DISCLOSEABLE TRANSACTION SUBSCRIPTION OF SHARES IN SHANGHAI ZENDAI PROPERTY LIMITED

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1 Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. SHANGHAI FORTE LAND CO., LTD. * (a sino-foreign joint stock company incorporated in the People s Republic of China with limited liability) (Stock Code: 02337) DISCLOSEABLE TRANSACTION SUBSCRIPTION OF SHARES IN SHANGHAI ZENDAI PROPERTY LIMITED On 7 January 2010, China Alliance, a wholly owned subsidiary of the Company, entered into the Subscription Agreement with Zendai Property, pursuant to which China Alliance has agreed to subscribe for, and Zendai Property has agreed to allot and issue to China Alliance, the Subscription Shares (being 1,550,000,000 new Shares) for a consideration of HK$480,500,000 at the Subscription Price (being HK$0.31) per Subscription Share. Immediately after completion of the Subscription, China Alliance will hold 2,431,815,000 shares of Zendai Property, representing approximately 19.68% of the issued share capital of the Zendai Property as enlarged by the allotment and issue of the Subscription Shares. As one or more of the applicable percentage rations (as defined under Rule 14.04(9)) of the Hong Kong Listing Rules in relation to the Subscription exceed 5% but less than 25%, the Subscription constitutes a discloseable transaction of the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Hong Kong Listing Rules. INTRODUCTION On 7 January 2010, China Alliance, a wholly owned subsidiary of the Company, entered into the Subscription Agreement with Zendai Property, pursuant to which China Alliance has agreed to subscribe for, and Zendai Property has agreed to allot and issue to China Alliance, the Subscription Shares (being 1,550,000,000 new Shares) for a consideration of HK$480,500,000 at the Subscription Price (being HK$0.31) per Subscription Share. Immediately after completion of the Subscription, China Alliance will hold 2,431,815,000 shares of Zendai Property, representing approximately 19.68% of the issued share capital of the Zendai Property as enlarged by the allotment and issue of the Subscription Shares. 1

2 SUBSCRIPTION AGREEMENT Date 7 January 2010 Parties (i) (ii) China Alliance as the subscriber Zendai Property as the issuer To the best of the Directors knowledge, information and belief, having made all reasonable enquiry, each of Zendai Property and its ultimate beneficial owner(s) is not connected with the Directors, chief executive, substantial shareholder of the Company or its subsidiaries or any of their respective Associates except that Mr. Wang Zhe, the executive director of the Company, is also an executive director of Zendai Property. Subscription Shares Pursuant to the Subscription Agreement, China Alliance has agreed to subscribe for, and Zendai Property has agreed to allot and issue to China Alliance, the Subscription Shares (being 1,550,000,000 new Shares) for a consideration of HK480,500,000 at the Subscription Price (being HK$0.31) per Subscription Share. Immediately after completion of the Subscription, China Alliance will hold 2,431,815,000 shares of Zendai Property, representing approximately 19.68% of the issued share capital of the Zendai Property as enlarged by the allotment and issue of the Subscription Shares. Subscription Price The Subscription Price represents (i) a discount of approximately 1.59% to the closing price of HK$0.315 per Share as quoted on the Stock Exchange on 7 January 2010, being the date of the Subscription Agreement; and (ii) a discount of approximately 1.59% to the average closing price of HK$0.315 per Share as quoted on the Hong Kong Stock Exchange for the last five consecutive trading days up to and including 7 January CONDITIONS PRECEDENT Completion of the Subscription will be conditional upon the fulfillment of the following conditions precedent: (a) (b) the Listing Committee of the Hong Kong Stock Exchange granting or agreeing to grant the listing of, and permission to deal in, the Subscription Shares (either unconditionally or subject to conditions which are acceptable to the China Alliance and Zendai Property); and all other necessary waivers, consents and approvals (if required) from the relevant governmental or regulatory authorities in Hong Kong and Bermuda for the Subscription Agreement and the transaction contemplated thereunder having been obtained and fulfilled. 2

3 If any of the conditions of the Subscription set out above is not fulfilled at or before 5:00 p.m. on 22 January 2010 (or such later date as may be agreed in writing between the China Alliance and Zendai Property), the Subscription Agreement and all rights and obligations thereunder will cease and terminate and neither party shall have any claim against the other, same for any antecedent breaches of the Subscription Agreement. RANKING The Subscription Shares will, upon issue, rank pari passu in all respects with the issued Shares as at the date of its allotment and issue, including the right to receive all dividends and distributions declared, paid or made on or after that date. LOCK-UP China Alliance has undertaken not to dispose of or create any encumbrances in respect of the Subscription Shares or any interest therein within 6 months from the date of the Completion, save for using such interests as security in favour of an authorised institution (as defined in the Banking Ordinance (Chapter 155 of the Laws of Hong Kong)) for a bona fide commercial loan. COMPLETION Completion shall take place on the fifth business day after the date on which all conditions of the Subscription have been fulfilled. REASONS FOR THE SUBSCRIPTION The Company is of the view that the Subscription will reinforce the strategic cooperation between the Company and Zendai Property, further strengthen the Company s leading position in the PRC property market and bring better returns for its shareholders. FINANCIAL INFORMATION ON ZENDAI PROPERTY The audited net asset attributable to equity holders of the Zendai Property as at 31 December 2008 was HK$3,132,211,000. The audited net profit/(loss) before and after taxation and extraordinary items of the Zendai Property for the two years ended 31 December 2007 and 2008, prepared in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants, were as follows: For the year ended 31 December 2007 (HK$) For the year ended 31 December 2008 (HK$) Audited net profit/(loss) before taxation and extraordinary items Audited net profit/(loss) after taxation and extraordinary items 700,330, ,001, ,265, ,588,000 3

4 HONGKONG LISTING RULES IMPLICATIONS As one or more of the applicable percentage rations (as defined under Rule 14.04(9)) of the Hong Kong Listing Rules in relation to the Subscription exceed 5% but less than 25%, the Subscription constitutes a discloseable transaction of the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Hong Kong Listing Rules. GENERAL The Directors (including the independent non-executive Directors) are of the view that the terms of the Subscription Agreement (i) have been negotiated on an arm s length basis; and (ii) are fair and reasonable and in the interests of the Company and its shareholders as a whole. GENERAL INFORMATION OF THE PARTIES TO THE SUBSCRIPTION China Alliance China Alliance is a wholly owned subsidiary of the Company. It is principally engaged in investment holding. Zendai Property Zendai Property is an exempted company incorporated in Bermuda with limited liability. It is principally engaged in property development business. DEFINITION In this announcement, the expressions below have the meanings assigned: Associates Board China Alliance Company Completion Director(s) Group HK$ has the meaning ascribed to it under the Hong Kong Listing Rules the board of directors of the Company China Alliance Properties Limited, a company incorporated under laws of Hong Kong and a wholly owned subsidiary of the Company Shanghai Forte Land Co., Ltd. ( ), a sino-foreign joint stock company incorporated in the PRC with limited liability and whose H shares are listed and traded on the main board of the Hong Kong Stock Exchange completion of the Subscription director(s) of the Company the Company and its subsidiaries Hong Kong dollars, the lawful currency of Hong Kong for the time being 4

5 Hong Kong Hong Kong Listing Rules Hong Kong Stock Exchange PRC Share(s) Subscription the Hong Kong Special Administrative Region of the PRC the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange The Stock Exchange of Hong Kong Limted The People s Republic of China, which for the purpose of this announcement shall exclude Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan ordinary share(s) of HK$0.02 each in the capital of Zendai Property subscription of the Subscription Shares by China Alliance in accordance with the terms of the Subscription Agreement Subscription Agreement the subscription agreement entered into between China Alliance and Zendai Property on 7 January 2010 in relation to the Subscription Subscription Price Subscription Shares Zendai Property HK$0.31 per Subscription Share 1,550,000,000 new Shares Shanghai Zendai Property Limited, an exempted company incorporated in Bermuda with limited liability, the issued Shares of which are listed on the Hong Kong Stock Exchange By Order of the Board SHANGHAI FORTE LAND CO., LTD.* FAN WEI Chairman 8 January 2010, Shanghai, the PRC As at the date of this Notice, the executive Directors of Forte are Mr. Fan Wei, Mr. Zhang Hua and Mr. Wang Zhe; the non-executive Directors are Mr. Guo Guangchang, Mr. Feng Xiekun and Mr. Chen Qiyu; and the independent non-executive Directors are Mr. Charles Nicholas Brooke, Mr. Chen Yingjie, Mr. Zhang Hongming and Ms. Wang Meijuan. * For identification purpose only 5