The Directors announce that Hollyfield Holdings Limited ("Hollyfield"), a wholly-owned subsidiary of the Company, entered into an agreement ("Joint Venture Agreement") with Shanghai Zhong Hong (Group) Company Limited ("Shanghai Party") on 27th April, 2001 for the establishment of a joint venture company ("JV Company") in the PRC. JV Company will have a registered capital of Rmb 467 million (approximately HK$ 436 million) which will be contributed as to 99 per cent. by Hollyfield and 1 per cent. by Shanghai Party. The investment cost is Rmb 1,400 million (approximately HK$1,308 million) being the estimated development cost for the first phase of the Project. It is expected that the excess of the investment cost over the registered capital will be largely financed by banking facilities and internal funds. The principal activities of JV Company will be the construction and development in phases of certain parcels of land ("Project") totalling approximately 300,000 square metres for residential and ancillary commercial uses in the Hong Kou District in Shanghai, PRC, currently known as "Rui Hong Xin Cheng" and, producing upon completion of the entire Project, a total gross floor area of approximately 1.35 million square metres. It is currently contemplated that the JV Company will develop, for the first phase of the Project, a parcel of land measuring approximately 52,000 square metres and producing, upon completion, a total gross floor area of approximately 237,000 square metres, of which approximately 160,000 square metres will be for residential units and the rest for commercial units and car parks. The land is located on top of a metro station which is expected to be opened in the year 2003. Shanghai Ruichen Property Company Limited ("Connected Company") is a subsidiary of Shui On Company Limited, which is indirectly interested in approximately 64 per cent. of the Company, and is undertaking the development of site number 5 of Rui Hong Xin Cheng (not forming part of the Project). Pursuant to an agreement ("Relinquishment Agreement") dated 2nd May, 2001 between Hollyfield and the Connected Company, the Connected Company, which currently holds the development rights and title to the Project, has agreed to, amongst others: (i) relinquish and surrender the development rights and title to the Project; and (ii) use all reasonable endeavours to procure the relevant regulatory authorities in the PRC to grant in favour of JV Company the necessary development rights and title to the Project. In consideration for the above, Hollyfield will procure JV Company to: (i) pay Connected Company a sum of Rmb 184,546,731 (approximately HK$172 million) which has been calculated based on the costs of certain public infra-structure and site clearance works paid by the Connected Company in respect of the Project within 10 business days after the JV Company has received all the necessary new documents of title in favour of the JV Company; and (ii) from time to time pay to Connected Company, in respect of each square metre of the residential units sold, a sum equal to 20 per cent. of the portion of achieved average selling price over and above Rmb 7,500 per square metre ("Base Price") and, in respect of each square metre of the commercial units leased, a sum equal to 20 per cent. of the portion of achieved average rental over and above USD 0.7 per square metre per day ("Base Rental"). In the event that the amount so calculated is equal to or less than zero, no amount shall be payable to Connected Company. In the event that if the aggregate of the site clearance cost and construction cost in respect of each phase of the Project exceeds the estimated cost of Rmb 5,200 per square metre, then the Base Price and the Base Rental will also be adjusted according to the same percentage of increase. Moreover, in the event that any commercial unit of any particular phase is sold, the sale proceeds will be apportioned between the JV Company and the Connected Company in order to reflect the sharing of rental income in relation to such unit. Under the Listing Rules, the Joint Venture Agreement constitutes a discloseable transaction, while the Relinquishment Agreement constitutes a connected transaction for the Company and is subject to the approval of the Independent Shareholders. An Independent Board has been formed to consider the terms of the Relinquishment Agreement and to make the appropriate recommendation to the Independent Shareholders. An independent financial adviser will be appointed to advise the Independent Board.

JOINT VENTURE AGREEMENT
Date of agreement:	27th April, 2001
Parties:	Hollyfield and Shanghai Party
Business:	To construct and develop in phases certain parcels of land of approximately 300,000 square metres for residential and ancillary commercial uses in the Hong Kou District, Shanghai, PRC.
Investment cost:	Rmb 1,400 million (approximately HK$1,308 million) (based on the estimated total development cost for the first phase of the Project)
Registered capital:	A total of Rmb 467 million (approximately HK$436 million) will be contributed as to 99 per cent. by Hollyfield and 1 per cent. by Shanghai Party, of which Rmb 100 million will have to be paid within 90 days of the establishment of the JV Company according to their respective shareholdings. It is expected that the excess of the investment cost over the registered capital will be largely financed by banking facilities and internal funds.
Board of directors:	The board of directors of the JV Company will comprise six directors. Hollyfield will be entitled to appoint five directors while Shanghai Party will be entitled to appoint one. The managing director and the deputy managing director will be appointed by Hollyfield and Shanghai Party respectively.
Term:	70 years from the date of issue of the land use right certificate in favour of the JV Company.
Profit and loss:	To be shared between Hollyfield and Shanghai Party in proportion to their respective shareholdings in the JV Company.
Dissolution:	At the end of the term of the JV Company, all fixed assets of the JV Company will belong to Shanghai Party and upon completion of an audit undertaken in accordance with the relevant laws and regulations, all remaining current assets will be distributed to Hollyfield.
Governing law:	Laws of the PRC
Conditions precedent:	(i) Approvals of the relevant government authorities in Shanghai; and (ii) the approval of the Independent Shareholders of the Joint Venture Agreement and the Relinquishment Agreement if required by the Listing Rules.
Special reserve fund:	Hollyfield and Shanghai Party will each contribute Rmb 50 million into a special reserve fund to be set up by the for subsidising the development cost of all phases except the first phase of the Project.
THE RELINQUISHMENT AGREEMENT
Date:	2nd May, 2001
Parties:	Hollyfield and Connected Company
Undertaking:	(a) The Connected Company undertakes in favour of Hollyfield that it shall on demand (i) relinquish and surrender the development rights and title to the Project; (ii) use all reasonable endeavours to procure the relevant regulatory authorities in the PRC to grant in favour of the JV Company documents of title subject to which and with the benefit of which JV Company shall hold all interests and rights in the Project on substantially the same terms and conditions as are currently held by the Connected Company and for a minimum term of years which shall be for the residue of the terms of years according to the original development rights and title to the Project held by the Connected Company; and (iii) execute and deliver such documents and do such things as may reasonably be required to fulfill its obligations under the Relinquishment Agreement; and (b) Hollyfield undertakes in favour of the Connected Company that it shall use all reasonable endeavours to procure (i) the setting up of the JV Company; and (ii) subject to the Connected Company having done such things as may reasonably be expected to be done by it pursuant to its undertaking, the JV Company to make the Reimbursement to the Connected Company and to execute and deliver such documents and to do such things as may reasonably be required to obtain the necessary new title documents.
Reimbursement:	Hollyfield shall procure the JV Company to pay to Connected Company a sum of Rmb 184,546,731 (approximately HK$172 million) within 10 business days after the JV Company has received all the necessary new documents of title in favour of the JV Company. The sum of Rmb 184,546,731 (approximately HK$172 million) is calculated based on the amount of costs paid by the Connected Company for certain public infrastructure and site clearance works in respect of the Project.
Revenue sharing arrangement:	In consideration of Connected Company agreeing to the above undertakings and the Reimbursement arrangement, Hollyfield will procure the JV Company to pay to Connected Company, in respect of each square metre of the residential units sold, a sum equal to 20 per cent. of the portion of achieved average selling price over and above the Base Price and, in respect of each square metre of the commercial units leased, a sum equal to 20 per cent. of the portion of achieved average rental over and above the Base Rental. In the event that (i) the amount so calculated is equal to or less than zero, no amount shall be payable to Connected Company; and (ii) if the aggregate of the site clearance cost and construction cost in respect of each phase of the Project shall exceed the estimated cost of Rmb 5,200 per square metre, the Base Price and the Base Rental will be adjusted according to the same percentage increase. The Base Price in respect of the residential units of any particular phase shall be calculated as soon as reasonably practicable (i) when 90 per cent. or more of the residential units in that phase of the Project has been sold; or (ii) 18 months after that phase of the Project has been completed, whichever is earlier, and every six months thereafter. The Base Rental in respect of any commercial units of any particular phase shall be calculated as soon as reasonably practicable when 85 per cent. or more of the commercial units in that phase of the Project has been leased, and every six months thereafter. In the event that any commercial unit of any particular phase is sold, the sale proceeds will be apportioned between the JV Company and the Connected Company in order to reflect the sharing of rental income in relation to such unit as described above.
Conditions Precedent:	(i) the Relinquishment Agreement being approved by the Independent Shareholders as required by the applicable Listing Rules; and (ii) the grant of all the necessary new documents of title to the JV Company (including the land use right certificates) being completed on or before 31 October 2001.

REASONS FOR THE ESTABLISHMENT OF JV COMPANY

The core businesses of SOCAM are construction, contracting, construction materials and property development primarily in the Hong Kong Home Ownership Private Sector Participation Scheme, and SOCAM's principal objective is to maximize total returns to Shareholders over time. An investment in JV Company, which will target at the mass housing market in Shanghai and have a synergy with the core businesses of SOCAM, will allow SOCAM to achieve this objective by continuing its business focus on the construction and construction related sector whilst opening up a new area with long term growth prospects. The Directors believe that with SOCAM's successful track record in the Hong Kong Home Ownership Private Sector Participation Scheme, an investment in JV Company should also provide an attractive opportunity for the Company to further diversify its operations into property development in the quality mass housing sector in Shanghai, the PRC while optimising the use of its experience and resources in the construction, contracting, cost control, and project management businesses. Land supply for large scale development in the city centre of Shanghai is limited. The Directors believe that the terms of the Joint Venture Agreement are fair and reasonable. In view of the above, the Directors believe that the investment in JV Company is beneficial to the Company and the Shareholders as a whole.

INFORMATION ON SOCAM

The principal activities of the Company are in construction and contracting, renovation and fitting out, manufacturing and trading of construction materials including cement, stone aggregates and concrete, and property development primarily in the Hong Kong Home Ownership Private Sector Participation Scheme.

CONNECTED AND DISCLOSEABLE TRANSACTIONS

Discloseable transaction

Under the Listing Rules, the Joint Venture Agreement constitutes a discloseable transaction for SOCAM.

Connected transaction

The Connected Company is a subsidiary of Shui On Company Limited which is indirectly interested in approximately 64 per cent. of SOCAM. Accordingly, the Relinquishment Agreement constitutes a connected transaction for SOCAM under the Listing Rules and is subject to the approval of the Independent Shareholders in a Special General Meeting.

INDEPENDENT BOARD AND INDEPENDENT FINANCIAL ADVISER

The Independent Board has been formed to consider the terms of the Relinquishment Agreement and to advise the Independent Shareholders as to whether the terms are fair and reasonable. An independent financial adviser will be appointed in due course to advise the Independent Board.

SPECIAL GENERAL MEETING AND CIRCULAR

A circular containing details of the Joint Venture Agreement and the Relinquishment Agreement, a notice convening the Special General Meeting to approve the Relinquishment Agreement, a letter of recommendation from the Independent Board and a letter of advice to the Independent Board from the independent financial adviser as to whether the terms of the Relinquishment Agreement are fair and reasonable so far as the Independent Shareholders are concerned will be despatched to Shareholders as soon as practicable in accordance with the Listing Rules.

The Special General Meeting will be convened on or around 13th June, 2001 in which ordinary resolutions to approve the Relinquishment Agreement will be proposed. Shui On Company Limited and its associates (as defined in the Listing Rules) shall abstain from voting at the Special General Meeting.

DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context required otherwise:-

"Connected Company"	Shanghai Ruichen Property Company Limited, a sino foreign joint venture set up in the PRC which is indirectly held as to 99 per cent. by Shui On Company Limited which is indirectly interested in approximately 64 per cent. of SOCAM
"Directors"	the directors of the Company
"Hollyfield"	Hollyfield Holdings Limited, a wholly-owned subsidiary of the Company
"Independent Board"	the independent committee of the board of Directors appointed to advise the Independent Shareholders in respect of the Relinquishment Agreement
"Independent Shareholders"	shareholders other than Shui On Company Limited and its associates (as defined in the Listing Rules)
"Joint Venture Agreement"	the agreement entered into between Hollyfield and Shanghai Party on 27th April, 2001 for the establishment of the JV Company to develop the Project
"JV Company"	the sino foreign joint venture to be set up in the PRC which will be held as to 99 per cent. by Hollyfield and 1 per cent. by Shanghai Party pursuant to the Joint Venture Agreement
"Listing Rules"	the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
"PRC"	The People's Republic of China
"Project"	The construction and development in phases of certain parcels of land totalling approximately 300,000 square metres for residential and ancillary commercial uses in the Hong Kou District in Shanghai, PRC
"Relinquishment Agreement"	the agreement entered into between Connected Company and Hollyfield on 2nd May, 2001 regarding the Reimbursement and the revenue sharing arrangement between the two said parties
"Reimbursement"	the reimbursement by Hollyfield to Connected Company of Rmb 184,546,731 (approximately HK$172 million) which is calculated based on the costs incurred by Connected Company in respect of certain public infrastructure and site clearance works in respect of the Project
"Shanghai Party"	Shanghai Zhong Hong (Group) Company Limited
"Shareholders"	shareholders of the Company
"SOCAM" or     the "Company"	Shui On Construction and Materials Limited
"Special General Meeting"	A special general meeting to be convened by the Company to approve the Relinquishment Agreement

In this announcement, except as otherwise indicated, Rmb has been translated into HK$ at the rate of HK$1 = Rmb 1.07 for reference purpose.

By Order of the Board
Shui On Construction and Materials Limited
Choi Yuk Keung, Lawrence
Managing Director

Dated: 2nd May, 2001, Hong Kong

* For identification purposes only

Please also refer to the published version of this announcement in South China Morning Post, Hong Kong Economic Times and Hong Kong Economic Journal.