Hopson Development Holdings Limited

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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

HOPSON DEVELOPMENT HOLDINGS LIMITED 合生創展集團有限公司* (Incorporated in Bermuda with limited liability) website:http://www.irasia.com/listco/hk/hopson

DISCLOSEABLE TRANSACTION

A letter from the Chairman of Hopson Development Holdings Limited is set out on pages 3 to 9 of this Circular.

9th October 2002

* for identification purpose only CONTENTS

Page

DEFINITIONS...... 1

LETTER FROM THE CHAIRMAN ...... 3 1. INTRODUCTION ...... 3 2. THE REDEVELOPMENT CONTRACT...... 4 3. BASIS OF DETERMINATION OF CONSIDERATION ...... 7 4. REASONS FOR THE TRANSACTION ...... 7 5. DISCLOSEABLE TRANSACTION ...... 8 6. ANNOUNCEMENT ...... 9 7. FURTHER INFORMATION...... 9

APPENDIX I VALUATION REPORT ...... 10

APPENDIX II GENERAL INFORMATION ...... 16

– i – DEFINITIONS

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

“associate” the meaning given to that term in the Listing Rules

“Company” Hopson Development Holdings Limited

“Development Site North” the portion of the Shanghai Hopson Development Site bordered by Guiyang Road to the west, Yangshupu Road to the north, Longchang Road to the east and Haizhou Road to the south

“Development Site South” the portion of the Shanghai Hopson Development Site bordered by Shanghai Yangshupu Power Plant to the west, Huangpu River to the north, Shanghai Yangshupu Gas Plant to the east and Yangshupu Road to the south

“Directors” the directors of the Company

“DTZ” DTZ Debenham Tie Leung Limited

“Group” the Company and its subsidiaries

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

“Latest Practicable Date” 23rd September 2002, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

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

“PRC” People’s Republic of China

“Redevelopment Contract” contract to redevelop the Shanghai Hopson Development Site dated 27th March 2002 and entered into between Shanghai Hopson and Yangpu Redevelopment Operations Office

– 1 – DEFINITIONS

“Shanghai Hopson” Shanghai Hopson Property Development Co., Ltd. (上海合生房地產開發有限公司), a wholly foreign owned enterprise established pursuant to the laws of the PRC and a wholly-owned subsidiary of the Company

“Shanghai Hopson Development Site” Shanghai Yangpu 121, 129 and 130 Old Districts and the subject matter of the Redevelopment Contract

“Shanghai Buildings and Shanghai Municipal Buildings and Land Resources Land Bureau” Administrative Bureau (上海市房屋土地資源管理局 )

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Yangpu Redevelopment Operations Shanghai Yangpu Old Area Redevelopment Office” Operations Office (上海市楊浦區舊區改造指揮部辦公室)

“HK$” Hong Kong dollars, the lawful currency of Hong Kong

“RMB” Renminbi, the lawful currency of the PRC

For illustration purposes of this circular, RMB106 = HK$100

– 2 – LETTER FROM THE CHAIRMAN

HOPSON DEVELOPMENT HOLDINGS LIMITED 合生創展集團有限公司* (Incorporated in Bermuda with limited liability) website:http://www.irasia.com/listco/hk/hopson

Executive Directors: Principal Office: CHU Mang Yee (Chairman) 19th Floor AU YEUNG Fu, Anthony (Deputy Chairman) Wyndham Place XIANG Bin (Deputy Chairman) 40-44 Wyndham Street TSE Sai Tung, Stones (Managing Director) Central AU Wai Kin Hong Kong CHEUNG Fong Wing XIAO Yan Xia Registered Office: Clarendon House Independent Non-executive Directors: 2 Church Street YUEN Pak Yiu, Philip Hamilton HM 11 LEE Tsung Hei, David Bermuda WONG Shing Kay, Oliver 9th October 2002

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

1. INTRODUCTION

On 17th September 2002, the Directors announced that on 27th March 2002, Shanghai Hopson, a wholly-owned subsidiary of the Company, entered into the Redevelopment Contract with Yangpu Redevelopment Operations Office for the acquisition of the Shanghai Hopson Development Site. Yangpu Redevelopment Operations Office is a working department of the Shanghai Yangpu Buildings and Land Administrative Bureau (上海市楊浦區房屋土地管理局 ), both of which are independent of and not connected with any of the directors, chief executives, substantial shareholders of the Company or any of its subsidiaries, or any of their respective associates.

* for identification purpose only

– 3 – LETTER FROM THE CHAIRMAN

The Redevelopment Contract constitutes a discloseable transaction of the Company under the Listing Rules. The purpose of this circular is to provide you with details of the Redevelopment Contract and other information in accordance with the Listing Rules.

2. THE REDEVELOPMENT CONTRACT

Pursuant to the Redevelopment Contract, in consideration of cash payments of approximately RMB660 million (approximately HK$623 million) (“Consideration”) in aggregate, Yangpu Redevelopment Operations Office will be responsible for all demolition and relocation works on the Shanghai Hopson Development Site, submitting all necessary applications to include the Shanghai Hopson Development Site within the next round of old area redevelopment zone designated by the Shanghai Buildings and Land Bureau and to assist Shanghai Hopson in applications to develop the Shanghai Hopson Development Site and to obtain the land-use rights certificate(s) for it.

Shanghai Hopson Development Site

The Shanghai Hopson Development Site comprises Shanghai Yangpu 121, 129 and 130 Old Districts, of which “Development Site South” is bordered by Shanghai Yangshupu Power Plant to the west, Huangpu River to the north, Shanghai Yangshupu Gas Plant to the east and Yangshupu Road to the south, and “Development Site North” is bordered by Guiyang Road to the west, Yangshupu Road to the north, Longchang Road to the east and Haizhou Road to the South.

The useable area of Development Site South is approximately 84,000 square metres (approximately 126 mu), with additional public usage redline areas yet to be determined. The useable area of Development Site North is approximately 108,000 square metres (approximately 162 mu), with an additional 17,000 square metres (approximately 25 mu) for public usage. Development Site North is partitioned into Areas A, B, C and D according to a map attached to the Redevelopment Contract. All area references are subject to survey results of the “Survey Borders Technological Report” to be issued by the Shanghai Yangpu Survey Department.

Demolition and relocation works

The demolition and relocation works shall be completed and handed over to Shanghai Hopson according to the following schedule:

Upon payment of second instalment Development Site South Before 27th December 2002 Development Site North A Area Before 27th June 2003 Development Site North B Area Before 26th March 2004 Southern half of Development Site North C Area Before 30th September 2004 Entire Development Site North C Area To be determined by the parties Development Site North D Area

– 4 – LETTER FROM THE CHAIRMAN

Consideration

Shanghai Hopson shall pay Yangpu Redevelopment Operations Office demolition and relocation costs of RMB2.2 million for each mu of useable land and RMB1.1 million for each mu of land for public usage.

The Consideration is payable in cash according to the following schedule:

Upon the Redevelopment Contract taking effect RMB100 million Before 28th April 2002 RMB100 million Before 28th October 2002 RMB130 million Before 27th December 2002 RMB50 million Before 27th June 2003 RMB90 million Before 26th March 2004 RMB90 million Demolition and relocation in respect of Development Site North C Area 90% completed RMB20.24 million

Time of payment in respect of Development Site North D Area shall be determined by the parties.

Final settlement of the balance will be calculated on the basis of actual costs incurred and actual site areas to be set out in the “Survey Borders Technological Report” after all demolition and relocation works are completed. RMB200 million (approximately HK$189 million) had been paid by Shanghai Hopson to Yangpu Redevelopment Operations Office to date in accordance with the Redevelopment Contract.

The Consideration was negotiated between Shanghai Hopson and the Yangpu Redevelopment Operations Office on an arm’s length basis.

The Consideration shall be funded by internal resources of the Company and/or bank borrowings.

Preferential treatment

As part of the new round of old area redevelopment zone, the Shanghai Hopson Development Site will be entitled to:

1. waiver of land use fees;

2. self-budgeting for construction of municipal and public facilities, waiver of residential construction ancillary fees;

– 5 – LETTER FROM THE CHAIRMAN

3. no restriction on the ratio of public facilities to residential premises. Ancillary public facilities shall be constructed in accordance with the necessary requirements of the community. The local government shall not otherwise requisition public facilities;

4. Shanghai Hopson shall cooperate and construct a certain portion of underground facilities for use both during peace and war. Subject to the approval of the civil defence authorities, the construction fee for civil defence facilities shall be waived;

5. waiver of environmental sanitation facilities subsidy;

6. waiver of education subsidy;

7. waiver of demolition and relocation administrative fee and compensation fee for removing the old public houses;

8. waiver of sanitation deposit and the fee for eliminating “four pests”;

9. waiver of ancillary project fee for completion of the residential constructions, the fee for awarding good-quality residences and the fee for quality control of construction projects;

10. waiver of the fee for construction project planning licence, the deposit for city construction filing and the fee for producing files for completion of the construction projects;

11. waiver of environmental protection deposit, the costs for materials fee for new-type wall body and the deposit for greening;

12. waiver from being requisitioned low-priced residences for helping the poor;

13. waiver of all other fees separately levied by various departments and entities under Yangpu District;

14. for so long as Shanghai Hopson is developing the Shanghai Hopson Development Site, it shall be entitled to enjoy the relevant tax preferential policy of the Yangpu District; and

15. in the event that Yangpu Redevelopment Operations Office grants a more favourable policy in respect of another plot of land during the process of redevelopment of the Shanghai Hopson Development Site, Yangpu Redevelopment Operations Office shall also grant to Shanghai Hopson the same preferential treatment.

– 6 – LETTER FROM THE CHAIRMAN

Breach of contract

In the event that Yangpu Redevelopment Operations Office does not hand over the relevant plots of land comprising the Shanghai Hopson Development Site according to schedule, damages of 0.0005% on the corresponding demolition and relocation costs paid by Shanghai Hopson shall be paid by Yangpu Redevelopment Operations Office to Shanghai Hopson for each day of delay. In the event of more than three months’ delay, Shanghai Hopson shall have the right to terminate the Redevelopment Contract, Yangpu Redevelopment Operations Office shall refund without interest all corresponding demolition and relocation costs paid by Shanghai Hopson, and compensate Shanghai Hopson for all losses suffered by Shanghai Hopson as a result of the breach of contract by Yangpu Redevelopment Operations Office.

In the event that Shanghai Hopson falls behind its payment schedule, an additional amount of 0.0005% on the outstanding instalment shall be payable for each day of delay. In the event of more than six months’ delay by Shanghai Hopson, Yangpu Redevelopment Operations Office shall have the right to terminate the Redevelopment Contract, cancel all development rights over the remaining plots of land comprising the Shanghai Hopson Development Site and claim compensation from Shanghai Hopson for all losses suffered by Yangpu Redevelopment Operations Office as a result of the breach of contract by Shanghai Hopson. If Shanghai Hopson chooses to develop Development Site South without Development Site North, land grant fees shall be payable at the rate of RMB2.2 million per mu.

3. BASIS OF DETERMINATION OF CONSIDERATION

The Consideration represents the aggregate demolition and relocation costs of RMB2.2 million for each mu of useable land, and RMB1.1 million for each mu of land for public usage payable by Shanghai Hopson to Yangpu Redevelopment Operations Office. The Consideration was negotiated between Shanghai Hopson and the Yangpu Redevelopment Operations Office on an arm’s-length basis.

4. REASONS FOR THE TRANSACTION

The Group was principally engaged in property development in the Guangdong Province of the PRC and is gradually expanding to targeted cities in the northern provinces, namely, Beijing, Tianjin and Shanghai.

The Shanghai Hopson Development Site is a prime city location bordering the Huangpu River. As an old area targeted for redevelopment, the site also enjoys a whole host of benefits and concessions described above. The Group plans to develop the Shanghai Hopson Development Site as a commodity property area and believes that the site is a strategically valuable acquisition. In view of the prime location of the Shanghai Hopson Development Site and foreseeable relevant market conditions, the Directors consider that the site, after

– 7 – LETTER FROM THE CHAIRMAN redevelopment into a commodity property area, would be of great commercial value and thus have a positive effect on the earnings of the Company. The Directors consider that the terms of the Redevelopment Contract are in the ordinary and usual course of business of the Company, that the terms have been negotiated on an arm’s-length basis and on normal commercial terms, and are fair and reasonable so far as the shareholders of the Company are concerned.

5. DISCLOSEABLE TRANSACTION

The Consideration payable by Shanghai Hopson pursuant to the Redevelopment Contract represents approximately 28.5% of the unaudited net tangible assets value of HK$2,185 million of the Group as at 30th June 2001 (which was the date to which the latest published accounts of the Group as at 27th March 2002 were made up), and would have constituted a discloseable transaction for the Company on the date it was first entered into. The Consideration payable pursuant to the Redevelopment Contract represents approximately 26.3% of the latest published unaudited net tangible assets value of HK$2,367 million of the Group as at 30th June 2002, thus, the Redevelopment Contract still constitutes a discloseable transaction if entered into after the unaudited results for the six months ended 30th June 2002 were published.

Pursuant to Rule 14.13 of the Listing Rules, the Company should have informed the Stock Exchange and published an announcement as soon as possible after the terms of the Redevelopment Contract were agreed, and a circular dispatched to shareholders within 21 days thereafter. The Directors have reviewed the circumstances leading to and surrounding the Redevelopment Contract and sought legal advice, and determined that the reasons for the delay in announcing details of the Redevelopment Contract are:

1. insufficient communication between the operational and compliance departments of the Group;

2. doubt as to its legality and validity as, inter alia, Yangpu Redevelopment Operations Office is simply a working department with no legal person status independent from the Shanghai Yangpu local government, and did not have the legal capacity to enter into the Redevelopment Contract and to perform its obligations thereunder according to its statutory powers; and

3. unexpectedly long lead time in seeking required confirmation as to the legal capacity of Yangpu Redevelopment Operations Office to enter into the Redevelopment Contract and, hence, ratification of the Redevelopment Contract.

The Company sought legal advice on the legality issue in late May 2002, and was advised that written confirmation should be sought from the Shanghai Yangpu local government that the Yangpu Redevelopment Operations Office did indeed have authority to represent the Shanghai Yangpu local government to enter into contracts relating to land with foreign parties.

– 8 – LETTER FROM THE CHAIRMAN

Shanghai Hopson contacted the Shanghai Yangpu local government on numerous occasions for clarification as from early June 2002. Written confirmation in the form of an authorization chopped with the official seal of the Shanghai Yangpu Buildings and Land Administrative Bureau by its legal representative confirming that the Redevelopment Contract was entered into by Yangpu Redevelopment Operations Office with its full authorization, and confirming and ratifying the Redevelopment Contract, was only received by the Company on 12th September 2002.

The Company acknowledges breach of Rule 14.13 of the Listing Rules and the Stock Exchange has stated that it reserves its rights to take appropriate action against the Company and/or the Directors.

6. ANNOUNCEMENT

The Directors would like to bring to your attention that there was an inadvertent typo- error in the announcement of the Company published on 18th September 2002 in respect of this discloseable transaction in The Standard (English version) and Hong Kong Economic Journal (Chinese version) respectively. The error appeared in the last sentence of the second paragraph of the paragraph headed “Breach of contract” in the said announcement which read as “If Shanghai Hopson chooses to develop Development Site South without Development Site North, land grant fees shall be payable at the rate of RMB220 million per mu.”. The Directors confirm that instead of RMB220 million per mu, the correct rate of land grant fees as referred to in the said sentence should be RMB2.2 million per mu. The Directors apologise for such inadvertent typo-error.

7. FURTHER INFORMATION

Your attention is drawn to the valuation report set out in appendix I and the general information set out in appendix II to this circular.

Yours faithfully, By Order of the Board CHU Mang Yee Chairman

– 9 – APPENDIX I VALUATION REPORT

DTZ Debenham Tie Leung International Property Advisers

9th October 2002

The Directors Hopson Development Holdings Limited 19th Floor Wyndham Place 40-44 Wyndham Street Central Hong Kong

Dear Sirs,

Re : Nos. 121, 129 and 130 Jie Fang bounded by Gui Yang Road, Huang Pu River, Long Chang Road and Hai Zhou Road, Yangpu District, Shanghai, the People’s Republic of China

Instructions, Purpose & Date of Valuation

In accordance with the instructions of Hopson Development Holdings Limited (the “Company”) for us to value the captioned property contracted to be acquired by the Company and/or its subsidiaries (hereinafter together referred to as the “Group”) in the People’s Republic of China (the “PRC”), we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the value of this property as at 31st August, 2002 (the “date of valuation”) for the incorporation into the circular of the Company dated 9th October, 2002.

Definition of Open Market Value

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

(a) a willing seller;

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

– 10 – APPENDIX I VALUATION REPORT

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

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

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

Valuation Bases & Assumptions

Our valuation has been made on the assumption that the owner sells the property on the open market without the benefit of a deferred terms contract, leaseback, management agreement, joint venture or any similar arrangements which would serve to increase the value of such property.

In valuing the property which is situated in the PRC, we have valued it on the bases that transferable land use rights in respect of the property for a specific term at nominal annual land use fee have been granted and that any premium payable has already been fully paid. We have also assumed that the grantee or the user of the property has free and uninterrupted rights to use or to assign the property for the whole of the unexpired term as granted. We have relied on the advice given by the Group and the Group’s legal adviser on PRC law – Jun He Law Offices regarding the title to and the Group’s proposed interest in the property.

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

Method of Valuation

In forming our opinion of the value of the property, we have valued it by Direct Comparison Approach assuming sale of the property with vacant possession and by making reference to comparable site transaction and land prices as available in the relevant market.

Source of Information

We have relied to a very considerable extent on the information given by the Group and the Group’s legal adviser on PRC law and have accepted advice given to us on such matters as planning approvals or statutory notices, easements, tenure, development potential, site and floor areas and all other relevant matters.

– 11 – APPENDIX I VALUATION REPORT

Dimension, measurements and areas included in the valuation certificate attached are based on information provided to us and are therefore only approximations. We have had no reason to doubt the truth and accuracy of the information provided to us by the Group which is material to the valuation. We were also advised by the Group that no material facts have been omitted from the information supplied. Unless otherwise stated, we have not been able to carry out on-site measurement to verify the site and floor areas of the property and we have assumed that the areas shown on the copies of the documents handed to us are correct.

Title Investigation

We have been provided with copies of documents in relation to the title to the property. However, we have not carried out searches to verify the ownership of the property and to ascertain any amendment which may not appear on the copies handed to us.

Site Inspection

We have inspected the property. However, we have not carried out investigations on site to determine the suitability of the ground conditions and the services etc. for the future development. Our valuations are prepared on the assumption that these aspects are satisfactory and that no unexpected extraordinary expenses or delays will be incurred during the construction period.

Currency & Exchange Rate

Unless otherwise stated, all money amounts stated herein are in Renminbi (“RMB”) which is the lawful currency of the PRC. For reference purpose, the prevailing exchange rate between Hong Kong dollars and RMB as at the date of valuation was HK$1=RMB1.06 and there has been no significant fluctuation in such exchange rate between that date and the date of this letter.

Our valuation certificate is set forth below.

Yours faithfully, for and on behalf of DTZ Debenham Tie Leung Limited

Andrew K. F. Chan R.P.S.(GP), A.H.K.I.S., M.R.I.C.S. Director

Note: Mr. Andrew K. F. Chan is a Registered Professional Surveyor who has extensive experience in valuation of properties in the PRC.

– 12 – APPENDIX I VALUATION REPORT

VALUATION CERTIFICATE

Particulars of Capital value as at Property Description and tenure occupancy 31st August, 2001

Nos. 121, 129 and 130 The property comprises an The southern part of RMB706,000,000 Jie Fang bounded by irregular-shaped site with the property is Gui Yang Road, Huang an area of approximately currently vacant Pu River, Long Chang 191,808 sq.m. (2,064,621 whilst the northern Road and Hai Zhou sq.ft.). part is currently Road, Yangpu District, under site clearing Shanghai, the PRC The property is planned to works. be developed into a residential development and is permitted to comprise a total gross floor area of not exceeding 450,000 sq.m. (4,843,800 sq.ft.).

The land use rights of the property will be granted for a term of 70 years for residential use from the date of issue of the Certificate for the Use of State-owned Land.

Notes:–

(1) According to the Contract for Development and Construction on Lots 121, 129 and 130 Jie Fang in Yangpu District (the “Development Contract”) entered into between 上海市楊浦區舊區改造指揮部辦公室 (Shanghai Yangpu Old Area Redevelopment Operations Office) (“Party A”) and Shanghai Hopson Property Development Co., Ltd. (“Shanghai Hopson”) (“Party B”) on 27th March, 2002, the parties have agreed to cooperate on the development of the property. The salient terms and conditions stipulated in the said contract are cited, inter alia, as follows:–

(i) The property comprises South Site and North Site. South Site comprises a usable area of 84,123 sq.m. (126.185 mu) with additional road and set back areas yet to be determined; North Site (being partitioned into four areas, namely A, B, C and D) comprises a total usable area of 107,685 sq.m. (161.528 mu) with additional road area of 16,711 sq.m. (25.067 mu). All areas references are subject to survey results of the Survey Borders Technological Report to be issued by Shanghai Yangpu District Survey Department.

(ii) The pre-development fee of North Site D will be the same as that of the other parts of the site (being RMB2,200,000 per mu). However, owing to some uncertain issues, the demolition, resettlement, site levelling and development payments in respect of North Site D will be determined by entering into a separate contract.

(iii) Party A shall be responsible for the demolition, site levelling and resettlement of the site whilst Party B shall be responsible for paying the cost of the same to Party A.

– 13 – APPENDIX I VALUATION REPORT

(iv) The property is permitted to be developed into residential housing with a total gross floor area of not exceeding 450,000 sq.m. (excluding basement area).

(v) Party B shall pay to Party A a total pre-development fee (including that of North Site D) of RMB660,542,300. While time and payment in respect of North Site D shall be further determined by the parties, Party B shall pay to Party A a total consideration of RMB580,235,700 on the following schedule:–

Date Payment

Before 2002/03/27 100,000,000 Before 2002/04/28 100,000,000 Before 2002/10/28 130,000,000 Before 2002/12/27 50,000,000 Before 2003/06/27 90,000,000 Before 2004/03/26 90,000,000 Upon 90% completion of demolition and resettlement on North Site C 20,235,700

(v) Party A shall complete demolition and resettlement of the various parts of the property and hand over the respective parts to Party B on the following schedule:–

Date Part to be handed over

Upon 2nd payment South Site Before 2002/12/27 North Site A Before 2003/06/27 North Site B Before 2004/03/26 North Site C (50%) Before 2004/09/30 North Site C

(2) According to Document No. (2002) 461 issued by Shanghai Housing and Land Resources Administrative Bureau on 20th August, 2002, the property, comprising a total site area of 203,625 sq.m., has been admitted to the re-urbanization area of Yangpu District.

(3) According to Business Licence No. 029579, Shanghai Hopson has been incorporated as a sole-proprietorship foreign enterprise with a registered capital of US$5,000,000 and an operation period from 31st October, 2001 to 30th October, 2071.

(4) The opinion of the Group’s legal adviser on PRC law states, inter alia, that:–

(i) Shanghai Hopson has been duly incorporated as a wholly-owned foreign enterprise under the PRC law on 31st October, 2001. The total investment amount and registered capital of Shanghai Hopson are US$9,800,000 and US$5,000,000 respectively.

(ii) The Development Contract has been duly signed and is legally enforceable.

(iii) Development of the property is subject to certain planning and construction approvals to be obtained from the relevant government authorities of Shanghai.

(iv) Save for (iii) above and by virtue of complying with the terms and conditions stipulated in the Development Contract, Shanghai Hopson may legally obtain the rights of development, construction and sale of the property, subject to the conditional terms on North Site D.

– 14 – APPENDIX I VALUATION REPORT

(v) Save for (iii) above, Shanghai Hopson is entitled to obtain the land use rights of the property pursuant to the Development Contract. By virtue of complying with the terms and conditions stipulated in the Development Contract, Shanghai Hopson may obtain the land use rights of the property by entering into the Contract for Grant of State-owned Land Use Rights with Shanghai Housing and Land Resources Administrative Bureau. By virtue of complying with the terms and conditions stipulated in the Contract for Grant of State-owned Land Use Rights, Shanghai Hopson may transfer, lease and/or mortgage the land use rights of the property throughout the land use term to be granted.

(vi) After completion of the relevant land grant procedures, the land use rights of the property will normally be granted for respective terms of 70 years for residential use, 40 years for commercial use and 50 years for industrial use.

(5) We have relied on the aforesaid legal opinion and prepared our valuation on the following assumptions:–

(i) Shanghai Hopson will be in possession of a proper legal title to the property and will be entitled to transfer the property with the residual term of its land use rights at no extra land premium or other onerous payment payable to the government;

(ii) all land premium and other costs of ancillary utilities services would have been settled in full;

(iii) the development scale of the property is in compliance with the local planning regulations and have been approved by the relevant authorities; and

(iv) the property may be disposed of freely to third parties.

(6) The status of the title and grant of major approvals and licences in accordance with the information provided by the Group are as follows:–

Certificate for the Use of State-owned Land N/A Contract for Grant of State-owned Land Use Rights N/A Planning Permit for Construction Land N/A Planning Permit for Construction Works N/A Building Ownership Certificate/Real Estate Certificate N/A Permit for Overseas/Domestic Pre-sale N/A Business Licence Yes

– 15 – APPENDIX II GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, 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 herein misleading.

2. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests of the Directors in the issued share capital of the Company as recorded in the register maintained by the Company pursuant to Section 29 of the Securities (Disclosure of Interests) Ordinance (“SDI Ordinance”) were as follows:

Number of shares beneficially held Name Notes Personal Corporate

Mr. Chu Mang Yee (a) – 637,500,000 Mr. Au Wai Kin (b) – 37,500,000 Mr. Cheung Fong Wing (c) – 38,000,000 Ms. Xiao Yan Xia 100,000 –

Notes:

(a) These Shares are held by Sounda Properties Limited, a company wholly-owned by Mr. Chu Mang Yee and HKSCC Nominees Limited, a nominee company.

(b) These Shares are held by a company wholly-owned and controlled by Mr. Au Wai Kin.

As at the Latest Practicable Date, the following Directors had interests recorded in the register kept under Section 29 of the SDI Ordinance being options granted under the existing share option scheme of the Company to subscribe for shares in the Company:

Number of Shares Subscription price Name under options granted Date of Grant per share (HK$)

Mr. Tse Sai Tung, 2,000,000 14th July 1998 1.49 Stones 1,000,000 * 14th January 1999 0.61 1,000,000 14th July 1999 1.00 1,000,000 * 14th January 2000 0.75 1,000,000 18th September 2002 1.16

Mr. Xiang Bin 1,000,000 30th April 2002 1.17

* Options granted were exercised

– 16 – APPENDIX II GENERAL INFORMATION

Save as disclosed herein, none of the Directors and chief executives of the Company had any interests in the equity or debt securities of the Company and its associated corporations (within the meaning of the SDI Ordinance) which were required to be notified to the Company and the Stock Exchange pursuant to Section 28 of the SDI Ordinance (including interests which they were deemed or taken to have under Section 31 or Part I of the Schedule to the SDI Ordinance) or which were required, pursuant to Section 29 of the SDI Ordinance, to be entered in the register referred to therein or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange.

No contract, commitment or agreement of significance in relation to the Company’s business, to which the Company or any of its subsidiaries was a party and in which any of the Directors had a material interest, either directly or indirectly, subsisted at the date of this circular.

As at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in any asset which since 31st December 2001, the date to which the latest published audited financial statements of the Group were made up, have been acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group.

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as is known to, or can be ascertained after reasonable enquiry by, the Directors, the persons (not being a Director or the chief executive of the Company) who were, directly or indirectly, interested in 10 % or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company and the amount of such persons’ interests in such securities, together with particulars of any options in respect of such capital, were as follows:

Name Number of issued shares

Sounda Properties Limited 637,500,000

Save as disclosed herein, there is no person known to the Directors, who, as at the Latest Practicable Date, was, directly or indirectly, interested in 10 % or more of the nominal value of the share capital carrying rights to vote in all circumstances at general meetings of the Company or had any options in respect of such capital.

4. EXPERT

The following is the qualification of the expert who has given an opinion or advice contained in this circular:

Name Qualification

DTZ International property advisers

– 17 – APPENDIX II GENERAL INFORMATION

The valuation report was compiled and issued by DTZ for incorporation into this circular. As at the Latest Practicable Date, DTZ did not have any shareholding, directly or indirectly, in any member of the Group or the right to subscribe for or to nominate persons to subscribe for shares in any member of the Group nor any interest, direct or indirect, in any assets which since 31st December 2001, the date to which the latest published audited financial statements of the Group were made up, have been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group. DTZ has given and has not withdrawn its written consent to the issue of this circular with the reference to its name and its valuation report in the form and context in which it appears.

5. MATERIAL CHANGES

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

6. SECRETARY

The secretary of the Company is Ms. Mok Wai Kun, Barbara, a solicitor practising in Hong Kong.

7. LITIGATION

Outward Expanse Investment Limited (“Outward”), a wholly-owned subsidiary of the Company, and Guangdong Zhujiang Investment Limited (“Zhujiang”) were named as the respondents in an arbitration claim brought before China International Economic and Trade Arbitration Commission, Shenzhen Commission (“CIETAC”) by Guangzhou Shanlian Hua Qiao Real Estate Limited (“Shanlian”) on 16th July 2002. Shanlian claims, inter alia, that Zhujiang and Outward are liable to Shanlian for breach of the joint venture contract for Guangzhou Zhujiang Qiaodao Real Estate Limited (“Qiaodao”) entered into between them. Qiaodao is a contractual joint venture incorporated in the PRC for the development of properties located in Haizhu District, Guangzhou, Guangdong Province, the PRC, whose shareholders are Outward, Zhujiang and Shanlian. The claim by Shanlian is scheduled to be heard by the arbitrators at CIETAC on 31st October 2002.

Outward has been advised that Shanlian’s chance of success in the arbitration is not high and the outcome would not, in the opinion of the Directors, have a material adverse effect on the Group’s financial results.

8. MISCELLANEOUS

(a) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda.

(b) The English text of this circular shall prevail over their Chinese texts.

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