10:03 TIAN AN<00028> - Announcement (6) US$9,000,000 and the Group is obligated to contribute only the capital contribution of US$9,000,000. Upon completion of the acquisition under the CZTA Yuan Cheng Acquisition Agreement, CZTA Yuan Cheng shall become a wholly-owned subsidiary of the Company. CZTA Yuan Cheng is principally engaged in property development in the PRC and is involved in the development of *(Changzhou Tian An Villa) ("Changzhou Tian An Villa"). Changzhou Tian An Villa is a residential development project located at Ge Lake, Wu Jin District, Changzhou City, Jiang Su Province, the PRC and is divided into 4 phases. Changzhou Tian An Villa will have a total gross floor area of approximately 142,000 square meters when completed. The residential development is designed to consist solely of villas targeting the high-end market. The development of Changzhou Tian An Villa commenced in 2004 and offered for pre-sale in 2004. The first phase of the project with 112 units is under construction and is expected to be completed by mid-2005. As at the date of this announcement, other than Changzhou Tian An Villa, CZTA Yuan Cheng has no other income-generating business or assets. According to the unaudited management accounts of CZTA Yuan Cheng for the period from 5th March, 2004 to 30th June, 2004, CZTA Yuan Cheng recorded a net loss before and after taxation of approximately RMB80,000 (equivalent to approximately HK$75,500) and approximately RMB80,000 (equivalent to approximately HK$75,500) respectively. The net assets of CZTA Yuan Cheng as at 30th June, 2004 was approximately RMB32,320,000 (equivalent to approximately HK$30,490,600). Both before and after the completion of the CZTA Yuan Cheng Acquisition Agreement, the Company's accounting treatment of its interest in CZTA Yuan Cheng would be the same in that CZTA Yuan Cheng will continue to be accounted for as a subsidiary and consolidated into the next published consolidated accounts of the Company. INFORMATION ON CHANGZHOU CHANGJIANG Changzhou Changjiang is a company incorporated under the laws of the PRC and is principally engaged in property development and trading. To the best of the Directors' knowledge, information and belief, Changzhou Changjiang and its ultimate legal beneficial owners, are independent of and not connected with the Company and its connected persons (as defined under the Listing Rules). LISTING RULES IMPLICATIONS OF THE AGREEMENTS Changzhou Changjiang is a Substantial Shareholder of CZTA City Development and CZTA Yuan Cheng and thus a connected person of the Company under the Listing Rules by virtue of its interests of 10% and 10% in the registered capitals of CZTA City Development and CZTA Yuan Cheng respectively, which are non-wholly owned subsidiaries of the Company. The transactions pursuant to the Agreements thus constitute connected transactions of the Company under Rule 14A.13(1)(a) of the Listing Rules. The Disposal constitutes a non-exempt connected transaction of the Company under Rule 14A.16(5) of the Listing Rules (by virtue of the fact that the revenue ratio is more than 2.5% but less than 25% and the total consideration pursuant to Rule 14.15 exceeds HK$10,000,000) and is therefore subject to the requirements of reporting, announcement and approval by independent Shareholders as set out in Chapter 14A of the Listing Rules. As the applicable percentage ratios of the Acquisitions are less than 2.5% under Rule 14A.32(1) of the Listing Rules, each of the Acquisitions is subject to reporting and announcement requirements. As both the Acquisitions and the Disposal are contemplated under a similar context to enhance the Group's residential property portfolio for long-term development, motions for their approval will be put forward to the independent Shareholders' voting by way of poll at the EGM for their full consideration. To the best of the Directors' knowledge, information and belief and having made all reasonable enquiries, no Shareholder is required under Rule 14A.18 of the Listing Rules to abstain from voting on the resolution(s) regarding the Acquisitions and/or Disposal and the transactions contemplated thereunder at the EGM. The Independent Board Committee will be formed to advise the independent Shareholders in relation to the Acquisitions and the Disposal. An independent financial adviser will be appointed to advise the Independent Board Committee and the independent Shareholders as to whether the terms of the Acquisitions and the Disposal are fair and reasonable so far as the independent Shareholders are concerned. REASONS FOR THE CONNECTED TRANSACTIONS