11:23     HK CONSTRUCTION<00190> - Announcement (6)                           

    the parties to the Equity Transfer Agreements having                      
    taken into account a number of factors including,                         
    among other things, (i) the current financial                             
    position of the Group (including in particular the                        
    liquidity position of the Group); (ii) the registered                     
    capital and total investment cost of the Project                          
    Companies and (iii) the actual amount of costs and                        
    expenses incurred by the Transferor for the Projects.                     
                                                                              
    After completion of the Equity Transfer Agreements,                       
    the Group will have 29% and 75% equity interests in                       
    Project Company I and Project Company II respectively                     
    (subject to exercise of the Option by APC in respect                      
    of Project Company II).                                                   
                                                                              
    The costs for carrying out the Projects are estimated                     
    to be about RMB600 million (about HK$566 million).                        
    Both Project (Phase I) and Project (Phase II) are                         
    expected to be completed and commence operation by                        
    the end of 2005 and to generate revenue from tariffs                      
    in 2006.                                                                  
                                                                              
    3.2     Reasons for and benefit of the Equity Transfer                    
    Agreements                                                                
    The Group has remained as a predominant construction                      
    company for over 30 years. Over the past 30 years,                        
    the Company has developed the capability to act as                        
    general contractor on the most sophisticated and                          
    technically complex construction projects in Hong                         
    Kong and the PRC. It is one of the most prestigious                       
    contractors in Hong Kong and is well known for                            
    adopting internationally advanced technology. It has                      
    solid track records in various civil and buildings                        
    work undertaken in both Hong Kong and the PRC,                            
    including roads and highways, land reclamation, ports,                    
    water works, bridges, submerged tube tunnel, site                         
    formation, container terminals, power plants,                             
    apartment, government buildings and interior                              
    decoration.                                                               
                                                                              
    The Group has undertaken various projects in the                          
    energy field including the Castle Peak 'A' and 'B'                        
    Power Stations at Tap Shek Kok, Penny's Bay Gas                           
    Turbine Power Station in Lantau, and Yangpu Power                         
    Station in Hainan, PRC. The Board believes that the                       
    Group can apply its expertise in such civil                               
    construction works, including but not limited to,                         
    project management and cost control, to carry out the                     
    Projects successfully.  Although the Group has not                        
    owned or operated any wind power plants in the past,                      
    the Group can recruit personnel or outsource                              
    professional managers (if necessary) to manage the                        
    wind power plants when they commence operation at the                     
    end of 2005.  Meanwhile, the project management team                      
    and the accounting team of the Group have sufficient                      
    resources to manage and supervise the wind power                          
    plants construction.                                                      
                                                                              
    As set out in the Company's announcement dated 23                         
    March 2005, the Board believes that following the                         
    completion of the debt restructuring exercise in                          
    April 2004, and in order to tackle with the                               
    increasingly challenging market ahead, it is in the                       
    interests of the Company and the Shareholders as a                        
    whole to review and expand its revenue stream and/or                      
    profitability as and when appropriate so as to reduce                     
    the reliance on the volatile property markets in Hong                     
    Kong and the PRC and to secure a stable revenue                           
    environment/model for the Company's investors. The                        
    Directors consider that the Wind Power Acquisition                        
    offers a prime opportunity for the Group to diversify                     
    its earnings basis to the wind power generation market                    
    in the PRC. The Group can also capitalize on the growth                   
    opportunities and