Yue Da Holdings Limited
(Stock Code: 0629)

Major Shareholder:

• Jiangsu Yue Da ¡V 70.0% interest

Company Subsidiaries:

• Yancheng Tongda Highway Co., Ltd (100%): Management and operation of the Sin Fu Section
• Langfang Tongda Highway Co., Ltd (100%): Management and operation of theWen An Section

The Group is engaged principally in the m management and operation of the Xin Fu Section (·sªú¸ô¬q) of National Highway 204 in Jiangsu Province and the Wen An Section (¤å¦w¸ô¬q) of National Highway 106 in Hebei Province in the PRC.

National Highway 204 has a total length of approximately 991km and links Yantai in Shangdong Province and Shanghai. It passes through main cities such as Lian Yun Gang (³s¶³´ä) and Nantong («n³q). The Xin Fu Section of National Highway 204 is a single four-lane class 1 highway (tow lanes in each direction) that is located between Gan Lu Bridge. Din Xing Town, Yancheng City District and North Bridge, shi Zhuang Town, Fu Ning County in Jiangsu Province and has a total length of approximately 47.4km.

Another National Highway 106 has a total length of approximately 2,497km and links Guanzhou in Guangdong Province and Beijing. It passes through cities such as Henshui (¿Å¤ô), Erzhou (¶k¦{) and Shaoguan (»àÃö). The Wen An Section of National Highway 106 is a dual two-lane class 1 Highway (two lanes in each direction) that is located between Yi Liu Wa Bei Embankment, Ba Zhou, Langfang and the border between Wen An County and Ren Qiu Town in Hebei Province and has a total length of approximately 28.9km.

The Group is part of the Jiangsu Yue Da Group, of which Jiangsu Yue Da is the ultimate Holdings Company. Jiangsu Yue Da is a state-owned company. It is under the general supervision of the Yancheng Municipal government Jiangsu Yue Da has its own independent management and the Yancheng Municipal government does not participate in or interfere with its management. In the completion of the Capitalization Issue and the Share Offer, Jiangsu Yue Da will, through Yue Da Hong Kong, have a 70%.

There has been a consistent increase in the volume of both passenger and freight traffic by highways over the past twenty years. In 1985, freight and passenger traffic volumes by highways accounted for approximately 72% and 77% respectively of the total volume of freight and passenger traffic in the PRC. By 1999, such proportion grew to approximately 76% and 91% respectively.

The development of roads in the PRC has lagged behind the growth in its GDP. The Directors believe that there remains significant potential for road development in the PRC, particularly in provinces and regions with high economic growth rates.

Under the Tenth Five Year (2001-2005) adopted by the PRC government, it is expected that by 2005, the total length of highways in the PRC will be increased to approximately 1,600,000km of which expressways will account for approximately 25,000km.

The Directors believe that the Group has the following competitive advantages:

• The Xin Fu Section forms part of National Highway 204 which links Yantai in Shandong Province and Shanghai, one of the fastest growing economic centres in the PRC. The Wen An Section forms part of National Highway 106 which links Guangzhou in Guangdong Province and Beijing, both the Xin fu Section and the Wen An Section constitute part of major vehicular highways which the Directors believe is a key factor in assuring the Group of steady traffic growth.
• Jiangsu Province, where the Xin Fu Section is located, has been one of the provinces in the PRC that have experienced the highest rates of economic growth over the past 15 years. The Directors expect that the further economic development of Jiangsu Province would continue to provide the Xin fu Section with significant potential in traffic growth.
• The Group's senior management has extensive experience in the management and operation of toll roads in the PRC.

• The Group does not hold the land use of the land on which the Xin Fu Section or the Wen An Section is situated.
• There can be no assurance that the rights to manage, operate and collect toll charges on Te Xin Fu Section or the right to manage, operate, maintain and collect toll charges on the Wen An Section granted to the Group may not be revoked.
• The Group has not effected any insurance against business interruption, damage to property or third party liability in respect of either the Xin Fu Section or the Wen An Section.
• There is no assurance that any future application for increase in toll rates will be approved by the relevant authorities or that the relevant authorities will not require a reduction in toll rates.

Over the past 20 years, the road transport system in the PRC has undergone significant development. The development of the road transport system has been most notable in the coastal provinces in Eastern China, including Jiangsu Province. With the further growth of the PRC economy, the Directors believe that the road transport system will continue to undergo significant development, which will provide extensive opportunities for investment in toll roads in different parts of the PRC. It is the Directors current intention to continue identifies suitable opportunities to add to the portfolio of toll road under the Group's management and operation.

Other than the development of the road transport system, the Directors also believe that the further economic growth in the PRC will continue to present significant business opportunities in the development of other infrastructure facilities. Hence, in addition to the management and operation of other infrastructure facilities. The Group will ensure that management and technical personnel with the appropriate expertise and experience are engaged to manage and operate such infrastructure facilities.

The Group considers the Chongqing Niujiaotuo Jialingjiang Multi-lane Bridge to be an attractive investment opportunity. However, it is currently only at a preliminary stage of discussions with Chongqing Haixu concerning its proposed investment in Chongqing Sino-Portuguese, and no legally binding documentation has, so far, been entered into. Dependent on the progress of further discussion, the Group may or may not proceed with such proposed investment. If the Group decides to proceed with such proposed investment by acquiring an equity interest in Chongqing Sino- Portuguese, the Directors envisage that up to HK$35 million of the net proceeds of the Share Offer could be used to fund the cost of such acquisition.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$36.2 million (based on the offer price HK$0.87 per share). The Group at present intends to apply the net proceeds as follows: