09:56     SHIMAO CHINA<00649> - Announcement & Resumption (10)                

    and any definitive agreement is entered into between                      
    Suifenhe Shimao and the Russian Party for the purpose                     
    of any joint project development in the Intertrading                      
    Zone.                                                                     
                                                                              
    REASONS FOR THE S&P AGREEMENT AND THE ISSUE OF                            
    CONVERTIBLE NOTE                                                          
    The principal activity of the Company is investment                       
    holding. The principal subsidiaries of the Company                        
    are principally engaged in property investment and                        
    development in Hong Kong and the PRC, the provision                       
    of management services to the properties it developed                     
    and investment holding.                                                   
                                                                              
    The Group currently has two property development                          
    projects, Shimao Lakeside Garden and the two detached                     
    houses developed on the site of The Genesis. Shimao                       
    Lakeside Garden is expected to be completed in                            
    mid-2005 whilst the two houses are currently being                        
    offered for sale. As its property development                             
    projects come to an end, the Group currently has no                       
    property development projects in the PRC in the                           
    pipeline and that it does not have a land bank to draw                    
    from. The Group has been actively evaluating its                          
    business strategy going forward and intends to pursue                     
    a business strategy of property development and                           
    investment in international markets outside the PRC.                      
    As such, the Suifenhe Shimao Development Project                          
    represents an important step to realising this                            
    strategic business focus.                                                 
                                                                              
    The location of the Suifenhe Shimao Development                           
    Project presents the Group with a platform to pursue                      
    its international business strategy going forward,                        
    as the majority of the site of the project is situated                    
    in Russian territory. In addition, as described in                        
    the paragraph headed "The Pogranichny-Suifenhe                            
    Intertrading Economic Zone", the Group expects to                         
    leverage on the location of the Suifenhe Shimao                           
    Development Project and the expected significant                          
    commercial and economic development of the area as                        
    Chinese-Russian trade and tourism continues to                            
    flourish in the area.                                                     
                                                                              
    Further, the Suifenhe Shimao Development Project will                     
    involve warehousing, logistics and leisure and                            
    entertainment facilities in addition to the more                          
    traditional property development components of                            
    residential, office and retail space. As such, the                        
    project would also offer the Group an opportunity to                      
    develop a variety of properties, compared to the                          
    Group's current two projects which are both                               
    residential-only developments.                                            
                                                                              
    Given the variety of facilities that the Suifenhe                         
    Shimao Development Project is planned to offer and                        
    its location in a region designated for the                               
    development of cross-border commerce and tourism                          
    between Russia and the PRC, the Board believes that                       
    the Suifenhe Shimao Development Project has                               
    significantly better potential for the Group and                          
    represents a significant opportunity for the Group                        
    to diversify into more areas of property development,                     
    as well as providing the Group with a timely platform                     
    to pursue its international business strategy going                       
    forward.                                                                  
                                                                              
    The Group also announced that, as the Group's current                     
    property development projects in the PRC reach                            
    completion, the Group will pursue a business strategy                     
    of property development and investment in                                 
    international markets outside mainland PRC, and in                        
    this regard, the non-competition undertaking dated                        
    19 February 2005 was entered into between the Company,                    
    Mr. Hui and other parties, pursuant to