(Hong Kong, 21 August 2001) The new development strategies of Shui On Construction and Materials Limited ("SOCAM", HKEx: 983) continue to make good progress following the satisfactory results announcement in July. Notably, the company is building in Chongqing and Guizhou a sizeable cement group which is expected to have an annual capacity of 5 million tonnes of high grade cement by the end of the 2002-2003 financial year.

With the acquisition of 80% of Diwei Cement, SOCAM's joint venture TH Cement becomes the largest cement producer in Chongqing with a share of more than 70 percent of the local high grade cement market. With an annual capacity of 2.8 million tonnes of high grade cement in Chongqing alone, TH Cement's operations in Chongqing are now the fifth largest in the Chinese Mainland.

In Guizhou, SOCAM stretches its reach by signing an agreement in late July to build a new cement plant with an annual production capacity of 400,000 tonnes of high grade cement in Qianxinan in the southern part of the province. The total investment is estimated at Rmb140 million and SOCAM has a 90% share of the new plant. Together with the two cement plants in Zunyi in northern Guizhou and their planned expansion, SOCAM will have an annual production capacity of 1.6 million tonnes of high grade cement in Guizhou alone when the new kilns are completed by the 2002-2003 financial year.

SOCAM is one of the first Hong Kong companies investing in Central and Western China to coincide with the Central Government's policy to develop the region. "We're very confident of the high grade cement market in the central and western provinces as demand will continue to be boosted by numerous substantial infrastructure and housing projects. The government's initiative in closing down smaller and inefficient plants, which produce low grade cement and are usually an environmental hazard, would be conducive to our expansion," said Mr Vincent H S Lo, Chairman of SOCAM. TH Cement enjoys tax concessions as the first producer of the environmentally friendly fly ash cement in the Chinese Mainland.

Mr Lo added, "Prices of high grade cement hold firm in the central and western region as high transportation costs make it difficult for outside suppliers to compete, while costs of raw materials, energy and labour are low compared with the coastal region." With SOCAM's current acquisition and expansion plans, its aggregate annual production capacity in Chongqing and Guizhou is anticipated to reach 5 million tonnes of high grade cement by the end of the 2002-2003 financial year, making it one of the largest cement producers in the nation. The company will continue to expand into strategic locations in both Chongqing and Guizhou to capitalize on the anticipated increase in local demand for high grade cement.

The cement operations in Chongqing and Guizhou represent only one of the five strategic development areas of SOCAM, the other four being quality housing development in the Chinese Mainland; construction and construction materials supplies in Hong Kong and the Pearl River Delta; global trading of construction and home improvement materials; and planning, developing and promoting major development projects in the Mainland. Good progress has already been made in several of these areas.

In Shanghai, the second phase of Rui Hong Xin Cheng, recently taken over by SOCAM from the chairman's privately held Shui On Properties Limited, is progressing according to schedule. Relocation of existing residents in the area has started, with construction expected to begin early next year. In this phase, a 30,000-square-meter commercial complex and eleven residential blocks will be built next to a new Metro station, with completion expected to coincide with the opening of the new station.

The Construction division of SOCAM has recently been awarded two new building contracts, Pak Tin Estate Redevelopment Phases III and VI and Castle Peak Hospital Redevelopment Phase II Stage 2, with a total value exceeding HK$1 billion. SOCAM.com, launched in December 2000 to streamline operations, has helped to substantially reduce costs of the company's construction business. The web-based system brings a saving of more than 50% in paper and related costs such as stationery and storage area. The reduction in paperwork also raises efficiency, with inspection staff, for instance, saving up to 70% of the time spent on recording information during in-process inspection by using handheld computers. In the next phase of development, SOCAM will focus on materials control for its construction operations, targeting to reduce materials wastage.

AsiaMaterials.com, SOCAM's global trading house for building and home improvement materials, has set up a technology centre in Shenzhen in addition to the six AsiaMaterials Business Centres on the Mainland. It will open a Business Centre in the USA in September and plans to open two new centres in Britain and Japan by year end. Good progress has been made to secure exclusive agency rights for selected products and to build a product range bearing brand names owned by AsiaMaterials, the first being Sierra Green, a line of environmentally friendly lighting products manufactured in the Chinese Mainland.

In order to give strong focus and leadership for each of these strategic development areas, Mr Lo today announced a corresponding strengthening of SOCAM's top-level management with the appointment of Mr Wilfred Wong as Vice-Chairman of SOCAM as well as Shui On Holdings Limited, the holding company of the Shui On Group, with effect from 1 October 2001. "The appointment of Wilfred will allow top-level management to give due attention to each of the ambitious development strategies so that we can move faster and seize the vast opportunities in the market," said Mr Lo.

In his new role, Mr Wong will spearhead SOCAM's expansion into the quality housing market in the Chinese Mainland. "Wilfred&' extensive people network and solid experience in the Mainland property market will be highly beneficial to the development of Rui Hong Xin Cheng as well as future projects," said Mr Lo. Mr Wong will also continue to lead the development of AsiaMaterials.com.

"The appointment will allow other senior executives to focus on our other key strategic businesses, each of which demands strong leadership," Mr Lo added.

While SOCAM's growth strategy promises good long-term prospects, there will likely be a substantial drop in the company's profit in the immediate term before strategic growth areas start to contribute significantly. Mr Lo explained, "The decline in the public housing sector and the construction industry in general has been faster and more severe than expected.” Despite the company's continuous efforts in developing new revenue sources and implementing growth strategies, the company's financial results in the next two years will be disappointing due to housing policy changes and the property market slump in Hong Kong, according to Mr Lo.

Shui On Construction and Materials Limited (SOCAM), a member of the Shui On Group, was listed on the Hong Kong Stock Exchange in 1997 and is engaged in construction, construction materials and property development in Hong Kong and the Chinese Mainland. Apart from SOCAM, the Shui On Group has a separate, non-listed property arm with investments in Shanghai, Hong Kong, Beijing, Guangzhou and New York.