09:23 CHINA OVERSEAS<00688> - Announcement (1) The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. CHINA OVERSEAS LAND & INVESTMENT LTD. (incorporated in Hong Kong with limited liability) (Stock Code : 688) EXEMPTED CONNECTED TRANSACTION ACQUISITION OF A DESIGN CONSULTANCY COMPANY The Directors announce that on 18 May, 2005, the Share Vendor, Loan Assignor, the Share Purchaser and the Loan Assignee entered into the Hua Yi Agreement whereby the Share Vendor and the Loan Assignor has agreed to sell and transfer and the Share Purchaser and the Loan Assignee agreed to purchase the Hua Yi Shares and the Hua Yi Loan for cash consideration of HK$74,700,000 and HK$18,207,245.22 respectively. COHL is a controlling shareholder of the Company. The Share Vendor, being a direct wholly owned subsidiary of COHL, is an associate of COHL and therefore both the Share Vendor and COHL (as Loan Assignor) are connected persons of the Company under the Listing Rules. The Hua Yi Agreement and the transaction contemplated thereunder therefore constitutes a connected transaction of the Company for the purpose of the Listing Rules. The applicable size tests under the Hua Yi Agreement is less than 2.5% for each of the percentage ratios calculated pursuant to Rule 14.07 of the Listing Rules, the Hua Yi Agreement is exempted under Rule 14A.32(1) of the Listing Rules and is only subject to the reporting and announcement requirements in accordance with Chapter 14A of the Listing Rules. The details of the transaction will be included in the Company's next published annual report and accounts. THE HUA YI AGREEMENT DATED 18 MAY, 2005 Parties: (1) Share Vendor: CSCHK, a direct wholly owned subsidiary of COHL (2) Loan Assignor: COHL (3) Share Purchaser: the Company (4) Loan Assignee: Chung Hoi, an indirect wholly owned subsidiary of the Company Assets to be acquired: (1) the Hua Yi Shares; and (2) the Hua Yi Loan Consideration (1) Hua Yi Shares: HK$74,700,000 (2) Hua Yi Loan: HK$18,207,245.22 (3) Total: HK$92,907,245.22 The consideration was determined after arm's length negotiation between the parties involved with reference to the price earning ratio of 4.5 times of Hua Yi's audited net profit before property deficit in 2004 of HK$16,596,282 and the principal amount of the Hua Yi Loan as at 18 May, 2005 of approximately HK$18,207,245.22. A cash deposit of HK$10,000,000 has been paid on signing of the Hua Yi Agreement. There are no conditions precedent to completion of the Hua Yi Agreement. The balance consideration will be paid in cash upon completion which is within 7 days from the signing of the Hua Yi Agreement. All payments will be financed out of the internal resources of the Group. Other Terms COHL, being the parent company for the Share Vendor, would guarantee to the Company that the audited net profit for the year ended 31 December, 2005 and 31 December, 2006 will not be less than HK$16,596,282 per year ("Annual Guaranteed Profit"). If the annual audited net profit is less than the Annual Guaranteed Profit in any of these two years, COHL shall pay or shall procure the Share Vendor to pay the shortfall to the Company within 30 days from receiving the notice of demand and the audited account of Hua Yi from the Company. A further announcement will be made by the Company in compliance with Rule 14A.57 of the Listing Rules where applicable. INFORMATION ON HUA YI AND SHENZHEN HUA YI Hua Yi Hua Yi is a private limited liability company incorporated in Hong Kong on 5 August, 1986 and the principal activities are design consultants in buildings and investment holdings. Its principal asset is the investment in its wholly owned subsidiary, Hongkong Hua Yi Designing Consultants (Shenzhen) Ltd ("Shenzhen Hua Yi").