CONNECTED TRANSACTION ACQUISITION OF THE INTEREST IN BEIJING NORTH STAR REAL ESTATE DEVELOPMENT COMPANY LIMITED

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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. (a sino-foreign joint venture joint stock limited company incorporated in the People s Republic of China) (Stock Code : 588) CONNECTED TRANSACTION ACQUISITION OF THE INTEREST IN BEIJING NORTH STAR REAL ESTATE DEVELOPMENT COMPANY LIMITED Following the Listing and Sale Process of the Transferred Shares, the Company entered into the Equity Transfer Agreement with the Transferors on 22 October 2007, pursuant to which the Company agreed to acquire the Transferred Shares from the Transferors for a cash consideration of RMB36,630,800 (equivalent to HK$37,744,376). As at the date of this announcement, BNSRE is owned as to 86.22% by the Company and therefore is a subsidiary of the Company. BNSIGC, being the controlling shareholder of the Company, also holds the entire equity interests in each of BJBCF, BJBCQ, BJBCW, BJSHF, BJYAS and 20% of the equity interests in BJBCG. The Transferors, save and except BJBCG, are the associates of BNSIGC and therefore, are connected persons of the Company under the Listing Rules. Accordingly, the Transaction is considered to be a connected transaction. The Company had acquired 3.3% of the equity interests in BNSRE from Independent Third Parties during the past 12 months which, however, shall not be aggregated to the Acquisition because the previous transactions are not connected transactions while the Acquisition is a connected transaction in nature. The Transaction is subject to reporting and announcement requirements under Chapter 14A of the Listing Rules but is exempt from the independent shareholders approval requirement given that all applicable percentage ratio(s) as defined under Rule of the Listing Rules are less than 2.5%. 1

2 INTRODUCTION Following the Listing and Sale Process of the Transferred Shares, the Company entered into the Equity Transfer Agreement with the Transferors on 22 October 2007, pursuant to which the Company agreed to acquire the Transferred Shares from the Transferors for a cash consideration of RMB36,630,800 (equivalent to HK$37,744,376). THE EQUITY TRANSFER AGREEMENT Date 22 October 2007 Parties Transferors: (i) BJBCF, a wholly-owned subsidiary of BNSIGC; (ii) BJBCG, owned by BNSIGC as to 20%; (iii) BJBCQ, a wholly-owned subsidiary of BNSIGC; (iv) BJBCW, a wholly-owned subsidiary of BNSIGC; (v) BJSHF, a wholly-owned subsidiary of BNSIGC; and (vi) BJYAS, a wholly-owned subsidiary of BNSIGC. Transferee: Subject Company: The Company BNSRE Asset to be acquired under the Equity Transfer Agreement The Transferred Shares Consideration and terms of payment for the Transferred Shares The Consideration for the Acquisition payable by the Company is RMB36,630,800 (equivalent to HK$37,744,376). 2

3 China Beijing Equity Exchange is an establishment whereby State-owned enterprises transfers their assets through the Listing and Sale Process. As each of the Transferors is owned by the State and/or the Transferor s staff, the sale and purchase of the Transferred Shares shall be made by way of Listing and Sale Process and the Consideration will be settled via China Beijing Equity Exchange ( ). The Company shall, within five days after the taking effect of the Equity Transfer Agreement (which is the execution of the Equity Transfer Agreement), deposit the Consideration with China Beijing Equity Exchange ( ). The original investment amount of BNSRE in respect of the 4.374% interest (excluding BJBCG) in BNSRE was RMB21,877,112 (equivalent to HK$22,542,176). The aggregate purchase price for the acquisition of 3.3% of the equity interests in BNSRE from Independent Third Parties during the past 12 months was RMB23,017,772 (equivalent to HK$23,717,512). BASIS OF DETERMINING THE CONSIDERATION As at 31 December 2006, the audited net asset value attributable to the % interest in BNSRE was approximately RMB31,664,685, equivalent to approximately HK$32,627,291. According to a valuation done by a qualified valuer in the PRC who is an Independent Third Party on a costs basis, the net asset value attributable to the Transferred Shares was RMB36,630,800 (equivalent to HK$37,744,376) as at 30 April The Consideration has been arrived at after arm s length negotiation between the parties, by reference to the aforesaid audited net asset value and valuation and is on normal commercial terms. The Consideration will be financed by the Company s internal resources. BNSRE BNSRE was established as a joint stock limited company incorporated in 1994 and having a registered share capital divided into shares of equal par value. The registered share capital and paid up capital of BNSRE is RMB500,180,000. BNSRE is principally engaged in property development. For the year ended 31 December 2006, the audited net profits before and after taxation of BNSRE were RMB189,039,302 (equivalent to HK$194,786,097) and RMB133,825,970 (equivalent to HK$137,894,279) respectively. 3

4 For the year ended 31 December 2005, the audited net profits before and after taxation of BNSRE were RMB54,928,441 (equivalent to HK$56,598,266) and RMB38,249,465 (equivalent to HK$39,412,249) respectively. REASONS FOR THE TRANSACTION After the Acquisition, BNSRE is owned by the Company as to %, the remaining 9.382% of the equity interests in BNSRE are held by 36 corporate entites which are Independent Third Parties. BNSRE is principally engaged in property development. The Board belives that BNSRE have a good development opportunity and, by the Acquisition, the Company will further enhance the management of the business operation of BNSRE and enhance the return of investment to the Company. The directors of the Company, including the independent non-executive directors, believe that the terms of the Equity Transfer Agreement, including the Consideration, are fair and reasonable and in the interest of the Company and its shareholders as a whole. GENERAL The Company is principally engaged in land and property development, property investment, property management, provision of food and beverage services as well as the operation of hotels and department stores. BJBCF is principally engaged in providing hotel and restaurant management and services; BJBCG is principally engaged in providing exhibition and conference location and accommodating visitors; BJBCQ is principally engaged in leasing motor vehicles; and BJBCW is principally engaged in property management. BJSHF is principally engaged in the sale of machine, equipment and leasing of houses; BJYAS is principally engaged in the development of software, hardware and external equipment of computers; As at the date of this announcement, BNSRE is owned as to 86.22% by the Company and is a subsidiary of the Company. BNSIGC, being the controlling shareholder of the Company, also holds the entire equity interests in each of BJBCF, BJBCQ, BJBCW, BJSHF, BJYAS and 20% of the equity interests in BJBCG. The Transferors, 4

5 save and except BJBCG, are the associates of BNSIGC and therefore, are connected persons of the Company under the Listing Rules. Accordingly, the Transaction is considered to be a connected transaction. The Company had acquired 3.3% of the equity interests in BNSRE from Independent Third Parties during the past 12 months which, however, shall not be aggregated to the Acquisition because the previous transactions are not connected transactions while the Acquisition is a connected transaction in nature. The Transaction is subject to reporting and announcement requirements under Chapter 14A of the Listing Rules but is exempt from the independent shareholders approval requirement given that all applicable percentage ratio(s) as defined under Rule of the Listing Rules are less than 2.5%. DEFINITIONS In this announcement, unless otherwise indicated in the context, the following expressions have the meaning set out below: Acquisition associate(s) BJBCF BJBCG BJBCQ BJBCW acquisition of the Transferred Shares as described in this announcement has the meaning ascribed to it in the Listing Rules (Bei Jing Bei Chen Fan Dian Guan Li Gong Si*), a wholly-owned subsidiary of BNSIGC incorporated in the PRC with limited liability and holding 0.20% equity interest in BNSRE (Bei Jing Bei Chen Guo J Lv Xing She You Xian Gong Si*), a company incorporated in the PRC with limited liability owned by BNSIGC as to 20% and holding 0.024% equity interest in BNSRE (Bei Jing Bei Chen Qi Che Zu Lin Gong Si*), a wholly-owned subsidiary of BNSIGC with limited liability and holding 0.02% equity interest in BNSRE (Bei Jing Bei Chen Wu Ye Guan Li Gong Si*), a wholly-owned subsidiary of BNSIGC incorporated in the PRC with limited liability and holding 0.02% equity interest in BNSRE 5

6 BJSHF BJYAS BNSIGC BNSRE Board (Bei Jng Shi Hui Fa Lv You Shang Mao Gong Si *), a wholly-owned subsidiary of BNSIGC incorporated in the PRC with limited liability and holding 0.01% equity interest in BNSRE (Bei Jing Ya Ao Shi Ye Zong Gong Si*), a wholly-owned subsidiary of BNSIGC incorporated in the PRC with limited liability and holding 4.12% equity interest in BNSRE Beijing North Star Industrial Group Company, a stateowned enterprises controlled by the PRC government, holding % of the equity interest of the Company, being the Company s largest substantial shareholder. Beijing North Star Real Estate Development Company Limited ( ), a joint stock limited company having a registered share capital divided into shares of equal par value. the board of directors of the Company Company Beijing North Star Company Limited ( ), a sino-foreign joint venture joint stock company incorporated in the PRC with limited liability and listed on the Stock Exchange and Shanghai Stock Exchange connected person(s) Consideration Equity Transfer Agreement Independent Third Party(ies) Listing and Sale Process has the meaning as ascribed thereto under the Listing Rules RMB36,630,800 (equivalent to HK$37,744,376), being the total consideration for acquisition of the Transferred Shares to be paid from the Company to the Transferors the equity transfer agreement dated 22 October 2007 entered into between the Transferors and the Company independent third party(ies) not connected with the Company or any of its subsidiaries or any of their respective directors, chief executives or substantial shareholders or any of their respective associates the listing of the Transferred Shares on China Beijing Equity Exchange ( ) 6

7 Listing Rules PRC Stock Exchange Transaction Transferors Transferred Shares HK$ RMB The Rules Governing the Listing of Securities on the Stock Exchange as enforced at the relevant time the People s Republic of China The Stock Exchange of Hong Kong Limited the transaction contemplated under the Equity Transfer Agreement BJBCF, BJBCG, BJBCQ, BJBCW, BJSHF and BJYAS an aggregate of 4.398% shares in BNSRE held by the Transferors Hong Kong dollars, the lawful currency of Hong Kong Renminbi, the lawful currency of the PRC % per cent * The unofficial English transliterations or translations are for identification purposes only. By Order of the Board GUO Chuan Company Secretary Beijing, the PRC 22 October 2007 As at the date of this announcement, the Board comprises seven directors, of whom four are executive directors, namely, Mr. HE Jiang-Chuan, Ms. ZHAO Hui-Zhi, Mr. LIU Jian-Ping and Mr. CHEN Ji; and three are independent non-executive directors, namely, Mr. MENG Yan, Mr. YU Jing-Song and Mr. FU Yiu-Man, Peter. In this announcement, RMB has been converted to HK$ at the rate of RMB1 = HK$ for illustration purpose only. No representation is made that any amounts in RMB or HK$ have been, could have been or could be converted at the above rate or at any other rates or at all. 7