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Introduction
The directors (the "Directors") of Shui On Construction and Materials Limited (the "Company") announce that, on 3rd July, 1997, Kotemax Limited (the "Purchaser"), a wholly owned subsidiary of the Company entered into an agreement for sale and purchase (the "Agreement") with Kwong Nam Textile Limited (the "Vendor"), with respect to the acquisition (the "Acquisition") by the Purchaser from the Vendor of the Property (as defined below) for a cash consideraton of HK$155,000,000.00 (the "Consideration").

The Vendor is an independent third party not connected with the Company, directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates as defined in The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules").

The Property
The Property is situated a Nos. 54-56 Tsun Yip Street, Kwun Tong, Kowloon, with a site area of approximately 20,000 square feet. Presently, it is a 13-storey industrial building comprising a total gross floor area of approximately 212,300 square feet and 21 carparking spaces.

The Property is purchased subject to and with the benefit of existing tenancies and licences.

The Consideration
Pursuant to the Agreement, a cash deposit of HK$15,500,000.00 was paid by the Purchaser to the Vendor upon signing of the Agreement. The balance of the Consideration of HK$139,500,000.00 will be payable in cash by the Purchaser to the Vendor upon completion of the Acquisition which is expected to take place on or before 27th November, 1997. The Consideration will be financed by internal resources of the Company.

The Consideration is determined on the basis of arm's length negotiation with reference to the prevailing market conditions. The Directors consider that the terms of the Acquisition to be on normal commercial terms and are fair and reasonable.

Reasons for the Acquisition
The Company and its subsidiaries (together the "Group") are engaged in construciton and construction materials businesses. Currently, the Group operates from rented premises. Over the longer term, the Directors consider it beneficial to the Group to own premises for its workshops, storage and operations.

It is the present intention of the Group that approximately one-third of the Property will be utilised by the Group and the remaining areas will be held as long term investment to generate steady and recurrent rental income and to cope with the Group's future expansion.

Given the intended usage of the Property and the resultant savings in rental costs, the Directors consider that the Acquisition is in the best interest of the Group.

General
The Acquisition constitutes a discloseable transaction for the Company under the Listing Rules. A circular containing further details of the Acquisition will be despatched to the shareholders of the Company as soon as practicable.

By Order of the Board
Evans Li
Company Secretary

Hong Kong, 4 July 1997