Proforma Financials of Guangzhou Investment after acquiring Guangzhou Construction Holdings

Proforma Net Tangible Asset & Proforma Net Profit of Guangzhou Investment will increase substantially by 85% & 89.3% after acquiring Guangzhou Construction Holdings

According to the circular issued to shareholders, the unaudited consolidated net tangible assets of Guangzhou Investment Co., Ltd. ("GZI") was approximately HK$6,311 million before acquiring 100% stake in Guangzhou City Construction Holding BVI ("Guangzhou Construction") and 49% stake in Supergain Ltd. If the acquisition is completed on 31st June 2001, the unaudited proforma net tangible asset will increase by 85% to HK$11,681 million.

GZI s audited consolidated net profit for the year ended 31st December, 2000 was approximately HK$112 million. Assuming the above acquisition was completed on 31st December 2000 and taking into account interest expenses of additional debt, the unaudited proforma consolidated net profit of GZI for the year ended 31st December, 2000 would have been no less than approximately HK$212 million, representing a minimum increase of approximately 89.3 per cent.

With regards to the gearing ratio, GZI s net gearing expressed as a ratio of net debt to net tangible assets before the above acquisition was 29 per cent and will increase slightly to 36 per cent after acquisition, assuming the cash consideration of HK$2,000 million is fully funded by borrowings.

As shown by the above financial figures, for acquiring Guangzhou Construction and Supergain, has obvious positive impact to GZI.

Furthermore, by selling the non-core, less profitable cement and high-tech related business and concentrate on the core business of Guangzhou property investment and development GZI can reallocate her internal resources and achieve higher efficiency.

Guangzhou is one of the fastest growing and affluent cities in the PRC with the second highest monthly household income GDP per capita in the PRC in 2000. The above transactions will also allow the Company to capture the growth potential in property market in Guangzhou. According to official statistics from the Guangzhou Municipal People s Government, the annual total sales of all properties has risen form RMB 20.75 billion in 1998 to RMB 23.94 billion in 2000, representing an annualized 7.41 per cent increase.

Guangzhou Construction is a leading one-stop property developer with extensive local knowledge and the capacity to design, market, certify property development projects and provide agency services. Furthermore, Guangzhou Construction has a quality brand name and substantial land bank and rental property in Guangzhou. The former amounts to 3.8 million square meters and the letter is 300,000 square meters. Rental income was as high as RMB75,000,000 in the first half of 2001.

The acquisition of Guangzhou Construction is expected to complement the operation of the Group, which currently has a proportionally smaller land bank and does not engage in the design, marketing, renovating and certification of property development projects and provision of agency services. By acquiring Guangzhou Construction, the market position of GZI in the Guangzhou real estate market will be further strengthened.

Summary Information of Guangzhou Property Projects

Guangzhou Investment announced the acquisition of Guangzhou Construction and some other property assets in Guangzhou for HK$ 5.0 billion from holding company Yue Xiu Enterprise in December last year. This price represents a 40% discount to their total net asset value of HK$ 8.35 billion.These HK$ 8.35 billion property assets to be acquired by GZI is consisted of firstly, 100% City Construction Holding BVI (HK$6.35 billion) injected to Yue Xiu Enterprise by Guangzhou City Government. And secondly, 49% stake in Supergain Ltd. (HK$2.0 bn) held by Yue Xiu Enterprise. GZI will pay HK$ 2.0 billion in cash, issue to Yue Xiu Enterprise 2.15 billion new shares at HK$ 0.68 each, and sell to Yue Xiu Enterprise cement and hi-tech projects worth HK$ 1.55 billion. On completion, Yue Xiu Enterprise s shareholding in GZI will be increased from 43.8% to 63.4%. The above transaction will be voted by the shareholders in the Extraordinary General Meeting to be held on 17th January 2002.

Contact: Sophia Yan, Executive Director of Guangzhou Investment Co. Ltd.
(Tel: 2116 8022 ; Fax: 2598 7688 ; email: contact@gzinvestment.com.hk)