09:03 NEW WORLD CHINA<00917> - Announcement (2) The terms and conditions of the Agreement, including the consideration to be paid by NWDC to Beijing Bank for the Sale Interests, are determined after arm's length negotiation between the parties thereto with reference to, among others, the prevailing market price of land in Dalian, the PRC and the Directors believe that the terms and conditions of the Agreement are fair and reasonable and are in the interests of the shareholders of the Company as a whole. INFORMATION OF DALIAN IFC Dalian IFC was incorporated in the PRC on 8 March 1993 with limited liability and it was owned as to 70% and 30% by Beijing Bank and NWDC, respectively, as at the date of the Agreement. Upon completion of the Agreement, Dalian IFC will become an indirect wholly-owned subsidiary of the Company. The sole asset and business of Dalian IFC is the ownership and development right of a piece of land situated at No. 41 Renmin Lu, Zhongshan District, Dalian, the PRC and the land use right of which was acquired on 26 March 1994. The superstructure of the residential and commercial complex with gross floor area of approximately 215,166 square metres is now being built on the land, with completion expected to be in or around 2008 or 2009. As at the date of the Agreement, approximately RMB 224,005,498 (equivalent to HK$211,326,787) has been used for the preparation and construction of the complex. The estimated cost of completion of such residential and commercial complex is approximately RMB844,109,508 (equivalent to HK$796,332,910). The unaudited net asset value of Dalian IFC as at 30 June 2004 was RMB496,606,955 (equivalent to HK$468,499,001). The unaudited net loss after taxation of Dalian IFC for the financial years ended 31 December 2003 and 31 December 2004 was RMB1,708 (equivalent to HK$1,611) and RMB47,656 (equivalent to HK$44,959), respectively. INFORMATION OF DALIAN NWH Dalian NWH was incorporated in the PRC on 28 April 1995 with limited liability and it was owned as to 65%, 30% and 5% by Beijing Bank, NWDC and Dalian Zhongshan District Foreign Enterprise Service Centre, respectively, as at the date of the Agreement. Upon completion of the Agreement, Dalian NWH will be owned as to 95% by NWDC and 5% by Dalian Zhongshan District Foreign Enterprise Service Centre, a third party which is not a connected person of the Company and is independent of the Company and its connected persons. Dalian NWH is the holder of a licence in hotel operation which is not expected to commence any business operation until the completion of the construction of the residential and commercial complex by Dalian IFC. So far as the Directors are aware, no further approvals from government authorities in the PRC will be required for the commencement of operation of the hotel business by Dalian NWH. The unaudited net asset value of Dalian NWH as at 30 June 2004 was RMB217,000 (equivalent to HK$204,718). Dalian NWH did not make any profit or incur any loss for the two financial years ended 31 December 2004. The value of the aggregate consideration for the Sale Interests represents a premium of approximately 27% to the aggregate amount of the unaudited attributable net asset value of the Sale Interests. REASONS FOR ENTERING INTO THE AGREEMENT In view of the positive economic environment in Dalian, the Board believes that there will be persistent demand for properties in Dalian, thus the acquisition of further interest in Dalian IFC will provide an excellent opportunity for the Company to strengthen its control in Dalian IFC and increase its interests in the land owned by Dalian IFC which is valuable for future development, taking into account its prime position in the commercial centre of Dalian and that there is a lack of land supply in the vicinity. Dalian NWH, a holder of a hotel licence, will serve as a vehicle for the Group to enter into hotel business in Dalian when suitable opportunity arises. DISCLOSEABLE TRANSACTION According to the Listing Rules, as the consideration ratio (as defined in Rule 14.07(1) of the Listing Rules) is more than 5% but less than 25%, the Agreement constitutes a discloseable transaction for the Company which is subject to the notification and publication requirements as set out in Rules 14.34 to 14.39 of the Listing Rules. A circular containing details of the Agreement will be despatched to shareholders of the Company as soon as practicable. INFORMATION RELATING TO THE COMPANY The principal business of the Company includes property development and property related investments in the PRC.