10:04 TIAN AN<00028> - Announcement (7) The Group is principally engaged in property development and investment, hotel operation, provision of hotel and property management and agency services, investment holding and the sale of construction materials. Based on the Company's knowledge and experience of the PRC residential property market and its experience with the operation and management of the Group's subsidiaries, the Directors expect that the market demand for residential property will continue to grow and will have good financial prospects. As at the date of this announcement, whilst the major asset of CZTA City Development and CZTA Yuan Cheng are Changzhou New City Garden and Changzhou Tian An Villa respectively both of which are residential developments with good financial prospects, the major asset of CZTA Real Estate is North City Industrial Estate, which is a vacant site mainly for industrial and office uses. To focus its property portfolio on residential property for its long-term business development, the Group is restructuring its interests in the sino-foreign equity joint ventures established in Changzhou, the PRC such that the Group will obtain full control and financial benefits of the residential projects indirectly held by CZTA City Development and CZTA Yuan Cheng. As a result of the transactions contemplated under the Agreements, the Company shall cease to have any interest in CZTA Real Estate whereas CZTA City Development and CZTA Yuan Cheng shall become wholly-owned subsidiaries of the Company. Since the Group is entering into the transactions under the Agreements with the same party, i.e. Changzhou Changjiang, in totality, the Group will receive a nominal discount in the sum of approximately RMB810,400 as a result of the transactions under the Agreements. In other words, the discount given in the Disposal in the sum of approximately RMB3,594,000 (net asset value of CZTA Real Estate as at 31st December, 2004 of approximately RMB11,664,000 reduced by the consideration in the sum of RMB8,070,000) will be more than compensated by the discount to be received in the acquisition in the sum of approximately RMB4,404,400 (net asset value of CZTA City Development as at 31st December, 2004 of approximately RMB6,598,400 reduced by the consideration in the sum of RMB2,194,000) under the CZTA City Development Acquisition Agreement. The Directors (excluding the Independent Non-Executive Directors who will form the Independent Board Committee which will obtain advice from the independent financial adviser to be appointed) are of the view that the terms of the CZTA Real Estate Disposal Agreement were agreed after arm's length negotiations, on normal commercial terms and in the ordinary and usual course of business of the Company and are fair and reasonable and the entering into of the CZTA Real Estate Disposal Agreement is in the interests of the Company and the Shareholders as a whole. The Directors (including the Independent Non-Executive Directors) are of the view that the terms of the CZTA City Development Acquisition Agreement and the CZTA Yuan Cheng Acquisition Agreement were agreed after arm's length negotiations on normal commercial terms and in the ordinary and usual course of business of the Company and are fair and reasonable and the entering into of the CZTA City Development Acquisition Agreement and the CZTA Yuan Cheng Acquisition Agreement are in the interests of the Company and the Shareholders as a whole. GENERAL INFORMATION The Group is principally engaged in property development and investment, hotel operation, the provision of hotel and property management and agency services, investment holding and the sale of construction materials. As at the date of this announcement, the Board comprises Mr. Patrick Lee Seng Wei (Chairman), Mr. Ng Qing Hai (Managing Director), Mr. Ma Sun, Mr. Edwin Lo King Yau and Mr. Li Chi Kong being the Executive Directors, Mr. Moses Cheng Mo Chi and Miss Lisa Yang Lai Sum being the Non-Executive Directors, and Mr. Francis J. Chang Chu Fai, Mr. Goodwin Gaw, Mr. Ngai Wah Sang and Mr. Xu Su Jing being the Independent Non-Executive Directors. DEFINITIONS "Acquisitions" the acquisitions of interests contemplated under the CZTA City Development Acquisition Agreement and the CZTA Yuan Cheng Acquisition Agreement "Agreements" the CZTA Real Estate Disposal Agreement, the CZTA City Development Acquisition Agreement and the CZTA Yuan Cheng Acquisition Agreement