10:17     SHIMAO CHINA<00649> - Announcement & Resumption (8)                 

    "mixed" property developments means developments                          
    where over 30% of total planned construction GFA,                         
    determined on the basis of master plans, are to be                        
    constructed for non-residential use.                                      
                                                                              
    REASONS FOR AND BENEFITS OF THE DELINEATION                               
    The Directors (including the independent                                  
    non-executive Directors) consider that the terms of                       
    the Undertaking are fair and reasonable and in the                        
    interests of the Company and the Shareholders as a                        
    whole. The Directors' view is based on a number of                        
    business considerations, among which are those set                        
    out in the reasons below. At the Board meeting held                       
    on 19 February 2005 to approve the entering into of                       
    the Undertaking, all those Directors who have a                           
    material interest in the Undertaking abstained from                       
    voting as required by the Bye-laws of the Company.                        
    The remaining Directors, namely Professor Lee Chack                       
    Fan, Mr. Liu Hing Hung and Mr. Zhu Wenhui, voted                          
    unanimously in favour of the resolution approving the                     
    entering into of the Undertaking. The terms of the                        
    Undertaking are on normal commercial terms and were                       
    arrived at after arm's length negotiations.                               
                                                                              
    Whilst the business delineation under the Undertaking                     
    would restrict the Group from property development                        
    and investment activities in Mainland China, and                          
    would therefore mean that the Group will no longer                        
    undertake one of its geographical business segments,                      
    the Board believes that the entering into of the                          
    Undertaking and the delineation of its business from                      
    those of Mr. Hui and his associates are in the                            
    interests of the Company and the continued                                
    development of its business for the reasons stated                        
    in this announcement.                                                     
                                                                              
    (1)     The operating environment in Mainland China has                   
    become increasingly difficult for smaller developers                      
    such as the Group                                                         
    The Group has in the past focused its efforts on the                      
    Mainland China as well as Hong Kong property markets.                     
    However, whilst the property market has seen                              
    improvement during the past year, the operating                           
    environment in the Mainland China property                                
    development industry has become increasingly                              
    difficult financially for smaller developers such as                      
    the Group for the following reasons:                                      
                                                                              
    -      Intense competition for quality sites: As a result                 
    of PRC government policies towards land supply in                         
    recent years, it has become increasingly difficult                        
    for smaller developers such as the Group to secure                        
    land for further property developments in Mainland                        
    China. In May 2001 and May 2002 respectively, the                         
    Shanghai Municipal Government and the Central                             
    Government introduced regulations requiring that                          
    land use rights for residential property development                      
    be sold by public tender, auctions or bidding. This                       
    has put the Group in direct competition with larger                       
    developers including those from Mainland China and                        
    Hong Kong, when quality sites become available. The                       
    Board believes that such competition will continue                        
    to intensify, particularly since 11 December 2004,                        
    when China was required under its WTO commitments to                      
    lift most of the limitations on overseas property                         
    developers. The competition for quality sites has                         
    also led to increases in the price of such sites.                         
    Smaller developers do not have the economies of scale                     
    of their larger counterparts to offset the increase                       
    in unit cost of the land.