10:18     SHIMAO CHINA<00649> - Announcement & Resumption (11)                

    to look outside of Mainland China, in locations where                     
    there are fewer macro-economic policy restrictions,                       
    with a more flexible regulatory regime towards                            
    funding for land cost. The Board is of the view that                      
    this change is necessary, and will be made by the Group,                  
    irrespective of other factors, such as SPHL's                             
    Proposed Listing, or the proposed acquisition of the                      
    Suifenhe Shimao Development Project.                                      
                                                                              
    As such, the Group has been considering a strategy                        
    outside of Mainland China in order to develop its                         
    operating space, where the Group can identify                             
    suitable markets which do not pose high barriers to                       
    entry to smaller developers such as the Group has                         
    faced in Mainland China.                                                  
                                                                              
    As an example of its efforts to seek opportunities                        
    to diversify into locations outside Mainland China                        
    and Hong Kong, the Group had, in August 2004, actively                    
    pursued an opportunity in Malaysia regarding the                          
    purchase of certain property interests for                                
    development. A letter of intent was subsequently                          
    entered into by the Group following negotiations with                     
    the owner of the property. The Group is currently                         
    continuing to pursue similar opportunities in the                         
    Asia Pacific region.                                                      
                                                                              
    (3)     The Undertaking provides the Group the                            
    operating space separate from the potentially                             
    competing interests of Mr. Hui and his associates that                    
    it must have in order to develop its new strategic                        
    business focus                                                            
    Mr. Hui and his associates currently hold significant                     
    property development interests outside the Group,                         
    including the property development and investment                         
    interests in Mainland China of the SPHL Group and of                      
    the Private Group.                                                        
                                                                              
    The Group has considered a number of opportunities                        
    both in as well as outside Mainland China, including                      
    the possible acquisition of Mr. Hui's Mainland China                      
    property development and investment business of the                       
    SPHL Group. Whilst the acquisition of the SPHL Group                      
    would have been an opportunity on a standalone basis,                     
    an injection of sizeable assets by Mr. Hui in the form                    
    of the SPHL Group would have a number of potential                        
    effects on the Group, including the level of debt that                    
    it may have to assume in order to finance such purchase                   
    as well as the Company's public float (which is                           
    currently 25.26%). The Board notes that, as at 30 June                    
    2004, the Group has cash on hand of only around HK$9                      
    million.                                                                  
                                                                              
    In addition, Mr. Hui is also currently interested in                      
    the Suifenhe Shimao Development Project, which is                         
    located in a region designated for the development                        
    of cross-border commerce and tourism between Russia                       
    and the PRC and is planned to include a mixture of                        
    residential, hotel, office and retail space and                           
    warehousing and logistics, and leisure and                                
    entertainment facilities. The Group did not undertake                     
    this project at the outset due to its lack of financial                   
    resources for a project of this size and the Group's                      
    operating environment described above.                                    
                                                                              
    The Group faces potential competition from the SPHL                       
    Group in Mainland China whether or not the Proposed                       
    Listing takes place. In the absence of a delineation                      
    of the business in the form of a non-competition                          
    undertaking, the Group also faces the threat of                           
    competition from the property development interests                       
    of Mr. Hui and his associates, in the form