. 139 Section 1 of Jiefang Road North, Jinniu District, Chengdu, Sichuan Province, PRC

6. Haomen Apartment, 57,000,000 No. 15 Minsheng Road, Jiefengbei Area, Yuzhong District, Chongqing, PRC

7. Phase I of Shenyang Project, 1,496,000,000 West of Bailongjiang Street, Huanggu District, Shenyang, Liaoning Province, PRC

— 189 — APPENDIX III PROPERTY VALUATION REPORT

Capital value in existing state as at No. Property 28 February 2011 (HK$)

8. Parc Oasis (formerly known as 1,476,000,000 Chuangyi Centre), West of Wushan Road and North of Municipal No.113 Middle School, Tianhe District, Guangzhou, Guangdong Province, PRC

9. Qianxinian Building, 190,000,000 Jialing Third Village, Jiangbei District, Chongqing, PRC

Sub-total: 4,351,000,000

Group V — Property held by the SOCAM Group for owner-occupation in Hong Kong

10. Lot Nos. 609A, 610, 26,000,000 611 and 612F in DD85 Po Kat Tsai, Fanling, New Territories, Hong Kong

Sub-total: 26,000,000

— 190 — APPENDIX III PROPERTY VALUATION REPORT

Capital value in existing state as at No. Property 28 February 2011 (HK$)

Group VI — Property held by the SOCAM Group for sale in Hong Kong

11. 228 Carparking Spaces of 55,200,000 Bauhinia Garden, Tseung Kwan O, New Territories, Hong Kong

Sub-total: 55,200,000

Grand Total: 7,139,100,000

— 191 — APPENDIX III PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

GroupI—Property held by the SOCAM Group for sale in the PRC

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011

1. Various residential, The property comprises various residential, Portion of the HK$1,083,000,000 office and retail office and retail units and other ancillary retail units with units and car facilities of a composite development known as a total gross parking spaces and Creative Concepts Center. It was completed in floor area of other ancillary 2010. approximately facilities of 5,659.8 sq.m. Creative Concepts The total gross floor area of the property is (60,915 sq.ft.) Center, approximately 53,428.90 sq.m. (575,108 sq.ft.). is subject to No.388 Xinhua Breakdown of areas is listed as follows: various Road, Approximate tenancies with Yuzhong District, the latest one Gross Floor Area Chongqing, expiring on 28 PRC sq.m. sq.ft. August 2015 at a total monthly Residential 2,289.17 24,641 rental of Office 18,301.39 196,996 approximately Retail 21,022.34 226,284 RMB200,600. The remaining Car park 10,482.00 112,828 portion of the Ancillary facilities 1,334.00 14,359 property is vacant. Total 53,428.90 575,108

The land use rights of the property have been granted for various terms expiring on 28 November 2047 and 28 November 2057 for non-residential and residential uses respectively.

— 192 — APPENDIX III PROPERTY VALUATION REPORT

Notes:

1. Pursuant to four Real Estate Title Certificates issued by Chongqing Land Resources and Real Estate Management Bureau dated between 20 December 2010 and 22 December 2010, the land use rights of a parcel of land with a site area of approximately 4,581.30 sq.m. and the building ownership rights with a total gross floor area of approximately 85,121.65 sq.m. have been granted to Chongqing Hui Zheng Properties Co., Ltd. (“Chongqing Hui Zheng”), which is a wholly-owned subsidiary of the Company. Detail of the certificates are listed as follows:-

Site Area Gross Floor Certificate No. Date of Issuance (sq.m.) Area (sq.m.) Usage Expiry Date

101 Fang Di Zheng 2010 22 December 2010 10,482.11 Non-residential 28 November 2057 Zi Di No. 34822 101 Fang Di Zheng 2011 22 December 2010 21,022.34 Non-residential 28 November 2047 Zi Di No. 40186 4,581.30 101 Fang Di Zheng 2010 21 December 2010 23,529.46 Non-residential 28 November 2057 Zi Di No. 34824 101 Fang Di Zheng 2010 20 December 2010 30,087.74 Residential 28 November 2057 Zi Di No. 34825

According to Chongqing Hui Zheng, the expiry dates of the land use rights recorded in the Real Estate Title Certificates Fang Di Zheng 2010 Zi Di Nos. 34822 and 34824 should be corrected as 28 November 2047 in accordance with 101 מ the land use rights grant contract.

As advised by the SOCAM Group, the property comprises portions of the buildings with a total gross floor area of approximately 53,428.90 sq.m. as stated in the above Real Estate Title Certificates.

2. We have been provided with a legal opinion on the title to the property issued by Zhong Lun Law Firm, the Company’s PRC legal adviser, which contains, inter alia, the following information:

i. Chongqing Hui Zheng legally owns the property and is entitled to sell, lease, mortgage or otherwise dispose of the property subject to the relevant sales and mortgage of the property;

ii. portion of the property is subject to a mortgage in favour of the Industrial & Commercial Bank of China, Chongqing Yuzhong Branch; and

iii. the property is free from any seizures.

3. The property was also valued at RMB920,000,000 as of 31 December 2010.

— 193 — APPENDIX III PROPERTY VALUATION REPORT

Group II — Property held by the SOCAM Group for investment in the PRC

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011

2. Shama Luxe, The property comprises 100 residential units and Except for HK$1,555,000,000 No.18 of 168 Nong 100 carparking spaces of a serviced apartment portions of the Shunchang Road, development known as Shama Luxe. It was property with a Luwan District, completed in 2006. total gross floor Shanghai, area of PRC The total gross floor area of the property is approximately approximately 22,244.00 sq.m. (239,435 sq.ft.). 4,910.00 sq.m. Breakdown of the areas is listed as follows: which are Approximate vacant, the property is Gross Floor Area subject to sq.m. sq.ft. various tenancies with Residential 15,472.00 166,541 the latest one Car park 6,772.00 72,894 expiring in Total 22,244.00 239,435 March 2012 at a total monthly income of The land use rights of the property have been approximately granted for various terms expiring on 6 May RMB2,840,000. 2071 for residential use.

Notes: 1. Pursuant to 103 Shanghai Certificates of Real Estate Ownership issued by Shanghai Housing and Land Resources Administration Bureau, the building ownership rights of the property with a total gross floor area of approximately 16,826.33 sq.m. (including 100 residential units and 20 carparking spaces) have been granted to Peak Century Limited (“Peak Century”), Morning Success Limited (“Morning Success”) and Unique Winner Limited (“Unique Winner”), which are wholly-owned subsidiaries of the Company, for a term expiring on 6 May 2071 for residential use. 2. According to the 80 Shanghai Municipality Commodity House Sale Contracts dated 30 December 2010, Morning Success and Unique Winner have agreed to purchase 80 carparking spaces with a total gross floor area of approximately 5,417.60 sq.m. According to the Documents, as of 28 February 2011, the ownership of such carparking spaces remained under the name of the seller and should be transferred under the name of the buyers in accordance with the relevant sale contracts. 3. We have been provided with a legal opinion on the title to the property issued by Zhong Lun Law Firm, the Company’s PRC legal adviser, which contains, inter alia, the following information:

i. Peak Century, Morning Success and Unique Winner legally own the property and are entitled to sell, lease, mortgage or otherwise dispose of the property subject to the relevant mortgage of the property;

ii in respect of the 80 carparking spaces, the seller is obligated to transfer the ownership of such carparking spaces to Morning Success and Unique Winner respectively in accordance with the sale contracts and Morning Success and Unique Winner were entitled to the rights and interests as provided under the sale contracts.

iii. portion of the property is subject to a mortgage in favour of DBS Bank Limited; and

iv. the property is free from any seizures.

4. The property was also valued at RMB1,280,000,000 as of 31 December 2010.

— 194 — APPENDIX III PROPERTY VALUATION REPORT

Group III — Properties held by the SOCAM Group for owner-occupation in the PRC

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011

3. An industrial The property comprises 21 parcels of land with The property is HK$27,200,000 complex located at a total site area of approximately 308,494.03 vacant. Xikou Road, sq.m. (3,320,630 sq.ft.) on which various Xikou Town, buildings completed in between 1960s and 2000s Huaying, are erected. Sichuan Province, PRC The buildings comprise various workshops, warehouses and other ancillary buildings with a total gross floor area of approximately 37,104.57 sq.m. (399,394 sq.ft.).

The land use rights of the property have been granted for various terms. (refer to Note 1)

Notes:

1. Pursuant to 21 State-owned Land Use Certificates, the land use rights of 21 parcels of land with a total site area of 308,494.03 sq.m. have been granted to Guang’an Teng Hui Cement Co., Ltd. (“Guang’an Teng Hui”), a 45% owned jointly controlled entity of the SOCAM Group. Detail of the certificates are listed as follows:-

Site Area Certificate No. (sq.m.) Usage Expiry Date

Guang Shi Guo Yong (2004) 04334 39.10 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04335 30.00 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04336 373.80 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04337 21,014.38 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04338 1,547.33 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04339 49.60 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04340 211,916.70 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04341 2,093.50 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04342 2,750.50 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04343 3,450.00 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04344 1,137.21 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04345 207.38 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04346 4,400.00 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04347 38,266.58 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04349 10,698.42 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04350 83.70 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04351 379.70 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04352 843.12 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04353 6,117.44 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04354 2,785.12 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04355 310.45 Industrial 7 April 2053

— 195 — APPENDIX III PROPERTY VALUATION REPORT

2. Pursuant to 34 Building Ownership Certificates, the building ownership rights of various buildings of the property are vested in Guang’an Teng Hui. Detail of the certificates are listed as follows:-

Gross Floor Area Certificate No. (sq.m.)

Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01949 221.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01950 251.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01951 295.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01953 Unknown Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01955 324.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01956 1,403.21 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01957 1,297.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01958 2,418.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01959 554.00 (the gross floor area of one of the buildings is unknown.) Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01960 87.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01961 1,229.31 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01962 1,795.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01963 4,070.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01965 1,923.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01966 1,093.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01968 221.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01969 1,522.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01971 205.00 (The gross floor areas of two of the buildings are unknown.) Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01972 1,101.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 01973 84.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 02008 420.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 02009 2,996.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 02010 1,190.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 02011 1,038.00 (The gross floor area of one of the buildings is unknown.) Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 02012 179.00 (The gross floor areas of two of the buildings are unknown.) Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 02014 24.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 02015 2,569.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 02016 1,604.46 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 02017 1,498.00 (The gross floor areas of two of the buildings are unknown.) Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 02018 3,813.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 02020 2,983.00 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 02021 1,056.02 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 02022 1,164.30 Hua Ying Shi Fang Quan Zheng Xi Kou Zhen Zi Di No. 02023 333.48

As advised by the SOCAM Group, the property comprises portions of the buildings as stated in the above Building Ownership Certificates.

— 196 — APPENDIX III PROPERTY VALUATION REPORT

3. We have been provided with a legal opinion on the title to the property issued by Zhong Lun Law Firm, the Company’s PRC legal adviser, which contains, inter alia, the following information:

i. Guang’an Teng Hui legally owns the property and is entitled to sell, lease, mortgage or otherwise dispose of the property subject to the Company’s rights and interest in the property mentioned in Note 3(iii) below;

ii. the property is free from any seizures; and

iii. the Company enjoys the rights and interests of the property subject to the Joint Venture Agreement and other agreements between the joint venture parties.

— 197 — APPENDIX III PROPERTY VALUATION REPORT

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011

4. Two parcels of The property comprises 2 parcels of land with a The property is HK$41,700,000 land located at total site area of approximately 947,881.80 vacant. Shuanghe Town, sq.m. (10,203,000 sq.ft.). Huaying, Sichuan Province, The land use rights of the property have been PRC granted for two concurrent terms expiring on 7 April 2053.

Notes:

1. Pursuant to two State-owned Land Use Certificates, the land use rights of two parcels of land with a total site area of 947,881.80 sq.m. have been granted to Guang’an Teng Hui Cement Co., Ltd. (“Guang’an Teng Hui”), a 45% owned jointly controlled entity of the SOCAM Group. Detail of the certificates are listed as follows:-

Certificate No. Site Area (sq.m.) Usage Expiry Date

Guang Shi Guo Yong (2004) 04328 670,059.60 Industrial 7 April 2053 Guang Shi Guo Yong (2004) 04323 277,822.20 Industrial 7 April 2053

2. We have been provided with a legal opinion on the title to the property issued by Zhong Lun Law Firm, the Company’s PRC legal adviser, which contains, inter alia, the following information:

ii. the property is free from any seizures; and

iii. the Company enjoys the rights and interests of the property subject to the Joint Venture Agreement and other agreements between the joint venture parties.

— 198 — APPENDIX III PROPERTY VALUATION REPORT

Group IV — Properties held by the SOCAM Group under development in the PRC

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011

5. Chengdu Orient The property comprises two parcels of land with The property is HK$1,132,000,000 Home Project, a total net site area of approximately 57,397.26 under No. 139 Section 1 sq.m. (617,824 sq.ft.). construction. of Jiefang Road North, The property is planned to be developed into a Jinniu District, large-scale development with a mixture of Chengdu, residential, serviced apartment, office and retail Sichuan Province, uses. Kindergarten, community centre and car PRC park will be provided within the development.

Upon completion, the proposed development will provide a total gross floor area of approximately 467,826.11 sq.m. (5,035,679 sq.ft.). Breakdown of areas is listed as follows:

Approximate

Gross Floor Area

sq.m. sq.ft.

Residential 203,812.00 2,193,832

Serviced Apartment 33,020.00 355,427

Office 32,966.00 354,846

Retail 45,508.00 489,848

Ancillary Facilities 5,384.00 57,953

Car park 147,136.11 1,583,773

Total 467,826.11 5,035,679

The proposed development is scheduled for completion in the 4th quarter of 2014.

The land use rights of the property have been granted for various terms. (refer to Note 1)

— 199 — APPENDIX III PROPERTY VALUATION REPORT

Notes:

1. Pursuant to three State-owned Land Use Certificates issued by Chengdu Land Resources Bureau dated 25 June 2010, the land use rights of 3 parcels of land with a total site area of 57,397.26 sq.m. have been granted to Chengdu Xianglong Real Estate Co., Ltd (“Chengdu Xianglong”), which is a wholly-owned subsidiary of the Company. Detail of the certificates are listed as follows:-

Site Area Certificate No. Date of Issuance (sq.m.) Usage Expiry Date

Cheng Guo Yong (2010) 25 June 2010 51,197.15 Residential and Residential: 18 May 2078 Di No. 556 Commercial Commercial: 18 May 2048

Cheng Guo Yong (2010) 25 June 2010 3,600.05 Education 18 May 2058 Di No. 557 (Kindergarten)

Cheng Guo Yong (2010) 25 June 2010 2,600.06 Public Facilities 18 May 2058 Di No. 558 (Community Centre) 2. Pursuant to a Planning Permit for Construction Land — Di Zi Di No. 510106201020151 issued by Chengdu Planning and Management Bureau dated 27 May 2010, the project on the property with a site area of approximately 116,954.14 sq.m. (including net site area: 57,397.26 sq.m.; road: 19,069.71 sq.m.; landscape: 28,724.95 sq.m.; and others: 11,762.22 sq.m.) is in compliance with the urban planning requirements.

3. As advised by the SOCAM Group, there was an estimated construction cost of approximately RMB1,982,000,000 to be spent to complete the proposed development as at the Valuation Date. In undertaking our valuation, we have taken into account the said amount.

4. The capital value of the property as if completed as at 28 February 2011 was RMB4,257,000,000.

5. We have been provided with a legal opinion on the title to the property issued by Zhong Lun Law Firm, the Company’s PRC legal adviser, which contains, inter alia, the following information:

i. Chengdu Xianglong legally owns the property and is entitled to sell, lease, mortgage or otherwise dispose of the property; and

ii. the property is free from any seizures.

6. The property was also valued at RMB935,000,000 as of 31 December 2010.

— 200 — APPENDIX III PROPERTY VALUATION REPORT

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011

6. Haomen Apartment, The property comprises a parcel of land with a As at the HK$57,000,000 No. 15 Minsheng site area of approximately 560.10 sq.m. (6,029 Valuation Date, Road, sq.ft.) on which an uncompleted composite the property Jiefengbei Area, development is erected. was vacant. Yuzhong District, Chongqing, The property will be developed for residential, PRC retail and car parking uses. Upon completion, the proposed development will provide a total gross floor area of approximately 13,070.00 sq.m. (140,686 sq.ft.). Breakdown of areas is listed as follows:-

Approximate Gross Floor Area

sq.m. sq.ft.

Residential 9,800.00 105,487

Retail 2,180.00 23,466

Carpark 1,090.00 11,733

Total 13,070.00 140,686

The land use rights of the property have been granted for terms expiring on 20 April 2045 and 20 April 2055 for commercial and residential uses respectively.

Notes:

1. Pursuant to the Real Estate Title Certificate No. 101 Fang Di Zheng D2007 Zi Di No. 022 issued by Chongqing Land Resources and Real Estate Management Bureau dated 15 June 2007, the land use rights of a parcel of land with a site area of 560.10 sq.m. have been granted to Chongqing Fengde Haomen Co., Ltd. (“Chongqing Haomen”), which is a wholly-owned subsidiary of the Company, for terms due to expire on 20 April 2045 and 20 April 2055 for commercial and residential uses respectively.

2. Pursuant to an Approval Letter for Construction Land — Yu Zhong Guo Tu Jian Zi (2007) Di No. 11 issued by Chongqing Planning Bureau dated 18 May 2007, a parcel of land with a site area of approximately 560.10 sq.m. was permitted for construction.

3. Pursuant to the Confirmation Letter issued by the Land Reserve Management Centre of Yu Zhong District, Chongqing (“Land Reserve Management Centre”) on 4 January 2011, the Land Reserve Management Centre requests Chongqing Haomen to deliver the property to them on 5 January 2011.

As advised by the SOCAM Group, the total consideration for the delivery of the property was approximately RMB48,000,000.

4. We have been provided with a legal opinion on the title to the property issued by Zhong Lun Law Firm, the Company’s PRC legal adviser, which contains, inter alia, the following information:

i. Chongqing Haomen legally owns the property and is entitled to sell, lease, mortgage or otherwise dispose of the property; and

ii. the property is free from any seizures.

— 201 — APPENDIX III PROPERTY VALUATION REPORT

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011

7. Phase I of The property comprises a parcel of land with a The property is HK$1,496,000,000 Shenyang Project, site area of approximately 26,045.00 sq.m. under West of (280,348 sq.ft.) on which a mixed development construction. Bailongjiang is being constructed. Street, Huanggu District, The proposed development is designated for Shenyang, residential, serviced apartment, retail, office and Liaoning Province, car parking uses. PRC Upon completion, the proposed development will provide a total gross floor area of approximately 267,717.00 sq.m. (2,881,707 sq.ft.). Breakdown of areas is listed as follows:

Approximate Gross Floor Area

sq.m. sq.ft.

Residential 72,289.00 778,119

Serviced Apartment 45,663.00 491,517

Office 44,590.00 479,967

Retail 62,329.00 670,909

Car park 27,307.00 293,933

Ancillary 15,539.00 167,262

Total 267,717.00 2,881,707

The proposed development is scheduled to be completed in the 4th quarter of 2011.

The land use rights of the property have been granted for a term expiring on 15 May 2048 and 15 May 2058 for commercial and residential uses respectively.

Notes: 1. Pursuant to a State-owned Land Use Certificate — Shen Yang Guo Yong (2008) Di No. 0151 issued by Shenyang Municipal Government dated 15 July 2008, the land use rights of a parcel of land with a site area of approximately 26,045.00 sq.m. have been granted to Shenyang Hua Hui Properties Co., Ltd. (“Huahui”), which is a wholly-owned subsidiary of the Company, for a term due to expire on 15 May 2048 and 15 May 2058 for commercial and residential uses respectively. 2. Pursuant to a Planning Permit for Construction Land — Shen Gui Tu Zheng Zi 2008 Nian No. 0027 issued by Shenyang Plan and Land Resources Bureau dated 26 March 2008, a parcel of land with a site area of approximately 29,174.00 sq.m. was permitted for construction. The construction scale is approximately 116,700.00 sq.m. 3. Pursuant to a Notification about Content Modification of Planning Permit for Construction Land — Shen Gui Tu Zheng Fu Geng Zi 2008 Nian No. 0019 issued by Shenyang Plan and Land Resources Bureau dated 8 September 2008, the site area as stated in Note (2) was changed to 26,045.00 sq.m. The construction scale was also changed to 298,267.00 sq.m.

— 202 — APPENDIX III PROPERTY VALUATION REPORT

4. Pursuant to two Planning Permits for Construction Works — Jian Zi Di Nos. 210100200800170 and 210100200900005 issued by Shenyang Plan and Land Resources Bureau dated 17 October 2008 and 13 January 2009 respectively, the approved construction scale is approximately 166,427.00 sq.m.

5. Pursuant to three Commencement Permits for Construction Works — Nos. 210104200811280201, 210104200905080101 and 210104200905080201 issued by Shenyang Town and Rural Development Committee dated 28 November 2008 and 8 May 2009, the approved construction scale of the property is approximately 166,427.00 sq.m.

6. Pursuant to two Pre-sale Permits — Shen Fang Yu Shou Di Nos. 09298 and 10029 issued by Shenyang Real Estate Bureau dated 15 September 2009 and 11 March 2010 respectively, the total approved pre-sale area is approximately 95,294.51 sq.m.

7. Portions of the property with a total gross floor area of approximately 32,965.00 sq.m. have been contracted to be sold for a total consideration of approximately RMB264,000,000, which have been taken into account in our valuation.

8. As advised by the Company, there was an estimated construction cost of approximately RMB797,000,000 to be spent to complete the proposed development as at the Valuation Date. In undertaking our valuation, we have taken into account the said amount.

9. The capital value of the property as if completed as at 28 February 2011 was RMB2,591,000,000.

10. We have been provided with a legal opinion on the title to the property issued by Zhong Lun Law Firm, the Company’s PRC legal adviser, which contains, inter alia, the following information:

i. Huahui legally owns the property and is entitled to sell, lease, mortgage or otherwise dispose of the property subject to relevant sales and mortgage of the property;

ii. portions of the property are subject to a mortgage in favour of the Industrial Bank, Shenyang Sub-branch; and

iii. the property is free from any seizures.

11. The property was also valued at RMB 1,244,000,000 as of 31 December 2010.

— 203 — APPENDIX III PROPERTY VALUATION REPORT

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011

8. Parc Oasis The property comprises a parcel of land with a The property is HK$1,476,000,000 (formerly known as net site area of approximately 10,000.00 sq.m. under Chuangyi Centre), (107,640 sq.ft.) on which a residential construction. West of Wushan development is being constructed. Road and North of Municipal The proposed development comprises 1 block of No.113 Middle 32-storey serviced apartment, 3 blocks of School, 40-storey residential buildings and ancillary Tianhe District, facilities including a 4-storey basement for car Guangzhou, parking spaces, 1 clubhouse and 1 primary Guangdong Province, school with a total gross floor area of PRC approximately 116,559.00 sq.m. (1,254,642 sq.ft.). Breakdown of areas is listed as follows:

Approximate Gross Floor Area

sq.m. sq.ft.

High-rise Residential 51,620.00 555,638

Serviced Apartment 20,461.00 220,242

Retail 1,599.00 17,212

Ancillary 7,323.00 78,825

Car park 35,556.00 382,725

Total 116,559.00 1,254,642

The proposed development is scheduled for completion in the 4th quarter of 2011.

The land use rights of the property had been granted for various terms. (refer to Notes 1 and 2)

Notes:

1. Pursuant to a State-owned Land Use Rights Certificate — Sui Fu Guo Yong (1999) Zi Di No. Te 037 issued by Guangzhou Municipal Government dated 11 February 1999, the land use rights of a parcel of land with a net site area of 10,000.00 sq.m. have been granted to Guangzhou Infotach Property Development Co., Ltd. (“Infotach”), which is a wholly-owned subsidiary of the Company, for terms of 40 and 70 years for commercial, tourism and entertainment uses and residential use respectively.

2. Pursuant to a Contract for Grant of Land Use Rights — Sui Guo De Chu he [2001] No. 295 entered into between Guangzhou Municipal Land Resources and Housing Administrative Bureau and Infotach dated 9 October 2001, the land use rights of a parcel of land with a gross site area of approximately 14,753.00 sq.m. have been granted to Infotach for terms of 40, 50 and 70 years for commercial, tourism and entertainment uses, industrial and other uses and residential use respectively at a total consideration of RMB81,353,436.

3. Pursuant to a Certificate of Other Rights of Land — 09 Deng Ji 01066624 dated 2 December 2009 issued by Guangzhou Municipal Land Resources and Housing Administrative Bureau, the land use rights with a net site area of 10,000.00 sq.m. have been mortgaged to Agricultural Bank of China (Guangzhou Yangcheng Branch) and China Everbright Bank (Guangzhou Donghuan Branch).

— 204 — APPENDIX III PROPERTY VALUATION REPORT

4. Pursuant to an Agreement Letter entered into between Guangzhou Municipal Education Bureau of Tianhe District (Party A), Guangzhou Municipal Tianhe Science Park Construction Co., Ltd (Party B) and Infotach (Party C) dated 5 December 2008, the three parties have reached the following agreements concerning the construction of a primary school:

(i) Party B has agreed to provide the parcel of land located to the west of Wushan Road and the north of No.113 Middle School with a site area of 11,395.947 sq.m. to Party C for the construction of Chuangyi Primary School construction. The construction of the Primary School is to be financed by Party C.

(ii) Party B and Party C have agreed to bestow the Primary School to Party A upon completion.

5. Pursuant to an Approval Letter of Construction Detailed Planning — Sui Gui Pi (2008) No. 507 issued by Guangzhou Municipal Urban Planning Bureau on 19 December 2008, the detailed construction planning of Chuangyi Centre and Chuangyi Primary School is approved.

6. Pursuant to a Planning Permit for Construction Land — (91) Sui Cheng Gui Di No. 0854 Issued by Guangzhou Municipal Planning Bureau dated 12 March 1992, a parcel of land was permitted for construction.

7. Pursuant to three Planning Permits for Construction Works — Sui Gui Jian Zheng (2009) Nos. 2272, 2924 and 2926 issued by Guangzhou Municipal Planning Bureau dated 4 August 2009 and 18 September 2009 respectively, the approved construction scale is approximately 119,392.00 sq.m..

8. Pursuant to two Commencement Permits for Construction Works — Nos. 440106200911230101 and 440106200911260201 issued by Guangzhou Municipal Construction Committee dated 30 November 2009, the approved construction scale of the property is approximately 119,392.00 sq.m..

9. As advised by the Company, there was an estimated construction cost of approximately RMB503,000,000 to be spent to complete the proposed development as at the Valuation Date. In undertaking our valuation, we have taken into account the said amount.

10. The capital value of the property as if completed as at 28 February 2011 was RMB2,192,000,000.

11. We have been provided with a legal opinion on the title to the property issued by Zhong Lun Law Firm, the Company’s PRC legal adviser, which contains, inter alia, the following information:

i. Infotach legally owns the property and is entitled to sell, lease, mortgage or otherwise dispose of the property; and

ii. the property is free from any seizures.

12. The property was also valued at RMB1,234,000,000 as of 31 December 2010.

— 205 — APPENDIX III PROPERTY VALUATION REPORT

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011

9. Qianxinian The property comprises a parcel of land with a The property is HK$190,000,000 Building, site area of approximately 3,181.80 sq.m. vacant and pending for Jialing Third (34,249 sq.ft.) on which a commercial construction. Village, development is proposed to be built. Jiangbei District, Chongqing, The proposed development will be designated PRC for commercial, office and car parking uses. Upon completion, the proposed development will provide a total gross floor area of approximately 35,431.00 sq.m. (381,379 sq.ft.). Breakdown of areas is listed as follows:

Approximate Gross Floor Area

sq.m. sq.ft.

Commercial 2,660.00 28,632

Office 28,422.00 305,934

Car park 4,349.00 46,813

Total 35,431.00 381,379

The construction of the proposed development is scheduled for commencement in 2010 and for completion in the 4th quarter of 2012.

The land use rights of the property have been granted for a term expiring on 18 March 2045 for commercial services uses.

Notes:

1. Pursuant to a Real Estate Ownership Certificate No. 103 Fang Di Zheng (2007) Di No. 23310 issued by Chongqing Land Resources and Real Estate Management Bureau dated 22 November 2007, the land use rights of a parcel of land with a site area of 3,181.80 sq.m. have been granted to Chongqing Fengde Zunding Properties Co., Ltd. (“Chongqing Zunding”), which is a wholly-owned subsidiary of the Company, for a term due to expire on 18 March 2045 for commercial services uses.

2. Pursuant to a Planning Permit for Construction Land — Di Zi Di Jian No. 500105200800882 issued by Chongqing Planning Bureau dated 31 December 2008, a parcel of land with a site area of approximately 2,609.00 sq.m. was permitted for construction.

3. As advised by the Company, there was an estimated construction cost of RMB80,000,000 to be spent to complete the proposed development as at the Valuation Date. In undertaking our valuation, we have taken into account the said amount.

4. As advised by the Company, a portion of the property with a total gross floor area of approximately 926.33 sq.m. has been pre-sold as at the Valuation Date under various sales and purchases agreements at a total consideration of approximately RMB7,700,000. We have taken into account the said consideration in our valuation.

— 206 — APPENDIX III PROPERTY VALUATION REPORT

5. The capital value of the property as if completed as at 28 February 2011 was RMB285,000,000.

6. We have been provided with a legal opinion on the title to the property issued by Zhong Lun Law Firm, the Company’s PRC legal adviser, which contains, inter alia, the following information:

i. Chongqing Zunding legally owns the property and is entitled to sell, lease, mortgage or otherwise dispose of the property subject to relevant sales of the property; and

ii. the property is free from any seizures.

7. The property was also valued at RMB160,000,000 as of 31 December 2010.

— 207 — APPENDIX III PROPERTY VALUATION REPORT

Group V — Property held by the SOCAM Group for owner-occupation in Hong Kong

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011

10. Lot Nos. 609A, The property comprises four pieces of The property is HK$26,000,000 610, 611 and 612F contiguous agricultural lots with a total site area owner-occupied in Demarcation of approximately 120,395 sq ft (11,185 sq m). as workshop. District No. 85, Po Kat Tsai, The property is occupied for workshop purposes Fanling, with a number of temporary structures erected New Territories, thereon. Hong Kong Lot Nos. 609A, 610, 611 and 612F in Demarcation District No. 85 is held under a Block Government Lease for a term which expired on 27 June 1997 and had been extended upon expiry until 30 June 2047 without premium but at a revised annual Government rent equivalent to 3 percent of the rateable value for the time being of the lot.

Notes:

1. The registered owner of the property is Shui On Plant and Equipment Services Limited, which is a wholly-owned subsidiary of the Company.

2. As per our inspection of the property, there are some temporary structures erected on the property for workshop use which are in breach of the Block Government Lease unless a wavier from the Government is obtained. However, we understand that this use was reckoned as an existing use which is now the subject of a short term waiver application under Government’s consideration. Our valuation is prepared on the assumption that the workshop use on the property is permitted by the Government.

3. The property lies within an area zoned “Recreation” on Lung Yeuk Tau and Kwan Tei South Outline Zoning Plan.

— 208 — APPENDIX III PROPERTY VALUATION REPORT

Group VI — Property held by the SOCAM Group for sale in Hong Kong

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011

11. 228 Carparking Bauhinia Garden is a residential development The property is HK$55,200,000 Spaces in the comprising 8 residential towers with ancillary let on monthly Carpark Building commercial and carparking facilities under the basis yielding of Bauhinia Private Sector Participation Scheme (PSPS). The an average Garden, 11 Tong development was completed in 2001. gross monthly Chun Street, income of Tseung Kwan O, The property comprises 228 carparking spaces approximately Sai Kung, on the Ground to the 3rd Floor of a stand-alone 58,000 for the New Territories, Carpark Building period from Hong Kong March 2010 to Tseung Kwan O Town Lot No. 62 is held under February 2011. Portions of Tseung New Grant No. 9342 for a term of 50 years Kwan O Town Lot from 26 August 1998 at an annual Government No. 62. rent equivalent to 3% of the rateable value for the time being of the lot.

Notes:

1. The property comprises the following carparking spaces:

Floor Carpark No.

Ground Floor 1-27 1st Floor 1-55 2nd Floor 1-79 3rd Floor 1-67

2. The registered owner of the property is Jade City International Limited, which is a wholly-owned subsidiary of the Company.

3. The property is subject to a Deed of Guarantee by the Bank of East Asia, Limited in favour of The Director of Housing.

4. The property lies within an area zoned “Residential (Group A)” on Tseung Kwan O Outline Zoning Plan.

— 209 — APPENDIX IV GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This Composite Offer Document includes particulars given in compliance with the Takeovers Code for the purpose of giving information with regard to the Offeror and the future intentions of the Offeror regarding the Group.

The directors of the Offeror jointly and severally accept full responsibility for the accuracy of the information contained in this Composite Offer Document (other than those relating to the Company, its associates and parties acting in concert with it) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this Composite Offer Document (other than those expressed by the Company, its associates and parties acting in concert with it) have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Offer Document, the omission of which would make any statements in this Composite Offer Document misleading.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this Composite Offer Document (other than those relating to the Offeror, its associates and parties acting in concert with it) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this Composite Offer Document (other than those expressed by the Offeror, its associates and parties acting in concert with it) have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Offer Document, the omission of which would make any statements in this Composite Offer Document misleading.

2. SHARE CAPITAL OF THE COMPANY

The authorised and issued share capital of the Company as at the Latest Practicable Date were as follows:

Number of Shares Amount HK$

Ordinary shares of HK$1.00 each Sch.II(3)

Authorised: Balance as at the Latest Practicable Date 1,000,000,000 1,000,000,000

Issued and fully paid: Balance as at 31 December 2010 489,164,786 489,164,786 Shares issued pursuant to exercise of Share Options 133,000 133,000 Balance as at the Latest Practicable Date 489,297,786 489,297,786

All of the Shares currently in issue rank pari passu in all respects with each other, including the Sch.II(3) rights in respect of dividend, voting and capital. The Shares are listed and traded on the main board of the Stock Exchange.

— 210 — APPENDIX IV GENERAL INFORMATION

The Company has issued 133,000 Shares pursuant to the exercise of Share Options by the Sch.II(4) Optionholders in accordance with the Share Option Scheme since 31 December 2010, being the end of its last financial year, up to the Latest Practicable Date.

The Company has granted Share Options to the Directors and eligible employees of the Group Sch.II(5) pursuant to the Share Option Scheme from time to time. As at the Latest Practicable Date, the Company had outstanding Share Options to subscribe for a total of 37,514,000 Shares, details of which are set out below:

Number of Period during which Shares subject Subscription Share Options to the Share price per outstanding Options Date of grant Share are exercisable outstanding Notes HK$

1-8-2006 14.00 1-2-2007 to 3,128,000 1 31-7-2011

14-6-2007 20.96 14-12-2007 to 2,654,000 1 13-6-2012

14-6-2007 20.96 14-12-2008 to 600,000 2 13-6-2012

7-5-2008 19.76 7-11-2008 to 3,190,000 1 6-5-2013

7-5-2008 19.76 7-11-2009 to 300,000 2 6-5-2013

7-5-2008 19.76 7-5-2011 to 3,000,000 3 and 6 6-5-2018

9-4-2009 7.63 9-10-2009 to 3,682,000 1 8-4-2014

9-4-2009 7.63 9-4-2012 to 3,000,000 3 8-4-2019

5-6-2009 11.90 3-1-2010 to 4,484,000 4 2-1-2012

5-6-2009 11.90 1-7-2010 to 1,270,000 4 13-6-2012

5-6-2009 11.90 7-5-2011 to 1,236,000 4 and 7 6-5-2013

—211— APPENDIX IV GENERAL INFORMATION

Number of Period during which Shares subject Subscription Share Options to the Share price per outstanding Options Date of grant Share are exercisable outstanding Notes HK$

12-4-2010 12.22 12-10-2010 to 6,470,000 1 11-4-2015

12-4-2010 12.22 12-4-2013 to 4,500,000 5 11-4-2020

37,514,000

Notes:

(1) These Share Options shall vest in 5 tranches in accordance with the following vesting schedule:

(2) These Share Options shall vest in 4 tranches in accordance with the following vesting schedule after the satisfaction of the performance conditions over a period of 18 months:

40%: 18 months after the date of grant 20%: 2nd anniversary of the date of grant 20%: 3rd anniversary of the date of grant 20%: 4th anniversary of the date of grant

(3) These Share Options are granted to certain executive Directors only and may vest, in whole or in part, on the respective vesting dates depending on the performance of the Company’s Shares as compared with the change in the total return index of the Hang Seng Index over a performance period of 3 years.

(4) These Share Options shall vest, in whole or in part, on the respective vesting dates depending on the appraisal of the property development team performance and individual performance of the grantees over a performance period of 3 years.

(5) These Share Options are granted to certain executive Directors only and may vest, in whole or in part, on the vesting date depending on the Company’s performance during the three financial years ending 31 December 2012, to be measured based on a range of specific performance criteria/targets that the grantees are required to achieve during the said 3-year performance period for creating shareholder value, which include return on equity, free cash flow and risk management, achievement of strategic goals, financial and operational performance targets.

(6) The Board has reviewed the vesting recommendation by the Remuneration Committee and resolved that there should be no vesting for any of these Share Options on the vesting date of 7 May 2011 since the total shareholder return of the Shares for the 3 financial years ended 31 December 2010 was negative. Accordingly, all these Share Options shall lapse on 7 May 2011.

(7) The Board has reviewed the vesting recommendation by the Remuneration Committee based on the appraisal of the team performance and individual performance of the grantees for the 3 financial years ended 31 December 2010 and resolved that these Share Options shall vest to the extent of 992,000 Shares on the vesting date of 7 May 2011. Accordingly, part of these Share Options to subscribe for 244,000 Shares shall lapse on 7 May 2011.

— 212 — APPENDIX IV GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, there were no outstanding options, warrants or conversion rights affecting or convertible into Shares.

3. DISCLOSURE OF INTERESTS

(a) Interest of the Offeror, its directors and parties acting in concert with it, in the Company

As at the Latest Practicable Date, details of the interest in Shares held by the Offeror, its directors and parties acting in concert with it were as follows:

As at the Latest Practicable Date Number of Shares Approx % Sch 1-2

Mr. Lo Hong Sui, Vincent and the Offeror (Notes 1, 182,293,000 37.26 2 and 3) (Notes1&2) Other parties acting in concert with the Offeror Mr. Wong Yuet Leung, Frankie (Notes 4, 5 and 6) 800,000 0.16 Mr. Choi Yuk Keung, Lawrence (Notes 4 and 7) 540,000 0.11 Mrs. Chan Lo Hung Suen, Annie (Notes 8 and 10) 274,300 0.06 Ms. Lo Wai Duen, Gwen (Notes 9 and 10) 12,000 0.002

Notes:

(1) These interests comprise 181,981,000 Shares beneficially owned by the Offeror and 312,000 Shares TC Sch I para 2 beneficially owned by Ms. Loletta Chu (“Mrs. Lo”), the spouse of Mr. Lo Hong Sui, Vincent. Of the Sch 1-2 181,981,000 Shares beneficially owned by the Offeror, 166,148,000 Shares are held by the Offeror itself and 15,833,000 Shares are held by Shui On Finance Company Limited, an indirect wholly-owned subsidiary of the Offeror. The Offeror is owned by the Bosrich Unit Trust, the trustee of which is Bosrich Holdings (PTC) Inc. (“Bosrich”). The Bosrich Unit Trust is the property of a discretionary trust, of which Mr. Lo Hong Sui, Vincent is one of the discretionary beneficiaries (with other discretionary beneficiaries being family members of Mr. Lo Hong Sui, Vincent) and the founder of the trust, and HSBC International Trustee Limited (“HSBC Trustee”) is the trustee. Accordingly, Mr. Lo Hong Sui, Vincent, HSBC Trustee and Bosrich are deemed to be interested in such 181,981,000 Shares under the SFO.

(2) 312,000 Shares are beneficially owned by Mrs. Lo. Under the SFO, Mr. Lo Hong Sui, Vincent is deemed to be interested in such Shares and both Mr. Lo Hong Sui, Vincent and Mrs. Lo are also deemed to be interested in 181,981,000 Shares mentioned in note (1) above.

(3) Mr. Lo Hong Sui, Vincent, a director of the Offeror, is also a director of the Company and various members of the Group.

(4) Each of Mr. Wong Yuet Leung, Frankie and Mr. Choi Yuk Keung, Lawrence holds interests in the Share Options granted by the Company under the Share Option Scheme, details of which are set out in item 3(b)(iii) below.

(5) Mr. Wong Yuet Leung, Frankie also holds a call option granted by the Offeror in respect of 1,600,000 Shares as part of the incentive reward to his services to the Company, details of which are set out in item 3(b)(iv) below.

— 213 — APPENDIX IV GENERAL INFORMATION

(6) Mr. Wong Yuet Leung, Frankie, a director of the Offeror, is also a director of the Company and various members of the Group.

(7) Mr. Choi Yuk Keung, Lawrence, a director of the Offeror, is also a director of the Company and various members of the Group.

(8) These Shares are held by Maxiflow Global Limited, in which Mrs. Chan Lo Hung Suen, Annie, who is a sister of Mr. Lo Hong Sui, Vincent, has a beneficial interest.

(9) These Shares are beneficially owned by Ms. Lo Wai Duen, Gwen who is a sister of Mr. Lo Hong Sui, Vincent.

(10) According to Mrs. Chan Lo Hung Suen, Annie, the Shares that she is interested in were acquired in 2009. There had been no dealings in Shares by Mrs. Chan Lo Hung Suen, Annie from late 2009 until the Latest Practicable Date. Ms. Lo Wai Duen, Gwen does not recall when the Shares she is interested in were acquired. There had been no dealings by Ms. Lo Wai Duen, Gwen in last year until the Latest Practicable Date. Such shareholdings were informed to the Offeror recently. Disclosure, as such, has not been made in the previous announcements in relation to the Partial Offer and the Option Offer. The information had not previously been confirmed to the Offeror due to miscommunication during the flow of information between the Offeror and parties acting in concert with it previously.

Save as disclosed above, as at the Latest Practicable Date, none of the Offeror and its parties acting in concert with it owned or controlled or had any interest in the relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company.

(b) Interests of Directors in the Company

As at the Latest Practicable Date, the interests and short positions of the Directors and the Sch.II(2)(ii) chief executive of the Company in the Shares, underlying Shares and debentures of the Company 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 interests and short positions which they were taken or deemed to have been taken under such provisions of the SFO) or

— 214 — APPENDIX IV GENERAL INFORMATION

the Model Code for Securities Transactions by Directors of Listed Issuers or which were required to be entered in the register required to be kept under section 352 of the SFO were as follows:

(i) Long position in the Shares

Approximate percentage of the issued Number of Shares share capital Personal Family Other of the Name of Directors interests interests interests Total Company

37.26% 182,293,000 181,981,000 312,000 מ ,Mr. Lo Hong Sui Vincent (Note 4) (Note 1) (Note 2) 0.11% 540,000ממ Mr. Choi Yuk 540,000 Keung, Lawrence (Note 4) 0.16% 800,000ממ Mr. Wong Yuet 800,000 Leung, Frankie (Note 4) 0.01% 72,533 מ 72,533 מ ,Mr. Wong Kun To Philip (Note 3) 0.01% 32,000ממ Mr. Wong Fook 32,000 Lam, Raymond

Notes:

(1) These Shares are beneficially owned by Mrs. Lo. Under the SFO, Mr. Lo Hong Sui, Vincent is deemed to be interested in such Shares and both Mr. Lo Hong Sui, Vincent and Mrs. Lo are also deemed to be interested in the 181,981,000 Shares mentioned in note (2) below.

(2) These Shares are beneficially owned by the Offeror. Of these 181,981,000 Shares beneficially owned Sch.II(2)(ii) by the Offeror, 166,148,000 Shares are held by the Offeror itself and 15,833,000 Shares are held by Shui On Finance Company Limited, an indirect wholly-owned subsidiary of the Offeror. The Offeror is owned by the Bosrich Unit Trust, the trustee of which is Bosrich. The Bosrich Unit Trust is the property of a discretionary trust, of which Mr. Lo Hong Sui, Vincent is one of discretionary beneficiaries (with other discretionary beneficiaries being family members of Mr. Lo Hong Sui, Vincent) and the founder of the trust, and HSBC Trustee is the trustee. Accordingly, Mr. Lo Hong Sui, Vincent, Mrs. Lo, HSBC Trustee and Bosrich are deemed to be interested in such Shares under the SFO.

(3) These shares are beneficially owned by the spouse of Mr. Wong Kun To, Philip. Under the SFO, Mr. Wong Kun To, Philip is deemed to be interested in such Shares.

(4) Each of Mr. Lo Hong Sui, Vincent, Mr. Choi Yuk Keung, Lawrence and Mr. Wong Yuet Leung, Frankie is also a director of the Offeror.

— 215 — APPENDIX IV GENERAL INFORMATION

(ii) Short position in the Shares

Approximate percentage of the issued Number of Shares share capital Personal Family Other of the Name of Director interests interests interests Total Company

0.32% 1,600,000 1,600,000ממ ,Mr. Lo Hong Sui Vincent (Note)

Note: This short position represents the underlying Shares subject to the call option granted by the Offeror on 27 August 2002 to Mr. Wong Yuet Leung, Frankie as part of the incentive reward to his services to the Company. Mr. Lo Hong Sui, Vincent, Mrs. Lo, HSBC Trustee and Bosrich are deemed to have short position in these Shares under the SFO.

(iii) Share Options

As at the Latest Practicable Date, the following Directors had interests in the Share Options granted by the Company under the Share Option Scheme:

— 216 — APPENDIX IV GENERAL INFORMATION

Number Period during of Shares which Share subject to Subscription Options the Share Date of price per outstanding are Options Name of Directors grant Share exercisable outstanding HK$ Mr. Wong Yuet 1-8-2006 14.00 1-2-2007 to 2,000,000 Leung, Frankie 31-7-2011 (Note 2) 14-6-2007 20.96 14-12-2007 to 500,000 13-6-2012 7-5-2008 19.76 7-11-2008 to 500,000 6-5-2013 7-5-2008 19.76 7-5-2011 to 2,000,000 6-5-2018 9-4-2009 7.63 9-10-2009 to 750,000 8-4-2014 9-4-2009 7.63 9-4-2012 to 2,000,000 8-4-2019 12-4-2010 12.22 12-10-2010 to 350,000 11-4-2015 12-4-2010 12.22 12-4-2013 to 1,000,000 11-4-2020 Mr. Wong Kun To, 5-6-2009 11.90 3-1-2010 to 1,602,000 Philip 2-1-2012 5-6-2009 11.90 1-7-2010 to 88,000 13-6-2012 12-4-2010 12.22 12-10-2010 to 350,000 11-4-2015 12-4-2010 12.22 12-4-2013 to 1,500,000 11-4-2020

— 217 — APPENDIX IV GENERAL INFORMATION

Notes:

(1) The vesting of all Share Options granted to the Directors is subject to the vesting schedules and/or performance conditions as set out in their respective offer letters.

(2) Each of Mr. Choi Yuk Keung, Lawrence and Mr. Wong Yuet Leung, Frankie is also a director of the Offeror.

(iv) Call option over the Shares

As at the Latest Practicable Date, the following Director had a call option granted by the Offeror over the Shares pursuant to the arrangement mentioned in the note to item 3(b)(ii) above:

Number of Shares Exercise price Exercise subject to the Name of Director per Share period call option HK$

Mr. Wong Yuet Leung, 6.00 27-8-2005 to 1,600,000 Frankie 26-8-2011 (Note)

Note: The Offeror granted a call option over the Shares to Mr. Wong Yuet Leung, Frankie, who is also a director of the Offeror, on 27 August 2002 as part of the incentive reward to his services to the Company. Pursuant to a letter of agreement entered into between the Offeror and Mr. Wong Yuet Leung, Frankie in July 2010, the exercise period for this call option was extended from 26 August 2010 to 26 August 2011.

— 218 — APPENDIX IV GENERAL INFORMATION

Save as disclosed above, none of the Directors or chief executive of the Company had, as at the Latest Practicable Date, any interests or short positions in the Shares, underlying Shares and debentures of the Company 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 interests and short positions which were taken or deemed to have been taken under such provisions of the SFO) or the Model Code for Securities Transactions by Directors of Listed Issuers or which were required to be entered in the register required to be kept under section 352 of the SFO.

Save as disclosed above, none of the Directors had any interests in the relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) of the Company.

(i) As at the Latest Practicable Date and prior to the posting of this Composite Offer TC Sch I para 4(iv) Document:

(a) Penta Investment Advisers Limited has irrevocably committed on behalf of its funds and managed accounts to approve the Partial Offer in respect of 108,462,499 Shares, representing 35.52% of all Shares not held by the Offeror and parties acting in concert with it. As at the Latest Practicable Date, Penta Investment Advisers Limited (by virtue of the Shares held by the funds and accounts it advises) is interested in 108,462,499 Shares under the SFO. Q27

(b) Mr. Wong Kun To, Philip and Mr. Wong Fook Lam, Raymond, both being Directors, have irrevocably committed not to accept and procure that no acceptance be tendered for the Partial Offer and the Option Offer in respect of the Shares and the Share Options held by them or in which they were interested in accordance with the SFO. Details of their interests in the relevant securities of the Company are set out in item 3(b) above. Neither of them had dealt for value in the relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company during the Relevant Period.

(c) According to the filings under the SFO, (i) on 5 August 2010, Penta Master Fund, Sch I-4(iv) Limited sold the interest in 1,400,000 Shares; and (ii) on 14 January 2011, Penta Asia Long/Short Fund, Ltd. acquired an interest in 70,000 Shares. Both of these entities are advised by Penta Investment Advisers Limited. Since the date of the first joint announcement issued by the Company and the Offeror in relation to the then possible proposed Partial Offer and the Option Offer on 28 January 2011, the funds and managed accounts advised by Penta Investment Advisers Limited have also acquired an aggregate of 100,000 Shares.

— 219 — APPENDIX IV GENERAL INFORMATION

(ii) Save as disclosed in paragraph (c)(i) above, as at the Latest Practicable Date:

(a) no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Offeror or any parties acting in concert with it. The Sch 1-32 directors of the Offeror and its financial advisor were not aware of any such arrangements between any other associate of the Offeror and any other person;

(b) none of the Offeror or any parties acting in concert with it had borrowed or lent Sch 1-4(vi) in the relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company, save for any borrowed Shares which had been either on-lent or sold;

(c) none of the subsidiaries of the Company, any pension funds of the Group; or any Sch.II(2)(iii) advisor to the Company as specified in class (2) of the definition of “associate” under the Takeovers Code (but excluding exempt principal traders) owned or controlled any of the relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company;

(d) no person had any arrangement of the kind referred to in Note 8 to Rule 22 of Sch 1-4(v), Sch 1-32, the Takeovers Code with the Company or with any person who was an associate Sch.II(2)(iv), of the Company by virtue of classes (1), (2), (3) and (4) of the definition of Note2to(2) “associate” under the Takeovers Code;

(e) no relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) Sch.II(2)(v) of the Company were managed on a discretionary basis by fund managers (other than exempt fund managers) connected with the Company;

(f) none of the Directors has undertaken or given any indication of their intention Sch.II(2)(vi) to accept or reject the Partial Offer and the Option Offer in respect of their own beneficial ownership in the relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company; and

(g) neither the Company nor any of the Directors had borrowed or lent any of the Sch.II(2)(vii) relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company, save for any borrowed Shares which had been either on-lent or sold.

(d) Interests of the Company and the Directors in the Offeror

As at the Latest Practicable Date, the following Director has interest in the shares of the Offeror:

Percentage of the issued Number of shares share capital Name of Director in the Offeror of the Offeror

Mr. Lo Hong Sui, Vincent 700,000 100% (Note)

Note: These shares are held by Bosrich as trustee of the Bosrich Unit Trust. The Bosrich Unit Trust is the property of a discretionary trust, of which Mr. Lo Hong Sui, Vincent is one of the discretionary beneficiaries and the founder of the trust, and HSBC Trustee is the trustee.

— 220 — APPENDIX IV GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, neither the Company nor the Sch.II 2(i),(ii) Directors have any interest in the shares of the Offeror.

4. DEALINGS IN SECURITIES

The Offeror and parties acting in concert with it further undertake that they will not acquire any voting rights in the Company from the date of the first joint announcement issued by the Company and the Offeror on 28 January 2011 to the end of the Offer Period.

(a) During the Relevant Period:

(i) none of the Offeror, its directors or parties acting in concert with the Offeror had dealt for value in the relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company;

(ii) no other person who had irrevocably committed themselves to accept or reject the Sch 1-4(iv) Partial Offer and the Option Offer had dealt for value in the relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company;

Q29 (iii) none of the Offeror or any parties acting in concert with the Offeror who had borrowed or lent the relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company, save for any borrowed Shares which had been either on-lent or sold, had dealt for value in the relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company;

(iv) none of the Directors had dealt for value in the relevant securities (as defined in Note Sch.II(2)(ii) 4 to Rule 22 of the Takeovers Code) of the Company; and

(v) neither the Company nor any of its Directors had dealt for value in the relevant Sch.II(2)(i), (ii) securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Offeror.

(b) During the Offer Period and up to the Latest Practicable Date:

(i) none of the subsidiaries of the Company or, any pension funds of the Group nor any Sch.II(2)(iii) advisor to the Company as specified in class (2) of the definition of “associate” under the Takeovers Code had dealt for value in the relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company;

(ii) no person who had an arrangement of the kind referred to in Note 8 to Rule 22 of the Sch.II(2)(iv) Takeovers Code with the Company or with a person who has an associate of the Company by virtue of classes (1), (2), (3) and (4) of the definition of “associate” under the Takeovers Code had dealt for value in the relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company; and

— 221 — APPENDIX IV GENERAL INFORMATION

(iii) no relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Sch.II(2)(v) Company which were managed on a discretionary basis by fund managers (other than exempt fund managers) connected with the Company had been dealt for value in the relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company.

5. ARRANGEMENTS AFFECTING AND RELATING TO DIRECTORS

As at the Latest Practicable Date:

(a) there was no arrangement whereby any Director would be given any benefit as Sch 1-13 Sch.II(10) compensation for loss of office or otherwise in connection with the Partial Offer and the Option Offer;

(b) no agreement or arrangement existed between any Director and any other person which was Sch 1-14 Sch.II(11) conditional or dependent upon the outcome of the Partial Offer and the Option Offer or otherwise connected with the Partial Offer and the Option Offer;

(c) save for the loan agreement entered into between Mr. Lo Hong Sui, Vincent and the Offeror Sch.II(12) dated 27 January 2011 in relation to the Partial Offer and the Option Offer, no material contract had been entered into by the Offeror in which any Director had a material personal interest; and

(d) there was no agreement, arrangement or understanding (including any compensation Sch 1-14 arrangement) between the Offeror and any parties acting in concert with it on the one hand and any Director, recent Director, Shareholder or recent Shareholder on the other hand, having any connection with or dependence upon the Partial Offer and the Option Offer.

6. DIRECTORS’ SERVICE AGREEMENTS

The Company has entered into a service agreement with each of the independent non-executive Sch.II(13) Directors for a fixed term of three years, subject to the provision for retirement by rotation in the bye-laws of the Company and termination of the appointment by either party serving a written notice of 3 months. Details of such service agreements with more than 12 months to run are set out below:

Commencement Fee per date of service Expiry date of annum Name of Directors agreement service agreement (Note 1) HK$

Mr. Gerrit Jan de Nys 28 May 2010 27 May 2013 410,000 Mr. David Gordon Eldon 1 January 2010 31 December 2012 410,000 Mr. Chan Kay Cheung 1 January 2010 31 December 2012 505,000 Mr. Tsang Kwok Tai, Moses 1 January 2010 31 December 2012 380,000

— 222 — APPENDIX IV GENERAL INFORMATION

Notes: (1) The fees payable to the Directors are fixed and reviewed by the Board from time to time pursuant to the authority given by the Shareholders at the annual general meetings of the Company. The current basic fee for directorship of each non-executive Director is HK$250,000 plus additional fees at a fixed scale for any chairmanship and membership of various Board committees the individual Director sits on. The fees as set out in the above table represent the aggregate current fees payable to such Director for his directorship in the Company, chairmanship and/or membership in Board committees based on the fee schedule as determined by the Board for 2011. (2) The service agreement between the Company and Ms. Li Hoi Lun, Helen, an independent non-executive Director, will expire in August 2011 and therefore this has not been set out above.

Save as disclosed above, as at the Latest Practicable Date, there were no service contracts with the Company or any of its subsidiaries or associated companies in force for the Directors:

(a) which (including both continuous and fixed term contracts) had been entered into or amended within six months before the commencement of the Offer Period;

(b) which were continuous contracts with a notice period of 12 months or more; or

7. MARKET PRICES

The table below shows the closing price per Share as quoted on the Stock Exchange on (i) the Latest Practicable Date; (ii) the Last Trading Day; (iii) the last trading day immediately preceding the date of the joint announcement issued by the Offeror and the Company on 21 April 2011 on the making of the Partial Offer and the Option Offer (“Rule 3.5 announcement”); and (iv) the last trading day of each of the calendar months during the Relevant Period.

Closing price Date per Share (HK$) Sch 1-10(a)(i)

30 July 2010 9.66 Sch 1-10(a)(iii) Sch 1-10(c) 31 August 2010 9.08 30 September 2010 9.59 29 October 2010 9.50 30 November 2010 9.17 31 December 2010 9.05 Last Trading Day 9.65 31 January 2011 10.76 28 February 2011 10.44 31 March 2011 10.42 Date preceding the Rule 3.5 announcement, 20 April 2011 10.58 Sch 1-10(a)(ii) 29 April 2011 10.42 Latest Practicable Date 10.30

— 223 — APPENDIX IV GENERAL INFORMATION

8. HIGHEST AND LOWEST SHARE PRICE

The highest and lowest closing prices of the Shares as quoted on the Stock Exchange during the Sch 1-10(b) Relevant Period were HK$11.12 per Share on 7 February 2011 and HK$8.77 per Share on 28 December 2010.

9. LITIGATION

As at the Latest Practicable Date, neither the Company nor any member of the Group was Sch.II(8) engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened by or against the Company or any member of the Group.

10. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business of Sch.II(9) the Group) had been entered into by the Group within the two years immediately preceding the commencement of the Offer Period, and up to and including the Latest Practicable Date which were, or might be, material:

(i) a deed of undertaking dated 12 May 2009 entered into between the Company and China Central Properties Limited (“CCP”) pursuant to which the Company and CCP undertook to each other that each of them will comply with the City Code on Takeovers and Mergers of the United Kingdom (“City Code”) in relation to the share offer and mixed offer made by the Company to acquire the entire issued share capital of CCP not already owned by the Group on the terms and subject to the conditions set out in the offer document issued by the Company on 14 May 2009 and the related form of acceptance, subject to a number of agreed derogations from the City Code;

(ii) an equity transfer agreement dated 5 June 2009 entered into between Lancewood Enterprises Limited (“Lancewood”, a wholly-owned subsidiary of Gracious Spring Limited which became a wholly-owned subsidiary of the Company after privatisation of CCP in June 2009) as purchaser and 西藏築信投資諮詢有限公司 (Xi Zang Zhu Xin Investment Consultancy Limited*) as vendor whereby the vendor agreed to sell and Lancewood agreed to purchase 51% equity interest in Orient Home Chengdu Jinniu Zhiye Co., Ltd. (now known as Chengdu Xianglong Real Estate Co., Ltd.), which owns a piece of land in Chengdu, the PRC, at a consideration of RMB203.3 million upon and subject to the terms and conditions contained therein;

(iii) a sale and purchase agreement dated 20 August 2009 entered into between Eagle Fit Limited (“Eagle Fit”, a then wholly-owned subsidiary of the Company and now a 52.5% owned jointly controlled entity of the Company) as purchaser and Excel Bright Properties Limited (“Excel Bright”) as vendor whereby Excel Bright agreed to sell and Eagle Fit agreed to purchase the entire issued share capital of Prime Asset Investment Limited (a company holding indirectly the interest in a “construction in progress” development project located in Chaoyang District, Beijing, the PRC) and the related shareholder’s loan at an aggregate consideration of US$118 million (subject to adjustment) upon and subject to the terms and conditions contained therein;

— 224 — APPENDIX IV GENERAL INFORMATION

(iv) a shareholders deed dated 29 September 2009 entered into between the Company, Noble Pearl Limited (“Noble Pearl”, a wholly-owned subsidiary of the Company), Keen Hero International Limited (“Keen Hero”), Many Gain International Limited (“Many Gain”) and Eagle Fit pursuant to which Noble Pearl and Keen Hero agreed to subscribe for 65% and 35% equity interests in, and provide shareholder’s loans in an aggregate amount of approximately US$37.6 million and US$20.2 million to, Eagle Fit respectively for the development of a property project located in Chaoyang District, Beijing, the PRC; and the Company and Many Gain agreed to guarantee the obligations of Noble Pearl and Keen Hero thereunder respectively;

(v) a counter guarantee and indemnity dated 5 November 2009 issued by Many Gain as guarantor in favour of the Company in respect of the pro rata share of Keen Hero, being 35%, of the obligations and liabilities assumed by the Company under the finance documents in relation to a HK$550 million banking facility granted to a subsidiary of Eagle Fit, for which the Company has provided a 100% guarantee;

(vi) a shareholders deed dated 11 December 2009 entered into between the Company, Noble Pearl, Keen Hero, Many Gain, PGR Asian Real Estate Fund, L.P. (“PGR Fund”), Penta Investment Advisers Limited and Eagle Fit pursuant to which Noble Pearl agreed to sell and PGR Fund agreed to purchase 12.5% interest in the issued share capital of, and the related shareholder’s loan due from, Eagle Fit at an aggregate consideration of approximately US$6.6 million; and each of Noble Pearl, Keen Hero and PGR Fund agreed to provide shareholder’s loans in an aggregate amount of approximately US$30.3 million, US$20.2 million and US$7.2 million to Eagle Fit respectively in proportion to their shareholdings in Eagle Fit, which replaced the previous shareholders deed as referred to in item (iv) above;

(vii) a counter guarantee and indemnity dated 11 December 2009 issued by Penta Investment Advisers Limited as guarantor in favour of the Company in respect of the pro rata share of PGR Fund, being 12.5%, of the obligations and liabilities assumed by the Company under the finance documents in relation to a HK$550 million banking facility granted to a subsidiary of Eagle Fit, for which the Company has provided a 100% guarantee;

(viii) a sale and purchase agreement dated 22 December 2009 entered into between Mount Shine Limited (“Mount Shine”, a wholly-owned subsidiary of the Company) as purchaser and MIRAE ASSET Maps Asia Pacific Real Estate I Investment Company and Kookmin Bank, acting in its capacity as trustee of MIRAE ASSET Maps Frontier Private Placement China Real Estate Investment Trust II, as sellers whereby the sellers agreed to sell and Mount Shine agreed to purchase the entire issued share capital of Dignitary Limited (a company holding indirectly the interest in a completed residential development known as Tower 18, The Lakeville Regency located in Luwan District, Shanghai, the PRC) at a consideration of approximately US$46.4 million (subject to adjustment) upon and subject to the terms and conditions contained therein;

(ix) a sale and purchase agreement dated 10 February 2010 entered into between Shui On China Central Properties Limited (“SOCCP”), a wholly-owned subsidiary of the Company, as

— 225 — APPENDIX IV GENERAL INFORMATION

seller and Ascott Serviced Residence (China) Fund (“Ascott”) as purchaser whereby SOCCP agreed to sell and Ascott agreed to purchase the entire issued share capital of Prosper Idea Limited (“Prosper Idea”, a company holding indirectly the interest in a property project known as Central Point Phase I located in Chengdu, the PRC); and SOCCP agreed to assign and Ascott agreed to accept the assignment of the shareholder’s loans owed by Prosper Idea to SOCCP, at an aggregate consideration determined in accordance with such agreement (which is equivalent to the price of the subject property in the amount of RMB487.6 million as adjusted with the assets and liabilities of Prosper Idea and its subsidiaries on completion) and estimated to be approximately RMB367 million (subject to adjustment) upon and subject to the terms and conditions contained therein;

(x) a sale and purchase agreement dated 1 June 2010 entered into between New Rainbow Investments Limited (“New Rainbow”, a wholly-owned subsidiary of the Company) and Shui On Properties Limited (“SOPL”) whereby New Rainbow agreed to sell and SOPL agreed to purchase approximately HK$1.08 billion worth of shares of Shui On Land Limited upon and subject to the terms and conditions contained therein;

(xi) an agreement dated 17 September 2010 entered into between Chengdu Shui On Huiyuan Property Co., Ltd. (“Hui Yuan”, a wholly-owned subsidiary of the Company) and Ping An Property & Casualty Insurance Company of China, Ltd. (“PingAn”) whereby Hui Yuan agreed to sell and PingAn agreed to acquire the office building of Phase II and certain carparking spaces in Phases I and II of Central Point located in Chengdu, the PRC, at an estimated aggregate consideration of RMB718 million and the payment of an additional sum of RMB9 million as provided therein, subject to adjustment based on the actual relevant gross floor areas and/or the actual number of carparking spaces to be delivered to PingAn pursuant to the terms therein;

(xii) a sale and purchase agreement dated 30 September 2010 entered into between 北京億達房地產開發有限公司 (Beijing Yida Real Estate Development Co., Ltd.*) (“Beijing Yida”, a wholly-owned subsidiary of the Company) as seller, 內蒙古伊泰置業有限責任公司 (Inner Mongolia Yitai Real Estate Co., Ltd.*) and 北京華府盛世置業投資管理有限公司 (Beijing Huafu Shengshi Real Estate Investment Management Co., Ltd.*) as purchasers and SOCCP whereby Beijing Yida agreed to sell and the purchasers agreed to purchase the entire equity interest in 北京瑞順鴻業投資管理有限公司 (Beijing Ruishun Hongye Investment Management Co., Ltd.*) (“Beijing Ruishun”, which owned a residential development in Shunyi District, Beijing, the PRC) at a consideration of RMB492.6 million, and the purchasers also agreed to repay the related loans and debts in an aggregate amount of approximately RMB452.3 million to be owed by Beijing Ruishun to Beijing Yida and its affiliated companies;

(xiii)a sale and purchase agreement dated 16 November 2010 pursuant to which Lead Wealthy Investments Limited (“Lead Wealthy”, a then wholly-owned subsidiary of the Company and now a 70% owned jointly controlled entity of the Company) as purchaser and HPL Properties (North Asia) Pte Ltd (“HPL”) and Hines 21st Century Partners LLC (“Hines”) as vendors whereby HPL and Hines agreed to sell and Lead Wealthy agreed to purchase the entire issued share capital of, and the related shareholder’s loans owing by, HPL-Hines

— 226 — APPENDIX IV GENERAL INFORMATION

Development Pte. Ltd. (now known as Lead Wealthy Investments (Singapore) Pte. Ltd., a company then holding indirectly 72.7632% interest in a property project known as Shanghai 21st Century Tower in Shanghai, the PRC) at a total consideration of approximately RMB900 million (subject to adjustments) upon and subject to the terms and conditions contained therein;

(xiv) a sale and purchase agreement dated 22 December 2010 entered into between Bright Jade Investments Limited (“Bright Jade”, a wholly-owned subsidiary of the Company) and Remparts Ltd. (“Remparts”) whereby Bright Jade agreed to sell and Remparts agreed to purchase a 10% interest in the entire issued share capital of, and the related shareholder’s loan owed by, Lead Wealthy for a total consideration of RMB76.3 million upon and subject to the terms and conditions contained therein (as amended by a supplemental agreement dated 29 December 2010);

(xv) a counter guarantee and indemnity dated 22 December 2010 issued by Penta Investment Advisers Limited as guarantor in favour of the Company in respect of the pro rata share of Remparts, being 10%, of the obligations and liabilities assumed by the Company under the finance documents in relation to a HK$500 million banking facility granted to Lead Wealthy, for which the Company has provided a 100% guarantee, and under a letter of assumption dated 1 December 2010 signed by the Company in favour of Hines Real Estate Holdings Limited Partnership;

(xvi) a sale and purchase agreement dated 30 December 2010 entered into between Bright Jade, a wholly-owned subsidiary of the Company, HPL Leisure Holdings Pte Ltd (“HPL Leisure”) and Lead Wealthy whereby (a) Bright Jade agreed to sell and HPL Leisure agreed to purchase a 20% interest in the entire issued share capital (the “Sale Shares”) of, and the related shareholder’s loan (the “Shareholder’s Loan”) owed by, Lead Wealthy at a total cash consideration of approximately RMB152.6 million (subject to adjustment, with the maximum consideration amount not exceeding RMB200 million); and (b) Bright Jade agreed to grant to HPL Leisure a put option where HPL Leisure is entitled to require Bright Jade to purchase from HPL Leisure the same number of the Sale Shares at any time within 36 months after completion of the sale and purchase of the Sale Shares at the same consideration per Sale Share in cash, being the consideration paid as adjusted under the sale and purchase agreement and after deducting the Shareholder’s Loan, upon and subject to the terms and conditions contained therein;

(xvii) a joint venture agreement dated 19 January 2011 entered into between Ally Plus Limited, 啟迪控股股份有限公司 (Tsinghua Science Park Co. Ltd.) (“Tsinghua SP”), 上海健微實業投資有限公司 (Shanghai Jianwei Investment Co., Ltd*) (“Shanghai Jianwei”) and the Company to undertake knowledge community projects in the PRC whereby Tsinghua SP and Shanghai Jianwei agreed to contribute 25% of the registered capital of a joint venture company (the “JV Company”) by injecting certain assets into the JV Company at an agreed value of around RMB613 million, subject to adjustment, and the Group agreed to contribute

— 227 — APPENDIX IV GENERAL INFORMATION

up to 75% of the registered capital of the JV Company in stages for an aggregate amount of around RMB1,839 million, subject to adjustment, by injecting into the JV Company cash and a parcel of land in the PRC upon and subject to the terms and conditions contained therein;

(xviii) a guarantee dated 28 February 2011 executed by the Company and Shui On Development (Holdings) Limited (“SODH”) as guarantors in favour of Mitsui Fudosan Residential Co. Ltd. (“Mitsui”) and Many Praises Dalian Limited (“JV Co”) as beneficiaries whereby SODH and the Company severally (but not jointly) guaranteed to Mitsui and JV Co in the respective proportions of 69% and 31% of the obligations under the sale and purchase agreement, the development participation agreement and the shareholders agreement entered into in connection with the co-development of six parcels of land under the Dalian Tiandi property development project, with the aggregate guaranteed amount not exceeding RMB500 million;

(xix) a counter guarantee and indemnity dated 28 February 2011 executed by Many Gain in favour of SODH and the Company, pursuant to which Many Gain agreed to provide a counter guarantee to SODH and the Company with the maximum amount payable by Many Gain being 30% of the guaranteed obligations paid by SODH and the Company to Mitsui and JV Co under the guarantee as referred to in item (xviii) above; and

(xx) a compensation agreement dated 30 March 2011 entered into between 遵義天時利諮詢管理有限公司 (Zunyi Tianshili Management Consultancy Co. Ltd.*) (“Zunyi Tianshili”, a wholly-owned subsidiary of the Company) and 貴州遵義瑞安水泥有限公司 (Guizhou Zunyi Shui On Cement Co. Ltd.*) (“Guizhou Cement”, a 80% owned jointly controlled entity of the Company) whereby Zunyi Tianshili agreed to pay the aggregate amount of approximately RMB312.4 million as compensation for Guizhou Cement to, amongst other things, relinquish the land use rights of two parcels of land located in the Honghuagang District of Zunyi, Guizhou, the PRC originally permitted for industrial use; dismantle and remove its cement production facility and resettle the workers of its cement operation so that Zunyi Tianshili could acquire the land use rights of these land parcels with permitted uses of commercial and residential development.

* For identification purpose only

— 228 — APPENDIX IV GENERAL INFORMATION

11. EXPERTS AND CONSENTS

The following are the names and qualification of each of the professional advisors who are Sch.II Note4to(1) named in this Composite Offer Document or who has given opinions or advice which are contained in or referred to in this Composite Offer Document:

Name Qualification

Merrill Lynch a corporation licensed to carry out Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 7 (providing automated trading services) regulated activities as defined under the SFO

Anglo Chinese a corporation licensed to carry out Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities as defined under the SFO

Savills professional property valuer

Each of Merrill Lynch, Anglo Chinese and Savills has given and has not withdrawn its written consent to the issuance of this Composite Offer Document with the inclusion herein of the opinion or letter (as the case may be) and references to its name, in the form and context in which it is included.

As at the Latest Practicable Date, each of Merrill Lynch, Anglo Chinese and Savills did 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.

12. MISCELLANEOUS

(a) As at the Latest Practicable Date, the Offeror and parties acting in concert with it had no Sch 1-1 agreement or understanding to transfer, charge or pledge any of the Shares acquired pursuant to the Partial Offer and the Option Offer to any other persons.

(b) The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda and the head office and principal place of business of the Company in Hong Kong is located at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong.

(c) The registered office of the Offeror is at P.O. Box 91, Craigmuir Chambers, Road Town, Tortola, British Virgin Islands. The correspondence address of the Offeror is at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong.

(d) The directors of the Offeror are Mr. Lo Hong Sui, Vincent, Mr. Wong Yuet Leung, Frankie and Mr. Choi Yuk Keung, Lawrence.

— 229 — APPENDIX IV GENERAL INFORMATION

(e) The directors of Shui On Finance Company Limited are Mr. Lo Hong Sui, Vincent, Mr. Wong Yuet Leung, Frankie, Mr. Choi Yuk Keung, Lawrence, Mr. Wong Fook Lam, Raymond and Mr. Leung Ming Hing, Eric.

(f) The correspondence address of Mr. Lo Hong Sui, Vincent is at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong.

(g) The correspondence address of Mr. Wong Yuet Leung, Frankie is 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong.

(h) The correspondence address of Mr. Choi Yuk Keung, Lawrence is 13th Floor, New Kowloon Plaza, 38 Tai Kok Tsui Road, Kowloon, Hong Kong.

(i) Merrill Lynch is the financial advisor to the Offeror in respect of the Partial Offer and the Option Offer. The address of Merrill Lynch is at 15th Floor, Citibank Tower, 3 Garden Road, Central, Hong Kong.

(j) Merrill Lynch is making the Partial Offer and the Option Offer for and on behalf of the Offeror. The address of Merrill Lynch is at 15th Floor, Citibank Tower, 3 Garden Road, Central, Hong Kong.

(k) The independent financial advisor to the Independent Board Committee is Anglo Chinese whose address is at 40th Floor, Two Exchange Square, 8 Connaught Place, Central, Hong Kong.

(l) The Company’s Hong Kong branch share registrar and transfer office is Tricor Standard Limited, whose address is at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.

(m) The Company Secretary is Ms. Tsang Yuet Kwai, Anita.

(n) There are no agreements or arrangements to which the Offeror is a party which relate to Sch I-14A circumstances in which it may or may not invoke or seek to invoke a condition to the Partial Offer and/or the Option Offer.

(o) Neither the Partial Offer nor the Option Offer is a securities exchange offer. Sch I-15-29

(p) Neither the Partial Offer nor the Option Offer involves the issue of unlisted securities. Sch I-30

(q) All time references contained in this Composite Offer Document refer to Hong Kong time.

(r) In case of inconsistency, the English text of this Composite Offer Document, the Form of Approval and Acceptance and the Form of Option Offer Acceptance shall prevail over the Chinese texts.

— 230 — APPENDIX IV GENERAL INFORMATION

13. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection (i) during normal business hours Sch.II(14) (public holidays excepted) at the office of the Company at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong; (ii) on the website of the SFC at http://www.sfc.hk; and (iii) on the website of the Company at www.socam.com, from the date of this Composite Offer Document until the end of the Offer Period:

(a) the loan agreement entered into between Mr. Lo Hong Sui, Vincent and the Offeror dated 27 January 2011 in relation to the Partial Offer and the Option Offer;

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

(d) the audited consolidated financial statements of the Offeror for the two financial years ended 31 December 2009;

(e) the Letter from the Board, the text of which is set out on pages 6 to 14 of this Composite Offer Document;

(f) the Letter from Merrill Lynch, the text of which is set out on pages 15 to 31 of this Composite Offer Document;

(g) the Letter from the Independent Board Committee, the text of which is set out on pages 32 and 33 of this Composite Offer Document;

(h) the Letter from Anglo Chinese, the text of which is set out on pages 34 to 64 of this Composite Offer Document;

(i) the valuation report on property interests of the Group prepared by Savills, the summary report of which is set out in Appendix III to this Composite Offer Document;

(j) the letter of consent from each of Merrill Lynch, Anglo Chinese and Savills referred to in the paragraph headed “Experts and Consents” in this Appendix;

(k) the letter of undertaking dated 21 April 2011 from Penta Investment Advisers Limited on behalf of its funds and managed accounts to undertake to approve the Partial Offer in relation to 108,462,499 Shares owned by the funds and managed accounts it advises;

(l) the letter of undertaking dated 4 May 2011 from each of Mr. Wong Kun To, Philip and Mr. Wong Fook Lam, Raymond to approve the Partial Offer and not to accept the Partial Offer and the Option Offer;

— 231 — APPENDIX IV GENERAL INFORMATION

(m) the service agreements with Mr. Gerrit Jan de Nys, Mr. David Gordon Eldon, Mr. Chan Kay Cheung and Mr. Tsang Kwok Tai, Moses referred to in the section headed “Directors’ Service Agreements” in this Appendix; and

(n) each of the material contracts mentioned in the section headed “Material Contracts” in this Appendix.

— 232 — APPENDIX V FINANCIAL INFORMATION OF THE OFFEROR Sch 1-12(a)

1. SUMMARY OF FINANCIAL INFORMATION OF THE OFFEROR

Set out below is the summary of the financial information of the Offeror for three financial years ended 31 December 2009, as extracted from the audited consolidated financial statements of the Offeror and its subsidiaries (collectively the “Offeror Group”) for the three financial years ended 31 December 2009.

(i) Condensed consolidated income statements

2009 2008 2007 HK$ million HK$ million HK$ million

Turnover 3,212 5,242 7,824

Profit before taxation 3,669 4,571 5,611 Taxation (521) (1,054) (1,173)

Profit for the year 3,148 3,517 4,438

Attributable to: Owners of the Offeror 2,029 1,414 2,792 Non-controlling interests 1,119 2,103 1,646 3,148 3,517 4,438

Earnings per share HK$2,899 HK$2,020 HK$3,989

Profit before taxation has included the following items: Increase in fair value of investment properties 2,106 900 1,677 Gain on disposal of equity interests in subsidiaries — 2,140 903 Gain on deemed disposal of interests in subsidiaries 921 — — Gain on acquisition of additional equity interests in subsidiaries — 1,346 184 Gain on disposal of available-for-sale investments — — 868

The Offeror did not declare a dividend in each of the three financial years ended 31 December 2009.

— 233 — APPENDIX V FINANCIAL INFORMATION OF THE OFFEROR

(ii) Condensed consolidated statements of financial position

31 December 31 December 31 December 2009 2008 2007 HK$ million HK$ million HK$ million

Total non-current assets 22,386 36,464 29,153 Total current assets 1,231 24,447 19,336 Total current liabilities (5,483) (19,861) (17,544) Total non-current liabilities (2,556) (14,512) (8,084)

15,578 26,538 22,861

Equity attributable to: Owners of the Offeror 15,053 12,988 11,603 Non-controlling interests 525 13,550 11,258

15,578 26,538 22,861

(iii) Condensed consolidated cash flow statements

2009 2008 2007 HK$ million HK$ million HK$ million

Net cash from/(used in): Operating activities 2,124 (1,108) 1,139 Investing activities (6,705) (2,548) (5,855) Financing activities 1,611 3,126 2,574 Net decrease in cash and cash equivalents (2,970) (530) (2,142) Beginning cash and cash equivalents 3,404 3,860 5,983 Effect of foreign exchange rate changes 14 74 19

Closing cash and cash equivalents 448 3,404 3,860

Analysis of cash and cash equivalents Bank balances, deposits and cash 448 3,404 3,875 Bank overdrafts — — (15)

448 3,404 3,860

— 234 — APPENDIX V FINANCIAL INFORMATION OF THE OFFEROR

Note:

In the financial year 2009, the Company, a subsidiary of the Offeror, privatised its London AIM-listed, real estate, associated company, China Central Properties Limited. The transaction was completed partly by cash and partly by newly issued shares of the Company or by newly issued shares of the Company alone. Upon the completion of the transaction, the Offeror’s shareholding in the Company was reduced to below 50%, and thereby made the Company an associated company of the Offeror.

Following the dilution of the shareholding in the Company, the effective shareholding in Shui On Land Limited (“SOL”), another listed subsidiary of the Offeror, held by the Offeror has also decreased to below 50%, as a result of the loss of control of a 5.4% effective shareholding in SOL which was previously indirectly held by the Offeror through the Company. SOL has therefore also become an associated company of the Offeror. Accordingly, the results and assets and liabilities of the Company and SOL have been incorporated in the consolidated financial statements of the Offeror for the year ended 31 December 2009 using the equity method of accounting as described in more detail in significant accounting policies below.

2. SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the HKICPA.

The principal accounting policies adopted are set out as follows:

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Offeror and entities controlled by the Offeror (its subsidiaries). Control is achieved where the Offeror has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by other members of the Offeror Group.

All inter-company transactions and balances within the Offeror Group are eliminated on consolidation.

Non-controlling interests in the net assets of consolidated subsidiaries are presented separately from the Offeror Group’s equity therein. Non-controlling interests in the net assets consist of the amount of those interests at the date of the original business combination and the non-controlling interests’ share of changes in equity since the date of the combination. Losses applicable to the

— 235 — APPENDIX V FINANCIAL INFORMATION OF THE OFFEROR

non-controlling interests in excess of the non-controlling interests in the subsidiary’s equity are allocated against the interests of the Offeror Group except to the extent that the non-controlling interest has a binding obligation and is able to make an additional investment to cover the losses.

Business combinations

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Offeror Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under HKFRS 3 Business Combinations are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with HKFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Offeror Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Offeror Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

Acquisition of additional interest in a subsidiary

When the Offeror Group increases its interest in an entity that is already an entity controlled by the Offeror, goodwill arising on such acquisition represents the difference between the cost of additional interest acquired and the increase in the Offeror Group’s share of the fair value of the identifiable assets, liabilities and contingent liabilities. No revaluation surplus or deficit on revaluation of the identifiable assets, liabilities and contingent liabilities of the subsidiary to current fair value is recognised in the consolidated statement of financial position. The difference between the fair value, representing the amount of consideration less the amount of goodwill, and the carrying amount of the net assets attributable to the additional interest acquired is recognised as a reserve movement. This difference represents the portion of the revaluation

— 236 — APPENDIX V FINANCIAL INFORMATION OF THE OFFEROR

difference that arose since the original acquisition date that is attributable to the Offeror Group’s increased interest in the subsidiary and is released to the consolidated income statement upon the disposal of the assets, disposal of the subsidiary of the assets, which the assets relate, or when the related assets affect profit or loss.

At the date of acquisition, the Offeror Group reassesses the identification and measurement of the entity’s identifiable assets, liabilities and contingent liabilities. If the Offeror Group’s additional interest in the net fair value of those items exceeds the cost of the acquisition, any excess remaining after that reassessment, which represents the gain from acquisition, is recognised by the Offeror Group immediately in the consolidated income statement.

Goodwill

Goodwill arising on an acquisition of a business represents the excess of the cost of acquisition over the Offeror Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the relevant business at the date of acquisition. Such goodwill is carried at cost less any accumulated impairment losses and presented separately in the consolidated statement of financial position.

For the purposes of impairment testing, goodwill is allocated to each of the relevant cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the acquisition. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, and whenever there is an indication that the unit may be impaired. For goodwill arising on an acquisition in a financial year, the cash-generating unit to which goodwill has been allocated is tested for impairment before the end of that financial year. When the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated to reduce the carrying amount of any goodwill allocated to the unit first, and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in the consolidated income statement. An impairment loss for goodwill is not reversed in subsequent periods.

On subsequent disposal of the relevant cash-generating unit, the attributable amount of goodwill capitalised is included in the determination of the amount of profit or loss on disposal.

Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation. On initial recognition, investment properties are measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are measured at fair value using the fair value model. Gains or losses arising from changes in the fair value of investment property are included in consolidated income statement for the period in which they arise.

From 1 January 2009, investment properties under construction or development have been accounted for in the same way as completed investment properties. Specifically, construction costs incurred for investment properties under construction or development are capitalised as part of the carrying amount of the investment properties under construction or development.

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Investment properties under construction or development are measured at fair value at the end of the reporting period. Any difference between the fair value of the investment properties under construction or development and their carrying amounts is recognised in the consolidated income statement in the period in which it arises. Prior to 1 January 2009, the leasehold land and building elements of investment properties under construction or development were accounted separately; the leasehold land element was accounted for as an operating lease and the building element was measured at cost less impairment losses, if any.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use or no future economic benefits are expected from its disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated income statement in the year in which the item is derecognised.

Property, plant and equipment

Depreciation is provided to write off the cost of buildings over their estimated useful lives or where shorter, the terms of leasehold land where the buildings are located, using the straight-line method.

Depreciation is provided to write off the cost of items of property, plant and equipment, other than buildings, over their estimated useful lives and after taking into account their estimated residual value, using the straight-line method. Both the useful life of an asset and its residual value, if any, are reviewed annually.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the consolidated income statement in the year in which the item is derecognised.

Prepaid lease payments

Prepaid lease payments for leasehold land are charged to the consolidated income statement on a straight-line basis over the period of the land use rights.

Properties under development

Prior to 1 January 2009, property that was being constructed or developed for future use as an investment property was included in construction in progress until construction or development was completed, at which time it was reclassified to and subsequently accounted for as an

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investment property. Any difference between the fair value of the property at that date and its previous carrying amount was recognised in consolidated income statement. Upon the adoption of amendments to HKAS 40, that property has been reclassified as an investment property at 1 January 2009.

Properties under development which are intended to be held for sale are carried at lower of cost and net realisable value and are shown as current assets. Cost includes costs of land, development expenditure incurred, borrowing costs capitalised in accordance with the Offeror Group’s accounting policy and other direct costs attributable to such properties. These assets are recorded as current assets as they are expected to be realised in, or are intended for sale within the Offeror Group’s normal operating cycle. Net realisable value represents the estimated selling price less all anticipated costs of completion and costs to be incurred in marketing and selling. Upon completion, the assets are recorded as properties held for sale.

Investments in associates and jointly controlled entities

An associate is an entity over which the Offeror Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over these policies.

The results and assets and liabilities of associates and jointly controlled entities are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale (in which case it is accounted for under HKFRS 5 Non-current Assets Held/or Sale and Discontinued Operations) or when the investment is designated as at fair value through profit or loss upon initial recognition or is classified as held for trading (in which case it is accounted for under HKAB 39 Financial Instruments: Recognition and Measurement). Under the equity method, investments in associates and jointly controlled entities are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Offeror Group’s share of the net assets of the associates and the jointly controlled entities, less any identified impairment loss. When the Offeror Group’s share of losses of the associates or the jointly controlled entities equals or exceeds its interest in the associates or the jointly controlled entities (which includes any long-term interests that, in substance, form part of the Offeror Group’s net investment in the associates or jointly controlled entities), the Offeror Group discontinues recognising its share of further losses. An additional share of losses is provided for and a liability is recognised only to the extent that the Offeror Group has incurred legal or constructive obligations or made payments on behalf of the associate or the jointly controlled entity.

Any excess of the cost of acquisition over the Offeror Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate or the jointly controlled entity recognised at the date of acquisition is recognised as goodwill. The goodwill is included

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within the carrying amount of the investment and is not tested for impairment separately. Instead, the entire carrying amount of the investment is tested for impairment as a single asset. Any impairment loss recognised is not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment in the associate or jointly controlled entity. Any reversal of impairment loss is recognised to the extent that the recoverable amount of the investment subsequently increases.

Any excess of the Offeror Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss. A discount on acquisition arising on an acquisition of an associate or a jointly controlled entity (which is accounted for using the equity method) is included as income in the determination of the investor’s share of results of the associate or jointly controlled entity in the period in which the investment is acquired.

When a group entity transacts with an associate or a jointly controlled entity of the Offeror Group, profits and losses are eliminated to the extent of the Offeror Group’s interest in the relevant associate or the jointly controlled entity.

Impairment of assets (other than goodwill and club memberships with indefinite useful life and financial assets)

At the end of each reporting period, the Offeror Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.

Properties held for sale

Properties held for sale are stated at the lower of cost and net realisable value. Cost includes the costs of land, development expenditure incurred and, where appropriate, borrowing costs capitalised. Net realised value is determined based on prevailing market conditions.

Taxation

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

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The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Offeror Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

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

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Offeror Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

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

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rate (and tax laws) that have been enacted or substantively enacted by the end of each reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Offeror Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is recognised in profit or loss, except when it relates to items that are recognised in other comprehensive income or directly in equity, in which case the deferred tax is also recognised in other comprehensive income or directly in equity respectively.

Foreign currencies

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at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the period in which they arise, except for exchange differences arising on monetary item that forms part of the Offeror’s net investment in a foreign operation, in which case, such exchange differences are recognised in other comprehensive income and accumulated in equity and will be reclassified from equity to profit or loss on disposal of the foreign operation. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in other comprehensive income, in which cases, the exchange differences are also recognised directly in other comprehensive income.

For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Offeror Group’s foreign operations are translated into the presentation currency of the Offeror (i.e. Hong Kong dollars) at the rate of exchange prevailing at the end of the reporting period, and their income and expenses are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during the period, in which case, the exchange rates’ prevailing at the dates of transactions are used. Exchange differences arising, if any, are recognised as a separate component of equity (the translation reserve). Such exchange differences are recognised as profit or loss in the period in which the foreign operation is disposed of.

Goodwill and fair value adjustments on identifiable assets acquired arising on an acquisition of a foreign operation on or after 1 April 2005 are treated as assets and liabilities of that foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences arising are recognised in the translation reserve.

Revenue recognition

Development properties

Revenue from properties developed for sale in the ordinary business is recognised upon delivery of properties to the purchasers pursuant to the sales agreements.

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Others

Rental income from operating leases is recognised in the consolidated income statement on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased assets and recognised on a straight-line basis over the lease term.

Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts throughout the expected life of the financial asset to that asset’s net carrying amount.

Property management, project management and service fees are recognised as revenue in the consolidated income statement on an appropriate basis over the relevant period in which the services are rendered.

Revenue from serviced apartment operation is recognised in the consolidated income statement upon the provision of the services.

Dividend income from investments including financial assets at fair value through profit or loss is recognised when the Offeror Group’s right to receive the relevant payment has been established.

3. SUBSEQUENT EVENT

Significant events after the financial year ended 31st December 2009 are as follows:

(a) On 15 January 2010, Magic Garden Investments Limited (“MGIL”), a wholly-owned subsidiary of the Offeror, entered into a sale and purchase agreement (the “SPA”) with an independent third party. Under the SPA, MGIL agreed to sell 50% of the issued share capital of Victorious Run Limited, a then wholly-owned subsidiary of the Offeror which indirectly holds the entire registered capital of Shanghai Li Xing Hotel Co., Ltd. (“Shanghai Li Xing”) which, in turn, holds two hotels under development located next to Xintiandi on Lots 107 and 108 in the Luwan District, Shanghai, the PRC. The transaction was completed in March 2010.

On 1 April 2010, Shui On Investment Company Limited, a wholly-owned subsidiary of the Offeror and the holding company of MGIL, entered into another sale and purchase agreement with a subsidiary of Great Eagle Holdings Limited to dispose of one-third of the issued share capital of MGIL. The transaction was completed in August 2010.

Upon completion of the above transactions, the Offeror indirectly hold a 33.3% interest in Shanghai Li Xing.

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(b) In June 2010, Shui On Properties Limited, a wholly-owned subsidiary of the Offeror, acquired from a wholly-owned subsidiary of the Company, an associated company of the Offeror, 316,827,035 shares in SOL, another listed associated company of the Offeror, representing approximately 6.3% of the issued share capital of SOL, for a consideration of HK$1,080 million.

Upon completion of the transaction, the Offeror Group’s shareholding in SOL has increased from approximately 41.4% to 47.7%.

(c) In September 2010, Chester International Cayman Limited (“CICL”), a wholly-owned subsidiary of the Offeror, has entered into equity swap transactions as equity swap receiver with Standard Chartered Bank as equity swap payer, and possibly further equity swap transactions each with a term of three years. The aggregate equity notional amount of the equity swap transaction is HK$1,000 million.

Each equity swap transaction, can be, at the option of CICL, in whole or in part (subject to the terms of the equity swap agreement), cash-settled or physically-settled (such that CICL receives physical delivery of a number of SOL shares in accordance with the terms of the equity swap agreement). The equity swap agreement was entered into primarily for hedging purposes against potential dilutive impact of the bond issue by SOL in September 2010.

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