AGILE PROPERTY HOLDINGS LIMITED - Morningstar

If you are in any doubt about this prospectus, you should obtain independent professional advice.

AGILE PROPERTY HOLDINGS LIMITED

(incorporated in the Cayman Islands with limited liability)

GLOBAL OFFERING

Number of Offer Shares offered pursuantto the Global Offering :

955,070,000 (subject to the Over-allotment Option)

Number of Hong Kong Offer Shares : 95,508,000 (subject to adjustment)Number of International Offer Shares : 859,562,000 (including 124,570,000

Sale Shares) (subject to adjustmentand the Over-allotment Option)

Maximum offer price : Not more than HK$3.30 per Sharepayable in full on application in HongKong dollars, subject to refund, plusbrokerage of 1%, SFC transaction levyof 0.005%, investor compensation levyof 0.002% and Stock Exchange tradingfee of 0.005%

Nominal value : HK$0.10 eachStock code : 3383

Sole Global Coordinator, Bookrunner, Sponsor and Lead Manager

The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents ofthis prospectus, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any losshowsoever arising from or in reliance upon the whole or any part of the contents of this prospectus.

A copy of this prospectus, having attached thereto the documents specified in the section entitled ‘‘Documents Delivered to the Registrar ofCompanies and Available for Inspection’’ in Appendix VIII to this prospectus, has been registered by the Registrar of Companies in HongKong as required by section 342C of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and FuturesCommission and the Registrar of Companies in Hong Kong take no responsibility for the contents of this prospectus or any other documentreferred to above.

The Offer Price is expected to be fixed by agreement among the Global Coordinator, on behalf of the Underwriters, the Company and theSelling Shareholder on the Price Determination Date. The Price Determination Date is expected to be on or around Friday, 9 December2005 and, in any event, not later than Tuesday, 13 December 2005. The Offer Price will be not more than HK$3.30 and is currentlyexpected to be not less than HK$3.00 unless otherwise announced. Investors applying for Hong Kong Offer Shares must pay, onapplication, the maximum offer price of HK$3.30 for each Offer Share together with a brokerage of 1%, SFC transaction levy of 0.005%,investor compensation levy of 0.002% and Stock Exchange trading fee of 0.005%.

The Global Coordinator, on behalf of the Underwriters, may, with the consent of the Company and the Selling Shareholder, reduce thenumber of Offer Shares being offered pursuant to the Global Offering and/or the indicative offer price range below that stated in thisprospectus (which is HK$3.00 to HK$3.30 per Share) at any time on or prior to the morning of the last day for lodging applications underthe Hong Kong Public Offering. In such a case, notices of the reduction in the number of Offer Shares and/or the indicative offer pricerange will be published in the South China Morning Post and the Hong Kong Economic Times not later than the morning of the day which isthe last day for lodging applications under the Hong Kong Public Offering. If applications for Offer Shares have been submitted prior to theday which is the last day for lodging applications under the Hong Kong Public Offering, then even if the number of Offer Shares and/or theoffer price range is so reduced such applications cannot be subsequently withdrawn. If, for any reason, the Offer Price is not agreed amongthe Company, the Selling Shareholder and the Global Coordinator, on behalf of the Underwriters, the Global Offering (including the HongKong Public Offering) will not proceed.

The obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Agreement to subscribe for, and to procure applicantsfor the subscription for, the Hong Kong Offer Shares, are subject to termination by the Global Coordinator (on behalf of the Hong KongUnderwriters) if certain grounds arise prior to 8 : 00 a.m. on the day that trading in the Shares commences on the Stock Exchange. Suchgrounds are set out in the section entitled ‘‘Underwriting — Underwriting Arrangements and Expenses — Hong Kong Public Offering —Grounds for termination’’ in this prospectus. It is important that you refer to that section for further details.

The Shares have not been and will not be registered under the US Securities Act and may not be offered, sold, pledged or transferred withinthe United States or to, or for the account or benefit of US persons, except that Offer Shares may be offered, sold or delivered to QIBs inreliance on an exemption from registration under the US Securities Act provided by, and in accordance with the restrictions of, Rule 144Aor outside the United States in accordance with Rule 903 or Rule 904 of Regulation S.

IMPORTANT

5 December 2005

Latest time to lodge white and yellow

Application Forms . . . . . . . . . . . . . . . . . . . . 12 : 00 noon on Thursday, 8 December 2005

Latest time to give electronic

application instructions to HKSCC(2) . . . . . . . . 12 : 00 noon on Thursday, 8 December 2005

Application lists open(3) . . . . . . . . . . . . . . . . . . 11 : 45 a.m. on Thursday, 8 December 2005

Application lists close . . . . . . . . . . . . . . . . . . . 12 : 00 noon on Thursday, 8 December 2005

Expected Price Determination Date . . . . . . . . . . . . . . . . . . . . . . Friday, 9 December 2005

Announcement of the Offer Price, the indication of level of

interest in the International Offering, the results of

applications in the Hong Kong Public Offering and the

basis of allotment of the Hong Kong Offer Shares to be

published in the South China Morning Post and

Hong Kong Economic Times on or before . . . . . . . . . . . . . Wednesday, 14 December 2005

Despatch of refund cheques on or before(4) . . . . . . . . . . . . . . Wednesday, 14 December 2005

Despatch of share certificates on or before(4) . . . . . . . . . . . . . Wednesday, 14 December 2005

Dealings in Shares on the Stock Exchange

expected to commence on . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 15 December 2005

Notes:

(1) All times refer to Hong Kong local time, except as otherwise stated. Details of the structure of the Global Offering,

including its conditions, are set out in the section headed ‘‘Structure of the Global Offering.’’

(2) Applicants who apply by giving electronic application instructions to HKSCC should refer to the section entitled ‘‘How

to Apply for Hong Kong Offer Shares — Applying by giving electronic application instructions to HKSCC.’’

(3) If there is a ‘‘black’’ rainstorm warning or a tropical cyclone warning signal number 8 or above in force at any time

between 9 : 00 a.m. and 12 : 00 noon on Thursday, 8 December 2005, the application lists will not open on that day.

Further information is set out in the paragraph headed ‘‘Effect of Bad Weather on the Opening of the Application

Lists’’ in the section entitled ‘‘How to Apply for Hong Kong Offer Shares.’’

(4) Refund cheques will be issued in respect of wholly or partially unsuccessful applications and also in respect of

successful applications in the event that the Offer Price is less than the initial offer price per Share payable on

application. Applicants for 1,000,000 Hong Kong Offer Shares or more and who have indicated in their Application

Forms that they wish to collect refund cheques and share certificates (as relevant) personally from the Share registrar

may collect refund cheques (where applicable) and share certificates (where applicable) from Tricor Investor Services

Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong from

9 : 00 a.m. to 1 : 00 p.m. on Wednesday, 14 December 2005 or any other place and date notified by the Company in the

newspapers as the place and date of despatch of share certificates/refund cheques. Individual applicants who opt for

personal collection must not authorise any other person to make their collection on their behalf. Applicants being

corporations which opt for personal collection must attend by their authorized representatives, each bearing a letter of

authorization from such corporation stamped with the corporation’s chop. Both individuals and authorized

representatives (if applicable) must produce, at the time of collection, evidence of identity acceptable to Tricor

Investor Services Limited. Uncollected share certificates and refund cheques will be despatched by ordinary post at the

applicants’ own risk to the addresses specified in the relevant Application Forms promptly thereafter. Further

information is set out in the section entitled ‘‘How to Apply for Hong Kong Offer Shares — Applying by using a white

or yellow Application Form.’’

EXPECTED TIMETABLE

— i —

Share certificates will only become valid certificates of title provided that the Hong Kong

Public Offering has become unconditional in all respects and the right of termination described

in the section entitled ‘‘Underwriting — Underwriting Agreements and Expenses — Hong Kong

Public Offering — Grounds for termination’’ has not been exercised, which is scheduled to be

at 8 : 00 a.m. on Thursday, 15 December 2005.

For details of the structure of the Global Offering, including its conditions, you should refer to

the section entitled ‘‘Structure of the Global Offering.’’

EXPECTED TIMETABLE

— ii —

You should rely only on the information contained in this prospectus and the Application

Forms to make your investment decision. The Company has not authorized anyone to provide you

with information that is different from what is contained in this prospectus. Any information or

representation not made in this prospectus must not be relied on by you as having been authorized

by the Company, the Global Coordinator, the Underwriters, any of their respective directors or

any other person or party involved in the Global Offering.

Page

Expected Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Information about this Prospectus and the Global Offering . . . . . . . . . . . . . . . . . . . . . . . . . 35

Directors and Parties Involved in the Global Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Corporate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Industry Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

History, Reorganization and Group Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Directors, Senior Management and Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

Substantial Shareholders and Selling Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122

Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123

Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126

Future Plans and Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149

Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152

Structure of the Global Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

How to Apply for Hong Kong Offer Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165

CONTENTS

— iii —

Page

Appendix I — Accountants’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Appendix II — Profit Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1

Appendix III — Unaudited Pro Forma Financial Information . . . . . . . . . . . . . . . . . . . . III-1

Appendix IV — Property Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1

Appendix V — Summary of the Constitution of the Company

and Cayman Islands Company Law . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Appendix VI — Summary of PRC Laws Relating to the Property Sector . . . . . . . . . VI-1

Appendix VII — Statutory and General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1

Appendix VIII — Documents Delivered to the Registrar of Companies

and Available for Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1

CONTENTS

— iv —

This summary aims to give you an overview of the information contained in this prospectus.

Because this is a summary, it does not contain all the information that may be important to you.

You should read the whole document before you decide to invest in the Offer Shares. There are

risks associated with any investment. Some of the particular risks in investing in the Offer Shares

are set out in the section entitled ‘‘Risk Factors.’’ You should read that section carefully before

you decide to invest in the Offer Shares.

OVERVIEW

We are one of the leading property development companies in Guangdong Province, PRC. We

focus primarily on the development and sale of high quality private residential properties in

Guangdong Province and expect to benefit from future economic growth and related expansion of the

property market in that area. To date, our developments have been concentrated in the cities of

Guangzhou, Zhongshan and Foshan. According to the data compiled by the Zhongshan Bureau of

State-owned Land and Resources, we were one of the top real estate developers in Zhongshan in

terms of sales in each of the past four consecutive years. Among our projects, Agile Garden

Guangzhou was ranked second in terms of sales in the Panyu district in Guangzhou in 2004, Huadu

Grand Garden was ranked first in terms of sales in the Huadu district in Guangzhou in 2003 and

2004, and Nanhai Majestic Garden was ranked first and second in terms of sales in the Nanhai

district in Foshan in 2003 and 2004, respectively. These rankings were typically achieved within the

first two years of our entry in the respective market.

We engage primarily in the development of large-scale property projects comprising multiple

phases. We offer a broad range of products, including villas, condominiums, duplexes and

apartments, which appeal to customers of varying income levels, with our main focus on products

that target middle and upper-middle class purchasers, which include white collar workers, mid and

senior-level managers and entrepreneurs. In addition to our residential business, we develop

commercial properties, including retail shops complementary to our residential developments as well

as commercial complexes in strategic locations. We also engage in ancillary property-related

businesses such as property management and interior decoration.

We are managed by certain members of the Chen Family who own all of the Company and the

Group prior to the Global Offering. In preparation for the Global Offering, the Company was

incorporated in the Cayman Islands on 14 July 2005. Pursuant to the Reorganization, members of the

Chen Family transferred to the Company all of their interests in the property development and

ancillary property-related businesses that the Group now conducts, to which the following discussion

relates. See ‘‘History, Reorganization and Group Structure’’ for a description of the Reorganization.

The financial and operational data of the Group are presented in this prospectus on a

‘‘combined’’ basis pursuant to the Hong Kong Financial Reporting Standard, or the HKFRS, as if the

Company, the entities and businesses now comprising the Group and the current Group structure had

been in existence since 1 January 2002.

Under our management team, who have on average over ten years of experience in the real

estate industry, we have grown our businesses substantially since we first commenced property

development activities in 1997. As of 30 September 2005, we had 18 projects at various stages of

development, nine of which are located in Zhongshan, seven in Guangzhou and two in Foshan. These

18 projects had an aggregate site area of approximately 6.7 million sq.m., an aggregate gross floor

area, or GFA, of approximately 8.1 million sq.m., including an aggregate GFA of approximately 4.8

SUMMARY

— 1 —

million sq.m. relating to properties held for future development. We have obtained land use right

certificates in respect of each of these 18 projects. In addition, as of 31 October 2005, we had

various interests in several parcels of land, with an aggregate site area of approximately 1.5 million

sq.m., for which we have not yet obtained land use right certificates and to which no value has been

assigned in the Property Valuation Report included in Appendix IV to this prospectus.

As of 31 December 2002, 2003 and 2004 and 30 September 2005, our total site area was

approximately 3.7 million sq.m., 5.4 million sq.m., 6.2 million sq.m. and 6.7 million sq.m.,

respectively. For each of the three years ended 31 December 2002, 2003 and 2004 and the six

months ended 30 June 2005, we sold a total GFA of approximately 163,600 sq.m., 462,897 sq.m.,

534,588 sq.m. and 401,286 sq.m., resulting in a turnover from property developments of

approximately RMB697.5 million, RMB1,819.9 million, RMB2,427.9 million and RMB2,322.3

million, respectively.

For each of the three years ended 31 December 2002, 2003 and 2004 and the six months ended

30 June 2005, our total turnover from all of our business segments was approximately RMB763.1

million, RMB1,931.5 million, RMB2,548.9 million and RMB2,378.1 million, respectively. For each

of the two years ended 31 December 2003 and 2004 and the six months ended 30 June 2005, our net

profit was approximately RMB73.1 million, RMB230.3 million and RMB403.6 million, respectively.

We recorded a loss of RMB10.2 million for the year ended 31 December 2002, primarily due to the

expenditures incurred in connection with the early-stage development of our projects in the markets

of Guangzhou and Foshan. However, these projects made substantial contribution to our revenues

and profit in the subsequent periods.

We intend to continue to focus on property developments in the Pearl River Delta region as

well as to pursue strategic business opportunities in other PRC markets, such as Hainan Province and

Changsha City, Hunan Province, in a prudent manner. We may also expand into other property-

related businesses at an appropriate level, such as hotel, shopping mall or office building businesses,

with a view to strengthening our performance and diversifying our business risks.

SUMMARY

— 2 —

COMPETITIVE STRENGTHS

We believe that our primary competitive strengths are:

. real estate development expertise and experienced, stable management team

. strong brand name recognition and marketing expertise

. large-and-low-cost land reserves

. strategically selected property locations

. well-designed properties and innovative products

. experience on large-scale multi-phase developments

. diverse customer base and quality after-sale customer services

. specialized management structure enabling centralized oversight as well as project-level

autonomy

See ‘‘Business — Competitive Strengths’’ for a detailed description of these strengths.

BUSINESS STRATEGIES

Our business strategies are:

. prudent development and timely response to market conditions

. focus on fast growth customer segments while developing high quality, large-scale

property projects in suburban locations

. strengthen our brand recognition in local markets and leverage expertise to expand into

other parts of China

. adopt international industry best practices and maintain an efficient organizational

structure

See ‘‘Business — Business Strategies’’ for a detailed description of these strategies.

SUMMARY

— 3 —

SUMMARY HISTORICAL FINANCIAL INFORMATION


30 June 2005, we sold a total GFA of approximately 163,600 sq.m., 462,897 sq.m., 534,588 sq.m.

and 401,286 sq.m., resulting in a turnover from property developments of RMB697.5 million,

RMB1,819.9 million, RMB2,427.9 million and RMB2,322.3 million, respectively.






We recorded a loss of approximately RMB10.2 million for the year ended 31 December 2002.

The following tables set forth a summary of our combined financial statements for the periods

and as of the dates indicated. This summary has been extracted from, and should be read in

conjunction with, our audited combined financial statements included in the Accountants’ Report in

Appendix I to this prospectus. The basis of presentation is set out in note 2(a) of section II, after

making adjustments as are appropriate, of the Accountants’ Report in Appendix I to this prospectus.

Combined Income Statements

Year ended 31 December Six months ended 30 June

2002 2003 2004 2004 2005

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

(unaudited)

Turnover . . . . . . . . . . . . . . . . . 763,095 1,931,503 2,548,939 1,353,848 2,378,074

Cost of sales . . . . . . . . . . . . . . (542,946) (1,529,654) (1,901,408) (1,026,340) (1,617,541)

Gross profit . . . . . . . . . . . . . . . 220,149 401,849 647,531 327,508 760,533

Other gains . . . . . . . . . . . . . . . 987 4,729 7,320 2,478 1,834

Selling and marketing costs . . . . . (129,771) (172,354) (187,782) (84,653) (104,453)

Administrative expenses . . . . . . . . (77,192) (92,525) (98,223) (51,591) (46,581)

Other operating expenses . . . . . . . (794) (1,825) (2,091) (1,146) (2,191)

Operating profit . . . . . . . . . . . . 13,379 139,874 366,755 192,596 609,142

Finance costs . . . . . . . . . . . . . . (28,528) (28,119) (17,113) (11,503) (5,797)

(Loss)/profit before income tax . . . (15,149) 111,755 349,642 181,093 603,345

Income tax credit/(expense) . . . . . 4,942 (38,659) (119,364) (60,075) (199,717)

(Loss)/profit for the year/period . . (10,207) 73,096 230,278 121,018 403,628

Attributable to:

Owners . . . . . . . . . . . . . . . . . . (9,735) 71,950 227,609 120,820 401,653

Minority interests . . . . . . . . . . . . (472) 1,146 2,669 198 1,975

(10,207) 73,096 230,278 121,018 403,628

Dividends . . . . . . . . . . . . . . . . — — — — 77,451

SUMMARY

— 4 —

Extracted Combined Balance Sheets

As at 31 December As at 30 June

2002 2003 2004 2005

RMB’000 RMB’000 RMB’000 RMB’000

ASSETS

Non-current assets . . . . . . . . . . . . . . . . 1,750,081 1,635,446 1,514,414 1,268,893

Current assets . . . . . . . . . . . . . . . . . . . 3,473,494 4,435,691 4,615,005 4,646,756

Total assets . . . . . . . . . . . . . . . . . . . . 5,223,575 6,071,137 6,129,419 5,915,649

EQUITY AND LIABILITIES

Total equity . . . . . . . . . . . . . . . . . . . . 300,091 435,508 728,387 1,065,167

Non-current liabilities . . . . . . . . . . . . . . 1,233,401 1,661,491 1,163,209 1,162,973

Current liabilities . . . . . . . . . . . . . . . . . 3,690,083 3,974,138 4,237,823 3,687,509

Total equity and liabilities . . . . . . . . . . . 5,223,575 6,071,137 6,129,419 5,915,649

SUMMARY

— 5 —

PROFIT FORECAST FOR THE YEAR ENDING 31 DECEMBER 2005

Forecast profit after taxation and minority interests

but before extraordinary items(1)(4) . . . . . . . . not less than RMB936 million (HK$898 million)

Forecast earnings per Share

(a) Pro forma fully diluted basis(2)(4) . . . . . . . . . . . . . not less than RMB0.28 (HK$0.27)

(b) Weighted average basis(3)(4) . . . . . . . . . . . . . . . . not less than RMB0.37 (HK$0.36)

Notes:

(1) The bases on which the above profit forecast has been prepared are set out in Appendix II to this prospectus.

(2) The calculation of the forecast earnings per Share on a pro forma fully diluted basis is based on the forecast profit after

taxation and minority interest but before extraordinary items for the year ending 31 December 2005 assuming that the

Company had been listed since 1 January 2005 and a total of 3,322,000,000 Shares were in issue during the entire year.

This calculation assumes that the Over-allotment Option will not be exercised and the Shares issued pursuant to the

Global Offering and the Capitalization Issue were issued on 1 January 2005.

(3) The calculation of the forecast earnings per Share on a weighted average basis is based on the forecast profit after

taxation and minority interests but before extraordinary items for the year ending 31 December 2005 and a weighted

average number of approximately 2,530,180,822 Shares issued and outstanding during the year. This calculation

assumes that the Over-allotment Option will not be exercised and the Shares issued pursuant to the Global Offering will

be issued on Thursday, 15 December 2005.

(4) The forecast profit figure and forecast earnings per Share figure are converted into Hong Kong dollars at the rate of

RMB1.00 = HK$0.96.

OFFER STATISTICS

Based on an Offer Price

per Share of HK$3.00

Based on an Offer Price

per Share of HK$3.30

Market capitalization of the Shares(1) . . . . . . . . HK$9,966.0 million HK$10,962.6 million

Prospective price/earnings multiple

(a) Pro forma fully diluted basis(2) . . . . . . 11.1 times 12.2 times

(b) Weighted average basis(3) . . . . . . . . . 8.3 times 9.2 times

Adjusted net tangible asset value per Share(4) . . . HK$0.92 HK$1.00

Notes:

(1) The calculation of market capitalization is based on 3,322,000,000 Shares expected to be in issue following the Global

Offering and the Capitalization Issue, assuming that the Over-allotment Option is not exercised.

(2) The calculation of the prospective price/earnings multiple on a pro forma fully diluted basis is based on the forecast

earnings per Share on a pro forma fully diluted basis at the respective Offer Price of HK$3.00 and HK$3.30 per Share

assuming that the Over-allotment Option is not exercised.

(3) The calculation of the prospective price/earnings multiple on a weighted average basis is based on the above forecast

earnings per Share on a weighted average basis at the respective offer price of HK$3.00 and HK$3.30 per Share

assuming that the Over-allotment Option is not exercised.

(4) The adjusted net tangible asset value per Share is based on 3,322,000,000 Shares expected to be in issue following the

Global Offering and the Capitalization Issue (assuming no exercise of the Over-allotment Option) and the respective

offer price of HK$3.00 and HK$3.30 per Share.

SUMMARY

— 6 —

If the Over-allotment Option is exercised in full, the adjusted net tangible asset value per Share

will be approximately HK$1.01 per Share (based on an Offer Price of HK$3.00 per Share) or

approximately HK$1.09 (based on an Offer Price of HK$3.30 per Share), while the earnings per

Share on a pro forma fully diluted basis will be diluted to approximately HK$0.26.

DIVIDENDS

Considering our financial position, our Board currently intends, subject to certain limitations

set forth in the section entitled ‘‘Financial Information — Dividends’’ in this prospectus, and in the

absence of any circumstances which might reduce the amount of available distributable reserves,

whether by losses or otherwise, to distribute to our shareholders a proportion of our net profit for a

particular financial year. There is, however, no assurance that dividends of such amount or any

amount will be declared or distributed each year or in any year.

For each of the three years ended 31 December 2002, 2003 and 2004, we did not distribute any

dividends to our shareholders. In respect of the six months ended 30 June 2005, we have declared

and paid an interim dividend of approximately RMB77.5 million. In addition, subsequent to the

completion of the Reorganization, the Group has declared a special dividend of approximately

RMB320 million. The special dividend will be paid prior to the commencement of the listing of our

Shares on the Stock Exchange. Purchasers of our Offer Shares in the Global Offering will not be

entitled to these dividends. In the event that any portion of such special dividend is not paid prior to

the commencement of the listing of our Shares on the Stock Exchange, such unpaid portion will be

waived by the relevant shareholders.

For the year ending 31 December 2005, our Board currently intends to recommend a final

dividend of approximately HK$0.028 per Share. However, the final determination to pay such

dividends will be made at the discretion of our board of directors and will be based upon our

earnings, cash flow, financial condition, capital requirements, and any other conditions that our

board of directors may deem relevant. The payment of dividends may be limited by legal restrictions

and by financing agreements that we may enter into in the future and to the restrictions set out in

the section entitled ‘‘Financial Information — Dividends.’’

SELLING SHAREHOLDER

Top Coast, the trustee of the Chen Family Trust, will be selling 124,570,000 Shares,

representing approximately 3.75% of the Company’s enlarged issued share capital immediately after

completion of the Global Offering and the Capitalization Issue assuming the Over-allotment Option

is not exercised. Immediately before the Global Offering and the Capitalization Issue, Top Coast

holds 100% of the Company’s issued share capital and, immediately after completion of the Global

Offering, Top Coast holds approximately 71.25% of the Company’s enlarged issued share capital.

FUTURE PLANS AND USE OF PROCEEDS

We intend to grow our business steadily by focusing on property developments and the related

businesses. We intend to continue to focus on property development in the Pearl River Delta region

as well as to pursue strategic business opportunities in other PRC cities in a prudent manner. We

may also expand into other property-related businesses, such as hotel, shopping mall or office

building businesses, with a view to strengthening our performance and diversifying our business

risks. See the section entitled ‘‘Business — Business Strategies’’ for a detailed description of our

future plans.

SUMMARY

— 7 —

The net proceeds of the Global Offering accruing to the Company (after deduction of

underwriting fees and commissions and estimated expenses payable by the Company in relation to

the Global Offering, assuming the Over-allotment Option is not exercised) are estimated to be

approximately HK$2,355 million assuming an Offer Price per Share of HK$3.00, or approximately

HK$2,596 million assuming an Offer Price per Share of HK$3.30 (or if the Over-allotment Option is

exercised in full, approximately HK$2,769 million assuming an Offer Price per Share of HK$3.00,

or approximately HK$3,051 million assuming an Offer Price per Share of HK$3.30). The Company

intends to use the net proceeds to finance the development of existing properties held for future

development, and for general corporate purpose. In any event, use of the net proceeds for general

corporate purpose will not be more than 10% of the total net proceeds. See ‘‘Future Plans and Use of

Proceeds’’.

Any insufficient funding for the development of existing properties held for future development

will be financed by internal resources and/or bank borrowings. In the event that any part of our

development plan does not proceed as planned, including circumstances such as failure to obtain

requisite approvals for property developments, changes in government policies which would render

either of our property developments commercially not viable, and force majeure, the Directors will

carefully evaluate the situation and may reallocate the intended funding to other existing or new

property developments and/or hold such funds on short-term deposit as the Directors consider it to

be in our interests and those of our shareholders taken as a whole.

The Company will not receive any of the proceeds from the sale of the Offer Shares by the

Selling Shareholder. The net proceeds of the Global Offering accruing to the Selling Shareholder

(after deduction of underwriting fees and commissions and estimated expenses payable by the

Selling Shareholder in relation to the Global Offering) are estimated to be approximately HK$353

million, assuming an Offer Price of HK$3.00 per Share, or HK$389 million, assuming an Offer Price

of HK$3.30 per Share.

RISK FACTORS

The Directors consider that there are certain risks and considerations relating to our business,

real estate development in the PRC, the PRC and the Global Offering. These risk factors are set out

under the section entitled ‘‘Risk Factors’’ in this prospectus and can be summarized as follows:

Risks relating to our business

. We are heavily dependent on the performance of the property market in Guangdong

Province

. We may not have adequate resources to fund land acquisitions or property developments,

or to service our financing obligations

. We may not be able to obtain sites that are suitable for property developments

. We may not be able to obtain land use rights certificates with respect to certain parcels of

land in which we currently have various interests

. We do not have insurance to cover potential losses and claims in our operations

. We are subject to legal and business risks if we fail to obtain formal qualification

certificates

SUMMARY

— 8 —

. We guarantee the mortgages provided to our purchasers and consequently are liable to the

mortgagee banks if our purchasers default on their mortgage payments

. Property Valuation Report may materially differ from prices that can be achieved

. We rely on independent contractors

. We may be involved in legal and other proceedings arising out of our operations from

time to time and may face significant liabilities as a result

. Our turnover from property management could be adversely affected if owners of the

projects that we have developed elect to discontinue our engagement as the provider of

property management services

. Our strategy of acquiring complementary business or properties may fail

. The relevant PRC tax authorities may challenge the basis on which we calculate our LAT

obligations

. The non-compliant GFA of some of our completed property developments is subject to

governmental approval and additional payments

. Our success depends on the continuing efforts of our senior management team and other

key personnel and our business may be harmed if we lose their services

. The interests of our Founding Shareholders may not align with those of our other

shareholders

. We may be adversely affected by our association with other businesses and entities owned

or operated by the members of the Chen Family

. Our results of operations may be adversely affected if we fail to obtain, or there are

material delays in obtaining, requisite governmental approvals for a significant number of

our property developments

. Potential liability for environmental problems could result in substantial costs

Risks relating to real estate development in the PRC

. The PRC Government may adopt measures to curtail the overheating of real estate

development, which could slow down the industry’s rate of growth

. The real estate development in the PRC is still at an early stage and lacks adequate

infrastructural support

. The terms on which mortgages are available, if at all, may affect our sales

. Increasing competition in the PRC, particularly in Guangdong Province, may adversely

affect our business and financial condition

. We face risks related to the pre-sale of properties, including the risk that property

developments are not completed

SUMMARY

— 9 —

. We face significant property development risks before we realize any benefits from a

development

. We may be liable to our customers for damages if we do not deliver individual property

ownership certificates in a timely manner

. We may forfeit land to the PRC Government if we fail to comply with the terms of the

land grant contracts

. We must bear resettlement costs associated with our property developments

Risks relating to the PRC

. PRC economic, political and social conditions as well as government policies could affect

our business

. Governmental control of currency conversion may affect the value of your investment

. PRC regulations relating to the establishment of offshore special purpose companies by

PRC residents may adversely affect our business operations

. Fluctuation in the value of RMB may have a material adverse effect on your investment

. Uncertainty with respect to the PRC legal system could affect us

. The national and regional economies may be adversely affected by a recurrence of SARS

or an outbreak of other epidemics, thereby affecting our prospects

Risks relating to the Global Offering

. There has been no prior public market for our Shares and the liquidity and market price

of the shares may be volatile

. You may experience immediate dilution and may experience further dilution if we issue

additional Shares in the future

. Forward-looking information may prove inaccurate

. Future sales by our directors, officers and our current shareholders of a substantial

number of our Shares in the public market could materially and adversely affect the

prevailing market price of our Shares

. We strongly caution you not to place any reliance on any information contained in press

articles or media regarding us and the Global Offering

. We cannot guarantee the accuracy of facts, forecasts and other statistics with respect to

the PRC, the PRC economy and the PRC real estate industry contained in this prospectus

SUMMARY

— 10 —

In this prospectus, unless the context otherwise requires, the following terms shall have the

meanings set out below.

‘‘Application Form(s)’’ WHITE application form(s) and YELLOW application form(s), or

where the context so requires, any of them

‘‘Articles of Association’’

or ‘‘Articles’’

the articles of association of the Company, adopted on 23 November

2005, and as amended from time to time

‘‘associates’’ has the meaning ascribed thereto under the Listing Rules

‘‘Baiyun Agile Co.’’ (Guangzhou Baiyun Agile Real

Estate Development Ltd.), a sino-foreign cooperative joint venture

enterprise established in the PRC

‘‘Board’’ the board of Directors

‘‘BVI’’ British Virgin Islands

‘‘Capitalization Issue’’ the issue of Shares to be made upon capitalization of the share

premium account of the Company as referred to in the section headed

‘‘Further information about the Company — Resolutions in writing of

the shareholders of the Company passed on 23 November 2005’’ in

Appendix VII to this prospectus

‘‘CCASS’’ the Central Clearing and Settlement System established and operated by

HKSCC

‘‘CCASS Broker

Participant’’

a person admitted to participate in CCASS as a broker participant

‘‘CCASS Custodian

Participant’’

a person admitted to participate in CCASS as a custodian participant

‘‘CCASS Investor

Participant’’

a person admitted to participate in CCASS as an investor participant

who may be an individual or joint individuals or a corporation

‘‘CCASS Participant’’ a CCASS Broker Participant, a CCASS Custodian Participant or a

CCASS Investor Participant

‘‘Chen Family’’ Chen Zhuo Lin, Chan Cheuk Yin, Luk Sin Fong, Fion, Chan Cheuk

Hung, Chan Cheuk Hei, Chan Cheuk Nam, Lu Liqing, Lu Yanping,

Chan Siu Na and Zheng Huiqiong

‘‘Chen Family Trust’’ a family trust established by Top Coast as trustee and the beneficiaries

of which are the Founding Shareholders

‘‘commodity properties’’ residential properties, commercial properties and other buildings that

are developed by real estate developers for the purposes of sale or

lease after their completion

DEFINITIONS

— 11 —

‘‘Companies Law’’ the Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and

revised) of the Cayman Islands

‘‘Companies Ordinance’’ the Companies Ordinance (Chapter 32 of the Laws of Hong Kong), as

amended, supplemented or otherwise modified from time to time

‘‘the Company’’, ‘‘our

Company’’

Agile Property Holdings Limited ( ), an

exempted company incorporated in the Cayman Islands with limited

liability on 14 July 2005

‘‘controlling shareholder’’ has the meaning ascribed thereto under the Listing Rules

‘‘Director(s)’’ the directors of the Company

‘‘Eastern Supreme’’ Eastern Supreme Group Limited, a limited liability company

incorporated in the BVI on 6 April 2005

‘‘Ever Creator Co.’’ (Zhongshan Ever Creator Real Estate

Development Ltd.), a wholly foreign owned enterprise established in

the PRC

‘‘Fashion Decoration Co.’’ (Zhongshan Fashion Decoration Co., Ltd.), a

wholly foreign owned enterprise established in the PRC

‘‘Forever Fame’’ Forever Fame Holdings Limited, a limited liability company


‘‘Founding Shareholders’’ Chen Zhuo Lin, Chan Cheuk Yin, Luk Sin Fong, Fion, Chan Cheuk

Hung, Chan Cheuk Hei and Chan Cheuk Nam, who are all founding

shareholders of the Company and executive directors of the Company

‘‘Genesis Global’’ Genesis Global Development Limited, a limited liability company


‘‘GFA’’ gross floor area

‘‘Global Coordinator’’

or ‘‘Sponsor’’ or

‘‘Morgan Stanley Asia’’

Morgan Stanley Dean Witter Asia Limited, licensed to conduct type 1

(dealing in securities), type 4 (advising on securities) and type 6

(advising on corporate finance) regulated activities under the SFO

‘‘Global Offering’’ the Hong Kong Public Offering and the International Offering

‘‘Greenville Co.’’ (Zhongshan Greenville Real Estate


the PRC

‘‘Group’’, ‘‘we’’ and ‘‘us’’ the Company and its subsidiaries, or where the context refers to any

time prior to the date of incorporation, those entities and businesses

which were injected to and conducted by the Company upon its

establishment

DEFINITIONS

— 12 —

‘‘Guangzhou Agile Co.’’ (Guangzhou Agile Real Estate

Development Ltd.), a sino-foreign cooperative joint venture enterprise

established in the PRC

‘‘Guangzhou Property

Management Co.’’

(Guangzhou Agile Property

Management Services Co., Ltd.), a wholly foreign owned enterprise


‘‘HK$’’ or ‘‘HK dollars’’ Hong Kong dollars, the lawful currency of Hong Kong

‘‘HKSCC’’ Hong Kong Securities Clearing Company Limited

‘‘HKSCC Nominees’’ HKSCC Nominees Limited

‘‘Hong Kong’’ or ‘‘HK’’ the Hong Kong Special Administrative Region of the PRC

‘‘Hong Kong Agile’’ Agile International Co., Ltd., a company incorporated in Hong Kong on

19 July 1994

‘‘Hong Kong Offer

Shares’’

the Offer Shares initially being offered for subscription in the Hong

Kong Public Offering (subject to adjustment as described in the section

headed ‘‘Structure of the Global Offering’’)

‘‘Hong Kong Public

Offering’’

the offering by the Company of initially 95,508,000 Offer Shares for

subscription by the public in Hong Kong (subject to adjustment as

described in the section headed ‘‘Structure of the Global Offering’’ of

this prospectus) for cash at the Offer Price and on the terms and

conditions described in this prospectus and the Application Forms

‘‘Hong Kong

Underwriters’’

the underwriters of the Hong Kong Public Offering listed in the section

‘‘Underwriting — Hong Kong Underwriters’’

‘‘Hong Kong Underwriting

Agreement’’

the underwriting agreement dated 2 December 2005 relating to the

Hong Kong Public Offering entered into among the Company, Top

Coast, the Global Coordinator and the Hong Kong Underwriters

‘‘Huadu Agile Co.’’ (Guangzhou Huadu Agile Real

Estate Development Ltd.), a sino-foreign equity joint venture


‘‘Huadu Property


(Guangzhou Huadu Agile

Property Management Services Co., Ltd.), a wholly foreign owned


‘‘HKFRS’’ Hong Kong Financial Reporting Standards promulgated by the Hong

Kong Institute of Certified Public Accountants, which includes Hong

Kong Accounting Standards (‘‘HKAS’’) and their interpretations

‘‘International Offer

Shares’’

the Offer Shares offered pursuant to the International Offering

DEFINITIONS

— 13 —

‘‘International Offering’’ the offering of an aggregate of 859,562,000 Offer Shares by the

Company and the Selling Shareholder outside the United States

(including to professional investors in Hong Kong, other than to

retail investors in Hong Kong), and in the United States to QIBs in

reliance on Rule 144A as further described in the section entitled

‘‘Structure of the Global Offering’’

‘‘International

Underwriters’’

the underwriters of the International Offering as listed on the

International Purchase Agreement

‘‘International Purchase

Agreement’’

the international purchase agreement relating to the International

Offering which is expected to be entered into among, amongst others,

the Company, the Selling Shareholder, the Global Coordinator and the

International Underwriters on or around Friday, 9 December 2005

‘‘Jingtian’’ Jingtian & Gongcheng Attorneys at Law, the Company’s PRC Counsel

‘‘LAT’’ Land Appreciation Tax ( ) as defined in the Provisional

Regulations of the People’s Republic of China on Land Appreciation

Tax ( ) and the Detailed

Implementation Rules on the Provisional Regulations of the People’s

Republic of China on Land Appreciation Tax (

) as described in Appendix VI to this

prospectus

‘‘Latest Practicable Date’’ 31 October 2005

‘‘Listing Rules’’ the Rules Governing the Listing of Securities on The Stock Exchange

of Hong Kong Limited as amended from time to time

‘‘Macau’’ the Macau Special Administration Region of the PRC

‘‘Majestic Garden Co.’’ (Zhongshan Agile Majestic Garden

Real Estate Development Ltd.), a wholly foreign owned enterprise


‘‘Memorandum’’ or

‘‘Memorandum of

Association’’

the memorandum of association of the Company, adopted on 14 July

2005 and as amended from time to time

‘‘Ministry of Finance’’ or

‘‘MOF’’

the PRC Ministry of Finance ( )

‘‘MOP’’ Pataca, the lawful currency of Macau

‘‘Nanhai Agile Co.’’ (Foshan Nanhai Agile Real Estate


the PRC

‘‘Nanhai Co.’’ (Foshan Nanhai Ya Zhen Trading Co.,

Ltd.), a limited liability company established in the PRC

DEFINITIONS

— 14 —

‘‘Nanhai Property


(Foshan Nanhai Agile

Property Management Services Co., Ltd.), a wholly foreign owned


‘‘Offer Price’’ the final price per Share in Hong Kong dollars (exclusive of brokerage,

SFC transaction levy, investor compensation levy and the Stock

Exchange trading fee) at which the Offer Shares are to be subscribed

for and issued, or purchased and sold pursuant to the Global Offering,

to be determined as further described in the section entitled ‘‘Structure

of the Global Offering — Pricing of the Global Offering’’ in this

prospectus

‘‘Offer Shares’’ the Hong Kong Offer Shares and the International Offer Shares

together, where relevant, with any additional Shares issued pursuant

to the exercise of the Over-allotment Option

‘‘Over-allotment Option’’ the option to be granted by the Company to the Global Coordinator on

behalf of the International Underwriters exercisable by the Global

Coordinator pursuant to the International Purchase Agreement, to be

exercisable at any time from the date of the International Purchase

Agreement until 30 days after the last date for the lodging of

applications under the Hong Kong Public Offering, to require the

Company to allot and issue up to an aggregate of 143,260,000

additional Offer Shares representing approximately 15% of the initial

Offer Shares, at the same price per Share under the International

Offering to cover, among other things, over-allocations in the

International Offering, if any

‘‘Panyu Agile Co.’’ (Guangzhou Panyu Agile Real

Estate Development Ltd.), a sino-foreign equity joint venture


‘‘PBOC’’ the People’s Bank of China ( ), the central bank of the PRC

‘‘PRC’’ or ‘‘China’’ the People’s Republic of China. Except where the context requires,

geographical references in this prospectus to the PRC or China exclude

Hong Kong, Macau or Taiwan

‘‘PRC Government’’ or

‘‘State’’

the central government of the PRC including all governmental

subdivisions (including provincial, municipal and other regional or

local government entities) and instrumentalities thereof or, where the

context requires, any of them

‘‘Price Determination

Date’’

the date, expected to be on or around Friday, 9 December 2005 but no

later than Tuesday, 13 December 2005, on which the Offer Price is

fixed for the purposes of the Global Offering

‘‘QIBs’’ qualified institutional buyers within the meaning of Rule 144A

‘‘Regulation S’’ Regulation S under the U.S. Securities Act

DEFINITIONS

— 15 —

‘‘Relevant Periods’’ each of the Group’s financial years ended 31 December 2002, 2003 and

2004 and the six months ended 30 June 2005

‘‘Reorganization’’ the reorganization arrangements undergone by the Group in preparation

for the listing of Shares on the Stock Exchange which is more

particularly described in the sections ‘‘History, Reorganization and

Group Structure’’ and ‘‘Statutory and General Information — A.

Further information about the Company — 4. Corporate

Reorganization’’ in Appendix VII to this prospectus

‘‘RMB’’ or ‘‘Renminbi’’ Renminbi, the lawful currency of the PRC

‘‘Rule 144A’’ Rule 144A under the U.S. Securities Act

‘‘Sale Shares’’ the 124,570,000 Shares (subject to adjustment) offered for sale by the

Selling Shareholder under the International Offering

‘‘Selling Shareholder’’ Top Coast

‘‘SFC’’ the Securities and Futures Commission of Hong Kong

‘‘SFO’’ the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong

Kong), as amended, supplemented or otherwise modified from time to

time

‘‘Share Option Scheme’’ the share option scheme conditionally approved and adopted by the

Company on 23 November 2005, the principal terms of which are

summarized in the section headed ‘‘Share Option Scheme’’ in Appendix

VII to this prospectus

‘‘Share(s)’’ ordinary shares of the Company with a nominal value of HK$0.10 each

‘‘State Council’’ the PRC State Council ( )

‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited

‘‘Top Coast’’ Top Coast Investment Limited, a limited liability company incorporated

in the BVI on 17 May 2005 and the trustee of the Chen Family Trust

‘‘Top Delight’’ Top Delight International Limited, a limited liability company


‘‘Underwriters’’ collectively, the Hong Kong Underwriters and the International

Underwriters

‘‘Underwriting

Agreements’’

collectively, the Hong Kong Underwriting Agreement and the

International Purchase Agreement

‘‘United States’’ or ‘‘U.S.’’ the United States of America

DEFINITIONS

— 16 —

‘‘U.S. Exchange Act’’ the United States Exchange Act of 1934, as amended, and the rules and

regulations promulgated thereunder

‘‘U.S. Securities Act’’ the United States Securities Act of 1933, as amended, and the rules and

regulations promulgated thereunder

‘‘USD’’ or ‘‘U.S. dollars’’ United States dollars, the lawful currency of the United States

‘‘Zhongshan Agile Co.’’ (Zhongshan Agile Property

Development Co., Ltd.), a limited liability company established in

the PRC

‘‘Zhongshan Group Co.’’ (Zhongshan Agile Group Co., Ltd.), a

limited liability company established in the PRC

‘‘Zhongshan Property


(Zhongshan Agile Property

Management Services Co., Ltd.), a wholly foreign owned enterprise


‘‘Zhongshan Property

Land Co.’’

(Zhongshan Agile Property Land Co.,

Ltd.), a wholly foreign owned enterprise established in the PRC

Unless otherwise expressly stated or the context otherwise requires, all data in this prospectus

is as at the date of this prospectus.

For the purpose of illustration only and unless otherwise specified in this prospectus, amounts

denominated in RMB have been translated into HK$ at the rate of RMB1.00 = HK$0.96 and amounts

denominated in MOP have been translated into HK$ at the rate of MOP1.00 = HK$0.95. No

representation is made that the RMB amounts could have been, or could be, converted into MOP or

HK$ at such rates or at any other rate on such date or on any other date.

Unless otherwise specified, all references to any shareholdings in the Company assume no

exercise of the Over-allotment Option.

DEFINITIONS

— 17 —

You should carefully consider all of the information in this prospectus including the risks

and uncertainties described below before making an investment in our Shares. You should pay

particular attention to the fact that we conduct our operations in the PRC, the legal and

regulatory environment of which may differ in some respects from that which prevails in other

countries. Our business, financial condition or results of operations could be materially adversely

affected by any of these risks. The trading price of our Shares could decline due to any of these

risks, and you may lose all or part of your investment. For more information concerning the PRC

and certain related matters discussed below, please refer to Appendix VI ‘‘Summary of PRC Laws

Relevant to the Property Sector.’’

RISKS RELATING TO OUR BUSINESS

We are heavily dependent on the performance of the property market in Guangdong Province

We established our business by developing properties in the city of Zhongshan in 1997. We

began to develop projects in the city of Guangzhou and Foshan in 2000 and 2001, respectively. As

of 30 September 2005, all of our properties with an aggregate site area of 6.7 million sq.m. were

located in one of these three cities in Guangdong Province. Although we may consider pursuing

business opportunities in other cities in the PRC that are developing rapidly, our primary business

strategy is to maintain and increase our market share in Guangdong Province. As a result, our

business is and will be heavily dependent on the continued growth of the property market in

Guangdong Province and any adverse developments in the supply and demand or in property prices

in Guangdong Province, particularly in the cities of Guangzhou, Zhongshan and Foshan, would have

a material adverse effect on our results of operations and financial condition. In addition, future

demand for different types of residential properties is uncertain. If we do not respond to changes in

market conditions or customer preferences in a timely manner, our results of operation would be

adversely affected.

Demand for private residential properties in the PRC, particularly in Guangdong Province, has

been growing rapidly in recent years, but such growth is often coupled with volatility in market

conditions and fluctuation in property prices. There is no assurance that property development and

investment activities will continue at past levels or that we will be able to benefit from the future

growth, if any, of the property market in Guangdong Province or the PRC.

We may not have adequate resources to fund land acquisitions or property developments, or to

service our financing obligations

The property development business is capital intensive. We finance our property developments

primarily through a combination of internal funds, borrowings from banks and pre-sales and sales

proceeds. There is no guarantee that we will have sufficient cash flow available for land acquisitions

or property developments or that we will be able to achieve sufficient pre-sales and sales to fund

land acquisitions or property developments. In addition, there can be no assurance that we will be

able to secure external financing on terms acceptable to us or at all. As of 30 June 2005, our

outstanding borrowings were RMB1,361.2 million.

RISK FACTORS

— 18 —

Our ability to arrange adequate financing for land acquisitions or property developments on

terms that will allow us to earn reasonable returns depend on a number of factors, which are beyond

our control. The PRC Government has in recent years taken a number of policy initiatives in the

financial sector to further tighten lending requirements for real estate developers. In June 2003, the

PBOC issued a notice which among other things:

. forbids PRC commercial banks from granting loans to property developers for funding the

payments of land premiums;

. restricts PRC commercial banks from granting loans for the development of luxury

residential properties; and

. forbids real estate developers from using borrowings obtained from any local banks to

fund property developments outside that local region.

In recent years, both the national and regional governments have issued certain policy

initiatives requiring banks to tighten lending procedures for property developments. These initiatives

may limit our flexibility and ability to use bank loans to finance our property developments and

therefore, may require us to maintain a relatively high level of internally-sourced cash. As a result,

our business and financial condition may be materially adversely affected. In October 2004, the

PBOC raised the benchmark one-year lending rate from 5.31% to 5.58%. While this has not had and

we do not believe this will have a material adverse effect on our ability to obtain financing on terms

acceptable to us or on our overall financial condition, we cannot assure you that the PBOC will not

further raise lending rates or that our business, financial condition and results of operations will not

be adversely affected as a result of these adjustments. As of 30 June 2005, the effective interest rate

on our outstanding borrowings was 5.96% and we had RMB1,361.2 million of outstanding

borrowings. Our interest on bank borrowings for each of the three years ended 31 December 2002,

2003, 2004 and for the six months ended 30 June 2005, were RMB88.3 million, RMB119.6 million,

RMB101.1 million and RMB41.2 million, respectively.

We may not be able to obtain sites that are suitable for property developments

We derive a majority of our revenue from sale of properties that we have developed. This

revenue stream is dependent on the completion of, and our ability to, sell our property

developments. To maintain or grow our business in the future we will be required to replenish

our land bank with suitable sites for developments. Our ability to identify and acquire suitable sites

is subject to a number of factors that are beyond our control.

The PRC Government controls substantially all of the land supply in the PRC. As a result, the

policies of the PRC Government towards land supply affect our ability to acquire land use rights for

sites we identify and the costs of any acquisition. The PRC central and local governments may

regulate the means by which real estate developers, including ourselves, obtain land sites for

property developments. In May 2002, the PRC Government introduced regulations requiring

government departments and agencies to grant state-owned land use rights for residential and/or

commercial property developments through public tender, auction or listing-for-sale. We will be

required to participate in these processes to acquire land use rights which may result in higher prices

than those we paid in the past. Our business, financial condition and results of operations may be

adversely affected if we are unable to obtain land sites for development at prices that allow us to

achieve reasonable returns upon sale to our customers.

RISK FACTORS

— 19 —

We may not be able to obtain land use rights certificates with respect to certain parcels of land

in which we currently have various interests

In addition to our 18 projects with respect to each of which we have land use right certificates,

we have parcels of land in which we have various interests but for which we have not yet obtained

the relevant land use right certificates. As of 31 October 2005, these parcels of land occupied an

aggregate site area of approximately 1.5 million sq.m. We have not assigned any value to these

parcels of land in the Property Valuation Report in Appendix IV to this prospectus. If we fail to

obtain the land use right certificates with respect to these parcels of land in a timely manner, or at

all, we may not be able to acquire new land in replacement on terms acceptable to us, or at all,

which would have a material adverse effect on our business, financial condition and results of

operations and business prospects going forward. See ‘‘Business — Description of Property

Developments.’’

We do not have insurance to cover potential losses and claims in our operations

As consistent with what we believe to be customary practice in the property development

industry in the PRC, we do not maintain insurance for destruction of or damage to our property

developments, whether they are under development or have been completed and are pending

delivery. We also do not carry insurance against personal injuries that may occur during the

construction of our property developments. In addition, we do not carry insurance for any liability

arising from allegedly tortious acts committed on work sites. Although we believe any such liability

that may arise would be borne by third-party construction companies, we cannot assure you that we

will not be sued or held liable for damages due to such tortious acts. Moreover, there are certain

losses for which insurance is not available on commercially practicable terms, such as losses

suffered due to earthquake, typhoon, flooding, war and civil disorder. If we suffer from any losses,

damages and liabilities in the course of our operations and property development, we may not have

sufficient funds to cover any such losses, damages or liabilities or to replace any property

development that has been destroyed. In addition, any payment we make to cover any losses,

damages or liabilities could have a material adverse effect on our business, results of operations and

financial condition.

We are subject to legal and business risks if we fail to obtain formal qualification certificates

Real estate developers in the PRC must obtain a formal qualification certificate ( ) in

order to carry out property development business in the PRC. According to the Provisions on

Administration of Qualification Certificates of Real Estate Developers ( )

newly established developers must first apply for a temporary qualification certificate

( ), which can be renewed for a maximum of two additional one-year periods.

Entities engaged in property management or interior decoration should also obtain qualification

certifications before commencing their business, according to the Measures on Administration of

Qualification Certificates of Property Management Enterprises ( ) and the

Provisions on Administration of Qualification Certificates of Construction Enterprises

( ). All qualification certificates are subject to renewal on an annual basis.

In reviewing the renewal of a qualification certificate, the local authority considers the real estate

developer’s registered capital, property development investments, history of property development,

quality of property construction, expertise of the developer’s management, as well as whether the

real estate developer has any illegal or inappropriate operations. Each of our project companies is

responsible for, and monitors, the annual submission of its renewal application. See ‘‘Summary of

PRC Laws Relating to the Property Sector — II. Qualifications of a Real Estate Developer’’ in

Appendix VI to this prospectus.

RISK FACTORS

— 20 —

Real estate developers in the PRC must also produce a valid qualification certificate when they

apply for a pre-sale permit. If any one of our project companies is unable to meet the relevant

requirements, and is therefore unable to obtain or renew its qualification certificate, that project

company will be given a deadline within which it has to meet these requirements and it will also be

subject to a penalty of between RMB50,000 and RMB100,000. Failure to meet the requirements

within the specified timeframe could result in the revocation of the qualification certificate and the

business license of the relevant project company. There is no assurance that the qualification

certificates of any of our project companies will continue to be renewed or that formal qualification

certificates will be obtained in a timely manner, or at all, as and when they expire. If our project or

project management companies are unable to obtain or renew their qualification certificates, they

may not be permitted to continue their businesses, which could materially and adversely affect our

business and financial condition.

We guarantee the mortgages provided to our purchasers and consequently are liable to the

mortgagee banks if our purchasers default on their mortgage payments

We arrange for various domestic banks to provide mortgages to the purchasers of our

properties. In accordance with market practice, domestic banks require us to provide guarantees in

respect of these mortgages. Substantially all of these guarantees are discharged upon earlier of (i)

the issuance of the real estate ownership certificate, which generally takes place within one to two

years after we deliver possession of the relevant property to the purchasers; and (ii) the settlement of

mortgage loans between banks and purchasers of our properties. In line with industry practice, we do

not conduct independent credit checks on our customers but rely instead on the credit checks

conducted by the mortgagee banks. As of 31 December 2002, 2003 and 2004 and 30 June 2005, our

outstanding guarantees over mortgage loans of our customers amounted to RMB726.8 million,

RMB1,741.6 million, RMB2,575.9 million and RMB3,687.0 million, respectively. Although we have

historically experienced a low rate of default on mortgage loans guaranteed by us, there is no

assurance that such purchaser default rates will not increase in the future. If such default occurs and

our relevant guarantee is called upon, our business, results of operations and financial condition

could be adversely affected to the extent that there is a material depreciation in the value of the

related properties or if we are unable to sell the properties due to unfavorable market conditions or

other reasons.

Property Valuation Report may materially differ from prices that can be achieved

Property Valuation Report prepared by CB Richard Ellis, or CBRE, is included in Appendix IV

to this prospectus. The valuations are based upon certain assumptions, which, by their nature, are

subjective and uncertain and may differ materially from actual results. With respect to properties

under development and properties held for future development, the valuations are based on the

assumptions that (i) the properties will be completed or developed as currently proposed, (ii)

regulatory and governmental approvals for the proposals have been or will be obtained, (iii) we are

in possession of proper legal titles and are entitled to transfer the properties at no extra land

premium, and (iv) all premiums in connection with the properties have been paid and the properties

are free of encumbrances and other restrictions. For properties owned by the project companies in

which we have an attributable interest of less than 100%, the valuation assumes that the interest of

the relevant project companies in the aggregate value of the property or business is equal to our

proportionate ownership interest in the relevant company or business. These valuations are not a

prediction of the actual value we may achieve from these properties. Unforeseen changes in a

particular property development or in general or local economic conditions could affect the value of

our properties.

RISK FACTORS

— 21 —

We rely on independent contractors

We engage independent contractors to provide various services, including construction, piling

and foundation, engineering, interior decoration, mechanical and electrical installation and utilities

installation. We select independent contractors by submission of open tenders. Although we invite

contractors to tender bids according to their reputation for quality, track record and references, and

although once a contract is awarded we supervise the construction progress, we cannot assure you

that the services rendered by any of these independent contractors will always be satisfactory or

match our requirements for quality. Moreover, the completion of our property developments may be

delayed, and we may incur additional costs due to a contractor’s financial or other difficulties. Any

of these factors could have a material adverse effect on our business, financial condition and results

of operations.

We may be involved in legal and other proceedings arising out of our operations from time to

time and may face significant liabilities as a result

We may be involved in disputes with various parties involved in the development and the sale

of our properties, including contractors, suppliers, construction workers, partners and purchasers.

These disputes may lead to legal or other proceedings and may result in substantial costs and

diversion of resources and management’s attention. As most of our projects comprise of multiple

phases, purchasers of our properties in earlier phases may file legal actions against us if our

subsequent planning and development of the projects are perceived to be inconsistent with our

representations and warranties made to such earlier purchasers. In addition, we may have

disagreements with regulatory bodies in the course of our operations, which may subject us to

administrative proceedings and unfavorable decrees that result in pecuniary liabilities and cause

delays to our property developments. See ‘‘Business — Legal Proceedings.’’

Our turnover from property management could be adversely affected if owners of the projects

that we have developed elect to discontinue our engagement as the provider of property

management services

We provide post-sales property management services to the owners of each residential project

that we have developed through our four wholly-owned property management subsidiaries. The

services include, among others, rental agency, security management, maintenance, operation of

clubhouse, gardening and landscaping and other customer services. We believe that property

management is an integral part of our business and is very important to the successful marketing and

promotion of our property developments. Under PRC law, the home owners in a residential

community of certain scale have the right to change the property management company through

collective actions. If owners of the projects that we have developed elect to discontinue the services

provided by our property management subsidiaries, our property management business would be

adversely and significantly affected.

Our strategy of acquiring complementary business or properties may fail

As part of our business strategy going forward, we may expand our business into new

geographical areas, such as Hainan Province and Changsha City, Hunan Province, or new segments

such as hotels, shopping malls or office buildings. We may also pursue selective strategic

acquisitions of businesses and properties if suitable opportunities arise. Expansion or acquisition

may require a significant amount of capital investment, and involve uncertainties and risks which

include the risks of operating in a new geographic or business segment in which we have relatively

RISK FACTORS

— 22 —

little experience, the costs and difficulties of integrating new businesses and diversion of resources

and management’s attention. Our failure to address these risks may have a material adverse effect on

our business, financial condition and results of operations.

The relevant PRC tax authorities may challenge the basis on which we calculate our LAT

obligations

Under PRC tax laws and regulations, our PRC subsidiaries are subject to LAT which is

collected by the local tax authorities. All income from the sale or transfer of state-owned land use

rights, buildings and their attached facilities in the PRC is subject to LAT at progressive rates

ranging from 30% to 60% of the appreciation value as defined by the relevant tax laws, with certain

exemptions available for the sale of ordinary residential properties ( ) if the appreciation

values do not exceed 20% of the total deductible items as defined in the relevant tax laws. Sales of

commercial properties are not eligible for such exemption. We estimate and make provisions for the

full amount of applicable LATs in accordance with the requirements set forth in the relevant PRC

tax laws and regulations, but only pay a portion of such provisions, each year as required by the

local tax authorities. For each of the three years ended 31 December 2002, 2003 and 2004 and the

six months ended 30 June 2005, we made a provision for LAT in the amount of nil, RMB21.4

million, RMB80.7 million and RMB179.1 million, respectively. For the same periods, we made LAT

payments in the amount of RMB0.6 million, RMB6.2 million, RMB9.2 million and RMB9.0 million,

respectively. In April 2005, the Guangzhou tax authorities promulgated regulations clarifying that

the residential part of a combined-use building would not be eligible for the exemption available for

ordinary residential properties as discussed in the foregoing if the separation of residential and

commercial parts of the combined-use building would be impracticable. Since 1 January 2002, we

have made provisions for applicable LAT in respect of the residential part of the combined-use

buildings in Guangzhou, Zhongshan and Foshan as if the regulations promulgated by the Guangzhou

tax authorities in April 2005 had been in effect for all three cities. Although we believe such

provisions are sufficient, we cannot assure you that the tax authorities will agree with the basis on

which we calculate our LAT obligations. In the event that they believe a higher LAT should be paid,

our net profits after tax will be adversely affected.

Since January 2005, we have been required to prepay LAT in respect of the sales and pre-sales

of our properties in Guangzhou and as a result, have paid an aggregate amount of approximately

RMB3.0 million in LAT prepayment in Guangzhou for the six months ended 30 June 2005. In

Zhongshan and Foshan LAT prepayment requirements have been in effect since 1996 and 2002,

respectively. In the event that relevant tax authorities change their requirements as to the amount or

timing of LAT prepayments, our cashflow may be materially and adversely affected. See ‘‘Financial

Information — Certain Income Statement Items — Cost of Sales — LAT.’’

The non-compliant GFA of some of our completed property developments is subject to

governmental approval and additional payments

The local government authorities inspect property developments after their completion and

issue completion certificates if the developments are in compliance with the relevant laws and

regulations. If the total constructed GFA of a property development exceeds the amount of GFA

originally authorized in the relevant land grant contracts or construction permit, or if the completed

property contains built-up areas that are not in conformity with the plan authorized by the

construction permit, the property developer may be required to pay additional payments or take

corrective actions with respect to such non-compliant GFA before the property development could be

issued a completion certificate.

RISK FACTORS

— 23 —

As of 30 June 2005, the aggregate amount of GFA not in compliance with the authorized GFA

with respect to our completed properties was approximately 7,892.9 sq.m. All of the non-compliant

GFA related to the properties of Agile Garden Guangzhou. We have received approval from the

relevant government authority of such non-compliant GFA and received the relevant completion

certificates following the payment of an additional amount of RMB13.8 million, which was

calculated according to the relevant provisions of Urban Planning Law of People’s Republic of

China ( ) and Regulations on Urban Planning of Guangzhou

( ). As of the Latest Practicable Date, the aggregate amount of GFA not in

compliance with the authorized GFA with respect to our completed properties was nil. However, we

cannot assure you that the local government authorities will not find the total constructed GFA of

our existing projects under development or any future property developments exceeding the relevant

authorized GFA upon completion.

Our success depends on the continuing efforts of our senior management team and other key

personnel and our business may be harmed if we lose their services

Our future success depends heavily upon the continuing services of the members of our senior

management team, in particular our Chairman, Chen Zhuo Lin, our Vice-Chairman and Co-President,

Chan Cheuk Yin and our Vice-Chairlady and Co-President, Luk Sin Fong, Fion, each of whom has

more than ten years of real estate development experience in the PRC. Chen Zhuo Lin is responsible

for the formulation of development strategies, making decisions on investment projects and

development directions on the operations and overall business management of the Group. Mr. Chen

Cheuk Yin specializes in the overall planning of projects, property management, and business

management of the Group. Luk Sin Fong, Fion has extensive management experience in real estate

development and in particular in the area of strategic marketing and marketing management. If one

or more of our senior executives or other personnel are unable or unwilling to continue in their

present positions, we may not be able to replace them easily or at all, and our business may be

disrupted and our financial condition and results of operations may be materially and adversely

affected. Competition for senior management and key personnel is intense, the pool of qualified

candidates is very limited, and we may not be able to retain the services of our senior executives or

key personnel, or attract and retain high-quality senior executives or key personnel in the future. In

addition, if any member of our senior management team or any of our other key personnel joins a

competitor or forms a competing company, we may lose customers and key professionals and staff

members.

The interests of our Founding Shareholders may not align with those of our other shareholders

Immediately following the Global Offering, the Founding Shareholders collectively will

beneficially own approximately 71.25% of our outstanding Shares on a fully diluted basis, or

approximately 68.3% if the International Underwriters exercise their Over-allotment Option in full.

The interests of our Founding Shareholders may differ from the interests of our other shareholders.

These Founding Shareholders could have significant influence in determining the outcome of

any corporate transaction or other matter submitted to the shareholders for approval, including

mergers, consolidations and the sale of all or substantially all of our assets, election of directors and

other significant corporate actions. In cases where their interests are aligned and they vote together,

these Founding Shareholders will also have the power to prevent or cause a change in control.

Without the consent of some or all of these Founding Shareholders, we may be prevented from

entering into transactions that could be beneficial to us. In addition, such Founding Shareholders are

RISK FACTORS

— 24 —

also the controlling shareholders and senior executive officers of certain other companies that are

outside of our Group. We cannot assure you that they will act completely in our interests or that

conflicts of interest will be resolved in our favor.

We may be adversely affected by our association with other businesses and entities owned or

operated by members of the Chen Family


Group prior to the Global Offering. The Chen Family first entered the real estate business in 1992

and since then has substantially grown their operations to include, among others, businesses or

entities in property development, property management, hotel, golf club, interior decoration,

advertising and entertainment. Pursuant to the Reorganization, certain of these businesses or entities

were not transferred to the Group but remain controlled and managed by certain members of the

Chen Family. Due to our historical and current relationships with the Chen Family, we may be

adversely affected by events, matters or risks that adversely affect these other businesses and entities

owned or operated by certain members of the Chen Family, through association, diversion of

management resources or attention or otherwise.

Our results of operations may be adversely affected if we fail to obtain, or there are material

delays in obtaining, requisite governmental approvals for a significant number of our property

developments

The real estate industry in the PRC is heavily regulated by the PRC Government. PRC real

estate developers must comply with various requirements mandated by the laws and regulations,

including the policies and procedures established by local authorities designed for the

implementation of such laws and regulations. In order to develop and complete a property

development, a real estate developer must obtain various permits, licenses, certificates and other

approvals from the relevant administrative authorities at various stages of the property development,

including land use rights documents, planning permits, construction permits, pre-sale permits and

certificates or confirmation of completion and acceptance. Each approval is dependent on the

satisfaction of certain conditions. We have not experienced any material delays in obtaining such

governmental approvals in respect of our property developments that have had a material adverse

effect on our business or results of operations. However, there can be no assurance that we will not

encounter major problems in fulfilling the conditions precedent to the approvals, or that we will be

able to adapt ourselves to new laws, regulations or policies that may come into effect from time to

time with respect to the real estate industry in general or the particular processes with respect to the

granting of the approvals. There may also be delays on the part of the administrative bodies in

reviewing our applications and granting approvals. If we fail to obtain, or experience material delays

in obtaining, the requisite governmental approvals, the schedule of development and sale of our

developments could be substantially disrupted which would result in adverse effect on business,

results of operations and financial condition.

Potential liability for environmental problems could result in substantial costs

We are subject to a variety of laws and regulations concerning the protection of health and the

environment. The particular environmental laws and regulations which apply to any given project

development site vary greatly according to the site’s location, the site’s environmental condition, the

present and former uses of the site, as well as adjoining properties. Environmental laws and

conditions may result in delays, may cause us to incur substantial compliance and other costs and

can prohibit or severely restrict project development activity in environmentally-sensitive regions or

areas.

RISK FACTORS

— 25 —

As required by PRC law, each project developed by us is required to undergo environmental

assessments and an environmental impact assessment document is required to be submitted to the

relevant government authorities for approval before commencement of construction. To date, certain

of our projects have not obtained such approvals. The local authorities may request us to submit the

environmental impact documents, issue orders to suspend the construction and impose a penalty

amounting to RMB50,000 to RMB200,000 for each of our projects that did not receive the approval

of the environmental impact assessment documents before construction commenced. There is no

assurance that the environmental investigation with respect to these projects in the future would not

reveal material environmental liability. Although the environmental investigations conducted to date

have not revealed any environmental liability that we believe would have a material adverse effect

on our business, financial condition or results of operations, it is possible that these investigations

did not reveal all environmental liabilities, or that there are material environmental liabilities of

which we are unaware. See ‘‘Business — Environmental and Safety Matters’’ for a description of the

foregoing environmental matters.

RISKS RELATING TO REAL ESTATE DEVELOPMENT IN THE PRC

The PRC Government may adopt measures to curtail the overheating of real estate

development, which could slow down the industry’s rate of growth

Over the past few years, property developers have invested heavily in the PRC, intensifying

concerns that certain parts of the market have started to overheat. In response to concerns over the

scale of the increase in property investment, the PRC central government has introduced policies to

restrict future development, among others, including:

. limiting the monthly mortgage payment to 50% of an individual borrower’s monthly

income and limiting all monthly debt service payments of an individual borrower to 55%

of his or her monthly income;

. requiring real estate developers to finance with their internal resource 35% rather than

20% of the total projected capital outlay of any property development;

. increasing the required reserve ratio of funds that a commercial bank must hold on

deposit to 7.5% to 8.0% from 7.0%, effectively reducing the amount of money a bank is

able to lend; and

. tightening regulations governing mortgage lending and restricting approval of new

development zones.

In April 2005, Ministry of Construction of PRC and other relevant Chinese government

authorities jointly issued the Notice of Stabilizing Property Prices followed by a set of new

measures. The new policies appear to be the most aggressive measures implemented to date in

tackling the overheating of the real estate industry and, among others, include:

. since 1 June 2005 a business tax levy on the sales proceeds subject to the length of

holding period and type of properties;

. a ban on onward transfer of uncompleted properties;

RISK FACTORS

— 26 —

. an imposition of a land idle fee for land which has not been developed for one year

starting from the commencement date stipulated in the land grand contract and

cancellation of land-use right for land idle for two years or more;

. a revocation of projects not in compliance with the planning permits; and

. a ban on land provision for villa construction and a restriction on land provision for high-

end residential property construction.

The PRC Government’s determination and its restricted measures to control the industry’s rate

of growth could limit our access to capital resources, reduce market demand and increase our

operating costs in adapting to these measures. The PRC Government may adopt additional and more

stringent measures, which could further subdue the development of the industry in general and

adversely affect our business operations in particular.

The real estate development in the PRC is still at an early stage and lacks adequate

infrastructural support

Private ownership of property in the PRC is still in a relatively early stage of development.

Although demand for private residential property in the PRC, particularly in Guangdong Province,

has been growing rapidly in recent years, such growth is often coupled with volatility in market

conditions and fluctuation in property prices. It is not possible to predict how much and when

demand will develop, as many social, political, economic, legal and other factors may affect the

development of the market. The level of uncertainty is increased by limited availability of accurate

financial and market information as well as the overall low level of transparency in the PRC.

The lack of an effective liquid secondary market for residential real estate may discourage

investors from acquiring new properties because resale is not only difficult, but could also be a long

and costly process. The limited amount of property mortgage financing available to PRC individuals

compounded by the lack of security of legal title and enforceability of property rights may further

inhibit demand for residential developments. In the event of over-supply, prices may fall which may

adversely affect our revenues and profitability.

The terms on which mortgages are available, if at all, may affect our sales

A majority of all purchasers of our residential properties rely on mortgages to fund their

purchases. An increase in interest rates may significantly increase the cost of mortgage financing,

thus reducing the attractiveness of mortgages as a source of financing for property purchases and

adversely affecting the affordability of residential properties. In addition, the PRC Government and

commercial banks may also increase the down payment requirements, impose other conditions or

otherwise change the regulatory framework in a manner that would make mortgage financing

unavailable or unattractive to potential property purchasers. The China Banking Regulatory

Commission, or CBRC, issued a regulation on 2 September 2004 to limit mortgage loans on

properties to 80% of the sale price of the underlying properties. Furthermore, on 17 March 2005, the

PBOC set forth the minimum property mortgage loan rates which is 0.9 time of the corresponding

bench mark lending rates. As a result, for example, the minimum rate for property mortgages with a

term of over five years has been increased to 5.51%, 0.2 percentage points higher than the then

existing minimum mortgage loan rate. If the availability or attractiveness of mortgage financing is

reduced or limited, many of our prospective customers may not be able to purchase our properties

and, as a result, our business, liquidity and results of operations could be adversely affected.

RISK FACTORS

— 27 —

In line with industry practice, we provide guarantees to banks for mortgages they offer to our

purchasers. If there are changes in laws, regulations, policies and practices that would prohibit real

estate developers from providing guarantees to banks in respect of mortgages offered to property

purchasers and these banks would not accept any alternative guarantees by other third parties, or if

no third party is available in the market to provide such guarantees, it may become more difficult

for property purchasers to obtain mortgages from banks during pre-sales. Such difficulties in

financing could result in a substantially lower rate of pre-sales of our properties, which could

adversely affect our business, financial condition and results of operations. We are not aware of any

impending changes in laws, regulations, policies or practices which will prohibit such practice in the

PRC. However, there can be no assurance that such changes in laws, regulations, policies or

practices will not occur in the future.

Increasing competition in the PRC, particularly in Guangdong Province, may adversely affect

our business and financial condition

In recent years, a large number of property developers have begun undertaking property

development and investment projects in Guangdong Province and elsewhere in the PRC. These

include overseas property developers (including a number of leading Hong Kong property

developers), and developers from other parts of the PRC, some of which may have better track

records and greater financial and other resources than us. The intensity of the competition between

property developers, and also between Guangdong Province and other regions or cities in the PRC,

may result in increased costs for the acquisition of land for development, an oversupply of properties

in certain parts of the PRC, including Guangdong Province, a decrease in property prices and a

slowdown in the rate at which new property developments will be approved and/or reviewed by the

relevant government authorities, any of which may adversely affect our business and financial

position. In addition, the real estate market in Guangdong Province and elsewhere in the PRC is

rapidly changing. If we cannot respond to changes of the market conditions in Guangdong Province

or other markets more swiftly or more effectively than our competitors, our business, results of

operations and financial condition could be adversely affected.

We face risks related to the pre-sale of properties, including the risk that property

developments are not completed

We face risks relating to the pre-sale of properties. For example, we may fail to complete a

fully or partially pre-sold property development, in which case we would find ourselves liable to

purchasers of pre-sold units for losses suffered by them. There can be no assurance that these losses

would not exceed any deposits that may have been made in respect of the pre-sold units. In addition,

if a pre-sold property development is not completed on time, the purchaser may be entitled to

compensation for late delivery. If the delay extends beyond the contractually specified period, or if

the actual GFA of a completed property delivered to a purchaser deviated by more than 3% from the

GFA originally indicated in the purchase contract, the purchaser would be entitled to terminate the

purchase contract and claim damages.

On 5 August 2005, the PBOC issued a report entitled ‘‘2004 Real Estate Financing Report’’ in

which it recommended that the practice of pre-selling uncompleted properties be discontinued, on

the grounds that it creates significant market risks and generates transactional irregularities. These

recommendations have not been adopted by any PRC governmental authority and have no mandatory

effect. Proceeds from the pre-sale of our properties are an important source of financing for our

property developments. Consequently, any restriction on our ability to pre-sell our properties,

including any increase in the amount of up-front expenditure we must incur prior to obtaining the

pre-sale permit, would extend the time period required for recovery of our capital outlay and would

RISK FACTORS

— 28 —

result in our needing to seek alternative means to finance the various stages of our property

developments. This, in turn, could have an adverse effect on our business, cash flow results of

operations and financial condition.

We face significant property development risks before we realize any benefits from a

development

Property developments typically require substantial capital outlay during the construction

period and may take months or years before positive cash flows can be generated by pre-sales or

sales of completed property developments, if at all. The time and costs required in completing a

property development may be subject to substantial increases due to many factors, including

shortages of materials, equipment, technical skills and labor, adverse weather conditions, natural

disasters, labor disputes, disputes with contractors, accidents, changes in government priorities and

policies, changes in market conditions, delays in obtaining the requisite licenses, permits and

approvals from the relevant authorities and other unforeseeable problems and circumstances. Any of

these factors may lead to delays in, or prevent, the completion of a property development and result

in costs substantially exceeding those originally budgeted for. In addition, failure to complete a

property development according to its original specifications or schedule, if at all, may give rise to

potential liabilities and, as a result, our returns on investments may be lower than originally

expected.

We may be liable to our customers for damages if we do not deliver individual property

ownership certificates in a timely manner

Real estate developers are typically required to deliver to purchasers the relevant individual

property ownership certificates within one to two years after delivery of the property or within a

time frame set out in the relevant sale and purchase agreement. Real estate developers, including us,

generally elect to specify the deadline for the delivery of the individual property ownership

certificates in the sale and purchase agreements to allow sufficient time for the application and

approval processes. Under current regulations, we are required to submit requisite governmental

approvals in connection with our property developments, including land use rights documents and

planning and construction permits, to the local bureau of land resources and housing administration

within 30 days after the receipt of the completion and acceptance certificate for the relevant

properties and apply for the general property ownership certificate in respect of these properties. We

are then required to submit within regulated periods after delivery of the properties, the relevant

property sale and purchase agreements, identification documents of the purchasers, proof of payment

of deed tax, together with the general property ownership certificate, for the bureau’s review and the

issuance of the individual property ownership certificates in respect of the properties purchased by

the respective purchasers. Delays by the various administrative authorities in reviewing the

application and granting approval as well as other factors may affect timely delivery of the general

as well as individual property ownership certificates. We may become liable to purchasers for late

delivery of the individual property ownership certificates due to delays in the administrative

approval processes or for any other reason beyond our control. In the past three years during the

Relevant Periods, we have been sued by a few purchasers for late delivery of the individual property

ownership certificates and have incurred compensation expenses in the amount less than RMB50,000

to settle these disputes.

RISK FACTORS

— 29 —

We may forfeit land to the PRC Government if we fail to comply with the terms of the land

grant contracts

Under PRC law, if a developer fails to develop land according to the terms of the land grant

contract (including those relating to payment of fees, designated use of land, time for

commencement and completion of the developments of the land), the relevant government

authorities may issue a warning to or impose a penalty on the developer or require the developer

to forfeit the land. There can be no assurance that circumstances leading to forfeiture of land or

delays in the completion of a property development may not arise in the future. If we forfeit land,

we will not be able to continue our property development on the forfeited land or recover the costs

incurred for the initial acquisition of the forfeited land or recover development costs and other costs

incurred up to the date of forfeiture.

We must bear resettlement costs associated with our property developments

In accordance with the City Housing Resettlement Administration Regulations

( ) and the applicable local regulations, a real estate developer in the PRC is

required to enter into a written agreement with the owners or residents of existing buildings subject

to demolition for development, directly or indirectly through the local government, to provide

compensation for their relocation and resettlement. The compensation payable by the real estate

developer is calculated in accordance with pre-set formulae provided by the relevant provincial

authorities. However, there can be no assurance that these authorities will not change their

compensation formulas. If they do, land acquisition costs may be subject to substantial increases

which could adversely affect our financial condition. In addition, if we or the local government fail

to reach an agreement over compensation with the residents, any party may apply to the relevant

housing resettlement authorities for a ruling on the amount of compensation which may delay the

timetable of our projects.

RISKS RELATING TO THE PRC

Substantially all of our assets are located in the PRC and substantially all of our revenue is

sourced from the PRC. Accordingly, our results of operations, financial position and prospects are

subject to a significant degree to the economic, political and legal developments of the PRC.

PRC economic, political and social conditions as well as government policies could affect the

our business

The economy of PRC differs from the economies of most developed countries in many respects,

including but not limited to:

. structure;

. level of government involvement;

. level of development;

. growth rate;

. foreign exchange;

. control of foreign exchange; and

RISK FACTORS

— 30 —

. allocation of resources.

The PRC economy has been transitioning from a planned economy to a market oriented

economy. For the past two decades the PRC Government has implemented economic reform

measures emphasizing utilization of market forces in the development of the PRC economy.

Although we believe these reforms will have a positive effect on our overall and long-term

development, we cannot predict whether changes in the PRC’s political, economic and social

conditions, laws, regulations and policies will have any adverse effect on our current or future

business, results of operations or financial condition.

Governmental control of currency conversion may affect the value of your investment

The PRC Government imposes controls on the convertibility of RMB into foreign currencies

and, in certain cases, the remittance of currency out of China. We receive substantially all our

revenues in RMB. Under our current structure, our income is primarily derived from dividend

payments from our PRC subsidiaries. Shortages in the availability of foreign currency may restrict

the ability of our PRC subsidiaries to remit sufficient foreign currency to pay dividends or other

payments to us, or otherwise satisfy their foreign currency denominated obligations, if any. Under

existing PRC foreign exchange regulations, payments of certain current account items can be made

in foreign currencies without prior approval from the local branch of the PRC State Administration

of Foreign Exchange, or SAFE, by complying with certain procedural requirements. However,

approval from appropriate government authorities is required where RMB is to be converted into

foreign currency and remitted out of China to pay capital expenses such as the repayment of bank

loans denominated in foreign currencies. The PRC Government may also at its discretion restrict

access in the future to foreign currencies for current account transactions. If the foreign exchange

control system prevents us from obtaining sufficient foreign currency to satisfy our currency

demands, we may not be able to pay dividends in foreign currencies to our shareholders.

PRC regulations relating to the establishment of offshore special purpose companies by PRC

residents may adversely affect our business operations

On 21 October 2005, the SAFE issued a new public notice which became effective on 1

November 2005. The notice requires PRC residents to register with the local SAFE branch before

establishing or controlling any company outside of China for the purpose of capital financing,

referred to in the notice as a ‘‘special purpose offshore company.’’ PRC residents that are

shareholders of special purpose offshore companies established before 1 November 2005 are required

to register with the local SAFE branch before 31 March 2006. As all beneficial owners of our

Company and the Group prior to the Global Offering are Hong Kong permanent residents, Jingtian,

our PRC counsel, based on its inquiries with the SAFE, has advised us that such beneficial owners

are not required to file the registration prior to further clarification by relevant authorities of the

notice. Jingtian has further advised us that the notice would not have a material and adverse effect

on our business operations in general as well as the Global Offering in specific as we have complied

with the relevant SAFE requirements in all material respects in connection with our reorganization,

share transfers and investments. However, if the SAFE promulgates clarifications or regulations in

the future requiring Hong Kong permanent residents, as in the case of certain of our beneficial

owners, comply with the registration procedures and if such beneficial owners fail to comply with

the requirements, such failure may subject the beneficial owners to fines and legal sanctions and

may also adversely affect our business operations.

RISK FACTORS

— 31 —

Fluctuation in the value of RMB may have a material adverse effect on your investment

The value of the RMB against the U.S. dollar and other currencies may fluctuate and is

affected by, among other things, changes in China’s political and economic conditions. The

conversion of RMB into foreign currencies, including U.S. dollars, has been based on rates set by

the PBOC. On 21 July 2005, the PRC Government changed its policy of pegging the value of the

RMB to the U.S. dollar. Under the new policy, the RMB is permitted to fluctuate within a narrow

and managed band against a basket of certain foreign currencies. This change in policy has resulted

in a slight appreciation of the RMB against the U.S. dollar recently. Any significant revaluation of

RMB may materially and adversely affect our cash flows, revenues, earnings and financial position,

and the value of, and any dividends payable on, the Shares in foreign currency terms. For example,

an appreciation of RMB against the U.S. dollar would make any new RMB denominated investments

or expenditures more costly to us, to the extent that we need to convert U.S. dollars into RMB for

such purposes.

Uncertainty with respect to the PRC legal system could affect us

As substantially all of our businesses are conducted, and substantially all of our assets are

located, in the PRC, our operations are governed principally by PRC laws and regulations. The PRC

legal system is based on written statutes, and prior court decisions can only be cited as reference.

Since 1979, the PRC Government has promulgated laws and regulations in relation to economic

matters such as foreign investment, corporate organization and governance, commerce, taxation,

foreign exchange and trade, with a view to developing a comprehensive system of commercial law.

However, China has not developed a fully integrated legal system and recently-enacted laws and

regulations may not sufficiently cover all aspects of economic activities in China. In particular,

because these laws and regulations are relatively new, and because of the limited volume of

published decisions and their nonbinding nature, the interpretation and enforcement of these laws

and regulations involve uncertainties. In addition, the PRC legal system is based in part on

government policies and internal rules (some of which are not published on a timely basis or at all)

that may have a retroactive effect. As a result, we may not be aware of our violation of these

policies and rules until some time after the violation. In addition, any litigation in China may be

protracted and result in substantial costs and diversion of resources and management attention.

The national and regional economies may be adversely affected by a recurrence of SARS or an

outbreak of other epidemics, thereby affecting our prospects

Certain areas of China, including Guangdong Province, are susceptible to epidemics such as

Severe Acute Respiratory Syndrome (‘‘SARS’’) or avian-influenza. A recurrence of SARS, avian-

influenza or any outbreak of other epidemics in Guangdong Province or other areas of China could

result in material disruptions to our property developments, which in turn would adversely affect our

financial condition and results of operations.

RISKS RELATING TO THE GLOBAL OFFERING

There has been no prior public market for our Shares and the liquidity and market price of the

Shares may be volatile

Prior to the Global Offering, there has been no public market for the Shares. The initial public

offering price range per Share was the result of negotiations among us, the Selling Shareholder and

the Global Coordinator on behalf of the underwriters, and the Offering Price may differ significantly

from the market price for the Shares following the Global Offering. We have applied to list and

RISK FACTORS

— 32 —

trade the Shares on the Stock Exchange of Hong Kong. There is no assurance that the Global

Offering will result in the development of an active, liquid public trading market for the Shares. In

addition, the price and trading volumes of the Shares may be volatile. Factors such as variations in

our revenues, earnings and cashflows or any other developments may affect the volume and price at

which the Shares will be traded.

You may experience immediate dilution and may experience further dilution if we issue

additional Shares in the future

The Offer Price of our Shares is higher than the net tangible assets value per Share

immediately prior to the Global Offering. Therefore, purchasers of our Shares in the Global Offering

will experience an immediate dilution in pro forma combined net tangible assets value to HK$1.00

per share, based on the maximum Offer Price of HK$3.30, assuming the Underwriters will not

exercise the Over-allotment Option.

In order to expand our business, we may consider offering and issuing additional Shares in the

future. We may also issue additional Shares pursuant to our Share Option Scheme. Purchasers of our

Shares may experience dilution in the net tangible assets book value per share of their Shares if we

issue additional Shares in the future at a price which is lower than the net tangible assets book value

per Share.

Forward-looking information may prove inaccurate

This prospectus contains certain forward-looking statements and information that are based on

the beliefs of our management as well as assumptions made by and information currently available

to our management. When used in this document, the words ‘‘anticipate,’’ ‘‘believe,’’ ‘‘estimate,’’

‘‘expect,’’ ‘‘going forward,’’ ‘‘plan,’’ ‘‘intend’’ and similar expressions, as they relate to us or our

management, are intended to identify forward-looking statements. Such statements reflect the current

views of our management with respect to future events and are subject to risks, uncertainties and

assumptions, including the risk factors described in this prospectus. We do not intend to update these

forward-looking statements subject to the Listing Rules requirements.

Future sales by our directors, officers and our current shareholders of a substantial number of

our Shares in the public market could materially and adversely affect the prevailing market

price of our Shares

Future sales of a substantial number of our Shares by our directors, officers or current

shareholders, including Shares issued upon exercise of outstanding options and warrants in the

public markets in Hong Kong, or the possibility of such sales, could negatively impact the market

price in Hong Kong of our Shares and our ability to raise equity capital in the future at a time and

price that we deem appropriate. The Shares held by our controlling shareholders are subject to

certain lock-up undertakings for periods up to 12 months after the date on which trading in our

Shares commences on the Stock Exchange, details of which are set forth in the section entitled

‘‘Underwriting — Underwriting Arrangements and Expenses — Hong Kong Public Offering —

Undertakings.’’ While we are not aware of any intentions of our controlling shareholders to dispose

of significant amounts of their Shares after the completion of the lock-up periods, we are not in a

position to give any assurance that they will not dispose of any Shares they may own now or in the

future.

RISK FACTORS

— 33 —

We strongly caution you not to place any reliance on any information contained in press

articles or media regarding us and the Global Offering

Prior to publication of this prospectus, there has been press and media coverage regarding us

and the Global Offering including, but not limited to, coverage in South China Morning Post, Ming

Pao Daily News and Wen Wei Po each dated 16 November 2005, which has included certain

financial information, operational information, financial projections and other information about us

that do not appear in our prospectus. We have not authorized the disclosure of any such information

in the press or media. We do not accept any responsibility for any such press or media coverage or

the accuracy or completeness or reliability of any such information or publication. To the extent that

any such information appearing in publications other than this prospectus is inconsistent or conflicts

with the information contained in this prospectus, we disclaim it. Accordingly, prospective investors

should not rely on any such information. In making your decision as to whether to purchase our

Shares, you should rely only on the financial, operational and other information included in this

prospectus.

We cannot guarantee the accuracy of facts, forecasts and other statistics with respect to the

PRC, the PRC economy and the PRC real estate industry contained in this prospectus

Facts, forecasts and other statistics in this prospectus relating to the PRC, the PRC economy

and the PRC real estate industry have been derived from various government publications generally

believed to be reliable. However, we cannot guarantee the quality or reliability of such source

materials. They have not been prepared or independently verified by us, the Underwriters or any of

our or their respective affiliates or advisors and, therefore, we make no representation as to the

accuracy of such facts, forecasts and statistics, which may not be consistent with other information

compiled within or outside the PRC. Due to possibly flawed or ineffective collection methods or

discrepancies between government publications and market practice and other problems, the statistics

herein may be inaccurate or may not be comparable to statistics produced for other economies and

should not be unduly relied upon. Further, there is no assurance that they are stated or compiled on

the same basis or with the same degree of accuracy as may be the case elsewhere.

In all cases, investors should give consideration as to how much weight or importance they

should attach to or place on such facts, forecasts or statistics.

RISK FACTORS

— 34 —

DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS

This prospectus contains particulars given in compliance with the Companies Ordinance, the

Securities and Futures (Stock Market Listing) Rules of Hong Kong (as amended) and the Listing

Rules for the purpose of giving information to the public with regard to the Company. The Directors

collectively and individually accept full responsibility for the accuracy of the information contained

in this prospectus and confirm, having made all reasonable enquiries, that to the best of their

knowledge and belief, there are no other facts the omission of which would make any statement in

this prospectus misleading.

UNDERWRITING

This prospectus is published solely in connection with the Hong Kong Public Offering which

forms part of the Global Offering. For applicants under the Hong Kong Public Offering, this

prospectus and the Application Forms set out the terms and conditions of the Hong Kong Public

Offering.

The listing of the Shares on the Stock Exchange is sponsored by the Sponsor. The Hong Kong

Public Offering is fully underwritten by the Hong Kong Underwriters under the terms of the Hong

Kong Underwriting Agreement and is subject to us, the Selling Shareholder and the Global

Coordinator (on behalf of the Underwriters) agreeing on the Offer Price. The Global Offering is

managed by the Global Coordinator.

If, for any reason, the Offer Price is not agreed among us, the Selling Shareholder and the

Global Coordinator (on behalf of the Underwriters) the Global Offering will not proceed. For full

information about the Underwriters and the underwriting arrangements. See ‘‘Underwriting.’’

RESTRICTIONS ON SALE OF OFFER SHARES

Each person acquiring the Hong Kong Offer Shares under the Hong Kong Public Offering will

be required to, or be deemed by his acquisition of Offer Shares to, confirm that he is aware of the

restrictions on offers of the Offer Shares described in this prospectus.

No action has been taken to permit an offering of the Hong Kong Offer Shares or the

distribution of this prospectus in any jurisdiction other than Hong Kong. Accordingly, this

prospectus may not be used for the purpose of, and does not constitute, an offer or invitation in any

jurisdiction or in any circumstances in which such an offer or invitation is not authorized or to any

person to whom it is unlawful to make such an offer or invitation.

United States

The Shares have not been and will not be registered under the US Securities Act and may not

be offered, sold, pledged or transferred within the United States or to, or for the account or benefit

of, US persons, except that Shares may be offered, sold or delivered to QIBs in reliance on an

exemption from registration under the US Securities Act provided by, and in accordance with the

restrictions of, Rule 144A or outside the United States in accordance with Rule 903 or Rule 904 of

Regulation S. The Offer Shares are being offered and sold outside the United States to non-US

persons in reliance on Regulation S and within the United States to QIBs in reliance on Rule 144A.

In addition, until 40 days after the later of the commencement of the Global Offering and the closing

date, an offer or sale of Offer Shares within the United States (whether or not as a part of the Global

INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING

— 35 —

Offering) may violate the registration requirements of the US Securities Act if such offer or sale is

made otherwise than in accordance with Rule 144A or another exemption from the registration

requirements of the US Securities Act.

The Shares have not been approved or disapproved by the US Securities and Exchange

Commission, any state securities commission in the United States or any other US regulatory

authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the Global

Offering or the accuracy of this prospectus or the circular relating to the International Offering. Any

representation to the contrary is a criminal offence in the United States.

Canada

The Offer Shares may not be offered or sold, directly or indirectly, in any province or territory

of Canada or to or for the benefit of any resident of any province or territory of Canada, except

pursuant to an exemption from the requirement to file a prospectus in the province or territory of

Canada in which such offer or sale is made, and only by a dealer duly registered under the

applicable securities laws of that province or territory in circumstances where any exemption from

the applicable registered dealer requirements is available.

United Kingdom

This prospectus has not been approved by an authorized person in the United Kingdom and has

not been registered with the Registrar of Companies in the United Kingdom. The Offer Shares have

not been offered or sold and, prior to the expiry of a period of 6 months from the latest date of the

issue of the Offer Shares, the Offer Shares may not be offered or sold, to any persons in the United

Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing

or disposing of investments (as principal or agent) for the purposes of their businesses, or otherwise

in circumstances which have not resulted and will not result in an offer to the public in the United

Kingdom within the meaning of the Public Offers of Securities Regulations 1995. All applicable

provisions of the Financial Services and Markets Act 2000 (the ‘‘FSMA’’) have been complied with

in respect of anything done in relation to the Offer Shares in, from or otherwise involving the United

Kingdom. No person may communicate or cause to be communicated any invitation or inducement to

engage in investment activity (within the meaning of section 21 of the FSMA) received by such

person in connection with the issue or sale of the Offer Shares except in circumstances in which

section 21(1) of the FSMA does not apply to the Company.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the

Prospectus Directive (each, a ‘‘Relevant Member State’’), with effect from and including the date on

which the Prospectus Directive is implemented in that Relevant Member State (the ‘‘Relevant

Implementation Date’’), an offer of Offer Shares has not been made or will not be made to the

public in that Relevant Member State prior to the publication of a prospectus in relation to the

Shares which has been approved by the competent authority in the Relevant Member State or, where

appropriate, approved in another Relevant Member State and notified to the competent authority in

the Relevant Member State, all in accordance with the Prospectus Directive, except that an offer of

Offer Shares may, with effect from and including the Relevant Implementation Date, be made to the

public in that Relevant Member State at any time:

(a) to legal entities which are authorized or regulated to operate in the financial markets or, if

not so authorized or regulated, whose corporate purpose is solely to invest in securities;


— 36 —

(b) to any legal entity which has two or more of (1) an average of at least 250 employees

during the last financial year; (2) a total balance sheet of more than 43,000,000 and (3)

an annual net turnover of more than 50,000,000, as shown in its last annual or

consolidated accounts; or

(c) in any other circumstances which do not require the publication by the Company of a

prospectus pursuant to Article 3 of the Prospectus Directive as implemented in each

Relevant Member State.

For the purposes of this provision, the expression an ‘‘offer of Offer Shares to the public’’ in

relation to any Offer Shares in any Relevant Member State means the communication in any form

and by any means of sufficient information on the terms of the offer and the Offer Shares to be

offered so as to enable an investor to decide to purchase or subscribe the Offer Shares, as the same

may be varied in that Member State by any measure implementing the Prospectus Directive in that

Member State and the expression ‘‘Prospectus Directive’’ means Directive 2003/71/EC and includes

any relevant implementing measure in each Relevant Member State.

Italy

This Global Offering has not been registered with the Commissione Nazionale per la Societa

(‘‘CONSOB’’) (the Italian securities exchange commission) pursuant to the Italian securities

legislation and, accordingly, the Offer Shares may not be offered, sold or delivered and any copies

of this prospectus or any other document relating to the Offer Shares may not be distributed in the

Republic of Italy in a solicitation to the public at large, and that sales of the Offer Shares in the

Republic of Italy shall only be negotiated:

(i) with professional investors (operatori qualificati), as defined in Article 31, second

paragraph of CONSOB Regulation no. 11522 of 1 July 1998, as amended and effected, in

compliance with the terms and procedures provided therein; or

(ii) in circumstances which are exempted from the rules of solicitation of investments

pursuant to Article 100 of Legislative Decree no. 58 of 24 February 1998 and Article 33,

first paragraph, of CONSOB Regulation no. 11971 of 14 May 1999, as amended from

time to time; or

(iii) with an Italian resident who submits an unsolicited offer to purchase Offer Shares, and

shall in any event be effected in accordance with all relevant Italian securities, tax and

exchange control and other applicable laws and regulations.

Accordingly, and only in relation to the cases under (i), (ii) and (iii) above, in which the

private placement of the Offer Shares is admitted, the Offer Shares may not be offered, sold or

delivered and neither this prospectus nor any other material relating to the Offer Shares may be

distributed or made available in the Republic of Italy unless such offer, sale or delivery of the Offer

Shares or distribution or availability of copies of this prospectus or any other material relating to the

Offer Shares in the Republic of Italy is:

(a) made by investment firms, banks or financial intermediaries permitted to conduct such

activities in the Republic of Italy in accordance with relevant provisions of Italian laws

and regulations; and


— 37 —

(b) in compliance with any other applicable requirement or limitation which may be imposed

by CONSOB or the Bank of Italy.

Netherlands

The Offer Shares may not be offered, sold, transferred or delivered in or from within the

Netherlands as part of their initial distribution or at any time thereafter, directly or indirectly, and

neither this prospectus nor any other document in respect of the Global Offering may be distributed

or circulated in the Netherlands, other than to individuals or legal entities who or which trade or

invest in securities in the conduct of a profession or business within the meaning of the Netherlands

Securities Transactions Supervision Act 1995 (Vrijstellingsregeling wet foezicht effectenverkeer

1995) and its implementing regulations (which includes banks, brokers, securities institutions,

insurance companies, pension funds, investment institutions, other institutional investors and other

parties including treasury departments of commercial enterprises and finance companies of groups

which are regularly active in the financial markets in a professional manner).

Singapore

This prospectus has not been and will not be registered as a prospectus with the Monetary

Authority of Singapore. Accordingly, this prospectus and any other document or material in

connection with the offer or sale, or invitation for subscription or purchase, of the Offer Shares may

not be circulated or distributed, nor may the Offer Shares be offered or sold, or be made the subject

of an invitation for subscription or purchase, whether directly or indirectly, to the public or any

member of the public in Singapore other than: (i) to an institutional investor or other person

specified in Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the

‘‘Singapore Securities and Futures Act’’); (ii) to a sophisticated investor, and in accordance with the

conditions, specified in Section 275 of the Singapore Securities and Futures Act; or (iii) otherwise

pursuant to, and in accordance with the conditions of, any other applicable provision of the

Singapore Securities and Futures Act.

Japan

The Offer Shares have not been and will not be registered under the Securities and Exchange

Law of Japan. Accordingly, the Offer Shares may not be offered or sold, directly or indirectly, in

Japan or to or for the benefit of any resident of Japan, except pursuant to an exemption from the

registration requirements of, otherwise in compliance with, the Securities and Exchange Law of

Japan, and otherwise in compliance with any other applicable requirements of Japanese law. As used

in this paragraph, a ‘‘resident of Japan’’ means any person residing in Japan, any corporation or

other entity organized under the laws of Japan except for its branches or other offices located

outside Japan and, with respect to any corporation or other legal entity organized under a law other

than Japanese law, its branches and offices located in Japan.

PRC

This prospectus does not constitute a public offer of the Offer Shares, whether by way of sale

or subscription, in the PRC. The Offer Shares are not being offered and may not be offered or sold

directly or indirectly in the PRC to or for the benefit of, legal or natural persons of the PRC.

According to the laws and regulatory requirements of the PRC, the Offer Shares shall only be

offered or sold to natural or legal persons in Taiwan, Hong Kong or Macau or any country other

than the PRC by means of this prospectus or otherwise.


— 38 —

APPLICATION FOR LISTING ON THE STOCK EXCHANGE

The Company has applied to the Listing Committee of the Stock Exchange for the granting of

the listing of, and permission to deal in, the Shares in issue and the Offer Shares to be issued

pursuant to the Global Offering (including the additional Shares which may be issued pursuant to the

exercise of the Over-allotment Option and any Shares which may be issued under the Capitalization

Issue and the Share Option Scheme). Save as disclosed in this prospectus, no part of the share or

loan capital of the Company is listed on or dealt in on any other stock exchange and no such listing

or permission to list is being or proposed to be sought in the near future.

HONG KONG BRANCH REGISTER AND STAMP DUTY

All Offer Shares sold pursuant to applications made in the Hong Kong Public Offering will be

registered on the Company’s branch register of members to be maintained in Hong Kong. The

Company’s principal register of members will be maintained in the Cayman Islands by Butterfield

Fund Services (Cayman) Limited.

Dealings in Offer Shares registered in the branch register of members of the Company

maintained in Hong Kong will be subject to Hong Kong stamp duty.

PROFESSIONAL TAX ADVICE RECOMMENDED

Potential investors in the Global Offering are recommended to consult their professional

advisors if they are in any doubt as to the taxation implications of subscribing for, purchasing,

holding and dealing in the Offer Shares. None of the Company, the Global Coordinator, the Sponsor,

the Underwriters, any of their respective directors or any other person or party involved in the

Global Offering accepts responsibility for any tax effects on, or liabilities of, any person resulting

from the subscription, purchase, holding or disposition of Offer Shares.

OVER-ALLOTMENT AND STABILIZATION

Stabilization is a practice used by underwriters in some markets to facilitate the distribution of

securities. To stabilize, the underwriters may bid for, or purchase, the newly issued securities in the

secondary market, during a specified period of time, to retard and, if possible, prevent a decline in

the market price of the securities below the offer price. In Hong Kong, the price at which

stabilization is effected is not permitted to exceed the offer price.

In connection with the Global Offering, the Global Coordinator, as stabilizing manager, or its

affiliates or any person acting for it, on behalf of the Underwriters, may over-allocate or effect

transactions with a view to stabilizing or maintaining the market price of the Offer Shares at a level

higher than that which might otherwise prevail for a limited period after the commencement of

trading in the Shares on the Stock Exchange. Such transactions may be effected in compliance with

all applicable laws and regulatory requirements. However, there is no obligation on the Global

Coordinator, its affiliates or any person acting for it to do this. Such stabilization, if commenced,

will be conducted at the absolute discretion of the Global Coordinator, its affiliates or any person

acting for it and may be discontinued at any time, and must be brought to an end after a limited

period.


— 39 —

The Global Coordinator or any person acting for it may take all or any of the following

stabilizing actions in Hong Kong during the stabilization period:

(i) purchase, or agree to purchase, any of the Offer Shares or offer or attempt to do so for

the sole purpose of preventing or minimizing any reduction in the market price of the

Offer Shares;

(ii) in connection with any action described in paragraph (i) above;

(A) (1) over-allocate the Offer Shares; or

(2) sell or agree to sell the Offer Shares so as to establish a short position in them,

for the sole purpose of preventing or minimizing any reduction in the market price

of the Offer Shares;

(B) exercise the Over-allotment Option and purchase or subscribe for or agree to

purchase or subscribe for the Offer Shares in order to close out any position

established under paragraph (A) above;

(C) sell or agree to sell any of the Offer Shares acquired by it in the course of the

stabilizing action referred to in paragraphs (i) above in order to liquidate any

position that has been established by such action; or

(D) offer or attempt to do anything as described in paragraphs (ii)(A)(2), (ii)(B) or

(ii)(C) above.

The Global Coordinator, or any person acting for it, may, in connection with the stabilizing

action, maintain a long position in the Offer Shares, and there is no certainty as to the extent to

which and the time period for which it will maintain such a position. Investors should be warned of

the possible impact of any liquidation of the long position by the Global Coordinator or any person

acting for it and selling in the open market, which may include a decline in the market price of the

Offer Shares.

Stabilization cannot be used to support the price of the Offer Shares for longer than the

stabilization period, which begins on the day on which trading of the Offer Shares commences on

the Stock Exchange and ends on the earlier of the thirtieth day after the last day for lodging of

applications under the Hong Kong Public Offering or the commencement of trading of the Offer

Shares. The stabilization period is expected to expire on 7 January 2006. After this date, when no

further stabilizing action may be taken, demand for the Shares, and therefore their market price,

could fall.

Any stabilizing action taken by the Global Coordinator, or any person acting for it, may not

necessarily result in the market price of the Shares staying at or above the Offer Price either during

or after the stabilization period. Stabilizing bids or market purchases effected in the course of the

stabilization action may be made at any price at or below the Offer Price and can therefore be done

at a price below the price the investor has paid in acquiring the Offer Shares.

In connection with the Global Offering, the Global Coordinator may over-allocate up to and not

more than an aggregate of 143,260,000 additional Shares and cover such over-allocations by

exercising the Over-allotment Option or by making purchases in the secondary market at prices that


— 40 —

do not exceed the Offer Price or through stock borrowing arrangements or a combination of these

means. In particular, for the purpose of covering such over-allocations, the Global Coordinator may

borrow up to 143,260,000 shares from the Selling Shareholder, equivalent to the maximum number

of Shares to be issued on a full exercise of the Over-allotment Option, under a stock borrowing

agreement.

The Global Coordinator (on behalf of the Company and the Selling Shareholder) has obtained

from the Hong Kong Stock Exchange a waiver from strict compliance with Rule 10.07(1) of the

Listing Rules which restricts the disposal of shares by the controlling shareholder following a new

listing, in order to allow the Selling Shareholder to enter into and perform its obligations under the

stock borrowing agreement, on the following conditions:

(a) the stock borrowing arrangement will only be effected by Morgan Stanley or its affiliates

for settlement of over-allocations in the International Placing;

(b) the maximum number of Shares to be borrowed by Morgan Stanley or its affiliates from

the Selling Shareholder will be limited to the maximum number of Shares which may be

issued to Morgan Stanley by the exercise of the Over-allotment Option;

(c) the number of Shares borrowed will be returned to the Selling Shareholder on or before

the fifth business day following the earlier of (i) the last day on which Shares may be

issued by the Company pursuant to the Over-allotment Option, and (ii) the day on which

the Over-allotment Option is exercised in full and the relevant over-allotment Shares have

been issued;

(d) the stock borrowing arrangement will be effected in compliance with all applicable laws

and regulatory requirements; and

(e) no payments will be made to the Selling Shareholder in relation to the stock borrowing

arrangement.

PROCEDURE FOR APPLICATION FOR HONG KONG OFFER SHARES

The procedure for applying for Hong Kong Offer Shares is set out in the section entitled ‘‘How

to Apply for Hong Kong Offer Shares’’ and on the relevant Application Forms.

STRUCTURE OF THE GLOBAL OFFERING

Details of the structure of the Hong Kong Public Offering, the International Offering and the

Global Offering, including its conditions, are set out in the section entitled ‘‘Structure of the Global

Offering’’ in this prospectus.


— 41 —

DIRECTORS

Name Address Nationality

Executive Directors

Chen Zhuo Lin Flat A, 21st Floor, No.1, Ho Man Tin Hill,

1 Ho Man Tin Hill Road, Ho Man Tin, Kowloon,

Hong Kong.

Chinese

Chan Cheuk Yin Flat D, 18th Floor, No. 1 Ho Man Tin Hill,


Hong Kong.

Chinese

Luk Sin Fong, Fion Flat A, 21st Floor, No.1, Ho Man Tin Hill,


Hong Kong.

Chinese

Chan Cheuk Hung Flat D, 5th Floor, No. 1 Ho Man Tin Hill,


Hong Kong.

Chinese

Chan Cheuk Hei Flat D, 18th Floor, No. 1, Ho Man Tin Hill,


Hong Kong.

Chinese

Chan Cheuk Nam Flat D, 5th Floor, No. 1, Ho Man Tin Hill,


Hong Kong.

Chinese

Independent Non-Executive Directors

Cheng Hon Kwan 20 Broom Road, 2nd Floor, Hong Kong. Chinese

Kwong Che Keung,

Gordon

House 2, Palm Cove Villas, 28 Ng Fai Tin,

Clearwater Bay, Kowloon, Hong Kong.

Chinese

Cheung Wing Yui House B6, Springfield Garden,

No. 5–9 Shouson Hill Road West, Hong Kong.

Chinese

DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING

— 42 —

PARTIES INVOLVED IN THE GLOBAL OFFERING

Global Coordinator, Bookrunner,

Sponsor and Lead Manager and

Underwriter

Morgan Stanley Dean Witter Asia Limited

30/F, Three Exchange Square

Central

Hong Kong

Legal advisors to the Underwriters as to Hong Kong law:

Slaughter and May

47th Floor, Jardine House

One Connaught Place

Central

Hong Kong

as to U.S. law:

Davis Polk & Wardwell

The Hong Kong Club Building

3A Chater Road

Central

Hong Kong

as to PRC law:

Commerce & Finance Law Offices

6F NCI Tower

A12 Jianguomenwai Avenue

Chaoyang District

Beijing 100022

PRC

Legal advisors to the Company as to Hong Kong law:

Sidley Austin Brown & Wood

39th Floor, Two International Finance Center

8 Finance Street

Central

Hong Kong

and

Iu, Lai & Li

20th Floor, Gloucester Tower

The Landmark

11 Pedder Street

Central

Hong Kong


— 43 —

as to PRC law:

Jingtian & Gongcheng

Floor 15, The Union Plaza

20 Chaoyangmenwai Dajie

Beijing 100020

PRC

as to Cayman Islands Law:

Conyers Dill & Pearman

Century Yard

Cricket Square

Hutchins Drive

George Town

Grand Cayman

British West Indies

Auditors and reporting accountants PricewaterhouseCoopers

22/F, Prince’s Building

Central

Hong Kong

Property valuer CB Richard Ellis Limited

Suite 3401, Central Plaza

18 Harbour Road

Wanchai

Hong Kong

Compliance advisor Platinum Securities Company Limited

22/F, Standard Chartered Bank Building

4 Des Voeux Road

Central

Hong Kong

Receiving banker The Bank of East Asia, Limited

10 Des Voeux Road Central

Hong Kong

Bank of China (Hong Kong) Limited

1 Garden Road

Hong Kong


— 44 —

Registered office Century Yard

Cricket Square

Hutchins Drive

P.O. Box 2681GT

George Town

Grand Cayman

British West Indies

Principal place of business in the PRC Agile Hotel Building,

Jinyong Road, Sanxiang Town

Zhongshan City

Guangdong Province 528463

PRC

Place of business in Hong Kong 20/F

238 Nathan Road

Kowloon

Hong Kong

Company secretary Wai Ching Sum, FCIS, FCS

Authorized representatives Luk Sin Fong, Fion

Wai Ching Sum, FCIS, FCS

Audit committee Kwong Che Keung, Gordon (chairman)

Cheng Hon Kwan GBS, OBE, JP

Cheung Wing Yui

Board remuneration committee Luk Sin Fong, Fion

Cheng Hon Kwan GBS, OBE, JP

Kwong Che Keung, Gordon

Cheung Wing Yiu

Qualified accountant Ng Hin Kit, Frank, CPA, ACIS

Principal share registrar and transfer

office

Butterfield Fund Services (Cayman) Limited

Butterfield House

68 Fort Street

P.O. Box 705, George Town

Grand Cayman

Cayman Islands

Hong Kong branch share registrar and

transfer office

Tricor Investor Services Limited

Ground Floor, Bank of East Asia Harbour View Centre

56 Gloucester Road

Wanchai

Hong Kong

CORPORATE INFORMATION

— 45 —

Principal bankers The Bank of China

Industrial and Commercial Bank of China

China Construction Bank

Agriculture Bank of China

The Hongkong and Shanghai

Banking Corporation Limited

CORPORATE INFORMATION

— 46 —

The information in the section below has been derived, in part, from various government

publications unless otherwise indicated. This information has not been independently verified by

us, the Global Coordinator, the Sponsor, the Underwriters or any of our and their respective

affiliates or advisors. The information may not be consistent with other information compiled

within or outside the PRC.

THE ECONOMY OF THE PRC

The PRC economy has grown significantly since the PRC government introduced economic

reforms in the late 1970’s. China’s accession to the World Trade Organization, or the WTO, in 2001

has further accelerated the reform of the PRC economy. In the past ten years, China’s GDP has

increased from approximately RMB5,847.8 billion in 1995 to approximately RMB13,687.6 billion in

2004 at a Compound Average Growth Rate, or CAGR, of approximately 9.9%. In 2004, China’s

GDP grew approximately 9.5% to approximately RMB13,687.6 billion as compared to 2003. On 11

December 2004, nine business sectors, including the retail industry were opened to full foreign

participation in line with the commitments which China made upon accession to WTO.

Since 2004, in order to prevent China’s economy from expanding too rapidly and to achieve

balanced and sustainable economic growth, the PRC government has taken measures to control

money supply, credit availability and fixed assets investment. The PRC government has also taken

measures to discourage speculation in the residential property market and to increase the supply of

affordable housing. In response to concerns over the scale of the increase in property investment, the

PRC Government has introduced policies to restrict future development, including:

. limiting the monthly mortgage payment to 50% of an individual borrower’s monthly

income and limiting all monthly debt service payments of an individual borrower to 55%

of his or her monthly income;

. requiring real estate developers to finance 35% rather than 20% of the total projected

capital outlay of any property development with their capital funds;

. increasing the required reserve ratio of funds that a commercial bank must hold on

deposit to 7.5% to 8.0% from 7.0%, effectively reducing the amount of money a bank is

able to lend; and

. tightening regulations governing mortgage lending and restricting approval of new

development zones.

In April 2005, Ministry of Construction of PRC and other relevant Chinese government

authorities jointly issued the Notice of Stabilizing Property Prices followed by a set of new

measures. The new policies appear to be the most aggressive measures implemented to date in

tackling the overheating of the real estate industry and include:

. since 1 June 2005 a business tax levy on the sales proceeds subject to the length of

holding period and type of properties;

. a ban on onward transfer of uncompleted properties;

INDUSTRY OVERVIEW

— 47 —

. an imposition of a land idle fee for land which has not been developed for one year

starting from the commencement date stipulated in the land grand contract and

cancellation of land-use right for land idle for two years or more;

. a revocation of projects not in compliance with the planning permits; and

. a ban on land provision for villa construction and a restriction on land provision for high-

end residential property construction.

The table below sets out selected economic statistics of China for the years indicated.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Nominal GDP

(RMB in billions) . . 5,847.8 6,788.5 7,446.3 7,834.5 8,206.8 8,946.8 9,731.5 10,517.2 11,739.0 13,687.6

Real GDP growth rate

(%) . . . . . . . . . . . 10.5 9.6 8.8 7.8 7.1 8.0 7.5 8.3 9.5 9.5

Per capita GDP

(RMB) . . . . . . . . . 4,854.0 5,576.0 6,054.0 6,308.0 6,551.0 7,086.0 7,651.0 8,214.0 9,111.0 10,561.0

Foreign Direct

Investment

— Actual investment

(US$ in billions) . 37.5 41.7 45.3 45.5 40.3 40.7 46.9 52.7 53.5 60.6

— Contracted

investment (US$ in

billions) . . . . . . . 91.3 73.3 51.0 52.1 41.2 62.4 69.2 82.8 115.1 153.5

Fixed Asset investment

(RMB in billions) . . 2,001.9 2,291.4 2,494.1 2,840.6 2,985.5 3,291.8 3,721.4 4,350.0 5,556.7 7,047.7

Source: China Statistical Yearbook 2005

THE REAL ESTATE MARKET IN THE PRC

Real Estate Reform

Real estate reform in the PRC did not commence until the l990’s, prior to which the PRC real

estate development industry was part of the nation’s planned economy. In the 1990’s, China’s real

estate and housing sector began its transition to a market-based system. A brief timeline of key

housing reforms is set out below:

1988 The PRC government amended the national constitution to permit the transfer of

state-owned land use rights

1992 Public housing sales in major cities commenced

1994 The PRC government further implemented the reform and established an employer/

employee-funded housing fund

1995 The PRC government issued regulations regarding the sales and pre-sales of real

estate, establishing a regulatory framework for real estate sales

1998 The PRC government abolished state-allocated housing policy

Guangdong government issued regulations on the administration of pre-sales of

commodity properties in Guangdong Province

INDUSTRY OVERVIEW

— 48 —

1999 The PRC government extended maximum mortgage term to 30 years

The PRC government increased the maximum mortgage financing from 70% to 80%

The PRC government formalized procedures for the sale of real property in the

secondary market

2000 The PRC government issued regulations to standardize the quality of construction

projects, establishing a framework for administering construction quality

2001 The PRC government issued regulations relating to sales of commodity properties

2002 The PRC government promulgated the Rules Regarding the Grant of State-Owned

Land Use Rights by Way of Tender, Auction and Listing-For-Sale

The PRC government eliminated the dual system for domestic and overseas home

buyers in China

2003 The PRC government promulgated rules for more stringent administration of real

estate loans with a view to reducing the credit and systemic risks associated with

such loans

The State Council issued a notice for sustained and healthy development of the real

estate market

2004 The State Council issued a notice requiring that, with respect to real estate

development projects (excluding ordinary housing), the proportion of capital funds

should be increased from 20% to 35%

Ministry of Construction amended Administrative Measures on the Presale of

Commercial Housing in Cities

China Banking Regulatory Commission issued the Guideline for Commercial Banks

on Risks of Real Estate Loans to further strengthen the risk control of commercial

banks on real estate loans

2005 The PRC government instituted additional measures to discourage speculation in

certain regional markets including, among others, increasing the minimum required

down payment to 30% of the total purchase price, eliminating the preferential

mortgage interest rate for residential housing, imposing a business tax of 5% for

sales within two years of purchase, and prohibiting reselling unfinished properties

before they are completed

Additional information on housing reforms and recent regulatory developments is set out in the

section entitled ‘‘Summary of PRC Laws Relating to the Property Sector’’ in Appendix VI to this

prospectus.

INDUSTRY OVERVIEW

— 49 —

The housing reforms, together with the economic growth of China, an increase in disposable

income, emergence of the mortgage lending market and an increase in the urbanization rate, are key

factors in sustaining the growth of China’s real estate market. Government housing reforms continue

to encourage private ownership and it is expected that an increasing proportion of urban residents

will own their private properties in the near future. The table below sets out selected figures

showing China’s urbanization rate and the increase in disposable income levels of the urban

population in China for the periods indicated.

2000 2001 2002 2003 2004

Urban population (in millions) . . . . . . . . . . 459 481 502 524 543

Total population (in millions) . . . . . . . . . . 1,267 1,276 1,285 1,292 1,300

Urbanization rate (%) . . . . . . . . . . . . . . . 36.2 37.7 39.1 40.5 41.8

Per capita disposable income for urban

households (RMB) . . . . . . . . . . . . . . . . 6,280 6,860 7,703 8,472 9,422


Real Estate Price and Supply

Prices for real estate in China increased from 1998 to 2004. The average price of residential

properties in China increased from approximately RMB1,854.0 per sq.m. in 1998 to approximately

RMB2,549.0 per sq.m. in 2004, while the average price for commercial properties in the same period

increased from approximately RMB3,728.5 per sq.m. in 1998 to approximately RMB3,981.1 per

sq.m. in 2004. The average price per sq.m. for the overall property market, including residential and

commercial property, was approximately RMB2,714.0 in 2004, compared to approximately

RMB2,063.0 in 1998.

INDUSTRY OVERVIEW

— 50 —

The following table sets forth selected data relating to the PRC real estate market for the

periods indicated.

Residential Business 1998 1999 2000 2001 2002 2003 2004

Supply indicators:

Investment in real estate

(RMB in billions) . . . . . . 361.4 410.3 498.4 634.4 779.1 1,015.4 1,315.8

Total gross floor area sold

(sq.m. in millions) . . . . . . 121.9 145.6 186.4 224.1 268.1 337.2 382.3

Gross floor area of residential

properties sold (sq.m. in

millions) . . . . . . . . . . . . 108.3 130.0 165.7 199.4 237.0 297.8 338.2

Gross floor area of

commercial properties sold

(sq.m. in millions) . . . . . . 13.6 15.6 20.7 24.7 31.1 39.4 44.1

Demand indicators:

Average price of residential

properties (RMB per sq.m.) 1,854.0 1,857.0 1,948.0 2,017.0 2,092.0 2,197.0 2,549.0

Average price of commercial

properties (RMB per sq.m.) 3,728.5 3,683.9 3,419.5 3,403.3 3,459.8 3,585.4 3,981.1

Average price of residential

and commercial property

(RMB per sq.m.) . . . . . . . 2,063.0 2,053.0 2,112.0 2,170.0 2,250.0 2,359.0 2,714.0


Housing Mortgage

According to CEIC Data Company Limited, a database vendor based in Hong Kong, the

aggregate balance of outstanding mortgage loans for residential properties in the PRC grew from

approximately RMB42.6 billion in 1998 to approximately RMB1,600.0 billion in 2004.

Real Estate Sales Revenue

The upward trend in the China property industry is evidenced by the growth of the revenues

from the sale of properties in the PRC. According to China Statistical Yearbook 2005, the total

revenue from real property sales in the PRC increased from approximately RMB251.3 billion in

1998 to approximately RMB1,037.6 billion in 2004. During the same period, total GFA sold in the

PRC increased from approximately 121.9 million sq.m. in 1998 to approximately 382.3 million sq.m.

in 2004.

THE REAL ESTATE MARKET IN GUANGDONG PROVINCE

Guangdong Province is located in the Southern part of China and comprises approximately

179,757 square kilometers in area. According to 2004 Statistical Report on Guangdong Domestic

Economy and Social Development, prepared by the Bureau of Statistics of Guangdong Province

dated 28 February 2005, as of 31 December 2004, Guangdong Province had a population of

approximately 83.0 million. Guangdong Province has experienced substantial economic growth in the

past 10 years. The real GDP growth rate of Guangdong Province exceeded the average national

INDUSTRY OVERVIEW

— 51 —

growth rate for each of the past 10 years and the per capita GDP of Guangdong Province was

significantly higher than the national average. The table below sets out selected economic statistics

of Guangdong Province for the periods indicated.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Nominal GDP (RMB in

billions) . . . . . . . . 538.2 651.9 731.6 791.9 846.4 966.2 1,064.8 1,173.6 1,362.6 1,603.9

As % of PRC GDP. . . 9.8 9.6 9.8 10.1 10.3 10.8 10.9 11.2 11.6 11.7

Real GDP

growth rate (%) . . . 14.9 10.7 10.5 10.2 9.5 10.8 9.6 11.4 14.3 14.2

Per capita GDP

(RMB) . . . . . . . . . 8,495.0 9,513.0 10,428.0 11,143.0 11,728.0 12,885.0 13,730.0 14,986.0 17,213.0 19,316.0

Sources: China Statistical Yearbook 2005; CEIC Data Company Limited

According to CEIC Data Company Limited, a total GFA of approximately 27.8 million sq.m. of

residential properties was completed in the Guangdong Province. A total GFA of approximately 30.1

million sq.m. of residential properties was sold in Guangdong Province in 2004, which represented

an increase of approximately 19.9% over 2003. The table below sets out the total GFA completed,

total GFA sold, average price per sq.m. and sales revenues of residential properties in Guangdong

Province for the periods indicated.

2000 2001 2002 2003 2004

GFA completed (sq.m. in millions) . . . . . . . 21.4 23.1 25.9 33.1 27.8

GFA sold (sq.m. in millions) . . . . . . . . . . 17.5 19.3 19.8 25.1 30.1

% of total GFA sold in PRC. . . . . . . . . . . 11.5 10.4 9.0 8.8 8.9

Average price (RMB per sq.m.) . . . . . . . . . 2,833.0 3,214.0 3,075.0 2,986.0 3,298.0

Sales revenues (RMB in billions) . . . . . . . . 49.5 62.0 60.9 74.9 99.2

Source: CEIC Data Company Limited

The Real Estate Market in Guangzhou

Guangzhou is the largest city in South China and the capital of Guangdong Province.

According to 2004 Statistical Report on Guangzhou Domestic Economy and Social Development,

prepared by the Bureau of Statistics of Guangzhou City dated 25 February 2005, as of 31 December

2004, Guangzhou had a population of approximately 7.4 million. The city experienced a high GDP

growth rate for the five years from 2000 to 2004. In 2004, Guangzhou’s GDP reached approximately

RMB411.6 billion, representing a per capita GDP of approximately RMB56,271.0. The table below

sets out selected economic statistics of Guangzhou for the periods indicated.

2000 2001 2002 2003 2004

Nominal GDP (RMB in billions) . . . . . . 237.6 268.6 300.1 349.7 411.6

Real GDP growth rate (in percent) . . . . . 13.4 12.7 13.2 15.2 15.0

Per capita GDP (in RMB) . . . . . . . . . . 34,292.0 38,007.0 41,884.0 48,372.0 56,271.0


households (in RMB) . . . . . . . . . . . . 13,967.0 14,694.0 13,380.0 15,003.0 16,884.0

Sources: Major Statistical Indices of Guangzhou Domestic Economy and Social Development and Indices of Regional

GDP in Main Year, Bureau of Statistics of Guangzhou City

INDUSTRY OVERVIEW

— 52 —

Guangzhou is also one of the largest commercial centers in South China. It serves as a

transportation hub for the southern China region. A new international airport, the Guangzhou Baiyun

International Airport, was officially opened in August 2004. The Guangzhou Baiyun International

Airport is expected to support an annual capacity of approximately 25.0 million passengers and

approximately 1.0 million tons of air freight by 2010.

Commodity Property Market in Guangzhou

According to 2004 Statistical Report on Guangzhou Domestic Economy and Social

Development, prepared by the Bureau of Statistics of Guangzhou City dated 25 February 2005, a

total GFA of approximately 10.1 million sq.m. of commodity properties was completed in

Guangzhou in 2004. A total GFA of approximately 8.7 million sq.m. of commodity properties was

sold in Guangzhou in 2004, which represented an increase of approximately 7.0% over 2003. The

average selling price per sq.m. of commodity properties in Guangzhou in 2004 was approximately

RMB4,537.0.

The Real Estate Market in Zhongshan

Zhongshan is located in the southern region of Guangdong Province. It is located close to Hong

Kong and Macau, with direct ferries operating with Hong Kong. Zhongshan is the well-known

hometown of Dr. Sun Yat-Sen, widely regarded as the founding father of modern China. According

to 2004 Statistical Report on Zhongshan Domestic Economy and Social Development prepared by

the Bureau of Statistics of Zhongshan City dated 20 April 2005, as of 31 December 2004, Zhongshan

had a population of approximately 1.4 million. The city has experienced a high GDP growth rate for

the five years from 2000 to 2004. In 2004, Zhongshan’s GDP reached approximately RMB61.0

billion, representing a per capita GDP of approximately RMB44,005.0. The table below sets out

selected economic statistics of Zhongshan for the periods indicated.

2000 2001 2002 2003 2004

Nominal GDP (RMB in billions) . . . . . 31.0 35.9 41.6 49.7 61.0

Real GDP growth rate (%) . . . . . . . . . 11.5 15.5 16.5 17.8 18.7

Per capita GDP (RMB) . . . . . . . . . . . 23,300.0 26,760.0 30,547.0 36,278.0 44,005.0


households (RMB) . . . . . . . . . . . . . 11,876.0 12,803.0 14,208.0 14,906.0 15,836.0

Source: Statistical Reports on Zhongshan Domestic Economy and Social Development of 2000, 2001, 2002, 2003 and

2004, Bureau of Statistics of Zhongshan City

Commodity Property Market in Zhongshan

According to the Bureau of Statistics of Zhongshan City, a total GFA of approximately 1.9

million sq.m. of commodity properties was completed in Zhongshan in 2004. A total GFA of

approximately 1.6 million sq.m. of commodity properties was sold in Zhongshan in 2004, which

represented an increase of approximately 25.1% over 2003. The average selling price per sq.m. of

commodity properties in Zhongshan in 2004 was approximately RMB2,551.0.

INDUSTRY OVERVIEW

— 53 —

The Real Estate Market in Foshan

Foshan is located in the central part of Guangdong Province, situated to the east of Guangzhou.

According to 2004 Statistical Report on Foshan Domestic Economy and Social Development

prepared by the Bureau of Statistics of Foshan City dated 16 March 2005, as of 31 December 2004,

Foshan had a population of approximately 3.5 million. The city experienced a high GDP growth rate

for the five years from 2000 to 2004. In 2004, Foshan’s GDP reached approximately RMB165.4

billion, representing a per capita GDP of approximately RMB47,500.0. The table below sets out

selected economic statistics of Foshan for the periods indicated.

2000 2001 2002 2003 2004

Nominal GDP (RMB in billions) . . . . . . 94.8 107.9 116.9 138.1 165.4

Real GDP growth rate (%) . . . . . . . . . . 11.3 11.1 11.3 16.1 16.3

Per capita GDP (RMB) . . . . . . . . . . . . 28,665.0 32,276.0 34,636.0 40,437.0 47,500.0


households (RMB) . . . . . . . . . . . . . . 11,977.0 13,600.0 14,336.0 14,827.2 16,045.4

Source: Statistical Reports on Foshan Domestic Economy and Social Development of 2000, 2001, 2002, 2003 and

2004, Bureau of Statistics of Foshan City

Commodity Property Market in Foshan

According to Foshan Real Estate Association, a total GFA of approximately 6.6 million sq.m.

of commodity properties was sold in Foshan in 2004, which represented a decrease of approximately

7.6% over 2003. The average selling price per sq.m. of commodity properties in Foshan in 2004 was

approximately RMB3,030.

INDUSTRY OVERVIEW

— 54 —

HISTORY AND REORGANIZATION

General

The Company was incorporated in the Cayman Islands on 14 July 2005. As a result of the

corporate reorganization, the Company became the ultimate holding company of our various

operating subsidiaries. Further details of our corporate structure and reorganization are set out under

the paragraph ‘‘Corporate Reorganization’’ below.

History and Development

Our Group traces its roots to 1989 when the Chen Family established Dynasty Furniture

Factory, the foundation of our Group, which was initially engaged in the sale of furniture and was

transferred to an independent third party in 2005. In 1992, the Chen Family commenced their real

estate business in Zhongshan, and in 1997 they established Zhongshan Agile Co. for the construction

and development of Zhongshan Agile Garden, which was completely sold in 2005. Zhongshan

Property Management Co. was established in 1997 to provide property management services to

Zhongshan Agile Garden.

There was a mutual understanding among the Founding Shareholders, as recorded in an

agreement dated 15 August 1992 that they would use their collective efforts to develop and manage

the businesses in the Group, and that all of them would enjoy the benefits generated from the

businesses. If there were suitable projects, the Founding Shareholders agreed to discuss whether they

would participate and (if so) in whose name among themselves or the Chen Family members, such

participation in terms of investment and management should be carried out, but the Founding

Shareholders would have the final control and decision rights of such projects. It was further agreed

among the Founding Shareholders that the management of all the project companies shall be

centralized.

Zhongshan Agile Garden was first introduced to purchasers in Hong Kong and Macau in 1993.

With a view to reaching more potential Hong Kong and Macau purchasers, Hong Kong Agile was

established in Hong Kong on 19 July 1994. Approximately 95% of the units in Zhongshan Agile

Garden were sold to Hong Kong and Macau purchasers.

In 1996, the Chen Family commenced the development of Agile Golf & Country Club, which

provides services to both residents of the property developments of our Group and others. Though

the Agile Golf & Country Club has not been injected into our Group, the scenery of the golf course

helps to enhance the value of our projects located in the vicinity of the golf course, such as La Cite

Greenville and La Nobleu.

On 26 June, 1997, Zhongshan Group Co. was established to expand the property development

business, centralize the management of all the project companies within the Group and perform

certain other functions for the Group for the three years ended 31 December 2002, 2003 and 2004

and the six months ended 30 June 2005, including but not limited to (i) their daily operating and

financial management, (ii) provision of corporate guarantees, and (iii) land acquisitions. The

majority of the Directors, the other Founding Shareholders and various members of the senior

management of the Group also held directorships and senior management positions in Zhongshan

Group Co., including Chen Zhuo Lin as its president, Chan Cheuk Yin as its vice-president, Luk Sin

Fong, Fion as its vice-president and director, Chan Cheuk Hung, Chan Cheuk Hei and Chan Cheuk

Nam as its deputy managing directors, Chan Siu Na as its director, Liu Huaxi as the head of its

business development department, assistant to vice-president and deputy director of its real estate

HISTORY, REORGANIZATION AND GROUP STRUCTURE

— 55 —

center, Zheng Liqing as the head of its administrative office, assistant to president and deputy

director of its real estate center, Chen Zhongqi as the head of its project engineering department,

deputy manager of its projects management department and deputy director of its real estate center,

Wu Jinhong as its project finance officer, manager and deputy director of its finance center, Huang

Zejun as the assistant to president and Chen Weike as the deputy manager of its capital department

and manager of its investment department. This group of individuals, who are the directors and

senior management of Zhongshan Group Co., now act as Directors and senior management of the

Company and are most relevant to and responsible for the results of the Group for the three years

ended 31 December 2002, 2003 and 2004 and the six months ended 30 June 2005. Each of them has

participated in the management of the project companies within the Group for the three years ended

31 December 2002, 2003 and 2004 and the six months ended 30 June 2005 and will continue to so

participate up to the Latest Practicable Date and thereafter, forming the core management of the

Company.

Management contracts have been made between Zhongshan Group Co. and each of the project

companies within the Group and the board of directors of each such company has, pursuant to such

management contract, delegated its management role to Zhongshan Group Co. The directors of those

project companies were merely nominated to the board of directors of those project companies by

the Chen Family to satisfy the relevant legal requirement. The management of those project

companies was in fact carried out by Zhongshan Group Co. pursuant to the relevant management

contracts. As there are over ten project companies within the Group, the Chen Family and senior

management of the Group considered that it will be more effective and efficient to manage all the

project companies through a single entity, that is, Zhongshan Group Co., instead of setting up

management committees under each of those project companies which comprised the same

personnel. Under those management contracts, the role and function of Zhongshan Group Co. is

practically the same as those of a management committee for each of the project companies.

Since then, the property development and related businesses have been developed through

project companies established through Zhongshan Group Co., Hong Kong Agile or established

directly by the Chen Family members. The business scope of the Chen Family spanned real estate

development, property management, decoration, as well as other non-core businesses, namely, hotel

and hospitality businesses, golf club, entertainment and advertising.


— 56 —

As of 30 September 2005, 22 property projects with a total gross floor area of approximately

9.4 million sq.m. have been developed by the Chen Family. 18 of these projects, including, amongst

others La Cite Greenville, Metro Agile Zhongshan, Majestic Garden, Grand Garden, Star Palace,

Agile Garden Guangzhou, South Lagoon Guangzhou, Huadu Grand Garden, Nanhai Majestic Garden,

etc., together with their associated property management companies and an interior decoration

subsidiary, Fashion Decoration Co., have been injected into our Group pursuant to the

Reorganization. These 18 projects have an aggregate site area of approximately 6.7 million sq.m.

and an aggregate gross floor area of approximately 8.1 million sq.m. For the six months ended 30

June 2005, we generated revenues of approximately RMB2,378.1 million and net profits of

approximately RMB403.6 million.

Corporate Reorganization

The Reorganization was carried out in anticipation of the Global Offering. Businesses which

are related to residential property development and ancillary services, i.e. residential property

management services and the interior decoration and renovation business, are being injected into our

Group. We have excluded residential development projects which have already been completed and

sold out, namely Zhongshan Agile Garden, The Greenville, Park Lane and The Royale, as revenue

will no longer be generated from these projects. Businesses originally held by the Chen Family but

which are not related to the residential property business, namely those related to the golf course,

hotel management, entertainment and advertising, are also excluded from our Group so that we could

focus our business scope on the residential property business.

The shareholding structure of the key businesses held by the Chen Family prior to the

Reorganization are as follows:

I. Structure of the property business

Lu Liqing Chan Siu Na

Chen Zhuo LinLuk Sin Fong,

FionChan Cheuk Nam Chan Cheuk Hei Chan Cheuk Hung Chan Cheuk Yin

Luk Sin Fong,Fion

Lu Liqing Chan Cheuk Hei Zheng HuiqiongLuk Sin Fong,

Fion

ZhongshanGroup Co.

Hong KongAgile

50% 50% 4.35% 4.35% 4.35% 47.82% 39.13% 20% 30% 20% 30% 33.33% 6.25% 60.42%

BaiyunAgile Co.

GuangzhouAgile Co.

Ever Creator Co.ZhongshanAgile Co.

Lu Yanping Chan Cheuk Yin

Greenville Co.Majestic

Garden Co.

51% 49% 75%25% 90% 10% 10% 90%

5% 5%

90%

Royal HillsideVilla

South LagoonGuangzhou

Majestic Garden

Star Palace

Grand Garden

The Landmark

The Riverside

PanyuAgile Co.

Agile GardenGuangzhou

JiangbeiEstate

HuaduGrand Garden

HuaduFlower Paris

HuaduMajestic Garden

HuaduAgile Co.

NanhaiAgile Co.

NanhaiMajesticGarden

Nanhai MajesticMetropolis

La CiteGreenville

La Nobleu

Metro AgileZhongshan

Metropolis

Agile GardenZhongshan

The Greenville The Royale

Park Lane


— 57 —

II. Structure of the property management business

30%

Lu LiqingChan Cheuk YinLuk Sin Fong,

FionChan Cheuk Hei Lu LiqingChan Cheuk Yin Huadu Agile Co.Chan Siu Na Nanhai Agile Co.Chan Siu Na

30% 20% 20% 49% 51% 20% 80% 20% 80%

La CiteGreenville

branch office

Majestic Gardenbranch office

Panyubranch office

The Greenvillebranch office

ZhongshanProperty

Management Co.

GuangzhouProperty

Management Co.

HuaduProperty

Management Co.

NanhaiProperty

Management Co.

III. Structure of the other businesses

ZhongshanAgile Co.

25% 75%

Golfcourse

Chan Cheuk YinLu YanpingLuk Sin Fong,

Fion

33.33% 6.25% 60.42%

Chan Siu Na Lu Liqing

InteriorDecoration

40% 60%

Lu Yanping Chan Siu Na

Agile Hotel

Hotel Management

30% 30%

ChanCheuk Hung

40%

FashionDecoration Co.

Chen Zhuo LinChan Cheuk HeiLuk Sin Fong,

FionChan Cheuk Yin

Regal ChannelLimited

ChangjiangGolfcourse

30%20%20%30%

Note: refers to the companies which will be injected into the Group.

Pursuant to the Reorganization, equity interests in eight property development project

companies, four property management companies and one interior decoration company held by the

Chen Family members were transferred to our Group. A management consulting company,

Zhongshan Property Land Co. was established by our Group in 2005 and will manage and

supervise all property developments of our Group in place of Zhongshan Group Co.


— 58 —

As at the date of this prospectus, the registered capital of certain subsidiaries has not yet been

fully paid up as the relevant amounts are not yet due. A summary of such outstanding amounts of

registered capital and the payment due dates are as follows:

Name of company

Amount of

outstanding registered

capital (approximate) Payment Due date

Greenville Co.. . . . . . . . . . . . . . . . . . . RMB27.0 million 30 June 2008

Zhongshan Property Management Co. . . . . RMB6.9 million 30 July 2007

Guangzhou Agile Co. . . . . . . . . . . . . . . USD7.6 million 30 June 2006

Baiyun Agile Co. . . . . . . . . . . . . . . . . . USD3.1 million 30 June 2006

The Reorganization includes the following:

(i) Establishment of BVI companies to acquire interest of PRC companies

Various companies in the BVI have been established by:

(a) the original shareholders of the PRC companies which were injected into our Group,

who are not PRC residents; and/or

(b) in the case of those original shareholders who are PRC residents, their spouses (who

are not PRC residents).

Their shareholdings in the BVI companies have been established to match their

shareholdings in the PRC companies which were injected into our Group.

The PRC property development project companies, property management companies and

interior decoration company involved in the Reorganization are:

. Property development project companies

— Baiyun Agile Co.

— Guangzhou Agile Co.

— Majestic Garden Co.

— Panyu Agile Co.

— Huadu Agile Co.

— Nanhai Agile Co.

— Greenville Co.

— Ever Creator Co.


— 59 —

. Property management companies

— Huadu Property Management Co.

— Guangzhou Property Management Co.

— Nanhai Property Management Co.

— Zhongshan Property Management Co.

. Interior decoration company

— Fashion Decoration Co.

The BVI companies then acquired the equity interests in the PRC property development

project companies, property management companies and interior decoration company pursuant

to various share transfer agreements and documents in or around May and June 2005. The

consideration for these transfers was determined by reference to the appraised net asset value

of the respective PRC companies as of 30 September 2004 or 31 December 2004.

Except for Baiyun Agile Co., Guangzhou Agile Co., Panyu Agile Co. and Huadu Agile

Co., all equity interests in the PRC companies were transferred to the BVI companies. The

interests in the BVI companies were then transferred to our Group. After the share transfers,

these PRC companies (save for the aforesaid four companies) were converted into wholly

foreign owned enterprises.

Baiyun Agile Co. was a sino-foreign cooperative joint venture enterprise established by

Hong Kong Agile and (Guangdong Lingnan Economic Development

Ltd.) (‘‘Guangdong Lingnan’’), a third party PRC company. Hong Kong Agile agreed to

contribute the registered capital of Baiyun Agile Co. in cash which is required to be fully paid

by June 2006. Guangdong Lingnan contributed land use rights for the project. Guangdong

Lingnan is no longer entitled to profit distribution from Baiyun Agile Co. after receiving a

fixed return of RMB15,470,000 (which has already been paid) from Baiyun Agile Co. Pursuant

to the Reorganization, Hong Kong Agile transferred its interests in Baiyun Agile Co. to a BVI

company, Pomaine International Limited, and after the transfer, Baiyun Agile Co. remains a

sino-foreign cooperative joint venture enterprise. The joint venture partners are Pomaine

International Limited and Guangdong Lingnan.

Guangzhou Agile Co. was also a sino-foreign cooperative joint venture enterprise

established by Hong Kong Agile and (Guangzhou Tonghe Real

Estate Development Ltd.) (‘‘Guangzhou Tonghe’’), a third party PRC company. Hong Kong

Agile agreed to contribute the registered capital of Guangzhou Agile Co. in cash which is

required to be fully paid by June 2006. Guangzhou Tonghe contributed land use rights for the

project. Guangzhou Tonghe shall receive a fixed return of RMB67,701,400 from Guangzhou

Agile Co. (which has been fully paid) and shall no longer be entitled to profit distribution of

Guangzhou Agile Co. Pursuant to the Reorganization, Hong Kong Agile transferred its interests

in Guangzhou Agile Co. to a BVI company, Hefty Wealth Group Limited, and after the

transfer, Guangzhou Agile Co. remains a sino-foreign cooperative joint venture enterprise and

the joint venture partners are Hefty Wealth Group Limited and Guangzhou Tonghe.


— 60 —

According to Guangzhou local requirements, part of the equity interests of property

development companies established in Guangzhou are required to be held by PRC companies.

As a result, Panyu Agile Co. and Huadu Agile Co. are required to comply with such

requirements. Panyu Agile Co. was originally a sino-foreign equity joint venture enterprise held

25% by Hong Kong Agile and 75% by Zhongshan Group Co. Pursuant to the Reorganization,

Hong Kong Agile transferred its 25% interest in Panyu Agile Co. to a BVI company, Mexon

Holdings Limited, and Zhongshan Group Co. transferred its 73% in Panyu Agile Co. to another

BVI company, Maxsino Investments Limited. The remaining 2% has been transferred to Nanhai

Co., a PRC company held by two Chinese citizens, Chen Qingwei and Lu Zanchu, the relatives

of the executive Directors. After the said share transfers, Panyu Agile Co. remains a sino-

foreign equity joint venture enterprise and the shareholders are Mexon Holdings Limited,

Maxsino Investments Limited and Nanhai Co., which hold 25%, 73% and 2% respectively.

Huadu Agile Co. was originally a PRC limited liability company held 90% by Zhongshan

Group Co. and 10% by Lu Liqing. Pursuant to the Reorganization and in order to comply with

Guangzhou local requirement, Lu Liqing transferred 2% of her interest in Huadu Agile Co. to

Nanhai Co., a PRC company held by two Chinese citizens, Chen Qingwei and Lu Zanchu, the

relatives of the executive Directors. Zhongshan Group Co. and Lu Liqing then transferred the

remaining 98% interest to a BVI company, Chieffield Global Limited. After the share transfers,

Huadu Agile Co. was converted into a sino-foreign equity joint venture enterprise, in which

Chieffield Global Limited holds 98% and Nanhai Co. holds 2%.

(ii) Establishment of Overseas Holding Companies

Eastern Supreme was set up and held by Chen Zhuo Lin and Luk Sin Fong, Fion in the

British Virgin Islands. As of 23 November 2005, Eastern Supreme held the entire interests in

three major BVI companies, namely Forever Fame, Genesis Global and Top Delight.

Forever Fame, Genesis Global and Top Delight acquired the BVI companies engaging in

property business, property management business and interior decoration business as mentioned

in paragraph (i) from the Founding Shareholders and Eastern Supreme allotted and issued new

shares to the Founding Shareholders as consideration. The percentage shareholding of each

Founding Shareholder was calculated in accordance with the net asset value of the relevant

BVI companies contributed by them.

(iii) Incorporation of the Company

In preparation for the Global Offering, our Company was incorporated in the Cayman

Islands on 14 July 2005.

On 23 November 2005, our Company acquired Eastern Supreme from the Founding

Shareholders and allotted and issued 199,999,980 Shares to them and credit as fully paid-up the

20 nil-paid Shares issued to Chen Zhuo Lin and Luk Sin Fong, Fion as consideration. The

Founding Shareholders transferred 200,000,000 Shares to Top Coast, a company established by

Chen Zhuo Lin and Luk Sin Fong, Fion, and Top Coast then established the Chen Family Trust

on 23 November 2005 as its trustee and then declared that the beneficial entitlement of each

beneficiary in the Chen Family Trust, namely Chen Zhuo Lin, Chan Cheuk Yin, Luk Sin Fong,

Fion, Chan Cheuk Hung, Chan Cheuk Hei and Chan Cheuk Nam shall be 25%, 19%, 17%,

13%, 13% and 13% respectively. After the Reorganization but prior to the completion of the

Global Offering, the Company was wholly owned by Top Coast as trustee for the Chen Family

Trust. Subsequent to the completion of the Reorganization, the Group has declared a special


— 61 —

dividend of approximately RMB320 million. The special dividend will be paid prior to the

commencement of the listing of our Shares on the Stock Exchange. Purchasers of our Offer

Shares will not be entitled to these dividends. In the event that any portion of such special

dividend is not paid prior to the commencement of the listing of our Shares on the Stock

Exchange, such unpaid portion will be waived by the relevant shareholders. Further details of

the Chen Family Trust are set out in the section headed ‘‘The Chen Family Trust’’ below. The

Reorganization in anticipation of the Global Offering has been completed by then.

The Reorganization complies with the applicable PRC laws and regulations, and all necessary

approvals from relevant PRC regulatory authorities required for the implementation of the

Reorganization have been obtained.

The Chen Family Trust

For the purpose of streamlining the control and shareholding interest beneficially owned by the

Founding Shareholders in our Company, the Founding Shareholders have agreed to establish the

Chen Family Trust pursuant to the Reorganization. The Chen Family Trust was established as a fixed

trust under the laws of Hong Kong on 23 November 2005 with Top Coast acting as the trustee. Upon

listing of the Company, Top Coast, being the trustee of the Chen Family Trust, shall hold

approximately 71.25% (assuming the Over-allotment Option is not exercised) of the Shares in our

Company on trust for the Founding Shareholders. The beneficiaries of the Chen Family Trust are

Chen Zhuo Lin, Chan Cheuk Yin, Luk Sin Fong, Fion, Chan Cheuk Hung, Chan Cheuk Hei and

Chan Cheuk Nam and their respective entitlement in the Chen Family Trust are 25%, 19%, 17%,

13%, 13% and 13% respectively. Some of the members of the Chen Family, namely Lu Liqing, Lu

Yanping, Chan Siu Na and Zheng Huiqiong, who are the spouses of Chan Cheuk Hung, Chan Cheuk

Hei, Chan Cheuk Nam and Chan Cheuk Yin respectively, have not been included as beneficiaries of

the Chen Family Trust but their interests have been taken into consideration and reflected in their

respective spouse’s interests in the Chen Family Trust. Any profit or dividends received by Top

Coast shall be distributed to the beneficiaries of the Chen Family Trust in accordance with their

respective entitlements when Top Coast receives any dividend or other entitlements from the

Company. The Chen Family Trust is a fixed trust. A fixed trust is one in which the beneficial

entitlements of each beneficiary has been fixed, and such entitlements cannot be adjusted by the

trustee without the unanimous consent of all the beneficiaries of the trust. Any appointment or

removal of trustee shall be made by the unanimous consent of all the beneficiaries of the Chen

Family Trust. The establishment of the Chen Family Trust is in compliance with the relevant rules

and regulations of Hong Kong.


— 62 —

CORPORATE

STRUCTURE

Thefollowingchart

sets

outthecorporate

structure

ofourGroupuponcompletionoftheGlobalOffering(assumingthattheOver-allotm

ent

Optionis

notexercised):

Mar

keti

ngIn

vest

men

tH

oldi

ng

Pro

sper

o17In

ters

ino16

Pri

mea

st20

Eve

rtro

n21M

akel

22Si

nori

nc23

Sino

Cas

a15C

hief

fiel

d14M

axsi

no13

Mex

on12

Rov

ex11

Ete

rnal

Sun10

Hef

tyW

ealt

h9P

omai

ne8

Not

e2

Not

e2

51%

49%

25%

73%

98%

100%

100%

100%

100%

Roy

alH

ills

ide

Vil

la

Sou

thL

agoo

nG

uang

zhouM

ajes

tic

Gar

den Sta

rP

alac

eGra

ndG

arde

n

The

Lan

dmar

k

The

Riv

ersi

de

Agi

leG

arde

nG

uang

zhouJi

angb

eiE

stat

eH

uadu

Gra

ndG

arde

n

Nan

hai

Maj

esti

cM

etro

poli

s

Hua

duF

low

erP

aris

Nan

hai

Maj

esti

cG

arde

n

Hua

duM

ajes

icG

arde

n

La

Cit

eG

reen

vill

e

La

Nob

leu M

etro

Agi

leZ

hong

shanMet

ropo

lis

Man

agem

ent

and

Con

sult

ancy

Pro

fiti

ca18

Bol

dham

19

Fas

hion

Dec

orat

ion

Co.

Zho

ngsh

anP

rope

rty

Man

agem

ent

Co.

Nan

hai

Pro

pert

yM

anag

emen

tC

o.

Gua

ngzh

ouP

rope

rty

Man

agem

ent

Co.

100%

100%

100%

100%

100%

Gen

esis

Glo

bal4

Top

Del

ight

5F

orev

erF

ame3

2%

Eas

tern

Sup

rem

e

The

Com

pany

100%

100%

Wor

ldw

ide

Tri

nity

24

Dec

orat

ion

Pro

pert

yM

anag

emen

tP

rope

rty

Man

agem

ent

Pro

pert

yM

anag

emen

tP

rope

rty

Man

agem

ent

100%

100%

100%

Zho

ngsh

anP

rope

rty

Lan

dC

o.

Eve

rC

reat

orC

o.G

reen

vill

eC

o.N

anha

iA

gile

Co.

Hua

duA

gile

Co.

Nan

hai

Co.

Pan

yuA

gile

Co.

Maj

esti

cG

arde

nC

o.G

uang

zhou

Agi

leC

o.B

aiyu

nA

gile

Co.

Hua

duP

rope

rty

Man

agem

ent

Co.

28.7

5%71

.25%

Pub

lic

Top

Coa

st1

Agi

leIn

vest

men

t6

Mac

auA

gile

7

Mar

keti

ng

50%

50%

2%


— 63 —

Notes:

1. Top Coast shall hold the shares in the Company as trustee of the Chen Family Trust.

2. Baiyun Agile Co. and Guangzhou Agile Co. are sino-foreign cooperative joint venture enterprises. The PRC joint

venture parties are third parties which contributed land as a condition to setting up the joint venture enterprises.

After fixed returns were obtained by the PRC parties, the remaining profits will be distributed to our Group.

3. ‘‘Forever Fame’’ means Forever Fame Holdings Limited, a limited liability company incorporated in the BVI on

8 April 2005.

4. ‘‘Genesis Global’’ means Genesis Global Development Limited, a limited liability company incorporated in the

BVI on 8 April 2005.

5. ‘‘Top Delight’’ means Top Delight International Limited, a limited liability company incorporated in the BVI on

8 April 2005.

6. ‘‘Agile Investment’’ means Agile Investment Consultants Limited, a limited company incorporated in Hong Kong

on 16 July 2005.

7. ‘‘Macau Agile’’ means Nga Koi Lok Development and Investment Company Limited, a limited liability company

incorporated in Macau on 20 April 2004.

8. ‘‘Pomaine’’ means Pomaine International Limited, a limited liability company incorporated in the BVI on 10

January 2005.

9. ‘‘Hefty Wealth’’ means Hefty Wealth Group Limited, a limited liability company incorporated in the BVI on 28

January 2005.

10. ‘‘Eternal Sun’’ means Eternal Sun International Limited, a limited liability company incorporated in the BVI on

19 January 2005.

11. ‘‘Rovex’’ means Rovex Holdings Limited, a limited liability company incorporated in the BVI on 19 January

2005.

12. ‘‘Mexon’’ means Mexon Holdings Limited, a limited liability company incorporated in the BVI on 28 January

2005.

13. ‘‘Maxsino’’ means Maxsino Investments Limited, a limited liability company incorporated in the BVI on 10

January 2005.

14. ‘‘Chieffield’’ means Chieffield Global Limited, a limited liability company incorporated in the BVI on 19

January 2005.

15. ‘‘Sino Casa’’ means Sino Casa International Limited, a limited liability company incorporated in the BVI on 4

January 2005.

16. ‘‘Intersino’’ means Intersino Holdings Limited, a limited liability company incorporated in the BVI on 10

January 2005.

17. ‘‘Prospero’’ means Prospero International Group Limited, a limited liability company incorporated in the BVI on

4 January 2005.

18. ‘‘Profitica’’ means Profitica Group Limited, a limited liability company incorporated in the BVI on 28 January

2005.

19. ‘‘Boldham’’ means Boldham Holdings Limited, a limited liability company incorporated in the BVI on 28

January 2005.

20. ‘‘Primeast’’ means Primeast International Limited, a limited liability company incorporated in the BVI on 19

January 2005.

21. ‘‘Evertron’’ means Evertron International Limited, a limited liability company incorporated in the BVI on 28

January 2005.

22. ‘‘Makel’’ means Makel International Limited, a limited liability company incorporated in the BVI on 28 January

2005.

23. ‘‘Sinorinc’’ means Sinorinc Investments Limited, a limited liability company incorporated in the BVI on 28

January 2005.

24. ‘‘Worldwide Trinity’’ means Worldwide Trinity Limited, a limited liability company incorporated in Hong Kong

on 10 November 2005.


— 64 —

OVERVIEW

We are one of the leading property development companies in Guangdong Province, PRC. We

focus primarily on the development and sale of high quality private residential properties in

Guangdong Province and expect to benefit from future economic growth and related expansion of the

property market in that area. To date, our developments have been concentrated in the cities of

Guangzhou, Zhongshan and Foshan. According to the data compiled by the Zhongshan Bureau of

State-owned Land and Resources, we were one of the top real estate developers in Zhongshan in

terms of sales in each of the past four consecutive years. Among our projects, Agile Garden

Guangzhou was ranked second in terms of sales in the Panyu district in Guangzhou in 2004, Huadu

Grand Garden was ranked first in terms of sales in the Huadu district in Guangzhou in 2003 and

2004, and Nanhai Majestic Garden was ranked first and second in terms of sales in the Nanhai

district in Foshan in 2003 and 2004, respectively. These rankings were typically achieved within the

first two years of our entry in the respective market.

We engage primarily in the development of large-scale property projects comprising multiple

phases. We offer a broad range of products, including villas, condominiums, duplexes and

apartments, which appeal to customers of varying income levels, with our main focus on products

that target middle and upper-middle class purchaser, which include white collar workers, mid- and

senior-level managers and entrepreneurs. In addition to our residential business, we develop

commercial properties, including retail shops complementary to our residential developments as well

as commercial complexes in strategic locations. We also engage in ancillary property-related

businesses such as property management and interior decoration.


Group prior to the Global Offering. In preparation for the Global Offering, the Company was

incorporated in the Cayman Islands on 14 July 2005. Pursuant to the Reorganization, members of the

Chen Family transferred to the Group all of their interests in the property development and ancillary

property-related businesses that the Group now conducts, to which the following discussion relates.

See ‘‘History, Reorganization and Group Structure’’ for a description of the Reorganization.

The financial and operational data of the Group are presented in this prospectus on a

‘‘combined’’ basis pursuant to the HKFRS as if the Company, the entities and businesses now

comprising the Group and the current Group structure had been in existence since 1 January 2002.

Under our management team, who have on average over ten years of experience in the real

estate industry, we have grown our businesses substantially since we first commenced property

development activities in 1997. As of 30 September 2005, we had 18 projects at various stages of

development, nine of which are located in Zhongshan, seven in Guangzhou and two in Foshan. These

18 projects had an aggregate site area of approximately 6.7 million sq.m., an aggregate gross floor

area, or GFA, of approximately 8.1 million sq.m., including an aggregate GFA of approximately 4.8

million sq.m. relating to properties held for future development. We have obtained land use right

certificates in respect of each of these 18 projects. In addition, as of 31 October 2005, we had

various interests in a number parcels of land, with an aggregate site area of approximately 1.5

million sq.m., for which we have not yet obtained land use right certificates and to which no value

has been assigned in the Property Valuation Report included in Appendix IV to this prospectus.

BUSINESS

— 65 —

As of 31 December 2002, 2003 and 2004 and 30 September 2005, our total site area was

approximately 3.7 million sq.m., 5.4 million sq.m., 6.2 million sq.m. and 6.7 million sq.m.,

respectively. For each of the three years ended 31 December 2002, 2003 and 2004 and the six

months ended 30 June 2005, we sold a total GFA of approximately 163,600 sq.m., 462,897 sq.m.,

534,588 sq.m. and 401,286 sq.m., resulting in a turnover from property developments of

approximately RMB697.5 million, RMB1,819.9 million, RMB2,427.9 million and RMB2,322.3

million, respectively.






We recorded a loss of RMB10.2 million for the year ended 31 December 2002, primarily due to the

expenditures incurred in connection with the early-stage development of our projects in the markets

of Guangzhou and Foshan. However, these projects made substantial contribution to our revenues

and profit in the subsequent periods.





with a view to strengthening our performance and diversifying our business risks.

BUSINESS

— 66 —

The following map illustrates the geographic locations of the three cities where we undertake

the development of our 18 projects:

Project Location in Guangzhou, Zhongshan and Foshan

BUSINESS

— 67 —

Project Location in Guangzhou and Foshan

Project Location in Zhongshan

BUSINESS

— 68 —

COMPETITIVE STRENGTHS

Real estate development expertise and experienced, stable management team

Since 1997, we have successfully developed 18 projects with an aggregate GFA of

approximately 8.1 million sq.m. in Guangdong Province. Prior to that, certain members of the

Chen Family successfully developed four projects with an aggregate GFA of 1.3 million sq.m.,

which have not been included in our portfolio of completed properties set forth in the Property

Valuation Report in Appendix IV to this prospectus. For the past four consecutive years, four major

PRC state-owned commercial banks, together with Xinhua News Agency or People’s Daily, jointly

rated us as one of the 20 most creditworthy real estate developers in Guangdong Province.

Furthermore, since 2003, Zhongshan Bureau of State-owned Land and Resources has rated our

property development project, La Cite Greenville, the top selling residential estate in Zhongshan. We

believe that our real estate development expertise and customer-oriented business policy provide us

with a competitive advantage in the areas of customer satisfaction and market development.

Our management team comprises individuals with an average of over ten years of experience in

the real estate industry. Our Vice Chairman and Co-President Chen Cheuk Yin was awarded the title

of ‘‘outstanding entrepreneur of privately-owned enterprises in Guangdong Province’’ by the

Guangdong provincial government in 2003. Our Vice Chairlady and Co-President Luk Sin Fong,

Fion has served as the Vice Chairlady of Guangzhou Housing Society since 2002. The key members

of our management team have served in their capacities since we first commenced property

development activities in 1997, and a majority of our senior management has worked with us for

more than eight years.

We believe that the stability of our management team and its extensive operating experience,

industry knowledge and in-depth understanding of the real estate market in Guangdong Province will

enable us to continue to take advantage of future market opportunities.

Strong brand name recognition and marketing expertise

We have received numerous awards in recognition of the high quality design and construction

of our property developments. We believe these awards are testimonies to the success of our efforts

at building a strong brand name as well as the high quality of our developments. Guangdong

Provincial Industrial & Commercial Administration Bureau has recognized our brand name ‘‘ ’’

as a ‘‘famous trademark in Guangdong Province.’’ We believe that marketing has been one of the

key factors that helped us establish our strong brand name in Guangdong Province, Hong Kong and

Macau where many of our potential customers may be reached. For each of the three years ended 31

December 2002, 2003 and 2004 and for the six months ended 30 June 2005, we expended RMB89.9

million, RMB127.1 million, RMB119.8 million and RMB65.3 million on advertising, respectively.

We adopt a variety of measures to reach potential customers, including advertising through

traditional media such as television and newspaper as well as sponsoring performances and holding

entertainment activities for the public. We were one of the first Guangdong-based property

developers to launch advertisements in Hong Kong. For each of the past two consecutive years, we

were given awards jointly by the Hong Kong Advertisers Association and Asia Television Ltd. as

one of the top 10 most popular infomercials on television in Hong Kong.

BUSINESS

— 69 —

Large-and-low-cost land reserves

We believe that a sizeable land bank is one of the most important resources for a property

developer. As of 30 September 2005, we had approximately 1.1 million sq.m. of GFA under

development and approximately 4.8 million sq.m. of GFA held for future development, in respect of

all of which we have obtained the relevant land use right certificates. We acquired the majority of

these parcels of land in the past at prices that were substantially lower than their current market

value, according to the Property Valuation Report in Appendix IV to this prospectus. In addition, as

of 31 October 2005, we had parcels of land with a total site area of approximately 1.5 million sq.m.

with respect to which we have various interests but have not obtained land use right certificates, and

to which we have not assigned any value in the Property Valuation Report. We believe that our land

reserves provide us with a competitive advantage over other property development companies that

target the same markets as we do but have only recently begun to acquire land at current market

prices.

In addition, our low cost land reserves offer us the flexibility of developing properties targeting

broader customer segments, which enable us to respond more effectively in the event of a decline in

the higher-end property market. The flexibility to diversify our product portfolio allows us to cater

to customers of different income groups and thereby access wider market segments.

Most of our land reserves are located adjacent to the properties developed or under

development by us. We believe the well-established residential community and neighborhood

facilities we have already put in place will appeal to future purchasers of properties that we develop

on these land reserves, as well as reduce the future development costs due to the sharing of

community facilities.

Strategically selected property locations

Most of our developments are strategically located in suburban neighborhoods approximately

15 to 30 minutes drive from the center of the related city and have convenient access to

transportation networks. We also provide transportation services for our customers, which connect a

majority of our projects to destinations in the nearby city centers. Our suburban developments offer

customers pleasant living conditions close to nature and away from the congestion of a rapidly

developing urban center. For example, La Cite Greenville is located in the well-known scenic region

adjacent to the Wugui Mountain Range, and South Lagoon Guangzhou is situated in a National

Nature Preserve close to Baiyun mountain. As the cities of Guangzhou, Zhongshan and Foshan are

experiencing expansion due to their growing economies and increasing populations, and as people

increasingly seek housing with the advantages of proximity to a natural environment, we believe our

suburban properties are likely to appreciate in value. In addition, we selected the sites of certain

developments in anticipation of investment by local governments to develop the local transportation

and other surrounding public infrastructure which we believe will enhance the desirability of real

estate in the area. As China continues its urbanization and its cities become larger in size, we

believe we will have increasing opportunities to acquire additional suburban development sites.

Well-designed properties and innovative products

Since our first project, we have pursued a long-term vision of providing high-quality properties

in a healthy and scenic living environment. We devote a significant portion of our construction costs

to design and landscaping. We have retained internationally and nationally renowned designers who

are experienced in planning and landscaping large-scale properties, and we maintain an internal team

of designers with local knowledge. Their collaboration has resulted in successful designs such as

BUSINESS

— 70 —

man-made lagoons on several projects and residential units that maximize lake views. In most of our

projects, there are designated areas equipped for the activities of the elderly and children. We

believe amenities such as these distinguish our properties from those of our competitors.

We believe that accurate product positioning is critical to the success of our property

developments. We offer a broad range of products, including villas, condos, duplexes and

apartments. Utilizing our knowledge of and insights into market trends, we have offered

innovative products that have been well-received by various customer groups. A number of

residential unit models that we developed in Zhongshan became popular among our customers and

have been later adopted by our competitors and other property developers.

Experience on large-scale multi-phase developments

We engage primarily in the development of large-scale property projects consisting of multiple

phases. We believe that undertaking large-scale multi-phase development allows us to benefit from

economies of scale, for example, with respect to our ability to leverage investments in common

facilities, as well as with respect to negotiating contracts with service providers and suppliers. We

believe that our large-scale multi-phase properties, as compared to smaller single-phase

developments, are generally able to provide better living conditions and facilities, such as pools,

clubhouses and schools, at a more affordable price to customers. Furthermore, our phase-by-phase

development also provides us with the opportunity to monitor the level of market acceptance at each

phase and enables us to adjust our business strategy and related property designs to better satisfy

market demand if and when it changes. Moreover, the phase-by-phase development generally allows

us to achieve higher selling prices in later phases as the overall living experience improves along

with the maturity of our projects.

Diverse customer base and quality after-sale customer services

We market our properties to a broad range of customer groups including entrepreneurs,

professionals, government employees and young families. We also market our properties to overseas

customers, including customers in Hong Kong and Macau, who purchase our properties primarily for

vacation or investment purposes. We believe that a diverse customer composition helps to reduce our

exposure to the fluctuation and volatility in the real estate market.

We have built a reputation as a provider of quality residential properties and comprehensive

after-sales and property management services. Our property management subsidiaries also provide

professional property consulting advice and extensive after-sales services, such as rental agency,

security management, maintenance and landscaping services, to our purchasers. We also organize

customer events and product exhibitions periodically to improve customer relations and enhance our

customers’ confidence in our products and services. We issue to our customers The Agile Property

Club Card, which offers cardholders discounts at various retailers, supermarkets and restaurants in

various cities. We believe that these measures of customer relations are conducive to increase the

likelihood of referrals by our existing customers. Based on our internal records, we believe that

slightly more than half of the customers who purchased our property developments in 2004 were

referred by previous purchasers of our property developments.

BUSINESS

— 71 —

Specialized management structure enabling centralized oversight as well as project-level

autonomy

We believe that our specialized management structure has been an integral part in our success

in the property development business. Our management structure is two-tier: centralized departments

oversee and control the major steps of each development project and individual project companies

are responsible for the day-to-day operations and operating targets of their respective projects. Our

centralized management system establishes uniform operating procedures, quality and other

operational targets for the project companies. We believe that our centralized management system

optimizes our capacities and resources, enhances our negotiating power with suppliers and

contractors and facilitates the sharing of resources and expertise among various projects in the

areas of design, construction, marketing and sales. Our individual project companies conduct market

analysis, provide customer service, and supervise construction on site. We believe that our individual

project management system results in a higher level of managerial autonomy and in greater

flexibility regarding decision-making for each project, which enables our projects to develop

efficiently and cost-effectively.

BUSINESS STRATEGIES





with a view to strengthening our performance and diversifying our business risks. We intend to

achieve our overall objectives by pursuing the following strategies:

Prudent development and timely response to market conditions

We intend to focus our business on real estate development and ancillary property related

business. Balancing our short-term and long-term plans, we intend to maintain a prudent approach in

our future expansion. Specifically, we intend to continue to acquire sufficient sites to support the

number of property developments we wish to develop to meet our expansion target. At the same

time, we will conduct careful and in-depth market analysis before we purchase land, and closely

monitor newly promulgated laws and policies to analyze and understand their implications so as to

acquire land use rights at competitive prices in order to strike a balance between our objectives of

growing our project pipeline and preserving capital efficiency.

We intend to implement a prudent and disciplined corporate strategy to promote steady and

sustainable growth. We plan to expand our property business in a rational and disciplined manner

through stringent financial controls and at the same time, actively manage and control our costs

through careful budget planning processes such as monthly review of project expenditure reports.

Focus on fast growth customer segments while developing high quality, large-scale property

projects in suburban locations

We will continue to leverage our past experience and expertise in development of high quality

residential properties. We believe that, in the near future, our primary customer base will continue to

be the middle and upper-middle class purchasers which we expect will expand in number and present

substantial future purchasing potential. Meanwhile, we will also develop luxury properties targeting

more affluent customers at an appropriate level in order to maintain a degree of diversification of

our customer base and a notable presence in the higher-end property market.

BUSINESS

— 72 —

We believe suburban properties will become increasingly popular, as customers become more

focused on the higher quality of life, lower congestion and more pleasant environment provided by

the suburban properties, which are typically offered for sale at more affordable unit prices as

compared to city center properties. The commute from the suburbs to the city center is typically

considered acceptable by our customers and, depending on traffic conditions, could be more

tolerable than travels within the city during commuting hours. Accordingly, we intend to acquire

additional land reserves primarily in locations that are approximately 15 to 30 minutes drive from

city centers, with comprehensive local transportation and other public facilities already developed or

under development. In addition, we will evaluate and acquire properties at quality locations in city

centers. We intend to continue our focus on enhancing the value of our residential sites by

leveraging our expertise and experience in upgrading our property development and site design and

providing a comfortable, easily accessible and healthy living environment for our customers.

Strengthen our brand recognition in local markets and leverage expertise to expand into other

parts of China

We intend to continue to strengthen our established brand name recognition in Guangdong

Province. We plan to execute this strategy primarily through delivery of quality products and

services, as well as various advertising and marketing activities through diverse channels. We

believe customer satisfaction and word of mouth has been and continues to be an effective channel

for building and enhancing our reputation.

In addition to strengthening our position as one of the leading property developers in

Guangdong Province, we also intend to leverage our experience to increase our presence in other

parts of China, such as Hainan Province and Changsha City, Hunan Province. We plan to selectively

pursue strategic business opportunities in other PRC regions with high growth potential.

Adopt international industry best practices and maintain an efficient organizational structure

We aim to strengthen our transparent and employee-friendly corporate culture which

encourages responsibility, innovation and cooperation. We will continue to adopt international

industry best practices and standards of corporate governance. We plan to draw on our senior

management expertise and experience and actively interact with international business partners and

professional advisors. We intend to maintain an organizational structure that is in line with our

business development plans with a view to maintaining and increasing the efficiency of our

operations. We provide, and plan to continue to provide, incentives to our management and

employees through a performance incentive program and different levels of training specifically

tailored to the different functions and levels of expertise of our employees.

DESCRIPTION OF PROPERTY DEVELOPMENTS

We have 18 projects at various stages of development as listed below, nine in Zhongshan,

seven in Guangzhou and two in Foshan. We divide our property developments into three categories:

(1) completed property developments, (2) properties under development and (3) properties held for

future development. As our projects typically comprise multiple-phase developments on a rolling

basis, one project may include different phases that are variously completed, under development or

held for future development.

As stated in the Property Valuation Report in Appendix IV to this prospectus, a property

development is completed when we have received the Individual Construction Works Certified

Report ( ) with respect to the property development in Zhongshan and when we have

BUSINESS

— 73 —

received the Completed Construction Works Certified Report ( ) with respect to the

property development in Guangzhou or Foshan. These certificates are typically issued when we have

provided the relevant government authorities approvals from the bureaus of planning, fire services

and environmental protection, signed guarantees of construction quality from contractors and other

documents required by the relevant laws and regulations. A property is considered to be under

development immediately following the issuance of the Notice to Proceed of Civil Engineering

Project ( ) with respect to the property and before completion of the property. The

Notice to Proceed of Civil Engineering Project is issued by us to, and confirmed by, our contractors

to commence the construction of the superstructure of the first building of the property development.

It is typically issued after we have made the application for construction to the local authorities and

the foundation works have been completed.

The site area information for an entire project is based on the relevant land use right

certificates. The aggregate GFA of an entire project is calculated by multiplying its site area by the

maximum permissible plot ratio as specified in the relevant land grant contracts or other approval

documents from the local governments relating to the project or such lower plot ratio that we

reasonably expect to be able to develop for such project. Different from the above ground and semi-

underground carparks, underground carparks generally do not account for a project’s total GFA. The

aggregate GFA of a project includes both saleable and non-saleable GFAs. Saleable GFAs refer

primarily to residential units (including internal floor area and shared areas in the building that are

exclusively allocated to such residential units) and retail shops. Non-saleable GFAs refer to certain

communal facilities, including, among others, club houses and schools.

According to the Property Valuation Report in Appendix IV to this prospectus, properties are

sold when the purchase contract with a customer has been executed and the properties have been

delivered to the customer. Properties are pre-sold when the purchase contract has been executed but

the properties have not yet been delivered to the customer. Information regarding land costs and

development costs in this prospectus is based solely on our internal records or estimates.

We include in this prospectus the project names which we have used, or intend to use, to

market our properties. Some of the names for our property developments are pending approvals by

the relevant government authorities and may be subject to change.

BUSINESS

— 74 —

The table below sets forth the GFA information of our 18 projects as of 30 September 2005.

Project City

Aggregate

GFA for

entire project

Completed property developments Properties under development

Properties held

for future

development

Interest

attributable

to us

GFA

completed(1)

Total

completed

saleable

GFA(4)

Total

saleable

GFA

sold(2)

GFA under

development(3)

Total saleable

GFA under

development(4)

Total

saleable

GFA

pre-sold(2)

GFA held

for future

development(5)

(sq.m.) %

La Cite Greenville . . . . . . . Zhongshan 2,055,877 338,479 292,318 260,565 207,644 185,714 54,483 1,509,754 100

La Nobleu . . . . . . . . . . . Zhongshan 160,142 — — — 42,616 42,616 2,453 117,526 100

Metro Agile Zhongshan . . . . Zhongshan 609,681 58,175 58,175 49,759 110,248 108,879 31,990 441,258 100

Metropolis . . . . . . . . . . . Zhongshan 113,264 41,298 41,298 29,480 38,310 38,310 5,014 33,656 100

Majestic Garden . . . . . . . . Zhongshan 236,926 236,926 217,065 199,639 — — — — 100

Grand Garden . . . . . . . . . Zhongshan 157,187 127,476 125,276 119,109 — — — 29,711 100

Star Palace . . . . . . . . . . . Zhongshan 183,899 62,194 62,194 48,809 67,708 65,839 6,097 53,997 100

The Riverside . . . . . . . . . Zhongshan 72,644 18,472 18,472 7,249 54,172 53,146 2,245 — 100

The Landmark . . . . . . . . . Zhongshan 13,278 13,278 13,278 4,453 — — — — 100

Agile Garden Guangzhou . . . . Guangzhou 1,846,813 597,671 557,654 438,276 127,646 127,646 26,117 1,121,496 98

Jiangbei Estate . . . . . . . . . Guangzhou 791,638 — — — — — — 791,638 98

South Lagoon Guangzhou . . . Guangzhou 270,711 155,197 147,266 142,778 103,934 103,934 10,785 11,580 100(6)

Royal Hillside Villa . . . . . . Guangzhou 198,940 — — — 34,891 32,131 6,518 164,049 100(6)

Huadu Grand Garden . . . . . . Guangzhou 99,607 99,607 97,740 97,740 — — — — 98

Huadu Flower Paris . . . . . . Guangzhou 207,690 129,644 123,253 85,126 78,046 76,917 28,717 — 98

Huadu Majestic Garden . . . . Guangzhou 219,112 — — — 38,536 36,435 — 180,576 98

Nanhai Majestic Garden . . . . Foshan 834,916 354,647 331,550 311,053 177,703 177,703 32,672 302,566 100

Nanhai Majestic Metropolis . . Foshan 61,673 — — — 61,673 61,673 6,974 — 100

Total . . . . . . . . . . . . . . 8,133,997 2,233,064 2,085,539 1,794,036 1,143,127 1,110,943 214,065 4,757,806

(1) ‘‘Completed GFA’’ for completed property developments is derived from our internal records.

(2) ‘‘Total saleable GFA sold’’ for completed property developments and ‘‘Total saleable GFA pre-sold’’ for

properties under development are derived from the relevant purchase contracts with our customers.

(3) ‘‘GFA under development’’ is derived from our internal records.

(4) ‘‘Total completed saleable GFA’’ and ‘‘Total saleable GFA under development’’ are based on our internal records

and estimates.

(5) ‘‘GFA held for future development’’ for each project is the aggregate GFA for the entire project less the

completed GFA and GFA under development.

(6) See ‘‘— Description of Property Developments — In the City of Guangzhou — South Lagoon Guangzhou’’ and

‘‘— Description of Property Developments — In the City of Guangzhou — Royal Hillside Villa.’’

BUSINESS

— 75 —

Some of the property information contained in the above table, the following descriptions of

the individual projects and elsewhere in this prospectus may differ from the Property Valuation

Report in Appendix IV to this prospectus because, among other things, the Property Valuation

Report does not include 1.8 million sq.m. of total saleable GFA sold.

As of 31 October 2005, there were also eight parcels of land for which our project companies

had entered into land use right transfer agreements, compensation agreements or other agreements

but for which we had not obtained the relevant land use right certificates. As of 31 October 2005,

these parcels of land occupied an aggregate site area of approximately 1.5 million sq.m. There is no

assurance that we will obtain the land use right certificates in respect of these parcels of land in a

timely manner, or at all, we have not assigned any value to these parcels of land in the Property

Valuation Report in Appendix IV to this prospectus. We have not commenced any construction or

preparation of construction relating to these parcels of land, nor do we have any detailed plans

relating thereto. Under the Law of the Administration of Urban Real Estate of the PRC and the

Administration of Pre-sale of Commodity Premises Regulations of Guangdong Province, we are not

allowed to engage in any pre-sale activities prior to obtaining the land use right certificate. As of 30

June 2005, the aggregate carrying value of parcels of land for which land use right certificates had

not been obtained was approximately RMB93.7 million. See note 7 to the Financial Statements in

Appendix I to the prospectus.

Among the parcels of land for which we have not obtained land use right certificates, there are

three parcels with a total site area of 327,962.5 sq.m. for which we have entered into land use right

transfer agreements or a land grant confirmation agreement. Jingtian, our PRC counsel, has advised

us that there are no material impediments in obtaining land use right certificates with respect to

these parcels. The table below sets forth the location, site area, incurred costs and outstanding

commitments relating to each of these parcels of land as of 31 October 2005. The site area

information for these parcels of land is based on the relevant land use right transfer agreements and

land grant confirmation agreement. The costs incurred are calculated based on our internal records.

The outstanding commitments represent the aggregate purchase price specified in the relevant

transfer agreement or land grant confirmation agreement net of the costs that we have already

incurred.

Project Company Location Site Area Costs Incurred

Outstanding

Commitments

(m2) (RMB’000) (RMB’000)

Greenville Co.

— Xinsheng Village(1) . . . . . . . . . . . . . . . Zhongshan 63,464.0 10,000.0 14,751.0

Majestic Garden Co.(1) . . . . . . . . . . . . . . . . Zhongshan 79,802.5 40,000.0 51,495.5

Nanhai Agile Co.(2) . . . . . . . . . . . . . . . . . . Foshan 184,696.0 28,772.0 711,000.0

Total: . . . . . . . . . . . . . . . . . . . . . . . . . . . 327,962.5 78,772.0 777,246.5

(1) We have entered into a land use right transfer agreement relating to this parcel of land.

(2) We entered into a land grant confirmation agreement with the Land Trade Center of Foshan in October 2005 for

the grant of this parcel of land through public auction.

The remaining five parcels of land for which we have not obtained land use right certificates

occupy a total site area of 1,198,658.1 sq.m. We have entered into compensation agreements with

the former occupants but have not entered into, and there is no assurance that we will be able to

enter into, land grant agreements with the local governments, nor have we paid any land premium

relating to these parcels of land. The table below sets forth the location, site area, incurred costs and

BUSINESS

— 76 —

outstanding commitments relating to each of these parcels of land as of 31 October 2005. The site

area information for these parcels of land is based on the relevant compensation agreements. The

costs incurred are calculated based on our internal records. The outstanding commitments (including

the estimated amounts of land premium) are calculated based on our internal estimates.

Project Company Location Site Area Costs Incurred

Outstanding

Commitments

(m2) (RMB’000) (RMB’000)

Greenville Co.

— Gonghua Village . . . . . . . . . . . . . . . . Zhongshan 260,001.3 11,700.0 66,300.0

— A01 Parcel . . . . . . . . . . . . . . . . . . . . Zhongshan 10,000.0 0.0 4,500.0

Ever Creator Co.(1) . . . . . . . . . . . . . . . . . . Zhongshan 490,139.4 22,456.1 61,276.6

Baiyun Agile Co. . . . . . . . . . . . . . . . . . . . . Guangzhou 39,384.0 11,992.7 14,769.0

Huadu Agile Co. . . . . . . . . . . . . . . . . . . . . Guangzhou 399,133.4 0.0 209,545.0

Total: . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,198,658.1 46,148.8 356,390.6

(1) The land was designated for industrial development and we intend to obtain government approval to qualify the

land for residential development. We expect that additional costs would be incurred for a change in the land use

designation.

In this prospectus, when we refer to our properties or the site areas or the GFAs of our

properties, we refer to the properties in respect of which we have obtained land use right

certificates, unless otherwise indicated.

The following are detailed descriptions of our 18 projects. The commencement date relating to

each project or each phase of a project refers to the date of commencing construction of the first

building of the project or phase. The completion dates set out in the descriptions of project

developments are derived on the following basis: (i) where a project is located in Zhongshan, the

completion date of the project or a phase of the project is taken to be the date when the Individual

Works Certified Report is obtained; (ii) where a project is located in Guangzhou or Foshan, the

completion date of the project or a phase of the project is taken to be the date when the Completed

Construction Works Certified Report is obtained; and (iii) where the Individual Works Certified

Report or the Completed Construction Works Certified Report, as the case may be, has not been

obtained, the completion date represents our best estimate based on our current development plans.

For purposes of this prospectus, a project is considered to be fully sold even if carpark units are still

available for sale.

BUSINESS

— 77 —

IN THE CITY OF ZHONGSHAN

La Cite Greenville ( )

La Cite Greenville is located inside the Changjiang Tourist Spot in the city of Zhongshan. The

project occupies a total site area of approximately 1,960,274 sq.m. with an expected GFA (including

saleable and non-saleable) of approximately 2,055,877 sq.m. The villas of the project are constructed

on sloping hillside adjacent to the Wugui Mountain Range with a view of and convenient access to

the Changjiang Agile Golf Course, a National Top Ten Golf Course as ranked by China Golf

Association.

As of 30 September 2005, the completed property developments occupied a site area of

approximately 706,899 sq.m. with a GFA (including saleable and non-saleable) of approximately

338,479 sq.m. Such completed property developments commenced construction on 30 April 2002 and

were completed on 30 September 2005. They comprised 1,842 residential units with a saleable GFA

of approximately 281,655 sq.m., seven retail shops with a saleable GFA of approximately 10,662

sq.m. and 564 carparks. As of 30 September 2005, 1,738 residential units with a saleable GFA of

approximately 260,357 sq.m., two retail shops with a saleable GFA of approximately 208 sq.m. and

121 carparks had been sold, with a saleable GFA of approximately 31,753 sq.m. remaining for sale.

As of 30 September 2005, the properties under development occupied a site area of

approximately 258,176 sq.m. with an expected GFA (including saleable and non-saleable) of

approximately 207,644 sq.m. Such properties under development commenced construction on 10

September 2004 and are expected to complete in December 2005. They are expected to comprise

1,123 residential units with a saleable GFA of approximately 177,711 sq.m., 86 retail shops with a

saleable GFA of approximately 8,003 sq.m. and 122 carparks.

As of 30 September 2005, the properties held for future development occupied a site area of


approximately 1,509,754 sq.m.

As of 30 June 2005, the total development costs (including land acquisition costs, construction

costs and capitalized finance costs) incurred for La Cite Greenville were approximately RMB1,165.9

million. We estimate that an additional amount of approximately RMB351.7 million is required to

complete the development of La Cite Greenville (excluding properties held for future development).

Development of La Cite Greenville is undertaken by Greenville Co., our wholly-owned project

company.

BUSINESS

— 78 —

We lease a piece of land with a total site area of 179,333 sq.m. from a local village committee

and have developed the land to a hilltop park for the exclusive use of the La Cite Greenville

residents. The term of the lease is 70 years beginning from 2005.

We also have a parcel of land with a total site area of 130,601 sq.m. which is designated only

for landscaping purpose. Pursuant to the agreement with Zhongshan Bureau of State-owned Land and

Resources, the land is reserved for future railway construction by the municipal government and not

entitled to land use right certificates. We agreed to return the land to the government

unconditionally upon the commencement of the construction of the railway and will receive a

refund of the consideration paid. If the designated land use is changed by the government, we will

have the right to develop the land for commercial or residential purpose by paying an additional

consideration to the government. We have no plans to apply for a change in the land use designation

in the near future.

La Nobleu ( )

La Nobleu is located inside the Changjiang Tourist Spot in the city of Zhongshan, which is

surrounded by the Changjiang Agile Golf Course from three directions. The project occupies a total

site area of approximately 280,689 sq.m. with an expected GFA (including saleable and non-

saleable) of approximately 160,142 sq.m.

As of 30 September 2005, there was no completed property development at La Nobleu.



approximately 42,616 sq.m. Such properties under development commenced construction on 20 April

2005 and are expected to complete in December 2005. They are expected to comprise 102 residential

units with a saleable GFA of approximately 42,616 sq.m.



approximately 117,526 sq.m.

As of 30 June 2005, the total development costs for the project (including land acquisition

costs, construction costs and capitalized finance costs) incurred for La Nobleu were approximately

RMB138.4 million. We estimate that an additional amount of approximately RMB39.4 million is

required to complete the development of La Nobleu (excluding properties held for future

development). Development of La Nobleu is undertaken by Greenville Co.

BUSINESS

— 79 —

Metro Agile Zhongshan ( )

Metro Agile Zhongshan is located at the center of Sanxiang Town, Zhongshan and is

approximately a 30-minute ride to Macau. The project is expected to be approximately a 30-minute

ride to the currently proposed Hong Kong-Zhuhai-Macau Bridge. The project occupies a total site

area of approximately 428,534 sq.m. with an expected GFA (including saleable and non-saleable) of

approximately 609,681 sq.m. It is situated close to the Cultural Square, Exhibition Center and the

new Government Office Building of Sanxiang Town.



58,175 sq.m. Such completed property developments commenced construction on 22 August 2003

and were completed on 28 September 2005. They comprised 498 residential units with a saleable

GFA of approximately 54,437 sq.m., 86 retail shops with a saleable GFA of approximately 3,738

sq.m. and 38 carparks. As of 30 September 2005, 440 residential units with a saleable GFA of

approximately 46,982 sq.m., 71 retail shops with a saleable GFA of approximately 2,777 sq.m. and

eight carparks had been sold, with a saleable GFA of approximately 8,416 sq.m. remaining for sale.




October 2004 and are expected to complete in December 2005. They are expected to comprise 774

residential units with a saleable GFA of approximately 102,768 sq.m. and 80 retail shops with a

saleable GFA of approximately 6,111 sq.m.





costs and an additional amount of capitalized finance costs) incurred for Metro Agile Zhongshan

were approximately RMB202.9 million. We estimate that an additional amount of approximately

RMB29.4 million is required to complete the development of Metro Agile Zhongshan (excluding

properties held for future development). Development of Metro Agile Zhongshan is undertaken by

Ever Creator Co., our wholly-owned project company.

BUSINESS

— 80 —

Metropolis ( )

Metropolis is located on Wenchang Road, Sanxiang Town, Zhongshan. The project occupies a

total site area of approximately 72,420 sq.m. with an expected GFA (including saleable and non-

saleable) of approximately 113,264 sq.m. It is a multi-function commercial complex comprising one

shopping building and hundreds of independent retail shops at the center of Sanxiang Town,

surrounded by a convenient transportation network.



41,298 sq.m. Such completed property developments commenced construction on 10 July 2004 and

were completed on 30 April 2005. They comprised 227 retail shops with a saleable GFA of

approximately 41,298 sq.m. As of 30 September 2005, 151 retail shops with a saleable GFA of

approximately 29,480 sq.m. had been sold, with a saleable GFA of approximately 11,818 sq.m.

remaining for sale.




December 2004 and was completed in November 2005. They are expected to comprise 198 retail

shops with a saleable GFA of approximately 38,310 sq.m.





costs and capitalized finance costs) incurred for Metropolis were approximately RMB99.5 million.

We estimate that an additional amount of approximately RMB21.0 million is required to complete

the development of Metropolis (excluding properties held for future development). Development of

Metropolis is undertaken by Ever Creator Co.

BUSINESS

— 81 —

Majestic Garden ( )

Majestic Garden is located at the juncture of Bo’ai road and Qiguan West Road in the Eastern

District of Zhongshan, adjacent to the Citizen Exercise Square and the municipal government, and

about a 20-minute ride to Zhongshan Pier. The project occupies a total site area of approximately

143,377 sq.m. with a GFA (including saleable and non-saleable) of approximately 236,926 sq.m. In

2000, the project was awarded ‘‘The AAA National Recognition’’ and ‘‘The National Middle Class

Model Residential Community,’’ both by the Ministry of Construction of the PRC. It has also

received from the Ministry of Construction of the PRC various awards in the areas of property

planning, quality of construction, advanced technology application, interior design, environmental

quality and property management.



236,926 sq.m. Such completed property developments commenced construction on 25 October 1997

and were completed by 28 July 2002. They comprised 1,907 residential units with a saleable GFA of

approximately 205,711 sq.m., 101 retail shops with a saleable GFA of approximately 11,354 sq.m.

and 1,010 carparks. As of 30 September 2005, 1,896 residential units with a saleable GFA of



As of 30 September 2005, there were no properties under development or held for future

development at Majestic Garden.


costs and capitalized finance costs) incurred for Majestic Garden were approximately RMB728.1

million. Development of Majestic Garden is undertaken by Majestic Garden Co., our wholly-owned

project company.

BUSINESS

— 82 —

Grand Garden ( )

Grand Garden is located at the juncture of Bo’ai Road and Xingzhong Road in Eastern District

of Zhongshan, across the Stadium of Zhongshan. The project occupies a total site area of


approximately 157,187 sq.m. It is in close proximity to the Municipal Culture and Art Center and

Sun Yat Sen Memorial Park.




and were completed on 20 November 2003. They comprised 987 residential units with a saleable


sq.m. and 882 carparks. As of 30 September 2005, 968 residential units with a saleable GFA of

approximately 117,774 sq.m., eight retail shops with a saleable GFA of approximately 1,335 sq.m.

and 326 carparks had been sold, with a saleable GFA of approximately 6,167 sq.m. remaining for

sale.

As of 30 September 2005, there were no properties under development at Grand Garden.





costs and capitalized finance costs) incurred for Grand Garden were approximately RMB374.2

million. Development of Grand Garden is undertaken by Majestic Garden Co.

BUSINESS

— 83 —

Star Palace ( )

Star Palace is located at the juncture of Bo’ai Road and Chengui Road in Eastern District of

Zhongshan, connected to Grand Garden. The project occupies a total site area of approximately

112,155 sq.m. with an expected GFA (including saleable and non-saleable) of approximately 183,899

sq.m. It is in close proximity to the Municipal Cultural and Art Center, Sun Yat Sen Memorial Park,

Bo’ ai Hospital and Zhongshan No. 1 High School.




and were completed on 10 December 2004. They comprised 362 residential units with a saleable

GFA of approximately 61,357 sq.m., 14 retail shops with a saleable GFA of approximately 837 sq.m.

and 415 carparks. As of 30 September 2005, 300 residential units with a saleable GFA of

approximately 48,197 sq.m., 11 retail shops with a saleable GFA of approximately 612 sq.m. and





August 2004 and are expected to complete in December 2005. They are expected to comprise 501

residential units with a saleable GFA of approximately 64,935 sq.m., 17 retail shops with a saleable

GFA of approximately 904 sq.m. and 365 carparks.





costs and capitalized finance costs) incurred for Star Palace were approximately RMB277.2 million.

We estimate that an additional amount of approximately RMB56.0 million is required to complete

the development of Star Palace (excluding properties held for future development). Development of

Star Palace is undertaken by Majestic Garden Co.

BUSINESS

— 84 —

The Riverside ( )

The Riverside is located on Henghai Road, junction of West District, East District and

Southern District, Zhongshan. The project occupies a total site area of approximately 102,225 sq.m.

with an expected GFA (including saleable and non-saleable) of approximately 72,644 sq.m. It is the

first river-front villa community in Zhongshan.




were completed on 30 April 2005. They comprised 96 residential units with a saleable GFA of

approximately 18,472 sq.m. As of 30 September 2005, 40 residential units with a saleable GFA of


remaining for sale.






GFA of approximately 3,670 sq.m. and 69 carparks.

As of 30 September 2005, there were no properties held for future development at The

Riverside.


costs and capitalized finance costs) incurred for The Riverside were approximately RMB167.2


complete the development of The Riverside. Development of The Riverside is undertaken by

Majestic Garden Co.

BUSINESS

— 85 —

The Landmark ( )

The Landmark is located at the juncture of Bo’ai road and Yintong Road in the Eastern District

of Zhongshan, adjacent to Majestic Garden. The project occupies a total site area of approximately

7,887 sq.m. with a GFA (including saleable and non-saleable) of approximately 13,278 sq.m. It is a

commercial complex situated in close proximity to several large-scale residential communities that

we believe offer high consumption potential.




were completed on 20 December 2004. They comprised 92 retail shops with a saleable GFA of

approximately 13,278 sq.m. As of 30 September 2005, 32 retail shops with a saleable GFA of


remaining for sale.


development at The Landmark.


costs and capitalized finance costs) incurred for the project were approximately RMB22.6 million.

Development of The Landmark is undertaken by Majestic Garden Co.

BUSINESS

— 86 —

IN THE CITY OF GUANGZHOU

Agile Garden Guangzhou ( )

Agile Garden Guangzhou is located on South Avenue, Nancun Town, Panyu district,

Guangzhou, with the Pearl River and an ecology protection zone to its north, Panyu Guest Road

and No. 3 Subway Line which is under construction to its west and Nansha Port Expressway to its

east. The project occupies a total site area of approximately 1,518,416 sq.m. with an expected GFA

(including saleable and non-saleable) of approximately 1,846,813 sq.m. It is positioned in the core

area of the greater Pearl River Delta region and within the emerging central business and residential

district of Guangzhou city.




and were completed by 28 September 2005. They comprised 3,389 residential units with a saleable


sq.m. and 1,348 carparks. As of 30 September 2005, 2,921 residential units with a saleable GFA of







residential units with a saleable GFA of approximately 119,591 sq.m. and 91 retail shops with a




approximately 1,121,496 sq.m.


costs and capitalized finance costs) incurred for Agile Garden Guangzhou were approximately

RMB2,146.6 million. We estimate that an additional amount of approximately RMB273.3 million is

required to complete the development of Agile Garden Guangzhou (excluding properties held for

future development).

BUSINESS

— 87 —

The development of Agile Garden Guangzhou is undertaken by Panyu Agile Co., a joint

venture company which is 73% owned by Maxsino Investments Limited, our wholly-owned BVI

subsidiary, 25% owned by Mexon Holdings Limited, our wholly-owned BVI subsidiary, and 2%

owned by Nanhai Co., a PRC company.

Jiangbei Estate ( )

Jiangbei Estate is located at Caotang Village, South Avenue, Nancun Town, Panyu district,

Guangzhou. It is positioned beside the Pearl River, directly opposite from the Guangzhou University

City. The project occupies a total site area of approximately 624,701 sq.m. with an expected GFA

(including saleable and non-saleable) of approximately 791,638 sq.m., all of which are properties

held for future development.

The development of Jiangbei Estate is undertaken by Panyu Agile Co..

South Lagoon Guangzhou ( )

South Lagoon Guangzhou is located at No. 998 Tonghe Road, Baiyun District, Guangzhou,

about 20-minute ride to the central business district of Guangzhou. The project occupies a total site

area of approximately 195,007 sq.m. with an expected GFA (including saleable and non-saleable) of

approximately 270,711 sq.m. Situated in the First Class National Nature Preserve and at the foot of

Baiyun Mountain, South Lagoon Guangzhou includes a hilltop park of approximately 110,000 sq.m.

exclusively for the use of its residents.



155,197 sq.m. Such completed property developments commenced construction on 8 February 2001

and were completed on 30 November 2004. They comprised 1,128 residential units with a saleable


sq.m. and 1,123 carparks. As of 30 September 2005, 1,116 residential units with a saleable GFA of

approximately 142,778 sq.m. and 100 carparks had been sold, with a saleable GFA of approximately

4,487 sq.m. remaining for sale.

BUSINESS

— 88 —




December 2004 and are expected to complete in December 2006. They are expected to comprise 645

residential units with a saleable GFA of approximately 103,934 sq.m. and 435 carparks.





costs and capitalized finance costs) incurred for South Lagoon Guangzhou were approximately


required to complete the development of South Lagoon Guangzhou (excluding properties held for

future development).

Development of South Lagoon Guangzhou is undertaken by Guangzhou Agile Co., a

cooperative joint venture company which is owned by Hefty Wealth Group Limited, our wholly-

owned subsidiary, and Guangzhou Tonghe Real Estate Development Ltd. (‘‘Guangzhou Tonghe’’), a

PRC company. Hefty Wealth Group Limited agreed to contribute the unpaid registered capital in

cash which is required to be fully paid by June 2006. Guangzhou Tonghe contributed land use rights

for the property with a site area of 293,082 sq.m.

Under its amended joint venture agreement and articles of association, Guangzhou Agile Co.

will pay a total amount of RMB67,701,400 to Guangzhou Tonghe which has been fully paid.

Following such payment, Guangzhou Tonghe will no longer participate in the profit distribution of

Guangzhou Agile Co. The board of directors of Guangzhou Agile Co. consists of five directors with

three directors appointed by Hefty Wealth Group Limited and two directors appointed by Guangzhou

Tonghe.

We have a parcel of land with a total site area of 110,000 sq.m. which is designated for

landscaping or greenery purpose and we have no plans to apply for a change in the land use

designation in the near future. We have developed the land to a hilltop park for the exclusive use of

the South Lagoon Guangzhou residents.

BUSINESS

— 89 —

Royal Hillside Villa ( )

Royal Hillside Villa is located in Baiyun District of Guangzhou, adjacent to South Lagoon

Guangzhou. The project occupies a site area of approximately 122,742 sq.m. with an estimated GFA

(including saleable and non-saleable) of approximately 198,940 sq.m.

As of 30 September 2005, there was no completed property developments at Royal Hillside

Villa.



approximately 34,891 sq.m. Such properties under development commenced construction on

20 February 2005 and are expected to complete in December 2005. They are expected to

comprise 138 residential units with a saleable GFA of approximately 28,827 sq.m. and 33 retail

shops with a saleable GFA of approximately 3,304 sq.m.





costs and capitalized finance costs) incurred for Royal Hillside Villa were approximately RMB136.8


complete the development of Royal Hillside Villa (excluding properties held for future

development).

Development of Royal Hillside Villa is undertaken by Guangzhou Agile Co. and Baiyun Agile

Co. Baiyun Agile Co. is a cooperative joint venture company which is owned by Pomaine

International Limited and Guangdong Lingnan Economic Development Ltd. (‘‘Guangdong Lingnan’’),

a PRC company. Pomaine International Limited agreed to contribute the unpaid registered capital in

cash which is required to be fully paid by June 2006. Guangdong Lingnan contributed land use

rights for the property with a site area of 51,585 sq.m.

Under its joint venture agreement and articles of association. Baiyun Agile Co. shall pay a

fixed amount of RMB15,470,000 to Guangdong Lingnan within 24 months after the issuance of its

business license, which has already been paid. After such payment, Guangdong Lingnan shall no

BUSINESS

— 90 —

longer participate in the profit distribution of Baiyun Agile Co. The board of directors of Baiyun

Agile Co. shall consist of three directors with two directors appointed by Pomaine International

Limited and one director appointed by Guangdong Lingnan.

Huadu Grand Garden ( )

Huadu Grand Garden is located at No. 32 Phoenix Road, Huadu District, Guangzhou, close to

the municipal government and Ma’an Mountain Nature Park. The property occupies a total site area

of approximately 45,876 sq.m. with a GFA (including saleable and non-saleable) of approximately

99,607 sq.m. It is situated approximately 10 kilometers from the new Guangzhou Baiyun

International Airport.



99,607 sq.m. Such completed property developments commenced construction on 18 June 2002 and

were completed on 25 November 2003. They comprised 793 residential units with a saleable GFA of


315 carparks. As of 30 September 2005, 793 residential units with a saleable GFA of approximately

95,880 sq.m., 24 retail shops with a saleable GFA of approximately 1,860 sq.m. and 253 carparks

had been sold.


development at Huadu Grand Garden.


costs and capitalized finance costs) incurred for Huadu Grand Garden were approximately

RMB260.0 million.

The development of Huadu Grand Garden is undertaken by Huadu Agile Co., a joint venture

company which is 98% owned by Chieffield Global Limited, our wholly-owned BVI subsidiary and

2% owned by Nanhai Co., a PRC company.

BUSINESS

— 91 —

Huadu Flower Paris ( )

Huadu Flower Paris is located at No. 32 Phoenix Road, Huadu District, Guangzhou, connecting

to Huadu Grand Garden. The project occupies a total site area of approximately 157,420 sq.m. with

an expected GFA (including saleable and non-saleable) of approximately 207,690 sq.m. It is situated

approximately 10 kilometers from the new Guangzhou Baiyun International Airport.



129,644 sq.m. Such completed property developments commenced construction on 1 February 2004

and were completed on 25 March 2005. They comprised 779 residential units with a saleable GFA of


158 carparks. As of 30 September 2005, 569 residential units with a saleable GFA of approximately

85,126 sq.m. had been sold, with a saleable GFA of approximately 38,127 sq.m. remaining for sale.




March 2005 and are expected to complete in June 2006. They are expected to comprise 523



As of 30 September 2005, there were no properties held for future development at Huadu

Flower Paris.


costs and capitalized finance costs) incurred for Huadu Flower Paris were approximately RMB329.8


complete the development of Huadu Flower Paris.

The development of Huadu Flower Paris is undertaken by Huadu Agile Co.

BUSINESS

— 92 —

Huadu Majestic Garden ( )

Huadu Majestic Garden is located in the center of Huadu District of Guangzhou, in close

proximity to Huadu Culture Square. The project occupies a total site area of approximately 154,081

sq.m. with an expected GFA (including saleable and non-saleable) of approximately 219,112 sq.m.

As of 30 September 2005, there was no completed property development at Huadu Majestic

Garden.



approximately 38,536 sq.m. Such properties under development commenced construction on 18 July

2005 and are expected to complete in December 2005. They are expected to comprise 180 residential

units with a saleable GFA of approximately 36,435 sq.m.




Development of Huadu Majestic Garden is undertaken by Huadu Agile Co.

IN THE CITY OF FOSHAN

Nanhai Majestic Garden ( )

Nanhai Majestic Garden is located on Suiyan Road, Nanhai District, Foshan, about a 5-minute

ride to Fangcun Station on Guangzhou No. 1 Subway Line. Fangcun Station is near the center of

Guangzhou. The project occupies a site area of approximately 601,229 sq.m. with a GFA (including

saleable and non-saleable) of approximately 834,916 sq.m. The project is positioned at the juncture

of Guangzhou and Foshan, it is therefore well-positioned to appeal to purchasers from both markets.




and were completed by 30 June 2005. They comprised 2,458 residential units with a saleable GFA of


and 996 carparks. As of 30 September 2005, 2,391 residential units with a saleable GFA of

BUSINESS

— 93 —


and 381 carparks had been sold, with a saleable GFA of approximately 20,497 sq.m. remaining for

sale.




October 2004 and are expected to complete in December 2006. They are expected to comprise 1,334







costs and capitalized finance costs) incurred for Nanhai Majestic Garden were approximately

RMB1,095.7 million. We estimate that an additional amount of approximately RMB111.8 million is

required to complete the development of Nanhai Majestic Garden (excluding properties held for

future developments). Development of Nanhai Majestic Garden is undertaken by Nanhai Agile Co.,

our wholly-owned project company.

Nanhai Majestic Metropolis ( )

Nanhai Majestic Metropolis is located on Suiyan Road, Nanhai District, Foshan, connecting to

our Nanhai Majestic Garden. The project occupies a site area of approximately 48,949 sq.m. with an

expected GFA (including saleable and non-saleable) of approximately 61,673 sq.m. It benefits from

convenient transportations to Guangzhou and Foshan.

As of 30 September 2005, there was no completed property development at Nanhai Majestic

Metropolis.

BUSINESS

— 94 —




November 2004 and are expected to be completed in December 2005. They are expected to comprise

406 residential units with a saleable GFA of approximately 18,577 sq.m. and 234 retail shops with a


As of 30 September 2005, there were no properties held for future development at Nanhai

Majestic Metropolis.


costs and capitalized finance costs) incurred for Nanhai Majestic Metropolis were approximately


required to complete the development of Nanhai Majestic Metropolis. Development of Nanhai

Majestic Metropolis is undertaken by Nanhai Agile Co.

PROPERTY DEVELOPMENT

We engage primarily in the development and sale of high quality private residential properties

in Guangdong Province. Currently, all of our property development projects are located in this

region. In the future we may consider pursuing strategic business opportunities in other fast growing

Chinese cities or regions, such as Hainan Province and Changsha City, Hunan Province.

Qualifications of property developers

Real estate developers in the PRC must obtain a formal qualification certificate in order to

carry out property development activities in the PRC. According to the Provisions on Administration

of Qualification Certificates of Real Estate Developers promulgated by PRC Ministry of

Construction, newly established developers must first apply for a temporary qualification

certificate, which may be renewed for a maximum of two additional one-year periods. Entities

engaged in property management or interior decoration must also obtain qualification certificates

before commencing their business activities according to the Measures on Administration of

Qualification Certificates of Property Management Enterprises and the Provisions on Administration

of Qualification Certificates of Construction Enterprises promulgated by PRC Ministry of

Construction. All qualification certificates are subject to renewal on an annual basis. In

determining whether to renew a qualification certificate, the local authority evaluates the various

aspects of the real estate developers’ business, including its registered capital, property development

investments, history of property development, quality of property construction, the expertise of its

management, as well as whether the real estate developer has any illegal or inappropriate operations.

As of the Latest Practicable Date, each of our project companies has obtained or renewed, and is in

possession of, a valid formal qualification certificate. See ‘‘Summary of PRC Laws Relating to the

Property Sector — II. Qualifications of a Real Estate Developer’’ in Appendix VI to this prospectus.

Project management

We have established various centralized departments to oversee and control the major steps of

all our developments including project identification, project planning and design and budget

control. The centralized departments include the President’s Office, the Administrative Center, the

Marketing Center, the Finance Center, the Real Estate Management Center and the Property

BUSINESS

— 95 —

Management Center. Individual project companies have been formed to manage the day-to-day

operations of the projects, including sales, engineering, property management and supervision of

daily financial and administrative work.

The diagram below summarizes the different stages in the development of a property:

Land acquisition

— site evaluation/identification

— market analysis— feasibility study— acquiring land

Project planning andpreliminary work

— in-depth marketanalysis

— productpositioning

— develop plandesign

Design

— schematic design— structural design— construction

design— drawings— landscape design— interior design— property

managementdesign

Construction

— contractorselection

— procurement ofsupplies

— constructionsupervision

— completioninspection

Pre-sales and sales*

— marketing toexisting andpotentialcustomers

— pre-sale permitapplication

— sales and salesmanagement

— delivery ofproperty

After-sales services

— mortgage andregistrationassistance

— propertymanagement

— customer services— customer functions

and surveys— statistical analysis— customer database

Approval Process

3 months 2 months 8-24 months afterwards

* Pre-sales typically commence several months after the beginning of construction and complete within one or two

months after the end of construction.

Site selection and product positioning

We place a strong emphasis on the site selection and consider it fundamental to the success of

a property development. Our major site selection criteria include:

. development plans (of the government) for the relevant site;

. accessibility of the site and available infrastructure support;

. purchaser demand for properties in that area;

. competition from other developments in the locality;

. surrounding environment and convenience of the site (such as natural parks, greenery,

schools, rivers and commercial facilities); and

. cost, investment and financial return ratios of the potential developments.

Following site selection, our Planning and Design Department determines the products based on

their analysis of the purchasing power and preferences of our target customers to better match the

demand of our anticipated customers.

Land acquisition

Prior to the introduction by the PRC Government of regulations requiring that land use rights

for property development be sold by tender, auction or listing-for-sale, we obtained most of our land

use rights through purchase arrangements or co-operative arrangements with local governments or

original grantees of land use rights.

BUSINESS

— 96 —

The PRC Rules Regarding the Grant of State-Owned Land Use Rights by Way of Tender,

Auction and Listing-for-sale ( ) issued by the Ministry of Land

and Resources provide that, from 1 July 2002, land use rights for the purposes of commercial use,

tourism, entertainment and commodity residential property development in the PRC may be granted

by the government only through public tender, auction or listing-for-sale. Where land-use rights are

granted by way of a tender, an evaluation committee consisting of not fewer than five members

(including a representative of the grantor and other experts) will consider and select the tenders that

have been submitted. When deciding whom to grant land use rights, the relevant authorities will

consider not only the tender price, but also the credit history and qualifications of the tender and its

tender proposal. Where land-use rights are granted by way of an auction, a public auction will be

held by the relevant local land bureau and the land-use rights are granted to the highest bidder. We

believe these measures will result in a more transparent land grant process, which will enable

developers to compete more effectively. Under current regulations, grantees of land use rights are

generally allowed to dispose of the land use rights granted to them in secondary markets, except that

if a transferor is a state-owned enterprise or a collectively-owned enterprise or the land use right is

obtained by way of allocation. In these latter cases, such land will be transferred through public

tenders, auction or listing-for-sale. We will continue to obtain land use rights through transfers from

third parties or through cooperative arrangements with third parties in the secondary markets. The

availability of privately held land will, however, remain limited and subject to uncertainties.

Financing of property developments

We have three main sources of funding for our property developments: internal funds,

borrowings from banks and proceeds from sales and pre-sales. Our financing methods vary from

project to project. As of 30 June 2005, our outstanding borrowings from banks amounted to

RMB1,361.2 million. For information relating to the financing of our properties under development

and properties held for future development, see ‘‘Future Plans and Use of Proceeds.’’

On 5 June 2003, the PBOC published the Notice on Further Strengthening the Administration

of Real Estate Loans ( ). This notice prohibits

commercial banks from advancing loans to fund the payment of land premiums. In addition, the

Guangzhou municipal government indicated in 2001 that it intended to abolish the installment

payment method in connection with the transfer of state-owned land use rights after 31 December

2003. As a result, real estate developers may only use their own funds to pay for land premium and

real estate developers in Guangzhou may be required to make a lump sum payment for the land

premium within a specified period after the acquisition. At the time the PBOC issued the notice, we

had entered into land acquisition agreements with respect to all the land of our 18 projects and had

paid the majority of the consideration for the acquisitions.

Prior to the publication of the notice, we had financed our payments of land premium through a

combination of borrowings from banks and proceeds from the sales and pre-sales of properties.

Following the publication of the notice, all of our payments of land premium have been funded by

proceeds from the sales and pre-sales of properties, and none of our outstanding bank borrowings

has been used to pay any land premium. We plan to use proceeds from the sales and pre-sales of

properties and internal funds to finance our future payments of land premium.

BUSINESS

— 97 —

Project design work

The project design work for our property developments is typically conducted by reputable

domestic or overseas architectural and interior design firms under contract which are assisted by our

internal design team, which plan the architectural, landscape and interior designs of the relevant

property development in accordance with our requirements.

In general, we will consider:

. surrounding environment or neighborhood of the site where the relevant property

development is to be undertaken;

. relevant site area;

. advice provided by professional advisors including architects and planning experts; and

. the proposed type of residential development, in determining the design (including the

number of buildings and the levels in each building) of a particular property development.

Our Real Estate Development Center is responsible for overseeing project design and interior

design of our property developments. The Real Estate Development Center takes part in the selection

of design firms and works to ensure that the project designs are completed on time. In selecting

design firms, we consider the reputation of the design firms in terms of reliability and quality, the

price quoted, the reference, and the design proposed. Design contractors are typically selected

through a tender process for each property development concerned. The Real Estate Development

Center constantly monitors the progress and quality of the design teams to ensure they meet the

required standards.

Construction work

We generally contract out our construction work to independent construction companies. The

construction contractors are selected by our Real Estate Development Center taking into account the

reputation of the contractors, the prices they quote and references. We generally contracted with

reputable construction companies, including Zhongtian Construction Group and Hong Run

Construction Group Co. Ltd. The contractors are typically selected through a tender process for

each property development concerned. The quality and timeliness of the construction is usually

warranted by contract. In the event of delay or poor quality of work, the construction contractor may

be required to pay a penalty. Our project company monitors the cost control closely during the

construction. We have had disputes with some of our construction contractors in the past. See ‘‘—

Legal Proceedings.’’ In connection with the development of Majestic Garden, we experienced a two-

month delay of the completion of construction in 2000, as Taixing First Construction Company, our

independent construction contractor, suffered financial difficulties. We have not incurred any

additional costs in significant amounts as a result of our independent contractors’ financial or other

difficulties.


30 June 2005, payments to our single largest construction contractor accounted for approximately

12.6%, 11.7%, 13.1% and 10.9%, respectively, of our total payment under our construction contracts.

For the same periods, payments to our five largest construction contractors accounted for

BUSINESS

— 98 —

approximately 30.5%, 24.6%, 28.9% and 22.0%, respectively, of our total payment under

construction contracts. None of the directors, their associates or our shareholders holding more

than 5% of our issued share capital has any interest in the five largest suppliers.

The construction contracts contain warranties from the construction companies in respect of

quality and timely completion of the construction projects. We require construction companies to

comply with PRC laws and regulations relating to the quality of construction as well as our own

standards and specifications. The contractors are also subject to our quality control procedures,

including appointment of internal on-site quality control engineers, examination of materials and

supplies, on-site inspection and production of progress reports. Construction payments are

determined primarily on the basis of the labor and material costs and fitting requirements, and

are adjustable under the construction contract. In the event of delay in construction or unsatisfactory

quality of workmanship, we may require the construction companies to pay a penalty or provide

other remedies.

Quality control

We place a strong emphasis on quality control to ensure that the quality of our properties and

services complies with relevant regulations and meets market standards. There are quality control

procedures in place in our different functional departments as well as in each project company.

We generally contract with reputable design and construction companies and material suppliers

to ensure the quality of sub-contracted work. Internal guidelines have been established and are

strictly enforced to ensure control over documentation, record-keeping, remedial actions, preventive

actions, management control, construction standards, staff quality, recruitment standards, staff

training, construction supervision, supervisory inspection, information exchange and data analysis.

We provide our customers with a warranty for the structure and certain fittings and facilities of

our property developments in accordance with the relevant regulations.

Pre-sales

Upon satisfaction of certain requirements set forth in the relevant laws and regulations as

discussed below, we typically conduct pre-sale of our property units prior to the completion of a

project or a project phase. Under the Law of the Administration of Urban Real Estate of the PRC

and the Administrative Measures governing the Pre-sale of Urban Real Estate, as amended in 2001

and 2004, (which are generally applicable in the PRC, including Guangdong Province), we must

comply with the following conditions before pre-sales of a particular property can commence:

. the land premium must have been fully paid and the relevant land use right certificates

have been obtained;

. the construction works planning permit and the construction project building permit have

been obtained;

. the funds contributed to the development of the property developments where property

units are pre-sold may not be less than 25% of the total amount invested in the project

and the progress and the expected completion date and delivery date of the construction

work have been confirmed; and

. pre-sale permits must have been obtained from the county-level construction bureaus.

BUSINESS

— 99 —

According to the Administration of Pre-sale of Commodity Premises Regulations of Guangdong

Province and a notice issued by Guangdong provincial construction bureau on 2 January 2001, we

must fulfill the following conditions, in addition to the four conditions mentioned above, before

obtaining a pre-sale permit:

. a business license and a real property development qualification certificate have been

obtained;

. the construction quality and safety monitoring procedures have been performed;

. the main structural construction must have been completed in respect of properties of not

more than seven stories, and at least two-thirds of the main structural construction must

have been completed in respect of properties of more than seven stories;

. a special property pre-sale account has been opened with a commercial bank in the place

where the project is located; and

. the land use rights with respect to the properties in the project are free from third party

rights.

A portion of the proceeds from the pre-sales of our properties is required to be deposited into special

accounts. Before the completion of the pre-sold properties, the proceeds deposited in the special

accounts must only be used for the restricted purposes of purchasing construction materials,

equipment, making interim construction payments and paying taxes, with the prior approval of the

relevant local authorities. If we do not comply with these requirements, the qualification certificates

held by our project companies may be revoked and we may be subject to a penalty amounting to

10%–20% of the used portion of the deposited proceeds that have been used in violation of these

regulations. These regulations are supplemented by similar regulations governing pre-sale of

properties promulgated by the cities of Guangzhou, Zhongshan and Foshan. The local governments

of Guangzhou City and Foshan City require our project companies maintain 5% to 15% of their pre-

sale proceeds in the special accounts as guarantee deposits for construction of related properties.

There are no requirements to such effect in Zhongshan City. As of 31 December 2002, 2003 and

2004 and 30 June 2005, our total deposited proceeds from pre-sales were approximately RMB29.8

million, RMB15.0 million, RMB69.8 million and RMB63.2 million, respectively. See ‘‘Summary of

PRC Laws Relating to the Property Sector — V. Sale of Commodity Buildings’’ in Appendix VI to

this prospectus for further information on regulations that relate to pre-sales.

As of the Latest Practical Date, we had complied, in all material aspects, with relevant laws

and regulations applicable to the pre-sales of properties.

Sales and marketing

Our principal customers are individual purchasers of residential properties from the PRC. We

primarily target middle and upper-middle class purchasers, such as white collar workers, middle-

level and senior-level managers and entrepreneurs. None of the directors, their associates nor any of

our shareholders holding more than 5% of our issued capital has any interest in the five largest

customers of the Group or any of the Company’s subsidiaries.

Our sales and marketing functions are delegated in part to our subsidiaries. We have also

established a Marketing Center to supervise, manage and coordinate such subsidiaries. As of 30 June

2005, our sales and marketing force comprised over 238 employees, all of whom receive regular

BUSINESS

— 100 —

training. The sales and marketing staff cooperate closely in order to determine appropriate

advertising and sales plans for a particular property development as well as plan and organize

efficient and orderly on-site sales procedures.

We adopt a variety of measures to reach potential customers, including advertising through

traditional media such as television and newspaper as well as sponsoring performances and holding

entertainment activities for the public. Our property management subsidiaries also provide

professional property consulting advice and extensive after-sales services, such as rental agency,

security management, maintenance and landscaping services, to our purchasers. We also issue to our

customers The Agile Property Club Card, which offers cardholders discounts at various retailers,

supermarkets and restaurants in various cities. We believe that these measures increase the number

of referrals by our existing customers.

Payment arrangements

Our customers, including those purchasing pre-sold properties, can choose between making a

single lump-sum payment or arrange for mortgage facilities with banks. We typically require all

purchasers pay a deposit between RMB10,000 and RMB50,000 when executing the purchase

contracts. If purchasers choose to pay a lump-sum payment, the remaining balance of the purchase

price must generally be made no later than three months after the execution of the purchase

contracts. If the purchasers choose to pay through mortgage facilities provided by banks, under

current PRC laws and regulations, they may obtain mortgages up to a maximum of 80% of the

purchase price with a repayment period of up to 30 years. These purchasers are generally required to

pay up the remaining balance of that portion, from a minimum of 20%, of the purchase price which

is not covered by the mortgage payments prior to the disbursement of the mortgage payment from

mortgagee banks. We generally receive the mortgage payments from mortgagee banks within one

and half months after the execution of the purchase contracts. The payment terms of sales and pre-

sales of properties are substantially identical.

In accordance with market practice, we provide guarantees to banks in respect with the

mortgages offered to our customers. These guarantees will be released upon the earlier of (i) the

issuance of the real estate ownership certificate which are generally available within one to two

years after we deliver the relevant property to our customers; and (ii) the settlement of mortgage

loans between the mortgage banks and the purchasers of our properties. In line with industry

practice, we do not conduct independent credit checks on our customers but rely on the credit checks

conducted by the mortgagee banks. As of 31 December 2002, 2003 and 2004 and 30 June 2005, our

outstanding guarantees over the mortgage loans of our customers amounted to RMB726.8 million,

RMB1,741.6 million, RMB2,575.9 million and RMB3,687.0 million, respectively. For the three years

ended 31 December 2002, 2003 and 2004 and the six months ended 30 June 2005, the default

amount for which we were held liable as guarantor for our customers was approximately RMB0.4

million, RMB10.3 million, RMB10.1 million and RMB2.7 million, respectively. These defaults have

not had a material adverse effect on our financial condition or results of operations. See ‘‘Risk

Factors — Risk Relating to Our Business — We guarantee the mortgages provided to our purchasers

and consequently are liable to the mortgagee banks if our purchasers default on their mortgage

payments.’’

PROPERTY MANAGEMENT

We provide post-sales property management and post-sales service to the residents of each of

the projects we develop through our four wholly-owned property management subsidiaries,

Zhongshan Property Management Co., Guangzhou Property Management Co., Huadu Property

BUSINESS

— 101 —

Management Co., and Nanhai Property Management Co. In 2000, Zhongshan Agile Property

Management & Service achieved accreditation to the BSI-ISO9002 international quality system. Our

property management subsidiaries also provide services to certain projects that were not injected to

the Group in the Reorganization. We intend to develop a reputation for providing comprehensive

quality post-sales property management and post-sales services to purchasers of our properties,

including services such as rental agency, security management, maintenance, operation of clubhouse,

gardening and landscaping and other customer services. Under PRC law, the owners association of a

residential community has the right to change property management company, pursuant to certain

procedures. See ‘‘Risk Factors — Risk Relating to Our Business — Our turnover from property

management could be adversely affected if owners of the projects that we have developed elect to

discontinue our engagement as the provider of property management services.’’

Our property management companies generally enter into property management agreements

with the owners of properties. The property management contract sets forth the scope and the quality

requirements of the services provided by our property management companies. We are responsible

for establishing the property management procedures, initiating penalties against owners of the

properties and others who use the land in a manner that violates the relevant laws, regulations or

procedures, and preparing maintenance and renovation plans with respect to the properties and

public facilities. We are not allowed to assign the management responsibilities to a third party. The

property management contract also sets up the payment arrangements of management fees between

the owners of properties and us and we cannot increase the management fees without the prior

consent of the owners of the properties.

INTERIOR DECORATION

Fashion Decoration Co., our wholly-owned subsidiary, was established in March 2000. It

achieved accreditation to the BSI-ISO9001 international quality system in September 2005. As of 30

September 2005, its factories occupied a site area of approximately 27,397.2 sq.m. Fashion

Decoration Co. provides decoration services for the property units to be delivered to the customers

of our project companies as well as the project companies that were not injected to the Group in the

Reorganization. We plan for it to provide decoration services exclusively for our own projects in the

future.

PROPERTY LEASING SERVICES

We lease properties when we believe that the economic benefits of leasing are likely to exceed

that of selling. Occasionally, we lease properties until we sell them when we expect the sale of the

property development will take a considerable period of time. Most of our lease properties are

commercial spaces. As of 30 September 2005, the aggregate GFA of the properties leased to third

parties was approximately 30,927.7 sq.m.

PROPERTIES USED BY US

As of 30 September 2005, we used factory space at Fashion Decoration Co., with a total GFA

of approximately 16,290.0 sq.m. We rented properties from independent third parties with a total

floor area of approximately 34,833.4 sq.m. We also rented properties from our related parties with a

total floor area of approximately 4,044.2 sq.m. The rented properties are primarily used as

dormitories for our employees.

BUSINESS

— 102 —

COMPETITION

The property industry in the PRC is highly competitive. Our existing and potential competitors

include major domestic state-owned and private property developers in the PRC, as well as property

developers from Hong Kong and elsewhere in Asia and other parts of the world. A number of our

competitors have greater financial, marketing, land and other resources than are available to us, and

greater economies of scale, broader name recognition and a longer track record and more established

relationships in certain markets. In Zhongshan and Foshan, our major competitors include China

Vanke Co. Ltd., Country Garden Property Development Co. Ltd. and China Overseas Property Group

Co., Ltd. In Guangzhou, our major competitors include, among others, Hopson Development

Holdings Ltd., Guangzhou R&F Property Co., Ltd., China Overseas Property Group Co., Ltd. and

Clifford Group. See ‘‘Risk Factors — Risks Relating to Real Estate Development in the PRC —

Increasing competition in the PRC, particularly in Guangdong Province, may adversely affect our

business and financial condition.’’

INTELLECTUAL PROPERTY RIGHTS

Zhongshan Group Co. has registered with the PRC Trademark Office our trademarks of

‘‘Agile,‘‘ ‘‘ ’’ and variations of them under various categories. Guangdong Province Industrial

& Commercial Administration Bureau has recognized ‘‘ ’’ as a ‘‘famous trademark in

Guangdong Province.’’ As Zhongshan Group Co. was not injected into our Group in the

Reorganization, it has entered into transfer agreements to transfer its trademarks to us.

Applications for such transfer have been submitted to the local trademark office pending for its

approval. Jingtian, our PRC counsel, has advised us that there is no material legal impediment to

such transfer. We have also registered the domain name of www.agile.com.cn. In addition, our

project companies have registered the trademarks of the respective project names under various

categories and registered certain domain names associated with our project names. See ‘‘Intellectual

property rights’’ in Appendix VII to this prospectus.

In the PRC, the registration and protection of a company’s corporate name is regional.

Although we have registered our corporate name ‘‘Agile’’ in Guangdong Province, we cannot prevent

others from registering the same corporate name in other administrative regions. If a company first

registers ‘‘Agile’’ as its corporate name in an administrative region other than Guangdong Province,

we will have to adopt another corporate name if we plan to enter that market.

INSURANCE

As is consistent with what we believe to be customary practice in the property development

industry in China, we do not maintain insurance coverage for any of our properties, whether they are

under construction or have been completed and are pending delivery. There are no mandatory

requirements to maintain insurance coverage in the PRC in respect of our property development

operations. Since 1 January 2002, we have not suffered any losses or damages or incurred any

liabilities relating to our properties that had a material adverse effect on our business.

Our property management subsidiaries maintain management liability insurance coverage in

connection with their business operations. We maintain insurance coverage for certain clubhouses. In

addition, we also purchase employee-related insurances, such as pension insurance, for our

employees.

BUSINESS

— 103 —

ENVIRONMENTAL AND SAFETY MATTERS

We are subject to PRC national environmental laws and regulations as well as environmental

regulations promulgated by local governments. These include regulations on air pollution, noise

emissions and water and waste discharge. Each property developed by us is required to undergo

environmental assessments and an environmental impact assessment document is required to be

submitted to the relevant government authorities for approval before commencement of property

development. Although we have not submitted the environmental impact assessment documents with

the local authorities with respect to some of our projects, we have nonetheless obtained the relevant

government approvals to commence the development of these projects and such failure to submit the

environmental impact assessment documents has not resulted in any, nor do we believe that it would

result in any, material impact on these projects. We have submitted the environmental impact

assessment documents for some of these projects and are currently preparing such documents for the

remaining projects. As of June 30, 2005, there was no penalty payable in connection with such

environmental non-compliance. On the completion of each property development, the relevant

government authorities inspect the site to ensure that applicable environmental standards have been

complied with, and the resulting report is then presented together with other specified documents to

the local construction administration authorities for their record. We believe that our operation is in

compliance with currently applicable national and local environmental and safety regulations in all

material respects. See ‘‘Risk Factors — Risks Relating to Our Business — Potential liability for

environmental problems could result in substantial costs.’’

LEGAL PROCEEDINGS

From time to time during the Relevant Periods, we had been involved in legal proceedings or

other disputes in the ordinary course of our business, which included primarily disputes or legal

actions between us and three construction companies for payment delays in connection with four

projects. We have made settlement payments in the aggregate amount of approximately RMB8.0

million to discharge these disputes and legal actions. We are not aware of any other material legal

proceedings, claims or disputes currently existing or pending against us. See ‘‘Risk Factors — Risks

Relating to Our Business — We may be involved in legal and other proceedings arising out of our

operations from time to time and may face significant liabilities as a result.’’

LICENSES, REGULATORY APPROVALS AND COMPLIANCE RECORD

As to the date hereof, except for failure to submit timely environmental impact assessment

documents with respect to certain projects, we are in compliance in all material respects with

relevant PRC legal requirements relating to the PRC property sector, including obtaining valid

business licenses and the relevant qualification certificates, such as real estate developer

qualification certificates, property management enterprise certificates and construction enterprise

qualification certificates. Jingtian, our PRC counsel, has advised us that other than the licenses and

certificates discussed above, no other approvals and certificates are required for our operations or

those of our PRC subsidiaries.

RELATIONSHIP WITH THE CONTROLLING SHAREHOLDER

Upon completion of the Global Offering, Top Coast, the trustee for the Chen Family Trust, in

which Chen Zhuo Lin, Chan Cheuk Yin, Luk Sin Fong, Fion, Chan Cheuk Hung, Chan Cheuk Hei

and Chan Cheuk Nam are the beneficiaries, will be interested in approximately 71.25% of the Shares

(assuming the Over-allotment Option is not exercised) and hence it will be the Controlling

Shareholder within the meaning of the Listing Rules. As at the Latest Practicable Date, apart from

BUSINESS

— 104 —

its shareholding interests in the Group, the Chen Family held the entire equity interest in Agile

Hotel and Agile Golf and Country Club. Agile Hotel is principally engaged in the business of hotel

ownership and management whilst Agile Golf and Country Club owns and operates the golf course

known as Agile Changjiang Golf Course in Changjiang Tourist Spot, Zhongshan City, Guangdong

Province, the PRC. The businesses of the entities in which the Chen Family is engaged are not in

direct or indirect competition with the business of the Group.

NON-COMPETITION UNDERTAKING

In order to eliminate existing, if any, and future competing business with the Group, on 23

November 2005, Chen Zhuo Lin, Chan Cheuk Yin, Luk Sin Fong, Fion, Chan Cheuk Hung, Chan

Cheuk Hei and Chan Cheuk Nam entered into a deed of non-competition with the Company pursuant

to which each of them confirm/undertake, inter alia, that:

(a) as at the date of the deed of non-competition, he/she did not engage or was not interested

in any entities which engaged in any business that is directly or indirectly in competition

with the business of the Group;

(b) he/she shall not and shall procure his/her associates not to either alone or jointly with

other person, firm or company, be engaged, interested, or otherwise involved, directly or

indirectly, in any business that is or likely to be in competition with the business of the

Group;

(c) in the event that he/she or his/her associates is/are given/identifies any opportunities to

engage in a business that is in competition with that of the Group, he/she or his/her

associates shall forthwith inform the Company of such opportunity and the Company has a

right within six months thereafter to request he/she or his/her associates to allow the

Group to take the opportunity and endeavour to assist the Group to obtain the opportunity;

(d) he/she shall not and shall procure his/her associates not to solicit or entice away from any

member of the Group any existing, future or potential clients of the Group; and

(e) he/she shall not and shall procure that his/her associates not to solicit or entice away from

any member of the Group any existing or potential employees of the Group or, in any

manner and through any means, employ such employees of the Group.

On the basis on the matters described in this section, the Company is satisfied that it is capable

of carrying on its business independently of its controlling shareholders and their associates.

BUSINESS

— 105 —

CONNECTED TRANSACTION

(A) Connected transactions under Rule 14A.31(2) of the Listing Rules which are exempted

from the reporting, announcement and independent shareholders’ approval requirements

(1) Appointment of Guangzhou Lu Hua Jian Company Limited ( )

as contractor for foundation laying, roadway surfacing and drainage work in respect of

the property project undertaken by Huadu Agile Co. (the ‘‘First Contractor

Arrangement’’)

On 18 June 2005, Huadu Agile Co. and Guangzhou Lu Hua Jian Construction Company

Limited entered into an agreement pursuant to which Guangzhou Lu Hua Jian Construction

Company Limited was appointed as a contractor for foundation laying, roadway surfacing and

drainage work in respect of the properties developed by Huadu Agile Co. The agreement will

be terminated upon completion of the contractor’s project and such project is expected to be

completed in June 2006.

The outstanding contract sum under the First Contractor Arrangement payable to

Guangzhou Lu Hua Jian Construction Company Limited will not exceed RMB1,000,000. The

proposed transaction amount has been determined with reference to the prevailing market rates

for foundation laying, roadway surfacing and drainage work.

Lu Mei Jing ( ) is interested as to 56% in Guangzhou Lu Hua Jian Construction

Company Limited and thus is the controlling shareholder of Guangzhou Lu Hua Jian

Construction Company Limited. Lu Mei Jing is a niece of Chan Cheuk Hung who is an

executive Director. Hence, Guangzhou Lu Hua Jian Construction Company Limited is a

connected person of the Company (as defined in the Listing Rules).

(2) Appointment of Zhongshan San Xiang Jing An Electrical Appliances Company Limited

( ) as contractor for the installation and repair of

water supply infrastructure in respect of the property project undertaken by Greenville

Co. (the ‘‘Second Contractor Arrangement’’)

On 2 June 2005, Greenville Co. and Zhongshan San Xiang Jing An Electrical Appliances

Company Limited entered into an agreement pursuant to which Zhongshan San Xiang Jing An

Electrical Appliances Company Limited was appointed as a contractor for the installation and

repair of water supply infrastructure in respect of La Nobleu and Region A09 of La Cite

Greenville ( ), which are parts of the property project carried out by Greenville

Co. The agreements will be terminated upon completion of the contractor’s project and such

project is expected to be completed in June 2006.

The outstanding contract sum under the Second Contractor Arrangement payable to

Zhongshan San Xiang Jing An Electrical Appliances Company Limited will not exceed

RMB1,000,000. The proposed transaction amount has been determined with reference to the

prevailing market rates for installation and repair of water supply infrastructure.

Zheng Wen Bo ( ) and Zheng Guan Ping ( ) hold 50% and 50%, respectively

in Zhongshan San Xiang Jing An Electrical Appliances Company Limited and thus are

controlling shareholders of Zhongshan San Xiang Jing An Electrical Appliances Company

BUSINESS

— 106 —

Limited. Zheng Wen Bo and Zheng Guan Ping are brothers-in-law of Chan Cheuk Yin who is

an executive Director. Hence, Zhongshan San Xiang Jing An Electrical Appliances Company

Limited is a connected person of the Company (as defined in the Listing Rules).

The Directors (including the independent non-executive Directors) are of the view that the

above transactions will be entered into and conducted in the ordinary and usual course of

business of the Group and on normal commercial terms which are fair and reasonable and in

the interests of the Group and the shareholders of the Company as a whole.

Since each of the percentage ratios (other than the profits ratio) under Chapter 14 of the

Listing Rules is less than 0.1%, the transactions in respect of the First Contractor Arrangement

and the Second Contractor Arrangement constitute connected transactions for the Company

under Rule 14A.31(2) of the Listing Rules which are exempted from the reporting,

announcement and independent shareholders’ approval requirements set out in Rules 14A. 45

to 14A.48 of the Listing Rules.

(B) Connected transactions under Rule 14A.32 of the Listing Rules which are exempted from

the independent shareholders’ approval requirement but are subject to the reporting and

announcement requirements

(3) Appointment of Zhongshan Dong Fang Mu Qiang Construction Company Limited

( ) as contractor for aluminum alloy window and door

installation in respect of the property project undertaken by members of the Group (the

‘‘Third Contractor Arrangement’’)

On 18 July 2005 and 1 April 2005, Zhongshan Dong Fang Mu Qiang Construction

Company Limited entered into two agreements with Greenville Co. and Majestic Garden Co.,

respectively, pursuant to which Zhongshan Dong Fang Mu Qiang Construction Company

Limited was appointed as a contractor for aluminum alloy window and door installation in

respect of Region A12 of La Cite Greenville ( ) and commercial and residential

complexes of Star Palace as part of the property projects carried out by the relevant members

of the Group. Each of the agreements will be terminated upon completion of the relevant

contractor’s project, the last of which will be completed in June 2006.

For the three years ended 31 December 2002, 2003 and 2004, contract sums paid to

Zhongshan Dong Fang Mu Qiang Construction Company Limited amounted to approximately

RMB2,870,000, RMB10,500,000 and RMB9,380,000, respectively.

The outstanding contract sum under the Third Contractor Arrangement payable to

Zhongshan Dong Fang Mu Qiang Construction Company Limited will be RMB3,000,000 which

will be payable in several installments in accordance with the progress of the contractor’s

project. The proposed transaction amount has been determined with reference to the prevailing

market rates for aluminum alloy window and door installation work.

Lu Jian Xin ( ) holds 89% interest in Zhongshan Dong Fang Mu Qiang Construction

Company Limited and thus is the controlling shareholder of Zhongshan Dong Fang Mu Qiang

Construction Company Limited. Lu Jian Xin is a brother of Luk Sin Fong, Fion who is an

executive Director. Hence, Zhongshan Dong Fang Mu Qiang Construction Company Limited is

a connected person of the Company (as defined in the Listing Rules).

BUSINESS

— 107 —

(4) Appointment of Zhongshan Jing Xing Industry and Trade Development Company Limited

( ) as contractor for the installation of electrical devices in

respect of the property project undertaken by Majestic Garden Co. (the ‘‘Fourth

Contractor Arrangement’’)

On 18 August 2005, Majestic Garden Co. and Zhongshan Jing Xing Industry and Trade

Development Company Limited entered into an agreement pursuant to which Zhongshan Jing

Xing Industry and Trade Development Company Limited was appointed as a contractor for the

installation of electrical devices in respect of commercial and residential area of The Riverside

as part of the property project carried out by Majestic Garden Co. The agreement will be

terminated upon completion of the contractor’s project and such project will be completed in

June 2006.

For the three years ended 31 December 2002, 2003 and 2004, contract sums paid to

Zhongshan Jing Xing Industry and Trade Development Company Limited amounted to

approximately RMB800,000, RMB11,020,000 and RMB9,280,000, respectively.

The outstanding contract sum under the Fourth Contractor Arrangement payable to

Zhongshan Jing Xing Industry and Trade Development Company Limited will be

RMB2,000,000 which will be payable in several installments in accordance with the progress

of the contractor’s project. The proposed transaction amount has been determined with

reference to the prevailing market rates for the installation of electrical devices in electricity

rooms.

Zheng Guan Ping holds 50% interest in Zhongshan Jing Xing Industry and Trade

Development Company Limited and thus is the controlling shareholder of Zhongshan Jing Xing

Industry and Trade Development Company Limited. Zheng Guan Ping is the brother-in-law of

Chan Cheuk Yin who is an executive Director. Hence, Zhongshan Jing Xing Industry and Trade

Development Company Limited is a connected person of the Company (as defined in the

Listing Rules).


Listing Rules is less than 2.5%, the transactions in respect of the Third Contractor Arrangement

and the Fourth Contractor Arrangement constitute connected transactions for the Company

under Rule 14A.3(1) of the Listing Rules which are exempted from the independent

shareholders’ approval requirement and are subject to the reporting and announcement

requirements.

The Directors (including the independent non-executive Directors) are of the opinion that

the above transactions have been entered into and conducted in the ordinary and usual course

of business of the Group, on normal commercial terms which are fair and reasonable and in the

interests of the Group and the shareholders of the Company as a whole.

Pursuant to Rule 14A.42(3) of the Listing Rules, we have applied to the Stock Exchange,

and the Stock Exchange has agreed, to grant a waiver to us from strict compliance with the

announcement requirement under Rule 14A.47 of the Listing Rules in connection with the

above transactions.

BUSINESS

— 108 —

(C) Continuing connected transactions under Rule 14A.33(3) of the Listing Rules which are

exempted from reporting, announcement and independent shareholders’ approval

requirements

(5) The leasing arrangement between Zheng Huiqiong ( ) as landlord and Majestic

Garden Co. as tenant (the ‘‘First Leasing Arrangement’’)

On 31 December 2004, Zheng Huiqiong and Majestic Garden Co. entered into an

agreement pursuant to which Zheng Huiqiong agreed to lease to Majestic Garden Co. the

property known as Units 301–701, 302–702, No. 7 Yue He Street, Yue Lai Road South,

Zhongshan City, Guangdong Province, the PRC with an aggregate area of approximately

1,470.2 sq.m. used as staff quarters with retrospective effect from 1 January 2005. The leasing

arrangement has a term of two years ending on 31 December 2006 with an annual rental of

RMB120,000.

For each of the three years ended 31 December 2002, 2003 and 2004, the rental paid to

Zheng Huiqiong amounted to approximately RMB120,000, RMB120,000 and RMB120,000,

respectively.

The proposed annual value of the above transactions will not exceed RMB120,000,

RMB120,000 and RMB120,000 for the three financial years ending 31 December 2005, 2006

and 2007, respectively (the ‘‘First Rental Caps’’). The First Rental Caps are determined with

reference to the prevailing market rent. CBRE, an independent property valuer, has confirmed

that the rental payable under the First Leasing Arrangement is comparable to the prevailing

market rate.

Zheng Huiqiong is the spouse of Chan Cheuk Yin, who is an executive Director, hence is

a connected person of the Company (as defined in the Listing Rules).

(6) The first leasing arrangement between Agile Golf and Country Club as landlord and

Greenville Co. as tenant (the ‘‘Second Leasing Arrangement’’)

On 30 June 2005, Agile Golf and Country Club and Greenville Co. entered into an

agreement pursuant to which Agile Golf and Country Club agreed to lease to Greenville Co.

the property known as B1/F. and portion of 1/F., Agile Changjiang Golf Course, La Cite

Greenville, Changjiang Tourist Spot, Zhongshan City, Guangdong Province, the PRC; B1/F,

Changjiang Golf Course, La Cite Greenville, Changjiang Tourist Spot, Zhongshan City,

Guangdong Province, the PRC; and No. 31 Aochang Road, Changjiang Village, Eastern

District, Zhongshan City, Guangdong Province, the PRC with an aggregate area of

approximately 1,403.6 sq.m. as office, staff canteen and quarters, respectively with the term

commenced on 1 July 2005 and ending on 31 December 2007 with an annual rental of

RMB70,512.

For each of the three years ended 31 December 2002, 2003 and 2004 and the first six

months of 2005, no rental was paid to Agile Golf and Country Club in respect of the Second

Leasing Arrangement as agreed between the parties.


RMB70,512 and RMB70,512 for the six months ending 31 December 2005 and the two

financial years ending 31 December 2006 and 2007, respectively (the ‘‘Second Rental Caps’’).

BUSINESS

— 109 —

The Second Rental Caps are determined with reference to the prevailing market rent. CBRE, an

independent property valuer, has confirmed that the rental payable under the Second Leasing

Arrangement is comparable to the prevailing market rate.

Agile Golf and Country Club is beneficially owned by as to 7.5% by Chan Cheuk Yin, as

to 5% by Chan Cheuk Hei, as to 42.5% by Luk Sin Fong, Fion and as to 45% by Chen Zhuo

Lin, each an executive Director. Hence, Agile Golf and Country Club is a connected person of

the Company (as defined in the Listing Rules).

(7) The leasing arrangement between Agile Golf and Country Club as landlord and

Greenville Branch of Zhongshan Property Management Co.

( ) as tenant (the ‘‘Third Leasing

Arrangement’’)

On 30 June 2005, Agile Golf and Country Club and the Greenville Branch of

Zhongshan Property Management Co. entered into an agreement under which Agile Golf and

Country Club agreed to lease to the Greenville Branch of Zhongshan Property Management Co.

No. 31 Aochang Road, Changjiang Village, Eastern District, Zhongshan City, Guangdong

Province, the PRC with an aggregate area of approximately 521.3 sq.m. used for staff quarters

from 1 July 2005 to 31 December 2007 at an annual rental of RMB18,768.


months of 2005, no rental was paid to Agile Golf and Country Club in respect of the Third




financial years ending 31 December 2006 and 2007, respectively (the ‘‘Third Rental Caps’’).

The Third Rental Caps are determined with reference to the prevailing market rent. CBRE, an

independent property valuer, has confirmed that the rental payable under the Third Leasing


Agile Golf and Country Club is beneficially owned as to 7.5% by Chan Cheuk Yin, as to

5% by Chan Cheuk Hei, as to 42.5% by Luk Sin Fong, Fion and as to 45% by Chen Zhuo Lin,

each an executive Director. Hence, Agile Golf and Country Club is a connected person of the

Company (as defined in the Listing Rules).

(8) The leasing arrangement between Agile Golf and Country Club as landlord and the La

Cite Greenville Branch of Zhongshan Property Management Co.

( ) as tenant (the ‘‘Fourth Leasing

Arrangement’’)

On 30 June 2005, Agile Golf and Country Club and the La Cite Greenville Branch of

Zhongshan Property Management Co. entered into an agreement under which Agile Golf and

Country Club agreed to lease to the La Cite Greenville Branch of Zhongshan Property

Management Co. No. 31 Aochang Road, Changjiang Village, Eastern District, Zhongshan City,

Guangdong Province, the PRC with an aggregate area of approximately 613.3 sq.m. used for

staff quarters from 1 July 2005 to 31 December 2007 at an annual rental of RMB22,080.

BUSINESS

— 110 —


months of 2005, no rental was paid to Agile Golf and Country Club in respect of the Fourth




financial years ending 31 December 2006 and 2007, respectively (the ‘‘Fourth Rental Caps’’).

The Fourth Rental Caps are determined with reference to the prevailing market rent. CBRE, an

independent property valuer, has confirmed that the rental payable under the Fourth Leasing






(9) The leasing arrangement between Luk Sin Fong, Fion and Chen Zhuo Lin as landlord and

Nga Koi Lok Development and Investment Company Limited as tenant (the ‘‘Fifth Leasing

Arrangement’’)

On 28 June 2005, Luk Sin Fong, Fion, Chen Zhuo Lin and Nga Koi Lok Development and

Investment Company Limited entered into an agreement under which Luk Sin Fong, Fion and

Chen Zhuo Lin agreed to lease to Nga Koi Lok Development and Investment Company

Limited, the property known as Shop Unit M, No. 57 Rua Da Bras Da Rosa, No. 57 RCM, Sto.

Antonio, Macau, with an aggregate area of approximately 35.75 sq.m. used for office with

exhibition centre from 1 July 2005 to 30 June 2006 at an annual rental of MOP96,000.

The Fifth Leasing Arrangement started on 1 July 2004. For the six months ended 31

December 2004 and the first six months of 2005, MOP48,000 and MOP48,000 were

respectively paid to Luk Sin Fong, Fion and Chen Zhuo Lin as rental.

The proposed annual value of the above transactions will not exceed MOP48,000,

MOP96,000 and MOP96,000 for the six months ending 31 December 2005 and the two

financial years ending 31 December 2006 and 2007, respectively (the ‘‘Fifth Rental Caps’’).

The Fifth Rental Caps are determined with reference to the prevailing market rent. CBRE, an

independent property valuer, has confirmed that the rental payable under the Fifth Leasing


Luk Sin Fong, Fion and Chen Zhuo Lin are executive Directors and hence are connected

persons of the Company (as defined in the Listing Rules).

(10) The security service arrangement between Agile Golf and Country Club and the

Greenville Branch of Zhongshan Property Management Co.

( ) (the ‘‘First Security Service

Arrangement’’)

On 31 August 2005, Agile Golf and Country Club and the Greenville Branch of

Zhongshan Property Management Co. entered into an agreement pursuant to which Agile Golf

and Country Club engages the Greenville Branch of Zhongshan Property Management Co. to

provide the security management service for its club premises for a term commencing on 1

September 2005 and ending on 31 December 2007.

BUSINESS

— 111 —

For each of the three years ended 31 December 2002, 2003 and 2004 and the first eight

months of 2005, no fee was paid to the Greenville Branch of Zhongshan Property Management

Co. in respect of the First Security Service Arrangement as agreed between the parties.


RMB132,000 and RMB132,000 for the four months ending 31 December 2005 and the two

financial years ending 31 December 2006 and 2007, respectively (the ‘‘First Security Service

Caps’’). The First Security Service Caps are determined with reference to the costs of

providing such service.





(11) The security service arrangement between Agile Hotel and Zhongshan Property

Management Co. (the ‘‘Second Security Service Arrangement’’)

On 31 August 2005, Agile Hotel and Zhongshan Property Management Co. entered into an

agreement pursuant to which Agile Hotel engages Zhongshan Property Management Co. to

provide the service of security guards for its club premises for a term commencing on 1

September 2005 and ending on 31 December 2007.


months of 2005, no fee was paid to Zhongshan Property Management Co. in respect of the

Second Security Service Arrangement as agreed between the parties.


RMB36,000 and RMB36,000 for the four months ending 31 December 2005 and the two

financial years ending 31 December 2006 and 2007, respectively (the ‘‘Second Security Service

Caps’’). The Second Security Service Caps are determined with reference to the costs of


Agile Hotel is owned as to 40% by Chan Cheuk Hung, who is an executive Director, as to

30% by Luk Yin Ping, who is the spouse of Chan Cheuk Hei, an executive Director, and as to

30% by Chan Siu Na, who is the spouse of Chan Cheuk Nam, an executive Director. Hence,

Agile Hotel is a connected person of the Company (as defined in the Listing Rules).


Listing Rules is less than 0.1%, the transactions in respect of the First Leasing Arrangement,

the Second Leasing Arrangement, the Third Leasing Arrangement, the Fourth Leasing

Arrangement, the Fifth Leasing Arrangement, the First Security Service Arrangement and the

Second Security Service Arrangement constitute continuing connected transactions for the

Company under Rule 14A.33(3)(a) of the Listing Rules which will be exempt from the

reporting, announcement and independent shareholders’ approval requirements set out in Rules

14A.45 to 14A.48 of the Listing Rules.

BUSINESS

— 112 —

(12) The administrative arrangement between Agile Golf and Country Club and Greenville Co.

(the ‘‘Administrative Service Arrangement’’)

On 31 August 2005, Greenville Co. agreed to provide administrative and staff services to

Agile Golf and Country Club for a term commencing on 1 September 2005 and ending on 31

December 2007.


months of 2005, no fee was paid to Greenville Co. in respect of the Administrative Service

Arrangement.


RMB1,440,000 and RMB1,440,000 for the four months ending 31 December 2005 and the two

financial years ending 31 December 2006 and 2007, respectively (the ‘‘Administrative Service

Caps’’). The Administrative Service Caps are determined with reference to the costs of




each an executive Director. Hence, Agile Golf and Country Club is therefore a connected

person of the Company (as defined in the Listing Rules).

Since the transactions in respect of the Administrative Service Arrangement are on a cost

basis, they are exempt from the reporting, announcement and independent shareholders’

approval requirement under Rule 14A.33(2) of the Listing Rules.

(D) Continuing connected transactions under Rule 14A.34 of the Listing Rules which are

exempted from the independent shareholders’ approval requirement but are subject to the

reporting and announcement requirements

(13) Provision of restaurant and hotel services by Agile Hotel to members of the Group (the

‘‘Hotel Services Arrangement’’)

On 1 September 2005, the Company and Agile Hotel entered into an agreement pursuant

to which Agile Hotel agreed to provide restaurant and hotel services to members of the Group

from time to time on normal commercial terms which are no less favorable than those available

to independent third parties. The agreement is for the period commencing on the date of the

Proposed Listing and ending on 31 December 2007.

The arrangement involves the provision of food and beverages and hotel accommodation

to staff members and business associates of the Group, including suppliers, contractors and

customers of the Group.

For each of the three years ended 31 December 2002, 2003 and 2004, fees paid to Agile

Hotel amounted to approximately RMB95,042, RMB245,794 and RMB622,961, respectively.

The proposed annual value of the above transactions will not exceed RMB1,500,000,

RMB500,000 and RMB500,000 for the three financial years ending 31 December 2005, 2006

and 2007, respectively (the ‘‘Hotel Caps’’). The Hotel Caps are determined with reference to

the historical transaction amounts. The proposed annual cap of RMB1,500,000 for the year

BUSINESS

— 113 —

ending 31 December 2005 was further adjusted with reference to the estimated expenses that

would be incurred for the provision of food, beverages and hotel accommodation to

professional parties in preparation for the Proposed Listing.

Agile Hotel is owned as to 40% by Chan Cheuk Hung, who is an executive Director, as to

30% by Luk Yin Ping, who is the spouse of Chan Cheuk Hei, an executive Director, and as to

30% by Chan Siu Na, who is the spouse of Chan Cheuk Nam, an executive Director. Hence,

Agile Hotel is therefore a connected person of the Company (as defined in the Listing Rules).

(14) Provision of golf facilities by Agile Golf and Country Club to members of the Group (the

‘‘Golf Services Arrangement’’)

On 1 September 2005, the Company and Agile Golf and Country Club entered into an

agreement pursuant to which Agile Golf and Country Club agreed to provide golf facilities to

members of the Group from time to time. The agreement is for the period commencing on the

date of the Proposed Listing and ending on 31 December 2007.

The arrangement involves the provision of golf facilities to staff members and business

associates of the Group, including suppliers, contractors and customers of the Group.

For each of the three years ended 31 December 2002, 2003 and 2004, fees paid to Agile

Golf and Country Club amounted to approximately RMB62,930, RMB127,154 and

RMB1,646,099, respectively.

The proposed annual value of the above transactions will not exceed RMB2,000,000,

RMB2,000,000, RMB2,000,000 for the three financial years ending 31 December 2005, 2006

and 2007, respectively (the ‘‘Golf Caps’’). The Golf Caps are determined with reference to the

historical transaction amounts and the anticipated increase in the transaction amounts in respect

of the Golf Services Arrangement after the listing.



each an executive Director. Hence Agile Golf and Country Club is a connected person of the



Listing Rules is less than 0.25%, the transactions in respect of the Hotel Services Arrangement

and the Golf Services Arrangement for the three years ending 31 December 2007 constitute

continuing connected transactions for the Company under Rule 14A.34 of the Listing Rules

which are exempted from the independent shareholders’ approval requirements but are subject

to the reporting and announcement requirements.

The Directors (including the independent non-executive Directors) are of the view that the

above transactions will be entered into and conducted in the ordinary and usual course of

business of the Group and on normal commercial terms which are fair and reasonable and in

the interests of the Group and the shareholders of the Company as a whole. The Directors are

also of the opinion that the Hotel Caps and the Golf Caps were arrived at after due and careful

consideration and are fair and reasonable.

BUSINESS

— 114 —

Pursuant to Rule 14A.42(3) of the Listing Rules, we have applied to the Stock Exchange,

and the Stock Exchange has agreed, to grant a waiver to us from strict compliance with the

announcement requirement under Rule 14A.47 of the Listing Rules in connection with the

above connected transactions. We will comply with the provisions in Rules 14A.35(1),

14A.35(2), 14A.36, 14A.37, 14A.38, 14A.39 and 14A.40 of the Listing Rules as amended from

time to time governing these connected transactions.

Confirmation from the Sponsor

Based on the above, the Sponsor is of the view that the terms of the connected transactions set

forth in paragraphs B and D above, for which a waiver from strict compliance with the Listing Rules

is required from the Hong Kong Stock Exchange, are in the ordinary and usual course of the

Company’s business, on normal commercial terms, are fair and reasonable and in the interests of the

Company’s shareholders as a whole.

BUSINESS

— 115 —

MANAGEMENT

Board of Directors

The Board of Directors consists of nine Directors, six of whom are executive directors and

founders of the Group, and three of whom are independent non-executive Directors. Chen Zhuo Lin,

Chan Cheuk Yin, Chan Cheuk Hung, Chan Cheuk Hei and Chan Cheuk Nam are brothers and Luk

Sin Fong, Fion is the spouse of Chen Zhuo Lin. The Directors are elected at meetings of the

shareholders of the Company for a term of three years, renewable upon re-election and re-

appointment. The functions and duties conferred on the Board of Directors include: convening

shareholders’ meeting and reporting on the work of the Board to the shareholders’ meetings,

implementing the resolutions of the shareholders’ meetings, determining the Company’s business

plans and investment plans, formulating the Company’s annual budget and final accounts,

formulating the Company’s proposals for dividend and bonus distributions and for the increase or

reduction of registered capital as well as exercising other powers, functions and duties as conferred

on it by the Articles of Association. Service contracts between the Company and its executive

Directors and letters of appointment between the Company and independent non-executive Directors

were entered into on 23 November, 2005.

DIRECTORS

Executive Directors

Chen Zhuo Lin ( ), aged 43, is our Chairman. Mr. Chen has over 13 years extensive

experience in the real estate development and management. Prior to his role with the Group, Mr.

Chen served as a general manager in Zhongshan Dynasty Furniture Factory, the foundation of our

Group, from 1989 to 1992. Prior to joining Zhongshan Group Co., Mr. Chen served as the president

of Zhongshan Agile Co. from 1992 to 1996 and as the president of Zhongshan Group Co. since

1997. In 1993, Mr. Chen made the strategic decision to target the Hong Kong and Macau customer

base in respect of PRC property development and laid a sound foundation for the development of the

Group. Thereafter, Mr. Chen started to expand our business from Zhongshan to Guangzhou in 2000

and Foshan in 2001. The success in developing large real estate projects in Guangzhou and Foshan

has led us to become one of the leading real estate developers in the Guangdong Province. Mr. Chen

is responsible for the formulation of development strategies, making decisions on investment

projects and development directions on the operations and overall business management of the

Group. He, together with Chan Cheuk Yin and Luk Sin Fong, Fion, co-founded the Agile property

brandname. Currently, he is also the honorary Chairman of Hong Kong Zhongshan Sanxiang

Friendship Association ( ) and the Vice-Chairman of Zhongshan Qiaozi Enterprise

Association ( ).

Chan Cheuk Yin ( ), aged 38, is our Vice-Chairman and a Co-President of the Company.

Mr. Chan has over 13 years experience in real estate development and project management. Prior to

joining the Group, Mr. Chan worked as the deputy general manager in Zhongshan Dynasty Furniture

Factory, the predecessor of our Group, from 1989 to 1992. He then served as a general manager of

Zhongshan Agile Co. from 1992 to 1996 and as a vice-president of Zhongshan Group Co. since

1997. Mr. Chan specializes in the overall planning of projects, property management, and business

management of the Group. He, together with Chen Zhuo Lin and Luk Sin Fong, Fion, co-founded the

Agile property brandname. He is also the Vice-Chairman of Zhongshan Real Estate Society

( ). He was awarded as one of the Guangdong Province Outstanding Entrepreneurs

of Privately-owned Enterprises ( ) in 2003.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

— 116 —

Luk Sin Fong, Fion ( ), aged 44, is our Vice-Chairlady and a Co-President of the

Company. Ms. Luk has over 13 years extensive management experience in real estate development

and in particular in the area of strategic marketing and marketing management. Ms. Luk served as a

deputy general manager in Zhongshan Dynasty Furniture Factory from 1989 to 1992. She then

served as a general manager of Zhongshan Agile Co. from 1992 to 1996 and as a Vice-President of

Zhongshan Group Co. since 1997. Ms. Luk is responsible for strategies and marketing, sales, finance

and human resources management of the Group. She, together with Chen Zhuo Lin and Chan Cheuk

Yin, co-founded the Agile property brandname. She is currently the Vice-Chairlady of Guangzhou

Housing Society ( ). She has also received honorary citizenships in Foshan and

Nanhai, respectively. Ms. Luk completed a Master in Business Administration program at the

University of Western Sydney in 2005.

Chan Cheuk Hung ( ), aged 48, is our executive Director and a Senior Vice-President of

the Company. Prior to joining the Group, he had approximately eight years of working experience as

a deputy general manger in Zhongshan Dynasty Furniture Factory. He has served as the deputy

managing director of Zhongshan Group Co. since 1997. Mr. Chan is responsible for the quality

control of projects, as well as management of the contractors of the Group. He has awarded honorary

citizenship in Foshan. He was appointed as a standing committee member of the Guangdong

Province Real Estate Association ( ) in 2004. He was awarded Small City

Construction Outstanding Contribution Award ( ) in National Xiaokang Housing

Demonstration Small City Competition ( ) by the Ministry of Construction

( ) in 2000. He was a director of Shenzhen Agile Investment Development Company

Limited ( ) (‘‘Shenzhen Agile’’), a company established in the PRC in

2000, which had not commenced its business since its establishment. The business license of

Shenzhen Agile was revoked in 2004 due to the decision of the management of Shenzhen Agile not

to arrange for its annual verification since 2001.

Chan Cheuk Hei ( ), aged 46, is our executive Director and a Senior Vice-President of

the Company. Mr. Chan has over 15 years experience in the real estate development and related

businesses. Prior to joining the Group, he worked as a deputy general manager in Zhongshan

Dynasty Furniture Factory from 1989 to 1996. He has served as the deputy managing director of

Zhongshan Group Co. since 1997. Mr. Chan is responsible for management of decorations and

development of decoration materials for the Group.

Chan Cheuk Nam ( ), aged 42, was appointed as an executive Director of the Board and

a Senior Vice-President of the Company. Mr. Chan has over 15 years experience in the real estate

development and related businesses. Prior to joining the Group, he worked as a deputy general

manager in Zhongshan Dynasty Furniture Factory from 1989 to 1996. He has served as the deputy

managing director in Zhongshan Group Co. since 1997. Mr. Chan is responsible for quality control

of suppliers of construction materials and cost control of the Group.

Independent Non-executive Directors

Cheng Hon Kwan ( ), aged 78, is our Independent Non-executive Director. Dr. Cheng

graduated with a Bachelor of Science in Engineering from Tianjin University and a post-graduate

diploma from Imperial College of Science and Technology, London in 1964. He was awarded

Honorary Doctor’s Degrees from Hong Kong University of Science and Technology, City University

of Hong Kong, Open University of Hong Kong and Open University, United Kingdom in 1996, 1996,

1993 and 1994 respectively. He is a Fellow of Imperial College and City and Guilds London

Institute. He is a Past President, Honorary Fellow and Gold Medallist of the Hong Kong Institution

of Engineers; Past Vice President, Fellow and Gold Medallist of the Institution of Structural


— 117 —

Engineers; Fellow of the Institution of Civil Engineers, United Kingdom and of the American

Society of Civil Engineers and Honorary Fellow of Engineers Australia. He is also an Honorary

Member of the Hong Kong Institute of Planners. Dr. Cheng is an authorized person and a registered

structural engineer; and a Former Chairman of Hong Kong Housing Authority and Transport

Advisory Committee. He is a member of the Standing Committee of the Tianjin CPPCC, Chairman

of Tianjin GangJin Architects & Engineers Ltd. and a permanent Honorary Chairman of the Hong

Kong Tianjin Friendship Association. He was a member of both the Executive and Legislative

Councils. Dr. Cheng is currently an independent non-executive director of a number of companies

listed on the Stock Exchange including Hang Lung Group Limited and Hang Lung Properties

Limited.

Kwong Che Keung, Gordon ( ), aged 56, is our Independent Non-executive Director.

Mr. Kwong graduated with a Bachelor of Social Science degree from The University of Hong Kong

in 1972, qualifying as a chartered accountant in the Institute of Chartered Accountants in England

and Wales in 1977. He was a partner of Price Waterhouse from 1984 to 1998. He is currently a non-

executive director of COSCO Pacific Limited, an independent non-executive director of 15

companies listed on the Stock Exchange, including COSCO International Holdings Limited, Tianjin

Development Holdings Limited, Henderson Land Development Company Limited etc.. In the public

sector, he was a part-time panel member of the Hong Kong Government’s Central Policy Unit from

1993 to 1995 and an independent member of the Council of the Stock Exchange from 1992 to 1997.

Cheung Wing Yui ( ), aged 56, is our Independent Non-executive Director. He received a

Bachelor of Commerce degree in accountancy from the University of New South Wales, Australia in

1973. Mr. Cheung is a member of CPA Australia. He has been a practising solicitor in Hong Kong

since 1979 and is a partner of the law firm Woo, Kwan, Lee & Lo. He has been admitted as a

solicitor in the United Kingdom and as an advocate and solicitor in Singapore. Mr. Cheung is a non-

executive director of a number of companies listed on the Stock Exchange including Tianjin

Development Holdings Limited and is an independent non-executive director of Ping An Insurance

(Group) Company of China, Ltd., Ching Hing (Holdings) Limited and Hop Hing Holdings Limited.

QUALIFIED ACCOUNTANT

Ng Hin Kit, Frank ( ), aged 46, joined the Group in 2005 as our Chief Financial Officer

and qualified accountant of the Group. He is an associate member of the Hong Kong Institute of

Certified Public Accountants, a full member of CPA Australia and an associate member of The

Institute of Chartered Secretaries and Administrators. He obtained a Postgraduate Diploma in

Management Studies from City University of Hong Kong in 1991 and a Master of Business

Administration from Monash University in 1994. He has over 20 years of professional experience in

a number of multi-national corporations in both Hong Kong and China such as Beijing Oriental

Plaza Co., Ltd., A. S. Watson Co., Ltd., Duracell (China) Ltd., Procter & Gamble, Inchcape Pacific

Ltd. and PepsiCo. Inc.

COMPANY SECRETARY

Wai Ching Sum ( ), aged 38, joined the Group in 2005 as our Company Secretary. She is

a fellow member of The Institute of Chartered Secretaries and Administrators in the United Kingdom

and The Hong Kong Institute of Chartered Secretaries. Ms. Wai obtained a Master of Science degree

in Financial Economics from University of London, England in 1997 and a Master of Laws degree in


— 118 —

Chinese Law and Comparative Law from the City University of Hong Kong in 2002. She has over

10 years of professional experience in a number of listed companies in Hong Kong such as COSCO

International Holdings Limited, UDL Holdings Limited and KEL Holdings Limited.

SENIOR MANAGEMENT

Liu Huaxi ( ), aged 31, is our Vice-President. Mr. Liu is mainly responsible for the

management of the Group’s real estate business operation, property management and decoration

management. Since joining the Group in 1995, Mr. Liu has been the head of the business

development department, head of administrative office, assistant to vice-president and deputy

director of the Real Estate Management Center of the Group. Mr. Liu graduated from the Hehai

University in 1995 majoring in Enterprise Management.

Zheng Liqing ( ), aged 42, is our Vice-President. Ms. Zheng is mainly responsible for

project plannings and interior designs, as well as administration and human resources management of

the Group. Since joining the Group in 1994, Ms. Zheng has been the head of administrative office,

assistant to president and deputy director of the Real Estate Management Center of the Group. Prior

to joining the Group, Ms. Zheng had run her own business in Costa Rica from 1987 to 1994.

Ng Hin Kit, Frank ( ), aged 46, is our Chief Financial Officer and qualified accountant

of the Group. Particulars of Mr. Ng is set out in the paragraph headed ‘‘Qualified Accountant’’

above.

Chen Zhongqi ( ), aged 39, registered engineer and quantity surveyor, was appointed as

the Company’s Project Controller and Chief Engineer. Mr. Chen is mainly responsible for the

management of the project development of the Group’s real estate business, including monitoring the

project quality, progress, technical control and quantity survey. Since joining the Group in 1993, he

has been the head of the Project Engineering Department, deputy manager of Project Management

Department and deputy director of the Real Estate Management Center of the Group. Mr. Chen

graduated from Sichuan Neijiang Institute of Education in 1991.

Wu Jinhong ( ), aged 36, is our Deputy Chief Financial Officer of the Company. Mr. Wu

is mainly responsible for the financial management and supervision of the Group. Since joining the

Group in 1998, he has been the project finance officer, manager and deputy director of the Finance

Center of the Group. Prior to joining the Group, Mr. Wu had been an auditor of an accounting firm

and finance manager of a property development company. Mr. Wu graduated from the Guangdong

University of Broadcasting and Television in 1995 majoring in finance and accounting, and obtained

a post-graduate diploma from Guangdong Institute of Social Science in economic management in

2002.

Huang Zejun ( ), aged 41, is our Deputy General Manager. He is mainly responsible for

project planning, public affairs and corporate governance of the Group. Since joining the Group in

1996, he has been the manager of the Agile Golf and Country Club, assistant to vice-president and

assistant to president of the Group. Prior to joining the Group, he had been working for China

Travel Group in Zhongshan City. Mr. Huang obtained a Post-graduate diploma in the foreign

languages department of South China University of Technologies in 1989.

Chen Weike ( ), aged 31, is our Deputy General Manager. Mr. Chen is mainly

responsible for the Group’s capital operation and the analysis of new project investments. Since

joining the Group in 2000, he has been the officer and deputy manager of the capital department and


— 119 —

manager of the investment department of the Group. Prior to joining the Group, from 1996 to 2000,

he worked for the Agricultural Bank of China of Zhongshan City. Mr. Chen graduated from

Shanghai University of Finance and Economics in 1996 obtaining a bachelor’s degree in Economics.

Wai Ching Sum ( ), aged 38, is our company secretary. Detailed information of Ms Wai

is set out in the paragraph headed ‘‘Company Secretary’’ above.

COMPENSATION OF DIRECTORS

The aggregate amount of fees, salaries, housing allowances, other allowances and benefits in

kind paid by the Group to the Directors during each of the three years ended 31 December 2004 was

approximately nil, RMB200,000 and RMB1,200,000, respectively. No compensation was paid by the

Group to the Directors as contributions to pension schemes and discretionary bonuses for the three

years ended 31 December 2004.

RMB1,200,000 was paid or granted by the Group to the Directors in respect of the financial

year ended 31 December 2004.

Under the current arrangements, the aggregate remuneration and benefits in kind which the

Directors are entitled to receive for the financial year ending 31 December 2005 is expected to be

approximately RMB1,200,000, excluding any discretionary bonuses which may be paid to the

Directors.

Under the current arrangements and conditional upon Listing, the annual remuneration

(excluding any discretionary bonus which may be paid) payable by the Group to each of the

Directors will be as follows:

Name of Director HK$

Executive Directors

Chen Zhuo Lin 4,200,000

Chan Cheuk Yin 3,600,000

Luk Sin Fong, Fion 3,600,000

Chan Cheuk Hung 3,000,000

Chan Cheuk Hei 3,000,000

Chan Cheuk Nam 3,000,000

Independent non-executive Directors

Cheng Hon Kwan 250,000

Kwong Che Keung, Gordon 250,000

Cheung Wing Yui 250,000

AUDIT COMMITTEE

The Company has established an audit committee in compliance with Rules 3.21 and 3.22 of

the Listing Rules. The primary duties of the audit committee will be to review and supervise the

financial reporting process and internal control system of the Group and to provide advice and

comments to the Board of Directors. The audit committee consists of three members who are all

Independent Non-executive Directors and Kwong Che Keung, Gordon was appointed as the chairman

of the audit committee.


— 120 —

BOARD REMUNERATION COMMITTEE

The Company has also set up a board remuneration committee which comprises Luk Sin Fong,

Fion, Cheng Hon Kwan, Kwong Che Keung, Gordon and Cheung Wing Yui. The board remuneration

committee considers and recommends to the Board the remuneration and other benefits paid by the

Company to the Directors. The remuneration of all Directors is subject to regular monitoring by the

board remuneration committee to ensure that the levels of their remuneration and compensation are

appropriate.

COMPLIANCE ADVISOR

The Company has appointed Platinum Securities Company Limited, as its compliance advisor

pursuant to Rule 3A.19 of the Listing Rules to provide advisory services to the Company pursuant to

the requirements thereunder. Platinum Securities Company Limited will, inter alia, provide advice to

the Company with due care and skill on a timely basis when consulted by the Company in the

following circumstances:

(i) before the publication by the Company of any regulatory announcement (whether required

by the Listing Rules or requested by the Stock Exchange or otherwise), circular or

financial report;

(ii) where a transaction, which might be a notifiable or connected transaction under Chapters

14 or 14A of the Listing Rules, is contemplated by the Company including share issues

and share repurchases;

(iii) where the Company proposes to use the proceeds of the Listing in a manner different

from that detailed in the listing document in respect of the Listing (the ‘‘Listing

Document’’) or where the business activities, developments or results of the Company

deviate from any forecast, estimate, or other information in this prospectus; and

(iv) where the Stock Exchange makes an inquiry of the Company under Rule 13.10 of the

Listing Rules.

The term of the appointment shall commence on the Listing Date and end on the date on which

the Company complies with Rule 13.46 of the Listing Rules in respect of its financial results for the

first full financial year commencing after the Listing.

EMPLOYEES

As at 30 June 2005, our Group had 3,324 full time employees. An analysis by function as at 30

June 2005 is as follows:

President Office 17

Administration and Human Resources Management 317

Marketing and Sales 238

Finance Management 184

Design 69

Real Estate Project Management 240

Property Management 2,259

Total 3,324


— 121 —

So far as the Directors are aware, the following persons will, immediately following the

completion of the Global Offering and taking no account of any Shares which may be taken up

under the Global Offering or which may be allotted and issued pursuant to the exercise of the Over-

allotment Option, have beneficial interests or short positions in any Shares or underlying Shares of

the Company which would fall to be disclosed to the Company under the provisions of Divisions 2

and 3 of Part XV of the SFO, or who is directly and/or indirectly interested in 10% or more of the

nominal value of any class of share capital carrying rights to vote in all circumstances at general

meetings of any other member of the Group:

The Company:

Number of Shares

directly or

indirectly held after

Global Offering

Approximate percentage of Shareholding

in the Company after Global Offering

Shareholder

Direct

interests

(%)

Indirect

interests

(%)

Aggregate direct

and indirect

interests (%)

Top Coast . . . . . . . . . . . . . . . . 2,366,930,000 71.25 — 71.25

Chen Zhuo Lin . . . . . . . . . . . . . 2,366,930,000 — 71.25 71.25

Chan Cheuk Yin . . . . . . . . . . . . 2,366,930,000 — 71.25 71.25

Luk Sin Fong, Fion . . . . . . . . . . 2,366,930,000 — 71.25 71.25

Chan Cheuk Hung . . . . . . . . . . . 2,366,930,000 — 71.25 71.25

Chan Cheuk Hei . . . . . . . . . . . . 2,366,930,000 — 71.25 71.25

Chan Cheuk Nam. . . . . . . . . . . . 2,366,930,000 — 71.25 71.25

For details of the Directors’ interests in Shares immediately following the completion of the

Global Offering, please refer to section entitled ‘‘C. Further Information About Directors and

Substantial Shareholders — 1. Directors’’ in Appendix VII to this prospectus.

Save as disclosed herein, the Directors are not aware of any person (who are not Directors)

who will, immediately following the completion of the Global Offering, be directly or indirectly

interested in 10% or more of the Company’s registered capital. The Directors are not aware of any

arrangement which may at a subsequent date result in a change of control of the Company.

SELLING SHAREHOLDER

Top Coast, the trustee of the Chen Family Trust, will be selling 124,570,000 Shares,

representing 3.75% of the Company’s enlarged issued share capital immediately after completion of

the Global Offering and the Capitalization Issue assuming the Over-allotment Option is not

exercised. Immediately before the Global Offering and the Capitalization Issue, Top Coast holds

100% of the Company’s issued share capital and, immediately after completion of the Global

Offering and the Capitalization Issue, Top Coast holds 71.25% of the Company’s enlarged issued

share capital (assuming the Over-allotment Option is not exercised) See ‘‘History, Reorganization

and Group Structure’’ for further information on the Chen Family Trust.

SUBSTANTIAL SHAREHOLDERS AND SELLING SHAREHOLDER

— 122 —

The authorized and issued share capital of the Company is as follows:

Number of Shares comprised in the authorized share capital:

Authorized

share capital

(HK$)

10,000,000,000 Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000,000

Assuming the Over-allotment Option is not exercised, the share capital of the Company

immediately following the Global Offering will be as follows:

Issued and to be issued, fully paid or credited as fully paid upon

completion of the Global Offering (HK$)

200,000,000 Shares in issue at the date of this prospectus . . . . . . . . . . 20,000,000

2,291,500,000 Shares to be issued pursuant to the Capitalization Issue (Note) 229,150,000

830,500,000 Shares to be issued in the Global Offering . . . . . . . . . . . . 83,050,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332,200,000

Assuming the Over-allotment Option is exercised in full, the share capital of the Company

immediately following the Global Offering will be as follows:

Issued and to be issued, fully paid or credited as fully paid upon

completion of the Global Offering (HK$)

200,000,000 Shares in issue at the date of this prospectus . . . . . . . . . . 20,000,000

2,291,500,000 Shares to be issued pursuant to the Capitalization Issue (Note) 229,150,000

973,760,000 Shares to be issued in the Global Offering . . . . . . . . . . . . 97,376,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346,526,000

Note: Pursuant to the written resolutions of shareholders of the Company passed on 23 November 2005, the Directors

were authorized to capitalize an amount of HK$229,150,000 from the amount standing to the credit of the share

premium account of the Company as a result of the Global Offering and to appropriate such amount as capital to

pay up in full at par 2,291,500,000 Shares for allotment and issue to the entity whose name appears on the

register of members of the Company at the close of business on Monday, 5 December 2005 or in accordance

with the direction of such entity.

Assumptions

The above tables assume that the Global Offering becomes unconditional. They take no account

of Shares which may be allotted and issued or repurchased by the Company pursuant to the Issuing

Mandate and Repurchase Mandates as described below.

Ranking

The Offer Shares, including the Shares issuable pursuant to the Over-allotment Option, will

rank pari passu in all respects with all other Shares in issue as mentioned in this prospectus, and in

particular, will rank in full for all dividends and other distributions hereafter declared, paid or made

on the Shares after the date of this prospectus.

SHARE CAPITAL

— 123 —

SHARE OPTION SCHEME

The Company has conditionally adopted the Share Option Scheme, the principal terms of which

are set out in the paragraph headed ‘‘Share Option Scheme’’ in Appendix VII to this prospectus.

GENERAL MANDATE TO ISSUE SHARES

The Directors have been granted a general unconditional mandate to allot, issue and deal with

unissued Shares with an aggregate nominal value not exceeding the sum of:

(i) 20% of the aggregate nominal amount of our share capital in issue immediately following

completion of the Global Offering (excluding any Shares which may be issued pursuant to

the exercise of the Over-allotment Option, as set out in the table above); and

(ii) the aggregate nominal amount of our share capital repurchased by the Company (if any)

pursuant to the Repurchase Mandate.

The Directors may, in addition to the Shares which they are authorized to issue under the

mandate, allot, issue and deal in the Shares pursuant to a rights issue, or any scrip dividend shares

or similar arrangements providing for allotment and issue of Shares in lieu of the whole or part of a

dividend on Shares in accordance with the Articles of Association or upon the exercise of any

options which may be granted under the Share Option Scheme or other similar arrangement.

The mandate will expire:

. at the conclusion of the Company’s next annual general meeting;

. upon the expiry of the period within which the Company is required by law or the

Articles to hold its next annual general meeting; or

. when varied or revoked by an ordinary resolution of its shareholders in general meeting,

whichever occurs first.

For further details of the Issuing Mandate, see the paragraph headed ‘‘Resolutions in writing of

the shareholders of the Company passed on 23 November 2005’’ in Appendix VII to this prospectus.

GENERAL MANDATE TO REPURCHASE SHARES

The Directors have been granted a general unconditional mandate to exercise all the powers of

the Company to repurchase Shares with an aggregate nominal amount of not more than 10% of the

total nominal amount of the share capital of the Company in issue immediately following completion

of the Global Offering (excluding any Shares which may be issued pursuant to the exercise of the

Over-allotment Option, as set out in the table above).

This mandate relates only to repurchases made on the Stock Exchange and/or on any other

stock exchange on which the Shares are listed (and which is recognized by the SFC and the Stock

Exchange for this purpose), and which are made in accordance with the Listing Rules. A summary of

the relevant Listing Rules is set out in the section headed ‘‘Repurchase by the Company of Shares’’

in Appendix VII to this prospectus.

SHARE CAPITAL

— 124 —

This mandate will expire:

. at the conclusion of the Company’s next annual general meeting;

. upon the expiry of the period within which the Company is required by law or the

Articles to hold its next annual general meeting; or

. when varied or revoked by an ordinary resolution of its shareholders in general meeting,


For further information about the Repurchase Mandate, please refer to the section headed

‘‘Resolutions in writing of the shareholders of the Company passed on 23 November 2005’’ in

Appendix VII to this prospectus.

SHARE CAPITAL

— 125 —

FINANCIAL INFORMATION

The following discussion should be read in conjunction with our combined financial

information together with the accompanying notes. See Accountants’ Report in Appendix I to this

prospectus. The following discussion contains forward-looking statements that involve risks and

uncertainties. Factors that could cause or contribute to such differences include, without limitation,

those discussed in the sections entitled ‘‘Risk Factors’’ and ‘‘Business’’ and elsewhere in this

prospectus.

Basis of Presentation

In preparation for the Global Offering, the Company was incorporated in the Cayman Islands

on 14 July 2005. Pursuant to the Reorganization, members of the Chen Family transferred to the

Group all their interests in the property development and ancillary property-related businesses that

the Group now conducts. See ‘‘History, Reorganization and Group Structure’’ for a description of the

Reorganization.

For purposes of this prospectus, the combined balance sheets, combined income statements,

combined cash flow statements and combined statements of changes in equity and other combined

financial and operational data of the Group and the companies now comprising the Group as a result

of the Reorganization as of or for each of the three years ended 31 December 2002, 2003 and 2004

and as of or for the six months ended 30 June 2005, to which the following discussion relates, have

been prepared as if the current Group structure had been in existence throughout the Relevant

Periods, or since their respective dates of incorporation or establishment whichever is the shorter

period. All significant intra-group transactions, balances and unrealized gains on transactions

between the companies now comprising the Group have been eliminated. However, the combined

financial and operational data of the Group presented in this prospectus do not purport to be

indicative of the what the Group’s actual financial and operational data would have been if the

Group in its current structure had been in existence since 1 January 2002.

Overview

We are one of the largest property developers in Guangdong Province in the PRC, in terms of

sales. We primarily engage in the development of large-scale residential property projects

comprising multiple phases. We offer a broad range of products, including villas, condominiums,

duplexes and apartments, which appeal to customers of varying income levels, with our principal

focus on products that target middle class and upper-middle class purchasers, including primarily

white collar workers, mid- and senior-level managers and entrepreneurs. In addition to our

residential business, we develop commercial properties, including retail shops complementary to our

residential developments as well as commercial complexes at strategic locations. We also engage in

ancillary property related businesses such as property management and interior decoration.

Under our experienced management team, we have grown our business substantially since our

inception in 1997. For each of the three years ended 31 December 2002, 2003 and 2004 and the six

months ended 30 June 2005, our turnover was RMB763.1 million, RMB1,931.5 million, RMB2,548.9

million and RMB2,378.1 million, respectively. For the years ended 31 December 2003 and 2004 and

the six months ended 30 June 2005, our net profit was RMB73.1 million, RMB230.3 million and

RMB403.6 million, respectively. We recorded a net loss of RMB10.2 million in 2002.


— 126 —

Certain Income Statement Items

Turnover

Turnover comprises primarily the proceeds from sale of properties or provision of services and

after the elimination of transactions between the companies now comprising the Group. Our turnover

comprises revenues generated from the segments of property development, property management and

interior decoration.

Revenues from property development represent proceeds from sale of our properties. Because

we derive substantially all of our total turnover from the property development segment, our results

of operations for a given period are dependent upon the GFA of properties we have available for

sale during that period, the market demand for those properties and the price we are able to obtain

for such properties. Conditions of the property markets in which we operate change from period to

period and are affected significantly by the general economic, political and regulatory developments

in the PRC as well as in Guangdong Province. See ‘‘— Factors Affecting Our Performance.’’

We recognize revenues from sales of properties based on the completion method. Revenues

from sale of properties are recognized when the relevant properties have been delivered to the

purchasers. For each of the three years ended 31 December 2002, 2003 and 2004 and the six months

ended 30 June 2005, we recognized revenues of RMB697.5 million, RMB1,819.9 million,

RMB2,427.9 million and RMB2,322.3 million in connection with the delivery of aggregate GFA

of 163,600 sq.m., 462,897 sq.m., 534,588 sq.m., and 401,286 sq.m., respectively, representing an

average realized selling price per sq.m. (calculated by dividing the revenue from the property

developments by the aggregate GFA sold) of RMB4,263, RMB3,932, RMB4,542, and RMB5,787,

respectively.

Consistent with industry practice, we typically enter into purchase contracts with customers

while the properties are still under development, after satisfying the conditions for pre-sales

according to PRC laws and regulations. See ‘‘Business — Property Development — Pre-sales.’’

Generally there is a time difference typically ranging from several months to one year between the

time we commence pre-selling properties under development and the completion of the development.

We do not recognize any revenue from the pre-sales of our properties until the development of such

properties is completed and the properties are delivered to the purchasers, even if the payment of a

portion of the purchase price for a property is typically made at various stages prior to completion.

Before the delivery of a pre-sold property upon the completion of development, deposits and

purchase price or portions thereof received from our customers are recorded as current liability

‘‘advances from customers’’ on our balance sheet and reflected in the cash flow statements as part of

the increase in trade and other payables. See Notes 18 and 26 accompanying the Financial

Statements in Appendix I to this prospectus.

Revenues from our property management segment and our interior decoration segment are

recognized in the period in which the services are provided. As all of our subsidiaries engaging in

property management and interior decoration are wholly-owned, the revenues generated by these

subsidiaries from services provided to our projects are eliminated in our combined financial

statements. For the years ended 31 December 2002, 2003 and 2004 and the six months ended 30

June 2005, our property management companies experienced a net loss of approximately RMB4.1

million, RMB11.1 million, RMB 4.9 million and RMB0.6 million, respectively. The losses were

primarily due to the significant costs incurred, particularly in the initial phases of our projects, in

providing our property management services, including services such as rental agency, security

management, maintenance, operation of clubhouses, gardening and landscaping and other services.


— 127 —

Our interior design subsidiary has historically also provided services to project companies that were

not injected to the Group in the Reorganization. We expect that the revenue generated from our

interior decoration subsidiary will decline in the future as it will provide services exclusively for our

own projects following the Global Offering.

Cost of Sales

Cost of sales represents primarily the costs we incur directly for our property development

activities which include construction costs, cost of land use rights, business taxes, interest

capitalized and LATs. Property developments require substantial capital investment for land

acquisition and construction and may take many months or years before generating positive

cashflows.

The table below sets forth the components of our cost of properties sold and the percentage of

the cost of properties sold represented by it for the periods indicated.


2002 2003 2004 2004 2005

Amount

Percentage

of cost of

properties

sold Amount

Percentage

of cost of

properties

sold Amount

Percentage

of cost of

properties

sold Amount

Percentage

of cost of

properties

sold Amount

Percentage

of cost of

properties

sold

RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %

Construction costs . . . 363,804 76 1,070,996 75 1,280,187 71 708,120 72 964,758 61

Land use rights . . . . . 68,116 14 174,312 12 245,909 14 137,447 14 266,839 17

Business taxes . . . . . . 35,554 7 102,840 7 132,770 7 74,396 7 123,278 8

Interest capitalized . . . 11,805 3 54,549 4 52,682 3 40,122 4 49,850 3

LATs . . . . . . . . . . . — 0 21,370 2 80,733 5 25,151 3 179,105 11

479,279 100 1,424,067 100 1,792,281 100 985,236 100 1,583,830 100

Properties under development are stated at the lower of cost and net realizable value. Net

realizable value takes into account the price ultimately expected to be realized and the anticipated

costs to complete the properties. Completed properties remaining unsold at the end of each financial

period are stated at the lower of cost and net realizable value.

Construction Costs. Construction costs encompass all costs for the design and construction of

a project, including costs for construction of infrastructure and communal facilities. The price of raw

materials and the level of difficulty to transform a raw land to a residential site, given the various

original condition and environment of the land, are the major factors affecting the average

construction costs. Cost for properties under development comprises construction costs, borrowing

costs and professional fees incurred during the development period.

Costs of Land Use Rights. Substantially all of the land used in our projects or property

developments, during the Relevant Periods whether completed, under development or held for future

development, were acquired prior to the promulgation of PRC Rules Regarding the Grant of State-

Owned Land Use Rights by Way of Tender, Auction and Listing-for-Sale by the Ministry of Land

and Resources (the ‘‘New Land Acquisition Rules’’). Accordingly, those land use right payments,

according to the original land acquisition procedures, included payments to the relevant government

authorities for obtaining the right to occupy, use and develop land, certain fees for altering the

intended use of the land and resettlement costs. We typically pay resettlement costs to the former

occupants or users of the land through the relevant government authorities. Resettlement costs are in

most cases included in the overall purchase price of the land paid to the relevant government


— 128 —

authorities and are not separately identifiable. As of the date hereof, we are not aware of any rules

and regulations, in the PRC or Guangdong Province, that would require property developers pay for

resettlement costs directly to the former occupants or users of the land.

In July 2002, the PRC Government established new rules to determine the purchase prices of

all granted land through a competition process. See ‘‘— Factors Affecting Our Performance —

Ability to acquire land use rights.’’

In accordance with the New Land Acquisition Rules, following 1 July 2002, land use rights for

the purposes of commercial use, tourism, entertainment and commodity residential property

development in the PRC may only be granted by the government through public tender, auction

or listing-for-sale (‘‘Bidding Process’’). In addition, under current regulations, grantees of land use

rights are generally allowed to transfer the land use rights granted to them in secondary markets,

except that if a transferor is a state-owned enterprise or a collectively-owned enterprise or the land

use right is obtained by way of allocation, such land use rights shall be transferred through a public

Bidding Process. See ‘‘Business — Property Development — Land acquisition’’ for a description of

the land acquisition procedures. Consequently, if we acquire land through a Bidding Process in the

future, our cost of land use rights will comprise primarily a lump-sum purchase price payable to the

government or the other transferors as determined by the Bidding Process. Pursuant to the New Land

Acquisition Rules, the relevant government authority shall be responsible for establishing a floor

price for the Bidding Process on the basis of land value appraisals and government industrial

policies. If we acquire land use rights from other grantees in secondary markets in the future, our

cost of land use rights will be the negotiated purchase prices payable to such grantees.

Business Taxes. Our PRC subsidiaries are subject to local business taxes. The current effective

tax rate for each of our property development, property management and interior decoration

businesses is 5%, 5% and 3%, respectively.

Interest Capitalized. We capitalize a portion of our costs of borrowing to the extent that such

costs are directly attributable to the construction. In general, we capitalize finance costs incurred

from the commencement of development of relevant project until the completion of construction.

Finance costs incurred after the completion of construction are not capitalized, but are instead

accounted for in our income statement as finance costs in the period in which they are incurred.

LAT. Under PRC laws and regulations, our PRC subsidiaries engaging in property

development are subject to the LAT which is collected by the local tax authorities. All income

from the sale or transfer of state-owned land use rights, buildings and their attached facilities in the

PRC is subject to the LAT at progressive rates ranging from 30% to 60% of the appreciation value

as defined in the relevant tax laws, with certain exemptions available for the sale of ordinary

residential properties ( ) if the appreciation values do not exceed 20% of the total

deductible items as defined in the relevant tax laws. Sale of commercial properties is not eligible for

such exemption. Whether a property qualifies for the ordinary residential property exemption is

determined by the local government taking into consideration the property’s plot ratio, aggregate

GFA and sales price. Sales of villas and retail shops typically realize higher appreciation values, and

are subject to higher LAT rates, compared to less expensive properties. We estimate and make

provisions for the full amount of applicable LAT in accordance with the requirements set forth in

the relevant PRC tax laws and regulations, but only pay a portion of such provisions each year as

required by the local tax authorities. For each of the three years ended 31 December 2002, 2003 and

2004 and for the six months ended 30 June 2005, we made a provision for LAT in the amount of nil,

RMB21.4 million, RMB80.7 million, and RMB179.1 million, respectively. For the same periods, we

made LAT payments in the amount of RMB0.6 million, RMB6.2 million, RMB9.2 million and


— 129 —

RMB9.0 million, respectively. Since January 2005, we have been required to prepay LAT based on

the proceeds from the sales and pre-sales of our properties in Guangzhou and as a result, have paid

an aggregate amount of approximately RMB3.0 million in LAT prepayment for the six months ended

30 June 2005. In Zhongshan and Foshan, LAT prepayment requirements have been in effect since

1996 and 2002, respectively.

In April 2005, the Guangzhou tax authorities promulgated regulations clarifying that the

residential part of a combined-use building would not be eligible for the exemption available for

ordinary residential properties as discussed in the preceding paragraph if separation of residential

and commercial parts of the combined-use building would be impracticable. Since 1 January 2002,

we have made provisions for applicable LAT in respect of the residential part of combined-use

buildings in Guangzhou, Zhongshan and Foshan as if the regulations promulgated by the Guangzhou

tax authorities in April 2005 had been in effect for all three cities.

Other Gains

Other gains comprise forfeited deposits from customers as a result of their failure to complete

the purchases, interest income and miscellaneous income. Upon entering into a purchase contract, a

customer deposits a portion of the purchase price, typically between RMB10,000 and RMB50,000 to

secure the chosen property. Deposits are forfeited if customers are unable to fulfill their obligations

under the purchase contracts. See ‘‘Business — Property Development — Payment arrangements.’’

Miscellaneous income comprises primarily processing fees we charge our customers in connection

with the sales of our properties.

Selling and Marketing Costs

Selling and marketing costs include advertising and promotion expenses relating to sales of the

properties (including advertisements on television and in newspapers, magazines, on billboards and

promotional offers made directly to our customers), selling and marketing staff costs and other

selling expenses.

Administrative Expenses

Administrative expenses include primarily staff costs, operating leases charges-land use right

and depreciation.

Finance Costs

Finance costs consist primarily of interest costs net of capitalized interest. We capitalise a

portion of our costs of borrowings to property under development to the extent that such costs are

directly attributable to construction. Finance costs fluctuate from period to period due primarily to

fluctuations in our level of outstanding indebtedness and the interest rates on our borrowings. Since

the development period for a property development does not necessarily coincide with the repayment

period of the relevant loan, not all of the interest costs related to a property development can be

capitalized. As a result, the period to period fluctuation of our finance costs is also attributable to

the amount and timing of capitalization.


— 130 —

Income Tax Expense

Income tax expense represents PRC enterprise income tax, accrued by our operating

subsidiaries. Because we operate as an overseas company for Cayman Islands regulatory purposes,

we are not subject to Cayman Islands income tax. Our PRC subsidiaries are subject to a 30%

foreign-invested enterprise income tax and a 3% local income tax except that as required by local

taxation bureau, the PRC enterprise income tax of our interior decoration subsidiary was levied on

its turnover at a rate of 2% during the three-year period ended 31 December 2004, which is no

longer applicable thereafter.

Minority Interests

Minority interests represent our profit or loss after taxation that is attributable to the other

shareholders of our two subsidiaries, Panyu Agile Co. and Huadu Agile Co.

Factors Affecting Our Performance

Our business, results of operations and financial condition are affected by a number of factors,

many of which are beyond our control. See ‘‘Risk Factors.’’ Some of these factors include the

following:

Economic growth of the PRC and the property market in the PRC.

We derive substantially all of our turnover from sale of properties that we develop.

Accordingly, the amount of our revenue for a given period is dependent on the number of

properties we are able to sell and the prices at which we make such sales. We believe that

demand for our properties is driven in large part by the overall economic development, rising

wages and the standard of living in the PRC, particularly in Guangdong Province and, to a

lesser extent, Hong Kong and Macau where some of the purchasers of our properties reside. In

the last 10 years, China’s GDP has increased at a CAGR of 9.9% and the GDP growth rate of

Guangdong Province has exceeded the national average for each of the last 10 years. We

believe that the increasing disposable income of PRC and, to a lessor extent, Hong Kong and

Macau residents, coupled with the relaxation of restrictions on private ownership of properties

in recent years have boosted both demand and prices for private properties.

Ability to acquire land use rights.

The PRC Government controls substantially all of the land supply in the PRC. As a result,

the policies of the PRC Government towards land supply affect our ability and costs to acquire

land use rights. Historically, we acquired substantially all of our land supply through purchase

arrangements or co-operative arrangements with the occupants of the land and the local

governments. In July 2002, the PRC Government introduced regulations requiring government

departments and agencies to grant state-owned land use rights for residential or commercial

property development through competitive processes, including public or private tenders, public

auctions or listing at land exchanges administered by local governments. Where land-use rights

are granted by way of a tender, an evaluation committee consisting of not fewer than five

members (including a representative of the grantor and other experts) will consider and select

the tenders that have been submitted. Where land use rights are granted by way of an auction, a

public auction will be held by the relevant local land bureau and the land use rights are granted


— 131 —

to the highest bidder. These competitive processes may significantly intensify competition

among real estate developers for any available land, and thereby driving up the acquisition

costs of the land. See ‘‘Business — Property Development — Land acquisition.’’

PRC regulations on financing.

We finance our property development primarily through internal funds, borrowings and

proceeds from sale and pre-sale of properties. As of 31 December 2002, 2003 and 2004 and as

of 30 June 2005, our outstanding borrowings were RMB1,917.0 million, RMB2,018.3 million,

RMB1,416.7 million and RMB1,361.2 million, respectively. Any increase of benchmark lending

rates published by the PBOC may result in an increase in our interest costs, as all of our bank

borrowings bear floating interest rates linked to the PBOC-published rates. We are also highly

susceptible to any regulations or measures adopted by the PBOC that may restrict bank lending

to enterprises, particularly, to real estate developers. Moreover, a substantial portion of our

customers depend on mortgage financing to purchase our properties. Regulations or measures

adopted by the PRC Government that are intended to restrict the ability of purchasers to obtain

mortgages or increase the costs of mortgage financing may decrease market demand for our

properties and adversely affect our sales revenues.

Timing of property development.

The number of property developments that a developer can undertake during any

particular period is limited due to substantial capital requirements for land acquisitions and

cost of construction as well as limited supply of land. In addition, significant time is required

for property developments whereby it may take many months or possibly years before any pre-

sale of the property developments may occur. Moreover, while the pre-sale of a property

generates positive cash flow for us in the period in which it is made, no sale is recognized in

respect of such property until its development has been completed and the property delivered to

the purchaser. In addition, as market demand is not stable, turnover in a particular period can

also depend on our ability to gauge the expected demand in the market at the expected launch

time for completion of a particular project. As a result, our results of operations have

fluctuated in the past and are likely to continue to fluctuate in the future.

Critical Accounting Policies

Revenue Recognition Turnover comprises primarily the proceeds from sales of properties or

provision of property related services after the elimination of transactions between the companies

now comprising the Group. Our turnover comprises revenues generated from the segments of

property development, property management and interior decoration. We recognize revenues from

sales of properties based on the completion method. Revenues from sales of properties are

recognized when the relevant properties have been delivered to the purchasers. Revenues from our

property management segment and interior decoration segment are recognized in the period in which

the services are provided.

Capitalization of Borrowing Costs We capitalize a portion of our costs of borrowing to the

extent that such costs are directly attributable to the construction. In general, we capitalize finance

costs incurred from the commencement of development of relevant project until the completion of

construction. Finance costs incurred after the completion of construction are not capitalized, but are

instead accounted for in our income statements as finance costs in the period in which such costs are

incurred.


— 132 —

Land Use Rights Costs Cost of land use rights typically comprises payments to the

government authorities for obtaining the right to occupy, use and develop land, certain fees for

altering the intended use of land and resettlement costs. We recognize amortization charges of land

use rights on a straight-line basis over the period for which the Group had been granted the land use

rights, until the related properties were completed and delivered to purchasers.

Properties under Development Properties under development are stated at the lower of cost

and net realizable value. Net realizable value is determined by reference to the price ultimately

expected to be realized, less applicable variable selling expenses and the anticipated costs to

completion.

Completed Properties Held for Sale Completed properties remaining unsold at the end of

each financial period are stated at the lower of cost and net realizable value. Net realizable value is

determined by reference to sale proceeds of properties sold in the ordinary course of business, less

applicable variable selling expenses, or by management estimates based on prevailing market

conditions.

Estimates and judgments used in preparing our combined financial statements are evaluated and

based on historical experience and other factors, including expectations of future events that are

believed to be reasonable under the circumstances. We make estimates and assumptions concerning

the future. The resulting accounting estimates will, by definition, seldom equal the related actual

results. The estimates and assumptions that may have a significant effect on the carrying amounts of

assets and liabilities mainly include those related to property development activities. For more

information relating to our critical accounting policies, please see note 2 to the Financial Statements

in Appendix I to the prospectus.


— 133 —

Combined Results of Operations

The following discussion is based on our historical combined results of operations. The

historical combined results of operations included the financial information of the companies now

comprising the Group as result of the Reorganization as if the current group structure had been in

existence since 1 January 2002, or since their respective date of incorporation or establishment,

whichever is the shorter period. As a result of the factors discussed above, such results of operations

may not be indicative of our future operating performance. Our combined results for each of the

three years ended 31 December 2002, 2003 and 2004 and the six months ended 30 June 2004 and

2005 are summarized below.


2002 2003 2004 2004 2005

(RMB’000)

Turnover . . . . . . . . . . 763,095 1,931,503 2,548,939 1,353,848 2,378,074

Cost of sales . . . . . . . . (542,946) (1,529,654) (1,901,408) (1,026,340) (1,617,541)

Gross profit . . . . . . . . . 220,149 401,849 647,531 327,508 760,533

Other gains . . . . . . . . . 987 4,729 7,320 2,478 1,834

Selling and marketing

costs . . . . . . . . . . . . (129,771) (172,354) (187,782) (84,653) (104,453)

Administrative expenses . . (77,192) (92,525) (98,223) (51,591) (46,581)

Other operating expenses . (794) (1,825) (2,091) (1,146) (2,191)

Operating profit . . . . . . 13,379 139,874 366,755 192,596 609,142

Finance costs . . . . . . . . (28,528) (28,119) (17,113) (11,503) (5,797)

(Loss)/profit before

income tax . . . . . . . . (15,149) 111,755 349,642 181,093 603,345

Income tax credit/

(expense) . . . . . . . . . 4,942 (38,659) (119,364) (60,075) (199,717)

(Loss)/profit for the year/

period . . . . . . . . . . . (10,207) 73,096 230,278 121,018 403,628

Attributable to:

Owners . . . . . . . . . . . . (9,735) 71,950 227,609 120,820 401,653

Minority interests . . . . . . (472) 1,146 2,669 198 1,975

(10,207) 73,096 230,278 121,018 403,628

Dividends . . . . . . . . . . — — — — 77,451


— 134 —

The following table sets forth, for the periods indicated, certain items derived from our

combined income statements as a percentage of turnover.


2002 2003 2004 2004 2005

%

Turnover. . . . . . . . . . . 100 100 100 100 100

Cost of sales . . . . . . . . (71.2) (79.2) (74.6) (75.8) (68.0)

Gross profit . . . . . . . . . 28.8 20.8 25.4 24.2 32.0

Other gains . . . . . . . . . 0.1 0.2 0.3 0.2 0.1

Selling and marketing

costs . . . . . . . . . . . . (17.0) (8.9) (7.3) (6.3) (4.4)

Administrative expenses . . (10.0) (4.8) (3.9) (3.8) (2.0)

Other operating expenses . (0.1) (0.1) (0.1) (0.1) (0.1)

Operating profit . . . . . . 1.8 7.2 14.4 14.2 25.6

Finance costs . . . . . . . . (3.7) (1.4) (0.7) (0.8) (0.2)

(Loss)/profit before

income tax . . . . . . . . (1.9) 5.8 13.7 13.4 25.4

Income tax credit/

(expense) . . . . . . . . . 0.6 (2.0) (4.7) (4.5) (8.4)


period . . . . . . . . . . . (1.3) 3.8 9.0 8.9 17.0

Six Months Ended 30 June 2005 compared to Six Months Ended 30 June 2004

Turnover. Our turnover increased by 75.7% to RMB2,378.1 million for the six months ended 30

June 2005 from RMB1,353.8 million for the six months ended 30 June 2004, primarily due to the

increase in sales of property. The increase was slightly offset by a decrease of turnover generated

from our interior decoration related services.

. Property Development. Turnover generated from property development increased by

77.7% to RMB2,322.3 million for the six months ended 30 June 2005 from RMB1,307.0

million for the six months ended 30 June 2004, primarily attributable to a 37.3% increase

in the average realized sales price per sq.m. of our properties sold, and, to a lesser extent,

to a 29.4% increase in total GFA sold to 401,286 sq.m. for the six months ended 30 June

2005 from 310,101 sq.m. for the six months ended 30 June 2004.

The increase in total GFA sold primarily reflected more favorable market conditions in

our target markets, where demand for residential properties of high quality increased. The

increase in average realized sales price per sq.m. resulted primarily from a change in our

product mix as villas accounted for an increased portion of our turnover for the six

months ended 30 June 2005, as well as increases in sales prices for most of our

properties.


— 135 —

The following table sets forth the turnover generated from each project and the percentage

of the total turnover it represented in the six months ended 30 June 2005 and the six

months ended 30 June 2004, respectively.

Six months ended 30 June

Project 2005 2004

Turnover

Percentage

of turnover Turnover

Percentage

of turnover

(RMB’000) (%) (RMB’000) (%)

Metro Agile Zhongshan . 140,641 6.0 17,299 1.3

Majestic Garden/Grand

Garden . . . . . . . . . . 149,796 6.5 42,183 3.2

La Cite Greenville . . . . 428,949 18.5 566,403 43.4

Agile Garden Guangzhou 972,258 41.9 163,869 12.5

South Lagoon Guangzhou 204,450 8.8 95,901 7.3

Huadu Grand Garden . . 72,413 3.1 105,881 8.1

Nanhai Majestic Garden . 353,822 15.2 315,459 24.2

Total . . . . . . . . . . . . 2,322,329 100.0 1,306,995 100.0

. Property Management. Turnover generated from our property management increased by

34.2% to RMB49.1 million for the six months ended 30 June 2005 from RMB36.6 million

for the six months ended 30 June 2004, primarily due to an increase in the cumulative

GFA under our management.

. Interior Decoration. Turnover generated from our interior decoration decreased by 34.3%

to RMB6.7 million for the six months ended 30 June 2005 from RMB10.2 million for the

six months ended 30 June 2004, primarily due to a decrease in the volume of interior

decoration services rendered to the projects that were not injected to the Group in the

Reorganization.

Cost of Sales. Cost of sales increased by 57.6% to RMB1,617.5 million for the six months

ended 30 June 2005 from RMB1,026.3 million for the six months ended 30 June 2004, primarily

attributable to the increase in construction costs, costs of land use rights and business taxes, each

primarily as a result of the increase in the total GFA sold. Our LAT provision increased to

RMB179.1 million from RMB25.2 million primarily due to the increased sales of our properties as

well as to the increased portion of our sales accounted for by villas, which are typically taxed at

higher LAT rates and not subject to the ordinary residential property exemption.

Gross Profit. Gross profit increased by 132.2% to RMB760.5 million for the six months ended

30 June 2005 from RMB327.5 million for the six months ended 30 June 2004, primarily attributable

to the significant increase of the total GFA of the properties we sold and the higher gross profit

margin. Our gross profit margin increased to 32.0% from 24.2%, primarily due to (i) the increase of

the sales of villas as a percentage of our total turnover to 59% for the six months ended 30 June

2005 from 37% for the six months ended 30 June 2004 as sales of villas are more profitable as

compared to sales of our other products and (ii) an increase of average selling price of villas while

the average cost of sales for villas remained at the same level.


— 136 —

Other Gains. Other gains decreased by 26.0% to RMB1.8 million for the six months ended 30

June 2005 from 2.5 million for the six months ended 30 June 2004, primarily due to a decrease of

miscellaneous income.

Selling and Marketing Costs. Our selling and marketing costs increased by 23.4% to RMB104.5

million for the six months ended 30 June 2005 from RMB84.7 million for the six months ended 30

June 2004, primarily due to an increase in advertisement fees to RMB65.3 million for the six months

ended 30 June 2005 from RMB55.2 million for the six months ended 30 June 2004, resulting from

the higher investment in our promotional and marketing activities both in Hong Kong and

Guangdong Province.

Administrative Expenses. Administrative expenses decreased by 9.7% to RMB46.6 million for

the six months ended 30 June 2005 from RMB51.6 million for the six months ended 30 June 2004,

primarily due to the improvement of our cost control.

Finance Costs. Finance costs decreased by 49.6% to RMB5.8 million for the six months ended

30 June 2005 from RMB11.5 million for the six months ended 30 June 2004, mainly reflecting the

reduction of the total amount of our outstanding borrowings as we repaid part of our loans in 2004,

using proceeds from our sales.

Income Tax Expense. Income tax expense increased by 232.3% to RMB199.7 million for the six

months ended 30 June 2005 from RMB60.1 million for the six months ended 30 June 2004, primarily

due to the increase of profit before taxation.

Profit. Profit increased by 233.6% to RMB403.6 million for the six months ended 30 June 2005

from RMB121.0 million for the six months ended 30 June 2004. As a percentage of turnover, profit

increased to 17.0% for the six months ended 30 June 2005 from 8.9% for the six months ended 30

June 2004, as a result of the cumulative effect of the foregoing factors.

Minority Interests. Minority interests increased by 900.0% to RMB2.0 million for the six

months ended 30 June 2005 from RMB0.2 million for the six months ended 30 June 2004, primarily

due to the proportionate increase of profit attributable to the minority shareholders of our non-

wholly-owned subsidiaries, as a result of the increase of our profit after taxation.

2004 Compared to 2003

Turnover. Our turnover increased by 32.0% to RMB2,548.9 million in 2004 from RMB1,931.5

million in 2003, primarily due to the increase in sale of properties. The increase was slightly offset

by a decrease of turnover generated from our interior decoration related services.

. Property Development. Turnover generated from property development increased by

33.4% to RMB2,427.9 million in 2004 from RMB1,819.9 million in 2003, primarily

attributable to a 15.5% increase in total GFA sold to 534,588 sq.m. in 2004 from 462,897

sq.m. in 2003 and to a 15.5% increase in the average realized sales price per sq.m. of our

properties.


— 137 —

The increase in total GFA sold reflected the market conditions in the cities of Guangzhou,

Zhongshan and Foshan, where demand for private residential properties of high quality

has increased in recent years as economic growth has continued. The increase in average

realized sales price per sq.m. resulted primarily from a change in our product mix as

villas and retail shops, which carried higher sale prices than apartments, accounted for an

increased portion of our turnover in 2004, which was partially offset by decreases in the

sales prices for villas and retail shops, as a result of the increased portion of sales of

economical residential units in 2004.


it represented of the total turnover in 2003 and 2004, respectively.

2004 2003

Project Turnover

Percentage


Percentage

of turnover

(RMB’000) (%) (RMB’000) (%)

Metro Agile Zhongshan . . . . . . . . . . 73,343 3.0 — —

Majestic Garden/Grand Garden . . . . . 209,433 8.6 335,051 18.4

La Cite Greenville . . . . . . . . . . . . . 636,148 26.2 132,777 7.3

Agile Garden Guangzhou . . . . . . . . . 547,703 22.6 419,127 23.0

South Lagoon Guangzhou . . . . . . . . . 256,760 10.6 234,740 12.9

Huadu Grand Garden . . . . . . . . . . . 332,836 13.7 196,228 10.8

Nanhai Majestic Garden . . . . . . . . . . 371,657 15.3 502,007 27.6

Total . . . . . . . . . . . . . . . . . . . . . 2,427,880 100.0 1,819,930 100.0


74.2% to RMB83.6 million in 2004 from RMB48.0 million in 2003, primarily due to an

increase in cumulative GFA under our management.

. Interior Decoration. Turnover generated from our interior decoration decreased by 41.2%

to RMB37.4 million in 2004 from RMB63.6 million in 2003, primarily due to the

decrease in the volume of interior decoration services rendered to the Zhongshan Agile

Garden and Greenville Grand Garden projects as they approached completion in 2004.

Cost of Sales. Cost of sales increased by 24.3% to RMB1,901.4 million in 2004 from

RMB1,529.7 million in 2003, primarily due to a 19.5% increase of construction costs to RMB1,280.2

million in 2004 from RMB1,071.0 million in 2003 and, to a lesser extent, to the increases in costs

for land use rights. The increase of construction costs was primarily attributable to an increase in

total sales of our properties and, to a lesser extent, to the increase in sales of villas, which required

higher average construction costs. LAT increased by 277.1% to RMB80.7 million in 2004 from

RMB21.4 million in 2003, primarily due to the increased sales of our properties as well as to the

increased portion of our sales accounted for by villas and retail shops, which are typically taxed at

higher rates and not subject to the ordinary residential property exemption.

Gross Profit. Gross profit increased by 61.1% to RMB647.5 million in 2004 from RMB401.8

million in 2003, primarily due to the increase in sales of our properties. Our gross profit margin

increased to 25.4% in 2004 from 20.8% in 2003. This was primarily due to the higher profitability


— 138 —

of the properties sold from La Cite Greenville and Metro Agile Zhongshan as compared to our other

properties sold, and to the increase of sales of villas as a percentage of our turnover as sales of

villas are more profitable as compared to sales of our other products.

Other Gains. Other gains increased to RMB7.3 million in 2004 by 55.3% from RMB4.7 million

in 2003, primarily due to an increase of forfeited deposits from our customers and miscellaneous

income, both of which were in line with the growth of our pre-sales in 2004.

Selling and Marketing Costs. Our selling and marketing costs increased by 8.9% to RMB187.8

million in 2004 from RMB172.4 million in 2003. This was primarily due to an increase in our

general selling and marketing expenses as we promoted and sold more properties in 2004 and to an

increase of total salaries and benefits for our selling and marketing personnel. This increase was

partially offset by a slight decrease in advertising fees to RMB119.8 million in 2004 from

RMB127.1 million in 2003, as a result of our reduced investment in advertisements as our brand

name had become established in the market.

Administrative Expenses. Administrative expenses increased by 6.2% to RMB98.2 million in

2004 from RMB92.5 million in 2003, primarily due to an increase of total salaries and benefits for

our administrative personnel to RMB19.1 million in 2004 from RMB12.3 million in 2003 resulting

from the increased headcount.

Finance Costs. Finance costs decreased by 39.1% to RMB17.1 million in 2004 from RMB28.1

million in 2003, mainly reflecting the decrease of the total interest expenses as we repaid part of our

outstanding bank loans as well as the increase of the capitalized portion of interest expense in 2004.

Income Tax Expense. Income tax expense increased by 208.5% to RMB119.4 million in 2004

from RMB38.7 million in 2003, primarily due to the increase of profit before taxation.

Profit. Profit increased by 215.0% to RMB230.3 million in 2004 from RMB73.1 million in

2003. As a percentage of turnover, profit increased to 9.0% in 2004 from 3.8% in 2003, as a result

of the cumulative effect of the foregoing factors.

Minority Interests. Minority interests increased by 145.5% to RMB2.7 million in 2004 from

RMB1.1 million in 2003, primarily due to the proportionate increase of profit attributable to the

minority shareholders of our non-wholly-owned subsidiaries, as a result of the increase of our profit

after taxation in 2004.

2003 Compared to 2002

Turnover. Turnover increased by 153.1% to RMB1,931.5 million in 2003 from RMB763.1

million in 2002, primarily due to the increase in sale of our properties.

. Property Development. Turnover generated from property development increased 160.9%

to RMB1,819.9 million in 2003 from RMB697.5 million in 2002. The increase was

primarily attributable to a 182.9% increase in total GFA sold to 462,897 sq.m. in 2003

from 163,600 sq.m. in 2002 and partially offset by a 7.8% decrease in the average

realized sales price per sq.m. of our properties.

The increase in total GFA sold was primarily due to the recognition of sales of several

new projects, including Grand Garden, South Lagoon Guangzhou, Nahai Majestic Garden

and Huadu Grand Garden in 2003, as these projects were still under development in 2002.


— 139 —

Turnover from the sale of these new projects contributed approximately 58.6% in

aggregate to our total turnover generated from property developments in 2003. The

increase in total GFA sold also reflected the increased acceptance of our properties by

purchasers resulting from our strengthened brand name and the appeal of the ancillary

facilities, such as schools, established on our projects. The decrease in average realized

sales price per sq.m. was primarily due to a decrease in sales prices for apartments,

partially offset by the commencement of sales of villas and retail shops in 2003 which

carried higher sales prices.

2001 and 2002 saw the commencement of construction and promotion of several large-

scale projects which demanded significant capital layout in those years. As we had just

entered the markets of Guangzhou and Foshan, we incurred and recognized significant

expenditure in sales and marketing costs and other expenses for these projects in 2002.

However, we did not recognize a significant turnover from the sales arising from these

projects until 2003 or after, as revenue is recognized when the properties are delivered to

our purchasers. As a result, turnover and net profit margin was significantly lower in 2002

as compared to 2003 and 2004. We believe our strategic investment and development in

2002 positioned us well for the increasingly competitive market in the years after.


of the total turnover it represented in 2002 and 2003, respectively.

2003 2002

Project Turnover

Percentage


Percentage

of turnover

(RMB’000) (%) (RMB’000) (%)

Metro Agile Zhongshan . . . . . . . — — — —

Majestic Garden/ Grand Garden . . 335,051 18.4 508,765 72.9

La Cite Greenville . . . . . . . . . . 132,777 7.3 — —

Agile Garden Guangzhou . . . . . . 419,127 23.0 188,741 27.1

South Lagoon Guangzhou . . . . . . 234,740 12.9 — —

Huadu Grand Garden . . . . . . . . 196,228 10.8 — —

Nanhai Majestic Garden . . . . . . . 502,007 27.6 — —

Total . . . . . . . . . . . . . . . . . . 1,819,930 100.0 697,506 100.0


146.2% to RMB48.0 million in 2003 from RMB19.5 million in 2002, primarily due to an

increase in cumulative GFA under our management.

. Interior Decoration. Turnover generated from our interior decoration increased by 38.0%

to RMB63.6 million in 2003 from RMB46.1 million in 2002, primarily due to the increase

of interior decoration services rendered to the Zhongshan Agile Garden and Greenville

Grand Garden projects as they were both undergoing significant development and

construction in 2003.

Cost of Sales. Cost of sales increased by 181.8% to RMB1,529.7 million in 2003 from

RMB542.9 million in 2002 in line with the significant increase in the development of our properties,

which was attributable primarily to an increase in the construction costs to RMB1,071.0 million in

2003 from RMB363.8 million in 2002 and, to a lesser extent, attributable to an increase in land


— 140 —

costs. We did not make any LAT provision in 2002 as all our sales generated less than 20%

appreciation value and were exempted from LAT obligations under PRC law. We made a LAT

provision of RMB21.4 million in 2003 as a result of increased sales and increased portion of our

sales accounted for by properties that generate higher appreciation values and as a result were not

subject to the ordinary residential property exemption.

Gross Profit. Gross profit increased by 82.6% to RMB401.8 million in 2003 from RMB220.1

million in 2002 primarily due to the increase in turnover in 2003. Gross profit margin decreased to

20.8% in 2003 from 28.8% in 2002. The decrease was primarily due to (i) Majestic Garden

approached to the last stage of its sale and the remaining residential units were offered at

comparatively lower prices and (ii) the properties sold at South Lagoon Guangzhou and the low-rise

apartments sold at La Cite Greenville were less profitable compared to other properties sold in 2002.

Other Gains. Other gains increased by 370.0% to RMB4.7 million in 2003 from RMB1.0

million in 2002, primarily due to the increases of forfeited deposits from our customers and

miscellaneous income, both of which were in line with the growth of our pre-sales in 2003.

Selling and Marketing Costs. Selling and marketing costs increased 32.8% to RMB172.4

million in 2003 from RMB129.8 million in 2002, primarily due to a 41.3% increase in advertising

fees and an increase in total salaries and benefits for our selling and marketing personnel resulting

from the increase of headcount to support the commencement of pre-sales for several new projects in

2003.

Administrative Expenses. Administrative expenses increased 19.8% to RMB92.5 million in 2003

from RMB77.2 million in 2002, primarily due to an increase in the depreciation expenses on our

fixed assets as we acquired additional fixed assets during 2003. The increase of administrative

expenses was also attributable to an increase of total salaries and benefits for our administrative

personnel to RMB12.3 million in 2003 from RMB7.1 million in 2002, as a result of increased

headcount.

Income Tax Expense. We incurred income tax expense of RMB38.7 million in 2003, as

compared to enterprise income tax benefit of RMB4.9 million in 2002, as we had a profit before

taxation of RMB111.8 million in 2003 as compared to a loss of RMB15.1 million in 2002.

Profit. We recorded a net profit of RMB73.1 million in 2003, as compared to a loss of

RMB10.2 million in 2002 as a result of the cumulative effect of the foregoing factors.

Minority Interests. We accounted for minority interest to the other shareholders of our non-

wholly-owned subsidiaries in the amount of RMB1.1 million in 2003, as compared to a loss of

RMB0.5 million in 2002.

Liquidity and Capital Resources

To date we have funded our growth principally from internal funds, borrowings from banks and

proceeds from sales and pre-sales of our developed properties.


— 141 —

The following table presents selected cash flow data from our combined cash flow statements

for each of the three years ended 31 December 2002, 2003 and 2004 and the six months ended 30

June 2004 and 2005.


2002 2003 2004 2004 2005

(RMB’000)

Net cash (outflow)/inflow

from operating activities (905,956) 420,028 863,799 346,593 255,630


from investing activities (386,040) (511,147) 413,371 282,767 165,633

Net cash inflow/(outflow)

from financing . . . . . . 1,155,154 147,225 (1,198,069) (587,873) (353,319)

Cash and cash equivalents 37,415 93,521 172,622 135,008 240,566

Cash Flows From Operating Activities

Net cash inflow from operating activities decreased by 26.3% to RMB255.6 million for the six

months ended 30 June 2005 from RMB346.6 million for the corresponding period in 2004. Operating

profit before changes in working capital increased to RMB615.7 million in the first half of 2005

from RMB198.2 million in the corresponding period of 2004, primarily due to the increase of sales

of our properties. Changes in working capital contributed a cash outflow of RMB220.3 million for

the first half of 2005 as compared to a cash inflow of RMB216.9 million for the corresponding

period of 2004, primarily due to a decrease of trade and other payables of RMB382.7 million for the

first half of 2005 compared to an increase of RMB36.4 million for the corresponding period of 2004.

Such decrease was primarily attributable to a decease in total amount of received advances from

customers in the form of deposits and pre-paid purchase price of pre-sold properties as the sales of

such properties were finally recognized upon their completion and delivery in the first half of 2005,

partially offset by advances received from customers in the first half of 2005 in connection with the

pre-sales of other properties in such period.

Net cash inflow from operating activities increased by 105.7% to RMB863.8 million in 2004

from RMB420.0 million in 2003, which was primarily the result of a significant increase in profit

from operating activities. This increase was mainly due to the increase of the sales of our properties.

Our increase in net cash inflow from operating activities in 2004 also reflected an increase in trade

and other payables of RMB983.0 million, primarily attributable to the increase of deposits and pre-

paid purchase price of pre-sold properties received from customers resulting from the increased pre-

sales of our properties, which accounted for the substantial majority of the increase in our trade and

other payables from 31 December 2003 to 31 December 2004.

Net cash inflow from operating activities was RMB420.0 million in 2003, as compared to net

cash outflow from operating activities of RMB906.0 million in 2002. This was primarily because

several major projects were under development and had not generated any significant turnover in

2002.

As of 30 June 2005, we had accounts payables aged more than one year in the amount of

RMB165.0 million, which consisted primarily of RMB63.3 million in construction payments and

RMB101.7 million in land acquisition costs. We typically recognize construction costs or land

acquisition costs when we are required to perform our contractual obligations to pay them. Due to

the length of the interval between the time we enter into a construction contract, land use right


— 142 —

transfer agreement or land grant agreement and the time we are required to make payments pursuant

to the schedule specified in the contract, some of our accounts payables could age more than one

year. As to the date hereof, we are not aware of any disputes or claims relating to such accounts

payables.

Cash Flows From Investing Activities

Net cash inflow from investing activities decreased by 41.4% to RMB165.6 million for the six

months ended 30 June 2005 from RMB282.8 million for the corresponding period in 2004. The

decrease was primarily due to an increase in cash advances made to related parties to RMB256.8

million for the six months ended 30 June 2005 from RMB26.3 million for the corresponding period

in 2004, partially offset by an increase in repayments of cash advances received from related parties

to RMB430.3 million in the first half of 2005 from RMB313.1 million in the corresponding period in

2004. Both of the increases were attributable to our effort to reduce the outstanding balances of

borrowings between us and the related parties.

Net cash inflow from investing activities was RMB413.4 million in 2004, as compared to net

cash outflow of RMB511.1 million in 2003, primarily due to an increase in repayments of cash

advances received from our related parties to RMB591.1 million in 2004 from RMB37.0 million in

2003. Cash advances made to related parties in 2004 was RMB169.6 million, compared to

RMB517.4 million in 2003.

Net cash outflow from investing activities increased by 32.4% to RMB511.1 million in 2003

from RMB386.0 million in 2002, primarily due to an increase in the cash advances made to our

related parties to RMB517.4 million in 2003 from RMB386.6 million in 2002.

Cash Flows From Financing

Net cash outflow from financing decreased by 39.9% to RMB353.3 million for the six months

ended 30 June 2005 from RMB587.9 million for the corresponding period in 2004, primarily due to

an increase of new long-term loans in the amount of RMB134.0 million as a related party transferred

to Greenville Co. a long-term loan in the amount of RMB150.0 million as a part of our

Reorganization.

Net cash outflow from financing was RMB1,198.1 million in 2004, as compared to net cash

inflow from financing of RMB147.2 million in 2003, primarily due to a significant decrease in new

long term loans to RMB297.7 million in 2004 from RMB1,080.5 million in 2003, and to an increase

in our repayments of cash advances to related parties to RMB763.2 million in 2004 from RMB137.4

million in 2003, both as a result of our improvement in cash flows from both operating and investing

activities over the periods.

Net cash inflow from financing was RMB147.2 million in 2003 as compared to RMB1,155.2

million in 2002, primarily as a result of an increase in repayments of short term loans to RMB848.0

million in 2003 from RMB136.0 million in 2002.


— 143 —

Borrowings

Our net borrowings as of 31 December 2002, 2003 and 2004 and 30 June 2005, respectively,

were as follows:

As of 31 December As of 30 June

2002 2003 2004 2005

(RMB’000)

Bank borrowings . . . . . . . . . . . . 1,146,490 1,642,970 1,416,700 1,361,200

Borrowings from a related party . . 770,500 375,300 — —

Total borrowings . . . . . . . . . . . . 1,916,990 2,018,270 1,416,700 1,361,200

Less: Amount due within one year . (725,000) (410,500) (318,500) (361,000)

Non-current borrowings . . . . . . . . 1,191,990 1,607,770 1,098,200 1,000,200

Our loans for each of the three years ended 31 December 2002, 2003 and 2004 and for the six

months ended 30 June 2005, bore an average annual interest of 6.14%, 6.08%, 5.89% and 5.96%,

respectively. As of 30 June 2005, a substantial part of our borrowings were secured by land use

rights and properties of the Group. As of 31 December 2002, 2003 and 2004 and as of 30 June 2005,

our bank loans secured by land use rights and properties of our related parties were RMB25.0

million, RMB894.5 million, RMB844.2 million and RMB836.0 million, respectively. In addition, as

of 31 December 2002, 2003 and 2004 and as of 30 June 2005, our bank loans guaranteed by our

related parties were RMB1,023.5 million, RMB1,449.0 million, RMB1,253.7 million and

RMB1,259.2 million, respectively. All the related party guarantees and securities were released

from such related parties and assumed by our operating subsidiaries by 26 October 2005.

The maturity of our borrowings included in non-current liabilities as of 31 December 2002,

2003 and 2004 and 30 June 2005 is as follows:

As of 31 December As of 30 June

2002 2003 2004 2005

(RMB’000)

Between 1 and 2 years . . . . . . . . 188,000 695,300 629,000 497,000

Between 2 and 5 years . . . . . . . . 1,003,990 912,470 469,200 503,200

Over 5 years. . . . . . . . . . . . . . . — — — —

1,191,990 1,607,770 1,098,200 1,000,200

Restricted Cash

Pursuant to relevant regulations, certain of our project companies are required to deposit a

portion of proceeds from pre-sales of properties into specific bank accounts. Before the completion

of the pre-sold properties, the proceeds deposited in the specific bank accounts may only be used for

the restricted purposes of purchasing construction materials, equipment, making interim construction

payments and paying taxes, with the prior approval of the relevant local authorities. The local

governments of Guangzhou City and Foshan City require our project companies maintain 5% to 15%

of their pre-sale proceeds in the special accounts as guarantee deposits for construction of related

properties. There are no requirements to such effect in Zhongshan City. As of 31 December 2002,

2003 and 2004 and 30 June 2005, the outstanding amount of pre-sale proceeds so deposited was

approximately RMB29.8 million, RMB15.0 million, RMB69.8 million and RMB63.2 million,


— 144 —

respectively. See ‘‘— Certain Income Statement Items — Turnover,’’ ‘‘Business — Property

Development — Pre-sales,’’ and Note 12(b) to the Financial Statements in Appendix I to this

prospectus.

Working Capital

Taking into account the estimated net proceeds from the Global Offering, available banking

facilities and cashflows from our operations, we believe we have sufficient working capital for our

near term requirements.

We have a special purpose line of credit from the Agriculture Bank of China in the aggregate

amount of approximately RMB1.0 billion expiring in September 2008, none of which have been

drawn to date hereof.

Indebtedness

As at the close of business on 31 October 2005, being the latest practicable date for the

inclusion of information in this section prior to the printing of this prospectus, we had total

borrowings of RMB1,223.7 million, consisting of current borrowings of RMB511.5 million and non-

current borrowings of RMB712.2 million.

Maturity

Total

Less than

1 year 1–2 years 2–5 years

(RMB in millions)

Current portion of long-term bank loans

Secured . . . . . . . . . . . . . . . . . . . . . . 511.5 511.5 — —

Long-term bank loans

Secured . . . . . . . . . . . . . . . . . . . . . . 712.2 — 313.2 399.0

Total . . . . . . . . . . . . . . . . . . . . . . . . 1,223.7 511.5 313.2 399.0

As of 31 October 2005, our outstanding borrowings amounted to RMB1,223.7 million, all of

which were secured by land use rights and properties of the Group.

Contingent Liabilities

As of 31 October 2005, we provided guarantees of approximately RMB3,045.3 million to PRC

banks in respect of the mortgage loans provided by the banks to purchasers of our developed

properties. These guarantees will be released upon the earlier of (i) the issuance of the real estate

ownership certificate which will generally be available within one to two years after we deliver

possession of the relevant property to our customers; and (ii) the settlement of mortgaged loans

between the guarantee banks and the purchasers of our properties.

Contractual Obligations

As of 31 October 2005, our contractual obligations in connection with our property

development activities amounted to RMB1,579.0 million, primarily arising from contracted

construction fees or other capital commitments for future property developments.


— 145 —

Off-Balance Sheet Commitments and Arrangement

Except for the contingent liabilities set forth above, we have not entered into any financial

guarantees or other commitments to guarantee the payment obligations of any third parties. We have

not entered into any derivative contracts that are indexed to our Shares and classified as

shareholder’s equity, or that are not reflected in our combined financial statements. We do not have

any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or

credit support to us or engages in leasing or hedging or research and development services with us.

Market Factors

Interest Rate

Our business is sensitive to fluctuations in interest rates. An increase in interest rates would

adversely affect our prospective purchasers’ ability to obtain financing and depress the overall

housing demand. Higher interest rates may adversely affect our turnover, gross profits and net

income. The PBOC published benchmark one-year lending rates in China (which directly affects the

property mortgage rates offered by commercial banks in the PRC) for the years 2002, 2003 and 2004

were 5.31%, 5.31% and 5.58%, respectively. On 17 March 2005, the PBOC raised the minimum

property mortgage loan rate to 90% of the respective benchmark lending rates. As a result, the

minimum rate for property mortgages with a term of over five years has been increased to 5.51%, 20

basis points higher than the then existing minimum mortgage loan rate.

Foreign Exchange Rate

We conduct our business almost exclusively in RMB except that certain receipts of sales

proceeds are in other foreign currencies. The value of RMB against the U.S. dollar and other

currencies may fluctuate and is affected by, among other things, changes in China’s political and

economic conditions. The conversion of RMB into foreign currencies, including U.S. dollars, has

been based on rates set by the PBOC. On 21 July 2005, the PRC Government changed its decade-old

policy of pegging the value of RMB to the U.S. dollar. Under the new policy, RMB is permitted to

fluctuate within a narrow and managed band against a basket of certain foreign currencies. While the

international reaction to the RMB revaluation has generally been positive, there remains significant

international pressure on the PRC Government to adopt an even more flexible currency policy,

which could result in a further and more significant appreciation of RMB against the U.S. dollar.

Fluctuation in the value of RMB to the U.S. dollar may adversely affect our cash flows, revenues,

earnings and financial position. See ‘‘Risk Factors — Risks Relating to the PRC — Fluctuation in

the value of RMB may have a material adverse effect on your investment.’’

Inflation

In recent years, the PRC has not experienced significant inflation, and thus inflation has not

had a significant effect on our business during the past three years. According to the China

Statistical Bureau, China’s overall national inflation rate, as represented by the general consumer

price index, was approximately (0.8)%, 1.2% and 3.9% in 2002, 2003 and 2004, respectively.

Deflation could negatively affect our business as it would be a disincentive for prospective property

buyers to make a purchase. As of the date of this prospectus, we have not been materially affected

by any inflation or deflation.


— 146 —

Disclosure Required Under the Listing Rules

Our Directors have confirmed that they are not aware of any circumstances that would give rise

to a disclosure requirement under Rules 13.11 to 13.19 of the Listing Rules.

Profit Forecast

The Directors believe that, on the bases and assumptions set out in Appendix II, ‘‘Profit

Forecast,’’ and in the absence of unforeseen circumstances, our forecast of the combined profit

attributable to equity holders for the year ending 31 December 2005 is unlikely to be less than

RMB936 million. The profit forecast has been prepared by the Directors based on the audited

combined results of the Group for the six months ended 30 June 2005, the unaudited combined

results based on management accounts for the two months ended 30 August 2005 and a forecast of

the combined results of the Group for the four months ending 31 December 2005 on the basis that

the current Group structure had been in existence throughout the whole financial year ending 31

December 2005.

On a pro forma basis on the assumption that a total of 3,322,000,000 Shares were issued and

outstanding throughout the year ending 31 December 2005, the forecast earnings per Share for the

year ending 31 December 2005 is RMB0.28, representing a price/earnings multiple of 11.1 times or

12.2 times, depending on whether the Offer Price is HK$3.00 per Share or HK$3.30 per Share,

respectively.

Dividends

Subject to the Cayman Companies Law, we through a general meeting may declare dividends in

any currency but no dividend shall be declared in excess of the amount recommended by the Board.

Our Articles of Association provide that dividends may be declared and paid out of our profit,

realized or unrealized, or from any reserve set aside from profits which the Directors determine is no

longer needed. With the sanction of an ordinary resolution dividends may also be declared and paid

out of share premium account or any other fund or account which can be authorized for this purpose

in accordance with the Cayman Companies Law.

Except in so far as the rights attaching to, or the terms of issue of, any share may otherwise

provide, (i) all dividends shall be declared and paid according to the amounts paid up on the shares

in respect whereof the dividend is paid but no amount paid up on a share in advance of calls shall

for this purpose be treated as paid up on the share and (ii) all dividends shall be apportioned and

paid pro rata according to the amount paid up on the shares during any portion or portions of the

period in respect of which the dividend is paid. The directors may deduct from any dividend or other

monies payable to any member or in respect of any shares all sums of money (if any) presently

payable by him to us on account of calls or otherwise.

In addition, the declaration of dividends is subject to the discretion of our Directors, and the

amounts of dividends actually declared and paid will also depend upon the following factors:

. our general business conditions;

. our financial results;

. our capital requirements;


— 147 —

. interests of our shareholders; and

. any other factors which the Board may deem relevant.

Our Directors will declare dividends, if any, in Hong Kong dollars with respect to Shares on a

per share basis and will pay such dividends in Hong Kong dollars. Any final dividend for a fiscal

year will be subject to our shareholders’ approval.

Considering our financial position, our Board currently intends, subject to the above

limitations, and in the absence of any circumstances which might reduce the amount of available

distributable reserves, whether by losses or otherwise, to distribute to our shareholders a proportion

of our net profit for a particular financial year. There is, however, no assurance that dividends of

such amount or any amount will be declared or distributed each year or in any year.

For the years ended 31 December 2002, 2003, and 2004, we did not distribute any dividends to

our shareholders. For the six months ended 30 June 2005, the Group has declared and paid an

interim dividend of approximately RMB77.5 million to the then shareholders. In addition, subsequent

to the Completion of the Reorganization, the Group has declared a special dividend of approximately

RMB320 million. The special dividend will be paid prior to the commencement of the listing of our

Shares on the Stock Exchange. Purchasers of our Offer Shares in the Global Offering will not be

entitled to these dividends. In the event that any portion of such special dividend is not paid prior to

the commencement of the listing of our Shares on the Stock Exchange, such unpaid portion will be

waived by the relevant shareholders.

For the year ending 31 December 2005, our Board currently intends to recommend a final

dividend of approximately HK$0.028 per Share. However, the final determination to pay such

dividends will be made at the discretion of our board of directors and will be based upon our

earnings, cash flow, financial condition, capital requirements, and any other conditions that our

board of directors may deem relevant. The payment of dividends may be limited by legal restrictions

and by financing agreements that we may enter into in the future and to the restrictions set out in

the section headed ‘‘Financial Information — Dividends.’’

No Material Adverse Change

There was no interruption in our business that may have or has had a significant effect on our

financial condition in the last 12 months. We are not aware of any material adverse change in our

financial position since 30 June 2005 (being the date as of which our latest audited combined

financial statements were prepared as set out in the Accountants’ Report in Appendix I to the

prospectus).


— 148 —

FUTURE PLANS

We intend to grow our business steadily by focusing on property developments and the related

businesses. We intend to continue to focus on property development in the Pearl River Delta region

as well as to pursue strategic business opportunities elsewhere in China, such as Hainan Province

and Changsha City, Hunan Province, in a prudent manner. We may also expand into other property-

related businesses, such as hotel, shopping mall or office building businesses, with a view to

strengthening our performance and diversifying our business risks. See the section entitled ‘‘Business

— Business Strategies.’’

Based on our current development schedule and land bank, we will have sufficient land

reserves and pipeline for the next three years and will continue to maintain a three-year land reserve

on a rolling basis. Consistent with our future plans, our future property development will consist

largely of residential properties targeted at middle to upper middle income residents. As we engage

primarily in the development of large-scale development projects comprising multiple phases, our

future property development is categorized into the developments of properties under development

and properties held for future development based on the development status of our properties as of

30 June 2005. As of 30 June 2005, we had approximately 1.0 million sq.m. of GFA under

development and approximately 5.2 million sq.m. of GFA held for future development, in respect of

which we have obtained the relevant land use right certificates. We expect to complete all of the

GFA under development and 14.2% of the GFA held for future development by September 2006, and

another 20% of the GFA held for future development by September 2007. La Cite Greenville and

Agile Garden Guangzhou will account for substantially all of the 65.8% of the GFA held for future

development that will be completed between September 2007 and 2011, pursuant to a steady

development schedule.

Properties under Development

We estimate that an additional amount of approximately RMB1,275.1 million will be required

to complete all properties under development as of 30 June 2005, of which approximately 45% will

be incurred in the second half of 2005, another 45% in the first half of 2006, with the remaining

10% in the second half of 2006.

The table below sets forth certain information relating to our plans for the properties under

development of each of our 18 projects as of 30 June 2005.

Project

GFA of

properties under

development

Estimated additional

costs for the

completion of

properties under

development

Estimated completion time of

properties under development

sq.m RMB’million

La Cite Greenville . . . . . . . . . . . 231,585 351.7 December 2005

La Nobleu . . . . . . . . . . . . . . . . 42,616 39.4 December 2005

Metro Agile Zhongshan . . . . . . . . 61,476 29.4 December 2005

Metropolis . . . . . . . . . . . . . . . . 38,310 21.0 November 2005

Majestic Garden . . . . . . . . . . . . — — —

Grand Garden . . . . . . . . . . . . . . — — —

Star Palace . . . . . . . . . . . . . . . . 67,708 56.0 December 2005

The Riverside . . . . . . . . . . . . . . 56,341 47.8 December 2005

The Landmark . . . . . . . . . . . . . . — — —

Agile Garden Guangzhou . . . . . . . 127,674 273.3 December 2005

Jiangbei Estate . . . . . . . . . . . . . — — —

South Lagoon Guangzhou . . . . . . . 31,034 85.4 June 2006


— 149 —

Project

GFA of

properties under

development

Estimated additional

costs for the

completion of

properties under

development

Estimated completion time of

properties under development

sq.m RMB’million

Royal Hillside Villa . . . . . . . . . . 28,849 24.9 December 2005

Huadu Grand Garden . . . . . . . . . — — —

Huadu Flower Paris . . . . . . . . . . 168,439 179.6 June 2006

Huadu Majestic Garden . . . . . . . . — — —

Nanhai Majestic Garden . . . . . . . . 74,370 111.8 June 2006

Nanhai Majestic Metropolis . . . . . 64,083 54.8 December 2005

Total . . . . . . . . . . . . . . . . . . . 992,485 1,275.1

We plan to use internal funds, existing bank borrowings and proceeds from sales and pre-sales

of our developed properties to fund the completion of our properties under development as of 30

June 2005.

Properties Held for Future Development

We plan to use the proceeds from the Global Offering, internal funds, proceeds from sales and

pre-sales of our developed properties and, to a lesser extant, existing and new bank borrowings, to

fund the development of our properties held for future development as of 30 June 2005.

We plan to use the proceeds from the Global Offering to finance the properties held for future

development as of 30 June 2005 of several projects with the largest financing requirements among

the properties that are expected to complete by the end of 2006. See ‘‘— Use of Proceeds’’ for more

details. For the remaining part of the properties that are expected to complete by the end of 2006

and the properties that are expected to complete beyond 2006, we plan to finance them with a

combination of internal resources, proceeds from sales and pre-sales of our developed properties

and, to a lesser extent, existing and new bank borrowings.

USE OF PROCEEDS

The net proceeds of the Global Offering accruing to us (after deduction of underwriting fees

and estimated expenses payable by us in relation to the Global Offering, assuming the Over-

allotment Option is not exercised) are estimated to be approximately HK$2,355 million, assuming an

Offer Price of HK$3.00 per Share, or HK$2,596 million, assuming an Offer Price of HK$3.30 per

Share, (or if the Over-allotment Option is exercised in full, HK$2,769 million, assuming an Offer

Price of HK$3.00 per Share, or HK$3,051 million, assuming an Offer Price of HK$3.30 per Share).

We plan to use the proceeds from the Global Offering to finance the properties held for future

development as of 30 June 2005 of several projects with the largest financing requirements among

the properties that are expected to complete by the end of 2006 :

(a) approximately RMB806.1 million will be used to finance the development of

approximately 204,102 sq.m. of La Cite Greenville which is expected to complete in

late 2006;

(b) approximately RMB470.1 million will be used to finance the development of

approximately 137,968 sq.m. of Agile Garden Guangzhou which is expected to

complete in mid to late 2006;


— 150 —

(c) approximately RMB445.6 million will be used to finance the development of

approximately 132,362 sq.m. Nanhai Majestic Garden which is expected to complete in

mid to late 2006;

(d) approximately RMB322.6 million will be used to finance the development of

approximately 147,477 sq.m. of Metro Agile Zhongshan which is expected to complete

in late 2006;

(e) general corporate business purposes, in any event not more than 10% of the total net

proceeds.

The remaining portion of any net proceeds, if any, will be used to finance the development of

up to 145,522 sq.m. of Jiangbei Estate for approximately up to RMB431.6 million, which is expected

to complete in late 2006. Any insufficient funding for the above projects will be financed by internal

funds and/or bank borrowings. In the event that there is any change in our development plan,

including circumstances such as failure to obtain requisite approvals, changes in government policies

which would render any of the above property developments commercially not viable, and force

majeure, and new property developments, the Directors will carefully evaluate the situation and may

reallocate the intended funding to other existing or new property developments and/or hold such

funds on short-term deposit as the Directors consider to be in our interests and those of our

shareholders taken as a whole.

We will issue an announcement if there is any material change in the above proposed use of

proceeds.

The net proceeds of the Global Offering accruing to the Selling Shareholder (after deduction of

underwriting fees and commissions and estimated expenses payable by the Selling Shareholder in

relation to the Global Offering) are estimated to be approximately HK$353 million, assuming an

Offer Price of HK$3.00 per Share, or HK$389 million, assuming an Offer Price of HK$3.30 per

Share.

We will not receive any of the proceeds from the sale of the Offer Shares by the Selling

Shareholder.


— 151 —

HONG KONG UNDERWRITERS

Lead Manager


Co-Lead Managers

CLSA Limited

BOCI Asia Limited

Co-Managers

CAF Securities Company Limited

The Bank of East Asia, Limited

BCOM Securities Company Limited

Kingsway Financial Services Group Limited

South China Securities Limited

Sun Hung Kai International Limited

UNDERWRITING ARRANGEMENTS AND EXPENSES

Hong Kong Public Offering

Hong Kong Underwriting Agreement

Pursuant to the Hong Kong Underwriting Agreement, the Company is offering initially

95,508,000 Hong Kong Offer Shares for subscription by the public in Hong Kong on and

subject to the terms and conditions of this prospectus and the Application Forms. Subject to the

Listing Committee of the Stock Exchange granting listing of, and permission to deal in, the

Shares in issue and to be offered as mentioned herein and to certain other conditions set out in

the Hong Kong Underwriting Agreement, the Hong Kong Underwriters have agreed severally to

subscribe or procure subscribers for their respective applicable proportions of the Hong Kong

Offer Shares now being offered which are not taken up under the Hong Kong Public Offering

on the terms and conditions of this prospectus, the Application Forms and the Hong Kong

Underwriting Agreement. The Hong Kong Underwriting Agreement is conditional upon and

subject to the International Purchase Agreement having been signed and becoming

unconditional.

One of the conditions is that the Offer Price must be agreed between us and the Global

Coordinator, on behalf of the Underwriters. For applicants applying under the Hong Kong

Public Offering, this prospectus and the Application Forms contain the terms and conditions of

the Hong Kong Public Offering. The International Offering will be fully underwritten by the

International Underwriters. If, for any reason, the Offer Price is not agreed between us and the

Global Coordinator, on behalf of the Underwriters, the Global Offering will not proceed.

UNDERWRITING

— 152 —

Grounds for termination

The obligations of the Hong Kong Underwriters to subscribe or procure subscribers for

the Offer Shares under the Hong Kong Underwriting Agreement are subject to termination, if,

at any time prior to 8 : 00 a.m. on the day that trading in the Shares commences on the Hong

Kong Stock Exchange:

(i) there shall develop, occur, exist or come into effect:

(a) any new law or regulation or any change or development involving a

prospective change in existing laws or regulations or any change or

development involving a prospective change in the interpretation or

application thereof by any court or other competent authority in Hong Kong,

the PRC, the United States, the Cayman Islands or the United Kingdom; or

(b) any change or development involving a prospective change, or any event or

series of events likely to result in any change or development involving a

prospective change, in the local, national or international financial, political,

military, industrial, economic, currency or market or regulatory conditions or

any monetary or trading settlement system (including but not limited to a

change in the system under which the value of the Hong Kong currency is

linked to that of the currency of the United States or the Renminbi is linked to

any foreign currency or currencies) in any relevant jurisdiction; or

(c) a disruption or any general moratorium on commercial banking activities or

securities settlement, payment or clearance services or procedures in Hong

Kong (imposed by the Financial Secretary and/or the Hong Kong Monetary

Authority or otherwise), New York (imposed at Federal or New York State

level or otherwise), the PRC, the United Kingdom or the Cayman Islands; or

(d) the imposition of any moratorium, suspension or material restriction on trading

in securities generally on or by the Hong Kong Stock Exchange, the New York

Stock Exchange or the London Stock Exchange; or

(e) any change or development involving a prospective change in taxation or

exchange control (or the implementation of any exchange control or currency

exchange rates) in any relevant jurisdiction; or

(f) any adverse change or prospective adverse change in the earnings, business,

business prospects, financial or trading position, or conditions (financial or

otherwise) of the Company or any member of the Group (including any

litigation or claim of material importance being threatened or instigated against

the Company or any member of the Group); or

(g) any act of force majeure or any event, or series of events, beyond the control

of the Global Coordinator including, without limitation, acts of government,

labor disputes strikes, lock-outs, riots, public disorder, fire, explosion, flooding,

civil commotion, acts of war, acts of God, acts of terrorism, outbreak of

diseases or epidemics including, but not limited to, SARS and H5N1 and such

related/mutated forms or interruption or delay in transportation, economic

UNDERWRITING

— 153 —

sanction and any local, national, regional or international outbreak or escalation

of hostilities (whether or not war is or has been declared) or other state of

emergency or calamity or crisis; or

(h) any change or prospective change, or a materialisation of, any of the risks set

out in the section headed ‘‘Risk Factors’’; or

(i) a valid demand by any creditor for repayment or payment of any indebtedness

of the Company or any member of the Group or in respect of which the

Company or any member of the Group is liable prior to its stated maturity; or

(j) a petition is presented for the winding-up or liquidation of the Company or any

member of the Group or the Company or any member of the Group makes any

composition or arrangement with its creditors or enters into a scheme of

arrangement or any resolution is passed for the winding-up of the Company or

any member of the Group or a provisional liquidator, receiver or manager is

appointed over all or part of the assets or undertaking of the Company or any

member of the Group or anything analogous thereto occurs in respect of the

Company or any member of the Group,

which, in the sole opinion of the Global Coordinator (for itself and on behalf of the

Hong Kong Underwriters):

(1) is or may be or is likely to be materially adverse to the business, financial or

other condition or prospects of the Company or the Group or, in the case of

sub-paragraph (e), to any present or prospective shareholder of the Company in

his/its capacity as such; or

(2) has or might have or is likely to have a material adverse effect on the success

of the Global Offering or the level of Offer Shares being applied for or

accepted or the distribution of Offer Shares; or

(3) makes it inadvisable, impracticable or inexpedient to proceed with the Global

Offering or the delivery of the Offer Shares on the terms and in the manner

contemplated by this Prospectus; or

(ii) there comes to the notice of the Global Coordinator any matter or event showing any

of the Warranties or undertakings given by the Company or the Selling Shareholder

under the Hong Kong Underwriting Agreement or the International Purchase

Agreement to be untrue, inaccurate or misleading when given or repeated; or

(iii) there comes to the notice of the Global Coordinator any breach on the part of the

Company or the Selling Shareholder of any of the provision of the Hong Kong

Underwriting Agreement or the International Purchase Agreement; or

(iv) there comes to the notice of the Global Coordinator that any matter which would,

had it arisen or been discovered immediately before the prospectus date, not having

been disclosed in the prospectus, constitute a material omission therefrom; or

UNDERWRITING

— 154 —

(v) there comes to the notice of the Global Coordinator that any statement contained in

this prospectus has become or is discovered to be untrue, incorrect or misleading in

any material respect, or

(vi) there comes to the notice of the Global Coordinator that any event, act or omission

which gives or is likely to give rise to any liability of a material nature of the

Company pursuant to the indemnity provisions under the Hong Kong Underwriting

Agreement,

then the Global Coordinator may, upon giving notice orally or in writing to the Company

and the Hong Kong Underwriters, terminate the Hong Kong Underwriting Agreement with

immediate effect.

Undertakings

Pursuant to Rule 10.08 of the Listing Rules, the Company has undertaken to the Stock

Exchange that:

(i) except pursuant to the Global Offering, the Over-allotment Option, the Capitalization

Issue and the exercise of options under the Share Option Scheme at any time during

the period of six months from the date on which dealings in the Shares commence

on the Stock Exchange (the ‘‘First Six-month Period’’), it will not without the prior

consent of the Stock Exchange and unless in compliance with the requirements of

the Listing Rules, allot or issue or agree to allot or issue any Shares or other

securities of the Company (including warrants or other convertible securities) or

grant or agree to grant any options or rights over any Shares or other securities of

the Company or enter into any swap or other arrangement that transfers, in whole or

in part, any of the economic consequence of ownership of any Shares or offer to or

agree to do any of the foregoing or have any intention to do so; and

(ii) within a period of six months commencing from the expiry of the First Six-month

Period (the ‘‘Second Six-month Period’’), it will not allot or issue any Shares or

other securities of the Company (including warrants or other convertible securities)

or grant or agree to grant any options or rights over any Shares or other securities of

the Company or enter into any swap or other arrangement that transfers, in whole or

in part, any of the economic consequence of ownership of any Shares or offer to or

agree to do any of the foregoing or announce any intention to do so to the extent

that such action would result in Top Coast, Chen Zhuo Lin, Chan Cheuk Yin, Luk

Sin Fong, Fion, Chan Cheuk Hung, Chan Cheuk Hei, Chan Cheuk Nam, Lu Liqing,

Lu Yanping, Chan Siu Na or Zheng Huiqiong ceasing to be a controlling shareholder

(as defined in the Listing Rules) of the Company.

UNDERWRITING

— 155 —

Pursuant to the Hong Kong Underwriting Agreement, the Company has undertaken to each

of the Global Coordinator and the Hong Kong Underwriters (and is expected to undertake to

the International Underwriters) that, except pursuant to the Global Offering (including pursuant

to the Over-allotment Option), the Capitalization Issue and the grant or exercise of options

under the Share Option Scheme at any time after the date of the Hong Kong Underwriting

Agreement and until the end of the First Six-month Period, the Company will not, and will

cause each member of the Group not to, without the Global Coordinator’s prior written consent

and unless in compliance with the requirements of the Listing Rules:

(i) offer, pledge, charge, allot, issue, sell, contract to allot, issue or sell, sell any option

or contract to purchase, purchase any option or contract to sell, grant or agree to

grant any option, right or warrant to purchase or subscribe for, lend or otherwise

transfer or dispose of, either directly or indirectly, or repurchase, any of its share

capital or any securities convertible into or exercisable or exchangeable for or that

represent the right to receive such share capital, or

(ii) enter into any swap or other arrangement that transfers to another, in whole or in

part, any of the economic consequences of ownership of such share capital,

whether any of the foregoing transactions is to be settled by delivery of share capital or such

other securities, in cash or otherwise, or publicly disclose that the Company will or may enter

into any transaction described above. In the event that any disposal as described in (i) or (ii)

above of any Shares or any interest therein or any of the Company’s securities within the

Second Six-month Period, the Company will take all reasonable steps to ensure that such a

disposal will not create a disorderly or false market for the Shares.

Further, Top Coast has undertaken to the Global Coordinator, the Hong Kong underwriters

and the Company (and is expected to undertake to the International Underwriters), and each of

Chen Zhuo Lin, Chan Cheuk Yin, Luk Sin Fong, Fion, Chan Cheuk Hung, Chan Cheuk Hei,

Chan Cheuk Nam, Lu Liqing, Lu Yanping, Chan Siu Na and Zheng Huiqiong, jointly and

severally has agreed to procure (and is expected to agree with the International Underwriters to

procure) that, except pursuant to the Global Offering, without the prior written consent of the

Global Coordinator on behalf of the Hong Kong Underwriters, Top Coast will not, at any time

after the date of the Hong Kong Underwriting Agreement up to and until the end of the Second

Six-month Period:

(i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase

any option or contract to sell, grant or agree to grant any option, right or warrant to

purchase or subscribe for, lend, or otherwise transfer or dispose of, either directly or

indirectly, any share capital or other securities of the Company held by Top Coast

that are convertible into or exercisable or exchangeable for, or that represent the

right to receive such share capital of the Company; or

(ii) enter into any swap or other arrangement that transfers to another, in whole or in

part, any of the economic consequences of ownership of share capital of the

Company,

UNDERWRITING

— 156 —

whether any such transaction described in (i) or (ii) above is to be settled by delivery of share

capital of the Company or such other securities, in cash or otherwise. In the event of a disposal

of any of the share capital of the Company or any interest therein within 12 months after the

end of the Second Six-month Period, Top Coast will take all reasonable steps to ensure that

such a disposal will not create a disorderly or false market in the Shares.

Pursuant to Rule 10.07(1) of the Listing Rules, each of Top Coast, Chen Zhuo Lin, Chan

Cheuk Yin, Luk Sin Fong, Fion, Chan Cheuk Hung, Chan Cheuk Hei, Chan Cheuk Nam, Lu

Liqing, Lu Yanping, Chan Siu Na and Zheng Huiqiong has undertaken to the Stock Exchange

that:

(i) it will not, without the prior written consent of the Stock Exchange and unless in

compliance with the requirements of the Listing Rules, during the period

commencing from the date of this prospectus up to the expiry of the First Six-

month Period, dispose of any of the Shares in respect of which it is shown by this

prospectus to be the beneficial owner (the ‘‘Locked-up Shares’’); and

(ii) it will not, without the prior written consent of the Stock Exchange, within the

Second Six-month Period dispose of any of the Locked-up Shares if, immediately

following such disposal, any of Top Coast, Chen Zhuo Lin, Chan Cheuk Yin, Luk

Sin Fong, Fion, Chan Cheuk Hung, Chan Cheuk Hei, Chan Cheuk Nam, Lu Liqing,

Lu Yanping, Chan Siu Na or Zheng Huiqiong would cease to be a controlling

shareholder (as defined in the Listing Rules) of the Company.

Top Coast has also undertaken to us, the Global Coordinator and the Hong Kong

Underwriters pursuant to the Hong Kong Underwriting Agreement (and each of Chen Zhuo Lin,

Chan Cheuk Yin, Luk Sin Fong, Fion, Chan Cheuk Hung, Chan Cheuk Hei, Chan Cheuk Nam,

Lu Liqing, Lu Yanping, Chan Siu Na and Zheng Huiqiong has agreed to procure (and is

expected to agree with the International Underwriters to procure) that it will not without the

prior written consent of the Global Coordinator, directly or indirectly, and will procure that

none of its associates or companies controlled by it or any nominee or trustee holding in trust

for it shall at any time until the end of the Second Six-month Period do any of the acts that

may result in Top Coast, Chen Zhuo Lin, Chan Cheuk Yin, Luk Sin Fong, Fion, Chan Cheuk

Hung, Chan Cheuk Hei, Chan Cheuk Nam, Lu Liqing, Lu Yanping, Chan Siu Na and Zheng

Huiqiong ceasing to be a controlling shareholder (as defined in the Listing Rules) of the

Company.

Each of Top Coast, Chen Zhuo Lin, Chan Cheuk Yin, Luk Sin Fong, Fion, Chan Cheuk

Hung, Chan Cheuk Hei, Chan Cheuk Nam, Lu Liqing, Lu Yanping, Chan Siu Na and Zheng

Huiqiong has further undertaken to us, the Global Coordinator, the Hong Kong Underwriters

and the Stock Exchange (and is expected to undertake to the International Underwriters) that it

will, at any time after the date of this prospectus and until the end of the Second Six-month

Period immediately inform us, the Global Coordinator and the Stock Exchange of:

(i) any pledges or charges of any of the Shares or other securities of the Company

beneficially owned by it and the number of such Shares or other securities so

pledged or charged; and

(ii) any indication received by it, either verbal or written, form any pledgee or chargee

of any of our Shares or other securities pledged or charged that any of such Shares

or other securities of the Company will be dispose of.

UNDERWRITING

— 157 —

We will also inform the Stock Exchange as soon as we have been informed of the above

matters (if any) by each of Top Coast, Chen Zhuo Lin, Chan Cheuk Yin, Luk Sin Fong, Fion,

Chan Cheuk Hung, Chan Cheuk Hei, Chan Cheuk Nam, Lu Liqing, Lu Yanping, Chan Siu Na

and Zheng Huiqiong and disclose such matters by way of a press notice as soon as possible

after being so informed.

The International Offering

In connection with the International Offering, it is expected that the Company and the Selling

Shareholder amongst others, will enter into the International Purchase Agreement with the

International Underwriters. Under the International Purchase Agreement, it is expected that the

International Underwriters would, subject to certain conditions, severally and not jointly, agree to

procure subscribers for or purchasers for, or failing which to subscribe for or purchase themselves,

their respective applicable proportions of the International Offer Shares being offered pursuant to the

International Offering which are not taken up under the International Offering.

The Company is expected to grant to the International Underwriters the Over-allotment Option,

exercisable by the Global Coordinator on behalf of the International Underwriters at any time from

the date of the International Purchase Agreement until 30 days after the last date for the lodging of

applications under the Hong Kong Public Offering, to require the Company to allot and issue up to

an aggregate of 143,260,000 additional Offer Shares representing approximately 15% of the initial

Offer Shares, at the same price per Share under the International Offering to cover, among other

things, over-allocations (if any) in the International Offering.

Total Commission and Expenses

The Hong Kong Underwriters will receive an underwriting commission of 3.0% on the Offer

Price of the Hong Kong Offer Shares initially offered under the Hong Kong Public Offering, out of

which they will pay any sub-underwriting commission. For unsubscribed Hong Kong Offer Shares

reallocated to the International Offering, the Company and the Selling Shareholder will pay an

underwriting commission at the rate applicable to the International Offering and such commission

will be paid to the Global Coordinator and the relevant International Underwriters (but not the Hong

Kong Underwriters). In addition, we and the Selling Shareholder may, in our sole discretion, pay the

Global Coordinator an additional incentive fee of up to 0.5% of the gross proceeds from the Global

Offering (including any proceeds pursuant to the exercise of the Over-allotment Option).

Assuming an Offer Price of HK$3.15 per Share (being the mid-point of the indicative offer

price range of HK$3.00 to HK$3.30 per Share), the aggregate commissions and fees, together with

listing fees, SFC transaction levy, investor compensation levy, Stock Exchange trading fee, legal and

other professional fees and printing and other expenses relating to the Global Offering are estimated

to approximately HK$161.6 million (assuming the Over-allotment Option is not exercised) in total.

Such commissions, fees and expenses are payable by the Company as to HK$140.5 million and the

Selling Shareholder as to HK$21.1 million, being in proportion to the amount of Offer Shares sold

by the Company and the Selling Shareholder in the Global Offering.

Hong Kong Underwriters’ Interests in the Company

Save as disclosed in this prospectus and save for its obligations under the Hong Kong

Underwriting Agreement, none of the Hong Kong Underwriters has any shareholding interests in the

Group or the right or option (whether legally enforceable or not) to subscribe for or nominate

persons to subscribe for securities in any member of the Group.

UNDERWRITING

— 158 —

THE GLOBAL OFFERING

This prospectus is published in connection with the Hong Kong Public Offering as part of the

Global Offering. The Global Offering comprises:

(i) the Hong Kong Public Offering of 95,508,000 Offer Shares (subject to adjustment as

mentioned below) in Hong Kong as described below in the section entitled ‘‘The Hong

Kong Public Offering’’ below; and

(ii) the International Offering of an aggregate of 859,562,000 Offer Shares (subject to

adjustment as mentioned below) outside the United States and Canada (including to

professional and institutional investors within Hong Kong) and in the United States to

QIBs in reliance on Rule 144A.

Of the total 955,070,000 Offer Shares comprised in the Global Offering, 830,500,000 Offer

Shares are offered by the Company and 124,570,000 Offer Shares are offered by the Selling

Shareholder.

Investors may apply for Offer Shares under the Hong Kong Public Offering or apply for or

indicate an interest for Offer Shares under the International Offering, but may not do both.

The Offer Shares will represent approximately 28.75% of the enlarged issued share capital of

the Company immediately after completion of the Global Offering and the Capitalization Issue,

without taking into account the exercise of the Over-allotment Option. If the Over-allotment Option

is exercised in full, the Offer Shares will represent approximately 31.70% of the enlarged issued

share capital immediately after completion of the Global Offering, the Capitalization Issue and the

exercise of the Over-allotment Option as set out in the paragraph headed ‘‘Over-allotment Option’’

below.

THE HONG KONG PUBLIC OFFERING

Number of Offer Shares initially offered

The Company is initially offering 95,508,000 Offer Shares for subscription by the public in

Hong Kong at the Offer Price, representing approximately 10% of the total number of Offer Shares

initially available under the Global Offering.

The Hong Kong Public Offering is open to members of the public in Hong Kong as well as to

institutional and professional investors. The Offer Shares will represent approximately 30% of the

Company’s registered share capital immediately after completion of the Global Offering, assuming

that the Over-allotment Option is not exercised. Professional investors generally include brokers,

dealers, companies (including fund managers) whose ordinary business involves dealing in shares

and other securities and corporate entities which regularly invest in shares and other securities.

Completion of the Hong Kong Public Offering is subject to the conditions as set out in the

section below entitled ‘‘Conditions of the Hong Kong Public Offering.’’


— 159 —

Allocation

Allocation of Offer Shares to investors under the Hong Kong Public Offering will be based

solely on the level of valid applications received under the Hong Kong Public Offering. The basis of

allocation may vary, depending on the number of Hong Kong Offer Shares validly applied for by

applicants, but, subject to that, will be made strictly on a pro-rata basis. Such allocation could,

where appropriate, consist of balloting, which would mean that some applicants may receive a higher

allocation than others who have applied for the same number of Hong Kong Offer Shares, and those

applicants who are not successful in the ballot may not receive any Hong Kong Offer Shares.

The total number of Offer Shares available under the Hong Kong Public Offering (after taking

account of any reallocation referred to below) is to be divided into 2 pools for allocation purposes:

pool A and pool B. The Offer Shares in pool A will be allocated on an equitable basis to applicants

who have applied for Offer Shares with an aggregate price of HK$5 million (excluding the

brokerage, SFC transaction levy, investor compensation levy and Stock Exchange trading fee

payable) or less. The Offer Shares in pool B will be allocated on an equitable basis to applicants

who have applied for Offer Shares with an aggregate price of more than HK$5 million (excluding

the brokerage, SFC transaction levy, investor compensation levy and Stock Exchange trading fee

payable). Investors should be aware that applications in pool A and applications in pool B may

receive different allocation ratios. If Offer Shares in one (but not both) of the pools are under

subscribed, the surplus Offer Shares will be transferred to the other pool to satisfy demand in this

other pool and be allocated accordingly. For the purpose of this paragraph only, the ‘‘price’’ for

Offer Shares means the price payable on application therefor (without regard to the Offer Price as

finally determined). Applicants can only receive an allocation of Offer Shares from either pool A or

pool B but not from both pools. Multiple or suspected multiple applications and any application for

more than 47,754,000 Offer Shares are liable to be rejected.

Reallocation

The allocation of the Offer Shares between (i) the Hong Kong Public Offering and (ii) the

International Offering is subject to adjustment. If the number of Offer Shares validly applied for

under the Hong Kong Public Offering represents (i) 15 times or more but less than 50 times, (ii) 50

times or more but less than 100 times, and (iii) 100 times or more of the number of Offer Shares

initially available under the Hong Kong Public Offering, then Offer Shares will be reallocated to the

Hong Kong Public Offering from the International Offering. As a result of such reallocation, the

total number of Offer Shares available under the Hong Kong Public Offering will be increased to

286,524,000 Offer Shares (in the case of (i)), 382,032,000 Offer Shares (in the case of (ii)) and

477,540,000 Offer Shares (in the case of (iii)) representing approximately 30%, 40% and 50% of the

Offer Shares initially available under the Global Offering, respectively (before any exercise of the

Over-allotment Option). In each case, the additional Offer Shares reallocated to the Hong Kong

Public Offering will be allocated between pool A and pool B and the number of Offer Shares

allocated to the International Offering will be correspondingly reduced in such manner as the Global

Coordinator deems appropriate. In addition, the Global Coordinator may allocate Offer Shares from

the International Offering to the Hong Kong Public Offering to satisfy valid applications under the

Hong Kong Public Offering.

If the Hong Kong Public Offering is not fully subscribed for, the Global Coordinator has the

authority to reallocate all or any unsubscribed Hong Kong Offer Shares to the International Offering,

in such proportions as the Global Coordinator deems appropriate.


— 160 —

Applications

Each applicant under the Hong Kong Public Offering will also be required to give an

undertaking and confirmation in the Application Form submitted by him that he and any person(s)

for whose benefit he is making the application have not applied for or taken up, or indicated an

interest for, and will not apply for or take up, or indicate an interest for, any Offer Shares under the

International Offering, and such applicant’s application is liable to be rejected if the said

undertaking and/or confirmation is breached and/or untrue (as the case may be) or it has been or will

be placed or allocated Offer Shares under the International Offering.

The listing of the Offer Shares on the Stock Exchange is sponsored by the Sponsor. Applicants

under the Hong Kong Public Offering are required to pay, on application, the maximum price of

HK$3.30 per Share in addition to any brokerage, SFC transaction levy, investor compensation levy

and Stock Exchange trading fee payable on each Offer Share. If the Offer Price, as finally

determined in the manner described in the section entitled ‘‘Pricing of the Global Offering’’ below,

is less than the maximum price of HK$3.30 per Share, appropriate refund payments (including the


attributable to the surplus application monies) will be made to successful applicants, without

interest. Further details are set out below in the section entitled ‘‘How to Apply For Hong Kong

Offer Shares.’’

References in this prospectus to applications, Application Forms, application monies or the

procedure for application relate solely to the Hong Kong Public Offering.

THE INTERNATIONAL OFFERING

Number of Offer Shares offered

Subject to reallocation as described above, the International Offering will consist of an

aggregate of 859,562,000 Offer Shares.

Allocation

The International Offering will include selective marketing of Offer Shares to institutional and

professional investors and other investors anticipated to have a sizeable demand for such Offer

Shares. Professional investors generally include brokers, dealers, companies (including fund

managers) whose ordinary business involves dealing in shares and other securities and corporate

entities which regularly invest in shares and other securities. Allocation of Offer Shares pursuant to

the International Offering will be effected in accordance with the ‘‘book-building’’ process described

in the section entitled ‘‘Pricing of the Global Offering’’ below and based on a number of factors,

including the level and timing of demand, the total size of the relevant investor’s invested assets or

equity assets in the relevant sector and whether or not it is expected that the relevant investor is

likely to buy further Offer Shares, and/or hold or sell its Offer Shares, after the listing of the Offer

Shares on the Stock Exchange. Such allocation is intended to result in a distribution of the Offer

Shares on a basis which would lead to the establishment of a solid professional and institutional

shareholder base to the benefit of the Company and its shareholders as a whole.


— 161 —

The Global Coordinator (on behalf of the Underwriters) may require any investor who has been

offered Offer Shares under the International Offering, and who has made an application under the

Hong Kong Public Offering to provide sufficient information to the Global Coordinator so as to

allow it to identify the relevant applications under the Hong Kong Public Offering and to ensure that

it is excluded from any application of Offer Shares under the Hong Kong Public Offering.

Over-allotment Option

In connection with the Global Offering, the Company is expected to grant an Over-allotment

Option to the International Underwriters exercisable by the Global Coordinator on behalf of the

International Underwriters.

Pursuant to the Over-allotment Option, the Global Coordinator have the right, exercisable at

any time from the date of the International Purchase Agreement until 30 days after the last date for

the lodging of applications under the Hong Kong Public Offering, to require the Company to allot

and issue up to 143,260,000 additional Offer Shares, representing approximately 15% of the initial

Offer Shares, at the same price per Share under the International Offering to cover, among other

things, over-allocation in the International Offering, if any. If the Over-allotment Option is exercised

in full, the additional Offer Shares will represent approximately 4.13% of the Company’s enlarged

share capital immediately following the completion of the Global Offering and the exercise of the

Over-allotment Option. In the event that the Over-allotment Option is exercised, a press

announcement will be made.

PRICING OF THE GLOBAL OFFERING

The International Underwriters will be soliciting from prospective investors indications of

interest in acquiring Offer Shares in the International Offering. Prospective professional and

institutional investors will be required to specify the number of Offer Shares under the International

Offering they would be prepared to acquire either at different prices or at a particular price. This

process, known as ‘‘book-building,’’ is expected to continue up to, and to cease on or around, the

last day for lodging applications under the Hong Kong Public Offering.

Pricing for the Offer Shares for the purpose of the various offerings under the Global Offering

will be fixed on the Price Determination Date, which is expected to be on or around Friday,

9 December, 2005, and in any event on or before Tuesday, 13 December, 2005, by agreement

between the Global Coordinator (on behalf of the Underwriters), the Company and the Selling

Shareholder and the number of Offer Shares to be allocated under various offerings will be

determined shortly thereafter.

The Offer Price will not be more than HK$3.30 per Share and is expected to be not less than

HK$3.00 per Share unless otherwise announced, as further explained below, not later than the

morning of the last day for lodging applications under the Hong Kong Public Offering. Prospective

investors should be aware that the Offer Price to be determined on the Price Determination

Date may be, but is not expected to be, lower than the indicative offer price range stated in this

prospectus.

The Global Coordinator, on behalf of the Underwriters, may, where considered appropriate,

based on the level of interest expressed by prospective professional and institutional investors during

the book-building process, and with the consent of the Company and the Selling Shareholder, reduce

the number of Offer Shares offered in the Global Offering and/or the indicative offer price range

below that stated in this prospectus at any time on or prior to the morning of the last day for lodging


— 162 —

applications under the Hong Kong Public Offering. In such a case, the Company will, as soon as

practicable following the decision to make such reduction, and in any event not later than the

morning of the day which is the last day for lodging applications under the Hong Kong Public

Offering, cause there to be published in the South China Morning Post and the Hong Kong

Economic Times notices of the reduction. Upon issue of such a notice, the number of Offer Shares

offered in the Global Offering and/or the revised offer price range will be final and conclusive and

the offer price, if agreed upon by the Global Coordinator, on behalf of the Underwriters, the Selling

Shareholder and the Company, will be fixed within such revised offer price range. Applicants should

have regard to the possibility that any announcement of a reduction in the number of Offer Shares

being offered under the Global Offering and/or the indicative offer price range may not be made

until the day which is the last day for lodging applications under the Hong Kong Public Offering.

Such notice will also include confirmation or revision, as appropriate, of the working capital

statement and the profit forecast for the year ending 31 December 2005 and the Global Offering

statistics as currently set out in this prospectus, and any other financial information which may

change as a result of such reduction. Applicants under the Hong Kong Public Offering should

note that in no circumstances can applications be withdrawn once submitted, even if the

number of Offer Shares being offered under the Global Offering and/or the offer price range is

so reduced. In the absence of any such notice so published, the Offer Price, if agreed upon with the

Company, the Selling Shareholder and the Global Coordinator, will under no circumstances be set

outside the offer price range as stated in this prospectus.

The net proceeds of the Global Offering accruing to the Company (after deduction of

underwriting fees and estimated expenses payable by the Company in relation to the Global

Offering, assuming the Over-allotment Option is not exercised) are estimated to be approximately

HK$2,355 million, assuming an Offer Price per Share of HK$3.00, or approximately HK$2,596

million, assuming an Offer Price per Share of HK$3.30 (or if the Over-allotment Option is exercised

in full, approximately HK$2,769 million, assuming an Offer Price per Share of HK$3.00, or

approximately HK$3,051 million, assuming an Offer Price per Share of HK$3.30).

The net proceeds of the Global Offering accruing to the Selling Shareholder (after deduction of

underwriting fees and estimated expenses payable by the Selling Shareholder in relation to the

Global Offering) are estimated to be approximately HK$353 million, assuming an Offer Price of

HK$3.00 per Share, or HK$389 million, assuming an Offer Price of HK$3.30 per Share.

The final Offer Price, the indications of interest in the Global Offering, the results of

applications and the basis of allotment of Offer Shares available under the Hong Kong Public

Offering, are expected to be announced on Wednesday, 14 December, 2005 in the South China

Morning Post and the Hong Kong Economic Times.

HONG KONG UNDERWRITING AGREEMENT

The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters under

the terms of the Hong Kong Underwriting Agreement and is conditional upon the International

Purchase Agreement being signed and becoming unconditional.

The Company expects to enter into the International Purchase Agreement relating to the

International Offering on or around the Price Determination Date.

These underwriting arrangements, and the respective Underwriting Agreements, are summarized

in the section entitled ‘‘Underwriting.’’


— 163 —

DEALING

Assuming that the Hong Kong Public Offering becomes unconditional at or before 8 : 00 a.m. in

Hong Kong on Thursday, 15 December 2005, it is expected that dealings in the Offer Shares on the

Stock Exchange will commence at 9 : 30 a.m. on Thursday, 15 December 2005.

CONDITIONS OF THE HONG KONG PUBLIC OFFERING

Acceptance of all applications for Offer Shares pursuant to the Hong Kong Public Offering will

be conditional on:

(i) the Listing Committee of the Stock Exchange granting listing of, and permission to deal

in, the Offer Shares being offered pursuant to the Global Offering (including the

additional Offer Shares which may be made available pursuant to the exercise of the

Over-allotment Option) (subject only to allotment);

(ii) the Offer Price having been fixed on or around the Price Determination Date;

(iii) the execution and delivery of the International Purchase Agreement on or around the Price

Determination Date; and

(iv) the obligations of the Underwriters under each of the respective Underwriting Agreements

becoming and remaining unconditional and not having been terminated in accordance with

the terms of the respective agreements,

in each case on or before the dates and times specified in the respective Underwriting Agreements

(unless and to the extent such conditions are validly waived on or before such dates and times) and

in any event not later than 4 January 2006.

If, for any reason, the Offer Price is not agreed between the Company, the Selling

Shareholder and the Global Coordinator (on behalf of the Underwriters), the Global Offering

will not proceed.

The consummation of each of the Hong Kong Public Offering and the International Offering is

conditional upon, among other things, the other offering becoming unconditional and not having

been terminated in accordance with its terms.

If the above conditions are not fulfilled or waived prior to the times and dates specified, the

Global Offering will lapse and the Stock Exchange will be notified immediately. Notice of the lapse

of the Hong Kong Public Offering will be published by the Company in the South China Morning

Post and the Hong Kong Economic Times on the next day following such lapse. In such eventuality,

all application monies will be returned, without interest, on the terms set out in the section entitled

‘‘How to Apply for Hong Kong Offer Shares.’’ In the meantime, all application monies will be held

in (a) separate bank account(s) with the receiving banker or other licensed bank(s) in Hong Kong

licensed under the Banking Ordinance (Chapter 155 of the Laws of Hong Kong) (as amended).

Share certificates for the Shares are expected to be issued on Wednesday, 14 December 2005

but will only become valid certificates of title at 8 : 00 a.m. on Thursday, 15 December 2005

provided that (i) the Global Offering has become unconditional in all respects and (ii) the right of

termination as described in the section entitled ‘‘Underwriting — Grounds for termination’’ has not

been exercised.


— 164 —

I. METHODS OF APPLYING FOR THE HONG KONG OFFER SHARES

There are two ways to make an application for the Hong Kong Offer Shares. You may apply

for the Hong Kong Offer Shares by either using a white or yellow Application Form or giving

electronic application instructions to HKSCC to cause HKSCC Nominees to apply for the Hong

Kong Offer Shares on your behalf. Except where you are a nominee and provide the required

information in your application, you or you and your joint applicant(s) may not make more than one

application (whether individually or jointly) by applying on a white or yellow Application Form or

by giving electronic application instructions to HKSCC.

II. APPLYING BY USING A WHITE OR YELLOW APPLICATION FORM

1. Which Application Form to Use

(a) Use a white Application Form if you want the Offer Shares to be issued in your own

name.

(b) Use a yellow Application Form if you want the Offer Shares to be issued in the

name of HKSCC Nominees and deposited directly into CCASS for credit to your

CCASS Investor Participant stock account or your designated CCASS Participant’s

stock account.

Note: The Offer Shares are not available to existing beneficial owners of Shares in the Company, Directors or

chief executives of the Company or any of its subsidiaries, or associates of any of them (an ‘‘associate’’

is defined in the Listing Rules) or to legal or natural persons of the PRC (other than Hong Kong, Macau

and Taiwan) or United States persons (as defined in Regulation S) or persons who do not have a Hong

Kong address.

2. Where to Collect the Application Forms

(a) You can collect a white Application Form and a prospectus from:

any of the following addresses of the Hong Kong Underwriters:


30th Floor, Three Exchange Square, Central, Hong Kong

CLSA Limited

18/F Pacific Place One, Admiralty

BOCI Asia Limited

26th Floor, Bank of China Tower, 1 Garden Road, Central, Hong Kong

CAF Securities Company Limited

13th Floor, Fairmont House, 8 Cotton Tree Drive, Central, Hong Kong

The Bank of East Asia, Limited

10 Des Voeux Road Central, Hong Kong

BCOM Securities Company Limited

3rd Floor, Far East Consortium Building, 121 Des Voeux Road Central, Hong Kong

HOW TO APPLY FOR HONG KONG OFFER SHARES

— 165 —

Kingsway Financial Services Group Limited

5/F, Hutchison House, 10 Harcourt Road, Central, Hong Kong

South China Securities Limited

28/F., Bank of China Tower, No. 1 Garden Road, Central, Hong Kong

Sun Hung Kai International Limited

Level 12, One Pacific Place, 88 Queensway, Hong Kong

or any of the following branches of The Bank of East Asia, Limited;

District Branch Address

Hong Kong

Island

Main Branch 10 Des Voeux Road Central

Causeway Bay Branch 46 Yee Wo Street

88 Des Voeux Road West Branch Shop Nos. 2-3, G/F, Princeton Tower,

88 Des Voeux Road West, Hong

Kong

North Point Branch 326-328 King’s Road

Wanchai Branch Shop Nos A-C, G/F, Easey

Commercial Building, 253–261

Hennessy Road, Wanchai, Hong

Kong

Kowloon Kwun Tong Branch 7 Hong Ning Road

Mongkok Branch 638–640 Nathan Road

Prince Edward Branch G/F, Hanley House, Nos 776–778

Nathan Road, Kowloon

San Po Kong Branch 65 Shung Ling Street

Tsim Sha Tsui Branch Shop A & B, Milton Mansion, No.96

Nathan Road, Kowloon

New Territories Tai Wai Branch 16–18 Tai Wai Road, Cheung Fung

Mansion, Shatin

Tsuen Wan Branch 239–243 Sha Tsui Road

or any of the following branches of Bank of China (Hong Kong) Limited;


Hong Kong

Island

Bank of China Tower Branch 3/F, 1 Garden Road

Central District (Wing On House)

Branch

71 Des Voeux Road Central

Shek Tong Tsui Branch 534 Queen’s Road West,

Shek Tong Tsui

Taikoo Shing Branch Shop G1006–7, Hoi Sing Mansion,

Taikoo Shing

North Point (Kiu Fai Mansion)

Branch

413–415 King’s Road, North Point


— 166 —


Kowloon Kwun Tong Branch 20–24 Yue Man Square, Kwun Tong

Shanghai Street

(Mong Kok) Branch

611–617 Shanghai Street, Mong Kok

Mei Foo Mount Sterling Mall Branch Shop N47–49 Mount Sterling Mall,

Mei Foo Sun Chuen

To Kwa Wan Branch 80N To Kwa Wan Road, To Kwa Wan

Tsim Sha Tsui East Branch Shop G02–03,

Inter-Continental Plaza, 94

Granville Road, Tsim Sha Tsui

New Territories Castle Peak Road

(Tsuen Wan) Wealth Management

Center

167 Castle Peak Road, Tsuen Wan

Lucky Plaza Branch Lucky Plaza, Wang Pok Street, Shatin

(b) You can collect a yellow Application Form and a prospectus from:

(1) the Depository Counter of HKSCC at 2nd Floor, Vicwood Plaza, 199 Des

Voeux Road Central, Hong Kong; or

(2) the Customer Service Center of HKSCC at Upper Ground Floor, V-Heun

Building, 128–140 Queen’s Road Central, Hong Kong; or

(3) your stockbroker, who may have such Application Forms and this prospectus

available.

How to complete the Application Form and make payment

There are detailed instructions on each Application Form. You should read these

instructions carefully. If you do not follow the instructions your application may be rejected

and returned by ordinary post together with the accompanying cheque or banker’s cashier order

to you (or the first-named applicant in the case of joint applicants) at your own risk at the

address stated in the Application Form.

You should note that by completing and submitting the Application Form, amongst other

things, you:

(i) agree with the Company and each shareholder of the Company, and the Company

agrees with each of its shareholders, to observe and comply with the Companies

Ordinance, the Memorandum and the Articles of Association;

(ii) agree with the Company and each shareholder of the Company that the Shares in the

Company are freely transferable by the holders thereof;

(iii) authorise the Company to enter into a contract on your behalf with each of the

Directors and officers of the Company whereby each such Director and officer

undertakes to observe and comply with his obligations to shareholders as stipulated

in the Memorandum and Articles of Association;


— 167 —

(iv) confirm that you have only relied on the information and representations in this

prospectus in making your application and will not rely on any other information

and representations save as set out in any supplement to this prospectus;

(v) agree that the Company and the Directors are liable only for the information and

representations contained in this prospectus and any supplement thereto;

(vi) undertake and confirm that, you (if the application is made for your benefit) or the

person(s) for whose benefit you have made the application have not applied for or

taken up, or indicated an interest for, and will not apply for or take up, or indicate

an interest for, any Offer Shares under the International Offering;

(vii) agree to disclose to the Company, its registrar, receiving banker, the Global

Coordinator and their respective advisors and agents personal data and any

information which they require about you or the person(s) for whose benefit you

have made the application;

(viii) instruct and authorise the Company and/or the Global Coordinator as agent for the

Company (or their respective agents or nominees) to do on your behalf all things

necessary to effect registration of any Hong Kong Offer Shares allocated to you in

your name(s) or HKSCC Nominees, as the case may be, as required by the Articles

of Association and otherwise to give effect to the arrangements described in this

prospectus and the Application Form;

(ix) represent, warrant and undertake that you are not, and none of the other person(s)

for whose benefit you are applying, is a U.S. person (as defined in Regulation S);

(x) represent and warrant that you understand that the Shares have not been and will not

be registered under the U.S. Securities Act and you are outside the United States (as

defined in Regulation S) when completing the Application Form or are a person

described in paragraph (h)(3) of Rule 902 of Regulation S;

(xi) agree (without prejudice to any other rights which you may have) that once your

application has been accepted, you may not rescind it because of an innocent

misrepresentation;

(xii) warrant the truth and accuracy of the information contained in your application;

(xiii) agree that your application, any acceptance of it and the resulting contract will be

governed by and construed in accordance with the laws of Hong Kong;

(xiv) confirm that you have read the terms and conditions and application procedures set

out in this prospectus and the Application Form and agree to be bound by them;

(xv) undertake and agree to accept the Shares applied for, or any lesser number allocated

to you under the application; and

(xvi) if the laws of any place outside Hong Kong are applicable to your application, agree

and warrant that you have complied with all such laws and none of the Company,

the Global Coordinator and the Hong Kong Underwriters nor any of their respective


— 168 —

officers or advisors will infringe any laws outside Hong Kong as a result of the

acceptance of your offer to purchase, or any actions arising from your rights and

obligations under the terms and conditions contained in this prospectus.

In order for the yellow Application Forms to be valid:

(i) If the application is made through a designated CCASS Participant (other than

a CCASS Investor Participant):

(a) the designated CCASS Participant or its authorized signatories must sign in the

appropriate box; and

(b) the designated CCASS Participant must endorse the form with its company

chop (bearing its company name) and insert its participant I.D. in the

appropriate box.

(ii) If the application is made by an individual CCASS Investor Participant:

(a) the Application Form must contain the CCASS Investor Participant’s name and

Hong Kong Identity Card Number; and

(b) the CCASS Investor Participant must insert its participant I.D. and sign in the

appropriate box in the Application Form.

(iii) If the application is made by a joint individual CCASS Investor Participant:

(a) the Application Form must contain all joint CCASS Investor Participants’

names and the Hong Kong Identity Card Number of all the joint CCASS

Investor Participants; and

(b) the participant I.D. must be inserted and the authorized signatory(ies) of the

CCASS Investor Participant’s stock account must sign in the appropriate box in

the Application Form.

(iv) If the application is made by a corporate CCASS Investor Participant:

(a) the Application Form must contain the CCASS Investor Participant’s company

name and Hong Kong Business Registration number; and

(b) the participant I.D. and company chop (bearing its company name) endorsed by

its authorized signatory(ies) must be inserted in the appropriate box in the

Application Form.

Signature(s), number of signatories and form of chop, where appropriate, should match

the records kept by HKSCC. Incorrect or incomplete details of the CCASS Participant or the

omission or inadequacy of authorized signatory(ies) (if applicable), participant I.D. or other

similar matters may render the application invalid.


— 169 —

If your application is made through a duly authorized attorney, the Company and the

Global Coordinator as its agent may accept it at their discretion, and subject to any conditions

they think fit, including evidence of the authority of your attorney. The Company and the

Global Coordinator, in the capacity as its agent, will have full discretion to reject or accept any

application, in full or in part, without assigning any reason.

4. How to Make Payment for the Application

Each completed white or yellow Application Form must be accompanied by either one

cheque or one banker’s cashier order, which must be stapled to the top left hand corner of the

Application Form.

If you pay by cheque, the cheque must:

. be in Hong Kong dollars;

. be drawn on your Hong Kong dollar bank account in Hong Kong;

. bear an account name (or, in the case of joint applicants, the name of the first-

named applicant) (either pre-printed on the cheque or endorsed on the reverse of the

cheque by an authorized signatory of the bank on which it is drawn), which must be

the same as the name on your Application Form (or, in the case of joint applicants,

the name of the first-named applicant). If the cheque is drawn on a joint account,

one of the joint account names must be the same as the name of the first-named

applicant);

. be made payable to The Bank of East Asia (Nominees) Limited — Agile Property

Public Offer;

. be crossed ‘‘Account Payee Only’’; and

. not be post dated.

Your application may be rejected if your cheque does not meet all of these requirements

or is dishonored on first presentation.

If you pay by banker’s cashier order, the banker’s cashier order must:

. be in Hong Kong dollars;

. be issued by a licensed bank in Hong Kong and have your name certified on the

reverse of the banker’s cashier order by an authorized signatory of the bank on

which it is drawn. The name on the reverse of the banker’s cashier order and the

name on the Application Form must be the same. If the application is a joint

application, the name on the back of the banker’s cashier order must be the same as

the name of the first-named applicant;

. be made payable to The Bank of East Asia (Nominees) Limited — Agile Property

Public Offer;

. be crossed ‘‘Account Payee Only’’; and


— 170 —

. not be post-dated.

Your application may be rejected if your banker’s cashier order does not meet all of these

requirements.

The right is reserved to present all or any remittance for payment. However, your cheque

or banker’s cashier order will not be presented for payment before 12 : 00 noon on Thursday,

8 December 2005. The Company will not give you a receipt for your payment. The Company

will keep any interest accrued on your application monies (up until, in the case of monies to be

refunded, the date of despatch of refund cheques). The right is also reserved to retain any

Share certificates and/or any surplus application monies or refunds pending clearance of your

cheque or banker’s cashier order.

5. Members of the Public — Time for Applying for Hong Kong Offer Shares

Completed white or yellow Application Forms, together with payment attached, must be

lodged by 12 : 00 noon on Thursday, 8 December, 2005, or, if the application lists are not open

on that day, by the time and date stated in the sub-paragraph headed ‘‘Effect of bad weather on

the opening of the application lists’’ below.

Your completed Application Form, together with payment attached, should be deposited in

the special collection boxes provided at any of the branches of The Bank of East Asia, Limited

and Bank of China (Hong Kong) Limited listed under the section entitled ‘‘Where to collect the

Application Forms’’ above at the following times:

Monday, 5 December 2005 — 9: 00 a.m. to 4 : 00 p.m.

Tuesday, 6 December 2005 — 9: 00 a.m. to 4 : 00 p.m.

Wednesday, 7 December 2005 — 9: 00 a.m. to 4 : 00 p.m.

Thursday, 8 December 2005 — 9: 00 a.m. to 12 : 00 noon

The application lists will be open from 11 : 45 a.m. to 12 : 00 noon on Thursday,

8 December 2005.

No proceedings will be taken on applications for the Offer Shares and no allotment of any

such Offer Shares will be made until after the closing of the application lists. No allotment of

any of the Offer Shares will be made later than 4 January 2006.

6. Effect of Bad Weather on the Opening of the Application Lists

The application lists will not open if there is:

. a tropical cyclone warning signal number 8 or above, or

. a ‘‘black’’ rainstorm warning

in force in Hong Kong at any time between 9 : 00 a.m. and 12 : 00 noon on Thursday,

8 December 2005. Instead they will open between 11 : 45 a.m. and 12 : 00 noon on the next

business day which does not have either of those warnings in Hong Kong in force at any time

between 9 : 00 a.m. and 12 : 00 noon.

Business day means a day that is not a Saturday, Sunday or public holiday in Hong Kong.


— 171 —

7. Publication of Results

The Company expects to announce the basis of allotment, the results of applications and

the Hong Kong Identity Card/passport/Hong Kong Business Registration numbers of successful

applicants under the Hong Kong Public Offering on Wednesday, 14 December 2005 in the

South China Morning Post (in English) and the Hong Kong Economic Times (in Chinese).

8. Despatch/Collection of Share Certificates and Refund Cheques

If an application is rejected, not accepted or accepted in part only, or if the Offer Price as

finally determined is less than the offer price of HK$3.30 per Share (excluding brokerage, SFC

transaction levy, investor compensation levy and Stock Exchange trading fee thereon) initially

paid on application, or if the conditions of the Hong Kong Public Offering are not fulfilled in

accordance with the section entitled ‘‘Structure of the Global Offering — Conditions of the

Hong Kong Public Offering’’ or if any application is revoked or any allotment pursuant thereto

has become void, the application monies, or the appropriate portion thereof, together with the

related brokerage, SFC transaction levy, investor compensation levy and Stock Exchange

trading fee, will be refunded, without interest. It is intended that special efforts will be made to

avoid any undue delay in refunding application monies where appropriate.

No temporary documents of title will be issued in respect of the Offer Shares. No receipt

will be issued for sums paid on application but, subject to personal collection as mentioned

below, in due course there will be sent to you (or, in the case of joint applicants, to the first-

named applicant) by ordinary post, at your own risk, to the address specified on your

Application Form:

(a) for applications on white Application Forms: (i) Share certificate(s) for all the Hong

Kong Offer Shares applied for, if the application is wholly successful; or (ii) Share

certificate(s) for the number of Hong Kong Offer Shares successfully applied for, if

the application is partially successful (for wholly successful and partially successful

applicants on yellow Application Forms: Share certificates for their Offer Shares

successfully applied for will be deposited into CCASS as described below); and/or

(b) for applications on white or yellow Application Forms, refund cheque(s) crossed

‘‘Account Payee Only’’ in favor of the applicant (or, in the case of joint applicants,

the first-named applicant) for (i) the surplus application monies for the Hong Kong

Offer Shares unsuccessfully applied for, if the application is partially unsuccessful;

or (ii) all the application monies, if the application is wholly unsuccessful; and/or

(iii) the difference between the Offer Price and the maximum offer price per Share

paid on application in the event that the Offer Price is less than the offer price per

Share initially paid on application, in each case including the brokerage of 1%, SFC

transaction levy of 0.005%, investor compensation levy of 0.002% and Stock

Exchange trading fee of 0.005%, attributable to such refund/surplus monies but

without interest.

Subject to personal collection as mentioned below, refund cheques for surplus application

monies (if any) in respect of wholly and partially unsuccessful applications and the difference

between the Offer Price and the offer price per Share initially paid on application (if any)

under white or yellow Application Forms; and Share certificates for wholly and partially


— 172 —

successful applicants under white Application Forms are expected to be posted on or around

Wednesday, 14 December, 2005. The right is reserved to retain any Share certificate(s) and any

surplus application monies pending clearance of cheque(s).

Share certificates will only become valid certificates of title at 8 : 00 a.m. on Thursday, 15

December, 2005 provided that the Hong Kong Public Offering has become unconditional in all

respects and the right of termination described in the section entitled ‘‘Underwriting —

Grounds for Termination’’ has not been exercised.

(a) If you apply using a white Application Form:

If you apply for 1,000,000 Hong Kong Offer Shares or more on a white Application

Form and have indicated your intention in your Application Form to collect your refund

cheque(s) (where applicable) and/or Share certificate(s) (where applicable) from Tricor

Investor Services Limited and have provided all information required by your Application

Form, you may collect your refund cheque(s) (where applicable) and Share certificate(s)

(where applicable) from Tricor Investor Services Limited at Ground Floor, Bank of East

Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong from 9 : 00 a.m. to

1 : 00 p.m. on Wednesday, 14 December, 2005 or such other place and date as notified by

the Company in the newspapers as the place and date of collection/despatch of refund

cheques/Share certificates. If you are an individual who opts for personal collection, you

must not authorise any other person to make collection on your behalf. If you are a

corporate applicant which opts for personal collection, you must attend by your authorized

representative bearing a letter of authorization from your corporation stamped with your

corporation’s chop. Both individuals and authorized representatives (if applicable) must

produce, at the time of collection, evidence of identity acceptable to Tricor Investor

Services Limited. If you do not collect your refund cheque(s) (where applicable) and/or

Share certificate(s) (where applicable) personally within the time specified for collection,

they will be sent to the address as specified in your Application Form promptly thereafter

by ordinary post and at your own risk.

If you apply for less than 1,000,000 Hong Kong Offer Shares or if you apply for

1,000,000 Hong Kong Offer Shares or more but have not indicated on your Application

Form that you will collect your refund cheque(s) (where applicable) and/or Share

certificate(s) (where applicable) in person, your refund cheque(s) (where applicable) and/

or Share certificate(s) (where applicable) will be sent to the address on your Application

Form on Wednesday, 14 December 2005, by ordinary post and at your own risk.

(b) If you apply using a yellow Application Form:

If you apply for 1,000,000 Hong Kong Offer Shares or more and you have elected

on your yellow Application Form to collect your refund cheque (where applicable) in

person, please follow the same instructions as those for white Application Form

applicants as described above.

If you apply for less than 1,000,000 Hong Kong Offer Shares or if you apply for

1,000,000 Hong Kong Offer Shares or more but have not indicated on your Application

Form that you will collect your refund cheque(s) (where applicable) in person, your

refund cheque(s) (where applicable) will be sent to the address on your Application Form

on Wednesday, 14 December, 2005, by ordinary post and at your own risk.


— 173 —

If you apply for Hong Kong Offer Shares using a yellow Application Form and your

application is wholly or partially successful, your Share certificate(s) will be issued in the

name of HKSCC Nominees and deposited into CCASS for credit to your CCASS Investor

Participant stock account or the stock account of your designated CCASS Participant as

instructed by you in your Application Form at the close of business on Wednesday,

14 December, 2005, or under contingent situation, on any other date as shall be

determined by HKSCC or HKSCC Nominees.

If you are applying through a designated CCASS Participant (other than a CCASS

Investor Participant):

. for Hong Kong Offer Shares credited to the stock account of your designated

CCASS Participant (other than a CCASS Investor Participant), you can check

the number of Hong Kong Offer Shares allocated to you with that CCASS

Participant.

If you are applying as a CCASS Investor Participant:

. the Company expects to publish the results of CCASS Investor Participants’

applications together with the results of the Hong Kong Public Offering in the

newspapers on Wednesday, 14 December, 2005. You should check the

announcement published by the Company and report any discrepancies to

HKSCC before 5 : 00 p.m. on Wednesday, 14 December, 2005 or such other

date as shall be determined by HKSCC or HKSCC Nominees. Immediately

after the credit of the Hong Kong Offer Shares to your stock account, you can

check your new account balance via the CCASS Phone System and the CCASS

Internet System (under the procedures contained in HKSCC’s ‘‘An Operating

Guide for Investor Participants’’ in effect from time to time). HKSCC will also

make available to you an activity statement showing the number of Hong Kong

Offer Shares credited to your stock account.

III. APPLYING BY GIVING ELECTRONIC APPLICATION INSTRUCTIONS TO HKSCC

1. General

CCASS Participants may give electronic application instructions to HKSCC to apply for

the Hong Kong Offer Shares and to arrange payment of the monies due on application and

payment of refunds. This will be in accordance with their participant agreements with HKSCC

and the General Rules of CCASS and the CCASS Operational Procedures.

If you are a CCASS Investor Participant, you may give electronic application instructions

through the CCASS Phone System by calling 2979 7888 or through the CCASS Internet System

(https://ip.ccass.com) (using the procedures contained in HKSCC’s ‘‘An Operating Guide for

Investor Participants’’ in effect from time to time).


— 174 —

HKSCC can also input electronic application instructions for you if you go to:

Hong Kong Securities Clearing Company Limited

Customer Service Center

Upper Ground Floor

V-Heun Building

128–140 Queen’s Road Central

Hong Kong

and complete an input request form.

Prospectuses are available for collection from the above address.

If you are not a CCASS Investor Participant, you may instruct your broker or custodian

who is a CCASS Broker Participant or a CCASS Custodian Participant to give electronic

application instructions via CCASS terminals to apply for the Hong Kong Offer Shares on

your behalf.

You are deemed to have authorized HKSCC and/or HKSCC Nominees to transfer the

details of your application, whether submitted by you or through your broker or custodian, to

the Company and its registrars.

2. Giving Electronic Application Instructions to HKSCC to Apply for Hong Kong Offer

Shares by HKSCC Nominees On Your Behalf

Where a white Application Form is signed by HKSCC Nominees on behalf of persons

who have given electronic application instructions to apply for the Hong Kong Offer Shares:

(i) HKSCC Nominees is only acting as a nominee for those persons and shall not be

liable for any breach of the terms and conditions of the white Application Form or

this prospectus;

(ii) HKSCC Nominees does the following things on behalf of each such person:

. agrees that the Hong Kong Offer Shares to be allotted shall be issued in the

name of HKSCC Nominees and deposited directly into CCASS for the credit of

the stock account of the CCASS Participant who has inputted electronic

application instructions on that person’s behalf or that person’s CCASS

Investor Participant stock account;

. undertakes and agrees to accept the Hong Kong Offer Shares in respect of

which that person has given electronic application instructions or any lesser

number;

. undertakes and confirms that that person has not applied for or taken up any

Offer Shares under the International Offering nor otherwise participated in the

International Offering;

. (if the electronic application instructions are given for that person’s own

benefit) declares that only one set of electronic application instructions has

been given for that person’s benefit;


— 175 —

. (if that person is an agent for another person) declares that that person has only

given one set of electronic application instructions for the benefit of that

other person and that that person is duly authorized to give those instructions

as that other person’s agent;

. understands that the above declaration will be relied upon by the Company, the

Directors and the Global Coordinator in deciding whether or not to make any

allotment of Hong Kong Offer Shares in respect of the electronic application

instructions given by that person and that that person may be prosecuted if he

makes a false declaration;

. authorises the Company to place the name of HKSCC Nominees on the register

of members of the Company as the holder of the Hong Kong Offer Shares

allotted in respect of that person’s electronic application instructions and to

send Share certificate(s) and/or refund monies in accordance with the

arrangements separately agreed between the Company and HKSCC;

. confirms that that person has read the terms and conditions and application

procedures set out in this prospectus and agrees to be bound by them;

. confirms that that person has only relied on the information and representations

in this prospectus in giving that person’s electronic application instructions

or instructing that person’s broker or custodian to give electronic application

instructions on that person’s behalf;

. agrees that the Company and the Directors are liable only for the information

and representations contained in this prospectus;

. agrees to disclose that person’s personal data to the Company, the Global

Coordinator and/or their respective agents and any information which they may

require about that person;

. agrees (without prejudice to any other rights which that person may have) that

once the application of HKSCC Nominees has been accepted, the application

cannot be rescinded for innocent misrepresentation;

. agrees that that person cannot revoke the electronic application instructions

before 4 January 2006, such agreement to take effect as a collateral contract

with the Company and to become binding when that person gives the

instructions and such collateral contract to be in consideration of the

Company agreeing that it will not offer any Hong Kong Offer Shares to any

person before 4 January 2006, except by means of one of the procedures

referred to in this prospectus. However, that person may revoke the instructions

before 4 January 2006 if a person responsible for this prospectus under Section

40 of the Companies Ordinance gives a public notice under that section which

excludes or limits the responsibility of that person for this prospectus;


— 176 —

. agrees that once the application of HKSCC Nominees is accepted, neither that

application nor that person’s electronic application instructions can be

revoked, and that acceptance of that application will be evidenced by the

announcement of the results of the Hong Kong Public Offering published by

the Company;

. agrees to the arrangements, undertakings and warranties specified in the

participant agreement between that person and HKSCC, read with the General

Rules of CCASS and the CCASS Operational Procedures, in respect of the

giving of electronic application instructions relating to Hong Kong Offer

Shares;

. agrees with the Company, for itself and for the benefit of each of the

shareholders of the Company (and so that the Company will be deemed by its

acceptance in whole or in part of the application by HKSCC Nominees to have

agreed, for itself and on behalf of each of the shareholders of the Company,

with each CCASS Participant giving electronic application instructions) to

observe and comply with the Companies Ordinance, the Memorandum and

Articles of Association;

. agrees with the Company (for the Company itself and for the benefit of each of

the shareholders of the Company) that the Shares in the Company are freely

transferable by the holders thereof;

. authorises the Company to enter into a contract on its behalf with each of the

Directors and officers of the Company whereby each such Director and officer

undertakes to observe and comply with his obligations to shareholders

stipulated in the Memorandum and Articles of Association; and

. agrees that that person’s application, any acceptance of it and the resulting

contract will be governed by and construed in accordance with the Laws of

Hong Kong.

3. Effect of Giving Electronic Application Instructions to HKSCC

By giving electronic application instructions to HKSCC or instructing your broker or

custodian who is a CCASS Broker Participant or a CCASS Custodian Participant to give such

instructions to HKSCC, you (and if you are joint applicants, each of you jointly and severally)

are deemed to have done the following things. Neither HKSCC nor HKSCC Nominees shall be

liable to the Company or any other person in respect of the things mentioned below:

. instructed and authorized HKSCC to cause HKSCC Nominees (acting as nominee for

the relevant CCASS Participants) to apply for the Hong Kong Offer Shares on your

behalf;

. instructed and authorized HKSCC to arrange payment of the maximum offer price,

brokerage, SFC transaction levy, investor compensation levy and Stock Exchange

trading fee by debiting your designated bank account and, in the case of a wholly or

partially unsuccessful application and/or the Offer Price is less than the offer price


— 177 —

per Share initially paid on application, refund of the application monies, in each case

including brokerage, SFC transaction levy, investor compensation levy and Stock

Exchange trading fee, by crediting your designated bank account; and

. instructed and authorized HKSCC to cause HKSCC Nominees to do on your behalf

all the things which it is stated to do on your behalf in the white Application Form.

4. Multiple Applications

If you are suspected of having made multiple applications or if more than one application

is made for your benefit, the number of Hong Kong Offer Shares applied for by HKSCC

Nominees will be automatically reduced by the number of Hong Kong Offer Shares in respect

of which you have given such instructions and/or in respect of which such instructions have

been given for your benefit. Any electronic application instructions to make an application

for the Hong Kong Offer Shares given by you or for your benefit to HKSCC shall be deemed to

be an actual application. No application for any other number of Hong Kong Offer Shares will

be considered and any such application is liable to be rejected.

5. Minimum Subscription Amount and Permitted Multiples

You may give or cause your broker or custodian who is a CCASS Broker Participant or a

CCASS Custodian Participant to give electronic application instructions in respect of a

minimum of 2,000 Hong Kong Offer Shares. Such instructions in respect of more than 2,000

Hong Kong Offer Shares must be in one of the numbers or multiples set out in the table in the

Application Forms.

6. Time for Inputting Electronic Application Instructions

CCASS Broker/Custodian Participants can input electronic application instructions at

the following times on the following dates:

Monday, 5 December 2005 — 9: 00 a.m. to 8 : 30 p.m.(1)

Tuesday, 6 December 2005 — 9: 00 a.m. to 8 : 30 p.m.(1)

Wednesday, 7 December 2005 — 9: 00 a.m. to 8 : 30 p.m.(1)

Thursday, 8 December 2005 — 9: 00 a.m.(1) to 12 : 00 noon

1 These times are subject to change as HKSCC may determine from time to time with prior notification to

CCASS Broker/Custodian Participants.

CCASS Investor Participants can input electronic application instructions from 9 : 00

a.m. on Monday, 5 December until 12 : 00 noon on Thursday, 8 December 2005 (24 hours daily,

except the last application day).

7. Effect of Bad Weather on the Opening of the Application Lists

The latest time for inputting your electronic application instructions will be 12 : 00 noon

on Thursday, 8 December 2005, the last application day. If:

. a tropical cyclone warning signal number 8 or above; or

. a ‘‘black’’ rainstorm warning signal


— 178 —

is in force in Hong Kong at any time between 9 : 00 a.m. and 12 : 00 noon on Thursday,

8 December 2005, the last application day will be postponed to the next business day which

does not have either of those warning signals in force in Hong Kong at any time between 9 : 00

a.m. and 12 noon on such day.

Business day means a day that is not a Saturday, Sunday or public holiday in Hong Kong.

8. Allocation of Hong Kong Offer Shares

For the purposes of allocating Hong Kong Offer Shares, HKSCC Nominees will not be

treated as an applicant. Instead, each CCASS Participant who gives electronic application

instructions or each person for whose benefit each such instructions is given will be treated as

an applicant.

9. Deposit of Share Certificates into CCASS and Refund of Application Monies

. No temporary document of title will be issued. No receipt will be issued for

application monies received.

. If your application is wholly or partially successful, your Share certificate(s) will be

issued in the name of HKSCC Nominees and deposited into CCASS for the credit of

the stock account of the CCASS Participant which you have instructed to give

electronic application instructions on your behalf or your CCASS Investor

Participant stock account at the close of business on Wednesday, 14 December

2005, or, in the event of a contingency, on any other date as shall be determined by

HKSCC or HKSCC Nominees.

. The Company expects to publish the application results of CCASS Participants (and

where the CCASS Participant is a broker or custodian, the Company will include

information relating to the relevant beneficial owner), your Hong Kong identity card/

passport number or other identification code (Hong Kong business registration

number for corporations) and the basis of allotment of the Hong Kong Public

Offering in the newspapers on Wednesday, 14 December 2005. You should check the

announcement published by the Company and report any discrepancies to HKSCC

before 5 : 00 p.m. on Wednesday, 14 December 2005 or such other date as shall be

determined by HKSCC or HKSCC Nominees.

. If you have instructed your broker or custodian to give electronic application

instructions on your behalf, you can also check the number of Hong Kong Offer

Shares allotted to you and the amount of refund monies (if any) payable to you with

that broker or custodian.

. If you have applied as a CCASS Investor Participant, you can also check the number

of Hong Kong Offer Shares allotted to you and the amount of refund monies (if any)

payable to you via the CCASS Phone System and the CCASS Internet System (under

the procedures contained in HKSCC’s ‘‘An Operating Guide for Investor

Participants’’ in effect from time to time) on Wednesday, 14 December 2005. On

Thursday, 15 December 2005, (i.e., the next business day following the credit of the

Hong Kong Offer Shares to your CCASS Investor Participant stock account and the

credit of refund monies to your designated bank account), HKSCC will also make


— 179 —

available to you an activity statement showing the number of Hong Kong Offer

Shares credited to your CCASS Investor Participant stock account and the amount of

refund monies (if any) credited to your designated bank account.

. Refund of your application monies (if any) in respect of wholly and partially

unsuccessful applications and/or difference between the Offer Price and the offer

price per Share initially paid on application, in each case including brokerage of 1%,

SFC transaction levy of 0.005%, investor compensation levy of 0.002% and Stock

Exchange trading fee of 0.005%, will be credited to your designated bank account or

the designated bank account of your broker or custodian on Wednesday, 14

December 2005. No interest will be paid thereon.

10. Section 40 of the Companies Ordinance

For the avoidance of doubt, the Company and all other parties involved in the preparation

of this prospectus acknowledge that each CCASS Participant who gives or causes to give

electronic application instructions is a person who may be entitled to compensation under

Section 40 of the Companies Ordinance.

11. Personal Data

The section of the Application Form entitled ‘‘Personal Data’’ applies to any personal data

held by the Company and the Offer Share registrar about you in the same way as it applies to

personal data about applicants other than HKSCC Nominees.

12. Warning

The subscription of the Hong Kong Offer Shares by giving electronic application

instructions to HKSCC is only a facility provided to CCASS Participants. The Company, the

Directors, the Global Coordinator and the Underwriters take no responsibility for the

application and provide no assurance that any CCASS Participant will be allotted any Hong

Kong Offer Shares.

To ensure that CCASS Investor Participants can give their electronic application

instructions to HKSCC through the CCASS Phone System or the CCASS Internet System,

CCASS Investor Participants are advised not to wait until the last minute to input their

electronic application instructions to the systems. In the event that CCASS Investor

Participants have problems connecting to the CCASS Phone System or the CCASS Internet

System to submit their electronic application instructions, they should either: (i) submit a

white or yellow Application Form; or (ii) go to HKSCC’s Customer Service Center to complete

an input request form for electronic application instructions before 12 : 00 noon on Thursday,

8 December 2005.


— 180 —

IV. HOW MANY APPLICATIONS YOU MAY MAKE

1. You may make more than one application for Hong Kong Offer Shares if and only if:

You are a nominee, in which case you may both give electronic application instructions to

HKSCC (if you are a CCASS Participant) and lodge more than one Application Form in your own

name if each application is made on behalf of different owners. In the box on the Application Form

marked ‘‘For nominees’’ you must include:

. an account number; or

. some other identification code

for each beneficial owner. If you do not include this information, the application will be treated as

being made for your benefit.

Otherwise, multiple applications are not allowed.

It will be a term and condition of all applications that by completing and delivering an

Application Form, you:

. (if the application is made for your own benefit) warrant that this is the only application

which will be made for your benefit on a white or yellow Application Form or by giving

electronic application instructions to HKSCC;

. (if you are an agent for another person) warrant that reasonable enquiries have been made

of that other person that this is the only application which will be made for the benefit of

that other person on a white or yellow Application Form or by giving electronic

application instructions to HKSCC and that you are duly authorized to sign the

Application Form as that other person’s agent.

Except where you are a nominee and provide the information required to be provided in your

application, all of your applications will be rejected as multiple applications if you, or you and your

joint applicant(s) together:

. make more than one application (whether individually or jointly) on a white or yellow

Application Form or by giving electronic application instructions to HKSCC;

. both apply (whether individually or jointly) on one white Application Form and one

yellow Application Form or on one white or yellow Application Form and give electronic

application instructions to HKSCC;

. apply on one white or yellow Application Form (whether individually or jointly) or by

giving electronic application instructions to HKSCC for more than 47,754,000 Offer

Shares, as more particularly described in the section entitled ‘‘Structure of the Global

Offering — The Hong Kong Public Offering;’’ or

. have applied for or taken up, or indicated an interest for, or have been or will be placed

(including conditionally and/or provisionally) Offer Shares under the International

Offering.


— 181 —

All of your applications will also be rejected as multiple applications if more than one

application is made for your benefit (including the part of the application made by HKSCC

Nominees acting on electronic application instructions). If an application is made by an unlisted

company and

. the principal business of that company is dealing in securities; and

. you exercise statutory control over that company,

then the application will be treated as being made for your benefit.

Unlisted company means a company with no equity securities listed on the Stock Exchange.

Statutory control means you:

. control the composition of the board of directors of the company; or

. or control more than half of the voting power of the company; or

. hold more than half of the issued share capital of the company (not counting any part of it

which carries no right to participate beyond a specified amount in a distribution of either

profits or capital).

V. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOTTED HONG KONG OFFER

SHARES

Full details of the circumstances in which you will not be allotted the Hong Kong Offer Shares

are set out in the notes attached to the Application Forms (whether you are making your application

by an Application Form or electronically instructing HKSCC to cause HKSCC Nominees to apply on

your behalf), and you should read them carefully. You should note in particular the following

situations in which Hong Kong Offer Shares will not be allotted to you:

. If your application is revoked:

By completing and submitting an Application Form you agree that you cannot revoke your

application on or before 4 January 2006. This agreement will take effect as a collateral contract

with the Company, and will become binding when you lodge your Application Form. This

collateral contract will be in consideration of the Company agreeing that it will not offer any

Hong Kong Offer Shares to any person before 4 January 2006 except by means of one of the

procedures referred to in this prospectus.

You may only revoke your application on or before 4 January 2006 if a person

responsible for this prospectus under Section 40 of the Companies Ordinance gives a public

notice under that section which excludes or limits the responsibility of that person for this

prospectus.

If any supplement to this prospectus is issued, applicant(s) who have already submitted an

application may or may not (depending on the information contained in the supplement) be

notified that they can withdraw their applications. If applicant(s) have not been so notified, or

if applicant(s) have been notified but have not withdrawn their applications in accordance with


— 182 —

the procedure to be notified, all applications that have been submitted remain valid and may be

accepted. Subject to the above, an application once made is irrevocable and applicants shall be

deemed to have applied on the basis of this prospectus as supplemented.

If your application has been accepted, it cannot be revoked. For this purpose, acceptance

of applications which are not rejected will be constituted by notification in the announcement

of the results of allocation, and where such basis of allocation is subject to certain conditions

or provides for allocation by ballot, such acceptance will be subject to the satisfaction of such

conditions or results of the ballot, respectively.

. Full discretion of the Company or its agents to reject or accept your application

The Company and the Global Coordinator (as agent for the Company), or their respective

agents and nominees, have full discretion to reject or accept any application, or to accept only

part of any application.

The Company, the Global Coordinator and the Hong Kong Underwriter(s), in their

capacity as the Company’s agents, and their agents and nominees do not have to give any

reason for any rejection or acceptance.

. If the allotment of Hong Kong Offer Shares is void

The allotment of Hong Kong Offer Shares to you or to HKSCC Nominees (if you give

electronic application instructions or apply by a yellow Application Form) will be void if the

Listing Committee of the Stock Exchange does not grant permission to list the Offer Shares

either:

. within three weeks from the closing of the application lists; or

. within a longer period of up to six weeks if the Listing Committee of the Stock

Exchange notifies the Company of that longer period within three weeks of the

closing date of the application lists.

. You will not receive any allotment if:

. you make multiple applications or suspected multiple applications;

. you or the person for whose benefits you apply for have applied for or taken up, or

indicated an interest for, or have been or will be placed or allocated (including

conditionally and/or provisionally) Hong Kong Offer Shares and/or Offer Shares in

the International Offering. By filling in any of the Application Forms or apply by

giving electronic application instructions to HKSCC, you agree not to apply for

Hong Kong Offer Shares as well as Offer Shares in the International Offering.

Reasonable steps will be taken to identify and reject applications in the Hong Kong

Public Offering from investors who have received Offer Shares in the International

Offering, and to identify and reject indications of interest in the International

Offering from investors who have received Hong Kong Offer Shares in the Hong

Kong Public Offering;

. your payment is not made correctly or you pay by cheque or banker’s cashier order

and the cheque or banker’s cashier order is dishonored upon its first presentation;


— 183 —

. your Application Form is not completed in accordance with the instructions as stated

in the Application Form (if you apply by an Application Form);

. the Underwriting Agreements do not become unconditional; or

. the Underwriting Agreements are terminated in accordance with their respective

terms.

You should also note that you may apply for Offer Shares under the Hong Kong Public

Offering or indicate an interest for Offer Shares under the International Offering, but may not

do both.

VI. HOW MUCH ARE THE HONG KONG OFFER SHARES

The maximum offer price is HK$3.30 per Share. You must also pay brokerage of 1%, SFC

transaction levy of 0.005%, investor compensation levy of 0.002% and Stock Exchange trading fee

of 0.005% in full. This means that for every board lot of 2,000 Offer Shares you will pay

approximately HK$6,666.79. The Application Forms have tables showing the exact amount payable

for certain multiples of Offer Shares up to 47,754,000 Offer Shares.

You must pay the amount payable upon application for the Offer Shares by one cheque or one

banker’s cashier order in accordance with the terms set out in the Application Form (if you apply by

an Application Form).

If your application is successful, brokerage is paid to participants of the Stock Exchange or the

Stock Exchange (as the case may be), the SFC transaction levy, investor compensation levy and the

Stock Exchange trading fee are paid to the Stock Exchange (in the case of the SFC transaction levy

and the investor compensation levy, collected on behalf of the SFC).

VII. REFUND OF APPLICATION MONIES

If you do not receive any Hong Kong Offer Shares for any reason, the Company will refund

your application monies, including brokerage of 1%, SFC transaction levy of 0.005%, investor

compensation levy of 0.002% and Stock Exchange trading fee of 0.005%. No interest will be paid

thereon. All interest accrued on such monies prior to the date of despatch of refund cheques will be

retained for the benefit of the Company.

If your application is accepted only in part, the Company will refund the appropriate portion of

your application monies, including the related brokerage of 1%, SFC transaction levy of 0.005%,

investor compensation levy of 0.002% and Stock Exchange trading fee of 0.005%, without interest.

If the Offer Price as finally determined is less than the offer price per Share (excluding


thereon) initially paid on application, the Company will refund the surplus application monies,

together with the related brokerage of 1%, SFC transaction levy of 0.005%, investor compensation

levy of 0.002% and Stock Exchange trading fee of 0.005%, without interest.

In a contingency situation involving a substantial over-subscription, at the discretion of the

Company and the Global Coordinator, cheques for applications for certain small denominations of

Hong Kong Offer Shares (apart from successful applications) may not be cleared.


— 184 —

Refund of your application monies (if any) will be made on Wednesday, 14 December 2005 in

accordance with the various arrangements as described above.

All refunds by cheque will be crossed ‘‘Account Payee Only’’, and made out to you (or in case

of joint applicants, the first-named applicant on the Application Form). Part of your Hong Kong

identity card number/passport number, (or in case of joint applicants, part of the Hong Kong identity

card number/passport number of the first-named applicant) provided by you may be printed on the

refund cheque, if any. Such data would also be transferred to a third party for refund purpose. A

banker may require verification of your Hong Kong identity card number/passport number before

encashment of your refund cheque. Inaccurate completion of your Hong Kong identity card number/

passport number may lead to delay in encashment of or may invalidate your refund cheque.

VIII.DEALINGS AND SETTLEMENT

1. Commencement of Dealings in the Shares

Dealings in the Shares on the Stock Exchange are expected to commence on Thursday, 15

December, 2005.

The Shares will be traded in board lots of 2,000 Shares each. The stock code of the

Shares is 3383.

2. Offer Shares will be Eligible for Admission into CCASS

If the Stock Exchange grants the listing of, and permission to deal in, the Shares and the

Company complies with the stock admission requirements of HKSCC, the Shares will be

accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with

effect from the date of commencement of dealings in the Shares on the Stock Exchange or any

other date HKSCC chooses. Settlement of transactions between participants of the Stock

Exchange is required to take place in CCASS on the second business day after any trading day.

All activities under CCASS are subject to the General Rules of CCASS and CCASS

Operational Procedures in effect from time to time.

Investors should seek the advice of their stockbroker or other professional advisor for

details of the settlement arrangement as such arrangements may affect their rights and interests.

All necessary arrangements have been made enabling the Shares to be admitted into

CCASS.


— 185 —

The following is the text of a report, prepared for the purpose of inclusion in this prospectus,

received from the auditors and reporting accountants, PricewaterhouseCoopers, Certified Public

Accountants, Hong Kong.

5 December 2005

The Directors

Agile Property Holdings Limited


Dear Sirs,

We set out below our report on the financial information relating to Agile Property Holdings

Limited (the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’)

for each of the three years ended 31 December 2002, 2003 and 2004 and the six months ended 30

June 2004 and 2005 (the ‘‘Relevant Periods’’) for inclusion in the prospectus of the Company dated

5 December 2005 (the ‘‘Prospectus’’) in connection with the initial listing of the shares of the

Company on the Main Board of The Stock Exchange of Hong Kong Limited (the ‘‘Stock

Exchange’’).

The Company was incorporated in the Cayman Islands on 14 July 2005 as an exempted

company with limited liability under the Companies Law, Cap 22 (Law 3 of 1961, as consolidated

and revised) of the Cayman Islands. Pursuant to a group reorganization as detailed in note 1 of

section II below, the Company became the holding company of the subsidiaries set out in note 1 of

section II (the ‘‘Reorganization’’). The Reorganization became effective on 23 November 2005.

All companies now comprising the Group have adopted 31 December as their financial year

end date. No audited accounts have been prepared for the Company since its date of incorporation as

it was newly incorporated and has not been involved in any significant business transactions since

incorporation other than the Reorganization. The statutory audited accounts or management accounts

of these entities were prepared in accordance with accounting principles and relevant financial

regulations of the People’s Republic of China (the ‘‘PRC GAAP accounts’’), or those relevant

accounting principles applicable to their respective place of incorporation.

For the purpose of this report, the directors have prepared accounts for the companies

established in the People’s Republic of China (the ‘‘PRC’’) in accordance with Hong Kong Financial

Reporting Standards (the ‘‘HKFRS’’) based on their PRC GAAP accounts for the three years ended

31 December 2002, 2003 and 2004 and the six months ended 30 June 2004 and 2005 or since their

respective date of establishment, where this is a shorter period (the ‘‘HKFRS accounts’’).

APPENDIX I ACCOUNTANTS’ REPORT

— I-1 —

We have carried out an independent audit and independent audit procedures on the HKFRS

accounts for the three years ended 31 December 2002, 2003 and 2004 and the six months ended 30

June 2005, respectively, in accordance with the Statement of Auditing Standards issued by the Hong

Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’) and have carried out such additional

procedures as are necessary in accordance with the Auditing Guidelines ‘‘Prospectuses and the

Reporting Accountant’’ issued by the HKICPA.

We have reviewed the financial information for the six months ended 30 June 2004 in

accordance with SAS 700 ‘‘Engagement to review interim financial reports’’ issued by the HKICPA.

A review consists principally of making enquiries of the Group management and applying analytical

procedures to the financial information and based thereon, assessing whether the accounting policies

and presentation have been consistently applied unless otherwise disclosed. A review excludes audit

procedures such as tests of controls and verifications of assets, liabilities and transactions. It is

substantially less in scope than an audit and therefore provides a lower level of assurance than an

audit. Accordingly we do not express an audit opinion on the financial information for the six

months ended 30 June 2004.

The financial information as set out in sections I to V below (the ‘‘Financial Information’’) has

been prepared based on the HKFRS accounts, or where appropriate, the management accounts on the

basis set out in section II below, after making such adjustments as are appropriate. The directors of

respective companies, at the Relevant Periods, are responsible for the preparation of these accounts

which give a true and fair view. In preparing these accounts, it is fundamental that appropriate

accounting policies are selected and applied consistently.

The directors of the Company are responsible for the Financial Information. It is our

responsibility to form an independent opinion, based on our examination and review, on the

Financial Information and to report our opinion.

In our opinion, the Financial Information, for the purpose of this report, and prepared on the

basis set out in note 2(a) of section II below, give a true and fair view of the combined state of

affairs of the Group as at 31 December 2002, 2003 and 2004 and 30 June 2005 and of the combined

results and cash flows of the Group for the periods then ended.

Moreover, on the basis of our review, which does not constitute an audit, we are not aware of

any material modifications that should be made to the Financial Information for the six months

ended 30 June 2004.


— I-2 —

I COMBINED ACCOUNTS

(a) Combined balance sheets

The following is a summary of the combined balance sheets of the Group as at 31 December

2002, 2003 and 2004 and 30 June 2005 prepared on the basis as set out in note 2(a) of section II

below, after making adjustments as are appropriate:

31 December 30 June

2002 2003 2004 2005

Note RMB’000 RMB’000 RMB’000 RMB’000

ASSETSNon-current assets

Property, plant and equipment . . . . . . 6 35,290 55,442 51,561 52,759Land use rights . . . . . . . . . . . . . . . 7 1,500,283 1,401,682 1,331,550 1,137,470Intangible assets . . . . . . . . . . . . . . 8 73 532 656 794Properties under development . . . . . . 9 154,444 76,424 60,194 51,022Deferred income tax assets . . . . . . . . 17 59,991 101,366 70,453 26,848

1,750,081 1,635,446 1,514,414 1,268,893

Current assetsLand use rights . . . . . . . . . . . . . . . 7 471,880 537,309 474,113 628,556Properties under development . . . . . . 9 1,968,941 2,047,812 2,127,342 1,940,781Completed properties held for sale . . . 10 — 271,027 570,145 740,532Trade and other receivables . . . . . . . 11 961,298 1,465,470 1,194,398 964,200Income tax recoverable . . . . . . . . . . 4,197 — — 61,055Restricted cash . . . . . . . . . . . . . . . 12 29,763 20,552 76,385 71,066Cash and cash equivalents . . . . . . . . 13 37,415 93,521 172,622 240,566

3,473,494 4,435,691 4,615,005 4,646,756

Total assets . . . . . . . . . . . . . . . . . . . 5,223,575 6,071,137 6,129,419 5,915,649

OWNERS’ EQUITYCapital and reserves

Combined capital . . . . . . . . . . . . . . 14 324,739 386,998 449,492 460,095Reserves . . . . . . . . . . . . . . . . . . . 15 (26,252) 45,698 273,307 597,509

298,487 432,696 722,799 1,057,604Minority interests . . . . . . . . . . . . . . . 1,604 2,812 5,588 7,563

Total equity . . . . . . . . . . . . . . . . . . . 300,091 435,508 728,387 1,065,167

LIABILITIESNon-current liabilities

Borrowings. . . . . . . . . . . . . . . . . . 16 1,191,990 1,607,770 1,098,200 1,000,200Deferred income tax liabilities . . . . . . 17 41,411 53,721 65,009 162,773

1,233,401 1,661,491 1,163,209 1,162,973

Current liabilitiesTrade and other payables . . . . . . . . . 18 2,965,083 3,537,287 3,898,579 3,284,950Current income tax liabilities . . . . . . — 26,351 20,744 41,559Borrowings. . . . . . . . . . . . . . . . . . 16 725,000 410,500 318,500 361,000

3,690,083 3,974,138 4,237,823 3,687,509

Total liabilities . . . . . . . . . . . . . . . . . 4,923,484 5,635,629 5,401,032 4,850,482

Total equity and liabilities . . . . . . . . . 5,223,575 6,071,137 6,129,419 5,915,649

Net current (liabilities)/assets . . . . . . . (216,589) 461,553 377,182 959,247

Total assets less current liabilities . . . . 1,533,492 2,096,999 1,891,596 2,228,140


— I-3 —

(b) Combined income statements

The following is a summary of the combined income statements of the Group for the Relevant

Periods, prepared on the basis as set out in note 2(a) of section II below, after making adjustments

as are appropriate:


2002 2003 2004 2004 2005

Note RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

(unaudited)

Turnover . . . . . . . . . . . . 5 763,095 1,931,503 2,548,939 1,353,848 2,378,074

Cost of sales . . . . . . . . . 20 (542,946) (1,529,654) (1,901,408) (1,026,340) (1,617,541)

Gross profit . . . . . . . . . . 220,149 401,849 647,531 327,508 760,533

Other gains . . . . . . . . . . 19 987 4,729 7,320 2,478 1,834

Selling and marketing costs 20 (129,771) (172,354) (187,782) (84,653) (104,453)

Administrative expenses . . . 20 (77,192) (92,525) (98,223) (51,591) (46,581)

Other operating expenses . . 20 (794) (1,825) (2,091) (1,146) (2,191)

Operating profit . . . . . . . 13,379 139,874 366,755 192,596 609,142

Finance costs . . . . . . . . . 21 (28,528) (28,119) (17,113) (11,503) (5,797)

(Loss)/profit before income

tax . . . . . . . . . . . . . . (15,149) 111,755 349,642 181,093 603,345

Income tax credit/(expense) 24 4,942 (38,659) (119,364) (60,075) (199,717)


period . . . . . . . . . . . . (10,207) 73,096 230,278 121,018 403,628

Attributable to:

Owners . . . . . . . . . . . . . (9,735) 71,950 227,609 120,820 401,653

Minority interests . . . . . . . (472) 1,146 2,669 198 1,975

(10,207) 73,096 230,278 121,018 403,628

Dividends . . . . . . . . . . . 25 — — — — 77,451


— I-4 —

(c) Combined statements of changes in equity

The following is a summary of the combined statements of changes in equity of the Group for

the Relevant Periods, prepared on the basis as set out in note 2(a) of section II below, after making

adjustments as are appropriate:

Owners’ equity

Minority

interests Total

Combined

capital Reserves

RMB’000 RMB’000 RMB’000 RMB’000

(note 14) (note 15)

Balance at 1 January 2002 . . . . . . . 304,506 (16,517) 2,076 290,065

Capital injections to subsidiaries by

their then shareholders . . . . . . . . 20,233 — — 20,233

Loss for the year . . . . . . . . . . . . . — (9,735) (472) (10,207)

Balance at 31 December 2002 . . . . . 324,739 (26,252) 1,604 300,091


their then shareholders . . . . . . . . 62,259 — 62 62,321

Profit for the year . . . . . . . . . . . . — 71,950 1,146 73,096

Balance at 31 December 2003 . . . . . 386,998 45,698 2,812 435,508


their then shareholders . . . . . . . . 62,494 — 107 62,601

Profit for the year . . . . . . . . . . . . — 227,609 2,669 230,278

Balance at 31 December 2004 . . . . . 449,492 273,307 5,588 728,387



Profit for the period . . . . . . . . . . . — 401,653 1,975 403,628

Dividends (note 25) . . . . . . . . . . . — (77,451) — (77,451)

Balance at 30 June 2005 . . . . . . . . 460,095 597,509 7,563 1,065,167

Unaudited:

Balance at 1 January 2004 . . . . . . . 386,998 45,698 2,812 435,508



Profit for the period . . . . . . . . . . . — 120,820 198 121,018

Balance at 30 June 2004 . . . . . . . . 433,648 166,518 3,010 603,176


— I-5 —

(d) Combined cash flow statements

The following is a summary of the combined cash flow statements of the Group for the

Relevant Periods, prepared on the basis as set out in note 2(a) of section II below, after making

adjustments as are appropriate:

Years ended 31 December Six months ended 30 June

2002 2003 2004 2004 2005


(unaudited)

Net cash (used in)/generated

from operations . . . . . . 26 (807,502) 576,841 1,047,658 415,142 395,386

PRC enterprise income tax

paid . . . . . . . . . . . . . (10,139) (37,176) (82,770) (13,412) (98,588)

Interest paid . . . . . . . . . . (88,315) (119,637) (101,089) (55,137) (41,168)


from operating activities (905,956) 420,028 863,799 346,593 255,630- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Investing activities

Purchase of property, plant

and equipment . . . . . . . (14,538) (30,862) (8,750) (4,171) (8,277)

Purchase of intangible assets (67) (475) (231) (210) (216)

Interest received . . . . . . . 344 645 793 413 591

Cash advances made to

related parties . . . . . . . (386,644) (517,412) (169,572) (26,316) (256,833)

Repayments of cash

advances from related

parties . . . . . . . . . . . . 14,865 36,957 591,131 313,051 430,368


from investing activities (386,040) (511,147) 413,371 282,767 165,633- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -


before financing . . . . . (1,291,996) (91,119) 1,277,170 629,360 421,263- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Financing activities . . . . .

Capital contributions from

the then shareholders of

subsidiaries . . . . . . . . . 20,233 16,448 25,250 9,299 10,603

New short term loans

payable . . . . . . . . . . . 170,990 345,500 293,300 — —

Repayments of short term

loans . . . . . . . . . . . . . (135,990) (848,000) (653,800) (175,000) (144,000)

New long term loans

payable . . . . . . . . . . . 931,500 1,080,500 297,700 127,000 261,000

Repayments of long term

loans . . . . . . . . . . . . . (10,210) (476,720) (538,770) (172,500) (172,500)

Cash advances from related

parties . . . . . . . . . . . . 308,406 166,931 141,430 68,934 45,163

Repayments of cash

advances to related

parties . . . . . . . . . . . . (129,775) (137,434) (763,179) (445,606) (353,585)

Net cash inflow/(outflow)

from financing . . . . . . 1,155,154 147,225 (1,198,069) (587,873) (353,319)- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -


— I-6 —

Years ended 31 December Six months ended 30 June

2002 2003 2004 2004 2005


(unaudited)

Net (decrease)/increase in

cash and cash

equivalents . . . . . . . . . (136,842) 56,106 79,101 41,487 67,944

Cash and cash equivalents at

the beginning of the year/

period . . . . . . . . . . . . 174,257 37,415 93,521 93,521 172,622

Cash and cash equivalents

at the end of the year/

period . . . . . . . . . . . . 13 37,415 93,521 172,622 135,008 240,566


— I-7 —

II. NOTES TO THE COMBINED ACCOUNTS

1. Group reorganization

The Company was incorporated in the Cayman Islands on 14 July 2005 as an exempted company with limited liability

under the Companies Law, Cap 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands.

Mr. Chen Zhuo Lin, Mr. Chan Cheuk Yin, Ms. Luk Sin Fong, Fion, Mr. Chan Cheuk Hung, Mr. Chan Cheuk Hei and

Mr. Chan Cheuk Nam (hereinafter collectively referred to as the ‘‘Founding Shareholders’’) established various companies in

the PRC engaging in property development, property management and decoration. As part of the Reorganization, Mr. Chen

Zhuo Lin and Ms. Luk Sin Fong, Fion incorporated Eastern Supreme Group Limited (‘‘Eastern Supreme’’) which wholly

owned Forever Fame Holdings Limited (‘‘Forever Fame’’), Genesis Global Development Limited (‘‘Genesis Global’’) and Top

Delight International Limited (‘‘Top Delight’’). In consideration of shares issued by Eastern Supreme to the Founding

Shareholders on 18 November 2005, the Founding Shareholders transferred to Forever Fame, Genesis Global and Top Delight

their equity interests in the PRC companies engaging in property development, property management and decoration and their

immediate holding companies.

On 23 November 2005, the Company allotted and issued 199,999,980 shares to the Founding Shareholders and credited

as fully paid-up the 20 nil-paid shares issued to Mr. Chen Zhuo Lin and Ms. Luk Sin Fong, Fion, in consideration for the

transfer of the respective interest in Eastern Supreme from the Founding Shareholders to the Company.

Top Coast Investment Limited (‘‘Top Coast’’), a company established by Mr. Chen Zhuo Lin and Ms. Luk Sin Fong,

Fion, then established the Chen Family Trust on 23 November 2005 as trustee, and the Founding Shareholders transferred

200,000,000 shares to Top Coast for the benefit of the Chen Family Trust. The beneficial interests in the Chen Family Trust

of each of Mr. Chen Zhuo Lin, Mr. Chan Cheuk Yin, Ms. Luk Sin Fong, Fion, Mr. Chan Cheuk Hung, Mr. Chan Cheuk Hei

and Mr. Chan Cheuk Nam are 25%, 19%, 17%, 13%, 13% and 13%, respectively.

Particulars of the subsidiaries of the Group as at 30 June 2005 are set out below:

Name

Place and date of

incorporation/

establishment

Nominal value of

issued and fully

paid share

capital/paid-in

capital

Percentage of

attributable equity

interest

Principal

activities/place

of operationDirectly Indirectly

Eastern Supreme Group Limited . . . . . . British Virgin Islands

(the ‘‘BVI’’)

6 April 2005

US$2 100% — Investment

holding/

People’s

Republic of

China

(the ‘‘PRC’’)

Forever Fame Holdings Limited . . . . . . BVI

8 April 2005

US$2 — 100% Investment

holding/PRC

Genesis Global Development Limited . . BVI

8 April 2005


holding/PRC

Top Delight International Limited. . . . . BVI

8 April 2005


holding/PRC

Pomaine International Limited . . . . . . . BVI

10 January 2005


holding/PRC

Hefty Wealth Group Limited . . . . . . . . BVI

28 January 2005


holding/PRC

Eternal Sun International Limited . . . . . BVI

19 January 2005

US$10,000 — 100% Investment

holding/PRC


— I-8 —

Name

Place and date of

incorporation/

establishment

Nominal value of

issued and fully

paid share

capital/paid-in

capital

Percentage of

attributable equity

interest

Principal

activities/place


Rovex Holdings Limited . . . . . . . . . . BVI

19 January 2005


holding/PRC

Mexon Holdings Limited . . . . . . . . . . BVI

28 January 2005


holding/PRC

Maxsino Investments Limited . . . . . . . BVI

10 January 2005


holding/PRC

Chieffield Global Limited. . . . . . . . . . BVI

19 January 2005


holding/PRC

Sino Casa International Limited . . . . . . BVI

4 January 2005


holding/PRC

Intersino Holdings Limited . . . . . . . . . BVI

10 January 2005


holding/PRC

Prospero International Group Limited . . BVI

4 January 2005


holding/PRC

Profitica Group Limited . . . . . . . . . . . BVI

28 January 2005


holding/PRC

Boldham Holdings Limited . . . . . . . . . BVI

28 January 2005


holding/PRC

Primeast International Limited . . . . . . . BVI

19 January 2005


holding/PRC

Evertron International Limited . . . . . . . BVI

28 January 2005


holding/PRC

Makel International Limited . . . . . . . . BVI

28 January 2005


holding/PRC

Sinorinc Investments Limited . . . . . . . BVI

28 January 2005


holding/PRC

Nga Koi Lok Development and Investment

Company Limited . . . . . . . . . . . . .

Macau

20 April 2004

MOP$25,000 — 100% Sale of

property/

Macau

Zhongshan Agile Property Land Company*

PRC

30 June 2005

— — 100% Management

consultants/

PRC

Zhongshan Agile Majestic Garden Real

Estate Development Limited* (note a) .

PRC

5 January 1998

RMB131,198,450 — 100% Property

development

/PRC

Guangzhou Panyu Agile Real Estate

Development Limited* (note b) . . . . .

PRC

27 March 2000

RMB100,000,000 — 98% Property

development

/PRC


— I-9 —

Name

Place and date of

incorporation/

establishment

Nominal value of

issued and fully

paid share

capital/paid-in

capital

Percentage of

attributable equity

interest

Principal

activities/place


Guangzhou Huadu Agile Real Estate

Development Limited* (note a) . . . . .

PRC

19 January 2001

RMB20,000,000 — 98% Property

development

/PRC

Foshan Nanhai Agile Real Estate


PRC

27 November 2000

RMB30,000,000 — 100% Property

development

/PRC

Zhongshan Greenville Real Estate

Development Limited* (note c) . . . . .

PRC

20 January 2001

RMB10,000,000 — 100% Property

development

/PRC

Zhongshan Ever Creator Real Estate

Development Limited* (note e) . . . . .

PRC

6 November 2003

RMB92,224,580 — 100% Property

development

/PRC

Guangzhou Baiyun Agile Real Estate


PRC

4 February 2002

RMB5,298,500 — 100% Property

development

/PRC

Guangzhou Agile Real Estate


PRC

19 October 2000

RMB62,573,422 — 100% Property

development

/PRC

Guangzhou Huadu Agile Property

Management Services Company

Limited* (note d) . . . . . . . . . . . . .

PRC

23 April 2003

RMB500,000 — 100% Property

management

/PRC

Guangzhou Agile Property


Limited* (note d) . . . . . . . . . . . . .

PRC

18 April 2003

RMB1,000,000 — 100% Property

management

/PRC

Foshan Nanhai Agile Property


Limited* (note d) . . . . . . . . . . . . .

PRC

20 September 2002

RMB500,000 — 100% Property

management

/PRC

Zhongshan Agile Property


Limited* (note c) . . . . . . . . . . . . .

PRC

26 June 1997

RMB5,000,000 — 100% Property

management

/PRC

Zhongshan Fashion Decoration

Company Limited* (note a) . . . . . . .

PRC

30 March 2000

RMB5,000,000 — 100% Provision of

decoration

service/PRC


— I-10 —

Notes:

(a) The accounts for the years ended 31 December 2002, 2003 and 2004 were audited by

Zhongshan Xiangshan Certified Public Accountants Company Limited*.

(b) The accounts for the years ended 31 December 2002 and 2003 were audited by

Zhongshan Xiangshan Certified Public Accountants Company Limited* and the accounts for the year ended 31

December 2004 was audited by Guangdong Yangcheng Certified Public

Accountants Company Limited*.

(c) The accounts for the years ended 31 December 2002 and 2003 were audited by

Zhongshan Xiangshan Certified Public Accountants Company Limited*. The accounts for the year ended 31

December 2004 was not audited as it is not required by relevant authorities.

(d) The accounts for the years ended 31 December 2003 and 2004 were audited by

Zhongshan Xiangshan Certified Public Accountants Company Limited*.

(e) The accounts for the years ended 31 December 2002, 2003 and 2004 were not audited as these are not required

by relevant PRC rules and regulations.

* The names of certain companies/entities referred to in this report represent management’s best efforts at translating

the Chinese names of those companies as no English names have been registered or available.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of the Financial Information are set out below. These

policies have been consistently applied to the Relevant Periods.

(a) Basis of preparation

For the purpose of this report, the Financial Information has been prepared to reflect the Reorganization of a

business under common control, in which all the companies now comprising the Group are ultimately controlled by the

Founding Shareholders as a result of contractual arrangement made among the Founding Shareholders. The combined

accounts as set out in section I above are prepared on a combined basis as prescribed by the Auditing Guidelines

‘‘Prospectuses and the Reporting Accountant’’ issued by the HKICPA.

Accordingly, the combined income statements, combined cash flow statements and combined statements of

changes in equity of the Group for the Relevant Periods include the Financial Information of the companies now

comprising the Group as a result of the Reorganization as if the current group structure had been in existence

throughout the Relevant Periods, or since their respective dates of incorporation/establishment, whichever is the shorter

period.

The combined balance sheets of the Group as at 31 December 2002, 2003 and 2004 and 30 June 2005 have been

prepared to present the assets and liabilities of the Group as at these dates as if the current group structure had been in

existence at these dates. As at 30 June 2005, the Reorganization was not yet completed. Accordingly, the owners’

equity of the Group as at 31 December 2002, 2003 and 2004 and 30 June 2005 represents the combined equities of

those companies, which, upon completion of the Reorganization, became the Company’s subsidiaries. The minority

interests in the combined income statements of the Group represent net profit attributable to those equity owners

outside the Group during the Relevant Periods.

Inter-company transactions, balances and unrealized gains on transactions between the companies now

comprising the Group are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence

of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to

ensure consistency with the policies adopted by the Group.

The Financial Information set out in this report is prepared in accordance with the HKFRS issued by the

HKICPA. They have been prepared under the historical cost convention.


— I-11 —

The preparation of Financial Information in conformity with the HKFRS requires the use of certain critical

accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s

accounting policies. Although these estimates are based on management’s best knowledge of current events and actions,

actual results ultimately may differ from those estimates.

(b) Subsidiaries

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies

generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential

voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls

another entity.

(c) Segment reporting

A business segment is a group of assets and operations engaged in providing products or services that are subject

to risks and returns that are different from those of other business segments. A geographical segment is engaged in

property activities within a particular economic environment that are subject to risks and returns that are different from

those of segments operating in other economic environments.

(d) Foreign currency translation

(i) Functional and presentation currency

Items included in the accounts of each of the companies now comprising the Group are measured using

the currency of the primary economic environment in which the company operates (the ‘‘functional currency’’).

For the purpose of this report, the Financial Information is presented in Renminbi (‘‘RMB’’), which is the

functional and presentation currency of the Group.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates

prevailing at the dates of the transaction. Foreign exchange gains and losses resulting from the settlement of such

transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in

foreign currencies are recognized in the combined income statements.

Translation differences on non-monetary items, such as equities instruments held at fair value through

profit and loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary items,

such as equities classified as available-for-sale financial assets, are included in the fair value reserve in equity.

(iii) Group companies

The results and financial positions of all the companies now comprising the Group (none of which has the

currency of a hyperinflationary economy) that have a functional currency different from the presentation

currency are translated into the presentation currency as follows:

. Assets and liabilities for each balance sheet of the companies now comprising the Group are

translated at the closing rate at the date of that balance sheet;

. Income and expenses for each income statement of the companies now comprising the Group are

translated at average exchange rates; and

. All resulting exchange differences are recognized as a separate component of equity.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and

liabilities of the foreign entity and translated at the closing rate.


— I-12 —

(e) Property, plant and equipment

Property, plant and equipment are stated at historical cost less depreciation and any impairment losses. Historical

cost includes expenditure that is directly attributable to the acquisition of the items. Buildings comprise mainly offices.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate,

only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of

the item can be measured reliably. All other repairs and maintenance are expensed in the combined income statements

during the Relevant Periods in which they are incurred.

Depreciation on property, plant and equipment is calculated using the straight-line method to allocate their cost

to their residual values over their estimated useful lives, as follows:

Buildings 20 years

Office equipment 5–8 years

Motor vehicles 5–10 years

Machinery 5–10 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount

is greater than its estimated recoverable amount.

(f) Intangible assets

Intangible assets mainly comprise acquired computer software licences. Acquired computer software licences are

capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are

amortized over their estimated useful lives (two to five years).

(g) Impairment of assets

Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment

and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be

recoverable. Assets that are subject to amortization are reviewed for impairment whenever events or changes in

circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the

amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of

an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at

the lowest levels for which there are separately identifiable cash flows (cash-generating unit).

(h) Properties under development

Properties under development are stated at the lower of cost and net realizable value. Net realizable value takes

into account the price ultimately expected to be realized, less applicable variable selling expenses and the anticipated

costs to completion.

Development cost of property comprises construction costs, borrowing costs and professional fees incurred

during the development period. On completion, the properties are transferred to completed properties held for sale.

Properties under development are classified as current assets unless the construction period of the relevant

property development project is expected to complete beyond 12 months from the balance sheet date.

(i) Completed properties held for sale

Completed properties remaining unsold at the end of each of the Relevant Periods are stated at the lower of cost

and net realizable value.

Cost comprises development costs attributable to the unsold properties.


— I-13 —

Net realizable value is determined by reference to the sale proceeds of properties sold in the ordinary course of

business, less applicable variable selling expenses, or by management estimates based on prevailing marketing

conditions.

(j) Trade and other receivables

Trade and other receivables are recognized initially at fair value and subsequently measured at amortized cost

using the effective interest method, less provision for impairment. A provision for impairment of trade and other

receivables is established when there is objective evidence that the Group will not be able to collect all amounts due

according to the original terms of receivables. The amount of the provision is the difference between the asset’s

carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The

amount of the provision is recognized in the combined income statements.

(k) Cash and cash equivalents

Cash and cash equivalent includes cash in hand and at banks and deposits held at call with banks with original

maturities of three months or less.

(l) Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently

stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is

recognized in the combined income statements over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of

the liability for at least 12 months after the respective balance sheet date.

Borrowing costs incurred for the construction of any qualifying asset are capitalized during the period of time

that is required to complete and prepare the asset for its intended use. Other borrowing costs are recognized as an

expense in the period in which they are incurred.

(m) Deferred income tax

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the

tax bases of assets and liabilities and their carrying amounts in the accounts. However, if the deferred income tax arises

from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the

transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred income tax is

determined using the tax rates that have been enacted or substantially enacted by the balance sheet date and are

expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be

available against which the temporary differences can be utilized.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where

the timing of the reversal of the temporary difference can be controlled by the Group and it is probable that the

temporary difference will not reverse in the foreseeable future.

(n) Employee benefits

(i) Employee leave entitlements

Employee entitlements to annual leave and long service leave are recognized when they accrue to

employees. A provision is made for the estimated liability for annual leave and long service leave as a result of

services rendered by employees up to the balance sheet date.

Employee entitlements to sick leave and maternity leave are not recognized until the time of leave.


— I-14 —

(ii) Pension obligations

The Group participates in a defined contribution scheme administrated by the relevant authority of the

PRC.

Contributions to the schemes are calculated as a percentage of employees’ salaries. The Group’s

contributions to the defined contribution retirement scheme are expensed as incurred.

(iii) Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or

whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognizes

termination benefits when it is demonstrably committed to either: terminating the employment of current

employees according to a detailed formal plan without possibility of withdrawal; or providing termination

benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12

months after balance sheet date are discounted to present value.

(o) Provisions

Provisions for environmental restoration, restructuring costs and legal claims are recognized when: the Group has

a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of

resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions

comprise lease termination penalties and employee termination payments. Provisions are not recognized for future

operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is

determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an

outflow with respect to any one item included in the same class of obligations may be small.

(p) Revenue recognition

Revenue comprises the fair value for the sales of properties and services, net of discount and after eliminated

sales with the companies now comprising the Group. Revenue is recognized as follows:

(i) Sales of properties

Revenue from sales of properties is recognized when a Group entity has delivered the relevant properties

to the purchasers and collectibility of related receivables is reasonably assured. Deposits and installments

received on properties sold prior to the date of revenue recognition are included in the combined balance sheets

under current liabilities.

(ii) Property management

Revenue arising from property management is recognized in the accounting period in which the services

are rendered.

(iii) Decoration services

Revenue from decoration service agreements is recognized in the accounting period in which the services

are rendered.

(iv) Interest income

Interest income is recognized on a time-proportion basis using the effective interest method. When a

receivable impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future

cashflow discounted at original effective interest rate of the instrument, and continues unwinding the discount as

interest income. Interest income on impaired loans is recognized either as cash is collected or on a cost-recovery

basis as conditions warrant.


— I-15 —

(v) Rental income

Rental income from properties letting under operating leases is recognized on a straight line basis over the

lease terms.

(q) Leases

Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified

as operating leases.

(i) The Group is the lessee

Payments made under operating leases (net of any incentives received from the lessor), including up-front

prepayment made for the land use rights, are charged to the combined income statements on a straight-line basis

over the period of the lease.

(ii) The Group is the lessor

Assets leased out under operating leases are included in property, plant and equipment in the combined

balance sheets. They are depreciated over their expected useful lives on a basis consistent with similar owned

property, plant and equipment.

(r) Dividend distribution

Dividend distribution to the then shareholders of the companies now comprising the Group during the Relevant

Periods is recognized in this report in the period in which the dividends are approved by the equity holders of relevant

companies now comprising the Group.

3. Financial risk management

The Group conducts its operations in the PRC and accordingly is subject to special considerations and significant risks.

These include risks associated with, among others, the political, economic and legal environment, influence of national

authorities over pricing regulation and competition in the industry.

(a) Financial risk factor

(i) Foreign exchange risk

The Group’s businesses are principally conducted in RMB, except that certain receipts of sales proceeds

are in other foreign currencies. As at 30 June 2005, all of the Group’s assets and liabilities were denominated in

RMB. Fluctuation of the exchange rates of RMB against foreign currencies could affect the Group’s results of

operations.

(ii) Interest rate risk

The Group’s income and operating cash flows are substantially independent of changes in market interest

rates. The Group has no significant interest-bearing assets. The Group’s exposure to changes in interest rates is

mainly attributable to its long term borrowings. Borrowings at variable rates expose the Group to cash flow

interest-rate risk.

The Group has not used any interest rate swaps to hedge its exposure to interest rate risk.

(iii) Credit risk

The Group has no concentrations on credit risk. Cash transactions are limited to high-credit-quality

institutions. The extent of the Group’s credit exposure is represented by the aggregate balance of cash in bank,

trade receivables, other receivables and prepayments.


— I-16 —

The Group has arranged bank financing for certain purchasers of property units and provided guarantees to

secure obligations of such purchasers for repayments. Detailed disclosure of these guarantees is made in note 29.

(iv) Liquidity risk

Management of the Group aims to maintain sufficient cash and cash equivalents or have available funding

through an adequate amount of committed credit facilities to meet its construction commitments.

(b) Fair value estimation

The face values less any estimated credit adjustments for financial assets and liabilities with a maturity of less

than one year are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes

is estimated by discounting the future contractual cash flows at the current market interest rate available to the Group

for similar financial instruments.

4. Critical accounting estimates and judgments

Estimates and judgments used in preparing the Financial Information are evaluated and based on historical experience

and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The

Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom

equal the related actual results. The estimates and assumptions that may have a significant effect on the carrying amounts of

assets and liabilities mainly include those related to property development activities.

5. Segment information

The Group is principally engaged in the property development, property management and decoration businesses. As less

than 10% of the Group’s combined turnover and results are attributable to the market outside the PRC and less than 10% of

the Group’s combined assets are located outside the PRC, no geographical segment data is presented.

Turnover for the Relevant Periods consist of the followings:


2002 2003 2004 2004 2005


(unaudited)

Property development . . . . . . . . . . . . 697,482 1,819,930 2,427,880 1,306,995 2,322,329

Property management and related services 19,490 48,006 83,634 36,633 49,057

Decoration . . . . . . . . . . . . . . . . . . . 46,123 63,567 37,425 10,220 6,688

763,095 1,931,503 2,548,939 1,353,848 2,378,074


— I-17 —

Segment information during the Relevant Periods is as follows:

Primary reporting format — business segments

Year ended 31 December 2002

Property

development

Property

management Decoration Elimination Group


Gross segment turnover . . . . . . . . . . . 697,506 19,490 46,123 — 763,119

Inter-segment turnover . . . . . . . . . . . . (24) — — — (24)

Turnover . . . . . . . . . . . . . . . . . . . . 697,482 19,490 46,123 — 763,095

Segment result . . . . . . . . . . . . . . . . 13,896 (6,076) 4,685 874 13,379

Finance costs . . . . . . . . . . . . . . . . . (28,528) — — — (28,528)

(Loss)/profit before income tax . . . . . . (14,632) (6,076) 4,685 874 (15,149)

Income tax credit/(expense) . . . . . . . . 4,483 2,005 (1,546) — 4,942

(Loss)/profit for the year . . . . . . . . . . (10,149) (4,071) 3,139 874 (10,207)

Segment assets . . . . . . . . . . . . . . . . 5,057,288 69,923 160,344 (63,980) 5,223,575

Segment liabilities . . . . . . . . . . . . . . 4,757,753 75,347 153,964 (63,580) 4,923,484

Capital expenditure . . . . . . . . . . . . . . 284,916 7,741 220 — 292,877

Depreciation . . . . . . . . . . . . . . . . . . 2,483 2,606 651 — 5,740


Property

development

Property



Gross segment turnover . . . . . . . . . . . 1,819,930 50,447 93,567 — 1,963,944

Inter-segment turnover . . . . . . . . . . . . — (2,441) (30,000) — (32,441)

Turnover . . . . . . . . . . . . . . . . . . . . 1,819,930 48,006 63,567 — 1,931,503

Segment result . . . . . . . . . . . . . . . . 137,427 (16,578) 24,319 (5,294) 139,874

Finance costs . . . . . . . . . . . . . . . . . (28,119) — — — (28,119)

Profit/(loss) before income tax. . . . . . . 109,308 (16,578) 24,319 (5,294) 111,755

Income tax (expense)/credit . . . . . . . . (36,105) 5,471 (8,025) — (38,659)

Profit/(loss) for the year . . . . . . . . . . 73,203 (11,107) 16,294 (5,294) 73,096

Segment assets . . . . . . . . . . . . . . . . 5,875,629 114,495 203,651 (122,638) 6,071,137


Capital expenditure . . . . . . . . . . . . . . 185,911 13,650 898 — 200,459

Depreciation . . . . . . . . . . . . . . . . . . 4,101 4,547 751 — 9,399


— I-18 —


Property

development

Property





Turnover . . . . . . . . . . . . . . . . . . . . 2,427,880 83,634 37,425 — 2,548,939

Segment result . . . . . . . . . . . . . . . . 361,042 (6,835) 12,856 (308) 366,755

Finance costs . . . . . . . . . . . . . . . . . (17,113) — — — (17,113)

Profit/(loss) before income tax. . . . . . . 343,929 (6,835) 12,856 (308) 349,642

Income tax (expense)/credit . . . . . . . . (117,062) 1,941 (4,243) — (119,364)

Profit/(loss) for the year . . . . . . . . . . 226,867 (4,894) 8,613 (308) 230,278

Segment assets . . . . . . . . . . . . . . . . 5,965,018 133,525 135,081 (104,205) 6,129,419


Capital expenditure . . . . . . . . . . . . . . 146,635 2,541 — — 149,176

Depreciation . . . . . . . . . . . . . . . . . . 6,647 5,035 745 — 12,427

Six months ended 30 June 2004

Property

development

Property



(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)



Turnover . . . . . . . . . . . . . . . . . . . . 1,306,995 36,633 10,220 — 1,353,848

Segment result . . . . . . . . . . . . . . . . 189,782 (2,771) 4,492 1,093 192,596

Finance costs . . . . . . . . . . . . . . . . . (11,503) — — — (11,503)

Profit/(loss) before income tax. . . . . . . 178,279 (2,771) 4,492 1,093 181,093

Income tax (expense)/credit . . . . . . . . (59,517) 924 (1,482) — (60,075)

Profit/(loss) for the period . . . . . . . . . 118,762 (1,847) 3,010 1,093 121,018

Segment assets . . . . . . . . . . . . . . . . 5,530,630 114,737 121,280 (55,413) 5,711,234


Capital expenditure . . . . . . . . . . . . . . 81,130 2,038 — — 83,168

Depreciation . . . . . . . . . . . . . . . . . . 2,687 2,893 380 — 5,960


— I-19 —

Six months ended 30 June 2005

Property

development

Property





Turnover . . . . . . . . . . . . . . . . . . . . 2,322,329 49,057 6,688 — 2,378,074

Segment result . . . . . . . . . . . . . . . . 590,010 (903) 30,053 (10,018) 609,142

Finance costs . . . . . . . . . . . . . . . . . (5,797) — — — (5,797)

Profit/(loss) before income tax. . . . . . . 584,213 (903) 30,053 (10,018) 603,345

Income tax (expense)/credit . . . . . . . . (196,503) 298 (6,818) 3,306 (199,717)

Profit/(loss) for the period . . . . . . . . . 387,710 (605) 23,235 (6,712) 403,628

Segment assets . . . . . . . . . . . . . . . . 5,872,766 115,542 110,410 (183,069) 5,915,649


Capital expenditure . . . . . . . . . . . . . . 249,913 — 463 — 250,376

Depreciation . . . . . . . . . . . . . . . . . . 3,809 2,145 367 — 6,321


— I-20 —

6. Property, plant and equipment

Buildings

Motor

vehicles

Office

equipment Machinery Total


Cost

At 1 January 2002 . . . . . . . . . . . . 4,700 16,712 10,533 2,908 34,853

Additions . . . . . . . . . . . . . . . . . . — 7,741 2,196 4,601 14,538

Disposals . . . . . . . . . . . . . . . . . . — (1,384) — (13) (1,397)

At 31 December 2002 . . . . . . . . . . 4,700 23,069 12,729 7,496 47,994

Additions . . . . . . . . . . . . . . . . . . — 25,300 1,320 4,242 30,862

Disposals . . . . . . . . . . . . . . . . . . — (100) (202) (1,105) (1,407)

At 31 December 2003 . . . . . . . . . . 4,700 48,269 13,847 10,633 77,449

Additions . . . . . . . . . . . . . . . . . . — 4,224 1,064 3,462 8,750

Disposals . . . . . . . . . . . . . . . . . . — (749) (119) (37) (905)

At 31 December 2004 . . . . . . . . . . 4,700 51,744 14,792 14,058 85,294

Additions . . . . . . . . . . . . . . . . . . 480 7,172 260 365 8,277

Disposals . . . . . . . . . . . . . . . . . . — (4,097) (102) (34) (4,233)

At 30 June 2005 . . . . . . . . . . . . . 5,180 54,819 14,950 14,389 89,338

Accumulated depreciation

At 1 January 2002 . . . . . . . . . . . . 74 6,051 1,298 642 8,065

Charge for the year . . . . . . . . . . . 223 2,507 1,731 1,279 5,740

Disposals . . . . . . . . . . . . . . . . . . — (1,097) — (4) (1,101)

At 31 December 2002 . . . . . . . . . . 297 7,461 3,029 1,917 12,704


Disposals . . . . . . . . . . . . . . . . . . — (9) (76) (11) (96)

At 31 December 2003 . . . . . . . . . . 520 13,514 4,733 3,240 22,007


Disposals . . . . . . . . . . . . . . . . . . — (645) (39) (17) (701)

At 31 December 2004 . . . . . . . . . . 743 21,287 6,587 5,116 33,733

Charge for the period . . . . . . . . . . 117 4,720 967 517 6,321

Disposals . . . . . . . . . . . . . . . . . . — (3,408) (44) (23) (3,475)

At 30 June 2005 . . . . . . . . . . . . . 860 22,599 7,510 5,610 36,579

Net book value

At 31 December 2002 . . . . . . . . . . 4,403 15,608 9,700 5,579 35,290

At 31 December 2003 . . . . . . . . . . 4,180 34,755 9,114 7,393 55,442

At 31 December 2004 . . . . . . . . . . 3,957 30,457 8,205 8,942 51,561

At 30 June 2005 . . . . . . . . . . . . . 4,320 32,220 7,440 8,779 52,759


— I-21 —

Depreciation expense was expensed in the following category in the combined income statements:


2002 2003 2004 2004 2005


(unaudited)

Cost of sales . . . . . . . . . . . . . . . 412 561 454 211 235

Selling and marketing costs . . . . . . 932 3,671 4,272 2,044 1,995

Administrative expenses . . . . . . . . . 4,396 5,167 7,701 3,705 4,091

5,740 9,399 12,427 5,960 6,321

7. Land use rights

31 December 30 June

2002 2003 2004 2005

RMB’000 RMB’000 RMB’000 RMB’000

Opening . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,791,277 1,972,163 1,938,991 1,805,663

Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278,272 169,122 140,195 241,883

Amortization of prepaid operating lease payment . . . (29,270) (27,982) (27,614) (14,681)

Transfer to cost of sales . . . . . . . . . . . . . . . . . . (68,116) (174,312) (245,909) (266,839)

1,972,163 1,938,991 1,805,663 1,766,026

Amount expected to be transferred to cost of sales

within one year included under current assets . . . . (471,880) (537,309) (474,113) (628,556)

1,500,283 1,401,682 1,331,550 1,137,470

Outside Hong Kong, held on leases of:

Over 50 years . . . . . . . . . . . . . . . . . . . . . . . 1,972,163 1,938,991 1,797,386 1,762,573

Between 10 to 50 years . . . . . . . . . . . . . . . . . — — 8,277 3,453

1,972,163 1,938,991 1,805,663 1,766,026

Land use rights comprise cost of acquiring rights to use certain land, which are all located in the PRC, for property

development over fixed periods. Cost of prepaid lease for land use rights is recognized as an expense on a straight-line basis

over the unexpired period of the rights and the remaining carrying amount is recognized as cost of sales when the relevant

properties are sold.

As at 31 December 2002, 2003, 2004 and 30 June 2005, land use rights of RMB1,513,943,000, RMB1,104,536,000

RMB431,313,000 and RMB522,217,000 were pledged as collateral for the Group’s borrowings, respectively.

As at 31 December 2002, 2003, 2004 and 30 June 2005, certificates of land use rights of RMB275,257,000,

RMB88,782,000, RMB39,918,000 and RMB93,678,000 were not obtained, respectively.


— I-22 —

8. Intangible assets

Intangible assets mainly comprised acquired computer software licenses:

31 December 30 June

2002 2003 2004 2005

RMB’000 RMB’000 RMB’000 RMB’000

Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 550 781 997

Accumulated amortization. . . . . . . . . . . . . . . . . . (2) (18) (125) (203)

Net book amount . . . . . . . . . . . . . . . . . . . . . . . 73 532 656 794


2002 2003 2004 2004 2005


(unaudited)

Opening net book amount. . . . . . . . 7 73 532 532 656

Additions . . . . . . . . . . . . . . . . . . 67 475 231 210 216

Amortization expense . . . . . . . . . . (1) (16) (107) (51) (78)

Closing net book amount . . . . . . . . 73 532 656 691 794

9. Properties under development

31 December 30 June

2002 2003 2004 2005

RMB’000 RMB’000 RMB’000 RMB’000

Properties under development expected to be

completed:

Within one year included under current assets . . . 1,968,941 2,047,812 2,127,342 1,940,781

After more than one year included under

non-current assets . . . . . . . . . . . . . . . . . . . 154,444 76,424 60,194 51,022

2,123,385 2,124,236 2,187,536 1,991,803

Amount comprises:

Construction costs . . . . . . . . . . . . . . . . . . . . 2,048,451 2,026,381 2,088,409 1,932,812

Interests capitalized

Opening balance . . . . . . . . . . . . . . . . . . . . 26,952 74,934 97,855 99,127

Additions (note 21) . . . . . . . . . . . . . . . . . . 59,787 91,518 83,976 35,371

Transfer to cost of sales . . . . . . . . . . . . . . . (11,805) (54,549) (52,682) (49,850)

Transfer to properties held for sale . . . . . . . . . — (14,048) (30,022) (25,657)

Ending balance . . . . . . . . . . . . . . . . . . . . . 74,934 97,855 99,127 58,991

2,123,385 2,124,236 2,187,536 1,991,803

The properties under development are located in the PRC.

As at 31 December 2002, 2003 and 2004, properties under development of approximately RMB233,331,000,

RMB40,988,000 and RMB52,996,000 were pledged as collateral for the Group’s borrowings. No property under development

as of 30 June 2005 was pledged as collateral for the Group’s borrowings.

The capitalization rate of borrowings is 6.14%, 6.08%, 5.89% and 5.96% for the three years ended 31 December 2002,

2003 and 2004 and six months ended 30 June 2005, respectively.


— I-23 —

10. Completed properties held for sale

All completed properties held for sale are located in the PRC.

As at 31 December 2002, 2003 and 2004, no completed properties held for sale was pledged as collateral for the

Group’s borrowings. As at 30 June 2005, completed properties held for sale of approximately RMB13,035,000 were pledged as

collateral for the Group’s bank borrowings.

11. Trade and other receivables

31 December 30 June

2002 2003 2004 2005

RMB’000 RMB’000 RMB’000 RMB’000

Trade receivables (note (a)) . . . . . . . . . . . . . . . . 37,322 22,247 47,080 96,015

Other receivables due from:

Directors (note (b) and note 31(d)) . . . . . . . . . . — — — 7,000

Other related parties (note 31(d)) . . . . . . . . . . . 846,328 1,326,783 905,224 724,689

Third parties . . . . . . . . . . . . . . . . . . . . . . . . 54,758 61,731 132,350 78,321

Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . 22,890 54,709 109,744 58,175

961,298 1,465,470 1,194,398 964,200

As at 31 December 2002, 2003 and 2004 and 30 June 2005, the fair value of other receivables and prepayments

approximated their carrying amounts.

Note:

(a) Trade receivables are mainly arisen from sales of properties. Consideration in respect of properties sold are

paid in accordance with the terms of the related sales and purchase agreements. All trade receivables at each of

the balance sheet dates of the Relevant Periods were aged less than 90 days.

(b) Particulars of other receivables due from directors disclosed pursuant to Section 161B of the Hong Kong

Companies Ordinance are as follows:

Maximum amount outstanding

Name of director

31 December 30 June

Year ended

31 December

Six

months

ended

30 June

2002 2003 2004 2005 2002 2003 2004 2005

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Ms. Luk Sin Fong,

Fion . . . . . . . — — — 3,000 — — — 3,000

Mr. Chan Cheuk

Hung . . . . . . . — — — 2,000 — — — 2,000

Mr. Chan Cheuk

Hei . . . . . . . . — — — 2,000 — — — 2,000

— — — 7,000 — — — 7,000

The amounts due are unsecured, interest free and have no fixed repayment terms.


— I-24 —

12. Restricted cash

Restricted cash comprised of:

(a) As at 31 December 2003 and 2004 and 30 June 2005 the Group’s cash of approximately RMB5,600,000,

RMB6,607,000 and RMB6,718,000, respectively, was deposited in certain banks as guarantee deposits for the

benefit of mortgage loan facilities granted by the banks to the purchasers of the Group’s properties.

(b) In accordance with relevant documents issued by local State-Owned Land and Resource Bureau, certain property

development companies of the Group are required to place at designated bank accounts certain amount of pre-

sale proceeds of properties as guarantee deposits for constructions of related properties. The deposits can only be

used for purchases of construction materials and payments of construction fee of the relevant property projects

when approval from local State-Owned Land and Resource Bureau is obtained. As at 31 December 2002, 2003

and 2004 and 30 June 2005, the guarantee deposits amounted to approximately RMB29,763,000,

RMB14,952,000, RMB69,778,000 and RMB63,158,000, respectively. Such guarantee deposits will only be

released after completion of related pre-sold properties or issuance of the real estate ownership certificate,

whichever is the earlier.

(c) In accordance with a regulation approved by local government in 2005, certain property development companies

of the Group are required to maintain certain amount of cash at designated bank accounts solely for medical

expenses and compensations to the workers carrying out construction projects. As at 30 June 2005, these cash in

bank amounted to approximately RMB1,190,000.

13. Cash and cash equivalents

31 December 30 June

2002 2003 2004 2005

RMB’000 RMB’000 RMB’000 RMB’000

Denominated in RMB . . . . . . . . . . . . . . . . . . . . 66,794 114,073 249,007 279,815

Denominated in other currencies . . . . . . . . . . . . . 384 — — 31,817

67,178 114,073 249,007 311,632

For the purpose of cash flow statement, cash and cash

equivalents comprises the following:

Cash at bank and in hand . . . . . . . . . . . . . . . . . 67,178 114,073 249,007 296,324

Short-term bank deposits . . . . . . . . . . . . . . . . . . — — — 15,308

67,178 114,073 249,007 311,632

Less: Restricted cash (note 12) . . . . . . . . . . . . . . (29,763) (20,552) (76,385) (71,066)

37,415 93,521 172,622 240,566

The conversion of Renminbi denominated balances into foreign currencies and the remittance of such foreign currencies

denominated bank balances and cash out of the PRC are subject to relevant rules and regulation of foreign exchange control

promulgated by the PRC government.

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short term deposits during the Relevant

Periods are made for varying period of between seven days and three months depending on the immediate cash requirements

of the Group, and earn interest at the respective short term deposit rates.

14. Combined capital

For the purpose of this report, the combined capital of the Group as at 31 December 2002, 2003 and 2004 and 30 June

2005 represented the combined capital of those PRC companies now comprising the Group at the respective dates.


— I-25 —

15. Reserves

Statutory

reserve and

enterprise

expansion fund

(Accumulated

losses)/retained

earnings Total

RMB’000 RMB’000 RMB’000

Balance at 1 January 2002 . . . . . . . . . . . . . . . . . . . . . — (16,517) (16,517)

Loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . — (9,735) (9,735)

Balance at 31 December 2002 . . . . . . . . . . . . . . . . . . . — (26,252) (26,252)

Profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . — 71,950 71,950

Balance at 31 December 2003 . . . . . . . . . . . . . . . . . . . — 45,698 45,698

Profit for the period . . . . . . . . . . . . . . . . . . . . . . . . . — 120,820 120,820

Balance at 30 June 2004 . . . . . . . . . . . . . . . . . . . . . . — 166,518 166,518


Transfer to statutory reserve and enterprise expansion fund . 2,863 (2,863) —

Balance at 31 December 2004 . . . . . . . . . . . . . . . . . . . 2,863 270,444 273,307


Transfer to statutory reserve and enterprise expansion fund . 12,982 (12,982) —

Dividends (note 25) . . . . . . . . . . . . . . . . . . . . . . . . . — (77,451) (77,451)

Balance at 30 June 2005 . . . . . . . . . . . . . . . . . . . . . . 15,845 581,664 597,509

Pursuant to the relevant rules and regulations concerning foreign investment enterprise established in the PRC and the

articles of association of certain PRC companies now comprising the Group, the subsidiaries are required to transfer an

amount of their profit after taxation to the statutory reserve fund, until the accumulated total of the fund reaches 50% of their

registered capital. The statutory reserve fund may be distributed to equity holders in the form of bonus issue.

The appropriation to the enterprise expansion fund is solely determined by the board of directors of the certain of the

PRC companies now comprising the Group.

16. Borrowings

31 December 30 June

2002 2003 2004 2005

RMB’000 RMB’000 RMB’000 RMB’000

Borrowings included in non-current liabilities:

Bank borrowings — secured . . . . . . . . . . . . . . 510,990 911,470 1,001,700 871,700

Bank borrowings . . . . . . . . . . . . . . . . . . . . . 365,000 609,000 365,000 489,500

Borrowings from a related party — secured . . . . 345,000 198,300 — —

Borrowings from a related party. . . . . . . . . . . . 171,000 77,000 — —

Less: Amount due within one year . . . . . . . . . . (200,000) (188,000) (268,500) (361,000)

1,191,990 1,607,770 1,098,200 1,000,200

Borrowings included in current liabilities:

Bank borrowings — secured . . . . . . . . . . . . . . 120,500 122,500 3,000 —

Bank borrowings . . . . . . . . . . . . . . . . . . . . . 150,000 — 47,000 —

Borrowings from a related party — secured . . . . 254,500 80,000 — —

Borrowings from a related party. . . . . . . . . . . . — 20,000 — —

Current portion of long-term borrowings. . . . . . . 200,000 188,000 268,500 361,000

725,000 410,500 318,500 361,000


— I-26 —

The Group’s borrowings of RMB1,230,990,000, RMB1,312,270,000, RMB1,004,700,000 and RMB871,700,000 at the

end of each of the Relevant Periods were secured by its land use rights and properties.

Borrowings from a related party bore interest at rates of bank borrowings in similar terms.

The exposure of the Group’s borrowings to interest-rate changes and the contractual repricing dates or maturity date

whichever is earlier are as follows:

6 months or less 6–12 months 1–5 years Over 5 years

RMB’000 RMB’000 RMB’000 RMB’000

Borrowings included in non-current liabilities:

At 31 December 2002 . . . . . . . . . . . . . . . 488,990 703,000 — —

At 31 December 2003 . . . . . . . . . . . . . . . 947,800 659,970 — —

At 31 December 2004 . . . . . . . . . . . . . . . 547,700 550,500 — —

At 30 June 2005 . . . . . . . . . . . . . . . . . . 710,000 290,200 — —

Borrowings included in current liabilities:

At 31 December 2002 . . . . . . . . . . . . . . . 454,500 270,500 — —

At 31 December 2003 . . . . . . . . . . . . . . . 100,000 310,500 — —

At 31 December 2004 . . . . . . . . . . . . . . . 34,000 284,500 — —

At 30 June 2005 . . . . . . . . . . . . . . . . . . 261,000 100,000 — —

The maturity of the borrowings included in non-current liabilities is as follows:

31 December 30 June

2002 2003 2004 2005

RMB’000 RMB’000 RMB’000 RMB’000

Bank borrowings:

Between 1 and 2 years . . . . . . . . . . . . . . . . . . . 100,000 518,000 629,000 497,000

Between 2 and 5 years . . . . . . . . . . . . . . . . . . . 575,990 902,470 469,200 503,200

Over 5 years. . . . . . . . . . . . . . . . . . . . . . . . . . — — — —

Borrowings from a related party:

Between 1 and 2 years . . . . . . . . . . . . . . . . . . . 88,000 177,300 — —

Between 2 and 5 years . . . . . . . . . . . . . . . . . . . 428,000 10,000 — —

Over 5 years. . . . . . . . . . . . . . . . . . . . . . . . . . — — — —

1,191,990 1,607,770 1,098,200 1,000,200

The effective interest rates at each of the balance sheet dates of the Relevant Periods were as follows:

31 December 30 June

2002 2003 2004 2005

Bank borrowings . . . . . . . . . . . . . . . . . . . . . . . 6.14% 6.08% 5.89% 5.96%

The carrying amounts of short-term borrowings and long-term borrowings approximate their fair value.

The carrying amounts of all the Group’s borrowings during the Relevant Periods are denominated in RMB.


— I-27 —

17. Deferred income tax

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets

against current liabilities and when the deferred income taxes relate to the same tax authority. The offset amounts are as

follows:

31 December 30 June

2002 2003 2004 2005

RMB’000 RMB’000 RMB’000 RMB’000

Deferred income tax assets:

— to be recovered after more than 12 months . . 1,339 8,856 — —

— to be recovered within 12 months . . . . . . . . 58,652 92,510 70,453 26,848

59,991 101,366 70,453 26,848

Deferred income tax liabilities to be recovered after

more than 12 months . . . . . . . . . . . . . . . . . . . (41,411) (53,721) (65,009) (162,773)

18,580 47,645 5,444 (135,925)

The gross movement on the deferred taxation is as follows:

31 December 30 June

2002 2003 2004 2005

RMB’000 RMB’000 RMB’000 RMB’000

Beginning of the year . . . . . . . . . . . . . . . . . . . . (2,302) 18,580 47,645 5,444

Combined income statements movements (note 24) . . 20,882 29,065 (42,201) (141,369)

End of the year . . . . . . . . . . . . . . . . . . . . . . . . 18,580 47,645 5,444 (135,925)


— I-28 —

Movement in deferred tax assets and liabilities during the Relevant Periods, without taking into consideration the

offsetting of balances within the same tax jurisdiction, is as follows:

Deferred income tax assets

Temporary

difference on

recognition of

sales and related

cost of sales

Temporary

difference on

recognition of

expenses Tax losses Total

RMB’000 RMB’000 RMB’000 RMB’000

At 1 January 2002 . . . . . . . . . . . . . . . . . . . . 14,852 — 4,515 19,367

Credited/(charged) to the combined income

statements. . . . . . . . . . . . . . . . . . . . . . . . 39,976 2,139 (1,491) 40,624

At 31 December 2002 . . . . . . . . . . . . . . . . . . 54,828 2,139 3,024 59,991

Credit to the combined income statements . . . . . 25,534 10,009 5,832 41,375

At 31 December 2003 . . . . . . . . . . . . . . . . . . 80,362 12,148 8,856 101,366

Charged to the combined income statements . . . . (899) (7,912) (65) (8,876)

At 30 June 2004 . . . . . . . . . . . . . . . . . . . . . 79,463 4,236 8,791 92,490

(Charged)/credited to the combined income

statements. . . . . . . . . . . . . . . . . . . . . . . . (22,654) (3,591) 4,208 (22,037)

At 31 December 2004 . . . . . . . . . . . . . . . . . . 56,809 645 12,999 70,453

(Charged)/credit to the combined income statements (44,514) (253) 1,162 (43,605)

At 30 June 2005 . . . . . . . . . . . . . . . . . . . . . 12,295 392 14,161 26,848


— I-29 —

Deferred income tax liabilities

Temporary

difference on

recognition of

sales and related

cost of sales Others Total

RMB’000 RMB’000 RMB’000

At 1 January 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,669) — (21,669)

Charged to the combined income statements . . . . . . . . . . . . . . . . (19,742) — (19,742)

At 31 December 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (41,411) — (41,411)

Charged to the combined income statements . . . . . . . . . . . . . . . . (12,310) — (12,310)

At 31 December 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (53,721) — (53,721)

Charged to the combined income statements . . . . . . . . . . . . . . . . (416) (46) (462)

At 30 June 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (54,137) (46) (54,183)

(Charged)/credit to the combined income statements . . . . . . . . . . . (10,872) 46 (10,826)

At 31 December 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (65,009) — (65,009)

Charged to the combined

income statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (96,854) (910) (97,764)

At 30 June 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (161,863) (910) (162,773)

Deferred income tax arose as a result of differences in timing of recognizing certain revenues, costs and

expenses between the tax based accounts and the HKFRS accounts. This constitutes temporary differences, being the

differences between the carrying amount of the assets or liabilities in the combined balance sheets and its tax bases in

accordance with HKAS 12.

Deferred income tax assets are recognized for tax losses carry-forwards to the extent that the realization of the

related benefit through the future taxable profits is probable. Losses amounting to RMB9,164,000, RMB17,673,000,

RMB12,555,000 and RMB3,521,000 will expire in 2007, 2009, 2010 and 2011 respectively.

18. Trade and other payables

31 December 30 June

2002 2003 2004 2005

RMB’000 RMB’000 RMB’000 RMB’000

Trade payables (see below) . . . . . . . . . . . . . . . . . 1,445,978 1,424,053 1,441,176 1,498,536

Other payables due to:

Related parties (note 31(d)) . . . . . . . . . . . . . . 1,030,082 1,059,579 437,830 129,408

Third parties (note (a)) . . . . . . . . . . . . . . . . . 51,391 125,485 211,085 218,634

Dividend payable . . . . . . . . . . . . . . . . . . . . . . . — — — 77,451

Advances from customers . . . . . . . . . . . . . . . . . . 368,176 822,273 1,654,000 1,042,049

Staff welfare benefit payable . . . . . . . . . . . . . . . . 546 361 140 77

Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 25,651 39,556 29,116 25,649

Other taxes payable . . . . . . . . . . . . . . . . . . . . . 43,259 65,980 125,232 293,146

2,965,083 3,537,287 3,898,579 3,284,950


— I-30 —

Note (a): Other payables due to third parties comprise:

31 December 30 June

2002 2003 2004 2005

RMB’000 RMB’000 RMB’000 RMB’000

Deposits and advance from constructors . . . . . 9,130 14,926 23,670 23,887

Provision for construction of public facilities

and building maintenance . . . . . . . . . . . . 17,998 29,373 69,211 76,966

Legal and professional fees payables . . . . . . . 1,011 4,115 5,900 3,560

Deed tax payables (note (i)) . . . . . . . . . . . . 10,212 40,940 73,784 80,232

Provision for selling expenses . . . . . . . . . . . 4,382 8,642 13,710 20,496

Payables for office utilities . . . . . . . . . . . . . 190 12,084 6,228 7,121

Other miscellaneous . . . . . . . . . . . . . . . . . 8,468 15,405 18,582 6,372

51,391 125,485 211,085 218,634

Note (i): Amount represents cash received from the Group’s property purchasers for deed tax on real estate ownership

certificates payable to the PRC government.

The ageing analysis of trade payables at the each of the balance sheet dates of the Relevant Periods is as follows:

31 December 30 June

2002 2003 2004 2005

RMB’000 RMB’000 RMB’000 RMB’000

Within 90 days . . . . . . . . . . . . . . . . . . . . . . . . 856,330 1,003,246 836,960 976,087

Over 90 days and within 180 days . . . . . . . . . . . . 566,893 285,356 438,371 229,552

Over 180 days and within 365 days . . . . . . . . . . . 3,555 18,530 93,869 127,921

Over 365 days . . . . . . . . . . . . . . . . . . . . . . . . 19,200 116,921 71,976 164,976

1,445,978 1,424,053 1,441,176 1,498,536

19. Other gains


2002 2003 2004 2004 2005


(unaudited)

Interest income . . . . . . . . . . . . . . . . 344 645 793 413 591

Forfeited deposits from customers. . . . . 637 1,641 3,352 736 974

Miscellaneous . . . . . . . . . . . . . . . . . 6 2,443 3,175 1,329 269

987 4,729 7,320 2,478 1,834


— I-31 —

20. Expenses by nature

Expenses included in cost of sales, selling and marketing costs, administration expenses and other operating expenses

are analysed as follows:


2002 2003 2004 2004 2005


(unaudited)

Staff costs — excluding directors’

emoluments (note 22) . . . . . . . . . . 25,287 50,677 67,236 30,877 45,010

Auditors’ remuneration . . . . . . . . . . . 145 81 356 85 937

Advertising costs . . . . . . . . . . . . . . . 89,938 127,102 119,817 55,187 65,342

Depreciation (note 6) . . . . . . . . . . . . 5,740 9,399 12,427 5,960 6,321

Amortization of intangible assets (note 8) 1 16 107 51 78

Operating leases charges — land use right

(note 7) . . . . . . . . . . . . . . . . . . . 29,270 27,982 27,614 14,146 14,681

Cost of properties sold . . . . . . . . . . . 479,279 1,424,067 1,792,281 985,236 1,583,830

21. Finance costs


2002 2003 2004 2004 2005


(unaudited)

Interest on bank borrowings wholly

repayable within five years . . . . . . . 88,315 119,637 101,089 55,137 41,168

Less: interest capitalized (note 9) . . . . (59,787) (91,518) (83,976) (43,634) (35,371)

28,528 28,119 17,113 11,503 5,797

22. Staff costs — excluding directors’ emoluments


2002 2003 2004 2004 2005


(unaudited)

Wages and salaries . . . . . . . . . . . . . . 23,680 47,235 59,562 27,655 35,872

Pension costs — statutory pension

(note 28) . . . . . . . . . . . . . . . . . . 659 1,020 1,050 942 1,481

Staff welfare. . . . . . . . . . . . . . . . . . 948 2,260 5,249 1,504 6,264

Medical benefits . . . . . . . . . . . . . . . — 162 160 108 324

Other allowances and benefits . . . . . . . — — 1,215 668 1,069

25,287 50,677 67,236 30,877 45,010


— I-32 —

23. Emoluments for directors and five highest paid individuals

(a) Directors’ emoluments


2002 2003 2004 2004 2005


(unaudited)

Fees . . . . . . . . . . . . . . . . . . . — — — — —

Salaries and other benefits . . . . . — 200 1,200 600 600

Bonuses. . . . . . . . . . . . . . . . . — — — — —

Retirement scheme contributions . — — — — —

— 200 1,200 600 600

No emoluments were paid to any independent non-executive directors during the Relevant Periods.

Emoluments of executive directors of the Company for the Relevant Periods are set out below:


2002 2003 2004 2004 2005


(unaudited)

Mr. Chen Zhuo Lin . . . . . . . . . — — — — —

Mr. Chan Cheuk Yin . . . . . . . . — 40 240 120 120

Ms. Luk Sin Fong, Fion . . . . . . — 40 240 120 120

Mr. Chan Cheuk Hung . . . . . . . — 40 240 120 120

Mr. Chan Cheuk Hei. . . . . . . . . — 40 240 120 120

Mr. Chan Cheuk Nam . . . . . . . . — 40 240 120 120

— 200 1,200 600 600

(b) Five highest paid individuals

During the Relevant Periods, none of the five highest paid individuals is director of the Company. The aggregate

amounts of emoluments of the five highest paid individuals for the Relevant Periods are set out below:


2002 2003 2004 2004 2005


(unaudited)

Salaries and other benefits . . . . . 572 1,313 1,302 636 769

Retirement scheme contributions . 10 11 11 6 6

582 1,324 1,313 642 775

The emoluments fell within the following bands;


2002 2003 2004 2004 2005

(unaudited)

Nil to RMB1,000,000 . . . . . . . . 5 5 5 5 5


— I-33 —

(c) During the Relevant Periods, no emolument was paid by the companies now comprising the Group to any of the

above directors or the five highest paid individuals as an inducement to join or upon joining the Group or as

compensation for loss of office.

24. Income tax (credit)/expense


2002 2003 2004 2004 2005


(unaudited)

Current income tax

— Hong Kong profits tax . . . . . . . — — — — —

— PRC enterprise income tax . . . . 15,940 67,724 77,163 50,737 58,348

Deferred income tax relating to

origination/(reversal) of temporary

differences

— PRC enterprise income tax . . . . (20,882) (29,065) 42,201 9,338 141,369

(4,942) 38,659 119,364 60,075 199,717

The income tax on the Group’s profit before taxation differs from the theoretical amount that would arise using the

enacted tax rate of the home country of the companies now comprising the Group as follows:


2002 2003 2004 2004 2005


(unaudited)

(Loss)/profit before income tax . . . . . . (15,149) 111,755 349,642 181,093 603,345

Calculated at PRC enterprise income tax

rate of 33% . . . . . . . . . . . . . . . . (4,999) 36,879 115,382 59,761 199,104

Effect of expenses not deductible for

income tax purposes . . . . . . . . . . . 57 1,780 3,982 314 613

PRC enterprise income tax . . . . . . . . . (4,942) 38,659 119,364 60,075 199,717

Hong Kong profits tax

No Hong Kong profits tax has been provided for as the companies now comprising the Group had no businesses

operations maintained in Hong Kong during the Relevant Periods.

PRC enterprise income tax

PRC enterprise income tax is provided for on 33% of the profits for the PRC statutory financial reporting

purpose, adjusted for those items, which are not assessable or deductible for the PRC enterprise income tax purpose.

PRC land appreciation tax

PRC land appreciation tax is levied at progressive rates ranging from 30% to 60% on the appreciation of land

value, being the proceeds of sales of properties less deductible expenditures including lease charges of land use right,

borrowing costs and all property development expenditures.


— I-34 —

Business taxes

The PRC companies now comprising the Group are subject to business taxes on their revenues at the following

rates:

Category Rate

Sale of properties. . . . . . . . . . . . . . 5%

Property management . . . . . . . . . . . 5%

Decoration services. . . . . . . . . . . . . 3%

25. Dividends

The following dividends were declared by the companies now comprising the Group to their then equity holders

throughout the Relevant Periods:


2002 2003 2004 2004 2005


(unaudited)

Dividends . . . . . . . . . . . . . . . . . . . — — — — 77,451

The rates of dividend and the number of shares ranking for dividends are not presented as such information is not

meaningful having regard to the purpose of this report.

26. Cash (used in)/generated from operations


2002 2003 2004 2004 2005


(unaudited)

(Loss)/profit for the year/period . . . . . . (10,207) 73,096 230,278 121,018 403,628

Adjustments for:

Income tax (credit)/expense (note 24) (4,942) 38,659 119,364 60,075 199,717

Interest income (note 19) . . . . . . . . (344) (645) (793) (413) (591)

Interest expense (note 21) . . . . . . . 28,528 28,119 17,113 11,503 5,797

Depreciation (note 6) . . . . . . . . . . 5,740 9,399 12,427 5,960 6,321

Amortization of intangible assets

(note 8) . . . . . . . . . . . . . . . . . 1 16 107 51 78

Loss of disposal of property, plant and

equipment ((note (a)) . . . . . . . . . 296 1,311 204 39 758

Changes in working capital:

Property under development and

completed properties held for sale . (1,103,814) (180,360) (278,442) 129,339 60,717

Land use rights . . . . . . . . . . . . . . (108,121) 79,045 170,679 110,566 39,637

Restricted cash . . . . . . . . . . . . . . (29,763) 9,211 (55,833) (54,944) 5,319

Trade and other receivables . . . . . . (23,884) (23,717) (150,487) (4,469) 56,663

Trade and other payables . . . . . . . . 439,008 542,707 983,041 36,417 (382,658)

Cash (used in)/generated from operations (807,502) 576,841 1,047,658 415,142 395,386

Notes:

(a) Loss on disposals of property, plant and equipment of each of the Relevant Periods represents the net book value

of the property, plan and equipment disposed.


— I-35 —

(b) Non-cash transactions

The principal non-cash transactions were the injection of land use rights of RMB45,873,000 and RMB37,351,000

during the years ended 31 December 2003 and 2004, respectively, as capital contribution to a subsidiary by its then

equity holders.

27. Earnings per share

Earnings per share information is not presented as its inclusion, for the purpose of this report, is not considered

meaningful due to the Reorganization and the preparation of the results for the Relevant Periods on the combined basis as

disclosed in note 1 above.

28. Pensions — defined contribution plans

Employees in the Group’s PRC subsidiaries are required to participate in a defined contribution retirement scheme

administrated and operated by the local municipal government. The Group’s PRC subsidiaries contribute funds which are

calculated on certain percentage of the average employee salary as agreed by local municipal government to the scheme to

fund the retirement benefits of the employees.

Details of the retirement scheme contributions for the employees, which have been dealt with in the combined income

statements of the Group for the Relevant Periods, are as follows:


2002 2003 2004 2004 2005


(unaudited)

Gross scheme contributions . . . . . . . . . 659 1,020 1,050 942 1,481

29. Contingencies

The Group has arranged mortgage loan facility for certain purchasers of property units and provided guarantees to

secure obligations of such purchasers for repayments. The outstanding guarantees amounted to RMB726,793,000,

RMB1,741,646,000, RMB2,575,895,000 and RMB3,686,969,000 as at 31 December 2002, 2003, 2004 and 30 June 2005,

respectively. Such guarantees terminate upon earlier of (i) issuance of the real estate ownership certificate which will

generally be available within one to two years after the purchasers take possession of the relevant properties; and (ii) the

satisfaction of mortgaged loan by the purchasers of properties.

30. Commitments

(a) Operating leases commitments

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

31 December 30 June

2002 2003 2004 2005

RMB’000 RMB’000 RMB’000 RMB’000

Property, plant and equipment:

Not later than one year . . . . . . . . . . . . . . . 337 1,728 2,516 719

Later than one year and not later than five years 147 1,828 432 900

Later than five years. . . . . . . . . . . . . . . . . — — — 225

484 3,556 2,948 1,844


— I-36 —

(b) Other commitments

31 December 30 June

2002 2003 2004 2005

RMB’000 RMB’000 RMB’000 RMB’000

Property development activities:

Contracted but not provided for . . . . . . . . . . 588,512 569,857 1,042,797 431,976

Authorized but not contracted for . . . . . . . . . — — — —

588,512 569,857 1,042,797 431,976

31. Related party transactions

(a) Name and relationship with related parties

Name Relationship

The Founding Shareholders, including Mr. Chen Zhuo

Lin, Mr. Chan Cheuk Yin, Ms. Luk Sin Fong, Fion,

Mr. Chan Cheuk Hung, Mr. Chan Cheuk Hei and

Mr. Chan Cheuk Nam . . . . . . . . . . . . . . . . . .

The Founding Shareholders are also Directors of the

Company

Zhongshan Agile Group

Company Limited* . . . . . . . . . . . . . . . . . . . .

Controlled by Directors of the Company

Zhongshan Agile

Property Development Company Limited* . . . . .

Controlled by Directors of the Company and close

family members of Founding Shareholders

Guangzhou Agile

(Nanhu) Real Estate Development Company

Limited* . . . . . . . . . . . . . . . . . . . . . . . . . .


Agile Golf & Country Club Controlled by Directors of the Company

Agile (H.K.) International Company Limited* . . . . . Controlled by Directors of the Company

Dynasty Furniture Company

Limited* . . . . . . . . . . . . . . . . . . . . . . . . . .


Bai Le Cheng Development

Company Limited* . . . . . . . . . . . . . . . . . . . .

Controlled by Directors of the Company and close

family members of Founding Shareholders

Agile Hotel* . . . . . . . . . . . . . . Controlled by Directors of the Company

Agile (Macau) Real Estate Company Limited. . . . . . Controlled by Directors of the Company

* The names of certain of the companies referred to in these reports represent management’s best efforts at

translating the Chinese names of these companies as no English names have been registered or available.


— I-37 —

(b) Transactions with related parties

During the Relevant Periods, the Group had the following significant transactions with related parties:


2002 2003 2004 2004 2005


(unaudited)

Decoration fee income:

Zhongshan Agile Property

Development Company Limited

(note (i)) . . . . . . . . . . . . . . 44,548 58,486 33,491 10,220 6,688

Loan interest charged by

a related party:

Zhongshan Agile Group Company

Limited (note (ii)) . . . . . . . . 43,504 46,785 11,996 — —

Management fee charged by related

parties (note (iii)):

Zhongshan Agile Group Company

Limited . . . . . . . . . . . . . . . 21,699 28,651 17,444 9,871 3,917

Agile (H.K.) International

Company Limited . . . . . . . . . 5,841 8,547 4,444 1,743 1,580

27,540 37,198 21,888 11,614 5,497

Restaurant and hotel service fee

charged by Agile Hotel

(note (iv)): . . . . . . . . . . . . . 95 246 623 320 750

Golf facilities service fee charged

by Agile Golf & Country Club

(note (v)): . . . . . . . . . . . . . 63 127 1,646 820 1,000

Directors’ emoluments . . . . . . . . — 200 1,200 600 600

Notes:

(i) Decoration fee were charged in accordance with the terms of the underlying agreements.

(ii) Interest on loan from a related party was charged at interest rate of bank borrowings in similar terms.

(iii) Management fee were charged based on the service rendered by the related parties to the Group and in

accordance with the terms of the underlying agreements.

(iv) Restaurant and hotel service fees were charged in accordance with the terms of the underlying

agreements. In the opinion of the directors, the fees were determined with reference to the market price at

the prescribed year.

(v) Golf facilities service fees were charged in accordance with the terms of the underlying agreements. In the

opinion of the directors, the fees were determined with reference to the market price at the prescribed

year.

In the opinion of the directors of the Company, the above related party transactions were carried out in the

normal course of business and at terms mutually negotiated between the Group and the respective related parties.


— I-38 —

As at 31 December 2002, 2003, 2004 and 30 June 2005, land use rights and properties of related parties have

been pledged to banks as collateral for the Group’s bank borrowings of RMB25,000,000, RMB894,500,000,

RMB844,200,000 and RMB836,000,000, respectively. Moreover, related parties also provided corporate guarantees

for the Group’s bank borrowings of RMB1,023,500,000, RMB1,449,000,000, RMB1,253,700,000 and

RMB1,259,200,000 at 31 December 2002, 2003 and 2004 and 30 June 2005, respectively. Up to 26 October 2005,

such securities and corporate guarantees were released by relevant lending banks.

(c) Key management compensation

Year end 31 December Six months ended 30 June

2002 2003 2004 2004 2005


(unaudited)

Salaries and other short-term

employee benefits 572 1,513 2,502 1,236 1,369

Retirement scheme contributions 10 11 11 6 6

582 1,524 2,513 1,242 1,375

(d) Balances with related parties

As at 31 December 2002, 2003 and 2004 and 30 June 2005, the Group had the following significant non-trade

balances with related parties:

31 December 30 June

2002 2003 2004 2005

RMB’000 RMB’000 RMB’000 RMB’000

Due from related parties (note (i)):

Zhongshan Agile Group Company Limited . . . 391,948 493,191 319,015 374,108

Zhongshan Agile Property Development

Company Limited . . . . . . . . . . . . . . . . . 231,491 528,421 395,378 249,973

Guangzhou Agile (Nanhu) Real Estate

Development Company Limited . . . . . . . . 104,604 103,476 5,541 5,482

Agile Golf & Country Club . . . . . . . . . . . . 59,002 128,560 101,117 3,019

Agile (H.K.) International Company Limited . . 34,124 48,071 74,222 82,968

Dynasty Furniture Company Limited . . . . . . . 18,957 17,965 7,969 7,908

Bai Le Cheng Development Company Limited . 5,931 5,929 — —

Agile Hotel . . . . . . . . . . . . . . . . . . . . . . 271 667 1,982 1,231

Agile (Macau) Real Estate Company Limited. . — 503 — —

Ms. Luk Sin Fong, Fion . . . . . . . . . . . . . . — — — 3,000

Mr. Chan Cheuk Hung . . . . . . . . . . . . . . . — — — 2,000

Mr. Chan Cheuk Hei. . . . . . . . . . . . . . . . . — — — 2,000

846,328 1,326,783 905,224 731,689

Due to related parties (note (i)):

Zhongshan Agile Group Company Limited . . . 168,114 186,609 156,152 34,619

Zhongshan Agile Property Development

Company Limited . . . . . . . . . . . . . . . . . 706,391 663,824 170,580 7,495

Agile (H.K.) International Company Limited . . 84,293 108,344 71,307 37,178

Agile (Macau) Real Estate Company Limited. . 20,533 23,046 — —

Dynasty Furniture Company Limited . . . . . . . 28,812 27,828 2,577 —

Guangzhou Agile (Nanhu) Real Estate

Development Company Limited . . . . . . . . 15,097 45,121 35,048 23,563

Agile Golf & Country Club . . . . . . . . . . . . 6,482 4,006 1,645 26,164

Bai Le Cheng Development Company Limited . 206 140 — —

Agile Hotel . . . . . . . . . . . . . . . . . . . . . . 154 661 521 389

1,030,082 1,059,579 437,830 129,408


— I-39 —

Note (i): Amounts due from/to related parties are unsecured, interest-free and have no fixed terms of

repayment, which are cash advances in nature.

All the above balances as at 30 June 2005 have been settled by the end of October 2005.

III. BALANCE SHEET OF THE COMPANY

The Company was incorporated on 14 July 2005 with an authorized share capital of

HK$390,000 divided into 390,000 shares of HK$1 each. On 4 August 2005, Mr. Chen Zhuo Lin and

Ms. Luk Siu Fong, Fion were each allotted and issued 1 nil-paid share of HK$1 each. On 17 October

2005, the share of the Company of HK$1 each was subdivided into 10 shares of HK$0.1 each and

the authorized share capital of the Company was increased from HK$390,000 to HK$1,000,000,000

by creation of additional 9,996,100,000 shares. The Company has not carried out any other business

since its date of incorporation.

IV. SUBSEQUENT EVENTS

Subsequent to 30 June 2005 and up to the date of this report, the Group has completed the

Reorganization in preparing for a listing of shares of the Company on the Main Board of the Stock

Exchange, details of which are set out in note 1 of the section II of this report.

Subsequent to the completion of the Reorganization, the Group has declared a special dividend

of approximately RMB320 million. The special dividend will be paid prior to the commencement of

listing of the Company’s shares on the Stock Exchange. In the event that any portion of such

dividend is not paid prior to the commencement of the listing of the Company’s shares on the Stock

Exchange, such unpaid portion will be waived by the relevant equity holders.

V. SUBSEQUENT ACCOUNTS

No audited accounts have been prepared for the Company and its subsidiaries in respect of any

period subsequent to 30 June 2005. In addition, except for those as disclosed in section IV of this

report, no dividend or distribution has been declared, made or paid by the Company or its

subsidiaries in respect of any period subsequent to 30 June 2005.

Yours faithfully

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong


— I-40 —

The forecast consolidated net profit attributable to equity holders of the Company for the year

ending 31 December 2005 is set out in the section headed ‘‘Financial Information — Profit

Forecast’’.

(A) BASES

The Directors have prepared the forecast of consolidated net profit attributable to equity

holders of the Company for the year ending 31 December 2005 on the basis of the results shown in

the audited accounts of the Group for the six months ended 30 June 2005, the unaudited management

accounts of the Group for the two months ended 31 August 2005 and a forecast of the combined

result of the Group for the remaining four months ending 31 December 2005. The Directors are not

aware of any extraordinary items which have arisen or are likely to arise in respect of the year

ending 31 December 2005. The forecast has been prepared on a basis consistent in all material

respects with the accounting policies currently adopted by the Group as summarized in Appendix I

to the Prospectus.

(B) ASSUMPTIONS

The Directors have adopted the following principal assumptions in the preparation of the profit

forecast, which are outside our influence:

(i) there will be no significant changes in the existing political, legal, fiscal, market or

economic conditions in the PRC, including changes in legislations, regulations or rules,

which may have a material adverse effect on business of the Group;

(ii) there will be no significant changes in the government policies in the PRC governing the

pricing and selling of properties of the Group;

(iii) there will be no material changes in the bases or rates of taxation, both direct and

indirect, in the PRC; and

(iv) there will be no material changes in inflation, interest and exchange rates in the PRC

from those prevailing as at the last audited balance sheet date.

APPENDIX II PROFIT FORECAST

— II-1 —

(C) LETTERS

The following is the text of the letters received by the Directors from the Company’s auditorsand reporting accountants, PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, andfrom the Company’s Sponsor, prepared for the purpose of incorporation in this prospectus inconnection with the profit forecast.

The Directors



5 December 2005

Dear Sirs

We have reviewed the calculations of and accounting policies adopted in arriving at the

forecast of the consolidated profit attributable to equity holders of Agile Property Holdings Limited

(the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) for the

year ending 31 December 2005 (the ‘‘Profit Forecast’’) as set out in the subsection headed ‘‘Profit

forecast’’ in the section headed ‘‘Financial information’’ in the prospectus of the Company dated 5

December 2005 (the ‘‘Prospectus’’).

We conducted our work in accordance with the Auditing Guideline 3.341 on ‘‘Accountants’

report on profit forecasts’’ issued by the Hong Kong Institute of Certified Public Accountants.

The Profit Forecast, for which the Directors of the Company are solely responsible, has been

prepared by them based on the audited combined results of the Group for the six months ended 30

June 2005, the unaudited combined results based on management accounts for the two months ended

31 August 2005 and a forecast of the combined results of the Group for the remaining four months

ending 31 December 2005 on the basis that the current Group structure had been in existence

throughout the whole financial year ending 31 December 2005.

In our opinion, the Profit Forecast, so far as the calculation and accounting policies are

concerned, has been properly compiled in accordance with the bases and assumptions made by the

Directors of the Company as set out on page II-1 of the Prospectus, and is presented on a basis

consistent in all material respects with the accounting policies presently adopted by the Group as set

out in our accountants’ report dated 5 December 2005, the text of which is set out in Appendix I of

the Prospectus.

Yours faithfully


Certified Public AccountantsHong Kong


— II-2 —

The following is the text of a letter received by our Directors from our Sponsor, prepared for

the purpose of incorporation in this prospectus in connection with the profit forecast.

5 December 2005

The Directors


Agile Hotel Building

Jinyong Road, Sanxiang Town

Zhongshan City

Guangdong Province 528463

PRC

Dear Sirs

We refer to the forecast of the consolidated profit attributable to equity holders of Agile

Property Holdings Limited (the ‘‘Company’’) and its subsidiaries (together the ‘‘Group’’) for the year

ending 31 December 2005 (the ‘‘Profit Forecast’’) as set out in the subsection headed ‘‘Profit

Forecast’’ in the section entitled ‘‘Financial Information’’ in the prospectus issued by the Company

dated 5 December 2005.

The Profit Forecast, for which the Directors are solely responsible, has been prepared by them

based on the audited accounts for the six months ended 30 June 2005, unaudited management

accounts of the Group for the two months ended 31 August 2005, and a forecast of the consolidated

results of the Group for the remaining four months ending 31 December 2005.

We have discussed with you the bases and assumptions upon which the Profit Forecast has

been made. We have also considered the letter dated 5 December 2005 addressed to you and us from

PricewaterhouseCoopers regarding the accounting policies and calculations upon which the Profit

Forecast has been made.

On the basis of the information comprising the Profit Forecast and on the bases of the

accounting policies and calculations adopted by you and reviewed by PricewaterhouseCoopers, we

are of the opinion that the Profit Forecast, for which you as the Directors of the Company are solely

responsible, has been made after due and careful enquiry.

Yours faithfully,

For and on behalf of


Che-Ning Liu

Managing Director


— II-3 —

A. UNAUDITED PRO FORMA ADJUSTED NET TANGIBLE ASSETS

The following unaudited pro forma adjusted net tangible assets prepared in accordance with

Rule 4.29 of the Listing Rules is for illustration purpose only, and is set out here to illustrate the

effect of the Global Offering on the combined net tangible assets of the Group as at 30 June 2005,

as if they had been taken place on 30 June 2005.

The unaudited pro forma adjusted net tangible assets has been prepared for illustrative purposes

only and because of its nature, it may not give a true picture of the combined net tangible assets of

the Group following the Global Offering. It is based on the audited combined net assets of the Group

as at 30 June 2005 as shown in the Accountants’ Report, the text of which is set out in Appendix I

to this prospectus and adjusted as described below. The unaudited pro forma adjusted net tangible

assets statement does not form part of the Accountants’ Report.

Audited

combined

net assets of

the Group

as at 30

June 2005

Less: Add:

Intangible

assets as at

30 June

2005

Dividend

declared

Estimated

net proceeds

from the

Global

Offering

Unaudited

pro forma

adjusted net

tangible

assets

Unaudited pro forma

adjusted net tangible

assets per Share

(RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB) (HK$)

(Note 1) (Note 2) (Note 3) (Note 4)

Based on an

Offer Price of

HK$3.00 per

Share . . . . . 1,065,167 794 320,000 2,455,740 3,200,113 0.96 0.92

Based on an

Offer Price of

HK$3.30 per

Share . . . . . 1,065,167 794 320,000 2,706,383 3,450,756 1.04 1.00

Notes:

(1) The audited combined net assets of Group as at 30 June 2005 is extracted from Accountants’ Report set out in

Appendix I to this prospectus.

(2) Subsequent to 30 June 2005, a special dividend of approximately RMB320 million was declared to the respective

shareholders.

(3) The estimated net proceeds from the Global Offering are based on the indicative Offer Prices of HK$3.00 and

HK$3.30 per share respectively, after deduction of the underwriting fees and other related expenses payable by

the Company and takes no account of any Shares which may be issued upon the exercise of the Over-allotment

Option.

(4) The unaudited pro forma adjusted net tangible assets per Share is arrived after the adjustment referred to in the

preceding paragraphs and on the basis that 3,322,000,000 Shares were in issue but takes no account of any

Shares which may be issued upon the exercise of the Over-allotment Option.

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION

— III-1 —

(B) UNAUDITED PRO FORMA BASIC FORECAST EARNINGS PER SHARE

The following unaudited pro forma basic forecast earnings per Share has been prepared on the

basis of the notes set out below for the purpose of illustrating the effect of the Global Offering as if

it had taken place on 30 June 2005. This unaudited pro forma basic forecast earnings per Share has

been prepared for illustrative purposes only and because of its nature, it may not give a true picture

of financial results of the Group following the Global Offering.

Forecast consolidated profit attributable to equity holders . . . . . not less than RMB936 million

(about HK$898 million)

Pro forma forecast basic earnings per Share . . . . . . . . . . . . . . . . . . . not less than RMB0.28

(about HK$0.27)

The forecast consolidated profit attributable to equity holders for the year ending 31 December

2005 has been prepared based on the audited combined accounts of the Group for the six months

ended 30 June 2005, the unaudited management accounts for the two months ended 31 August 2005

and our forecast of the consolidated results of the Group for the four months ending 31 December

2005 is set out under the section headed ‘‘Financial Information — Profit Forecast’’ in the

prospectus. The bases and assumptions on which the above profit forecast has been prepared are set

out in Appendix II to this prospectus.

The calculation of the unaudited pro forma forecast basic earnings per Share is based on the

forecast consolidated profit attributable to equity holders for the year ending 31 December 2005,

assuming that the Company had been listed on the Stock Exchange since 30 June 2005 and a total of

3,322,000,000 Shares have been in issue on 30 June 2005. The calculation assumes that the Over-

allotment Option will not be exercised.


— III-2 —

C. LETTER FROM THE REPORTING ACCOUNTANTS ON THE UNAUDITED PRO

FORMA FINANCIAL INFORMATION RELATING TO THE UNAUDITED PRO FORMA

ADJUSTED NET TANGIBLE ASSETS

The following is the text of a report received from the auditors and reporting accountants,

PricewaterhouseCoopers, Certified Public Accountants, Hong Kong for the purpose of inclusion in

this prospectus. As there is no specific guidance on the reporting on pro forma financial information

under the Auditing Guidelines issued by the Hong Kong Institute of Certified Public Accountants,

this report is prepared with reference to the Statements of Investment Circular Reporting Standards

and Bulletin 1998/8 ‘‘Reporting on pro forma financial information pursuant to the Listing Rules’’

issued by the Auditing Practices Board in the United Kingdom.

The Directors


5 December 2005

Dear Sirs

We report on the unaudited pro forma financial information of Agile Property Holdings Limited

(the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) set out on

page III-1 and III-2 under the headings of unaudited pro forma adjusted net tangible assets in

Appendix III of the Company’s prospectus dated 5 December 2005 in connection with the placing

and public offer of the shares of the Company on the Main Board of The Stock Exchange of Hong

Kong Limited. The unaudited pro forma financial information has been prepared by the directors of

the Company, for illustrative purposes only, to provide information about how the placing and public

offer might have affected the relevant financial information of the Group as of 30 June 2005.

Responsibilities

It is the responsibility solely of the Directors of the Company to prepare the unaudited pro

forma financial information in accordance with paragraph 21 of Appendix 1A and paragraph 4.29 of

the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (’’the

Listing Rules’’).

It is our responsibility to form an opinion, as required by paragraph 4.29 of the Listing Rules,

on the unaudited pro forma financial information and to report our opinion to you. We do not accept

any responsibility for any reports previously given by us on any financial information used in the

compilation of the unaudited pro forma financial information beyond that owed to those to whom

those reports were addressed by us at the dates of their issues.


— III-3 —

Basis of opinion

We conducted our work with reference to the Statements of Investment Circular Reporting

Standards and Bulletin 1998/8 ‘‘Reporting on pro forma financial information pursuant to the Listing

Rules’’ issued by the Auditing Practices Board in the United Kingdom, where applicable. Our work,

which involved no independent examination of any of the underlying financial information, consisted

primarily of comparing the unadjusted financial information with the source documents, considering

the evidence supporting the adjustments and discussing the unaudited pro forma financial

information with the directors of the Company.

Our work does not constitute an audit or review in accordance with Statements of Auditing

Standards issued by the Hong Kong Institute of Certified Public Accountants, and accordingly, we

do not express any such assurance on the unaudited pro forma financial information.

The unaudited pro forma financial information has been prepared on the bases set out on page

III-1 and III-2 for illustrative purpose only and, because of its nature, it may not be indicative of:

— the financial position of the Group at any future date, or

— the earnings per share of the Group for any future periods.

Our work has not been carried out in accordance with auditing standards generally accepted in

the United States of America and accordingly should not be relied upon as if it had been carried out

in accordance with those standards.

Opinion

In our opinion:

(a) the unaudited pro forma financial information has been properly compiled by the directors

of the Company on the basis stated;

(b) such basis is consistent with the accounting policies of the Group; and

(c) the adjustments are appropriate for the purposes of the unaudited pro forma financial

information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Yours faithfully


Certified Public Accountants

Hong Kong


— III-4 —

The following is the text of a letter with the summary of values and valuation certificates

received from CB Richard Ellis Limited, prepared for the purpose of incorporation in the

prospectus, in connection with their valuation as at 30th September 2005 of all the property

interests of the Group.

5 December 2005

The Board of Directors


20/F.,

No. 238 Nathan Road,

Kowloon,

Hong Kong

Dear Sirs,

In accordance with your instructions for us to value the property interests held by Agile

Property Holdings Limited (the ‘‘Company’’) and its subsidiaries (hereinafter together know as the

‘‘Group’’) in the PRC, Macau and Hong Kong. We confirm that we have carried out an inspection,

made relevant enquiries and obtained such further information as we consider necessary for the

purpose of providing you with our opinion of the capital values of such property interests as at 30th

September 2005 (the ‘‘date of valuation’’).

Our valuation is our opinion of Market Value which is defined to mean ‘‘the estimated amount

for which a property should exchange on the date of valuation between a willing buyer and a willing

seller in an arm’s-length transaction after proper marketing wherein the parties had each acted

knowledgeably, prudently and without compulsion.’’

Unless otherwise stated, our valuation is prepared in accordance with the ‘‘First Edition of The

HKIS Valuation Standards on Properties’’ published by The Hong Kong Institute of Surveyors

(‘‘HKIS’’). We have also compiled with all the requirements contained in Paragraph 34(2), (3) of

Schedule 3 of the Companies Ordinance (Cap. 32), Chapter 5 and Practice Note 12 of the Rules

Governing the Listing of Securities (the ‘‘Exchange Listing Rules issued by The Stock Exchange of

Hong Kong Limited’’).

APPENDIX IV PROPERTY VALUATION

— IV-1 —

For the purpose of area measurement in our valuation, Saleable Gross Floor Areas (Saleable

GFAs) refer to the internal floor area and common areas exclusively allocated to that unit including

balconies and other similar features comprising common areas such as staircases, lift lobbies. Non-

saleable Gross Floor Areas (Non-saleable GFAs) refer to the floor area of certain public ancillary

facilities, including, among others, clubhouses, kindergartens, power distribution houses and

connecting corridors between apartment buildings. The Gross Floor Areas (GFAs) of a project or

a phase of a project includes both saleable and non-saleable GFAs excluding GFAs for underground

car parks.

Our valuation has been made on the assumption that the owner sells the properties on the open

market without the benefit of a deferred term contract, leaseback, joint venture, management

agreement or any similar arrangement, which would serve to increase the values of the property

interests.

Under otherwise stated, all the property interests are valued by the comparison method on the

assumption that each property can be sold with the benefit of vacant possession. Comparison is

based on prices realized on actual transactions or asking price of comparable properties. Comparable

properties with similar sizes, character and locations are analyzed, and carefully weighted against all

respective advantages and disadvantages of each property in order to arrive at a fair comparison of

value.

In valuing the property interests in Group III, which is held by the Group for occupation in the

PRC, we have adopted the market approach in valuing the land portion of the property and

depreciated replacement cost approach in assessing buildings and structures standing on the land. In

the valuation of the land portion, reference has been made to the standard land prices and the sales

evidence as available to us in the locality.

Depreciated Replacement Cost is based on an estimate of the Market Value for the existing use

of the land, plus the current gross replacement (or reproduction) costs of the improvements, less

allowances for physical deterioration and all relevant forms of obsolescence and optimization.

Where due to the specific purpose for which the buildings and structures of the property

interests have been constructed, or where the property interests are located in markets where there

are no readily identifiable market comparable, the property interests have been valued on the basis

of the depreciated replacement cost. The depreciated replacement cost approach considers the cost to

reproduce or replace in new condition the property appraised in accordance with current construction

costs for similar property in the locality, with allowance for accrued depreciation as evidence by

observed condition or obsolescence present, whether arising from physical, functional or economic

causes. The depreciated replacement cost approach generally furnishes the most reliable indication of

value for property in the absence of a known market based on comparable sales.

For the property interests in Group IV, which are completed real estate developments held by

the Group for sale in the PRC, we have valued each of these property interests by the direct

comparison approach assuming sale of each of these property interests in its existing state with the

benefit of vacant possession and by making reference to comparable sales transactions as available

in the relevant market. For those property interests which have been contracted to be sold, but the

formal assignment procedures of which have not yet been completed, we have valued this portion of

property interests by taking the contracted prices.


— IV-2 —

For the purpose of our valuation, completed real estate developments are those the Individual

Construction Works Certified Report or Completed Construction Works Certified Report of the

building(s) thereof is (are) issued for by the relevant local authority, this also includes those

property interests which have been contracted to be sold, but the formal assignment procedures of

which have not yet been completed.

For the property interests in Group V, which are held by the Group under development in the

PRC, we have valued the property interests on the basis that the property will be developed and

completed in accordance with the Group’s latest development schemes provided to us. We have

assumed that approvals for the proposals have been obtained. In arriving at our opinion of value, we

have adopted the direct comparison approach by making reference to comparable sales evidence as

available in the relevant market and have also taken into consideration the development costs

already spent and to be spent to reflect the quality of the completed development. The ‘‘Capital

value of the property as if the property is completed at the date of valuation’’ represents our opinion

of the aggregate selling prices of the development assuming that it would have completed at the date

of valuation.

For the purpose of our valuation, real estate developments under development are those the

Notice to Proceed of Civil Engineering Project ( ) have been issued while the

Individual Construction Works Certified Report or Completed Construction Works Certified Report

of the building(s) thereof is (are) not issued.

For the property interests in Group VI, which are held by the Group for future development in

the PRC, we have also valued each of these property interests by the direct comparison approach

assuming sale of each of these property interests in its existing state with the benefit of vacant

possession and by making reference to comparable sales transactions as available in the relevant

market.

For the purpose of our valuation, real estate developments for future development are those the

Notice to Proceed of Civil Engineering Project ( ) is (are) not issued while the

State-owned Land Use Rights certificates have been obtained.

For the property interests in Group VII, which are other property interests held by the Group in

the PRC, are those have the Group has entered into agreements with relevant owner of the property

or government authority, while the Group has not yet obtained the State Owned Land Use Right

Certificates and/or the payment of the land premium has not yet been fully settled as at the date of

valuation, we have attributed no commercial value to the property interests. Subsequent to the date

of valuation, the Group has entered into three agreements to acquire three other property interests.

We have ascribed no commercial value to this property. Please refer to page IV-183–185.

In respect of the property interests in Group I, Group II and Group VIII which are rented by

the Group in Hong Kong, Macau and the PRC respectively, are considered to have no commercial

value due mainly to the prohibition against assignment or sub-letting or otherwise due to the lack of

substantial profit rent.

In the course of our valuation for the property interests in the PRC, we have relied on the legal

opinion provided by the Group’s PRC legal advisor, Jingtian & Gongcheng (the ‘‘PRC Legal

Opinion’’). We have been provided with extracts from title documents relating to such property

interests. We have not, however, searched the original documents to verify ownership or existence of

any amendment which do not appear on the copies handed to us. All documents have been used for

reference only.


— IV-3 —

For the property interests in Macau, we have been provided with the legal opinion prepared by

the Macau legal advisor of the Company. For the property interests in Hong Kong, we have caused

searches to be made at the Land Registry in Hong Kong. However, we have not examined the

original documents to verify ownership or to ascertain the existence of any lease amendments that

may not appear on the copies handed to us. All documents have been used for reference only.

We have relied to a considerable extent on information given by the Group, in particular, but

not limited to, the sales records, planning approvals, statutory notices, easements, tenancies, floor

areas (including Gross Floor Areas, Saleable Gross Floor Areas and Non-saleable Gross Floor

Areas). No on-site measurement has been taken. Dimensions, measurements and areas included in

the valuation certificates are only approximations. We have taken every reasonable care both during

inspecting the information provided to us and in making relevant enquiries. We have no reason to

doubt the truth and accuracy of the information provided to us by the Company, which is material to

the valuation. We were also advised by the Group that no material facts have been omitted from the

information provided to us.

We have inspected the properties to such extent as for the purpose of this valuation. In the

course of our inspection, we did not notice any serious defects. However, we have not carried out

any structural survey nor any tests were made on the building services. Therefore, we are not able to

report whether the properties are free of rot, infestation or any other structural defects. We have not

carried out investigations on the site to determine the suitability of the ground conditions and the

services etc. for any future development.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on

the property interests nor for any expenses or taxation which may be incurred in effecting a sale.

Unless otherwise stated, it is assumed that the property interests are free from encumbrances,

restrictions and outgoing of an onerous nature which could affect their values.

Unless otherwise stated, all monetary amounts are stated in Hong Kong dollars (‘‘HK$’’).

Where necessary, we have converted Renminbi (‘‘RMB’’) into Hong Kong dollars (‘‘HK$’’) at the

exchange rate of RMB1=HK$0.9586 being the rate prevailing at the date of valuation.

We enclose herewith a summary of valuation and our valuation certificates.

Yours faithfully,

For and on behalf of

CB Richard Ellis Limited

Kam Hung YU

BSc (Hons) FHKIS FRICS RPS(GP) FHIREA

Executive Director

Valuation & Advisory Services

Note: Mr. Yu is the Chairman of General Practice Divisional Council of the Hong Kong Institute of Surveyors. He is a

Registered Professional Surveyor (General Practice), a fellow of Royal Institution of Chartered Surveyors, a fellow of

the Hong Kong Institute of Surveyors and a fellow of the Hong Kong Institute of Real Estate Administration. He has

over 24 years’ valuation experience in Macau, Hong Kong, the PRC and Asia Pacific Region.


— IV-4 —

SUMMARY OF VALUE

Property Interests

Capital Value in

existing state as at

30th September 2005

Interests attributable

to the Group

Capital Value

attributable to the

Group as at 30th

September 2005

(RMB) (RMB)

Group I — Property interests rented by the Group in Hong Kong

1. 20th Floor of

238 Nathan Road,

Kowloon,

Hong Kong

No commercial

value

Group I Sub-total: No commercial

value

Group II — Property interests rented by the Group in Macau

2. Shop Unit M,

No. 57 Rua De Bras Da Rosa,

Sto. Antonio,

Macau

No commercial

value

Group II Sub-total: No commercial

value

Group III — Property interests held by the Group for occupation in the PRC

3. Majing, Ping Nan Village,

Sanxiang Town, Zhongshan City,

Guangdong Province,

the People’s Republic of China

12,600,000 100% 12,600,000

Group III Sub-total: 12,600,000


— IV-5 —

Property Interests

Capital Value in


30th September 2005


to the Group

Capital Value

attributable to the

Group as at 30th

September 2005

(RMB) (RMB)

Group IV — Property interests held by the Group for sale in the PRC

4. Various apartment units, villa

and townhouse units, retail shop

units and car parking spaces in

Tower 18, Commercial Plaza

Blocks A and B and Phase 1 of

District A01, Phase 1 of District

A02, District A05, District A06

and District A08, La Cite

Greenville, Changjiang Tourist

Spot, Zhongshan City,

Guangdong Province,


209,100,000 100% 209,100,000




Groups 1 and 2 of Phase 1, and

Group 1 of Phase 3

Metro Agile Zhongshan,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


37,200,000 100% 37,200,000

6. Various retail shop units in

Blocks A, B and C of Phase 2,

Metropolis, Wenchang Road,


Guangdong Province,


55,300,000 100% 55,300,000

7. Various apartment units, retail

shop units, car parking spaces

and clubhouse in Phase 1 and

Phase 2, Majestic Garden,

Qiguan West Road,

Eastern District, Zhongshan

City, Guangdong Province,


170,400,000 100% 170,400,000


— IV-6 —

Property Interests

Capital Value in


30th September 2005


to the Group

Capital Value

attributable to the

Group as at 30th

September 2005

(RMB) (RMB)

8. Various retail shop units in

Phase 1,

The Landmark (also known as

Phase 3, Majestic Garden),

Junction of Boai Road and

Yintong Road,




59,100,000 100% 59,100,000


shop units and car parking

spaces in Phase 1, Phase 2 and

Phase 3, Grand Garden, Boai

Road, Eastern District,

Zhongshan City,

Guangdong Province,


86,700,000 100% 86,700,000



spaces in Group 1 of Phase 1,

Star Palace,

Boai Road, Eastern District,

Zhongshan City,

Guangdong Province,


84,200,000 100% 84,200,000

11. Various villa and townhouse

units in Phase 1 and Langwang

Land Piece,

The Riverside, Henghai Road,

Southern District, Zhongshan



74,000,000 100% 74,000,000


— IV-7 —

Property Interests

Capital Value in


30th September 2005


to the Group

Capital Value

attributable to the

Group as at 30th

September 2005

(RMB) (RMB)




Districts A01, Phase 1 of

District A02, First Phase

Commercial Street, Groups A

and B of District A03, Phases 1

to 5 and Group 1 of Phase 3 of

District A04 and Phases 1 and 2

of District A08,

Agile Garden Guangzhou,

Nanda Road, Nancun Town,

Guangzhou City,

Guangdong Province,


912,700,000 98% 894,446,000



spaces in Districts 1, 2, 3 and 4

of Phase 1, South Lagoon

Guangzhou,

No. 998 Tonghe Road, Baiyun

District, Guangzhou City,

Guangdong Province,


130,900,000 100% 130,900,000

14. Various apartment units, villas



Districts 1-A, 1-B, 1-C, 1-E in

Phase 1, District 2-A,

District 2-B, District 3,

District 4 and 5A,

Nanhai Majestic Garden,

Suiyan Road,

Nanhai District, Foshan City,

Guangdong Province,


163,500,000 100% 163,500,000


— IV-8 —

Property Interests

Capital Value in


30th September 2005


to the Group

Capital Value

attributable to the

Group as at 30th

September 2005

(RMB) (RMB)

15. Various car parking spaces in

Huadu Grand Garden, No. 33

Phoenix Road, Xindu Boulevard

South, Xinhua Town, Huadu


Guangdong Province,


6,200,000 98% 6,076,000

16. Various apartment units, villas



Phase 1,

Huadu Flower Paris,

No. 33 Phoenix Road,

Xindu Boulevard South,

Xinhua Town, Huadu District,

Guangzhou City,

Guangdong Province,


197,400,000 98% 193,452,000

Group IV Sub-total: 2,164,374,000


— IV-9 —

Property Interests

Capital Value in


30th September 2005


to the Group

Capital Value

attributable to the

Group as at 30th

September 2005

(RMB) (RMB)

Group V — Property interests held by the Group under development in the PRC

17. Various apartment units,

villa and townhouse units,

retail shop units and car parking

spaces in Phase 2 of District

A02, District A09, Phases 1 and

2 of District A12,

La Cite Greenville, Changjiang

Tourist Spot, Zhongshan City,

Guangdong Province,


639,100,000 100% 639,100,000

18. Various villas and townhouse

units, District A15, La Nobleu,

Changjiang Tourist Spot,

Zhongshan City,

Guangdong Province,


332,800,000 100% 332,800,000

19. Various apartment units,

villa and townhouse units

and retail shop units in Group 3

of Phase 1, Groups 1, 2 and 3 of

Phase 3, and Phase 5,


Sanxiang Town,

Zhongshan City,

Guangdong Province,


267,200,000 100% 267,200,000

20. Various retail shop units of

Blocks E, F and G of Phase 2,

Metropolis, Wenchang Road,


Guangdong Province,


141,800,000 100% 141,800,000


— IV-10 —

Property Interests

Capital Value in


30th September 2005


to the Group

Capital Value

attributable to the

Group as at 30th

September 2005

(RMB) (RMB)



spaces of Group 2 of Phase 1

and Phase 2,

Star Palace,


Zhongshan City,

Guangdong Province,


209,100,000 100% 209,100,000



units and car parking spaces

of Phase 1, Group 1 and

Group 2 of Phase 2,





239,600,000 100% 239,600,000


and townhouse units, and retail

shop units in Group 2 of Phase 1

of District A02, Groups 2 and 3

of Phase 3 of District A04 and

portions of District A06,

Agile Garden Guangzhou, Nanda

Road, Nancun Town, Guangzhou



451,400,000 98% 442,400,000

24. Various apartment units and car

parking spaces in District 5 of

Phase 1 and Phase 2, South

Lagoon Guangzhou, No. 998

Tonghe Road, Baiyun District,

Guangzhou City,

Guangdong Province,


327,700,000 100% 327,700,000


— IV-11 —

Property Interests

Capital Value in


30th September 2005


to the Group

Capital Value

attributable to the

Group as at 30th

September 2005

(RMB) (RMB)

25. Various villas and townhouse

units, commercial block and

complex block in Reserved Land

No. 1, Royal Hillside Villa,

Nanhu Fun Park, Tonghe Road,

Guangzhou Boulevard North,

Guangzhou City,

Guangdong Province,


250,600,000 100% 250,600,000



spaces in Phase 2 of District 1-

E, Districts 3 and 5B, Nanhai

Majestic Garden, Suiyan Road,

Nanhai District, Foshan City,

Guangdong Province,


473,100,000 100% 473,100,000

27. Various apartment units and

retail shop units in Blocks A, B,

C, D, E and H,

Nanhai Majestic Metropolis,

Suiyan Road, Nanhai District,

Foshan City,

Guangdong Province,


242,500,000 100% 242,500,000



spaces in Phase 2 of District C,

Huadu Flower Paris,

No. 33 Phoenix Road, Xindu

Boulevard South, Xinhua Town,

Huadu District, Guangzhou City,

Guangdong Province,


165,900,000 98% 162,600,000

29. Various villa and townhouse

units in Phase 1,

Huadu Majestic Garden,

Tiangui Road East,

Huadu District,

Guangzhou City,

Guangdong Province,


218,900,000 98% 214,522,000

Group V Sub-total: 3,943,004,000


— IV-12 —

Property Interests

Capital Value in


30th September 2005


to the Group

Capital Value

attributable to the

Group as at 30th

September 2005

(RMB) (RMB)

Group VI — Property interests held by the Group for future development in the PRC

30. Phase 2 of District A01,

Districts A03, A04, A07,

A10, A11, Phases 2 and

3 of District A12, District

A12–02 and a parcel of land,

La Cite Greenville, Changjiang

Tourist Spot, Zhongshan City,

Guangdong Province,


2,868,500,000 100% 2,868,500,000

31. Gua Deng Hill site, Area A site,

San Jiao Market site and a site

next to Qiu Zi Playground,

La Nobleu,

Changjiang Tourist Spot,

Zhongshan City,

Guangdong Province,


329,300,000 100% 329,300,000

32. Various Reserved Land Parcels

and Group 4 of Phase 1,


Sanxiang Town,

Zhongshan City,

Guangdong Province,


570,900,000 100% 570,900,000

33. Block D of Phase 2, Metropolis,

Wenchang Road,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


41,600,000 100% 41,600,000


— IV-13 —

Property Interests

Capital Value in


30th September 2005


to the Group

Capital Value

attributable to the

Group as at 30th

September 2005

(RMB) (RMB)

34. Phase 4 and kindergarten site,

Grand Garden, Boai Road,




52,300,000 100% 52,300,000

35. Phase 3, Star Palace,


Zhongshan City,

Guangdong Province,


97,200,000 100% 97,200,000

36. Phase 2 of District A02, reserved

land and kindergarten site of

District A03,

portion of District A04, Districts

A05, A07, A09 and A10,

Agile Garden Guangzhou, Nanda

Road, Nancun Town, Guangzhou



1,995,400,000 98% 1,955,492,000

37. Districts B01, B02, B03, B04,

B05, B06, B07, B08 and

greenery site of District B09

JiangBei Estate,

Caotang Village,

Nanda Road,

Nancun Town,

Guangzhou City,

Guangdong Province,


1,637,400,000 98% 1,604,652,000

38. Portion of Reserved Land

No. 1 and Reserved Land No. 2,

Royal Hillside Villa,

Nanhu Fun Park, Tonghe Road,

Guangzhou Boulevard North,

Guangzhou City,

Guangdong Province,


466,700,000 100% 466,700,000


— IV-14 —

Property Interests

Capital Value in


30th September 2005


to the Group

Capital Value

attributable to the

Group as at 30th

September 2005

(RMB) (RMB)

39. Reserved Land,


Suiyan Road, Nanhai District,

Foshan City,

Guangdong Province,


847,200,000 100% 847,200,000

40. Phase 1 and Phase 2,

Huadu Majestic Garden,

Tiangui Road East,


Guangdong Province,


260,300,000 98% 255,094,000

41. Primary School and

Kindergarden site,

South Lagoon Guangzhou,

No. 998 Tonghe Road,

Baiyun District,

Guangzhou City,

Guangdong Province,


No commercial

value

100% No commercial

value

Group VI Sub-total: 9,088,938,000


— IV-15 —

Property Interests

Capital Value in


30th September 2005


to the Group

Capital Value

attributable to the

Group as at 30th

September 2005

(RMB) (RMB)

Group VII — Other property interests held by the Group in the PRC

42. A Parcel of Land,

Gonghua Village

Zhongshan City,

Guangdong Province,


No commercial

value

(Note 1)

43. Parcels of Industrial Land,


Sanxiang Town,

Yihao Road,

Zhongshan City,

Guangdong Province,


No commercial

value

(Note 2)

44. Two Parcels of Land,



City,

Guangdong Province,


No commercial

value

(Note 3)


Huadu Grand Garden,

No. 32 Phoenix Road, Xindu

Boulevard South, Xindu Town,


Guangdong Province,


No commercial

value

(Note 4)


No. 998 Tonghe Road, Baiyun


Guangdong Province,


No commercial

value

(Note 5)

Group VII Sub-total: No commercial

value


— IV-16 —

Property Interests

Capital Value

attributable to the

Group as at 30th

September 2005

(RMB)

Group VIII — Property interests rented by the Group in the PRC

47. 2/F., 3/F. and 4/F.,

Nanda Road,

Nancun Town,

Guangzhou City,

Guangdong Province,


No commercial

value

48. Unit 403, Block 11, Ya Yi Ting,


Nanda Road,

Nancun Town,

Guangzhou City,

Guangdong Province,


No commercial

value

49. Unit 801, Block 12, Ya Cui Ting,


Nanda Road,

Nancun Town,

Guangzhou City,

Guangdong Province,


No commercial

value

50. 6 residential blocks in Tian Mei Xin Du Hua Yuan,

Huadu District,

Guangzhou City,

Guangdong Province,


No commercial

value

51. Units 301–311 and

Units 401–412 in the building opposite to

Changjiang Guan Li Zhong Xin Village Composite Building,

Zhongshan City,

Guangdong Province,


No commercial

value

52. Hong Tu Building,

Changjiang Village,

Zhongshan City,

Guangdong Province,


No commercial

value


— IV-17 —

Property Interests

Capital Value

attributable to the

Group as at 30th

September 2005

(RMB)

53. B1/F. and portion of 1/F.,

Changjiang Golf Course,

La Cite Greenville and No. 31 Aochang Road,

Changjiang Village,

Eastern District,

Zhongshan City, Guangdong Province,


No commercial

value

54. Units 301–701, 302–702,

No. 7 Yue He Street,

Yue Lai Road South,

Zhongshan City,

Guangdong Province,


No commercial

value

55. Units 401, 501, 502, 601, 602 & 701,

No. 34 Yintong Street,

Zhongshan City,

Guangdong Province,


No commercial

value

56. Unit 12A,

Jia He Ju North Block,

Huaxia Road East,

Xincheng District,

Yanbu District,

Nanhai District,

Foshan City,

Guangdong Province,


No commercial

value

57. Unit 305, Block 5,

Hao Jing Tai,


Suiyan Road East,

Nanhai District,

Foshan City,

Guangdong Province,


No commercial

value


— IV-18 —

Property Interests

Capital Value

attributable to the

Group as at 30th

September 2005

(RMB)

58. 3/F., 4/F. and portion of 5/F.,

Wei Ye Building,

No. 65 Yongqing Road,

Nanhai District,

Foshan City,

Guangdong Province,


No commercial

value

59. 2/F., Block D1–D5, Yang Yi Ju,

Agile Garden,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


No commercial

value

60. Various retail shop units in Commercial Street,


Nanda Road,

Nancun Town,

Guangzhou City,

Guangdong Province,


No commercial

value

61. Various retail shop units, in Blocks A, B and C of Phase 1,

Metropolis,

Wenchang Road,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


No commercial

value

62. Various retail shop units, Phase 1,

The Landmark (also known as Phase 3, Majestic Garden),

Yintong Street,

Eastern District,

Zhongshan City,

Guangdong Province,


No commercial

value


— IV-19 —

Property Interests

Capital Value

attributable to the

Group as at 30th

September 2005

(RMB)

63. Various retail shop units,

Huadu Grand Garden,


Xindu Boulevard South,

Xinhua Town,

Huadu District,

Guangzhou City,

Guangdong Province,


No commercial

value

64. Various T-type residential units,

Phase 3, Agile Garden,

Xingye Road,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


No commercial

value

65. Various residential units,

Phase 1, Commercial New Street,

Agile Garden,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


No commercial

value

66. 1/F., Blocks J10 and J11,

Jing Hu Ju, Agile Garden,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


No commercial

value

67. 1/F. to 6/F., Property Management Building,

Xingye Road,

Agile Garden,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


No commercial

value


— IV-20 —

Property Interests

Capital Value

attributable to the

Group as at 30th

September 2005

(RMB)

68. 1/F. to 3/F., Agile Hotel (Office Tower),

Sanxiang Town,

Zhongshan City,

Guangdong Province,


No commercial

value

69. Room No. 100, Jianhe New Village,

Yanbu River East,

Nanhai District,

Foshan City,

Guangdong Province,


No commercial

value

70. A retail shop on Level 1, Block L5,

Greenville Garden,

Eastern District,

Zhongshan City,

Guangdong Province,


No commercial

value

71. Phase 7, Clubhouse,

Agile Garden,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


No commercial

value


Agile Garden,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


No commercial

value

Group VIII Sub-total: No commercial

value

GRAND TOTAL: 15,208,916,000


— IV-21 —

Notes:

1. In the course of our valuation, we have ascribed no commercial value to the property. Pursuant to an Land Use

Rights Transfer Agreement dated 21st November 2005 entered into between the Group and Zhongshan Baoyi

Property Company Limited* ( ), the property with a site area of 390mu will be transferred

to Zhongshan Baoyi Property Company Limited* ( ) for a consideration of

RMB11,770,000. As at the time of payment of consideration to the Group, the land use rights of the property

will be transferred to Zhongshan Baoyi Property Company Limited* ( ). As at the date of

24th November 2005, the payment of the consideration has been made.

2. In the course of our valuation, we have ascribed no commercial value to the property. Had the Company obtained

a valid Certificate of State-owned Land-Use Rights, the capital value in the existing state of the property as at

30th September 2005 assuming that the land premium has been fully paid, would be RMB147,000,000 (100%

interests attributable to the Group: RMB147,000,000)









5. In the course of our valuation, we have ascribed no commercial value to the property under State-owned Land-

Use Rights Grant Contract. Had the Company obtained a valid Certificate of State-owned Land-Use Rights, the

capital value in the existing state of the property as at 30th September 2005 assuming that the land premium has

been fully paid, would be RMB88,600,000 (100% interests attributable to the Group: RMB88,600,000).

6. Subsequent to the date of valuation, the Group has entered into three agreements to acquire three other property

interests. We have ascribed no commercial value to this property. Please refer to page IV-183–185.

* for identification purpose only


— IV-22 —

VALUATION CERTIFICATE

Group I — Property interests rented by the Group in Hong Kong

Property Description and tenure Details of occupancy

Capital value in


30th September

2005

(RMB)

1. 20th Floor of

238 Nathan Road,

Kowloon,

Hong Kong erected on

Section A of Kowloon

Inland Lot No. 1293,

The Remaining Portion

of Kowloon Inland Lot

No, 1293, Section A of

Kowloon Inland Lot

No. 1299, The

Remaining Portion of

Kowloon Inland Lot

No. 1299 and Kowloon

Inland Lot No. 1298.

The property comprises an office floor in a

commercial building, completed in about 1999.

The property has a saleable area of 552.84 sq.m.

approximately. The property is currently leased to

Agile Investment Consultants Limited for a term

of 14 months from 1st October 2005 to 30th

November 2006 at a monthly rent of

HK$103,935.00 exclusive of rates, government

rent, air-conditioning fees and management fees

with an option to renew for a further term of two

years.

The property is

currently occupied by

the Group as an

office with exhibition

centre.

No commercial

value

Notes:

1. The registered owner of the property is Upcentre Investments Limited under two Assignments registered vide

Memorial Nos. UB4752430 dated 28th February 1991 and UB5474586 dated 12th October 1992.

2. The property is subject to a mortgage registered vide Memorial No. UB 4752431 in favour of The Hongkong and

Shanghai Banking Corporation Limited.

3. The property lies within an area zoned for ‘‘commercial’’ uses under Tsim Sha Tsui Outline Zoning Plan No.

S/K1/20 dated 6th May 2005.

4. As advised by the Company, Upcentre Investments Limited is an independent third party to the Group.


— IV-23 —


Group II — Property interests rented by the Group in Macau


Capital value in


30th September

2005

(RMB)

2. Shop Unit M,

No. 57 Rua Da Bras

Da Rosa,

Sto. Antonio,

Macau

The property comprises a retail shop unit on the

ground level of a residential development,

Cheong Meng Garden, completed in about 1995.

The property has a gross floor area of 35.75

sq.m. approximately. The property is currently

leased to Nga Koi Lok Development and

Investment Company Limited for a term of 1 year

from 1st July 2005 to 30th June 2006 at a

monthly rent of MOP8,000.

The property is


the Group as office

with exhibition

centre.

No commercial

value

Notes:

1. Pursuant to the land search made on 25th August 2005, the registered owners of the property are Chen Zhuo Lin

and Luk Sin Fong, Fion.

2. Chen Zhuo Lin and Luk Sin Fong, Fion are connected parties of the Group.

3. We have been provided with a legal opinion on the property prepared by the Group’s legal advisor, which

contains, inter alia, the following information:

(a) The registered owners of the property are Chen Zhuo Lin and Luk Sin Fong, Fion.


— IV-24 —


Group III — Property interests held by the Group for occupation in the PRC


Capital value in


30th September

2005

(RMB)

3. Majing,

Ping Nan Village,

Sanxiang Town,

Zhongshan City,

Guangdong Province,

the People’s Republic

of China

The property comprises five industrial buildings

and various buildings and structures on three

parcels of land. The buildings were completed in

about 1994.

The total site area of the lands is 27,397.2 sq.m.

approximately (‘‘the Site’’).

The buildings and various ancillary structures

have a total gross floor area of approximately

16,289.98 sq.m..

The property is


the Group for

industrial production,

staff quarters and

ancillary purpose.

12,600,000

(100% interests

attributable to the

Group:

RMB12,600,000)

Building

Gross floor

area

(sq.m.)

Various workshops 7,067.69

Various warehouses 3,112.83

Office building 4,653.72

Various dormitories 1,308.79

Various ancillary building 146.95

The buildings and structures include workshops,

warehouse, ancillary office, dormitories and other

ancillary building and structures.

Within the Site, there is a parcel of land with the

site area of approximately 10,185.20 sq.m. which

is not covered by any State-owned Land Use

Rights Certificate. (The ‘‘New Site’’) (refer to

Note 15, 16, 17, 18)

The Site (excluding the ‘‘New Site’’) is held

under two State-owned Land Use Rights

Certificates for terms with the earliest one

commencing date on 1st September 1990 and the

latest one expiring on 2nd May 2041.

Notes:

1. Pursuant to the State-owned Land Use Rights Certificate Document No. (2005) 310198, the land use rights of the

property having a site area of approximately 2,360 sq.m. for industrial use for a term to be expired on 2nd May

2041 has granted to Fashion Decoration Company Limited.

2. Pursuant to the State-owned Land Use Rights Certificate Document No. (2005) 314061, the land use rights of the

property having a site area of approximately 14,852 sq.m. for industrial use for a term to be expired on 31st

August 2040 has granted to Fashion Decoration Company Limited.


— IV-25 —

3. Pursuant to the Realty Title Certificate Document No. Yue Fang Di Zheng Zi No. C3443756 dated 8th July 2005,

the building ownership rights of the property having a total gross floor area of approximately 2,148.77 sq.m. is

held by Fashion Decoration Company Limited.

4. Pursuant to the Realty Title Certificate Document No. Yue Fang Di Zheng Zi No. C4066018 dated 10th October

2005, the building ownership rights of the property having a total gross floor area of approximately 211.54 sq.m.

is held by Fashion Decoration Company Limited.

5. Pursuant to the Realty Title Certificate Document No. Yue Fang Di Zheng Zi No. 4066017 dated 10th October




2005, the building ownership rights of the property having a total gross floor area of approximately 4,653.72

sq.m. is held by Fashion Decoration Company Limited.

























15. On top of the land described in notes 1 & 2 above, by a Contractural Rights Transfer Agreement dated 8th July

2005 (‘‘the Agreement’’) the Group agreed to acquire a piece of land with a sale area of about 10,185.20 sq.m.

(‘‘the New Site’’) for a consideration of RMB364,300. This consideration does not include the land premium. As

confirmed by the Group, the consideration has been paid in full up to the date of valuation.

16. As advised by the Group, the estimated land premium payable shall be approximately RMB1,273,340 subject to

further agreement to be made between the Group and the land administration authority. As confirmed by the

Group, the premium has not been paid up to the date of valuation.

17. As advised by the Group, the State-owned Land Use Rights Certificate of the New Site is still under application

and will be issued in December 2005.


— IV-26 —

18. As at the date of valuation, the market value of the New Site, assuming that the Group has obtained a valid

certificate of State-owned Land Use Rights and the land premium has been fully paid, is about RMB3,056,000.

19. We have been provided with a legal opinion on the property prepared by the Group’s PRC legal advisors, which


(a) The State-owned Land Use Rights Certificates in respect of the land described in notes 1 & 2 above are

legal and valid. The Group has the right to legally transfer, lease and mortgage the land use rights.

(b) The Realty Title Certificates issued in respect of the property are legal and valid. The Group has the right

to legally transfer, lease and mortgage the building ownership rights.

(c) Notwithstanding that the Group has entered into the Agreement (referred to in note 15 above), the Group

has yet to enter into a Land Use Rights Transfer Contract with the relevant land administration authority

and pay the land premium. As such, there is no assurance that the Group will be able to obtain the land

use rights to the New Site.


— IV-27 —


Group IV — Property interests held by the Group for sale in the PRC


Capital value inexisting state as at

30th September2005

(RMB)

4. Various apartmentunits, villa andtownhouse units,retail shop units andcar parking spaces inTower 18,Commercial PlazaBlocks A and B andPhase 1 of DistrictA01, Phase 1 ofDistrict A02, DistrictA05, District A06and District A08,La Cite Greenville,Changjiang TouristSpot, ZhongshanCity, GuangdongProvince, thePeople’s Republic ofChina

The property comprises 83 apartment units withsaleable gross floor area of approximately 15,759sq.m., 21 villa and townhouse units with saleablegross floor area of approximately 5,539 sq.m., 5 retailshop units with saleable gross floor areaapproximately 10,455 sq.m., 443 car parking spacesand ancillary facilities such as water reservoir.

Tower 18, Commercial Plaza Blocks A and B andPhase 1 of District A01, Phase 1 of District A02,District A05, District A06 and District A08 of LaCite Greenville (‘‘the Development’’) occupying a sitewith an area of approximately 706,899 sq.m. havebeen developed with a total gross floor area ofapproximately 338,479 sq.m.. The total saleable grossfloor area of the said groups are approximately292,318 sq.m. and the non-saleable gross floor area isapproximately 46,161 sq.m..

The property was completed in September 2005.

The Development (of which the property, Property 17and Property 30 set out in this property valuationform part) is a large-scale development comprisingapartments, villas, townhouses, retail shops, carparking spaces and ancillary facilities (includingclubhouse, primary school, kindergarten, waterreservoir and swimming pool etc.) As advised by theGroup, it is planned to be developed in 12 districts(Districts A01–12) with a total expected gross floorarea of approximately 2,055,877 sq.m..

The Development occupies various pieces of landwith a total site area of approximately 1,960,274sq.m. (‘‘the Site’’) (which does not include the landleased by the Group from Zhongshan TorchDevelopment Zone Gong Hua Equity EconomicCooperation* ( ) andthe Railway Land described below).

In additional to the Site, there is a parcel of land withthe site area of approximately 179,334 sq.m. (269mu), is leased by the Group from Zhongshan TorchDevelopment Zone Gong Hua Equity EconomicCooperation* ( ) fora term of 70 years from 18th March 2005 to 17thMarch 2075. This parcel of land serves as ancillarygreenery to the development.(refer to Note 3)

In addition to the Site, there is a parcel of land with asite area of approximately 130,600 sq.m. (195.5 mu)located at the control line of railway (‘‘the RailwayLand’’) and as advised by the Group, it is planned forconstruction of railway purpose. (refer to Note 5 & 6)

A water supply treatment center with gross floor areaof approximately 490 sq.m. is provided in thedevelopment as ancillary facilities. (refer to Note 7)

The Site is held under various State-owned Land UseRights Certificates for various terms with the earliestone commencing date on 12th February 2001 and thelatest one expiring on 2nd November 2068.

The property iscurrently vacant.

209,100,000(100% interests

attributable to theGroup:

RMB209,100,000)



— IV-28 —

Notes:

1. Pursuant to the following State-owned Land Use Rights Transfer Contracts entered between Zhongshan City

State-owned Land Resources and Real Estate Management Bureau and Zhongshan Group Co., the land use rights

of the Site have been granted to the Group at a consideration of RMB389,872,730.

State-owned Land Use Rights

Grant Contract No. Date of Contract Subject Site Area Term

(sq.m.) (year)

(2000) 142 11-Dec-2000 1,784,002.92 70

(2000) 142 supplementary contract 28-Dec-2000 108,587.20 70

(2003) Kai 201 24-Dec-2003 58,035.49 70

(2002) Kai 122 31-Dec-2000 15,309.60 70

Total site area 1,965,935.21

2. Pursuant to the following State-owned Land Use Rights Certificates, the land use rights of the Site have been

granted to the Group.

State-owned Land Use Rights Certificate No. Date of Issuance Subject Site Area Date of Expiry

(sq.m.)

(2001) 150705 2-Mar-2001 64,950.5 11-Aug-2068

(2001) 150709 12-Feb-2001 32,674.0 2-Nov-2068

(2001) 150698 12-Feb-2001 33,019.3 11-Aug-2068

(2001) 150711 12-Feb-2001 31,766.4 7-Aug-2067

(2001) 150702 12-Feb-2001 66,153.8 5-Jul-2068

(2001) 150700 12-Feb-2001 65,016.4 7-Aug-2068

(2001) 150719 12-Feb-2001 65,863.9 9-Jun-2067

(2001) 150699 12-Feb-2001 64,922.4 12-Oct-2068

(2001) 150720 13-Feb-2001 33,300.8 6-Aug-2067

(2001) 150715 12-Feb-2001 65,255.2 18-Aug-2068

(2003) 150729 13-Feb-2001 66,225.2 19-Mar-2068

(2003) 150696 12-Feb-2001 65,482.4 31-Jan-2068

(2003) 150706 12-Feb-2001 36,130.0 7-Aug-2067

(2003) 150713 12-Feb-2001 65,506.6 9-Jun-2068

(2001) 150697 12-Feb-2001 32,672.3 10-Jun-2067

(2001) 150726 12-Feb-2001 32,672.2 9-Aug-2067

(2003) 150724 13-Feb-2001 65,389.2 9-Jun-2067

(2003) 150718 12-Feb-2001 63,225.6 9-Jun-2067

(2005) 150704 12-Feb-2001 5,188.7 4-Sep-2068

(2005) 150728 13-Feb-2001 65,589.7 9-Aug-2067

(2005) 150730 13-Feb-2001 32,649.6 9-Jun-2067

(2001) 150717 12-Feb-2001 32,844.8 12-Nov-2067

(2003) 150125 23-Jan-2003 44,532.2 7-Jun-2067

(2001) 150716 12-Feb-2001 46,803.9 15-Apr-2068

(2003) 150124 23-Jan-2003 42,291.8 8-Jun-2067

(2003) 150122 23-Jan-2003 58,233.0 8-Sep-2068

(2001) 150701 12-Feb-2001 65,391.1 9-Jun-2067

(2001) 150708 12-Feb-2001 65,419.1 8-Sep-2067

(2001) 150723 13-Feb-2001 65,900.6 7-Jun-2067

(2001) 150714 12-Feb-2001 65,931.3 7-Jul-2068

(2003) 151440 15-Aug-2003 48,486.2 7-Aug-2068

(2001) 150725 13-Feb-2001 65,257.6 7-Jun-2068

(2001) 150722 13-Feb-2001 64,455.6 17-Oct-2068

(2003) 150126 23-Jan-2005 21,347.2 7-Jun-2067

(2003) 150121 13-Feb-2003 7,569.2 8-Sep-2067

(2003) 150123 23-Jan-2003 18,091.9 7-Aug-2067

(2003) 151441 15-Aug-2003 17,616.1 7-Aug-2068


— IV-29 —


(sq.m.)

(2003) 150095 16-Jan-2003 15,309.6 19-Feb-2068

(2003) 151849 8-Oct-2003 52,551.4 5-Jul-2068

(2005) 150137 1-Feb-2005 2,441.5 17-Oct-2068

(2005) 150138 1-Feb-2005 13,228.1 17-Oct-2068

(2005) 150139 1-Feb-2005 41,277.2 17-Oct-2068

(2005) 150140 1-Feb-2005 17,745.5 17-Oct-2068

(2005) 150141 1-Feb-2005 33,895.8 17-Oct-2068


3. Pursuant to the Lease Agreement of Area outside Planned and Controlled Land Red Line*

( ) entered into between the Group and Zhongshan Torch Development Zone

Gong Hua Equity Economic Cooperation* ( ) dated 18th March 2005, a parcel

of land with a site area of approximately 179,334 sq.m. (269 mu) is leased to the Group for a term of 70 years

from 18th March 2005 to 17th March 2075 at a rental of RMB500,000 for greenery purpose.

4. There is no unit contracted to be sold.

5. Pursuant to the State-owned Land Use Rights Transfer Contracts dated 28th December 2000, the land use rights

of the Railway Land with a total site area of approximately 130,100 sq.m. (195.9 mu) have been agreed to be

granted to the Group at a total consideration of RMB7,836,000. The consideration does not include the land

premium payable to the Government. As confirmed by the Group, the consideration has been paid in full up to

the date of valuation.

6. In arriving at our opinion of the capital value of the property, we have not ascribed any value to the Railway

Land. Pursuant to the agreement with Zhongshan Bureau of State-owned Land and Resources, the Railway Land

is planned for future railway construction by the municipal government and only can be used for greenery and

non-construction purpose, therefore the State-own Land Use Rights Certificate is unable to be applied at present.

If the railway is to be constructed in the future, the Group should return the Railway Land to the Zhongshan

Bureau of State-owned Land and Resources and the consideration paid will be given back to the Group. If the

future railway is not to be constructed the Railway Land will be granted to the Group at a premium of

RMB19,198,200 for commercial residential development use.

7. The building ownership certificates of the water treatment with a gross floor area of approximately 490 sq.m. is

under application. According to the legal opinion, as confirmed by the Group, the PRC legal advisor is not aware

of any legal impediment in the Group obtaining the building ownership certificate as the Land Use Rights

Certificates ((2003) No. 150095) dated 26th January 2004 and the Approved Plan No. 4600020517 dated 23rd

April 2002 have been obtained by the Group.

8. We have been provided with a legal opinion on the property prepared by the Group’s legal advisor, which


(a) The Group has paid the land premium in respect of the Site in full and pursuant to various State-owned

Land Use Rights Certificates, the Group has acquired the land use rights to the Site. During the terms of

the land use rights, the Group is entitled to occupy, use, lease, mortgage, transfer or otherwise dispose of

the Site (save and except those parts which have been mortgaged).

(b) The Group has the building ownership to the property and is entitled to receive the sale proceeds of the

property and occupy, use, transfer, lease and mortgage the property.

(c) As confirmed by the Group, the permitted plot ratio of the Site is 1.1. The maximum allowed gross floor

area of the Development is approximately 2,156,301.07 sq.m.

(d) Greenville Co., the owner of the property, is a limited liability company established in accordance with

the laws of the PRC, in which the Group has a 100% equity interests.



— IV-30 —

(e) Tenancy agreement entered into between the Group and dated 18th

March 2005 is binding on both parties.

9. A summary of major certificates/approvals is shown as follows:

i. State-owned Land Use Rights Certificate Yes

ii. State-owned Land Use Rights Grant Contract Yes

iii. Construction Land Use Planning Permit Yes

iv. Construction Works Planning Permit Yes

v. Pre-sale Permit Yes

vi. Individual Construction Works Completion Certified Report Yes


— IV-31 —



Capital value in


30th September

2005

(RMB)

5. Various apartment

units, villa and

townhouse units, retail

shop units and car

parking spaces in

Groups 1 and 2 of

Phase 1 and Group 1

of Phase 3

Metro Agile

Zhongshan,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


of China

The property comprises 45 apartment units with

saleable gross floor area of approximately 5,548

sq.m., 13 villa and townhouse units with saleable

gross floor area of approximately 1,907 sq.m., 15

retail units with saleable gross floor area of

approximately 961 sq.m. and 30 car parking

spaces.

Groups 1 and 2 of Phase 1 and Group 1 of Phase

3 of Metro Agile Zhongshan (‘‘the

Development’’) occupying a site with an area of

approximately 48,291 sq.m. have been developed

with a total gross floor area of approximately

58,175 sq.m.. The total saleable gross floor area

of the said groups are approximately 58,175 sq.m.

There is no non-saleable gross floor area.


The Development (of which the property,

Property 19 and Property 32 set out in this

property valuation form part) is a large-scale

development comprising apartments, villas,

townhouses, retail shops, car parking spaces and

ancillary facilities (including clubhouse and

swimming pool etc.). As advised by the Group, it

is planned to be developed in 3 phases (phases 1,

3 and 5) with a total expected gross floor area of

approximately 609,681 sq.m..

The Development occupies various pieces of land

with a total site area of approximately 428,534

sq.m. (‘‘the Site’’).

The Site is held under various State-owned Land

Use Rights Certificates for various terms with the

earliest one commencing on 10th October 2003

and the latest one expiring on 27th December

2073.

The property is

currently vacant.

37,200,000

(100% interests

attributable to the

Group:

RMB37,200,000)


— IV-32 —

Notes:

1. Pursuant to the following State-owned Land Use Rights Grant Contracts, the land use rights of the Site have

been granted to the Group at a consideration of RMB79,052,911.

Land Grant Contract

Number

Subject Site

Area

Date of

Contract

Date of

Expiry Transferor/Grantor

(sq.m.)

N/A 31,899.6 21-Apr-2005 29-Apr-2068 Zhongshan Land and Resource Bureau


N/A 4,124.5 7-Jun-2005 13-Mar-2064 Zhongshan Land and Resource Bureau

N/A 42,550.9 7-Jun-2005 28-Nov-2063 Zhongshan Land and Resource Bureau



1998–13639 28,973.1 10-Jun-1998 9-Jun-2068 Zhongshan Land and Resource Bureau

1998–13794 8,926.6 21-May-1998 20-May-2068 Zhongshan Land and Resource Bureau


1998–13643 9,116.1 9-Jul-1998 8-Jul-2068 Zhongshan Land and Resource Bureau










1998–13642 32,959.8 23-Apr-1998 22-Apr-2068 Zhongshan Land and Resource Bureau




1998–13662 544.4 9-May-1998 8-May-2068 Zhongshan Land and Resource Bureau



— IV-33 —

Land Grant Contract

Number

Subject Site

Area

Date of

Contract

Date of


(sq.m.)










*2003–5285 23,512.9 21–Dec-2003 20-Dec-2073 Zhongshan Land and Resource Bureau

2003–5286 457.2 28-Dec-2003 27-Dec-2073 Zhongshan Land and Resource Bureau

Total site area 491,943.8

* This Land Grant Contract covers part of the site with site area of approximately 10,942.7 sq.m. under

Metropolis.


granted to the Group:

State-owned Land Use Rights Certificate No.

Date of

Issuance

Subject

Site Area

Term (year)/

Date of

Expiry

(sq.m.)

(2003) 312327 10-Oct-2003 28,973.1 9-Jun-2068

(2003) 312329 8-Dec-2003 8,926.6 20-May-2068

(2003) 312326 8-Dec-2003 3,729.1 8-Jun-2068

(2003) 312324 8-Dec-2003 9,116.1 8-Jul-2068

(2003) 312328 8-Dec-2003 16,912.1 20-Jul-2068

(2003) 312323 8-Dec-2003 3,684.0 20-May-2068

(2003) 312325 8-Dec-2003 4,692.6 20-Jul-2068

(2004) 313674 28-Jun-2004 13,661.9 8-May-2068

(2004) 313675 28-Jun-2004 32,803.4 29-May-2068

(2004) 313673 28-Jun-2004 32,959.8 22-Apr-2068


— IV-34 —


Date of

Issuance

Subject

Site Area

Term (year)/

Date of

Expiry

(sq.m.)

(2004) 313681 28-Jun-2004 13,240.2 18-Jun-2068

(2003) 312474 26-Dec-2003 6,400.6 9-Jun-2068

(2003) 312487 26-Dec-2003 22,216.7 18-May-2068

(2003) 312483 26-Dec-2003 544.4 8-May-2068

(2003) 312481 26-Dec-2003 628.5 8-May-2068

(2003) 312484 26-Dec-2003 234.0 8-May-2068

(2003) 312482 26-Dec-2003 4,432.6 17-May-2068

(2003) 312486 26-Dec-2003 4,489.1 17-May-2068

(2003) 312479 26-Dec-2003 714.6 17-May-2068

(2003) 312480 26-Dec-2003 17,238.9 25-Jul-2068

(2003) 312478 26-Dec-2003 27,444.1 18-May-2068

(2003) 312475 26-Dec-2003 19,366.3 28-May-2068

(2003) 312477 26-Dec-2003 13,600.5 25-May-2068

(2004) 313679 28-Jun-2004 15,985.9 28-May-2068

(2003) 314391 31-Dec-2003 457.2 27-Dec-2073

(2004) 310731 18-Jun-2004 3,431.3 20-Dec-2073

(2004) 310737 18-Jun-2004 3,759.1 20-Dec-2073

(2004) 310734 18-Jun-2004 1,479.1 20-Dec-2073

(2004) 310735 18-Jun-2004 704.6 20-Dec-2073

(2004) 310736 18-Jun-2004 1,568.6 20-Dec-2073

(2005) 313609 18-Aug-2005 42,550.9 28-Nov-2063

(2005) 313611 18-Aug-2005 1,222.8 2-Mar-2073

(2005) 313582 16-Feb-2005 2,658.6 13-Mar-2064

(2005) 312585 24-Jun-2005 4,130.9 13-Mar-2064

(2005) 311853 10-Jan-2005 31,899.6 29-Apr-2068

(2005) 311852 30-May-2005 32,676.2 19-Apr-2068



— IV-35 —

3. Portions of the property comprising 6 apartment units with a saleable gross floor area of approximately 698.92

sq.m., 2 retail shop units with a saleable gross floor area of approximately 122.29 sq.m. and 1 car parking space

have been contracted to be sold for the total purchase price of RMB2,837,287. In arriving at our opinion on the

capital value of the property, we have taken into account of the purchase price of those portions.

4. We have been provided with a legal opinion on the property prepared by the Group’s legal advisors, which






(b) Portions of the property comprising 6 apartment units with a saleable gross floor area of approximately

699 sq.m., 2 retail shop units with a saleable gross floor area of approximately 122.29 sq.m. and 1 car

parking space have been contracted to be sold but have not been handed over to the purchasers. The

Group is entitled to receive from the purchasers the sale proceeds of those portions in accordance with the

transfer contracts but the Group may not mortgage those portions without the purchasers’ approval.

(c) The Group has the building ownership to the remaining portions of the property (which have not been

contracted to be sold) and is entitled to receive the sale proceeds of those portions and occupy, use,

transfer, lease and mortgage those portions.

(d) Pursuant to Regulation on Zhongshan Urban Planning Technology* ( ), issued by

the PRC Construction Bureau, the plot ratio of middle high and high rise building in grade II land in new

district is 1.7. As confirmed by the Group, the permitted plot ratio of the Site is 1.7. The maximum

allowed gross floor area of the whole development is approximately 728,507.8 sq.m.

(e) Ever Creator Co., the owner of the property, is a limited liability company established in accordance with











— IV-36 —



Capital value in


30th September

2005

(RMB)

6. Various retail shop

units in Blocks A, B

and C of Phase 2,

Metropolis,

Wenchang Road,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


of China

The property comprises 76 retail shop units with


sq.m..

Blocks A, B and C of Phase 2 of Metropolis

(‘‘the Development’’) occupying a site with an

area of approximately 21,620 sq.m. have been

developed with a total gross floor area of

approximately 41,298 sq.m.. The total saleable

gross floor area of the said block are

approximately 41,298 sq.m. There is no

non-saleable gross floor area.

The property was completed in April 2005.




retail development. As advised by the Group, it is

planned to be developed into 7 blocks with a

total expected gross floor area of approximately

113,264 sq.m..






earliest one commencing on 18th June 2004 and

the latest one expiring as at 20th December 2043.

Unit A31# of the

property (‘‘the

tenanted portions’’) is

leased to a tenant

from 1st June 2005

with gross floor area

of approximately

235.92 sq.m. at a

total monthly rent of

RMB1 all exclusive

of management fee as

at the date of

valuation.

The remaining

portion of the

property is vacant.

55,300,000

(100% interests

attributable to the

Group:

RMB55,300,000)

Notes:

1. Pursuant to the following State-owned Land Use Rights Grant Contracts granted by Land and Resources Bureau

of Zhongshan, the land use rights of the Site have been granted to the Group at a consideration of

RMB12,504,585.

State-owned Land Right

Grant Contract No.

Date of

Contract

Subject

Site Area User

Term (year)/

Expiry Date

(sq.m.)

(1998) 13666 28-May-1998 6,102.10 Residential/Commercial 27-May-2068



(1998) 14062 21-Jul-1998 23,313.00 Residential/Commercial 20-Jul-2068

*(2003) 5285 21-Dec-2003 23,512.90 Residential/Commercial 20-Dec-2073

Total Site Area 83,363.90

* This Land Grant Contract covers part of the site with site area of 12,570.2 sq.m. under Metro Agile

Zhongshan.


— IV-37 —

2. Pursuant to the following State-owned Land Use Rights Certificates, the land use rights of the Site forcommercial/residential use, have been granted to the Group.

State-owned Land Use

Rights Certificate No.

Date of

Issuance Subject Site Area User Date of Expiry(sq.m.)

(2004) 311731 23-Nov-2004 6,102.1 Commercial/Residential 27-May-2043



(2004) 310730 18-Jun-2004 1,705.2 Commercial/Residential 20-Dec-2043




3. Portions of the property comprising 7 retail shop units with a saleable gross floor area of approximately 1,376sq.m. have been contracted to be sold for the total purchase price of RMB6,454,317. In arriving at our opinionon the capital value of the property, we have taken into account of the purchase price of those portions.

4. In arriving at our opinion of the capital value of the property, we have taken the rental income of the propertyinto account.

5. We have been provided with a legal opinion on the property prepared by the Group’s legal advisors, whichcontains, inter alia, the following information:

(a) The Group has paid the land premium in respect of the Site in full and pursuant to various State-ownedLand Use Rights Certificates, the Group has acquired the land use rights to the Site. During the terms ofthe land use rights, the Group is entitled to occupy, use, lease, mortgage, transfer or otherwise dispose ofthe Site.

(b) Portions of the property comprising 7 retail shop units with a saleable gross floor area of approximately1,376 sq.m. have been contracted to be sold but have not been handed over to the purchasers. The Groupis entitled to receive from the purchasers the sale proceeds of those portions in accordance with thetransfer contracts but the Group may not mortgage those portions without the purchasers’ approval.

(c) The Group has the building ownership to the remaining portions of the property (which have not beencontracted to be sold) and is entitled to receive the sale proceeds of those portions and occupy, use,transfer, lease and mortgage those portions.

(d) The tenancy agreement for the tenanted portions entered into between the Group and the tenant is legal,valid and legally binding on both parties.

(e) The Group has not submitted the tenancy agreement to the relevant PRC government administrativedepartment for registration, therefore the relevant PRC government administrative department may imposea fine on the Group but this will not affect the validity of the tenancy agreement or the legality of theincome derived therefrom.

(f) Pursuant to the approved plan of the Development, the permitted plot ratio of the Site is 1.57. Themaximum allowed gross floor area of the development is approximately 114,283 sq.m..

(g) Ever Creator Co., the owner of the property, is a limited liability company established in accordance withthe laws of the PRC, in which the Group has a 100% equity interests.


i. State-owned Land Use Rights Certificate Yesii. State-owned Land Use Rights Grant Contract Yesiii. Construction Land Use Planning Permit Yesiv. Construction Works Planning Permit Yesv. Pre-sale Permit Yesvi. Individual Construction Works Completion Certified Report Yes


— IV-38 —



Capital value in


30th September

2005

(RMB)


units, retail shop units,

car parking spaces and

clubhouse in Phase 1

and Phase 2, Majestic

Garden, Qiguan West

Road,

Eastern District,

Zhongshan City,

Guangdong Province,


of China



sq.m., 44 retail shop units with saleable gross

floor area of approximately 7,450 sq.m. and 591

car parking spaces. In addition, there is a

clubhouse with gross floor area of approximately

11,108.92 sq.m..

Phase 1 and Phase 2 of Majestic Garden

(‘‘the Development’’) occupying various pieces of

land with a total site area of approximately

143,377 sq.m. (‘‘the Site’’) have been developed



of the said phases are approximately 217,065

sq.m. There is approximately 19,861 sq.m. non-

saleable gross floor area.

The property was completed in July 2002.

The Development is a medium-scale development

comprising apartments, retail shops, car parking

spaces and ancillary facilities (including

clubhouse, primary school and kindergarten etc.)

It was developed in 2 phases (Phases 1 and 2).

The development is held under various State-

owned Land Use Rights Certificates for various

terms with the earliest one commencing on 5th

May 1998 and the latest one expiring on 25th

January 2069.

Various units of the

property (‘‘the

tenanted portions’’)

with total gross area

of approximately

6,600.08 sq.m. are

leased to various

tenants from 2001 at

a total monthly rent

of RMB114,083 all

exclusive of

management fee as at


The remaining

portion of the

property is vacant.

170,400,000

(100% interests

attributable to the

Group:

RMB170,400,000)


— IV-39 —

Notes:

1. Pursuant to the following State-owned Land Use Rights Transfer Contract entered into between Zhongshan City

Antai Development Company and the Group, the land use rights of the Site for residential purpose have been

transferred to the Group at a consideration of RMB138,675,526.4 :

State-owned Land

Use Rights Transfer

Contract No.

Date of

Contract

Subject

Site Area User

Term/

Date of

Expiry Transferor

(sq.m.) (year)

(1996) 002 17-Oct-1996 164,463.07 Residential/

Commercial

NA Zhongshan City Antai

Development

Company




State-owned Land

Use Rights

Certificate No.

Date of

issuance

Subject

Site Area User

Date of

Expiry Issuer

(sq.m.)

(1999) 210258 20-Jan-1999 26,784.00 Residential/

Commercial

29-Jun-2066 Zhongshan City Land

and Housing

Management Bureau

21980060 5-May-1998 23,624.00 Residential/

Commercial


and Housing

Management Bureau

(1999) 211859 30-Sep-1999 26,800.50 Residential/

Commercial


and Housing

Management Bureau

(1999) 211391 2-Jul-1999 24,459.00 Residential/

Commercial


and Housing

Management Bureau

(1999) 211386 1-Jul-1999 6,666.00 Residential/

Commercial

31-Aug-2068 Zhongshan City Land

and Housing

Management Bureau

(2000) 212006 14-Dec-2000 3,266.00 Residential/

Commercial

30-Nov-2068 Zhongshan City Land

and Housing

Management Bureau

(2000) 211997 8-Dec-2000 6,566.30 Residential/

Commercial

25-Jan-2069 Zhongshan City Land

and Housing

Management Bureau

(2000) 212005 14-Dec-2000 8,132.00 Residential/

Commercial

30-Nov-2068 Zhongshan City Land

and Housing

Management Bureau

*(1999) 211860 30-Sep-1999 24,966.90 Residential/

commercial


and Housing

Management Bureau


* This State-owned Land Use Rights Certificate also covers part of piece of land with the Landmark,

(Property No. 8). As advised by the Group, the site area within this State-owned Land Use Right

Certificate which belongs to this Development is approximately 17,079.6 sq.m. The total site area of this

Development is therefore approximately 143,377.7 sq.m.


— IV-40 —


4. Pursuant to the Realty Title Certificate Document No. Yue Fang Di Zheng Zi No. C0379357, the clubhouse

having a total gross floor area of approximately 11,108.92 sq.m. is held by the Group.

5. In arriving at our opinion of the capital value of the property, we have taken the rental income of the property

into account.







(b) The following parts of the Development are subject to mortgages:

Corresponding

State-owned

Land Use Rights

Certificate/Realty

Title Certificate

number

Encumbrance

number Date of Issuance

Date of

instrument Date of expiry Bank

Zhong Fu Guo

Yong (2001) Zi Di

213918

Yue Fang Ti

(C 0379357)

C 0647813 20-Sep-2002 5-Jan-2004 20-Sep-2008 Agricultural Bank

of China,

Nanhai City

Yanbu Branch

(c) The Group has the building ownership to the property and is entitled to receive the sale proceeds of the

property and occupy, use, transfer, lease and mortgage the property. For the clubhouse under the Realty

Title Certificate Document No. Yue Fang Di Zheng No. C0379357, consent from the mortgagee is

required before the sale of the clubhouse.

(d) The tenancy agreements for the tenanted portions entered into between the Group and various tenants are

legal, valid and legally binding on both parties.

(e) The Group has not submitted the tenancy agreements to the relevant PRC government administrative

department for registration, therefore the relevant PRC government administrative department may impose

a fine on the Group but this will not affect the validity of the tenancy agreements or the legality of the

income derived therefrom.

(f) Portion of the tenanted portions is mortgaged to Nanhai City Yanbu Branch of Agricultural Bank of China

and the Group has obtained the requisite consent from Nanhai City Yanbu Branch of Agricultural Bank of

China for leasing of that portion of the tenanted portions.

(g) Majestic Garden Co., the owner of the property, is a limited liability company established in accordance

with the laws of the PRC, in which the Group has a 100% equity interests.









— IV-41 —



Capital value in


30th September

2005

(RMB)


units in Phase 1,

The Landmark (also

known as Phase 3,

Majestic Garden),

Junction of Boai Road

and Yintong Road,

Eastern District,

Zhongshan City,

Guangdong Province,


of China

The property comprises 60 retail shop units with


sq.m..

Phase 1 of The Landmark (‘‘the Development’’)

occupying a site with an area of approximately

7,887 sq.m. has been developed with a total gross

floor area of approximately 13,278 sq.m.. The

total saleable gross floor area of the said phase

are approximately 13,278 sq.m. and there is no

non-saleable gross floor area.

The property was completed in December 2004.

The Development is a retail development and was

developed with a total expected gross floor area

of approximately 13,278 sq.m..



sq.m. (‘‘the Site’’) (which does not include the

Sales Center Land described below).

In addition to the Site, there is a parcel of land

with a site area of approximately 12,600 sq.m.

located at the sales center of Majestic Garden

(‘‘the Sales Center Land’’) and as advised by the

Group, it is planned to be developed into a

residential development with a total gross floor

area of approximately 27,720 sq.m. (refer to Note

5, 6, 7)

The Site is held under a State-owned Land Use

Rights Certificate for a term commencing on 30th

September 1999 and expiring on 29th June 2068.


property (‘‘the


are leased by various

tenants from 2005

with total gross area

of approximately

1,250.65 sq.m. at a


RMB22,575 all

exclusive of



The remaining

portion of the

property is vacant.

59,100,000

(100% interests

attributable to the

Group:

RMB59,100,000)

Notes:

1. Pursuant to the following State-owned Land Use Rights Grant Contract entered into between Zhongshan City

Antai Development Company and the Group, the land use rights of the Site for residential use have been granted

to the Group at a consideration of RMB138,675,526.4.

State-owned Land

Rights Grant

Contract No.

Date of

Contract

Subject

Site Area User

Term/

Date of

Expiry Grantor

(sq.m.) (year)

(1996) 002 17-Oct-1996 164,463.07 Residential/

Commercial

NA Zhongshan City Antai

Development

Company



— IV-42 —

2. Pursuant to the following State-owned Land Use Rights Certificate, the land use rights of the Site have been


State-owned Land

Use Rights

Certificate No.

Date of

issuance

Subject

Site Area User

Date of

Expiry Issuer

(sq.m.)

*(1999) 211860 30-Sep-1999 24,966.90 Residential/

Commercial


and Housing

Management Bureau


* This State-owned Land Use Rights Certificate also covers part of piece of land with the Majestic Garden

(Property No. 7). As advised by the Group, the site area within this Development is approximately 7,887

sq.m. The total site area of the Development is therefore approximately 7,887 sq.m.



into account.

5. Pursuant to the State-owned Land Use Rights Transfer Contract dated 17th October 1996, the land use rights of a

site area of approximately 164,462.93 sq.m. (246.7 mu) were agreed to be granted to the Group at a total

consideration of RMB138,675,526.4. The Sales Center Land with a site area of approximately 12,600 sq.m. (18.9

mu) is not covered by any State-owned Land Use Rights Certificate. As advised by the Group, the consideration

has been paid in full as at the date of valuation.

6. As advised by the Group, the State-own Land Use Rights Certificate for the Sales Center Land is estimated to be

issued in May 2006.

7. In arriving at our opinion of the capital value of the property, we have not ascribed any value to the Sales Center

Land.



(a) The Group has paid the land premium in respect of the Site in full and pursuant to a State-owned Land

Use Rights Certificate, the Group has acquired the land use rights to the Site. During the terms of the land

use rights, the Group is entitled to occupy, use, lease, mortgage, transfer or otherwise dispose of the Site.



(c) The tenancy agreements for the tenanted portions entered into between the Group and various tenants are


(d) The Group has not submitted the tenancy agreements to the relevant PRC government administrative




(e) Majestic Garden Co., the owner of the property, is a limited liability company established in accordance










— IV-43 —



Capital value in


30th September

2005

(RMB)


units, retail shop units

and car parking spaces

in Phase 1, Phase 2

and Phase 3, Grand

Garden, Boai Road,

Eastern District,

Zhongshan City,

Guangdong Province,


of China



sq.m., 11 retail units with saleable gross floor

area of approximately 1,571 sq.m. and 556 car

parking spaces.

Phase 1, Phase 2 and Phase 3 of Grand Garden


area of approximately 78,547 sq.m. have been



gross floor area of the said groups are

approximately 125,276 sq.m. There is

approximately 2,200 sq.m. non-saleable gross

floor area.

The property was completed in November 2003.

The Development (of which the property and

Property 34 set out in this property valuation

form part) is a medium-scale development

comprising apartments, retail shops, car parking


clubhouse and kindergarten etc.) As advised by

the Group, it is planned to be developed in 4

phases (Phase 1, 2, 3 and 4) with a total expected

gross floor area of approximately 157,187 sq.m..






earliest one commencing as at 17th April 2001

and the one expiring on 26th March 2071.

The property is

currently vacant.

86,700,000

(100% interests

attributable to the

Group:

RMB86,700,000)


— IV-44 —

Notes:

1. Pursuant to the following State-owned Land Use Rights Grant Contracts entered into between Zhongshan City

Land Resources Bureau and the Group, the land use rights of the Site for residential purpose have been granted

to the Group at a consideration of RMB72,280,850 :


Grant Contract No.

Date of

Contract

Subject

Site Area User Grantor

(sq.m.)

(2001) 1043 26-Mar-2001 33,333.3 Residential Zhongshan City Land

Resources Bureau


Resources Bureau


Resources Bureau




State-owned Land

Use Rights

Certificate No.

Date of

Issuance

Subject

Site Area User

Date of

Expiry Issuer

(sq.m.)

213454 17-Apr-2001 33,333.30 Residential/

Commercial

26-Mar-2071 Zhongshan City Land

& Housing

Management Bureau

213453 17-Apr-2001 29,707.90 Residential/

Commercial


& Housing

Management Bureau

213455 17-Apr-2001 33,333.60 Residential/

Commercial


& Housing

Management Bureau



4. Pursuant to the Realty Title Certificate Document No. Yue Fang Di Zhang Zi No. C3431896, clubhouse having a

total gross floor area of approximately 2,174.75 sq.m. is held by the Group.






the Site.



(c) Pursuant to the approved plan of the Development, the permitted plot ratio of the Site is 1.6. The

maximum allowed gross floor area of the Development is approximately 198,977 sq.m.


— IV-45 —

(d) Majestic Garden Co., the owner of the property, is a limited liability company established in accordance










— IV-46 —



Capital value in


30th September

2005

(RMB)




in Group 1 of Phase 1,

Star Palace,

Boai Road,

Eastern District,

Zhongshan City,

Guangdong Province,


of China



sq.m., 3 retail shop units, with saleable gross

floor area of approximately 225 sq.m. and 285

car parking spaces.

Group 1 of Phase 1 of Star Palace (‘‘the


approximately 40,667 sq.m. have been developed



of the said group is approximately 62,194 sq.m.

and there is no non-saleable gross floor area.

The property was completed in December 2004.



property valuation form part) is a medium-scale

development comprising apartments, retail shops,

car parking spaces and other ancillary facilities

(including clubhouse and swimming pool etc.) As

advised by the Group, it is planned to be

developed in 3 phases (Phase 1, 2 and 3) with a


183,899 sq.m..






earliest one commencing on 16th May 2001 and

the latest one expiring on 19th April 2071.

The property is

currently vacant.

84,200,000

(100% interests

attributable to the

Group:

RMB84,200,000)


— IV-47 —

Notes:

1. Pursuant to the following State-owned Land Use Rights Transfer Contracts entered into between Zhongshan City

Land Resources Bureau, Zhongshan City Land Development Property Management Company Limited and the

Group, the land use rights of the Site have been transferred to the Group at a consideration of RMB82,690,289.


Rights Transfer Contract

No.

Date of

Contract

Subject

Site Area User Transferor

(sq.m.)

(2001) 1200 2001 66,909.9 Residential/Commercial Zhongshan City Land

Resources Bureau


Resources Bureau

(2002) 16 20-Aug-2002 8,168.9 Residential/Commercial Zhongshan City Land

Development Property

Management Company

Limited






Date of

issuance

Subject

Site Area User

Date of

Expiry Issuer

(sq.m.)

(2001) 213791 16-May-2001 66,909.9 Residential/

Commercial

19-Apr-2071 Zhongshan City Land &

Housing Management Bureau

(2001) 213792 16-May-2001 37,076.8 Residential/

Commercial

19-Apr-2071 Zhongshan City Land &

Housing Management Bureau

(2004) 210424 27-Apr-2004 2,666.6 Residential/

Commercial

12-Jun-2068 Zhongshan City People’s

Government

(2004) 210425 27-Apr-2004 5,502.1 Residential/

Commercial

12-Jun-2068 Zhongshan City People’s

Government








the Site.




maximum allowed gross floor area of the whole development is approximately 219,817.99 sq.m.


— IV-48 —











— IV-49 —



Capital value in


30th September

2005

(RMB)

11. Various villa and

townhouse units in

Phase 1 and Langwang

Land Piece,

The Riverside,

Henghai Road,

Southern District,

Zhongshan City,

Guangdong Province,


of China

The property comprises 56 villa and townhouse

units with saleable gross floor area of

approximately 11,223 sq.m. in Phase 1.

Phase 1 and Langwang Land Piece of The

Riverside (‘‘the Development’’) occupying a site

with an area of approximately 35,462 sq.m. have

been developed with a total gross floor area of



approximately 18,472 sq.m. and there is no non-


The property was completed in April 2005.



form part) is a large-scale development

comprising apartments, villas, townhouses, retail

shops, car parking spaces and other ancillary

facilities (including clubhouse and swimming

pool etc.) As advised by the Group, it is planned

to be developed in 2 phases (Phase 1 and 2) with

a total expected gross floor area of approximately

72,644 sq.m..





Use Rights Certificate for various terms with the

earliest one commencing on 28th March 2001 and

the latest one expiring on 19th March 2071.

The property is

currently vacant.

74,000,000

(100% interests

attributable to the

Group:

RMB74,000,000)

Notes:


Land Resources Bureau, Langwang Town Real Estate Development Company Limited and the Group, the land

use rights of the Site have been transferred to the Group at a consideration of RMB2,716,200.

State-owned Land

Use Rights Transfer

Contract No.

Date of

Contract

Subject

Site Area User Term Transferor

(sq.m.) (year)

(2001) 0609 20-Mar-2001 99,900 Residential/

Commercial

70 Zhongshan City Land

Resources Bureau

*NA 8-May-2001 4,024 Residential/

Commercial

70 Langwang Town Real

Estate Development

Company Limited

Total site area 103,924

* This transaction included various buildings with gross floor area of approximately 3,177.1 sq.m..


— IV-50 —

2. Pursuant to the following State-owned Land Use Rights Certificates issued by Zhongshan City Planning Bureau,

the land use rights of the Site have been granted to the Group.


Date of

issuance

Subject

Site Area Date of Expiry

(sq.m.)

(2001) 234426 28-Mar-2001 99,900.0 19-Mar-2071

(2005) 260270 4-Aug-2005 225.5 31-Mar-2063

(2005) 260268 4-Aug-2005 221.8 31-Mar-2063

(2005) 260271 4-Aug-2005 226.0 31-Mar-2063

(2005) 260272 4-Aug-2005 291.6 31-Mar-2063

(2005) 260274 4-Aug-2005 227.5 31-Mar-2063

(2005) 260275 4-Aug-2005 223.4 31-Mar-2063

(2005) 260276 4-Aug-2005 223.9 31-Mar-2063

(2005) 260279 4-Aug-2005 227.1 31-Mar-2063

(2005) 260280 4-Aug-2005 232.3 31-Mar-2063

(2005) 260277 4-Aug-2005 226.5 31-Mar-2063


3. Portions of the property comprising 1 villa unit with a saleable gross floor area of approximately 150 sq.m. have

been contracted to be sold for the total purchase price of RMB987,013. In arriving at our opinion on the capital

value of the property, we have taken into account of the purchase price of those portions.

4. Pursuant to the following Realty Title Certificates issued by Zhongshan City People’s Government, the building

ownership rights certificates of various property have been granted to the Group.

Realty Title Certificate No.

Date of

issuance

Subject

GFA Area

(sq.m.)

C3430228 4-Aug-2005 319.14

C3430229 4-Aug-2005 319.14

C3438303 4-Aug-2005 319.14

C3438306 4-Aug-2005 320.13

C3438307 4-Aug-2005 320.13

C3438309 4-Aug-2005 320.55

C3438311 4-Aug-2005 319.14

C3438350 4-Aug-2005 318.77

C3438351 4-Aug-2005 317.67

C3438310 4-Aug-2005 319.72

Total GFA Area 3,193.53






the Site.

(b) 1 villa unit with a saleable gross floor area of approximately 150 sq.m. has been contracted to be sold but

has not been handed over to the purchasers. The Group is entitled to receive from the purchaser the sale

proceeds of the unit in accordance with the transfer contract but the Group may not mortgage the unit

without the purchaser’ approval.


— IV-51 —














— IV-52 —



Capital value in


30th September

2005

(RMB)


units, villa and


shop units and car

parking spaces in

Districts A01, Phase 1

of District A02,

Commercial Street,

Groups A and B of

District A03, Phases 1

to 5 and Group 1 of

Phase 3 of District A04

and Phases 1 and 2 of

District A08,

Agile Garden

Guangzhou,

Nanda Road,

Nancun Town,

Guangzhou City,

Guangdong Province,


of China

The property comprises 326 apartment units

with saleable gross floor area of approximately

53,698 sq.m., 142 villa and townhouse units


31,990 sq.m., 43 retail units with saleable gross

floor area of approximately 33,690 sq.m. and

1,298 car parking spaces.

District A01, portions of District A02, portions

of District A03, portions of District A04 and

District A08 of Agile Garden Guangzhou (‘‘the


approximately 844,229 sq.m. have been




approximately 557,654 sq.m. and there is


floor area.





development comprising apartments, retail,

villas, townhouses and ancillary facilities

(including clubhouse, swimming pool,

kindergarten, primary school and commercial

street, etc.) As advised by the Group, it is

planned to be developed in 10 districts

(Districts 1–10) with a total expected gross

floor area of approximately 1,846,813 sq.m..

The Development occupies various pieces of


1,518,416 sq.m. (‘‘the Site’’).

The Site is held under various State-owned

Land Use Rights Certificates for various terms

with the earliest one commencing on 14th

November 2001 and the latest one expiring as at

17th March 2074.


property (‘‘the


are leased to various

tenants from 2003

with total saleable

gross floor area of

approximately

4,472.01 sq.m. at a


about RMB62,982.76

all exclusive of



The remaining

portion of the

property is vacant.

912,700,000

(98% interests

attributable to the

Group:

RMB894,446,000)


— IV-53 —

Notes:

1. Pursuant to the following State-owned Land Use Rights Grant Contracts granted by Guangzhou Panyu District

Land Resource and Housing Management Bureau and Land Bureau of Panyu, Guangzhou, the land use rights of

the Site have been granted to the Group at a consideration of RMB124,178,985 :


Grant Contract No.

Date of

Contract

Subject

Site Area User Term (year)

(2003) 060 31-Dec-2003 852.20 Residential 70

(2003) 061 31-Dec-2003 32,576.60 Residential 70

(2003) 062 31-Dec-2003 45,187.80 Residential 70

(2003) 063 18-Mar-2004 9,977.90 Residential 70

J05000416 31-Dec-2003 73,007.00 Residential 70

J05000425 31-Dec-2003 20,127.00 Residential NA

(2003) 058 31-Dec-2003 1,841.50 Residential 70

(2003) 059 31-Dec-2003 4,384.70 Residential 70

(2001) 328 8-Nov-2001 424,477.00 Residential 70

(2002) 076 30-Mar-2002 566,391.00 Residential 70

N/A 21-Feb-2001 339,594.00 Residential 70




State-owned Land

Use Rights

Certificate No.

Date of

Issuance

Subject Site

Area User Term Issuer

(sq.m.) (year)

(2001) No. 210 14-Nov-2001 424,477.0 Not specified 70 (Residential)

40 (Commercial)

50 (Other Uses)

Guangzhou City State-

owned Land Resources

and Real Estate

Management Bureau

G05-000169 23-Nov-2001 211,381.15 Residential 70 People’s Government

of Guangzhou City

Panyu District


of Guangzhou City

Panyu District

G05-000400 12-Dec-2003 418,336.7 Composite 70 People’s Government

of Guangzhou City


of Guangzhou City


— IV-54 —

State-owned Land

Use Rights

Certificate No.

Date of

Issuance

Subject Site


(sq.m.) (year)

G05-000416 6-Feb-2004 73,007.0 Residential 70 People’s Government

of Guangzhou City

G05-000425 14-May-2004 20,127.0 Residential 70 People’s Government

of Guangzhou City

G05-000441 15-Sep-2004 852.0 Residential 70 People’s Government

of Guangzhou City

G05-000442 15-Sep-2004 1,842.0 Residential 70 People’s Government

of Guangzhou City


of Guangzhou City


of Guangzhou City


of Guangzhou City

G05-000419 30-Mar-2004 9,977.9 Residential 70 People’s Government

of Guangzhou City


3. Pursuant to the following Realty Title Certificates issued by People’s Government of Guangzhou, the building

ownership of buildings or structures with total gross floor area of approximately 45,816.5 sq.m. have been


Realty Title Certificate No. Date of issuance

Subject

Site Area User

(sq.m.)

C2634805 11-Jul-2004 5,410.9 Non-Residential

C1220293 9-Dec-2002 1,531.5 Composite

C1159626 6-Dec-2002 1,078.9 Retail

C1159625 6-Dec-2002 999.4 Retail

C1220118 6-Dec-2002 2,427.2 Composite

C1220119 6-Dec-2002 5,609.8 Retail

C1128817 21-Feb-2003 10,432 Other

C2636400 1-Sep-2004 18,326.8 Non-Residential (Club-house)

Total area 45,816.5


— IV-55 —

4. Portions of the property comprising 164 apartment units with a saleable gross floor area of approximately 22,059

sq.m., 24 villa and townhouse units with a saleable gross floor area of approximately 4,121 sq.m. and 14 retail

shop units with a saleable gross floor area of approximately 684 sq.m. have been contracted to be sold for the

total purchase price of RMB131,712,226. In arriving at our opinion on the capital value of the property, we have

taken into account of the purchase price of those portions.

5. As of 30 June 2005, the aggregate amount of GFA not in compliance with the authorized GFA with respect to

the property was approximately 7,892.9 sq.m. The Group has received approval from the relevant government

authority of such non-compliant GFA and received the relevant completion certificates following the payment of

an additional amount of RMB13.8 million, which was calculated according to the relevant provisions of Urban

Planning Law of People’s Republic of China ( ) and Regulations on Urban Planning of

Guangzhou ( ).


into account.








Corresponding Realty Title

Certificate number/State-owned Land

Use Rights Certificate number Encumbrance number

Date of

Issuance

C1128817

} & (2001) 210

C1190351

} & 200519730

26-Sept-2005

C1220119 C1190350 26-Sept-2005

C1220118 C1190349 26-Sept-2005

C2634805 C0973122 & 200416751 6-Jul-2004

C2636400 & G0500401 C1178939 28-Sept-2005

(c) Portions of the property comprising 164 apartment units, 24 villa and townhouse units and 14 retail shop

units with a saleable gross floor area of approximately 26,865 sq.m. have been contracted to be sold but

have not been handed over to the purchasers. The Group is entitled to receive from the purchasers the sale

proceeds of those portions in accordance with the transfer contracts but the Group may not mortgage those

portions without the purchasers’ approval.

(d) The Group has the building ownership to the remaining portions of the property (which have not been



(e) The tenancy agreements for the tenanted portions entered into between the Group and various tenants are


(f) The Group has not submitted the tenancy agreements to the relevant PRC government administrative




(g) Pursuant to the Letter of Reply and Discussion on Main Planning and Design*

( ) No. (2000)580 issued by Guangzhou City Planning Bureau, Panyu

District, the permitted plot ratio of the Site is 1.4. The maximum allowed gross floor area of the

Development is approximately 2,131,474.58 sq.m.



— IV-56 —

(h) Panyu Agile Co., the owner of the property, is a limited liability company established in accordance with

the laws of the PRC, in which the Group has a 98% equity interests. The rest is held by Foshan Nanhai Ya

Zhen Trading Co. Ltd.









— IV-57 —



Capital value in


30th September

2005

(RMB)




in Districts 1, 2, 3 and

4 of Phase 1,

South Lagoon

Guangzhou, No. 998

Tonghe Road,

Baiyun District,

Guangzhou City,

Guangdong Province,


of China



sq.m., 13 retail units with saleable gross floor

area of approximately 1,247 sq.m. and 1,023 car

parking spaces.

Districts 1, 2, 3 and 4 of Phase 1 of South

Lagoon Guangzhou (‘‘the Development’’)


128,793 sq.m. have been developed with a total


The total saleable gross floor area of the said

districts are approximately 147,266 sq.m. There is


floor area.





development comprising apartments, retail shops

and ancillary facilities (including clubhouse,

swimming pool and school etc.) As advised by


phases (Phase 1 and 2) with a total expected

gross floor area of approximately 270,711 sq.m.

There are 5 stages in Phase 1 (Stage 1, 2, 3, 4

and 5).




Peak Park Land described below).



(166.4 mu) located at the peak of Land Lot B1

(‘‘the Peak Park Land’’) designated for

landscaping and greenery purpose (refer to Note

5, 6, 7)



May 2001 and expiring on 27th May 2071.


property (‘‘the



tenants from 2003

with total gross floor

area of approximately

859.84 sq.m. at a


RMB13,968.4 all

exclusive of



The remaining

portion of the

property is vacant.

130,900,000

(100% interests

attributable to the

Group:

RMB130,900,000)


— IV-58 —

Notes:

1. Pursuant to the following State-owned Land Use Rights Grant Contract entered into between Land Bureau of

Guangzhou and the Group, the land use rights of the Site have been granted to the Group at a consideration of

RMB21,635,430 :

State-owned Land

Right Grant

Contract No.

Date of

Contract

Subject

Site Area User Term (year) Grantor

(sq.m.)

(2001) 041 28-May-2001 195,007.00 Residential/

Commercial

Residential: 70

Commercial,

tourism and

entertainment: 40

Other: 50

Land Bureau of

Guangzhou




State-owned Land

Use Rights

Certificate No.

Date of

Issuance

Subject

Site Area User

Term (year)/

Expiry Date Issuer

(sq.m.)

(2001) 161 28-May-2001 195,007.00 Residential/

Commercial

Residential: 70

Commercial,

tourism and

entertainment: 40

Other: 50

Guangzhou Land Resource

and Housing

Management Bureau




into account.

5. Pursuant to the Supplementary Agreement of Joint Development dated 22nd December 1999, the land use rights

of the Peak Park Land with a total site area of approximately 100,000 sq.m. (150 mu) have been agreed to be

granted to the Group at a consideration of RMB1,500,000. The consideration has already included the land


the date of valuation. Pursuant to Circular on Land Acquisition by Guangzhou People’s Government (Sui Fu

Zheng No. [2004]47)* ( ) dated 31st December 2004, the Group

has been granted with the allocated land with site area of approximately 110,907 sq.m. (166.4 mu).

6. The Peak Park Land was designated for landscaping or greenery purpose and the Group has no plans to apply for

a change in the land use designation in the near future. As advised by the Group, the State-owned Land Use

Rights Certificate of this piece of land is still under application and will be issued in March 2006.

7. In arriving at our opinion of the capital value of the property, we have not ascribed any value to the Peak Park

Land.



— IV-59 —






the Site.

(b) The tenancy agreements for the tenanted portions entered into between the Group and various tenants are


(c) The Group has not submitted the tenancy agreements to the relevant PRC government administrative




(d) The Group has the building ownership to the property and is entitled to receive the sale proceeds of the


(e) Pursuant to the Confirmation on Proposal of Adjustment to Plans* ( ) No. (2004)

51 issued by the Guangzhou City Planning Bureau dated 29th November 2004 and the approved plan of

the Development, the permitted plot ratio of the Site is 1.422.

(f) Development of South Lagoon Guangzhou is undertaken by Guangzhou Agile Co., a cooperative joint

venture company which is owned by Hefty Wealth Group Limited, a wholly-owned subsidiary of the

Company, and Guangzhou Tonghe Real Estate Development Ltd. (‘‘Guangzhou Tonghe’’), a PRC

company. Hefty Wealth Group Limited agreed to contribute registered capital in cash which is required to

be fully paid by June 2006. Guangzhou Tonghe contributed land use rights for the property with a site

area of 293,082 sq.m.

Under its amended joint venture agreement and articles of association, Guangzhou Agile Co. will pay a

total amount of RMB67,701,400 to Guangzhou Tonghe which has been fully paid. Following such

payment, Guangzhou Tonghe will no longer participate in the profit distribution of Guangzhou Agile Co.










— IV-60 —



Capital value in


30th September

2005

(RMB)


units, villas and


shop units and car

parking spaces in

Districts 1-A, 1-B,

1-C, 1-E in Phase 1,

District 2-A, District

2-B, District 3,

Districts 4 and 5A,

Nanhai Majestic

Garden, Suiyan Road,

Nanhai District,

Foshan City,

Guangdong Province,


of China



sq.m., 5 villa and townhouse units, with saleable

gross floor area of approximately 527 sq.m, 56

retail units with saleable gross floor area of

approximately 7,801 sq.m. and 615 car parking

spaces.

Districts 1-A, 1-B, 1-C, 1-E in Phase 1, Districts

2-A, 2-B, 3, 4 and 5-A of Nanhai Majestic

Garden (‘‘the Development’’) occupying a site

with an area of approximately 333,164 sq.m. have

been developed with a total gross floor area of


gross floor area of the said districts are

approximately 331,550 sq.m. The total

non-saleable gross floor area of the said groups

are approximately 23,097 sq.m.

The property was completed on September 2005.





townhouses, retail and ancillary facilities

(including clubhouse, swimming pool, primary

school, kindergarten and restaurant, etc.). As


developed in 5 districts (Districts 1, 2, 3, 4 and

5) with a total expected gross floor area of







earliest one commencing on 8th December 2003

and the latest one expiring on 21st March 2071.


property (‘‘the



tenants from 2003

with total saleable

area of approximately

17,349.77 sq.m. at a


RMB76,333.3 all

exclusive of



The remaining

portion of the

property is vacant.

163,500,000

(100% interests

attributable to the

Group:

RMB163,500,000)


— IV-61 —

Notes:

1. Pursuant to the following State-owned Land Use Rights Grant Contracts entered into between Land Bureau of

Nanhai City and the Group, the land use rights of the Site have been granted to the Group at a consideration of

RMB41,400,510.

State-owned Land

Grant Contract No. Date of Contract

Subject

Site Area User Term Grantor

(sq.m.) (year)

(2002) 00194 6-Jun-2002 24,554.70 Residential 70 Land Bureau of Nanhai City


(2002) 00177 17-May-2002 30,796.70 Residential 70 Land Bureau of Nanhai City

(2002) 00141 29-Jul-2002 33,320.00 Residential 70 Land Bureau of Nanhai City



(2001) 00076 13-Apr-2001 75,708.00 Residential 70 Land Bureau of Nanhai City

(2001) 00030 28-Feb-2001 171,984.80 Residential 70 Land Bureau of Nanhai City





2. Pursuant to the following State-owned Land Use Rights Certificates issued by Real Estate Management Bureau of

Foshan, the land use rights of the Site have been granted to the Group.


Rights Certificate No. Date of Issuance

Subject

Site Area User

Date of

Expiry Issuer

(sq.m.) (year)

(2003) 030174 8-Dec-2003 462,340.43 Residential 21-Mar-2071 Real Estate Management

Bureau of Foshan

(2003) 030173 8-Dec-2003 138,889.27 Residential 1-Mar-2071 Real Estate Management

Bureau of Foshan


3. Pursuant to the following Realty Title Certificates issued by Real Estate Bureau of Foshan, the building

ownership of the following buildings or structures with total gross floor area of approximately 16,467.98 sq.m.

has been granted to the Group.

Realty Title Certificate No. Date of Issuance

Subject

Site Area User

(sq.m.)

C3835355 5-Aug-2005 57.90 Retail

C3835356 5-Aug-2005 1,863.42 Retail

C3835358 5-Aug-2005 61.22 Retail

C3835357 5-Aug-2005 2,304.48 Retail

C3835353 5-Aug-2005 483.76 Retail

C3835354 5-Aug-2004 1,709.68 Retail

C3190049 5-Nov-2004 198.90 Retail

C3190050 5-Nov-2004 1,597.66 Retail

C3190051 5-Nov-2004 2,943.30 Retail

C3190052 5-Nov-2004 3,326.99 Retail

C3190053 5-Nov-2004 1,920.67

Total Area 16,467.98

4. Pursuant to the State-owned Land Use Rights Tenancy Agreement entered into between the Group and Nan Bian

Cun Society of Dong Xiu Villager Committee in Yanbu District, Nanhai*

( ) dated 29th July 2004, a parcel of land with a site area of

approximately 20 sq.m. is leased to the Group as playground of the primary school for 50 years from 1st

August 2004 to 31st July 2054 at a total rental of RMB48,000.* for identification purpose only


— IV-62 —



into account.









(c) The following parts of the Development are subject to mortgage:

Corresponding

Realty Title

Certificates

number/State-

owned Land Use

Rights Certificate

Encumbrance

No.

Date of

Issuance

Date of

Instrument

Date of

Expiry Bank

C3190049

C3190050

C3190051

C3190052

C3190053

C1233012 29-May-2005 29-May-2005 29-May-2008 Bank of China

Agriculture,

Branch Yanbu

(d) The tenancy agreements for the tenanted portions entered into between the Group and various tenants are


(e) The Group has not submitted the tenancy agreements to the relevant PRC government administrative




(f) Portion of the tenanted portions is mortgaged to Nanhai City Yanbu Branch of Agricultural Bank of China

and the Group has obtained the requisite consent from Nanhai City Yanbu Branch of Agricultural Bank of

China for leasing of that portion of the tenanted portions.

(g) Pursuant to the approved plan of the Development, the permitted plot ratio of the Site is 1.43. The

maximum allowed gross floor area of the whole Development is approximately 859,655 sq.m.

(h) Nanhai Agile Co., the owner of the property, is a limited liability company established in accordance with










— IV-63 —



Capital value in


30th September

2005

(RMB)

15. Various car parking

spaces in Huadu Grand

Garden, No. 33

Phoenix Road, Xindu

Boulevard South,

Xinhua Town, Huadu

District, Guangzhou

City, Guangdong

Province, the People’s

Republic of China

The property comprises 62 car parking spaces.

Huadu Grand Garden (‘‘the Development’’)

occupying various pieces of land with a total site

area of approximately 45,876 sq.m. (‘‘the Site’’)

has been developed with a total gross floor area

of approximately 99,607 sq.m.. The total saleable

gross floor area of the Development is

approximately 97,740 sq.m. There is


floor area.


The Development is a large-scale development

comprising apartments, retail shops and ancillary


pool, etc.) As advised by the Group, it is planned

to be developed in 1 phase (Phase 1).



March 2001 and expiring on 31st December 2068.

The property is

currently vacant.

6,200,000

(98% interests

attributable to the

Group:

RMB6,076,000)

Notes:

1. Pursuant to the following State-owned Land Use Rights Transfer Contract entered into between Guangzhou City

Huadu District Airport Development Company Limited and the Group, the land use rights of the Site, for

residential, commercial, tourism and entertainment use have been transferred to the Group at a consideration of

RMB100,001,550.

State-owned Land Use Transfer

Contract No. Date of Contract Subject Site Area Term

(sq.m.) (year)

*(2000) No.002 & Supplementary 28-Oct-2000 234,399.93 Residential: 70

Commercial, tourism and

entertainment: 40

Other: 50


* This Land Use Transfer Contract covers part of the site under Huadu Flower Paris.


— IV-64 —

2. Pursuant to the following State-owned Land Use Rights Certificate issued by Guangzhou City Huadu District

People’s Government, the land use rights of the Site have been granted to the Group.


Certificate No. Date of Issuance Subject Site Area Term

(sq.m.) (year)

(2001) 11034528 29-Mar-2001 45,876.1 Residential: 70


entertainment: 40

Other: 50




into account.

5. Various units in the clubhouse of the Development (‘‘the tenanted portions’’) are leased to various tenants from

2005 with total floor area of approximately 159.37 sq.m. at a total monthly rent of RMB1,480 all exclusive of

management fee as at the date of valuation.






the Site.



(c) The tenancy agreements for the tenanted portions entered into between the Group and various tenants are

legal, valid and legally binding on both parties. The Group has obtained from the relevant PRC authority a

Huadu Real Estate Ownerships Title Certificate* ( ) in respect of the tenanted

portions and is entitled to lease the tenanted portions pursuant to the said Huadu Real Estate Ownerships

Title Certificate* ( ).

(d) The Group has not submitted the tenancy agreements to the relevant PRC government administrative




(e) Huadu Agile Co., the owner of the property, is a limited liability company established in accordance with

the laws of the PRC, in which the Group has a 98% equity interests. The rest is held by Nanhai Ya Zhen

Trading Co. Ltd.










— IV-65 —



Capital value in


30th September

2005

(RMB)


units, villas and


shop units and car

parking spaces in

Phase 1,

Huadu Flower Paris,


Xindu Boulevard

South,

Xinhua Town,

Huadu District,

Guangzhou City,

Guangdong Province,


of China



sq.m., 3 villas and townhouse units with saleable

gross floor area of approximately 2,831 sq.m., 95

retail shop units with saleable gross floor area of

approximately 7,193 sq.m. and 158 car parking

spaces.

Phase 1 of Huadu Flower Paris (‘‘the


approximately 117,946 sq.m. have been



gross floor area of the said phase is

approximately 123,253 sq.m. and there is


floor area.

The property was completed in March 2005.




comprising villas, townhouses and ancillary

facilities (including clubhouse, swimming pool

and kindergarten etc.) As advised by the Group,

it is planned to be developed in 2 phases (Phase 1

and Phase 2) with a total expected gross floor

area of approximately 207,690 sq.m.






earliest one commencing on 23rd July 2002 and

the latest one expiring on 19th August 2074.

The property is

currently vacant.

197,400,000

(98% interests

attributable to the

Group:

RMB193,452,000)


— IV-66 —

Notes:


Huadu District Airport Development Company Limited and the Group, the land use rights of the Site for


RMB100,001,550.

State-owned Land Use Transfer


(sq.m.) (year)

*(2000) No.002 & Supplementary 28-Oct-2000 234,399.93 Residential: 70


entertainment: 40

Other: 50


* This Land Use Transfer Contract covers part of the site under Huadu Grand Garden.

2. Pursuant to the following State-owned Land Use Rights Certificates, the land use rights of the Site, have been


State-owned Land

Use Right

Certificate No. Date of Issuance Subject Site Area Term

(sq.m.) (year)

(2002) 11034802 23-Jul-2002 67,137.36 Residential: 70

Commercial, tourism and entertainment: 40

Other: 50

(2004) 720133 4-Apr-2004 49,918.52 Residential: 70


Other: 50

(2004) 720510 20-Aug-2004 36,541.50 Residential: 70


Other: 50

(2004) 720511 20-Aug-2004 3,820.75 Residential: 70


Other: 50


3. Portions of the property comprising 184 apartments units with a saleable gross floor area of approximately

24,711 sq.m. and 62 retail shop units with a saleable gross floor area of approximately 4,797 sq.m. have been

contracted to be sold for the total purchase price of RMB126,215,239. In arriving at our opinion on the capital



— IV-67 —






the Site.

(b) Portions of the property comprising 184 apartment units with a saleable gross floor area of approximately

24,711 sq.m. and 62 retail shop units with a saleable gross floor area of approximately 4,797 sq.m. have

been contracted to be sold but have not been handed over to the purchasers. The Group is entitled to

receive from the purchasers the sale proceeds of those portions in accordance with the transfer contracts

but the Group may not mortgage those portions without the purchasers’ approval.




(d) Huadu Agile Co., the owner of the property, is a limited liability company established in accordance with











— IV-68 —


Group V — Property interests held by the Group under development in the PRC

Property Description and tenure

Details of

occupancy

Capital value in


30th September

2005

(RMB)

17. Various apartmentunits, villa andtownhouse units,retail shop unitsand car parkingspaces in Phase 2of District A02,District A09,Phases 1 and 2 ofDistrict A12,La Cite Greenville,Changjiang TouristSpot, ZhongshanCity, GuangdongProvince, thePeople’s Republicof China

The property comprises 925 apartment units with saleablegross floor of approximately 127,962 sq.m., 198 villa andtownhouse units with saleable gross floor area ofapproximately 49,749 sq.m., 86 retail shop units withsaleable gross floor area of approximately 8,003 sq.m.and 122 car parking spaces.

As advised by the Group, Phase 2 of District A02,District A09, Phases 1 and 2 of District A12 of La CiteGreenville (‘‘the Development’’) occupying a site with anarea of approximately 258,176 sq.m. are planned to bedeveloped with a total gross floor area of approximately207,644 sq.m.. The total saleable gross floor area of theproperty is approximately 185,174 sq.m. and the non-saleable gross floor area is approximately 21,930 sq.m..

The property is expected to be completed in December2005.

As advised by the Group, the estimated developmentcosts to completion for the property is RMB215,823,300(excluding marketing, finance and other indirect costs).

The property isunder development.

639,100,000(100% interests

attributable to theGroup:

RMB639,100,000)

The Development (of which the property, Property 4 andProperty 30 set out in this property valuation form part)is a large-scale development comprising apartments,villas, townhouses, retail shops, car parking spaces andancillary facilities (including clubhouse, primary school,kindergarten, water reservoir and swimming pool etc.) Asadvised by the Group, it is planned to be developed in 12districts (Districts A01–12) with a total expected grossfloor area of approximately 2,055,877 sq.m..

The Development occupies various pieces of land with atotal site area of approximately 1,960,274 sq.m. (‘‘theSite’’) (which does not include the land leased by theGroup from Zhongshan Torch Development Zone GongHua Equity Economic Cooperation*( ) and the RailwayLand described below).

In addition to the site, there is a parcel of land with thesite area of approximately 179,334 sq.m. (269 mu), isleased by the Group from Zhongshan Torch DevelopmentZone Gong Hua Equity Economic Cooperation*( ) for a term of 70years from 18th March 2005 to 17th March 2075. Thisparcel of land serves as ancillary greenery to thedevelopment. (refer to Note 3)

In addition to the Site, there is a parcel of land with asite area of approximately 130,600 sq.m. (195.5 mu)located at the control line of railway (‘‘the RailwayLand’’) and as advised by the Group, it is planned forconstruction of railway purpose. (refer to Note 5, 6)

The Site is held under various State-owned Land UseRights Certificates for various terms with the earliest onecommencing on 12th February 2001 and the latest oneexpiring on 2nd November 2068.



— IV-69 —

Notes:

1. Pursuant to the following State-owned Land Use Rights Transfer Contracts entered between Zhongshan City

State-owned Land Resources and Real Estate Management Bureau and Zhongshan Agile Group Company Ltd.,

the land use rights of the Site have been granted to the Group at a consideration of RMB389,872,730.

State-owned Land Use Rights Transfer


(sq.m.) (year)

(2000) 142 11-Dec-2000 1,784,002.92 70

(2000) 142 supplementary contract 28-Dec-2000 108,587,20 70

(2003) Kai 201 24-Dec-2003 58,035.49 70

(2002) Kai 122 31-Dec-2000 15,309.60 70




State-owned Land Use Certificate No. Date of Issuance Subject Site Area Date of Expiry

(sq.m.)

(2001) 150705 2-Mar-2001 64,950.5 11-Aug-2068

(2001) 150709 12-Feb-2001 32,674.0 2-Nov-2068

(2001) 150698 12-Feb-2001 33,019.3 11-Aug-2068

(2001) 150711 12-Feb-2001 31,766.4 7-Aug-2067

(2001) 150702 12-Feb-2001 66,153.8 5-Jul-2068

(2001) 150700 12-Feb-2001 65,016.4 7-Aug-2068

(2001) 150719 12-Feb-2001 65,863.9 9-Jun-2067

(2001) 150699 12-Feb-2001 64,922.4 12-Oct-2068

(2001) 150720 13-Feb-2001 33,300.8 6-Aug-2067

(2001) 150715 12-Feb-2001 65,255.2 18-Aug-2068

(2003) 150729 13-Feb-2001 66,225.2 19-Mar-2068

(2003) 150696 12-Feb-2001 65,482.4 31-Jan-2068

(2003) 150706 12-Feb-2001 36,130.0 7-Aug-2067

(2003) 150713 12-Feb-2001 65,506.6 9-Jun-2068

(2001) 150697 12-Feb-2001 32,672.3 10-Jun-2067

(2001) 150726 12-Feb-2001 32,672.2 9-Aug-2067

(2003) 150724 13-Feb-2001 65,389.2 9-Jun-2067

(2003) 150718 12-Feb-2001 63,225.6 9-Jun-2067

(2005) 150704 12-Feb-2001 5,188.7 4-Sep-2068

(2005) 150728 13-Feb-2001 65,589.7 9-Aug-2067

(2005) 150730 13-Feb-2001 32,649.6 9-Jun-2067

(2001) 150717 12-Feb-2001 32,844.8 12-Nov-2067

(2003) 150125 23-Jan-2003 44,532.2 7-Jun-2067

(2001) 150716 12-Feb-2001 46,803.9 15-Apr-2068

(2003) 150124 23-Jan-2003 42,291.8 8-Jun-2067

(2003) 150122 23-Jan-2003 58,223.0 8-Sep-2068

(2001) 150701 12-Feb-2001 65,391.1 9-Jun-2067

(2001) 150708 12-Feb-2001 65,419.1 8-Sep-2067

(2001) 150723 13-Feb-2001 65,900.6 7-Jun-2067

(2001) 150714 12-Feb-2001 65,931.3 7-Jul-2068

(2003) 151440 15-Aug-2003 48,486.2 7-Aug-2068

(2001) 150725 13-Feb-2001 65,257.6 7-Jun-2068

(2001) 150722 13-Feb-2001 64,455.6 17-Oct-2068

(2003) 150126 23-Jan-2005 21,347.2 7-Jun-2067

(2003) 150121 13-Feb-2003 7,569.2 8-Sep-2067

(2003) 150123 23-Jan-2003 18,091.9 7-Aug-2067


— IV-70 —

State-owned Land Use Certificate No. Date of Issuance Subject Site Area Date of Expiry

(sq.m.)

(2003) 151441 15-Aug-2003 17,616.1 7-Aug-2068

(2003) 150095 16-Jan-2003 15,309.6 19-Feb-2068

(2003) 151849 8-Oct-2003 52,551.4 5-Jul-2068

(2005) 150137 1-Feb-2005 2,441.5 17-Oct-2068

(2005) 150138 1-Feb-2005 13,228.1 17-Oct-2068

(2005) 150139 1-Feb-2005 41,277.2 17-Oct-2068

(2005) 150140 1-Feb-2005 17,745.5 17-Oct-2068

(2005) 150141 1-Feb-2005 33,895.8 17-Oct-2068









units with a saleable gross floor area of approximately 4,804 sq.m. have been contracted to be sold for the total

purchase price of RMB310,668,111. In arriving at our opinion on the capital value of the property, we have





















(b) The Group has obtained from the PRC Government all requisite approvals in respect of the construction of

the property.

(c) Portions of the property comprising 288 apartment units with a saleable gross floor area of approximately

34,298 sq.m., 58 villa and townhouse units with a saleable gross floor area of approximately 15,381 sq.m.

and 50 retail shop unit with a saleable gross floor area of approximately 4,804 sq.m. have been contracted

to be sold. The Group is entitled to receive from the purchasers the sale proceeds of those portions in

accordance with the transfer contracts but the Group may not mortgage those portions without the

purchasers’ approval.



— IV-71 —

(d) As confirmed by the Group, the permitted plot ratio of the Site is 1.1. The maximum allowed gross floor


(e) Greenville Co., the owner of the property, is a limited liability company established in accordance with

the laws of the PRC, in which the Group has 100% equity interests.

(f) Tenancy agreement entered into between the Group and Zhongshan Torch Development Zone Gong Hua

Equity Stock Company Limited* ( ) dated 18th March 2005 is legal, valid

and legally binding on both parties.

8. As advised by the Group, the total development costs (excluding land costs) incurred up to 30th September 2005

is RMB313,257,500 (excluding marketing and finance costs).

9. The capital value of the property as if completed as at 30th September 2005 would be RMB1,022,067,300,

inclusive of the parts and portions that have been contracted to be sold and the aggregate value of which is

stated at their total contracted amount.






v. Pre-sale Permit Part

vi. Individual Construction Works Completion Certified Report N/A



— IV-72 —



Capital value in


30th September

2005

(RMB)

18. Various Villa and

townhouse units,

District A15, La

Nobleu, Changjiang

Tourist Spot,

Zhongshan City,

Guangdong Province,


of China

The property comprises of 102 villa and

townhouse units of gross floor area of


As advised by the Group, District A15 of La

Nobleu (‘‘the Development’’) occupying a site

with an area of approximately 102,680 sq.m. are

planned to be developed with a total gross floor

area of approximately 42,616 sq.m.. The total

saleable gross floor area of the property is

approximately 42,616 sq.m. and there is no non-


The property is expected to be completed in

December 2005.

As advised by the Group, the estimated

development costs to completion for the property

is RMB5,741,300 (excluding marketing, finance

and other indirect costs).



form part) is one of the development district of

La Cite Greenville with the Gua Deng Hill Land

Lot can enjoy view of golf course. As advised by

the Group, it is planned to be developed with a


160,142 sq.m.







and the latest one expiring on 30th May 2074.

The property is under

development.

332,800,000

(100% interests

attributable to the

Group:

RMB332,800,000)


— IV-73 —

Notes:

1. Pursuant to the following State-owned Land Use Rights Transfer Contracts entered into between Zhongshan

Group Co. or Zhongshan Agile Changjiang Golf Club and Greenville Co., the land use rights of the Site have

been transferred to the Group at a consideration of RMB77,534,604.00.

State-owned Land Use Right

Certificates of the Transferor

Subject

Site Area

Date of

Contract

Date of

Expiry Transferor

(sq.m.)

2001 (213456) 7,185.40 15-Dec-2004 14-Mar-2068 Zhongshan Agile Group

Company

2003 (211252) 9,827.70 15-Dec-2004 9-Oct-2073 Zhongshan Agile Group

Company

1999 (211939) 29,999.80 15-Dec-2004 22-Dec-2068 Zhongshan Agile

Changjian Golf Club

2002 (213899) 18,418.90 15-Dec-2004 24-Dec-2068 Zhongshan Agile Group

Company

2004 (210882) 28,554.40 14-Dec-2004 30-May-2074 Zhongshan Agile

Changjiang Golf Club

2003 (151614) 39,402.10 14-Dec-2004 14-Oct-2073 Zhongshan Agile








2000 (150211) 40,252.79 7-Dec-2004 19-Apr-2068 Zhongshan Agile Group

Company


Company



— IV-74 —



Land Use Right certificates Number

Date of

issuance Commencement Date Expiry Date

Subject

Site Area

(sq.m.)

(2005) 210900 4-Apr-2005 4-Apr-2005 14-Mar-2068 7185.4

(2005) 210902 4-Apr-2005 4-Apr-2005 9-Oct-2073 9827.7

(2004) 210209 16-Dec-2004 16-Dec-2004 22-Dec-2068 29999.8

(2004) 210212 16-Dec-2004 16-Dec-2004 24-Dec-2068 18418.9

(2004) 210223 20-Dec-2004 20-Dec-2004 30-May-2073 28554.4

(2004) 154909 24-Dec-2004 24-Dec-2004 14-Oct-2073 39402.1

(2004) 210218 20-Dec-2004 20-Dec-2004 30-May-2074 2369.7

(2004) 154910 13-Jan-2005 13-Jan-2005 14-Oct-2043 32353.6

(2004) 210215 20-Dec-2004 20-Dec-2004 23-Dec-2068 34141.6

(2004) 154908 22-Dec-2004 22-Dec-2004 19-Apr-2068 40252.79

(2004) 154907 22-Dec-2004 22-Dec-2004 19-Apr-2068 38182.8


3. Portions of the property comprising 8 villa and townhouse units with a saleable gross floor area of approximately

2,453 sq.m. have been contracted to be sold for the total purchase price of RMB23,952,291. In arriving at our

opinion on the capital value of the property, we have taken into account of the purchase price of those portions.








the property.

(c) Portions of the property comprising 8 villa and townhouse units with a saleable gross floor area of

approximately 2,453 sq.m. have been contracted to be sold. The Group is entitled to receive from the

purchasers the sale proceeds of those portions in accordance with the transfer contracts but the Group may

not mortgage those portions without the purchasers’ approval.




(e) Pursuant to the Construction Works Planning Permit of La Nobleu, the maximum allowed gross floor area

is approximately 46,403 sq.m.. Pursuant to Regulation on Zhongshan Urban Planning Technology*

( ), the permitted plot ratio of middle high and high rise building in grade II land



— IV-75 —

in new district is 1.7. As confirmed by the Group, apart from La Nobleu, the permitted plot ratio of the

development is 1.7, and the maximum allowed gross floor area for future development in the Development

is approximately 302,615.283 sq.m..

(f) Greenville Co., the owner of the property, is a limited liability company established in accordance with




6. The capital value of the property as if completed as at 30th September 2005 would be RMB417,550,600





ii. State-owned Land Use Rights Transfer Contract Yes






— IV-76 —



Capital value in


30th September

2005

(RMB)


units, villa and

townhouse units and

retail shop units in

Group 3 of Phase 1,

Groups 1, 2 & 3 of

Phase 3, and Phase 5,

Metro Agile

Zhongshan,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


of China



sq.m., 309 villa and townhouse units with


sq.m., and 80 retail shops with saleable gross

floor area of approximately 6,111 sq.m..

As advised by the Group, Group 3 of Phase 1,

Groups 1, 2 & 3 of Phase 3, and Phase 5 of

Metro Agile Zhongshan (‘‘the Development’’)


137,311 sq.m. are planned to be developed with a

total gross floor area of approximately 110,248

sq.m.. The total saleable gross floor area of the

property is approximately 108,879 sq.m. and the

non-saleable gross floor area is approximately

1,369 sq.m..


December 2005.



is RMB153,409,000 (excluding marketing,

finance and other indirect costs).





townhouses, retail shops, car parking spaces and



is planned to be developed in 3 phases (phases 1,

3 and 5) with a total expected gross floor area of








and the latest one expiring on 27th December

2073.


development.

267,200,000

(100% interests

attributable to the

Group:

RMB267,200,000)


— IV-77 —

Notes:


been granted to the Group at a consideration of RMB79,052,911 :

State-owned Land

Grant Contract

Number

Subject Site

Area

Date of

Contract

Date of


(sq.m.)














1998-13666 6,102.1 28-May-1998 27-May-2068 Zhongshan Land and Resource Bureau



1998-14062 23,313.0 21-Jul-1998 20-Jul-2068 Zhongshan Land and Resource Bureau










— IV-78 —

State-owned Land

Grant Contract

Number

Subject Site

Area

Date of

Contract

Date of


(sq.m.)










*2003–5285 23,512.9 21-Dec-2003 20-Dec-2073 Zhongshan Land and Resource Bureau




Metropolis.

2. Pursuant to the following State-owned Land Use Rights Certificates the land use rights of the Site have been



Date of

Issuance

Subject

Site Area

Term (year)/

Date of

Expiry

(sq.m.)

(2003) 312327 10-Oct-2003 28,973.10 9-Jun-2068

(2003) 312329 8-Dec-2003 8,926.60 20-May-2068

(2003) 312326 8-Dec-2003 3,729.10 8-Jun-2068

(2003) 312324 8-Dec-2003 9,116.10 8-Jul-2068

(2003) 312328 8-Dec-2003 16,912.10 20-Jul-2068

(2003) 312323 8-Dec-2003 3,684.00 20-May-2068

(2003) 312325 8-Dec-2003 4,692.60 20-Jul-2068

(2004) 313674 28-Jun-2004 13,661.90 8-May-2068

(2004) 313675 28-Jun-2004 32,803.40 29-May-2068

(2004) 313673 28-Jun-2004 32,959.80 22-Apr-2068


— IV-79 —


Date of

Issuance

Subject

Site Area

Term (year)/

Date of

Expiry

(sq.m.)

(2004) 313681 28-Jun-2004 13,240.20 18-Jun-2068

(2003) 312474 26-Dec-2003 6,400.60 9-Jun-2068

(2003) 312487 26-Dec-2003 22,216.70 18-May-2068

(2003) 312483 26-Dec-2003 544.40 8-May-2068

(2003) 312481 26-Dec-2003 628.50 8-May-2068

(2003) 312484 26-Dec-2003 234.00 8-May-2068

(2003) 312482 26-Dec-2003 4,432.60 17-May-2068

(2003) 312486 26-Dec-2003 4,489.10 17-May-2068

(2003) 312479 26-Dec-2003 714.60 17-May-2068

(2003) 312480 26-Dec-2003 17,238.90 25-Jul-2068

(2003) 312478 26-Dec-2003 27,444.10 18-May-2068

(2003) 312475 26-Dec-2003 19,366.30 28-May-2068

(2003) 312477 26-Dec-2003 13,600.50 25-May-2068

(2004) 313679 28-Jun-2004 15,985.90 28-May-2068

(2003) 314391 31-Dec-2003 457.20 27-Dec-2073

(2004) 310731 18-Jun-2004 3,431.30 20-Dec-2073

(2004) 310737 18-Jun-2004 3,759.10 20-Dec-2073

(2004) 310734 18-Jun-2004 1,479.10 20-Dec-2073

(2004)310735 18-Jun-2004 704.60 20-Dec-2073

(2004) 310736 18-Jun-2004 1,568.60 20-Dec-2073

(2005) 313609 18-Aug-2005 42,550.90 28-Nov-2063

(2005) 313611 18-Aug-2005 1,222.80 2-Mar-2073

(2005) 313582 16-Feb-2005 2,658.60 13-Mar-2064

(2005) 312585 24-Jun-2005 4,130.90 13-Mar-2064

(2005) 311853 10-Jan-2005 31,899.60 29-Apr-2068

(2005) 311852 30-May-2005 32,676.20 19-Apr-2068



— IV-80 —



shop with a saleable gross floor area of approximately 43 sq.m. have been contracted to be sold for the total

purchase price of RMB111,780,398. In arriving at our opinion on the capital value of the property, we have









the property.


29,059 sq.m., 18 villa and townhouse units with a saleable gross floor area of approximately 2,888 sq.m.

and 1 retail shop unit with a saleable gross floor area of approximately 43 sq.m. have been contracted to

be sold. The Group is entitled to receive from the purchasers the sale proceeds of those portions in

accordance with the transfer contracts but the Group may not mortgage those portions without the

purchasers’ approval.




(e) Pursuant to Regulation on Zhongshan Urban Planning Technology* ( ), the plot

ratio of middle high and high rise building in grade II land in new district is 1.7. As confirmed by the

Group, the permitted plot ratio of the Site is 1.7. The maximum allowed gross floor area of the whole

development is approximately 728,507.8 sq.m.

(f) Ever Creator Co., the owner of the property, is a limited liability company established in accordance with




6. The capital value of the property as if completed as at 30th September 2005 would be RMB514,892,400,












— IV-81 —



Capital value in


30th September

2005

(RMB)


units of Blocks E, F

and G of Phase 2,

Metropolis, Wenchang

Road, Sanxiang Town,

Zhongshan City,

Guangdong Province,


of China

The property comprises 198 retail shops with


sq.m..

As advised by the Group, Blocks E, F and G of

Phase 2 of Metropolis (‘‘the Development’’)





property is approximately 38,310 sq.m. and there

is no non-saleable gross floor area.

The property has been completed in November

2005.











113,264 sq.m..







the latest one expiring on 20th December 2043.


development.

141,800,000

(100% interests

attributable to the

Group:

RMB141,800,000)

Notes:

1. Pursuant to the following State-owned Land Use Rights Grant Contracts granted by Land and Resources Bureau

of Zhongshan. The land use rights of the Site have been granted to the Group at a consideration of

RMB12,504,585.


— IV-82 —


Grant Contract No.

Date of

Contract

Subject

Site Area User

Term (year)/Date

of Expiry

(sq.m.)







* This Land Grant Contract covers part of the site with site area of 12,570.2 sq.m. under Metro Agile

Zhongshan.




Certificate No.

Date of

Issuance

Subject

Site Area User Date of Expiry

(sq.m.)








3. Portions of the property comprising 25 retail shop units with a saleable gross floor area of approximately 5,014

sq.m. have been contracted to be sold for the purchase price of RMB24,294,169. In arriving at our opinion on the

capital value of the property, we have taken into account of the total purchase price of those portions.






the Site.


the property.


— IV-83 —

(c) Portions of the property comprising 25 retail shop units with a saleable gross floor area of approximately

5,014 sq.m. have been contracted to be sold. The Group is entitled to receive from the purchasers the sale



(d) Pursuant to the approved plan of the Development, the permitted plot ratio of the Site is 1.57. The

maximum allowed gross floor area of the development is approximately 114,283 sq.m.

(e) Ever Creator Co., the owner of the property, is a limited liability company established in accordance with















— IV-84 —



Capital value in


30th September

2005

(RMB)




of Group 2 of Phase 1

and Phase 2,

Star Palace,

Boai Road,

Eastern District,

Zhongshan City,

Guangdong Province,


of China



sq.m.. 17 retail shop units with saleable gross

floor area of approximately 904 sq.m. and 365

carparking spaces.

As advised by the Group, Group 2 of Phase 1 and

Phase 2 of Star Palace (‘‘the Development’’)







1,869 sq.m..


December 2005.







property valuation form part) is a medium-scale


car parking spaces and other ancillary facilities

(including clubhouse and swimming pool etc.) As


developed in 3 phases (Phase 1, 2 and 3) with a


183,899 sq.m..









development.

209,100,000

(100% interests

attributable to the

Group:

RMB209,100,000)


— IV-85 —

Notes:





Grand Contract No.

Date of

Contract

Subject


(sq.m.)


Resources Bureau


Resources Bureau



Management

Company Limited




State-owned Land

Use Rights

Certificate No.

Date of

Issuance

Subject

Site Area User

Date of

Expiry Issuer

(sq.m.)

(2001) 213791 16-May-2001 66,909.9 Residential/

Commercial

19-Apr-2071 Zhongshan City Land

& Housing

Management Bureau

(2001) 213792 16-May-2001 37,076.8 Residential/

Commercial


& Housing

Management Bureau

(2004) 210424 27-Apr-2004 2,666.6 Residential/

Commercial

12-Jun-2068 Zhongshan City

People’s

Government

(2004) 210425 27-Apr-2004 5,502.1 Residential/

Commercial


People’s

Government



— IV-86 —


sq.m. have been contracted to be sold for the total purchase price of RMB24,655,820. In arriving at our opinion

on the capital value of the property, we have taken into account of the purchase price of those portions.






the Site.


the property.








(e) Pursuant to the approved plan of the Development, the permitted plot ratio of the Site is 1.96. The


(f) Majestic Garden Co., the owner of the property, is a limited liability company established in accordance





inclusive of the parts and portions that have been contracted to be sold and this aggregate value of which is










— IV-87 —



Capital value in


30th September

2005

(RMB)


units, villa and


shop units and car

parking spaces of

Phase 1, Group 1 and

Group 2 of Phase 2,

The Riverside,

Henghai Road,

Southern District,

Zhongshan City,

Guangdong Province,


of China





sq.m., 34 retail shop units with saleable gross


car parking spaces.

As advised by the Group, Phase 1, Group 1 and

Group 2 of Phase 2 of The Riverside (‘‘the


approximately 66,763 sq.m. are planned to be



gross floor area of the property is approximately

53,146 sq.m. and the total non-saleable gross

floor area of the property is approximately 1,026

sq.m..


December 2005.








comprising apartments, villas, townhouses, retail




to be developed in 2 phases (Phase 1 and 2) with


72,644 sq.m..




The Site is held under State-owned Land Use

Rights Certificate for various terms with the

earliest one commencing on 28th March 2001 and

the latest one expiring on 19th March 2071.


development.

239,600,000

(100% interests

attributable to the

Group:

RMB239,600,000)


— IV-88 —

Notes:


Land Resources Bureau, Langwang Town Real Estate Development Company Limited and the Group, the land

use rights of the Site have been transferred to the Group at a consideration of RMB2,716,200.

State-owned Land

Use Rights Transfer

Contract No.

Date of

Contract

Subject

Site Area User

Term/

Expiry Date Grantor

(sq.m.) (year)

(2001) 0609 20-Mar-2001 99,900 Residential/

Commercial

70 Zhongshan City Land

Resources Bureau

*NA 8-May-2001 4,024 Residential/

Commercial

70 Langwang Town Real

Estate Development

Company Limited


* This transaction included a villa and townhouse unit with gross floor area of approximately 3,177.1 sq.m..

2. Pursuant to the following State-owned Land Use Rights Certificates issued by Zhongshan City Planning Bureau,

the land use rights of the Site have been granted to the Group.


Date of

issuance

Subject

Site Area Date of Expiry

(sq.m.)

(2001) 234426 28-Mar-2001 99,900.0 19-Mar-2071

(2005) 260270 4-Aug-2005 225.5 31-Mar-2063

(2005) 260268 4-Aug-2005 221.8 31-Mar-2063

(2005) 260271 4-Aug-2005 226.0 31-Mar-2063

(2005) 260272 4-Aug-2005 291.6 31-Mar-2063

(2005) 260274 4-Aug-2005 227.5 31-Mar-2063

(2005) 260275 4-Aug-2005 223.4 31-Mar-2063

(2005) 260276 4-Aug-2005 223.9 31-Mar-2063

(2005) 260279 4-Aug-2005 227.1 31-Mar-2063

(2005) 260280 4-Aug-2005 232.3 31-Mar-2063

(2005) 260277 4-Aug-2005 226.5 31-Mar-2063


3. Portions of the property comprising 6 apartment units with a saleable gross floor area of approximately 548 sq.m.

and 8 villa and townhouse units with a saleable gross floor area of approximately 1,697 sq.m. have been

contracted to be sold for the total purchase price of RMB15,408,429. In arriving at our opinion on the capital



— IV-89 —






the Site.


the property.


548 sq.m. and 8 villa and townhouse units with a saleable gross floor area of approximately 1,697 sq.m.

have been contracted to be sold. The Group is entitled to receive from the purchasers the sale proceeds of

those portions in accordance with the transfer contracts but the Group may not mortgage those portions

without the purchasers’ approval.




(e) Majestic Garden Co., the owner of the property, is a limited liability company established in accordance















— IV-90 —



Capital value in


30th September

2005

(RMB)


units, villa and

townhouse units, and

retail shop units in

Group 2 of Phase 1 of

District A02, Groups 2

and 3 of Phase 3 of

District A04 and

portions of

District A06,

Agile Garden

Guangzhou,

Nanda Road,

Nancun Town,

Guangzhou City,

Guangdong Province,


of China





sq.m. and 91 retail shops with saleable gross

floor area of approximately 8,056 sq.m..

As advised by the Group, Group 2 of Phase 1 of

District A02, Groups 2 and 3 of Phase 3 of

District A04 and portions of District A06 of

Agile Garden Guangzhou (‘‘the Development’’)





property is approximately 127,646 sq.m. and

there is no non-saleable gross floor area.


December 2005.








development comprising apartments, retail, villas,

townhouses and ancillary facilities (including

clubhouse, swimming pool, kindergarten, primary

school and commercial street, etc.) As advised by


districts (Districts 1–10) with a total expected

gross floor area of approximately 1,846,813

sq.m..


with a total site area of approximately 1,518,416




earliest one commencing on 14th November 2001

and the latest one expiring on 17th March 2074.


development.

451,400,000

(98% interests

attributable to the

Group:

RMB442,400,000)


— IV-91 —

Notes:



the Site have been granted to the Group at a consideration of RMB124,178,985.


Grant Contract No.

Date of

Contract

Subject

Site Area User Term (year)

(2003) 060 31-Dec-2003 852.20 Residential 70

(2003) 061 31-Dec-2003 32,576.60 Residential 70

(2003) 062 31-Dec-2003 45,187.80 Residential 70

(2003) 063 18-Mar-2004 9,977.90 Residential 70



(2003) 058 31-Dec-2003 1,841.50 Residential 70

(2003) 059 31-Dec-2003 4,384.70 Residential 70

(2001) 328 8-Nov-2001 424,477.00 Residential 70

(2002) 076 30-Mar-2002 566,391.00 Residential 70





State-owned Land

Use Rights

Certificate No.

Date of

Issuance

Subject Site


(sq.m.) (year)

(2001) No. 210 14-Nov-2001 424,477.0 Not specified 70 (Residential)

40 (Commercial)

50 (Other Uses)


owned Land

Resources and Real

Estate Management

Bureau


of Guangzhou City

Panyu District


of Guangzhou City

Panyu District


of Guangzhou City


of Guangzhou City


— IV-92 —

State-owned Land

Use Rights

Certificate No.

Date of

Issuance

Subject Site


(sq.m.) (year)

G05-000416 6-Feb-2004 73,007.0 Residential 70 People’s Government

of Guangzhou City

G05-000425 14-May-2004 20,127.0 Residential 70 People’s Government

of Guangzhou City

G05-000441 15-Sep-2004 852.0 Residential 70 People’s Government

of Guangzhou City


of Guangzhou City


of Guangzhou City


of Guangzhou City


of Guangzhou City

G05-000419 30-Mar-2004 9,977.9 Residential 70 People’s Government

of Guangzhou City



sq.m. and 47 villa and townhouse units with a saleable gross floor area of approximately 9,110 sq.m. and 15

retail shops with a saleable gross floor area of approximately 1,416 sq.m. have been contracted to be sold for the

total purchase price of RMB168,458,628. In arriving at our opinion on the capital value of the property, we have









the property.

(c) Pursuant to the Letter of Reply and Discussion on Main Planning and Design*


District, the permitted plot ratio of the Site is 1.4. The maximum allowed gross floor area of the


(d) Panyu Agile Co., the owner of the property, is a limited liability company established in accordance with


Zhen Trading Co. Ltd..

5. The total development costs (excluding land costs) incurred up to 30th September 2005 is RMB357,657,000

(excluding marketing and finance costs).* for identification purpose only


— IV-93 —












— IV-94 —



Capital value in


30th September

2005

(RMB)


units and car parking

spaces in District 5 of

Phase 1 and Phase 2,

South Lagoon

Guangzhou,


Baiyun District,

Guangzhou City,

Guangdong Province,


of China


saleable gross floor area of approximately

103,934 sq.m. and 435 car parking spaces.

As advised by the Group, District 5 of Phase 1

and Phase 2 of South Lagoon Guangzhou (‘‘the






103,934 sq.m. and there is no non-saleable gross

floor area.


December 2006.








development comprising apartments, retail shops

and ancillary facilities (including clubhouse,

swimming pool and school, etc.) As advised by


phases (Phase 1 and 2) with a total expected

gross floor area of approximately 270,711 sq.m.

There are 5 stages in Phase 1 (Stage 1, 2, 3, 4

and 5).









landscaping and greenery purpose. (refer to Note

4, 5, 6).





development.

327,700,000

(100% interests

attributable to the

Group:

RMB327,700,000)


— IV-95 —

Notes:



RMB21,635,430 :

State-owned Land

Use Rights Grant

Contract No.

Date of

Contract

Subject

Site Area User Term (year) Grantor

(sq.m.)

(2001) 041 28-May-2001 195,007.00 Residential/

Commercial

Residential: 70

Commercial,

tourism and

entertainment: 40

Other: 50

Land Bureau of

Guangzhou




State-owned Land

Use Rights

Certificate No.

Date of

Issuance

Subject

Site Area User

Term (year)/

Date of Expiry Issuer

(sq.m.)

(2001) 161 28-May-2001 195,007.00 Residential/

Commercial

Residential: 70

Commercial,

tourism and

entertainment: 40

Other: 50


and Housing

Management Bureau


3. Portions of the property comprising 74 apartment units with s saleable gross floors area of approximately 10,785









has been granted with the allocated land with site area of approximately 110,907 sq.m (166.4 mu).





Land.



— IV-96 —






the Site.


the property.


10,785 sq.m. have been contracted to be sold. The Group is entitled to receive from the purchasers the

sale proceeds of those portions in accordance with the transfer contracts but the Group may not mortgage

those portions without the purchasers’ approval.







(f) Development of South Lagoon Guangzhou is undertaken by Guangzhou Agile Co., a cooperative joint























— IV-97 —



Capital value in


30th September

2005

(RMB)

25. Various villas and

townhouse units,

commercial block and

complex block in

Reserved

Land No. 1,


Nanhu Fun Park,

Tonghe Road,

Guangzhou Boulevard

North,

Guangzhou City,

Guangdong Province,


of China

The property comprises 138 villa and townhouse


approximately 28,827 sq.m. and 33 retail shop



As advised by the Group, portions of Reserved

Land No. 1 of Royal Hillside Villa (‘‘the






32,131 sq.m. and the non-saleable gross floor

area is approximately 2,760 sq.m..


December 2005.



as advised by the Group is RMB3,481,700

(excluding marketing, finance and other indirect

costs).




comprising apartments, villas, townhouses and



is planned to be developed on 3 parcel of land

(No. 1, 2 and 3) with a total expected gross floor

area of approximately 198,940 sq.m..






earliest one commencing on 2nd February 2005

and the latest one expiring on 1st February 2075.


development.

250,600,000

(100% interests

attributable to the

Group:

RMB250,600,000)


— IV-98 —

Notes:



State-owned Land

Use Rights Grant

Contract No.

Date of

Contract

Subject


(sq.m.) (year)

(2004) 324 31-Aug-2004 82,931 Residential/

Commercial

Residential: 70

Commercial,

tourism and

entertainment: 40

Other: 50

Guangzhou Land,

Resources and Housing

Management Bureau

(2004) 303 31-Aug-2004 51,585 Residential 70 Guangzhou Land,


Management Bureau


2. Pursuant to the following State-owned Land Use Rights Certificate the land use rights of the Site have been


State-owned Land

Use Rights

Certificate No.

Date of

Issuance

Subject

Site Area User

Term (year)/

Date of Expiry Issuer

(sq.m.)

(2005) 12 2-Feb-2005 39,811 Residential Residential: 70

Commercial,

tourism and

entertainment: 40

Other: 50

People’s Government of

Guangzhou

(2005) 43 15-Mar-2005 82,931 Residential 70 People’s Government of

Guangzhou


3. Portions of the property comprising 30 villa and townhouse units with a saleable gross floor area of

approximately 6,518 sq.m. have been contracted to be sold for the total purchase price of RMB82,659,539. In

arriving at our opinion on the capital value of the property, we have taken into account of the purchase price of

those portions.






the Site.


the property.

(c) Portions of the property comprising 30 villa and townhouse units with a saleable gross floor area of

approximately 6,518 sq.m. have been contracted to be sold. The Group is entitled to receive from the

purchasers the sale proceeds of those portions in accordance with the transfer contracts but the Group may

not mortgage those portions without the purchasers’ approval.


— IV-99 —





1 issued by Guangzhou City Planning Bureau Baiyu District, the permitted plot ratio of Reserved Land

No. 1 of the Development is 0.996. The maximum allowed gross floor area of portion 1 of the

Development is approximately 92,818.7 sq.m.. Pursuant to the Letter of Application for Design and

Planning Documents* ( ) No. (2001) 37 issued by Guangzhou City Planning

Bureau, the permitted plot ratio of Reserved Land No. 2 of the Development is 2.5. The maximum allowed

gross floor area of portion 2 of the Development is approximately 111,059 sq.m.. The maximum allowed

gross floor area of the whole development is approximately 203,877.7 sq.m..

(f) Development of Royal Hillside Villa is undertaken by Guangzhou Agile Co. and Baiyun Agile Co. is a

cooperative joint venture company which is owned by Pomaine International Limited and Guangdong

Lingnan Economic Development Ltd. (‘‘Guangdong Lingnan’’), a PRC company. Pomaine International

Limited agreed to contribute the registered capital in cash which is required to be fully paid by June 2006.

Guangdong Lingnan contributed land use rights for the property with a site area of 51,585.0 sq.m.

Under its joint venture agreement and articles of association. Baiyun Agile Co. shall pay a fixed amount

of RMB15,470,000 to Guangdong Lingnan which has already been paid. After such payment, Guangdong

Lingnan shall no longer participate in the profit distribution of Baiyun Agile Co.















— IV-100 —



Capital value in


30th September

2005

(RMB)




in Phase 2 of District

1-E, Districts 3 and

5B,

Nanhai Majestic

Garden,

Suiyan Road,

Nanhai District,

Foshan City,

Guangdong Province,


of China

The property comprises 1,334 apartment units




car parking spaces.

As advised by the Group, Phase 2 of District 1-E,

Districts 3 and 5B of Nanhai Majestic Garden


area of approximately 101,202 sq.m. are planned

to be developed with a total gross floor area of



177,703 sq.m.


December 2006.









townhouses, retail and ancillary facilities



advised by the Group. it is planned to be


5) with a total expected total gross floor area of










development.

473,100,000

(100% interests

attributable to the

Group:

RMB473,100,000)


— IV-101 —

Notes:



RMB41,400,510.


Rights Grant Contract

No.

Date of

Contract

Subject

Site Area User Term Transferor

(sq.m.) (year)




(2002) 00141 29-Jul-2002 33,320.00 Residential 70 Land Bureau of Nanhai City










Foshan, the land use rights of the Site have been granted to the Group.

State-owned Land

Use Rights

Certificate No. Date of Issuance

Subject

Site Area User

Date of

Expiry Issuer

(sq.m.)

(2003) 030174 8-Dec-2003 462,340.43 Residential 21-Mar-2071 Land Bureau of Foshan

(2003) 030173 8-Dec-2003 138,889.27 Residential 1-Mar-2071 Land Bureau of Foshan


3. Pursuant to the State-owned Land Use Rights Tenancy Agreement entered into between the Group and Nan Bian



approximately 20 sq.m. is leased to the Group as playground for primary school for 50 years from 1st August

2004 to 31st July 2054 at a total rental of RMB48,000.


sq.m and 43 retail shops with a saleable gross floor area of approximately 4,752 sq.m. have been contracted to

be sold for the total purchase price of RMB160,376,740. In arriving at our opinion on the capital value of the

property, we have taken into account of the purchase price of those portions.








the property.



— IV-102 —


27,920 sq.m. and 43 retail shop units with a saleable gross floor area of approximately 4,752 sq.m. have

been contracted to be sold. The Group is entitled to receive from the purchasers the sale proceeds of those

portions in accordance with the transfer contracts but the Group may not mortgage those portions without

the purchasers’ approval.




(e) Pursuant to the approved plan of the Development, the permitted plot ratio of the Site is 1.43. The

maximum allowed gross floor area of the whole Development is 859,654.5 sq.m.

(f) Nanhai Agile Co., the owner of the property, is a limited liability company established in accordance with















— IV-103 —



Capital value in


30th September

2005

(RMB)


units and retail shop

units in Blocks A, B,

C, D, E and H, Nanhai

Majestic Metropolis,

Suiyan Road, Nanhai

District, Foshan City,

Guangdong Province,


of China


a saleable gross floor area of approximately

18,577 sq.m. and 234 retail units with a saleable


As advised by the Group, Blocks A, B, C, D, E

and H of Nanhai Majestic Metropolis (‘‘the






61,673 sq.m.


December 2005.





The property has a site area of approximately

48,949 sq.m. (‘‘the Site’’) and as advised by the

Group, the property is planned to be developed

with total gross floor area of approximately

61,673 sq.m..

The Development (of which the property set out

in this property valuation form part) is a large-

scale retail development. As advised by the

Group, it is planned to be developed in 6 blocks

(Blocks A, B, C, D, E and H).



September 2004 and expiring on 3rd August

2074.


development.

242,500,000

(100% interests

attributable to the

Group:

RMB242,500,000)


— IV-104 —

Notes:

1. Pursuant to the following State-owned Land Use Rights Grant Contract entered into between Land and Resources

Bureau of Nanhai City and the Group, the land use rights of the Site for residential use have been granted to the

Group at a consideration of RMB4,405,440.

State-owned Land

Use Rights Grant

Contract No.

Date of

Contract

Subject


(sq.m.) (year)

(2004) 00366 4-Aug-2004 48,949.29 Residential 70 Land and Resources

Bureau of Nanhai City


2. Pursuant to the following State-owned Land Use Rights Certificate issued by Land Bureau of Foshan, the land

use rights of the Site for residential use have been granted to the Group.

State-owned Land

Use Rights

Certificate No.

Date of

Issuance

Subject

Site Area User

Date of

Expiry Issuer

(sq.m.) (year)

(2004) 030150 24-Sep-2004 48,949.29 Residential 3-Aug-74 Land Bureau of

Fo Shan


3. Portions of the property comprising 40 retail units with a saleable gross floor area of approximately 6,974 sq.m.

have been contracted to be sold for the total purchase price of RMB38,403,618. In arriving at our opinion on the

capital value of the property, we have taken into account of the purchase price of those portions.






the Site.


the property.

(c) Portions of the property comprising 40 retail shop units with a saleable gross floor area of approximately




(d) Nanhai Agile Co., the owner of the property, is a limited liability company established in accordance with

the laws of the PRC, in which the Group has a 100% equity interest.







— IV-105 —




iii. Construction Land Use Planning Permit N/A





— IV-106 —



Capital value in


30th September

2005

(RMB)




in Phase 2 of District

C, Huadu Flower Paris,


Xindu Boulevard

South, Xinhua Town,

Huadu District,

Guangzhou City,

Guangdong Province,


of China

The property comprises 523 apartment units




car parking spaces.

As advised by the Group, Phase 2 of District C

of Huadu Flower Paris (‘‘the Development’’)







1,129 sq.m..


June 2006.


development costs to completion for the

property is RMB119,824,100 (excluding

marketing, finance and other indirect costs).




comprising villas, townhouses and ancillary

facilities (including clubhouse, swimming pool

and kindergarten etc.) As advised by the Group,

it is planned to be developed in 2 phases (Phase

1 and Phase 2) with a total expected gross floor

area of approximately 207,690 sq.m..



157,420 sq.m. (‘‘the Site’’).



with the earliest one commencing on 23rd July

2002 and the latest one expiring on

19th August 2074.


development.

165,900,000

(98% interests

attributable to the

Group:

RMB162,582,000)


— IV-107 —

Notes:

1. Pursuant to the following State-owned Land Use Rights Transfer Contracts entered into between Guangzhou City

Huadu District Airport Development Company Limited and the Group, the land use rights of the Site for


RMB100,001,550.



(sq.m.) (year)

(2000) No. 002 & Supplementary 28-Oct-2000 234,399.93 Residential: 70


entertainment: 40

Other: 50


* This Land Grant Contract covers part of the site under Huadu Flower Paris.

2. Pursuant to the following State-owned Land Use Rights Certificates, the land use rights of the Site, have been


State-owned Land

Use Rights

Certificate No. Date of issuance Subject Site Area Term

(sq.m.) (year)

(2002) 11034802 23-Jul-2002 67,137.36 Residential: 70


Other: 50

(2004) 720133 4-Apr-2004 49,918.52 Residential: 70


Other: 50

(2004) 720510 20-Aug-2004 36,541.50 Residential: 70


Other: 50

(2004) 720511 20-Aug-2004 3,820.75 Residential: 70


Other: 50










the Site.


— IV-108 —


the property.


28,717 sq.m have been contracted to be sold. The Group is entitled to receive from the purchasers the sale





















— IV-109 —



Capital value in


30th September

2005

(RMB)

29. Various villa and

townhouse units in

Phase 1, Huadu

Majestic Garden,

Tiangui Road East,

Huadu District,

Guangzhou City,

Guangdong Province,


of China

The property comprises 180 villas and

townhouse units with saleable gross floor area


As advised by the Group, Phase 1 of Huadu

Majestic Garden (‘‘the Development’’)







2,101 sq.m..


December 2005.


development costs to completion for the

property is RMB37,410,500 (excluding

marketing, finance and other indirect costs).




comprising apartments, retail shops, villas,


clubhouse, swimming pool, school, etc.). As


developed in 2 phases (Phases 1 and 2) with a


219,112 sq.m..



154,081 sq.m. (‘‘the Site’’).




March 2001 and the latest one expiring on 31st

December 2068.


development.

218,900,000

(98% interests

attributable to the

Group:

RMB214,522,000)


— IV-110 —

Notes:

1. Pursuant to the following State-owned Land Use Rights Transfer Contracts entered into between Guangzhou City

Huadu District Real Estate Company and the Group, the land use rights of the Site have been transferred to the



Contract No. Date of Contract

Subject

Site Area Term

(sq.m.) (year)



entertainment: 40

Other: 50





Certificate No. Date of issuance

Subject

Site Area Term

(sq.m.) (year)

(2001) 11034527 29-Mar-2001 66,388.86 Residential: 70


entertainment: 40

Other: 50

(2005) 720982 21-Mar-2005 64,085.57 Residential: 70


entertainment: 40

Other: 50

(2005) 720981 21-Mar-2005 23,606.35 Residential: 70


entertainment: 40

Other: 50










the property.

(c) The Group has the building ownership to the property and is entitled to receive the sale proceeds of the


(d) Pursuant to the approved plan of the Development issued by Guangzhou City Planning Bureau Huadu

District, the permitted plot ratio of phase 1 of the Development is 1.068. The maximum allowed gross

floor area of the phase 1 of the Development is approximately 170,004.2 sq.m.. Pursuant to Notice on


— IV-111 —

Announcement of Benchmark Land Price of Guangzhou State-owned Land Use Rights*

( ) No. (2004) 545 issued by Guangzhou City Land

Resources and Housing Management Bureau dated 9th August 2004 the permitted plot ratio for

residential and commercial land in Huadu District is 2.2. As confirmed by the Group, apart from phase 1

of the Development, the maximum allowed gross floor area of the Development for future development is

approximately 51,934 sq.m.. The total maximum allowed gross floor area of the Development is

approximately 221,938.2 sq.m..














v. Pre-sale Permit N/A




— IV-112 —


Group VI — Property interests held by the Group for future development in the PRC


Capital value in


30th September

2005

(RMB)

30. Phase 2 of District

A01, Districts A03,

A04, A07, A10, A11,

Phases 2 and 3 of

District A12, District

A12-02 and a parcel of

land, La Cite

Greenville, Changjiang

Tourist Spot,

Zhongshan City,

Guangdong Province,


of China

The property comprise a site with an area of

approximately 995,199 sq.m.. Its total expected

gross floor area of the buildings and structures

to be constructed on the property is

approximately 1,509,754 sq.m. which comprise

a number of villa and apartment blocks, retail

shop units and ancillary facilities.

La Cite Greenville (‘‘the Development’’) (of

which the property, Property 4 and Property 17

set out in this property valuation form part) is a

large-scale development comprising apartments,

villas, townhouses, retail shops, car parking


clubhouse, primary school, kindergarten, water

reservoir and swimming pool etc.) As advised

by the Group, it is planned to be developed in

12 districts (Districts A01–12) with a total

expected gross floor area of approximately

2,055,877 sq.m..

The Development occupies various

pieces of land with a total site area of

approximately 1,960,274 sq.m. (‘‘the Site’’)

(which does not include the land leased by the

Group from Zhongshan Torch Development

Zone Gong Hua Equity Economic Cooperation*

( ) and the

Railway Land described below).

In addition to the site, there is a parcel of land

with the site area of approximately 179,334

sq.m., is leased by the Group from Zhongshan

Torch Development Zone Gong Hua Equity

Economic Cooperation*

( ) for a term

of 70 years from 18th March 2005 to 17th

March 2075. This parcel of land serves as

ancillary greenery to the development. (refer to

Note 3)



(195.5 mu) located at the control line of railway

(‘‘the Railway Land’’) and as advised by the

Group, it is planned for construction of railway

purpose. (refer to Notes 4 & 5)




February 2001 and the latest one expiring on

2nd November 2068.

The property is

vacant.

2,868,500,000

(100% interests

attributable to the

Group:

RMB2,868,500,000)



— IV-113 —

Notes:


State-owned Land Resources and Real Estate Management Bureau and Zhongshan Group Co., the land use rights

of the Site have been transferred to the Group at a consideration of RMB389,872,730.


Transfer Contract No. Date of Contract Subject Site Area Term

(sq.m.) (year)

(2000) 142 11-Dec-2000 1,784,002.92 70

(2000) 142 supplementary contract 28-Dec-2000 108,587.20 70

(2003) Kai 201 24-Dec-2003 58,035.49 70

(2002) Kai 122 31-Dec-2000 15,309.60 70





(sq.m.)

(2001) 150705 2-Mar-2001 64,950.5 11-Aug-2068

(2001) 150709 12-Feb-2001 32,674.0 2-Nov-2068

(2001) 150698 12-Feb-2001 33,019.3 11-Aug-2068

(2001) 150711 12-Feb-2001 31,766.4 7-Aug-2067

(2001) 150702 12-Feb-2001 66,153.8 5-Jul-2068

(2001) 150700 12-Feb-2001 65,016.4 7-Aug-2068

(2001) 150719 12-Feb-2001 65,863.9 9-Jun-2067

(2001) 150699 12-Feb-2001 64,922.4 12-Oct-2068

(2001) 150720 13-Feb-2001 33,300.8 6-Aug-2067

(2001) 150715 12-Feb-2001 65,255.2 18-Aug-2068

(2003) 150729 13-Feb-2001 66,225.2 19-Mar-2068

(2003) 150696 12-Feb-2001 65,482.4 31-Jan-2068

(2003) 150706 12-Feb-2001 36,130.0 7-Aug-2067

(2003) 150713 12-Feb-2001 65,506.6 9-Jun-2068

(2001) 150697 12-Feb-2001 32,672.3 10-Jun-2067

(2001) 150726 12-Feb-2001 32,672.2 9-Aug-2067

(2003) 150724 13-Feb-2001 65,389.2 9-Jun-2067

(2003) 150718 12-Feb-2001 63,225.6 9-Jun-2067

(2005) 150704 12-Feb-2001 5,188.7 4-Sep-2068

(2005) 150728 13-Feb-2001 65,589.7 9-Aug-2067

(2005) 150730 13-Feb-2001 32,649.6 9-Jun-2067

(2001) 150717 12-Feb-2001 32,844.8 12-Nov-2067

(2003) 150125 23-Jan-2003 44,532.2 7-Jun-2067

(2001) 150716 12-Feb-2001 46,803.9 15-Apr-2068

(2003) 150124 23-Jan-2003 42,291.8 8-Jun-2067

(2003) 150122 23-Jan-2003 58,233.0 8-Sep-2068

(2001) 150701 12-Feb-2001 65,391.1 9-Jun-2067

(2001) 150708 12-Feb-2001 65,419.1 8-Sep-2067

(2001) 150723 13-Feb-2001 65,900.6 7-Jun-2067

(2001) 150714 12-Feb-2001 65,931.3 7-Jul-2068

(2003) 151440 15-Aug-2003 48,486.2 7-Aug-2068

(2001) 150725 13-Feb-2001 65,257.6 7-Jun-2068

(2001) 150722 13-Feb-2001 64,455.6 17-Oct-2068

(2003) 150126 23-Jan-2005 21,347.2 7-Jun-2067

(2003) 150121 13-Feb-2003 7,569.2 8-Sep-2067

(2003) 150123 23-Jan-2003 18,091.9 7-Aug-2067


— IV-114 —


(sq.m.)

(2003) 151441 15-Aug-2003 17,616.1 7-Aug-2068

(2003) 150095 16-Jan-2003 15,309.6 19-Feb-2068

(2003) 151849 8-Oct-2003 52,551.4 5-Jul-2068

(2005) 150137 1-Feb-2005 2,441.5 17-Oct-2068

(2005) 150138 1-Feb-2005 13,228.1 17-Oct-2068

(2005) 150139 1-Feb-2005 41,277.2 17-Oct-2068

(2005) 150140 1-Feb-2005 17,745.5 17-Oct-2068

(2005) 150141 1-Feb-2005 33,895.8 17-Oct-2068


























(b) The following parts of the Site are subject to mortgages:

Corresponding State-owned

Land Use Rights Certificate

number Encumbrance No. Date of Issuance Bank

(2001) 150708 (2005) 4269 28-Sep-2005 Bank of China Holdings

Limited, Zhongshan

Branch


Limited, Zhongshan

Branch


Limited, Zhongshan

Branch



— IV-115 —

Corresponding State-owned

Land Use Rights Certificate


(2001) 150697 (2004) 0317 5-Jan-2004 Agricultural Bank of

China, Nanhai City Yanbu

Branch

(2001) 150700 (2004) 0316 5-Jan-2004 Agricultural Bank of

China, Nanhai City Yanbu

Branch

(2001) 150696 (2004) 8400 4-Nov-2004 Industrial and Commercial

Bank of China, Zhongshan

Branch


Limited, Zhongshan

Branch

(2001) 150701 (2004) 1709 26-Jun-2003 Industrial and Commercial


Branch



Branch



Branch


Limited, Zhongshan

Branch



Branch


Limited, Zhongshan

Branch


Limited, Zhongshan

Branch


Limited, Zhongshan

Branch

(2005) 150139 (2005) 1260 25-Mar-2005 Industrial and Commercial


Branch

(2005) 150141 (2005) 1259 25-Mar-2005 Industrial and Commercial


Branch

(c) As confirmed by the Group, the permitted plot ratio of the Site is 1.1. The maximum allowed gross floor



— IV-116 —



(e) Tenancy agreement entered into between the Group and Zhongshan Torch Development Zone Gong Hua

Equity Economic Cooperation* ( ) dated 18th March 2005 is binding on

both parties.





iv. Construction Works Planning Permit N/A





— IV-117 —



Capital value in


30th September

2005

(RMB)

31. Gua Deng Hill site,

Area A site,

San Jiao Market site

and a site next to Qiu

Zi Playground

La Nobleu,

Changjiang Tourist

Spot,

Zhongshan City,

Guangdong Province,


of China

The property comprises a site with an area of

approximately 178,009 sq.m. and the total

expected gross floor area of the buildings and

structures to be constructed on the property is


La Nobleu (‘‘the Development’’) (of which the

property and Property 18 set out in this property

valuation form part) is one of the development

district of La Cite Greenville with the Guangdong

Hill Land Lot can enjoy view of golf course. As










and the latest one expiring on 30th May 2074.

The property is

vacant.

329,300,000

(100% interests

attributable to the

Group:

RMB329,300,000)

Notes:

1. Pursuant to the following State-owned Land Use Rights Transfer Contracts entered into between Zhongshan

Agile Group Company or Zhongshan Agile Changjiang Golf Club and Greenville Co., the land use rights of the

Site have been transferred to the Group at a consideration of RMB77,534,604.


Certificates of the transferor

Subject

Site Area Contract Date

Date of

Expiry Transferor

(sq.m.)

2001 (213456) 7,185.40 15-Dec-2004 14-Mar-2068 Zhongshan Agile Group

Company

2003 (211252) 9,827.70 15-Dec-2004 9-Oct-2073 Zhongshan Agile Group

Company


Changjian Golf Club

2002 (213899) 18,418.90 15-Dec-2004 24-Dec-2068 Zhongshan Agile Group

Company






— IV-118 —


Certificates of the transferor

Subject

Site Area Contract Date

Date of

Expiry Transferor

(sq.m.)








Company


Company




Land Use Rights Certificates Number

Date of

Issuance Date of expiry

Subject

Site Area

(sq.m.)

(2005) 210900 4-Apr-2005 14-Mar-2068 7185.4

(2005) 210902 4-Apr-2005 9-Oct-2073 9827.7

(2004) 210209 16-Dec-2004 22-Dec-2068 29999.8

(2004) 210212 16-Dec-2004 24-Dec-2068 18418.9

(2004) 210223 20-Dec-2004 30-May-2073 28554.4

(2004) 154909 24-Dec-2004 14-Oct-2073 39402.1

(2004) 210218 20-Dec-2004 30-May-2074 2369.7

(2004) 154910 13-Jan-2005 14-Oct-2043 32353.6

(2004) 210215 20-Dec-2004 23-Dec-2068 34141.6

(2004) 154908 22-Dec-2004 19-Apr-2068 40252.79

(2004) 154907 22-Dec-2004 19-Apr-2068 38182.8



— IV-119 —








Corresponding

State-owned Land

Use Rights

Certificate


(2004) 210212 (2005) 1918 28-Sep-2005 Bank of China Holdings Limited,

Zhongshan Branch


Zhongshan Branch


Zhongshan Branch


Zhongshan Branch


Zhongshan Branch


Zhongshan Branch


Zhongshan Branch

(c) Pursuant to the the Construction Works Planning Permit of La Nobleu, the maximum allowed gross floor

area is approximately 46,403 sq.m.. Pursuant to Regulation on Zhongshan Urban Planning Technology*

( ), the permitted plot ratio of middle high and high rise building in grade II land

in new district is 1.7. As confirmed by the Group, apart from La Nobleu, the permitted plot ratio of the

development is 1.7 and the maximum allowed gross floor area for future development in the Development

is approximately 302,615.28 sq.m.. Therefore, the total maximum allowed gross floor area of the

Development is approximately 349,018.28 sq.m..





ii. State-owned Land Use Rights Transfer Contract Yes

iii. Construction Land Use Planning Permit N/A






— IV-120 —



Capital value in


30th September

2005

(RMB)

32. Various Reserved Land

Parcels and Group 4 of

Phase 1,

Metro Agile

Zhongshan,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


of China






Metro Agile Zhongshan (‘‘the Development’’) (of




villas, townhouses, retail shops, car parking


clubhouse and swimming pool etc.). As advised

by the Group, it is planned to be developed in 3

phases (phases 1, 3 and 5) with a total expected








and the latest one expiring on 27th December,

2073.

The property is

vacant.

570,900,000

(100% interests

attributable to the

Group:

RMB570,900,000)

Notes:


been granted to the Group at a consideration of RMB79,052,911.

Land Grant Contract

Number

Subject Site

Area

Date of

contract Date of expiry Transferor/Grantor

(sq.m.)










— IV-121 —

Land Grant Contract

Number

Subject Site

Area

Date of


(sq.m.)









1998-14062 23,313.0 21-Jul-1998 20-Jul-2068 Zhongshan Land and Resource Bureau



















— IV-122 —

Land Grant Contract

Number

Subject Site

Area

Date of


(sq.m.)

*2003–5285 23,512.9 21-Dec-2003 20-Dec-2073 Zhongshan Land and Resource Bureau




Metropolis.




Date of

Issuance

Subject

Site Area

Term (year)/

Date of

Expiry

(sq.m.)

(2003) 312327 10-Oct-2003 28,973.10 9-Jun-2068

(2003) 312329 8-Dec-2003 8,926.60 20-May-2068

(2003) 312326 8-Dec-2003 3,729.10 8-Jun-2068

(2003) 312324 8-Dec-2003 9,116.10 8-Jul-2068

(2003) 312328 8-Dec-2003 16,912.10 20-Jul-2068

(2003) 312323 8-Dec-2003 3,684.00 20-May-2068

(2003) 312325 8-Dec-2003 4,692.60 20-Jul-2068

(2004) 313674 28-Jun-2004 13,661.90 8-May-2068

(2004) 313675 28-Jun-2004 32,803.40 29-May-2068

(2004) 313673 28-Jun-2004 32,959.80 22-Apr-2068

(2004) 313681 28-Jun-2004 13,240.20 18-Jun-2068

(2003) 312474 26-Dec-2003 6,400.60 9-Jun-2068

(2003) 312487 26-Dec-2003 22,216.70 18-May-2068

(2003) 312483 26-Dec-2003 544.40 8-May-2068

(2003) 312481 26-Dec-2003 628.50 8-May-2068

(2003) 312484 26-Dec-2003 234.00 8-May-2068

(2003) 312482 26-Dec-2003 4,432.60 17-May-2068

(2003) 312486 26-Dec-2003 4,489.10 17-May-2068

(2003) 312479 26-Dec-2003 714.60 17-May-2068


— IV-123 —


Date of

Issuance

Subject

Site Area

Term (year)/

Date of

Expiry

(sq.m.)

(2003) 312480 26-Dec-2003 17,238.90 25-Jul-2068

(2003) 312478 26-Dec-2003 27,444.10 18-May-2068

(2003) 312475 26-Dec-2003 19,366.30 28-May-2068

(2003) 312477 26-Dec-2003 13,600.50 25-May-2068

(2004) 313679 28-Jun-2004 15,985.90 28-May-2068

(2003) 314391 31-Dec-2003 457.20 27-Dec-2073

(2004) 310731 18-Jun-2004 3,431.30 20-Dec-2073

(2004) 310737 18-Jun-2004 3,759.10 20-Dec-2073

(2004) 310734 18-Jun-2004 1,479.10 20-Dec-2073

(2004) 310735 18-Jun-2004 704.60 20-Dec-2073

(2004) 310736 18-Jun-2004 1,568.60 20-Dec-2073

(2005) 313609 18-Aug-2005 42,550.90 28-Nov-2063

(2005) 313611 18-Aug-2005 1,222.80 2-Mar-2073

(2005) 313582 16-Feb-2005 2,658.60 13-Mar-2064

(2005) 312585 24-Jun-2005 4,130.90 13-Mar-2064

(2005) 311853 10-Jan-2005 31,899.60 29-Apr-2068

(2005) 311852 30-May-2005 32,676.20 19-Apr-2068









— IV-124 —


Corresponding

State-owned Land

Use Rights

Certificate

number

Encumbrance

number Date of Issuance

Date of

instrument Date of expiry Bank

(2003) 312487 (2004) 2301 10-Jun-2004 8-Jun-2004 8-Jun-2007 Industrial and

Commercial

Bank of China,

Zhongshan

Branch


Commercial

Bank of China,

Zhongshan

Branch


Commercial

Bank of China,

Zhongshan

Branch


Commercial

Bank of China,

Zhongshan

Branch

(c) Pursuant to Regulation on Zhongshan Urban Planning Technology* ( ), the plot

ratio of middle high and high rise building in grade II land in new district is 1.7. As confirmed by the

Group, the permitted plot ratio of the Site is 1.7. The maximum allowed gross floor area of the whole


(d) Ever Creator Co., the owner of the property, is a limited liability company established in accordance with











— IV-125 —



Capital value in


30th September

2005

(RMB)

33. Block D of Phase 2,

Metropolis,

Wenchang Road,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


of China


approximately 16,133 sq.m.. It is expected to be

developed into a single retail block, with a total


structures to be constructed on the property of


Metropolis (‘‘the Development’’) (of which the

property, Property 6 and Property 20 set out in

this property valuation form part) is a large-scale




113,264 sq.m..







the latest one expiring on 20th December 2043.

The property is

vacant.

41,600,000

(100% interests

attributable to the

Group:

RMB41,600,000)

Notes:

1. Pursuant to the following State-owned Land Use Rights Grant Contracts granted by Land and Resource Bureau of

Zhongshan, the land use rights of the Site have been granted to the Group at a consideration of RMB12,504,585.


Grant Contract No.

Date of

Contract

Subject

Site Area User

Term (year)/

Date of expiry

(sq.m.)







* This Land Grant Contract covers part of the site with site area of 12,570.2 sq.m. for the development of

Metro Agile Zhongshan.


— IV-126 —

2. Pursuant to the following State-owned Land Use Rights Certificates, the land use rights of the site for

commercial/residential use, have been granted to the Group.


Certificate No.

Date of

Issuance

Subject

Site Area User Date of Expiry

(sq.m.) (year)













the Site.

(b) Pursuant to the approved plan of the Development, the permitted plot ratio of the Site is 1.57. The


(c) Ever Creator Co., the owner of the property, is a limited liability company established in accordance with










— IV-127 —



Capital value in


30th September

2005

(RMB)

34. Phase 4 and

kindergarten site,

Grand Garden,

Boai Road,

Eastern District,

Zhongshan City,

Guangdong Province,


of China






Grand Garden (‘‘the Development’’) (of which the

property and Property 9 set out in this property

valuation form part) is a medium-scale


car parking spaces and ancillary facilities

(including clubhouse and kindergarten etc.) As


developed in 4 phases (Phase 1, 2, 3 and 4) with


157,187 sq.m..






earliest one commencing on 17th April 2001 and

the latest one expiring as at 26th March 2071.

Portion of the

property is

temporarily occupied

by the Group as sales

office and

engineering

department office

which are to be

demolished. The

remaining portion of

the property is

vacant.

52,300,000

(100% interests

attributable to the

Group:

RMB52,300,000)

Notes:

1. Pursuant to the following State-owned Land Use Rights Grant Contracts entered into between Zhongshan City

Land Resources Bureau and the Group, the land use rights of the Site for residential purpose have been granted

to the Group at a consideration of RMB72,280,850 :


Grand Contract No.

Date of

Contract

Subject


(sq.m.)


Resources Bureau


Resources Bureau


Resources Bureau



— IV-128 —



State-owned Land

Use Rights

Certificate No.

Date of

Issuance

Subject

Site Area User

Date of

Expiry Issuer

(sq.m.)

213454 17-Apr-2001 33,333.30 Residential/

Commercial


& Housing

Management Bureau

213453 17-Apr-2001 29,707.90 Residential/

Commercial


& Housing

Management Bureau

213455 17-Apr-2001 33,333.60 Residential/

Commercial


& Housing

Management Bureau







the Site.

(b) Pursuant to the approved plan of the Development, the permitted plot ratio of the Site is 1.6. The


(c) Majestic Garden Co., the owner of the property, is a limited liability company established in accordance










— IV-129 —



Capital value in


30th September

2005

(RMB)

35. Phase 3, Star Palace,

Boai Road,

Eastern District,

Zhongshan City,

Guangdong Province,


of China


approximately 36,596 sq.m.. It is expected to be


of the buildings and structures to be constructed

on the property of approximately 53,997 sq.m..

Star Palace (‘‘the Development’’) (of which the

property, Property 10 and Property 21 set out in

this property valuation form part) is a medium-

scale development comprising apartments, retail




to be developed in 3 phases (Phase 1, 2 and 3)

with a total expected gross floor area of









The property is

vacant.

97,200,000

(100% interests

attributable to the

Group:

RMB97,200,000)

Notes:




State-owned Land Rights

Transfer Contract No.

Date of

Contract

Subject

Site Area User Transferrer

(sq.m.)


Resources Bureau


Resources Bureau



Management

Company Limited



— IV-130 —



State-owned Land

Use Rights

Certificate No.

Date of

issuance

Subject

Site Area User

Date of

Expiry Issuer

(sq.m.)

(2001) 213791 16-May-2001 66,909.90 Residential/

Commercial


& Housing

Management Bureau

(2001) 213792 16-May-2001 37,076.80 Residential/

Commercial


& Housing

Management Bureau

(2004) 210424 27-Apr-2004 2,666.60 Residential/

Commercial


People’s Government

(2004) 210425 27-Apr-2004 5,502.10 Residential/

Commercial


People’s Government







the Site.

(b) The permitted plot ratio of the Site is 1.96. The maximum allowed gross floor area of the whole


(c) Majestic Garden Co., the owner of the property, is a limited liability company established in accordance










— IV-131 —



Capital value in


30th September

2005

(RMB)

36. Phase 2 of District

A02, reserved land and

kindergarten site of

District A03, portion

of District A04,

Districts A05, A07,

A09 and A10,

Agile Garden

Guangzhou,

Nanda Road,

Nancun Town,

Guangzhou City,

Guangdong Province,


of China


approximately 541,056 sq.m.. It is expected to

be developed with a total expected gross floor

area of the buildings and structures to be

constructed on the property of approximately

1,121,496 sq.m..

Agile Garden Guangzhou (‘‘the Development’’)

(of which the property, Property 12 and



comprising apartments, retail, villas,


clubhouse, swimming pool, kindergarten,

primary school and commercial street, etc.) As


developed in 10 districts (Districts 1–10) with a


1,846,813 sq.m..



1,518,416 sq.m. (‘‘the Site’’).




November 2001 and the latest one expiring on

17th March 2074.

Phase 2 of District

A02 is currently

occupied by the

Group as a temporary

golf course.

Remaining parts of

the property is

vacant.

1,995,400,000

(98% interests

attributable to the

Group:

RMB1,955,492,000)

Notes:



the Site have been granted to the Group at a consideration of RMB124,178,985 :


Grant Contract No.

Date of

Contract

Subject

Site Area User Term

(sq.m.) (year)

(2003) 060 31-Dec-2003 852.20 Residential 70

(2003) 061 31-Dec-2003 32,576.60 Residential 70

(2003) 062 31-Dec-2003 45,187.80 Residential 70

(2003) 063 18-Mar-2004 9,977.90 Residential 70



(2003) 058 31-Dec-2003 1,841.50 Residential 70


— IV-132 —


Grant Contract No.

Date of

Contract

Subject

Site Area User Term

(sq.m.) (year)

(2003) 059 31-Dec-2003 4,384.70 Residential 70

(2001) 328 8-Nov-2001 424,477.00 Residential 70

(2002) 076 30-Mar-2002 566,391.00 Residential 70







Date of

Issuance

Subject Site


(sq.m.) (year)

(2001) No. 210 14-Nov-2001 424,477.0 Not specified 70

(Residential)

40

(Commercial)

50

(Other Uses)


owned Land Resources

and Real Estate

Management Bureau

G05-000169 23-Nov-2001 211,381.15 Residential 70 People’s Government of

Guangzhou City Panyu

District

G05-000170 23-Nov-2001 128,212.6 Residential 70 People’s Government of

Guangzhou City Panyu

District

G05-000400 12-Dec-2003 418,336.7 Composite 69 People’s Government of

Guangzhou City

G05-000401 12-Dec-2003 148,054.4 Composite 69 People’s Government of

Guangzhou City

G05-000416 6-Feb-2004 73,007.0 Residential 69 People’s Government of

Guangzhou City

G05-000425 14-May-2004 20,127.0 Residential 70 People’s Government of

Guangzhou City

G05-000441 15-Sep-2004 852.0 Residential 69 People’s Government of

Guangzhou City

G05-000442 15-Sep-2004 1,842.0 Residential 69 People’s Government of

Guangzhou City


Guangzhou City


— IV-133 —



Date of

Issuance

Subject Site


(sq.m.) (year)


Guangzhou City


Guangzhou City

G05-000419 30-Mar-2004 9,977.9 Residential 69 People’s Government of

Guangzhou City








(b) Pursuant to the Letter of Reply and Discussion on Main Planning and Design*


District, the permitted plot plot ratio of the Site is 1.4. The maximum allowed gross floor area of the


(c) Panyu Agile Co., the owner of the property, is a limited liability company established in accordance with












— IV-134 —



Capital value in


30th September

2005

(RMB)

37. Districts B01, B02,

B03, B04, B05, B06,

B07, B08 and greenery

site of District B09

JiangBei Estate,

Caotang Village,

Nanda Road,

Nancun Town,

Guangzhou City,

Guangdong Province,


of China


approximately 624,701 sq.m. (‘‘the Site’’) and

the total expected gross floor area of the

buildings and structures to be constructed on

the property is approximately 791,638 sq.m.

The site is held under various State-owned Land

Use Rights Certificates for a term commencing

on 18th August 2005 and expiring on on 5th

April 2071.

The property is

currently vacant.

1,637,400,000

(98% interests

attributable to the

Group:

RMB1,604,652,000)

Notes:


been transferred to the Group at a consideration of RMB6,247,010.

Date of Contract

Subject


(sq.m.)

8-Feb-2001 339,209.00 Residential 70 Guangzhou Panyu District

Land Bureau

8-Feb-2001 285,492.00 Residential 70 Guangzhou Panyu District

Land Bureau


2. Pursuant to the following State-owned Land Use Rights Certificates, the Land Use Rights of the Site have been


State-owned Land

Use Rights

Certificate No.

Date of

Issuance

Subject

Site Area User

Date of

Expiry Issuer

(sq.m.)

G05-000490 18-Aug-2005 101,340.40 Residential 5-Apr-2071 The People’s Government

of Guangzhou City


of Guangzhou City


of Guangzhou City


of Guangzhou City


— IV-135 —

State-owned Land

Use Rights

Certificate No.

Date of

Issuance

Subject

Site Area User

Date of

Expiry Issuer

(sq.m.)


of Guangzhou City


of Guangzhou City


of Guangzhou City


of Guangzhou City


of Guangzhou City









Corresponding State-owned Land Use

Rights Certificate number

Encumbrance

number

Date of

Issuance Bank

G05-000490 &

G05-000493 &

G05-000494

200517387

200518107

200519008

13-Jul-2005

6-Sept-2005

14-Sept-2005

Industrial and Commercial

Bank of China, Panyu

Branch

G05-000491 &

G05-000495

200518685

200517630

13-Sept-2005

1-Sept-2005

Construction Bank of China,

Panyu Branch

G05-000492 &

G05-000497

200518534 1-Sept-2005 Agricultural Bank of China,

City South Branch

(c) The permitted plot ratio of the Site is 1.4. The maximum allowed gross floor area of the whole


(d) Panyu Agile Co., the owner of the property, is a limited liability company established in accordance with




— IV-136 —









— IV-137 —



Capital value in


30th September

2005

(RMB)

38. Portion of Reserved

Land No. 1 and

Reserved Land No. 2,


Nanhu Fun Park,

Tonghe Road,

Guangzhou Boulevard

North,

Guangzhou City,

Guangdong Province,


of China






Royal Hillside Villa (‘‘the Development’’) (of

which the property and Property 25 set out in this




clubhouse and swimming pool etc.). As advised

by the Group, it is planned to be developed on 3

parcel of land (No. 1, 2 and 3) with a total

expected gross floor area of approximately

198,940 sq.m..






earliest one commencing on 2nd February 2005

and the latest one expiring on 1st February 2075.

The property is

vacant.

466,700,000

(100% interests

attributable to the

Group:

RMB466,700,000)

Notes:



State-owned Land

Right Grant

Contract No.

Date of

Contract

Subject


(sq.m.) (year)

(2004) 324 31-Aug-2004 82,931.00 Residential/

Commercial

Residential: 70

Commercial,

tourism and

entertainment: 40

Other: 50

Guangzhou Land,


Management Bureau

(2004) 303 31-Aug-2004 51,585.00 Residential 70 Guangzhou Land,


Management Bureau



— IV-138 —

2. Pursuant to the following State-owned Land Use Rights Certificate the land use rights of the Site have been




Date of

Issuance

Subject

Site Area User Term Issuer

(sq.m.) (year)

(2005) 12 2-Feb-2005 39,811 Residential Residential: 70

Commercial,

tourism and

entertainment: 40

Other: 50

People’s

Government of

Guangzhou

(2005) 43 15-Mar-2005 82,931 Residential 40 People’s

Government of

Guangzhou







the Site.

(b) Pursuant to the Confirmation on Proposal of Adjustment to Plans* ( ) No. (2005)

1 issued by Guangzhou City Planning Bureau Baiyu District, the permitted plot ratio of Reserved Land

No. 1 of the Development is 0.996. The maximum allowed gross floor area of portion 1 of the

Development is approximately 92,818.7 sq.m.. Pursuant to the Letter of Application for Design and

Planning Documents* ( ) No. (2001) 37 issued by Guangzhou City Planning

Bureau, the permitted plot ratio of Reserved Land No. 2 of the Development is 2.5. The maximum allowed

gross floor area of portion 2 of the Development is approximately 111,059 sq.m.. The maximum allowed

gross floor area of the whole development is approximately 203,877.7 sq.m..

(c) Development of Royal Hillside Villa is undertaken by Guangzhou Agile Co. and Baiyun Agile Co. is a

cooperative joint venture company which is owned by Pomaine International Limited and Guangdong

Lingnan Economic Development Ltd. (‘‘Guangdong Lingnan’’), a PRC company. Pomaine International

Limited agreed to contribute the registered capital in cash which is required to be fully paid by June 2006.

Guangdong Lingnan contributed land use rights for the property with a site area of 51,585.0 sq.m.

Under its joint venture agreement and articles of association. Baiyun Agile Co. shall pay a fixed amount

of RMB15,470,000 to Guangdong Lingnan which has already been paid. After such payment, Guangdong

Lingnan shall no longer participate in the profit distribution of Baiyun Agile Co.










— IV-139 —



Capital value in


30th September

2005

(RMB)

39. Reserved Land,

Nanhai Majestic

Garden,

Suiyan Road,

Nanhai District,

Foshan City,

Guangdong Province,


of China






Nanhai Majestic Garden (‘‘the Development’’) (of




villas, townhouses, retail and ancillary facilities





5) with a total expected gross floor area of





The site is held under various State-owned Land




The property is

vacant.

847,200,000

100% interests

attributable

to the Group

RMB847,200,000

Notes:



RMB41,400,510.

State-owned Land

Grant Contract No.

Date of

Contract

Subject


(sq.m.) (year)

(2002) 00194 6-Jun-2002 24,554.70 Residential 70 Land Bureau of

Nanhai City


Nanhai City

(2002) 00177 17-May-2002 30,796.70 Residential 70 Land Bureau of

Nanhai City

(2002) 00141 29-Jul-2002 33,320.00 Residential 70 Land Bureau of

Nanhai City


Nanhai City


— IV-140 —

State-owned Land

Grant Contract No.

Date of

Contract

Subject


(sq.m.) (year)


Nanhai City

(2001) 00076 13-Apr-2001 75,708.00 Residential 70 Land Bureau of

Nanhai City

(2001) 00030 28-Feb-2001 171,984.80 Residential 70 Land Bureau of

Nanhai City

(2001) 00031 28-Feb-2001 34,568.80 Residential 70 Land Bureau of

Nanhai City

(2001) 00077 13-Apr-2001 137,415.40 Residential 70 Land Bureau of

Nanhai City


Nanhai City



Foshan, the land use rights of the Site have been transferred to the Group.

State-owned Land

Use Rights

Certificate No.

Date of

Issuance

Subject

Site Area User

Date of

Expiry Issuer

(sq.m.)

(2003) 030174 8-Dec-2003 462,340.43 Residential 21-Mar-2071 Land Bureau of

Foshan

(2003) 030173 8-Dec-2003 138,889.27 Residential 1-Mar-2071 Land Bureau of

Foshan


3. Pursuant to the State-owned Land Use Rights tenancy agreement entered into between the Group and Nan Bian



approximately 20 sq.m. is leased to the Group as playground for primary school for 50 years from 1st August

2004 to 31st July 2054 at a total rental of RMB48,000.









— IV-141 —


Corresponding

State-owned Land

Use Rights

Certificate

number

Encumbrance

number

Date of

Issuance

Date of

instrument

Date of

expiry Bank

(2003) 030173 C 0499000 20-Sept-2002 12-Jan-2004 20-Sept-2008 Agricultural

Bank of China,

Nanhai City

Yanbu branch



(d) Nanhai Agile Co., the owner of the property, is a limited liability company established in accordance with






iv. Construction Works Planning Permit No




— IV-142 —



Capital value in


30th September

2005

(RMB)

40. Phase 1 and Phase 2,

Huadu Majestic

Garden,

Tiangui Road East,

Huadu District,

Guangzhou City,

Guangdong Province,


of China






Huada Majestic Garden (‘‘the Development’’)

(of which the property and Property 29 set out

in this property valuation form part) is a large-

scale development comprising apartments, retail

shops, villas, townhouses and ancillary facilities

(including clubhouse, swimming pool, school,

etc.). As advised by the Group, it is planned to

be developed in 2 phases (Phase 1 and 2) with a


219,112 sq.m..



154,081 sq.m. (‘‘the Site’’).




March 2001 and the latest one expiring on 31st

December 2068.

The property is

vacant.

260,300,000

(98% interests

attributable to the

Group:

RMB255,094,000)

Notes:


Huadu District Real Estate Company and the Group, the land use rights of the Site, have been transferred to the


State-owned Land

Use Rights Transfer Contract No.

Date of

Contract

Subject

Site Area Term

(sq.m.) (year)


Commercial, tourism

and entertainment: 40

Other: 50



— IV-143 —




Certificate No.

Date of

Issuance Subject Site Area Term

(sq.m.) (year)

(2001) 11034527 29-Mar-2001 66,388.86 Residential: 70


entertainment: 40

Other: 50

(2005) 720982 21-Mar-2005 64,085.57 Residential: 70


entertainment: 40

Other: 50

(2005) 720981 21-Mar-2005 23,606.35 Residential: 70


entertainment: 40

Other: 50









Corresponding

State-owned Land

Use Rights

Certificate number

Encumbrance

number

Date of

Issuance

Date of

instrument

Date of

Expiry Bank

(2005) 720982 (2005) 0106 4-Aug-2004 31-May-2005 20-Jul-2006 Industrial and

Commercial

Bank of China,

Guangzhou

Huadu branch

(2001) 11034527 (2004) 0154 4-Aug-2004 20-Jul-2004 20-Jul-2006 Industrial and

Commercial

Bank of China,

Guangzhou

Huadu branch

(c) Pursuant to the approved plan of the Development issued by Guangzhou City Planning Bureau Huadu

District, the permitted plot ratio of phase 1 of the Development is 1.068. The maximum allowed gross

floor area of the phase 1 of the Development is approximately 170,004.2 sq.m.. Pursuant to Notice on

Announcement of Benchmark Land Price of Guangzhou State-owned Land Use Rights*

( ) No. (2004) 545 issued by Guangzhou City Land

Resources and Housing Management Bureau dated 9th August 2004 the permitted plot ratio for

residential and commercial land in Huadu District is 2.2. As confirmed by the Group, apart from phase 1



— IV-144 —

of the Development, the maximum allowed gross floor area of the Development for future development is

approximately 51,934 sq.m.. The total maximum allowed gross floor area of the Development is


(d) Huadu Agile Co., the owner of the property, is a limited liability company established in accordance with











— IV-145 —



Capital value in


30th September

2005

(RMB)

41. Primary school and

Kindergarten site,

South Lagoon

Guangzhou, No. 998

Tonghe Road,

Baiyun District,

Guangzhou City,

Guangdong Province,


of China






South Lagoon Guangzhou (‘‘the Development’’)

(of which the property, Property 13 and Property

24 set out in this property valuation form part) is

a large-scale development comprising apartments,

retail, shops and ancillary facilities (including

clubhouse, swimming pool, school, etc.) As


developed in 2 phases (Phase 1 and 2) with a


270,711 sq.m. There are 5 stages in Phase 1

(Stage 1, 2, 3, 4 and 5).









landscaping and greenery purpose. (refer to Note

3, 4, 5)




The property is

vacant.

No commercial

value

Notes:

1. Pursuant to the following State-owned Land Use Rights Grant Contract entered into between Land Bureau of


RMB21,635,430 :

State-owned Land

Right Grant

Contract No.

Date of

Contract

Subject


(sq.m.) (year)

(2001) 041 28-May-2001 195,007 Residential/

Commercial

Residential: 70

Commercial,

tourism and

entertainment: 40

Other: 50

Land Bureau of

Guangzhou



— IV-146 —



State-owned Land

Use Rights

Certificate No.

Date of

Issuance

Subject

Site Area User Term Issuer

(sq.m.) (year)

(2001) 161 28-May-2001 195,007 Residential/

Commercial

Residential: 70

Commercial,

tourism and

entertainment: 40

Other: 50


and Housing

Management Bureau








has been granted with the allocated land with site area of approximately 110,907 sq.m. (166.4 mu).





Land.






the Site.

(b) Pursuant to the Confirmation on Proposal of Adjustment to Plans* ( ) No. (2004)



(c) Development of South Lagoon Guangzhou is undertaken by Guangzhou Agile Co., a cooperative joint











— IV-147 —









— IV-148 —


Group VII — Other property interests held by the Group in the PRC


Capital value in


30th September

2005

(RMB)


Gonghua Village,

Zhongshan City,

Guangdong Province,


of China

The property comprises a site with a site area of

approximately 260,001 sq.m. (390 mu).

As advised by the Group, the property is planned

to be developed into residential development with

approximate gross floor area of 286,001 sq.m..

The property is

vacant.

No commercial

value

* As the Group did

not posses any

legal title to the

property interests

as at the day of

valuation, we have

attributed no

commercial value

to the property

interests

Notes:

1. By a Compensation Agreement dated 30th December 2004 (‘‘the Agreement’’), the Group agreed to acquire the

property for a consideration of RMB11,770,000. As confirmed by the Group, the consideration has been paid in

full up to the date of valuation. We have ascribed no commercial value to the property.



(a) Notwithstanding that the Group has entered into the Agreement, the Group has yet to enter into a Land

Use Rights Transfer Contract with the relevant land administration authority and pay the land premium.

(b) As such, there is no assurance that the Group will be able to obtain the land use rights to the property.

3. Pursuant to a Land Use Rights Transfer Agreement dated 21st November 2005 entered into between the Group

and Zhongshan Baoyi Property Company Limited* ( ), the property with a site area of

approximately 260,001 sq.m. (390mu) will be transferred to Zhongshan Baoyi Property Company Limited*

( ) for a consideration of RMB11,770,000. As at the time of payment of consideration to

the Group, the land use rights of the property will be transferred to Zhongshan Baoyi Property Company

Limited* ( ). As advised by the Group, the payment of the consideration has been made on

24th November 2005.



— IV-149 —



Capital value in


30th September

2005

(RMB)

43. Parcels of Industrial

Land, Metro Agile

Zhongshan,

Sanxiang Town,

Yihao Road,

Zhongshan City,

Guangdong Province,


of China

The property comprises various sites with total

site area of approximately 490,139 sq.m. (735.2

mu).

The user of the land is industrial.

As advised by the Group, the piece of land is

planned to change the user to residential use and

will be developed into residential development

with approximate gross floor area of 833,237

sq.m..

The property is

vacant.

No commercial

value

* As the Group

did not posses any

legal title to the

property interests

as at the day of

valuation, we have

attributed no

commercial value

to the property

interests

Notes:

1. By two Contractual Rights Transfer Agreements dated 15th July 2005 (‘‘the Agreements’’), the Group agreed to

acquire the property for a consideration of RMB21,764,871.2. As confirmed by the Group, the consideration has

been paid in full up to the date of valuation. The consideration does not include the land premium.



Group, the premium has not been paid up to the date of valuation. We have ascribed no commercial value to the

property.

3. As at the date of valuation, the market value of the property, assuming that the Group has obtained a valid

certificate of State-owned Land Use Rights, the land premium has been fully paid and the parcel of land can be

converted from industrial land to residential use is about RMB147,000,000.

4. As advised by the Group, the State-owned Land Use Rights Certificates of these pieces of land only can be

obtained in December 2005.







— IV-150 —



Capital value in


30th September

2005

(RMB)

44. Two Parcels of Land,

The Riverside,

Henghai Road,

Southern District,

Zhongshan City,

Guangdong Province,


of China


approximately 79,802.47 sq.m. (119.7037 mu).


to be developed into a residential development


sq.m..

The property is

vacant.

No commercial

value

* As the Group

did not posses any

legal title to the

property interests

as at the day of

valuation, we have

attributed no

commercial value

to the property

interests

Notes:

1. By two Land Use Rights Transfer Agreements both dated 16th June 2005, the Group agreed to acquire the

property for a total consideration of RMB91,495,500. This consideration has included the land premium. As

confirmed by the Group, part of consideration of RMB40,000,000 has been paid up to the date of valuation. We

have ascribed no commercial value to the property.



developed into residential development, is about RMB146,900,000.

3. As at the date of 4th November 2005, the State-owned Land Use Rights Certificates in respect of part of the

piece of land with site area of approximately 33,194 sq.m. (49.8 mu) has been issued. The piece of land has been

granted to the Group for residential (commercial) purpose with a term ending on 16th December 2062. As

advised by the Group, the State-owned Land Use Rights Certificates of the remaining part of the piece of land

are still under application.

4. As advised by the Group, the State-owned Land Use Rights Certificate of the remaining part of the piece of land

only can be obtained in May 2006.



(a) The Group has the contractual interests in the property and the procedures relating to the transfer of the

property are in progress.

(b) Upon payment of the consideration in full, there shall be no legal impediment in the Group obtaining the

land use rights to the property.


— IV-151 —



Capital value in


30th September

2005

(RMB)


Huadu Grand Garden,


Xindu Boulevard

South, Xindu Town,

Huadu District,

Guangzhou City,

Guangdong Province,


of China


approximately 399,133 sq.m. (598.7 mu).

As advised by the Group the property is planned



sq.m..

The property is

vacant.

No commercial

value

* As the Group

did not posses any

legal title to the

property interests

as at the day of

valuation, we have

attributed no

commercial value

to the property

interests

Notes:

1. By an Land Use Rights Transfer Agreement dated 15th June 2005 (‘‘the Agreement’’), the Group agreed to

acquire the property for a consideration of RMB209,545,000. This consideration has included the land premium.

As confirmed by the Group, the consideration has not been paid up to the date of valuation. We have ascribed no

commercial value to the property.




3. As advised by the Group, the State-owned Land Use Rights Certificates of these pieces of land only may be

obtained in December 2005.







— IV-152 —



Capital value in


30th September

2005

(RMB)



Baiyun District,

Guangzhou City,

Guangdong Province,


of China


approximately 39,384 sq.m. (59.076 mu).




sq.m..

The property is

vacant.

No commercial

value

* As the Group

did not posses any

legal title to the

property interests

as at the day of

valuation, we have

attributed no

commercial value

to the property

interests

Notes:

1. By an Joint Development Agreement dated 15th January 2002 and certain supplementary agreements collectively,

(‘‘the Agreements’’), the Group agreed to acquire the property for a consideration of RMB11,992,709. This

consideration does not include land premium. As confirmed by the Group, the consideration has been paid in full

up to the date of valuation.



Group, the premium has not been paid up to the date of valuation. We have ascribed no commercial value to the

property.




4. As advised by the Group, the State-owned Land Use Rights Certificate of this piece of land may be obtained in

June 2006.







— IV-153 —


Group VIII — Property interests rented by the Group in the PRC


Capital value in


30th September

2005

(RMB)

47. 2/F., 3/F. and 4/F.,

Nanda Road,

Nancun Town,

Guangzhou City,

Guangdong Province,


of China

The property comprises the whole 2nd, 3rd and

4th floors in a 4-storey composite building

completed in around 1999.

The saleable floor area of the property is


The property is leased by Guangzhou Pangyu

Nancun East Cosmetics Factory*

( ) to Panyu Agile

Co. via a tenancy agreement dated 1st February

2005 for a term of 1 year from 1st February 2005

at a monthly rent of RMB35,000.

The property is

occupied by the

Group as staff

quarters, canteen and

ancillary facilities.

No commercial

value

Notes:

1. Pursuant to a Realty Title Certificate, the registered owner of the property is Guangzhou Pangyu Nancun East

Cosmetics Factory* ( ).

2. We were advised that the registered owner is independent third party from the Group.



(a) Tenancy agreement entered into between Guangzhou Pangyu Nancun East Cosmetics Factory*

( ) and Panyu Agile Co. is legal, valid and legally binding on both parties.

(b) Guangzhou Pangyu Nancun East Cosmetics Factory* ( ) has the right to lease

the property according to the Realty Title Certificate.

(c) Panyu Agile Co. has the right to use the property according to the use specified in the tenancy agreement.

(d) Guangzhou Pangyu Nancun East Cosmetics Factory* ( ) has not submitted

the tenancy agreement to the relevant PRC government administrative department for registration but this

will not affect the validity of the tenancy agreement and Panyu Agile Co. will not thereby suffer any

penalty or fine or be responsible for any legal liability.



— IV-154 —



Capital value in


30th September

2005

(RMB)

48. Unit 403, Block 11,

Ya Yi Ting,

Agile Garden

Guangzhou,

Nanda Road,

Nancun Town,

Guangzhou City,

Guangdong Province,


of China

The property comprises an apartment unit on the

4th floor in a 7-storey composite building


The gross floor area of the property is

approximately 80.8 sq.m..

The property is leased by Han Li Li to Panyu

Branch of Zhongshan Property Management Co.

via a tenancy agreement dated 15th November

2004 for a term of 1 year from 15th November

2004 at a monthly rent of RMB1,500.

The property is

occupied by the

Group as staff

quarters.

No commercial

value

Notes:

1. Pursuant to a Realty Title Certificate No. Yue Fang Di Zheng Zi C3029741, the registered owner of the property

is Han Li Li.

2. We were advised that the registered owner is an independent third party from the Group.



(a) Tenancy agreement entered into between Han Li Li and Panyu Branch of Zhongshan Property Management

Co. is legal, valid and legally binding on both parties.

(b) Han Li Li has the right to lease the property according to the Realty Title Certificate.

(c) Panyu Branch of Zhongshan Property Management Co. has the right to use the property according to the

use specified in the tenancy agreement.

(d) Han Li Li has not submitted the tenancy agreement to the relevant PRC government administrative

department for registration but this will not affect the validity of the tenancy agreement and Panyu Branch

of Zhongshan Property Management Co. will not thereby suffer any penalty or fine or be responsible for

any legal liability.

4. As advised by the Group, the tenancy agreement for the property has been renewed for another term of 1 year

from 15th November 2005 at a monthly rent of RMB1,500.


— IV-155 —



Capital value in


30th September

2005

(RMB)

49. Unit 801, Block 12,

Ya Cui Ting,

Agile Garden

Guangzhou,

Nanda Road,

Nancun Town,

Guangzhou City,

Guangdong Province,


of China

The property comprises an apartment unit on 8th

floor in a 9-storey composite building completed

in around 2002.


approximately 84 sq.m..

The property is leased by Wang Dong Yong to

Panyu Agile Co. via a tenancy agreement dated

25th May 2005 for a term of 6 months from 1st

July 2005 at a monthly rent of RMB1,500.

The property is

occupied by the

Group as staff

quarters.

No commercial

value

Notes:


is Wang Dong Yong.




(a) Tenancy agreement entered into between Wang Dong Yong and Panyu Agile Co. is legal, valid and legally

binding on both parties.

(b) Wang Dong Yong has the right to lease the property according to the Realty Title Certificate.

(c) Panyu Agile Co. has the right to use the property according to the use specified in the tenancy agreement.

(d) Wang Dong Yong has not submitted the tenancy agreement to the relevant PRC government administrative

department for registration but this will not affect the validity of the tenancy agreement and Panyu Agile

Co. will not thereby suffer any penalty or fine or be responsible for any legal liability.


— IV-156 —



Market value in


30th September

2005

(RMB)

50. 6 residential blocks

in Tian Mei Xin Du

Hua Yuan,

Huadu District,

Guangzhou City,

Guangdong Province,


of China

The property comprises 6 blocks of 4-storey

residential buildings completed in about 1990s.

The total gross floor area of the property is


The property is leased by various lessors to

Huadu Agile Co. via 6 tenancy agreements at a

total monthly rent of RMB19,100 all exclusive of

management fee for the following terms:

The property is

occupied by the

Group as staff

quarters, canteen,

warehouse and office.

No commercial

value

tenancy agreement

Commencement Date Term

15-Apr-2005 5 years

20-Mar-2003 5 years and 1 day

1-Mar-2003 5 years and 1 day

1-Oct-2004 3 years and 6 months

16-Dec-2003 2 years and 1 day

10-Jan-2004 2 years

Notes:

1. We were advised that the registered owners are independent third parties from the Group.

2. As advised by the Group, the lessors cannot provide the Realty Title Certificates or the Building Ownership

Certificates of the property.



(a) As the lessors cannot provide the Realty Title Certificates or the Building Ownership Certificates of the

property, the validity of the following tenancy agreements is uncertain and the rights of Huadu Agile Co.

to use the property may not be protected under the laws of the PRC. Notwithstanding, the relevant clauses

on dispute resolution and breach of contract contained in the following tenancy agreements are still of

legal effect and Huadu Agile Co. may still claim against the lessors for compensation according to law.

Lessor Lessee

Current

Monthly

Rent

Date of

Contract

tenancy

agreement

Commencement

Date Term

(RMB)

Ye Zhi Kang Huadu Agile Co. 3,000 15-Mar-2005 15-Apr-2005 5 years

Jiang Zuo Gang Huadu Agile Co. 4,500 20-Mar-2003 20-Mar-2003 5 years and 1 day

Wang Hui Qing Huadu Agile Co. 3,000 5-Mar-2003 1-Mar-2003 5 years and 1 day

Chen Gui Liu Huadu Agile Co. 3,000 21-May-2004 1-Oct-2004 3 years and 6 months

Fang Ying Qiu Huadu Agile Co. 3,000 4-Dec-2003 16-Dec-2003 2 years and 1 day

Fang Ying Qiu Huadu Agile Co. 2,600 7-Jan-2004 10-Jan-2004 2 years


— IV-157 —



Capital value in


30th September

2005

(RMB)

51. Units 301–311 and

Units 401–412 in the

building opposite to

Changjiang Guan Li

Zhong Xin Village

Composite Building,

Zhongshan City,

Guangdong Province,


of China

The property comprises 11 units on 3rd floor and

12 units on 4th floor in a 4-storey composite

building completed in June 1997.



The property is leased by Zheng Wen Qian to

Greenville Co. via a tenancy agreement dated 5th

April 2005 for a term of 1 year from 1st January

2005 at a monthly rent of RMB12,418 all

exclusive of management fee.

The property is

occupied by the

Group as staff

quarters.

No commercial

value

Notes:

1. Pursuant to a Realty Title Certificate, the registered owner of the property is Zheng Wen Qian.




(a) Tenancy agreement entered into between Zheng Wen Qian and Greenville Co. is legal, valid and legally


(b) Zheng Wen Qian has the right to lease the property according to the Realty Title Certificate.

(c) Greenville Co. has the right to use the property according to the use specified in the tenancy agreement.

(d) Zheng Wen Qian has not submitted the tenancy agreement to the relevant PRC government administrative

department for registration but this will not affect the validity of the tenancy agreement and Greenville



— IV-158 —



Capital value in


30th September

2005

(RMB)

52. Hong Tu Building,

Changjiang Village,

Zhongshan City,

Guangdong Province,


of China

The property comprises a 4-storey composite

building completed in about December 1994.

The usable floor area of the property is


The property is leased by Huang Yan Ping to

Greenville Co. via a tenancy agreement dated

31st March 2005 for a term of half year from

16th May 2005 at a monthly rent of RMB6,200.

The property is

occupied by the

Group as staff

quarters and canteen.

No commercial

value

Notes:

1. Pursuant to a Realty Title Certificate, the registered owner of the property is Huang Yan Ping.




(a) Tenancy agreement entered into between Huang Yan Ping and Greenville Co. is legal, valid and legally


(b) Huang Yan Ping has the right to lease the property according to the Realty Title Certificate.

(c) Greenville Co. has the right to use the property according to the use specified in the tenancy agreement.

(d) Huang Yan Ping has not submitted the tenancy agreement to the relevant PRC government administrative

department for registration but this will not affect the validity of the tenancy agreement and Greenville



— IV-159 —



Capital value in


30th September

2005

(RMB)

53. B1/F. and portion

of 1/F.,

Changjiang Golf

Course,

La Cite Greenville and

No. 31 Aochang Road,

Changjiang Village,

Eastern District,

Zhongshan City,

Guangdong Province,


of China

The property comprises the whole basement 1st

floor and portion of 1st floor in a 2-storey

clubhouse building with a 1-storey basement

completed in about 1998 and certain spaces

in a 6-storey composite building.



The property is leased by Agile Golf and Country

Club to Greenville Co., Greenville and La Cite

Greenville Branches of Zhongshan Property

Management Co. via three tenancy agreements

dated 30th June 2005 for a term of 2 years and 6

months from 1st July 2005 at a total monthly rent

of approximately RMB9,280 all inclusive of

management fee.

The property is

occupied by the

Group as office, staff

quarters and canteen.

No commercial

value

Notes:

1. Pursuant to a Realty Title Certificate Nos. Yue Fang Di Zheng Zi C1054947 and 2397156, the registered owner

of the property is Agile Golf and Country Club.

2. We were advised that the registered owner is a connected person of the Group.



(a) Tenancy agreements entered into between Agile Golf and Country Club and Greenville Co., Greenville

and La Cite Greenville Branches of Zhongshan Property Management Co. are legal, valid and legally


(b) Agile Golf and Country Club has the right to lease the property according to the Realty Title Certificate.

(c) Greenville Co., Greenville and La Cite Greenville Branches of Zhongshan Property Management Co. have

the right to use the property according to the use specified in the tenancy agreement.

(d) Agile Golf and Country Club has not submitted the tenancy agreements to the relevant PRC government

administrative department for registration but this will not affect the validity of the tenancy agreements

and Greenville Co., Greenville and La Cite Greenville Branches of Zhongshan Property Management Co.

will not thereby suffer any penalty or fine or be responsible for any legal liability.


— IV-160 —



Capital value in


30th September

2005

(RMB)

54. Units 301–701,

302–702,

No. 7 Yue He Street,

Yue Lai Road South,

Zhongshan City,

Guangdong Province,


of China

The property comprises 10 apartment units on 3rd

floor to 7th floor in a 7-storey composite building



approximately 1,470.2 sq.m.

The property is leased by Zheng Hui Qiong to

Majestic Garden Co. for a term of 2 years from

1st January 2005 at a monthly rent of

RMB10,000 all exclusive of management fee.

The property is

occupied by the

Group as staff

quarters.

No commercial

value

Notes:

1. Pursuant to a Realty Title Certificate, the registered owner of the property is Zheng Hui Qiong.

2. We were advised that the registered owner is a connected person of the Group.



(a) Tenancy agreement entered into between Zheng Hui Qiong and Majestic Garden Co. is legal, valid and

legally binding on both parties.

(b) Zheng Hui Qiong has the right to lease the property according to the Realty Title Certificate.

(c) Majestic Garden Co. has the right to use the property according to the use specified in the tenancy

agreement.

(d) Zheng Hui Qiong has not submitted the tenancy agreement to the relevant PRC government administrative

department for registration but this will not affect the validity of the tenancy agreement and Majestic

Garden Co. will not thereby suffer any penalty or fine or be responsible for any legal liability.


— IV-161 —



Capital value in


30th September

2005

(RMB)

55. Units 401, 501, 502,

601, 602 & 701,

No. 34 Yintong Street,

Zhongshan City,

Guangdong Province,


of China

The property comprises 6 apartment units on 4th

floor to 7th floor in a 7-storey residential

building completed in 1990s.



The property is leased by Chen Lian Biao and He

Li Lian to Majestic Garden Branch of Zhongshan

Property Management Co. via a tenancy

agreement dated 2nd September 2005 for a term

of 1 year from 1st September 2005 at a monthly

rent of RMB9,000.

The property is

occupied by the

Group as staff

quarters.

No commercial

value

Notes:

1. Pursuant to a Realty Title Certificate Nos. Yue Fang Di Zheng Zi C1625861 and C1625860 and Yue Fang Di

Gong Zheng Zi C0243292 and C0243293, the registered owners of the property are Chen Lian Biao and He Li

Lian.




(a) Tenancy agreement entered into between Chen Lian Biao and He Li Lian and Majestic Garden Branch of

Zhongshan Property Management Co. is legal, valid and legally binding on both parties.

(b) Chen Lian Biao and He Li Lian have the right to lease the property according to the Realty Title

Certificate.

(c) Majestic Garden Branch of Zhongshan Property Management Co. has the right to use the property

according to the use specified in the tenancy agreement.

(d) Chen Lian Biao and He Li Lian have not submitted the tenancy agreement to the relevant PRC

government administrative department for registration but this will not affect the validity of the tenancy

agreement and Majestic Garden Branch of Zhongshan Property Management Co. will not thereby suffer

any penalty or fine or be responsible for any legal liability.


— IV-162 —



Capital value in


30th September

2005

(RMB)

56. Unit 12A, Jia He Ju

North Block,

Huaxia Road East,

Xincheng District,

Yanbu District,

Nanhai District,

Foshan City,

Guangdong Province,


of China


12th floor in a 17-storey residential building with

ground floor shops completed in around 1997.



The property is leased by Lin Yao to Nanhai

Agile Co., for a term of about half year from

28th August 2005 at a monthly rent of RMB995

all exclusive of management fee.

The property is

occupied by the

Group as staff

quarters.

No commercial

value

Notes:

1. Pursuant to a Realty Title Certificate, the registered owner of the property are Lin Yao and Lin Zhi Ming.




(a) Tenancy agreement entered into between Lin Yao and Nanhai Agile Co. is legal, valid and legally binding

on both parties.

(b) Lin Yao has the right to lease the property according to the Realty Title Certificate.

(c) Nanhai Agile Co., has the right to use the property according to the use specified in the tenancy

agreement.

(d) Lin Yao has not submitted the tenancy agreement to the relevant PRC government administrative

department for registration but this will not affect the validity of the tenancy agreement and Nanhai Agile


(e) Although Liu Yao has not produced consent of the co-owner of the property to lease the property, this will

not affect the validity of the tenancy agreement and Nanhai Agile Co. will not thereby suffer any penalty

or fine or be responsible for any legal liability.


— IV-163 —



Capital value in


30th September

2005

(RMB)

57. Unit 305, Block 5,

Hao Jing Tai,

Nanhai Majestic

Garden,

Suiyan Road East,

Nanhai District,

Foshan City,

Guangdong Province,


of China


3rd floor in a 7-storey composite building

completed in about 2003.



The property is leased by Fang Li Ling to Nanhai

Agile Co. via a tenancy agreement dated 6th

February 2004 for a term of about 1 year from

8th February 2005 at a monthly rent of

RMB1,200.

The property is

occupied by the

Group as staff

quarters.

No commercial

value

Notes:

1. Pursuant to a Realty Title Certificate, the registered owners of the property are Fang Li Ling and Chen Zheng

Hong.




(a) Tenancy agreement entered into between Fang Li Ling and Nanhai Agile Co. is legal, valid and legally


(b) Fang Li Ling has the right to lease the property according to the Realty Title Certificate.

(c) Nanhai Agile Co., has the right to use the property according to the use specified in the tenancy

agreement.

(d) Fang Li Ling has not submitted the tenancy agreement to the relevant PRC government administrative



(e) Although Fang Li Ling has not produced consent of the co-owner of the property to lease the property,

this will not affect the validity of the tenancy agreement and Nanhai Agile Co. will not thereby suffer any

penalty or fine or be responsible for any legal liability.


— IV-164 —



Capital value in


30th September

2005

(RMB)

58. 3/F., 4/F. and portion

of 5/F.,

Wei Ye Building,

No. 65 Yongqing

Road,

Nanhai District,

Foshan City,

Guangdong Province,


of China

The property comprises the whole 3rd, 4th and

5th floors excluding Unit 501 in a 5-storey

residential building completed in around 2001.



The property is leased by Zheng Wen Xi, which

was authorized by Zheng Wei Xin and Feng Gui

Fang, to Nanhai Agile Co. via a tenancy

agreement dated 24th June 2005 for a term of 1

year from 1st October 2004 at a monthly rent of

RMB9,500 for the period from 1st October 2004

to 30th June 2005 and RMB10,500 for the period

from 1st July 2005 to 30th September 2005 all

exclusive of management fee.

The property is

occupied by the

Group as staff

quarters.

No commercial

value

Notes:

1. Pursuant to a Realty Title Certificate No. Yue Fang Di Zheng Zi C1465509, the registered owners of the

property are Zheng Wei Xin and Feng Gui Fang.




(a) Tenancy agreement entered into between Zheng Wen Xi, which was authorized by Zheng Wei Xin and

Feng Gui Fang, and Nanhai Agile Co. is legal, valid and legally binding on both parties.

(b) Zheng Wei Xin and Feng Gui Fang has the right to lease the property according to the Realty Title

Certificate.

(c) Nanhai Agile Co. has the right to use the property according to the use specified in the tenancy

agreement.

(d) Zheng Wen Xi has not submitted the tenancy agreement to the relevant PRC government administrative



4. As advised by the Group, the tenancy agreement for the property has been renewed for another term of 2 years

from 1st October 2005 at a monthly rent of RMB10,500 and from 1st October 2006 at a monthly rent of

RMB11,500.


— IV-165 —



Capital value in


30th September

2005

(RMB)

59. 2/F., Block D1-D5,

Yang Yi Ju,

Agile Garden,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


of China

The property comprises the 2nd floor in a

2-storey retail podium with 28-storey and 29-

storey residential blocks built on top completed

in about 2003.



The property is leased by Zhongshan Agile Co. to

Ever Creator Co. and Zhongshan Property

Management Co. via two tenancy agreements for

a term of 2 years and 6 months from 1st July

2005 at a monthly rent of RMB10,144.

The property is

occupied by the

Group as an office.

No commercial

value

Notes:


2. As advised by the Group, the lessor cannot provide the Realty Title Certificate or the Building Ownership

Certificate of the property.



(a) As the lessor cannot provide the Realty Title Certificate or the Building Ownership Certificate of the

property, the validity of the tenancy agreements is uncertain and the rights of Ever Creator Co. and

Zhongshan Property Management Co. to use the property may not be protected under the laws of the PRC.

Notwithstanding, the relevant clauses on dispute resolution and breach of contract contained in the tenancy

agreements are still of legal effect and Ever Creator Co. and Zhongshan Property Management Co. may

still claim against the lessor for compensation according to law.


— IV-166 —



Capital value in


30th September

2005

(RMB)

60. Various retail

shop units in

Commercial Street,

Agile Garden

Guangzhou,

Nanda Road,

Nancun Town,

Guangzhou City,

Guangdong Province,


of China

The property comprises 16 retail shop units on

1st floor and 2nd floor in a 2-storey retail podium

with a number of residential blocks on top,




The property is leased by various lessors to

Panyu Agile Co. via 16 tenancy agreements at a

total monthly rent of RMB59,181.57 all exclusive

of management fee and utility fees. The tenancy

agreements commence at the earliest date on

1st December 2003 to the latest expiry date on

28th February 2006 with terms of about 2 years

with the details specified in Note No. 3 below.

The property is

occupied by the

Group as retail shops.

No commercial

value

Notes:


2. As advised by the Group, the Realty Title Certificates or the Building Ownership Certificates of the property are

still under application.




property, the validity of the following tenancy agreements is uncertain and the rights of Panyu Agile Co.



legal effect and Panyu Agile Co. may still claim against the lessors for compensation according to law.

Unit Lessor

Current

Monthly

Rent

Gross

Floor

Area

tenancy

agreement

Commencement

Date Term

(RMB) (sq.m.)

i. Unit 202, district 1 Guangdong Kang

Qiang

Pharmaceutics

Company

Limited

4,123.47 117.81 1-Feb-2004 2 years

ii. Unit 207, district 1 Li Jie Fen 2,951.67 84.33 31-Dec-2003 2 years

iii. Unit 102, district 2 Hu Min 6,020.00 120.40 1-Dec-2003 2 years

iv. Unit 104, district 3 Chen Ying Hua,

He Shun Hua

3,276.00 65.52 1-Mar-2004 2 years

v. Unit 109, district 3 Liao Xue Ying 5,288.00 105.76 31-Dec-2003 2 years

vi. Unit 105, district 4 Liu Yu Hong 3,381.50 67.63 1-Dec-2003 2 years

vii. Unit 106, district 4 Luo Tie Wei 4,875.50 97.51 1-Feb-2004 2 years


— IV-167 —

Unit Lessor

Current

Monthly

Rent

Gross

Floor

Area

tenancy

agreement

Commencement

Date Term

(RMB) (sq.m.)

viii. Unit 108, district 4 Liang Qi Hua 3,381.50 67.63 1-Dec-2003 2 years

ix. Unit 109, district 4 Li Shang Qian 4,745.00 94.90 1-Dec-2003 2 years

x. Unit 112, district 4 Wang Jun 668.50 13.37 31-Dec-2003 2 years

xi. Unit 104, district 8 Huang Yu 2,002.11 40.04 30-Nov-2003 2 years

xii. Unit 111, district 8 Wang Xiang Zu 2,233.52 44.67 31-Dec-2003 2 years

xiii. Unit 112, district 8 Ma Xue Bo 4,048.27 80.97 31-Dec-2003 2 years

xiv. Unit 115, district 8 Li An Lian 5,771.27 115.42 1-Dec-2003 2 years

and 1 day

xv. Unit 116, district 8 Zhang Zhi Neng,

Zhang Zhi

Chao

4,428.19 88.56 30-Nov-2003 2 years

xvi. Unit 205, district 8 Li Da Qing, Feng

Wen Jiang

1,987.07 56.77 31-Dec-2003 2 years


— IV-168 —



Capital value in


30th September

2005

(RMB)


units, in Blocks A, B

and C of Phase 1,

Metropolis, Wenchang

Road, Sanxiang Town,

Zhongshan City,

Guangdong Province,


of China

The property comprises 9 retail shop units on a

retail development with 3-storey retail blocks,




The property is leased by various landlords to

Ever Creator Co. via 9 tenancy agreements at a

total monthly rent of RMB26,888 at the first

year. The tenancy agreements commence at the

earliest date from 1st May 2005 to the latest

expiry date on 30th September 2008 with terms

of 3 years with the details specified in Note No.

3 below.

The property is

occupied by the


No commercial

value

Notes:







property, the validity of the following tenancy agreements is uncertain and the rights of Ever Creator Co.



legal effect and Ever Creator Co. may still claim against the lessors for compensation according to law.

Unit Lessor Monthly Rent

Gross

Floor

Area

tenancy

agreement

Commencement

Date Term

(RMB) (sq.m.) (years)

i. A-25 Li Shu Ling First year 3,239

Second year 3,886

Third year 5,182

171.10 1-Jun-2005 3

ii. A-26 Li Shu Ling First year 3,239

Second year 3,886

Third year 5,182

171.10 1-Jun-2005 3

iii. C2-99 Fang Qian Juan First year 2,874

Second year 3,448

Third year 4,598

161.77 1-May-2005 3

iv. C2-100 He Yu Qiong First year 2,874

Second year 3,448

Third year 4,598

171.10 1-May-2005 3


— IV-169 —


Gross

Floor

Area

tenancy

agreement

Commencement

Date Term

(RMB) (sq.m.) (years)

v. C1-103 Huang Huan Hua First year 2,992

Second year 3,591

Third year 4,788

161.86 1-May-2005 3

vi. C1-105 Huang Huan Hua First year 2,992

Second year 3,591

Third year 4,788

161.86 1-May-2005 3

vii. C-106 Li Bao Ming/

Xie Yu Qin/

Zhang Wei Feng

First year 2,843

Second year 3,411

Third year 4,549

161.86 1-Oct-2005 3

viii. C-107 Li Bao Ming/

Xie Yu Qin/

Zhang Wei Feng

First year 2,843

Second year 3,411

Third year 4,549

161.77 1-Oct-2005 3

ix. C-108 Li Gui Qing First year 2,992

Second year 3,591

Third year 4,788

161.86 1-May-2005 3


— IV-170 —



Capital value in


30th September

2005

(RMB)


units, Phase 1,

The Landmark (also

known as Phase 3,

Majestic Garden),

Yintong Street, Eastern

District, Zhongshan

City, Guangdong


Republic of China


retail development with typical 3-storey retail

blocks, completed in around 2005.




Majestic Garden Co. via 3 tenancy agreements at

a current total monthly rent of RMB14,363. The

tenancy agreements commence at the earliest date

from 6th June 2005 to the latest expiry date on

4th November 2008 with terms of about 3 years

with the details specified in Note No. 3 below.

The property is

occupied by the


No commercial

value

Notes:







property, the validity of the following tenancy agreements is uncertain and the rights of Majestic Garden

Co. to use the property may not be protected under the laws of the PRC. Notwithstanding, the relevant

clauses on dispute resolution and breach of contract contained in the following tenancy agreements are

still of legal effect and Majestic Garden Co. may still claim against the lessors for compensation

according to law.


Gross

Floor

Area

tenancy

agreement

Commencement

Date Term

(RMB) (sq.m.)

i. A1-33 Ye Chang Yu

Ren Dan

First year 4,662

Second year 5,594

Third year 6,527

137.12 11-May-2005 3 years

and

1 day

ii. A2-15 Chen Xiao Yang

Ruan Xiao Ling

First year 4,775

Second year 5,730

Third year 6,685

137.08 6-Jun-2005 3 years

iii. A2-16 Chen Xiao Yang

Ruan Xiao Ling

First year 4,926

Second year 5,911

Third year 6,896

137.08 6-Jun-2005 3 years


— IV-171 —



Capital value in


30th September

2005

(RMB)


units, Huadu Grand

Garden, No. 33

Phoenix Road, Xindu

Boulevard South,

Xinhua Town, Huadu

District, Guangzhou

City, Guangdong


Republic of China


retail podium with a number of residential blocks

on top, completed in about 2004.




Huadu Agile Co. via 10 tenancy agreements at a

total monthly rent of RMB29,528.89 as at the

date of valuation. The tenancy agreements

commence at the earliest date on 1st October

2003 to the latest expiry date on 31st October

2011 with terms of about 8 years with the details

specified in Note No. 3 below.

The property is

occupied by the


No commercial

value

Notes:







property, the validity of the following tenancy agreements is uncertain and the rights of Huadu Agile Co.



legal effect and Huadu Agile Co. may still claim against the lessors for compensation according to law.

Unit Lessor

Current

Monthly Rent

Gross

Floor

Area

tenancy

agreement

Commencement

Date Term

(RMB) (sq.m.)

i. Unit 13 Deng Li Zhu

Zhang Yong Ying

Zhang Yong Chao

4,169.55 119.13 1-Nov-2003 8 years

ii. Unit 15 Zhang Xue Hua

Zhang Xue Lan

2,526.30 72.18 1-Nov-2003 8 years

iii. Unit 16 Hu Hong Ye

Deng Mei E

Hu Wei Xi

4,141.90 118.34 1-Nov-2003 8 years

iv. Unit 18 Dai Zhao Bing 3,638.10 121.27 1-Oct-2003 8 years and 1 day


— IV-172 —

Unit Lessor

Current

Monthly Rent

Gross

Floor

Area

tenancy

agreement

Commencement

Date Term

(RMB) (sq.m.)

v. Unit 19 Zeng Jin Lan 574.94 15.13 1-Oct-2003 8 years and 1 day

vi. Unit 20 Zeng Jin Lan 1,577.80 41.51 1-Oct-2003 8 years and 1 day

vii. Unit 21 Cai Zhi Cong

Zu Jing Yau

1,887.30 62.91 1-Oct-2003 8 years and 1 day

viii. Unit 22 Chen Ai Ru 3,679.50 122.65 1-Oct-2003 8 years and 1 day

ix. Unit 23 Xie Feng Lan 4,038.60 134.62 1-Oct-2003 8 years and 1 day

x. Unit 25 Du Lian Xiang

Chen Yi Ming

3,294.90 109.83 1-Oct-2003 8 years and 1 day


— IV-173 —



Capital value in


30th September

2005

(RMB)

64. Various T-type

residential units,

Phase 3, Agile Garden,

Xingye Road, Sanxiang

Town, Zhongshan City,

Guangdong Province,


of China

The property comprise various residential unit in

a 3-storey composite building completed in about

1996.




Zhongshan Property Land Co., Zhongshan

Property Management Co. and Ever Creator Co.

via three tenancy agreements for a term of 2

years and 6 months from 1st July 2005 at a total

monthly rent of RMB4,770.

The property is

occupied by the

Group as staff

quarters and office.

No commercial

value

Notes:







property, the validity of the tenancy agreements is uncertain and the rights of Zhongshan Property Land

Co., Zhongshan Property Management Co. and Ever Creator Co. to use the property may not be protected

under the laws of the PRC. Notwithstanding, the relevant clauses on dispute resolution and breach of

contract contained in the tenancy agreements are still of legal effect and Zhongshan Property Land Co.,

Zhongshan Property Management Co. and Ever Creator Co. may still claim against the lessor for

compensation according to law.


— IV-174 —



Capital value in


30th September

2005

(RMB)

65. Various residential

units, Phase 1,

Commercial New

Street,

Agile Garden,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


of China

The property comprises various residential unit in

a 7-storey composite building completed in about

1999.


approximately 2,125.3 sq.m.


Zhongshan Property Land Co., Zhongshan

Property Management Co. and Ever Creator Co.

via three tenancy agreements for a term of 2

years and 6 months from 1st July 2005 at a


The property is

occupied by the

Group as staff


No commercial

value

Notes:







property, the validity of the tenancy agreements is uncertain and the rights of Zhongshan Property Land

Co., Zhongshan Property Management Co. and Ever Creator Co. to use the property may not be protected

under the laws of the PRC. Notwithstanding, the relevant clauses on dispute resolution and breach of

contract contained in the tenancy agreements are still of legal effect and Zhongshan Property Land Co.,

Zhongshan Property Management Co. and Ever Creator Co. may still claim against the lessor for



— IV-175 —



Capital value in


30th September

2005

(RMB)

66. 1/F., Blocks J10 and

J11, Jing Hu Ju, Agile

Garden, Sanxiang


Guangdong Province,


of China

The property comprises certain premises on the

1st floor in a 13-storey composite building



approximately 603.33 sq.m.


Ever Creator Co. via a tenancy agreement dated

30th June 2005 for a term of 2 years and 6

months from 1st July 2005 at a monthly rent of

RMB1,810.

The property is

occupied by the

Group as staff

canteen.

No commercial

value

Notes:

1. Pursuant to a Realty Title Certificate Nos. 2001-280 and 2001-281, the registered owner of the property is

Zhongshan Agile Co.




(a) Tenancy agreement entered into between Zhongshan Agile Co. and Ever Creator Co. is legal, valid and

legally binding on both parties.

(b) Zhongshan Agile Co. has the right to lease the property according to the Realty Title Certificate.

(c) Ever Creator Co. has the right to use the property according to the use specified in the tenancy agreement.

(d) Zhongshan Agile Co. has not submitted the tenancy agreement to the relevant PRC government

administrative department for registration but this will not affect the validity of the tenancy agreement and

Ever Creator Co. will not thereby suffer any penalty or fine or be responsible for any legal liability.


— IV-176 —



Capital value in


30th September

2005

(RMB)

67. 1/F. to 6/F., Property

Management Building,

Xingye Road, Agile

Garden, Sanxiang


Guangdong Province,


of China

The property comprises 1st to 6th floors in a 7-

storey composite building completed in about

1996.


approximately 862 sq.m.


Zhongshan Property Management Co. via two

tenancy agreements for a term of 2 years and 6


RMB3,146.

The property is

occupied by the

Group as staff


No commercial

value

Notes:


2. As advised by the Group, the lessor cannot provide the Realty Title Certificates or the Building Ownership

Certificates of the property.



As the lessors cannot provide the Realty Title Certificates or the Building Ownership Certificates of the property,

the validity of the tenancy agreements is uncertain and the rights of Zhongshan Property Management Co. to use

the property may not be protected under the laws of the PRC. Notwithstanding, the relevant clauses on dispute

resolution and breach of contract contained in the tenancy agreements are still of legal effect and Zhongshan

Property Management Co. may still claim against the lessor for compensation according to law.


— IV-177 —



Capital value in


30th September

2005

(RMB)

68. 1/F. to 3/F., Agile

Hotel (Office Tower),

Sanxiang Town,

Zhongshan City,

Guangdong Province,


of China

The property comprises 1st to 3rd floors in a 23-


1998.




Zhongshan Property Land Co. via a tenancy

agreement dated 30th June 2005 for a term of 5

years from 1st July 2005 at a monthly rent of

RMB20,000.

The property is

occupied by the

Group as offices.

No commercial

value

Notes:

1. Pursuant to a Realty Title Certificate Nos. Yue Fang Di Zheng Zi C0699343 and C0699283, the registered owner

of the property is Zhongshan Agile Co..




(a) Tenancy agreement entered into between Zhongshan Agile Co. and Zhongshan Property Land Co. is legal,

valid and legally binding on both parties.


(c) Zhongshan Property Land Co. has the right to use the property according to the use specified in the

tenancy agreement.



Zhongshan Property Land Co. will not thereby suffer any penalty or fine or be responsible for any legal

liability.

4. The property is used by the Group as its principal place of business.


— IV-178 —



Capital value in


30th September

2005

(RMB)

69. Room No. 110,

Jianhe New Village,

Yanbu River East,

Nanhai District,

Foshan City,

Guangdong Province,


of China

The property comprises a residential unit in a 3-

storey residential building completed in about

1987.



The property is leased by Du Yuan Hong to

Nanhai Agile Co. via a tenancy agreement dated

22nd August 2005 for a term of 11 months from

13th August 2005 to 12th July 2006 at a monthly

rent of RMB350.

The property is

occupied by the

Company as staff

quarters.

No commercial

value

Notes:

1. Pursuant to the Realty Title Certificate, the registered owner of the property is Du Yuan Hong.




(a) Tenancy agreement entered into between Du Yuan Hong and Nanhai Agile Co. is legal, valid and legally


(b) Du Yuan Hong has the right to lease the property according to the Realty Title Certificate.

(c) Nanhai Agile Co. has the right to use the property according to the use specified in the tenancy

agreement.

(d) has not submitted the tenancy agreement to the relevant PRC government administrative department

for registration but this will not affect the validity of the tenancy agreement and Nanhai Agile Co. will not

thereby suffer any penalty or fine or be responsible for any legal liability.


— IV-179 —



Capital value in


30th September

2005

(HK$)

70. A retail shop on Level

1, Block L5,

Greenville Garden,

Eastern District,

Zhongshan City,

Guangdong Province,


of China

The property comprises a retail shop unit in a 12-


2001.




Greenville Branch of Zhongshan Property

Management Co. for a term of 2 years and 6


RMB1,440.

The property is

occupied by the

Company as an office

and center for

residents.

No commercial

value

Notes:

1. Pursuant to a Realty Title Certificate No. 2004-0620, the registered owner of the property is Zhongshan Agile

Property Development Co. Ltd.




(a) Tenancy agreement entered into between Zhongshan Agile Co. and Greenville Branch of Zhongshan

Property Management Co. is legal, valid and legally binding on both parties.


(c) Greenville Branch of Zhongshan Property Management Co. has the right to use the property according to

the use specified in the tenancy agreement



Greenville Branch of Zhongshan Property Management Co. will not thereby suffer any penalty or fine or

be responsible for any legal liability.


— IV-180 —



Capital value in


30th September

2005

(HK$)


Agile Garden,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


of China

The property comprises a premises in a 3-storey

composite building completed in about 2001.




Zhongshan Property Management Co. for a term

of 2 years and 6 months from 1st July 2005 at a


The property is

occupied by the


and center for

residents.

No commercial

value

Notes:






a. As the lessor cannot provide the Realty Title Certificate or the Building Ownership Certificate of the

property, the validity of the tenancy agreement is uncertain and the rights of Zhongshan Property

Management Co. to use the property may not be protected under the laws of the PRC. Notwithstanding,

the relevant clauses on dispute resolution and breach of contract contained in the tenancy agreement are

still of legal effect and Zhongshan Property Management Co. may still claim against the lessor for



— IV-181 —



Capital value in


30th September

2005

(HK$)


Agile Garden,

Sanxiang Town,

Zhongshan City,

Guangdong Province,


of China

The property comprises a premises in a 3-storey

composite building completed in about 2002.




Zhongshan Property Management Co. via a

tenancy agreement dated 30th June 2005 for a

term of 2 years and 6 months from 1st July 2005

at a monthly rent of RMB20,487.

The property is

occupied by the


and center for

residents.

No commercial

value

Notes:


is Zhongshan Agile Co.




(a) Tenancy agreement entered into between Zhongshan Agile Co. and Zhongshan Property Management Co.

is legal, valid and legally binding on both parties.

(b) Zhongshan Agile Co. has the right to lease the property.

(c) Zhongshan Property Management Co. has the right to use the property according to the use specified in

the tenancy agreement.



Zhongshan Property Management Co. will not thereby suffer any penalty or fine or be responsible for any

legal liability.


— IV-182 —


Other property interests acquired by the Group in the PRC after the date of valuation


A Parcel of Land,

Xinsheng Village,

Minzhong Town,

Zhongshan City, Guangdong


Republic of China

The property comprises a site with a site area of approximately

63,464 sq.m. (95.2 mu).

As advised by the Group, the property is planned to be developed

into a residential development with approximate gross floor area

of 107,889 sq.m..

The property is vacant.

Notes:

1. By an Land Use Rights Transfer Agreement dated 10th October 2005, the Group agreed to acquire the property for a

total consideration of RMB24,750,960. This consideration has included land premium. As confirmed by the Group, part

of the consideration in the sum of RMB10,000,000 has been paid up to the date of 31st October 2005. We have

ascribed no commercial value to the property.

2. As at the date of 31st October 2005, the market value of the property, assuming that the Group has obtained a valid



3. As advised by the Group, the State-owned Land Use Rights Certificate of this piece of land may be obtained in March

2006.

4. We have been provided with a legal opinion on the property prepared by the Group’s legal advisors, which contains,

inter alia, the following information:

(a) The action relating to the transfer of the property is lawful.

(b) Upon payment of the consideration in full, there shall be no legal impediment in the Group obtaining the land

use rights to the property.


— IV-183 —



A Parcel of Land,

Wenhua Road East,

Changcheng District,

Foshan City, Guangdong


Republic of China


184,696 sq.m. for residential/commercial use.


into residential development with approximate gross floor area of

497,464 sq.m..


Notes:

1. By a Public Auction Agreement dated 20th October 2005, the Group agreed to acquire the property for a total

consideration of RMB731,000,000. This consideration does not include the compensation to the occupiers. As advised

by the Group, the transaction cost of the auction is about RMB8,772,000. As confirmed by the Group, part of the total

(including consideration and transaction cost) of RMB20,000,000 has been paid up to the date of 31st October 2005.

We have ascribed no commercial value to the property.

2. Pursuant to the Foshan Planning Bureau Construction Condition Permit, the piece of land should be developed with the

following condition:

(a) residential plot ratio 41.8

(b) commercial plot ratio 42.5

(c) residential building density 425%

(d) commercial building density 435%

(e) residential greenary ratio 535%

(f) commercial greenary ratio 525%

3. As at 31st October 2005 the market value of the property, assuming that the Group has obtained a valid certificate of

State-owned Land Use Rights, the land premium has been fully paid and the parcel of land can be developed into

residential development, is about RMB731,000,000.



(a) Upon signing of a Land Use Rights Transfer Contract with the relevant land administration authority and

payment of the consideration in full, there shall be no legal impediment in the Group obtaining the land use

rights to the property.


— IV-184 —



A Parcel of Land,

Gonghua Village, Zhongshan


the People’s Republic of

China


10,000 sq.m. (15 mu).


into a residential development with approximate gross floor area

of 11,000 sq.m..


Notes:

1. By a Land Use Rights Transfer Agreement dated 18th October 2005 (‘‘the Agreement’’), the Group agreed to acquire

the property for a consideration of RMB4,500,000. This consideration has included land premium. As confirmed by the

Group, the consideration has not yet paid up to the date of 31st October 2005. We have ascribed no commercial value

to the property.

2. As at the date of 31st October 2005, the market value of the property, assuming that the Group has obtained a valid





(a) Notwithstanding that the Group has entered into the Agreement, the Group has yet to enter into a Land Use

Rights Transfer Contract with the relevant land administration authority and pay the land premium.



— IV-185 —

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN COMPANY LAW

Set out below is a summary of certain provisions of the Memorandum and Articles of

Association of the Company and of certain aspects of Cayman company law.

The Company was incorporated in the Cayman Islands as an exempted company with limited

liability on 14 July 2005 under the Companies Law, Cap 22 (Law 3 of 1961, as consolidated and

revised) of the Cayman Islands (the ‘‘Cayman Companies Law’’). The Memorandum of Association

(the ‘‘Memorandum’’) and the Articles of Association comprise its constitution.

1. MEMORANDUM OF ASSOCIATION

(a) The Memorandum states, inter alia, that the liability of members of the Company is

limited to the amount, if any, for the time being unpaid on the Shares respectively held by

them and that the objects for which the Company is established are unrestricted (including

acting as an investment company), and that the Company shall have and be capable of

exercising any and all of the powers at any time or from time to time exercisable by a

natural person of full capacity irrespective of any question of corporate benefit, as

provided in section 27(2) of the Cayman Companies Law and in view of the fact that the

Company is an exempted company that the Company will not trade in the Cayman Islands

with any person, firm or corporation except in furtherance of the business of the Company

carried on outside the Cayman Islands.

(b) The Company may by special resolution alter its Memorandum with respect to any

objects, powers or other matters specified therein.

2. ARTICLES OF ASSOCIATION

The Articles were adopted on 23 November 2005. The following is a summary of certain

provisions of the Articles:

(a) Directors

(i) Power to allot and issue shares and warrants

Subject to the provisions of the Cayman Companies Law and the Memorandum and Articles and to any

special rights conferred on the holders of any shares or class of shares, any share may be issued with or have

attached thereto such rights, or such restrictions, whether with regard to dividend, voting, return of capital, or

otherwise, as the Company may by ordinary resolution determine (or, in the absence of any such determination

or so far as the same may not make specific provision, as the board may determine). Subject to the Cayman

Companies Law, the rules of any Designated Stock Exchange and the Memorandum and Articles, any share may

be issued on terms that, at the option of the Company or the holder thereof, they are liable to be redeemed.

The board may issue warrants conferring the right upon the holders thereof to subscribe for any class of

shares or securities in the capital of the Company on such terms as it may from time to time determine.

Subject to the provisions of the Cayman Companies Law and the Articles and, where applicable, the rules

of any Designated Stock Exchange and without prejudice to any special rights or restrictions for the time being

attached to any shares or any class of shares, all unissued shares in the Company shall be at the disposal of the

board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times, for

such consideration and on such terms and conditions as it in its absolute discretion thinks fit, but so that no

shares shall be issued at a discount.

APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANYAND CAYMAN ISLANDS COMPANY LAW

— V-1 —

Neither the Company nor the board shall be obliged, when making or granting any allotment of, offer of,

option over or disposal of shares, to make, or make available, any such allotment, offer, option or shares to

members or others with registered addresses in any particular territory or territories being a territory or

territories where, in the absence of a registration statement or other special formalities, this would or might, in

the opinion of the board, be unlawful or impracticable. Members affected as a result of the foregoing sentence

shall not be, or be deemed to be, a separate class of members for any purpose whatsoever.

(ii) Power to dispose of the assets of the Company or any subsidiary

There are no specific provisions in the Articles relating to the disposal of the assets of the Company or

any of its subsidiaries. The Directors may, however, exercise all powers and do all acts and things which may be

exercised or done or approved by the Company and which are not required by the Articles or the Cayman

Companies Law to be exercised or done by the Company in general meeting.

(iii) Compensation or payments for loss of office

Pursuant to the Articles, payments to any Director or past Director of any sum by way of compensation

for loss of office or as consideration for or in connection with his retirement from office (not being a payment to

which the Director is contractually entitled) must be approved by the Company in general meeting.

(iv) Loans and provision of security for loans to Directors

There are provisions in the Articles prohibiting the making of loans to Directors.

(v) Disclosure of interests in contracts with the Company or any of its subsidiaries.

A Director may hold any other office or place of profit with the Company (except that of the auditor of

the Company) in conjunction with his office of Director for such period and, subject to the Articles, upon such

terms as the board may determine, and may be paid such extra remuneration therefor (whether by way of salary,

commission, participation in profits or otherwise) in addition to any remuneration provided for by or pursuant to

any other Articles. A Director may be or become a director or other officer of, or otherwise interested in, any

company promoted by the Company or any other company in which the Company may be interested, and shall

not be liable to account to the Company or the members for any remuneration, profits or other benefits received

by him as a director, officer or member of, or from his interest in, such other company. Subject as otherwise

provided by the Articles, the board may also cause the voting power conferred by the shares in any other

company held or owned by the Company to be exercised in such manner in all respects as it thinks fit, including

the exercise thereof in favour of any resolution appointing the Directors or any of them to be directors or

officers of such other company, or voting or providing for the payment of remuneration to the directors or

officers of such other company.

Subject to the Cayman Companies Law and the Articles, no Director or proposed or intended Director

shall be disqualified by his office from contracting with the Company, either with regard to his tenure of any

office or place of profit or as vendor, purchaser or in any other manner whatsoever, nor shall any such contract

or any other contract or arrangement in which any Director is in any way interested be liable to be avoided, nor

shall any Director so contracting or being so interested be liable to account to the Company or the members for

any remuneration, profit or other benefits realized by any such contract or arrangement by reason of such

Director holding that office or the fiduciary relationship thereby established. A Director who to his knowledge is

in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or

arrangement with the Company shall declare the nature of his interest at the meeting of the board at which the

question of entering into the contract or arrangement is first taken into consideration, if he knows his interest

then exists, or in any other case, at the first meeting of the board after he knows that he is or has become so

interested.


— V-2 —

A Director shall not vote (nor be counted in the quorum) on any resolution of the board approving any

contract or arrangement or other proposal in which he or any of his associates is materially interested, but this

prohibition shall not apply to any of the following matters, namely:

(aa) any contract or arrangement for giving to such Director or his associate(s) any security or

indemnity in respect of money lent by him or any of his associates or obligations incurred or

undertaken by him or any of his associates at the request of or for the benefit of the Company or

any of its subsidiaries;

(bb) any contract or arrangement for the giving of any security or indemnity to a third party in respect

of a debt or obligation of the Company or any of its subsidiaries for which the Director or his

associate(s) has himself/themselves assumed responsibility in whole or in part whether alone or

jointly under a guarantee or indemnity or by the giving of security;

(cc) any contract or arrangement concerning an offer of shares or debentures or other securities of or by

the Company or any other company which the Company may promote or be interested in for

subscription or purchase, where the Director or his associate(s) is/are or is/are to be interested as a

participant in the underwriting or sub-underwriting of the offer;

(dd) any contract or arrangement in which the Director or his associate(s) is/are interested in the same

manner as other holders of shares or debentures or other securities of the Company by virtue only

of his/their interest in shares or debentures or other securities of the Company;

(ee) any contract or arrangement concerning any other company in which the Director or his associate(s)

is/are interested only, whether directly or indirectly, as an officer or executive or a shareholder or

in which the Director and any of his associates are not in aggregate beneficially interested in 5

percent. or more of the issued shares or of the voting rights of any class of shares of such company

(or of any third company through which his interest or that of any of his associates is derived); or

(ff) any proposal or arrangement concerning the adoption, modification or operation of a share option

scheme, a pension fund or retirement, death, or disability benefits scheme or other arrangement

which relates both to Directors, his associates and employees of the Company or of any of its

subsidiaries and does not provide in respect of any Director, or his associate(s), as such any

privilege or advantage not accorded generally to the class of persons to which such scheme or fund

relates.

(vi) Remuneration

The ordinary remuneration of the Directors shall from time to time be determined by the Company in

general meeting, such sum (unless otherwise directed by the resolution by which it is voted) to be divided

amongst the Directors in such proportions and in such manner as the board may agree or, failing agreement,

equally, except that any Director holding office for part only of the period in respect of which the remuneration

is payable shall only rank in such division in proportion to the time during such period for which he held office.

The Directors shall also be entitled to be prepaid or repaid all travelling, hotel and incidental expenses

reasonably expected to be incurred or incurred by them in attending any board meetings, committee meetings or

general meetings or separate meetings of any class of shares or of debentures of the Company or otherwise in

connection with the discharge of their duties as Directors.

Any Director who, by request, goes or resides abroad for any purpose of the Company or who performs

services which in the opinion of the board go beyond the ordinary duties of a Director may be paid such extra

remuneration (whether by way of salary, commission, participation in profits or otherwise) as the board may

determine and such extra remuneration shall be in addition to or in substitution for any ordinary remuneration as

a Director. An executive Director appointed to be a managing director, joint managing director, deputy managing

director or other executive officer shall receive such remuneration (whether by way of salary, commission or

participation in profits or otherwise or by all or any of those modes) and such other benefits (including pension

and/or gratuity and/or other benefits on retirement) and allowances as the board may from time to time decide.

Such remuneration may be either in addition to or in lieu of his remuneration as a Director.


— V-3 —

The board may establish or concur or join with other companies (being subsidiary companies of the

Company or companies with which it is associated in business) in establishing and making contributions out of

the Company’s monies to any schemes or funds for providing pensions, sickness or compassionate allowances,

life assurance or other benefits for employees (which expression as used in this and the following paragraph shall

include any Director or ex-Director who may hold or have held any executive office or any office of profit with

the Company or any of its subsidiaries) and ex-employees of the Company and their dependents or any class or

classes of such persons.

The board may pay, enter into agreements to pay or make grants of revocable or irrevocable, and either

subject or not subject to any terms or conditions, pensions or other benefits to employees and ex-employees and

their dependents, or to any of such persons, including pensions or benefits additional to those, if any, to which

such employees or ex-employees or their dependents are or may become entitled under any such scheme or fund

as is mentioned in the previous paragraph. Any such pension or benefit may, as the board considers desirable, be

granted to an employee either before and in anticipation of, or upon or at any time after, his actual retirement.

(vii) Retirement, appointment and removal

At each annual general meeting, one third of the Directors for the time being (or if their number is not a

multiple of three, then the number nearest to but not less than one third) will retire from office by rotation

provided that every Director shall be subject to retirement at least once every three years. The Directors to retire

in every year will be those who have been longest in office since their last re-election or appointment but as

between persons who became or were last re-elected Directors on the same day those to retire will (unless they

otherwise agree among themselves) be determined by lot. There are no provisions relating to retirement of

Directors upon reaching any age limit.

The Directors shall have the power from time to time and at any time to appoint any person as a Director

either to fill a casual vacancy on the board or as an addition to the existing board. Any Director so appointed

shall hold office only until the next following annual general meeting of the Company and shall then be eligible

for re-election. Neither a Director nor an alternate Director is required to hold any shares in the Company by

way of qualification.

A Director may be removed by a special resolution of the Company before the expiration of his period of

office (but without prejudice to any claim which such Director may have for damages for any breach of any

contract between him and the Company) and may by ordinary resolution appoint another in his place. Unless

otherwise determined by the Company in general meeting, the number of Directors shall not be less than two.

There is no maximum number of Directors.

The office or director shall be vacated:

(aa) if he resigns his office by notice in writing delivered to the Company at the registered office of the

Company for the time being or tendered at a meeting of the Board;

(bb) becomes of unsound mind or dies;

(cc) if, without special leave, he is absent from meetings of the board (unless an alternate director

appointed by him attends) for six (6) consecutive months, and the board resolves that his office is

vacated;

(dd) if he becomes bankrupt or has a receiving order made against him or suspends payment or

compounds with his creditors;

(ee) if he is prohibited from being a director by law;

(ff) if he ceases to be a director by virtue of any provision of law or is removed from office pursuant to

the Articles.


— V-4 —

The board may from time to time appoint one or more of its body to be managing director, joint managing

director, or deputy managing director or to hold any other employment or executive office with the Company for

such period and upon such terms as the board may determine and the board may revoke or terminate any of such

appointments. The board may delegate any of its powers, authorities and discretions to committees consisting of

such Director or Directors and other persons as the board thinks fit, and it may from time to time revoke such

delegation or revoke the appointment of and discharge any such committees either wholly or in part, and either

as to persons or purposes, but every committee so formed shall, in the exercise of the powers, authorities and

discretions so delegated, conform to any regulations that may from time to time be imposed upon it by the board.

(viii) Borrowing powers

The board may exercise all the powers of the Company to raise or borrow money, to mortgage or charge

all or any part of the undertaking, property and assets (present and future) and uncalled capital of the Company

and, subject to the Cayman Companies Law, to issue debentures, bonds and other securities of the Company,

whether outright or as collateral security for any debt, liability or obligation of the Company or of any third

party.

Note: These provisions, in common with the Articles in general, can be varied with the sanction of a

special resolution of the Company.

(ix) Proceedings of the Board

The board may meet for the despatch of business, adjourn and otherwise regulate their meetings as they

think fit. Questions arising at any meeting shall be determined by a majority of votes. In the case of an equality

of votes, the chairman of the meeting shall have an additional or casting vote.

(x) Register of Directors and Officers

The Cayman Companies Law and the Articles provide that the Company is required to maintain at its

registered office a register of directors and officers which is not available for inspection by the public. A copy of

such register must be filed with the Registrar of Companies in the Cayman Islands (the ‘‘Cayman Registrar’’) and

any change must be notified to the Cayman Registrar within thirty (30) days of any change in such directors or

officers.

(b) Alterations to constitutional documents

The Articles may be rescinded, altered or amended by the Company in general meeting by special resolution.

The Articles state that a special resolution shall be required to alter the provisions of the Memorandum, to amend the

Articles or to change the name of the Company.

(c) Alteration of capital

The Company may from time to time by ordinary resolution in accordance with the relevant provisions of the

Cayman Companies Law:

(i) increase its capital by such sum, to be divided into shares of such amounts as the resolution shall

prescribe;

(ii) consolidate and divide all or any of its capital into shares of larger amount than its existing shares;

(iii) divide its shares into several classes and without prejudice to any special rights previously conferred on

the holders of existing shares attach thereto respectively any preferential, deferred, qualified or special

rights, privileges, conditions or restrictions as the Company in general meeting or as the directors may

determine;


— V-5 —

(iv) sub-divide its shares or any of them into shares of smaller amount than is fixed by the Memorandum,

subject nevertheless to the provisions of the Cayman Companies Law, and so that the resolution whereby

any share is sub-divided may determine that, as between the holders of the shares resulting from such sub-

division, one or more of the shares may have any such preferred or other special rights, over, or may have

such deferred rights or be subject to any such restrictions as compared with the others as the Company has

power to attach to unissued or new shares; or

(v) cancel any shares which, at the date of passing of the resolution, have not been taken, or agreed to be

taken, by any person, and diminish the amount of its capital by the amount of the shares so canceled.

The Company may subject to the provisions of the Cayman Companies Law reduce its share capital or any

capital redemption reserve or other undistributable reserve in any way by special resolution.

(d) Variation of rights of existing shares or classes of shares

Subject to the Cayman Companies Law, all or any of the special rights attached to the shares or any class of

shares may (unless otherwise provided for by the terms of issue of that class) be varied, modified or abrogated either

with the consent in writing of the holders of not less than three-fourths in nominal value of the issued shares of that

class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of

that class. To every such separate general meeting the provisions of the Articles relating to general meetings will

mutatis mutandis apply, but so that the necessary quorum (other than at an adjourned meeting) shall be two persons

holding or representing by proxy not less than one-third in nominal value of the issued shares of that class and at any

adjourned meeting two holders present in person or by proxy whatever the number of shares held by them shall be a

quorum. Every holder of shares of the class shall be entitled on a poll to one vote for every such share held by him,

and any holder of shares of the class present in person or by proxy may demand a poll.

The special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise

expressly provided in the rights attaching to the terms of issue of such shares, be deemed to be varied by the creation

or issue of further shares ranking pari passu therewith.

(e) Special resolution-majority required

Pursuant to the Articles, a special resolution of the Company must be passed by a majority of not less than three-

fourths of the votes cast by such members as, being entitled so to do, vote in person or, in the case of such members as

are corporations, by their duly authorized representatives or, where proxies are allowed, by proxy at a general meeting

of which not less than twenty-one (21) clear days’ notice, specifying the intention to propose the resolution as a special

resolution, has been duly given. Provided that, except in the case of an annual general meeting, if it is so agreed by a

majority in number of the members having a right to attend and vote at such meeting, being a majority together holding

not less than ninety-five (95) per cent. in nominal value of the shares giving that right and, in the case of an annual

general meeting, if so agreed by all Members entitled to attend and vote thereat, a resolution may be proposed and

passed as a special resolution at a meeting of which less than twenty-one (21) clear days’ notice has been given.

A copy of any special resolution must be forwarded to the Cayman Registrar within fifteen (15) days of being

passed.

An ordinary resolution is defined in the Articles to mean a resolution passed by a simple majority of the votes of

such members of the Company as, being entitled to do so, vote in person or, in the case of corporations, by their duly

authorized representatives or, where proxies are allowed, by proxy at a general meeting held in accordance with the

Articles.

(f) Voting rights (generally and on a poll) and right to demand a poll

Subject to any special rights or restrictions as to voting for the time being attached to any shares by or in

accordance with the Articles, at any general meeting on a show of hands, every member who is present in person or by

proxy or being a corporation, is present by its duly authorized representative shall have one vote and on a poll every

member present in person or by proxy or, in the case of a member being a corporation, by its duly authorized

representative shall have one vote for every fully paid share of which he is the holder but so that no amount paid up or


— V-6 —

credited as paid up on a share in advance of calls or installments is treated for the foregoing purposes as paid up on the

share. Notwithstanding anything contained in the Articles, where more than one proxy is appointed by a member which

is a clearing house (or its nominee(s)), each such proxy shall have one vote on a show of hands. On a poll, a member

entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

At any general meeting a resolution put to the vote of the meeting is to be decided on a show of hands unless

voting by way of a poll is required by the rules of the Designated Stock Exchange or (before or on the declaration of

the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded by (i) the

chairman of the meeting or (ii) at least three members present in person or, in the case of a member being a

corporation, by its duly authorized representative or by proxy for the time being entitled to vote at the meeting or (iii)

any member or members present in person or, in the case of a member being a corporation, by its duly authorized

representative or by proxy and representing not less than one-tenth of the total voting rights of all the members having

the right to vote at the meeting or (iv) a member or members present in person or, in the case of a member being a

corporation, by its duly authorized representative or by proxy and holding shares in the Company conferring a right to

vote at the meeting being shares on which an aggregate sum has been paid equal to not less than one-tenth of the total

sum paid up on all the shares conferring that right or if required by the rules of the Designated Stock Exchange, by any

Director or Directors who, individually or collectively, hold proxies in respect of shares representing five per cent.

(5%) or more of the total voting rights at such meeting.

If a recognized clearing house (or its nominee(s)) is a member of the Company it may authorise such person or

persons as it thinks fit to act as its representative(s) at any meeting of the Company or at any meeting of any class of

members of the Company provided that, if more than one person is so authorized, the authorization shall specify the

number and class of shares in respect of which each such person is so authorized. A person authorized pursuant to this

provision shall be deemed to have been duly authorized without further evidence of the facts and be entitled to exercise

the same powers on behalf of the recognized clearing house (or its nominee(s)) as if such person was the registered

holder of the shares of the Company held by that clearing house (or its nominee(s)) including the right to vote

individually on a show of hands.

Where the Company has any knowledge that any shareholder is, under the rules of the Designated Stock

Exchange, required to abstain from voting on any particular resolution of the Company or restricted to voting only for

or only against any particular resolution of the Company, any votes cast by or on behalf of such shareholder in

contravention of such requirement or restriction shall not be counted.

(g) Requirements for annual general meetings

An annual general meeting of the Company must be held in each year, other than the year of adoption of the

Articles (within a period of not more than 15 months after the holding of the last preceding annual general meeting or a

period of 18 months from the date of adoption of the Articles, unless a longer period would not infringe the rules of

any Designated Stock Exchange) at such time and place as may be determined by the board.

(h) Accounts and audit

The board shall cause true accounts to be kept of the sums of money received and expended by the Company,

and the matters in respect of which such receipt and expenditure take place, and of the property, assets, credits and

liabilities of the Company and of all other matters required by the Cayman Companies Law or necessary to give a true

and fair view of the Company’s affairs and to explain its transactions.

The accounting records shall be kept at the registered office or at such other place or places as the board decides

and shall always be open to inspection by any Director. No member (other than a Director) shall have any right to

inspect any accounting record or book or document of the Company except as conferred by law or authorized by the

board or the Company in general meeting.

A copy of every balance sheet and profit and loss account (including every document required by law to be

annexed thereto) which is to be laid before the Company at its general meeting, together with a printed copy of the

Directors’ report and a copy of the auditors’ report, shall not less than twenty-one (21) days before the date of the

meeting and at the same time as the notice of annual general meeting be sent to every person entitled to receive notices

of general meetings of the Company under the provisions the Articles; however, subject to compliance with all


— V-7 —

applicable laws, including the rules of the Designated Stock Exchange, the Company may send to such persons a

summary financial statement derived from the Company’s annual accounts and the directors’ report instead provided

that any such person may by notice in writing served on the Company, demand that the Company sends to him, in

addition to a summary financial statement, a complete printed copy of the Company’s annual financial statement and

the directors’ report thereon.

Auditors shall be appointed and the terms and tenure of such appointment and their duties at all times regulated

in accordance with the provisions of the Articles. The remuneration of the auditors shall be fixed by the Company in

general meeting or in such manner as the members may determine.

The financial statements of the Company shall be audited by the auditor in accordance with generally accepted

auditing standards. The auditor shall make a written report thereon in accordance with generally accepted auditing

standards and the report of the auditor shall be submitted to the members in general meeting. The generally accepted

auditing standards referred to herein may be those of a country or jurisdiction other than the Cayman Islands. If so, the

financial statements and the report of the auditor should disclose this fact and name such country or jurisdiction.

(i) Notices of meetings and business to be conducted thereat

An annual general meeting and any extraordinary general meeting at which it is proposed to pass a special

resolution shall (save as set out in sub-paragraph (e) above) be called by at least twenty-one (21) clear days’ notice in

writing, and any other extraordinary general meeting shall be called by at least fourteen (14) clear days’ notice (in each

case exclusive of the day on which the notice is served or deemed to be served and of the day for which it is given).

The notice must specify the time and place of the meeting and, in the case of special business, the general nature of

that business. In addition notice of every general meeting shall be given to all members of the Company other than

such as, under the provisions of the Articles or the terms of issue of the shares they hold, are not entitled to receive

such notices from the Company, and also to the auditors for the time being of the Company.

Notwithstanding that a meeting of the Company is called by shorter notice than that mentioned above, it shall be

deemed to have been duly called if it is so agreed:

(i) in the case of a meeting called as an annual general meeting, by all members of the Company entitled to

attend and vote thereat; and

(ii) in the case of any other meeting, by a majority in number of the members having a right to attend and

vote at the meeting, being a majority together holding not less than ninety-five (95) per cent in nominal

value of the issued shares giving that right.

All business shall be deemed special that is transacted at an extraordinary general meeting and also all business

shall be deemed special that is transacted at an annual general meeting with the exception of the following, which shall

be deemed ordinary business:

(aa) the declaration and sanctioning of dividends;

(bb) the consideration and adoption of the accounts and balance sheet and the reports of the directors and the

auditors;

(cc) the election of directors in place of those retiring;

(dd) the appointment of auditors and other officers;

(ee) the fixing of the remuneration of the directors and of the auditors;

(ff) the granting of any mandate or authority to the directors to offer, allot, grant options over or otherwise

dispose of the unissued shares of the Company representing not more than twenty (20) per cent in nominal

value of its existing issued share capital; and

(gg) the granting of any mandate or authority to the directors to repurchase securities of the Company.


— V-8 —

(j) Transfer of shares

All transfers of shares may be effected by an instrument of transfer in the usual or common form or in a form

prescribed by the Designated Stock Exchange or in such other form as the board may approve and which may be under

hand or, if the transferor or transferee is a clearing house or its nominee(s), by hand or by machine imprinted signature

or by such other manner of execution as the board may approve from time to time. The instrument of transfer shall be

executed by or on behalf of the transferor and the transferee provided that the board may dispense with the execution of

the instrument of transfer by the transferee in any case in which it thinks fit, in its discretion, to do so and the

transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register of

members in respect thereof. The board may also resolve either generally or in any particular case, upon request by

either the transferor or the transferee, to accept mechanically executed transfers.

The board in so far as permitted by any applicable law may, in its absolute discretion, at any time and from time

to time transfer any share upon the principal register to any branch register or any share on any branch register to the

principal register or any other branch register.

Unless the board otherwise agrees, no shares on the principal register shall be transferred to any branch register

nor may shares on any branch register be transferred to the principal register or any other branch register. All transfers

and other documents of title shall be lodged for registration and registered, in the case of shares on a branch register, at

the relevant registration office and, in the case of shares on the principal register, at the registered office in the Cayman

Islands or such other place at which the principal register is kept in accordance with the Cayman Companies Law.

The board may, in its absolute discretion, and without assigning any reason, refuse to register a transfer of any

share (not being a fully paid up share) to a person of whom it does not approve or any share issued under any share

incentive scheme for employees upon which a restriction on transfer imposed thereby still subsists, and it may also

refuse to register any transfer of any share to more than four joint holders or any transfer of any share (not being a

fully paid up share) on which the Company has a lien.

The board may decline to recognize any instrument of transfer unless a fee of such maximum sum as any

Designated Stock Exchange may determine to be payable or such lesser sum as the Directors may from time to time

require is paid to the Company in respect thereof, the instrument of transfer, if applicable, is properly stamped, is in

respect of only one class of share and is lodged at the relevant registration office or registered office or such other

place at which the principal register is kept accompanied by the relevant share certificate(s) and such other evidence as

the board may reasonably require to show the right of the transferor to make the transfer (and if the instrument of

transfer is executed by some other person on his behalf, the authority of that person so to do).

The registration of transfers may be suspended and the register closed on giving notice by advertisement in a

relevant newspaper and, where applicable, any other newspapers in accordance with the requirements of any Designated

Stock Exchange, at such times and for such periods as the board may determine and either generally or in respect of

any class of shares. The register of members shall not be closed for periods exceeding in the whole thirty (30) days in

any year.

(k) Power for the Company to purchase its own shares

The Company is empowered by the Cayman Companies Law and the Articles to purchase its own Shares subject

to certain restrictions and the Board may only exercise this power on behalf of the Company subject to any applicable

requirements imposed from time to time by any Designated Stock Exchange.

(l) Power for any subsidiary of the Company to own shares in the Company

There are no provisions in the Articles relating to ownership of shares in the Company by a subsidiary.

(m) Dividends and other methods of distribution

Subject to the Cayman Companies Law, the Company in general meeting may declare dividends in any currency

to be paid to the members but no dividend shall be declared in excess of the amount recommended by the board.


— V-9 —

The Articles provide dividends may be declared and paid out of the profits of the Company, realized or

unrealized, or from any reserve set aside from profits which the directors determine is no longer needed. With the

sanction of an ordinary resolution dividends may also be declared and paid out of share premium account or any other

fund or account which can be authorized for this purpose in accordance with the Cayman Companies Law.

Except in so far as the rights attaching to, or the terms of issue of, any share may otherwise provide, (i) all

dividends shall be declared and paid according to the amounts paid up on the shares in respect whereof the dividend is

paid but no amount paid up on a share in advance of calls shall for this purpose be treated as paid up on the share and

(ii) all dividends shall be apportioned and paid pro rata according to the amount paid up on the shares during any

portion or portions of the period in respect of which the dividend is paid. The Directors may deduct from any dividend

or other monies payable to any member or in respect of any shares all sums of money (if any) presently payable by him

to the Company on account of calls or otherwise.

Whenever the board or the Company in general meeting has resolved that a dividend be paid or declared on the

share capital of the Company, the board may further resolve either (a) that such dividend be satisfied wholly or in part

in the form of an allotment of shares credited as fully paid up, provided that the shareholders entitled thereto will be

entitled to elect to receive such dividend (or part thereof) in cash in lieu of such allotment, or (b) that shareholders

entitled to such dividend will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of

the whole or such part of the dividend as the board may think fit. The Company may also upon the recommendation of

the board by an ordinary resolution resolve in respect of any one particular dividend of the Company that it may be

satisfied wholly in the form of an allotment of shares credited as fully paid up without offering any right to

shareholders to elect to receive such dividend in cash in lieu of such allotment.

Any dividend, interest or other sum payable in cash to the holder of shares may be paid by cheque or warrant

sent through the post addressed to the holder at his registered address, or in the case of joint holders, addressed to the

holder whose name stands first in the register of the Company in respect of the shares at his address as appearing in the

register or addressed to such person and at such addresses as the holder or joint holders may in writing direct. Every

such cheque or warrant shall, unless the holder or joint holders otherwise direct, be made payable to the order of the

holder or, in the case of joint holders, to the order of the holder whose name stands first on the register in respect of

such shares, and shall be sent at his or their risk and payment of the cheque or warrant by the bank on which it is

drawn shall constitute a good discharge to the Company. Any one of two or more joint holders may give effectual

receipts for any dividends or other moneys payable or property distributable in respect of the shares held by such joint

holders.

Whenever the board or the Company in general meeting has resolved that a dividend be paid or declared the

board may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any

kind.

All dividends or bonuses unclaimed for one year after having been declared may be invested or otherwise made

use of by the board for the benefit of the Company until claimed and the Company shall not be constituted a trustee in

respect thereof. All dividends or bonuses unclaimed for six years after having been declared may be forfeited by the

board and shall revert to the Company.

No dividend or other monies payable by the Company on or in respect of any share shall bear interest against the

Company.

(n) Proxies

Any member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint

another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may

appoint more than one proxy to represent him and vote on his behalf at a general meeting of the Company or at a class

meeting. A proxy need not be a member of the Company and shall be entitled to exercise the same powers on behalf of

a member who is an individual and for whom he acts as proxy as such member could exercise. In addition, a proxy

shall be entitled to exercise the same powers on behalf of a member which is a corporation and for which he acts as

proxy as such member could exercise if it were an individual member. On a poll or on a show of hands, votes may be

given either personally (or, in the case of a member being a corporation, by its duly authorized representative) or by

proxy.


— V-10 —

(o) Call on shares and forfeiture of shares

Subject to the Articles and to the terms of allotment, the board may from time to time make such calls upon the

members in respect of any monies unpaid on the shares held by them respectively (whether on account of the nominal

value of the shares or by way of premium). A call may be made payable either in one lump sum or by installments. If

the sum payable in respect of any call or installment is not paid on or before the day appointed for payment thereof, the

person or persons from whom the sum is due shall pay interest on the same at such rate not exceeding twenty (20) per

cent. per annum as the board may agree to accept from the day appointed for the payment thereof to the time of actual

payment, but the board may waive payment of such interest wholly or in part. The board may, if it thinks fit, receive

from any member willing to advance the same, either in money or money’s worth, all or any part of the monies

uncalled and unpaid or installments payable upon any shares held by him, and upon all or any of the monies so

advanced the Company may pay interest at such rate (if any) as the board may decide.

If a member fails to pay any call on the day appointed for payment thereof, the board may serve not less than

fourteen (14) clear days’ notice on him requiring payment of so much of the call as is unpaid, together with any interest

which may have accrued and which may still accrue up to the date of actual payment and stating that, in the event of

non-payment at or before the time appointed, the shares in respect of which the call was made will be liable to be

forfeited.

If the requirements of any such notice are not complied with, any share in respect of which the notice has been

given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution

of the board to that effect. Such forfeiture will include all dividends and bonuses declared in respect of the forfeited

share and not actually paid before the forfeiture.

A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares but shall,

notwithstanding, remain liable to pay to the Company all monies which, at the date of forfeiture, were payable by him

to the Company in respect of the shares, together with (if the board shall in its discretion so require) interest thereon

from the date of forfeiture until the date of actual payment at such rate not exceeding twenty (20) per cent. per annum

as the board determines.

(p) Inspection of register of members

Pursuant to the Articles the register and branch register of members shall be open to inspection for at least two

(2) hours on every business day by members without charge, or by any other person upon a maximum payment of

HK$2.50 or such lesser sum specified by the board, at the registered office or such other place at which the register is

kept in accordance with the Cayman Companies Law or, upon a maximum payment of HK$1.00 or such lesser sum

specified by the board, at the Registration Office, unless the register is closed in accordance with the Articles.

(q) Quorum for meetings and separate class meetings

No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to

business, but the absence of a quorum shall not preclude the appointment of a chairman.

Save as otherwise provided by the Articles the quorum for a general meeting shall be two members present in

person (or, in the case of a member being a corporation, by its duly authorized representative) or by proxy and entitled

to vote. In respect of a separate class meeting (other than an adjourned meeting) convened to sanction the modification

of class rights the necessary quorum shall be two persons holding or representing by proxy not less than one-third in

nominal value of the issued shares of that class.

A corporation being a member shall be deemed for the purpose of the Articles to be present in person if

represented by its duly authorized representative being the person appointed by resolution of the directors or other

governing body of such corporation to act as its representative at the relevant general meeting of the Company or at

any relevant general meeting of any class of members of the Company.


— V-11 —

(r) Rights of the minorities in relation to fraud or oppression

There are no provisions in the Articles relating to rights of minority shareholders in relation to fraud or

oppression. However, certain remedies are available to shareholders of the Company under Cayman law, as summarized

in paragraph 3(f) of this Appendix.

(s) Procedures on liquidation

A resolution that the Company be wound up by the court or be wound up voluntarily shall be a special

resolution.

Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on

liquidation for the time being attached to any class or classes of shares (i) if the Company shall be wound up and the

assets available for distribution amongst the members of the Company shall be more than sufficient to repay the whole

of the capital paid up at the commencement of the winding up, the excess shall be distributed pari passu amongst such

members in proportion to the amount paid up on the shares held by them respectively and (ii) if the Company shall be

wound up and the assets available for distribution amongst the members as such shall be insufficient to repay the whole

of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the

members in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the

winding up on the shares held by them respectively.

If the Company shall be wound up (whether the liquidation is voluntary or by the court) the liquidator may, with

the authority of a special resolution and any other sanction required by the Cayman Companies Law divide among the

members in specie or kind the whole or any part of the assets of the Company whether the assets shall consist of

property of one kind or shall consist of properties of different kinds and the liquidator may, for such purpose, set such

value as he deems fair upon any one or more class or classes of property to be divided as aforesaid and may determine

how such division shall be carried out as between the members or different classes of members. The liquidator may,

with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of members as the

liquidator, with the like authority, shall think fit, but so that no contributory shall be compelled to accept any shares or

other property in respect of which there is a liability.

(t) Untraceable members

Pursuant to the Articles, the Company may sell any of the shares of a member who is untraceable if (i) all

cheques or warrants in respect of dividends of the shares in question (being not less than three in total number) for any

sum payable in cash to the holder of such shares have remained uncashed for a period of 12 years; (ii) upon the expiry

of the 12 year period, the Company has not during that time received any indication of the existence of the member;

and (iii) the Company has caused an advertisement to be published in accordance with the rules of the Designated

Stock Exchange giving notice of its intention to sell such shares and a period of three months, or such shorter period as

may be permitted by the Designated Stock Exchange, has elapsed since the date of such advertisement and the

Designated Stock Exchange has been notified of such intention. The net proceeds of any such sale shall belong to the

Company and upon receipt by the Company of such net proceeds, it shall become indebted to the former member of the

Company for an amount equal to such net proceeds.

(u) Subscription rights reserve

The Articles provide that to the extent that it is not prohibited by and is in compliance with the Cayman

Companies Law, if warrants to subscribe for shares have been issued by the Company and the Company does any act or

engages in any transaction which would result in the subscription price of such warrants being reduced below the par

value of a share, a subscription rights reserve shall be established and applied in paying up the difference between the

subscription price and the par value of a share on any exercise of the warrants.


— V-12 —

3. CAYMAN ISLANDS COMPANY LAW

The Company is incorporated in the Cayman Islands subject to the Cayman Companies Law

and, therefore, operates subject to Cayman law. Set out below is a summary of certain provisions of

Cayman company law, although this does not purport to contain all applicable qualifications and

exceptions or to be a complete review of all matters of Cayman company law and taxation, which

may differ from equivalent provisions in jurisdictions with which interested parties may be more

familiar:

(a) Operations

As an exempted company, the Company’s operations must be conducted mainly outside the Cayman Islands. The

Company is required to file an annual return each year with the Cayman Registrar and pay a fee which is based on the

amount of its authorized share capital.

(b) Share capital

The Cayman Companies Law provides that where a company issues shares at a premium, whether for cash or

otherwise, a sum equal to the aggregate amount of the value of the premiums on those shares shall be transferred to an

account, to be called the ‘‘share premium account’’. At the option of a company, these provisions may not apply to

premiums on shares of that company allotted pursuant to any arrangement in consideration of the acquisition or

cancellation of shares in any other company and issued at a premium. The Cayman Companies Law provides that the

share premium account may be applied by the company subject to the provisions, if any, of its memorandum and

articles of association in (a) paying distributions or dividends to members; (b) paying up unissued shares of the

company to be issued to members as fully paid bonus shares; (c) the redemption and repurchase of shares (subject to

the provisions of section 37 of the Cayman Companies Law); (d) writing-off the preliminary expenses of the company;

(e) writing-off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the

company; and (f) providing for the premium payable on redemption or purchase of any shares or debentures of the

company.

No distribution or dividend may be paid to members out of the share premium account unless immediately

following the date on which the distribution or dividend is proposed to be paid, the company will be able to pay its

debts as they fall due in the ordinary course business.

The Cayman Companies Law provides that, subject to confirmation by the Grand Court of the Cayman Islands

(the ‘‘Cayman Court’’), a company limited by shares or a company limited by guarantee and having a share capital may,

if so authorized by its articles of association, by special resolution reduce its share capital in any way.

The Articles includes certain protections for holders of special classes of shares, requiring their consent to be

obtained before their rights may be varied. The consent of the specified proportions of the holders of the issued shares

of that class or the sanction of a resolution passed at a separate meeting of the holders of those shares is required.

(c) Financial assistance to purchase shares of a company or its holding company

Subject to all applicable laws, the Company may give financial assistance to Directors and employees of the

Company, its subsidiaries, its holding company or any subsidiary of such holding company in order that they may buy

Shares or shares in any subsidiary or holding company. Further, subject to all applicable laws, the Company may give

financial assistance to a trustee for the acquisition of Shares or shares in any such subsidiary or holding company to be

held for the benefit of employees of the Company, its subsidiaries, any holding company of the Company or any

subsidiary of any such holding company (including salaried Directors).

There is no statutory restriction in the Cayman Islands on the provision of financial assistance by a company to

another person for the purchase of, or subscription for, its own or its holding company’s shares. Accordingly, a

company may provide financial assistance if the directors of the company consider, in discharging their duties of care

and acting in good faith, for a proper purpose and in the interests of the company, that such assistance can properly be

given. Such assistance should be on an arm’s-length basis.


— V-13 —

(d) Purchase of shares and warrants by a company and its subsidiaries

Subject to the provisions of the Cayman Companies Law, a company limited by shares or a company limited by

guarantee and having a share capital may, if so authorized by its articles of association, issue shares which are to be

redeemed or are liable to be redeemed at the option of the company or a shareholder. In addition, such a company may,

if authorized to do so by its articles of association, purchase its own shares, including any redeemable shares. However,

if the articles of association do not authorise the manner or purchase, a company cannot purchase any of its own shares

unless the manner of purchase has first been authorized by an ordinary resolution of the company. At no time may a

company redeem or purchase its shares unless they are fully paid. A company may not redeem or purchase any of its

shares if, as a result of the redemption or purchase, there would no longer be any member of the company holding

shares. A payment out of capital by a company for the redemption or purchase of its own shares is not lawful unless

immediately following the date on which the payment is proposed to be made, the company shall be able to pay its

debts as they fall due in the ordinary course of business.

A company is not prohibited from purchasing and may purchase its own warrants subject to and in accordance

with the terms and conditions of the relevant warrant instrument or certificate. There is no requirement under Cayman

Islands law that a company’s memorandum or articles of association contain a specific provision enabling such

purchases and the directors of a company may rely upon the general power contained in its memorandum of association

to buy and sell and deal in personal property of all kinds.

Under Cayman Islands law, a subsidiary may hold shares in its holding company and, in certain circumstances,

may acquire such shares.

(e) Dividends and distributions

With the exception of section 34 of the Cayman Companies Law, there is no statutory provisions relating to the

payment of dividends. Based upon English case law, which is regarded as persuasive in the Cayman Islands, dividends

may be paid only out of profits. In addition, section 34 of the Cayman Companies Law permits, subject to a solvency

test and the provisions, if any, of the company’s memorandum and articles of association, the payment of dividends and

distributions out of the share premium account (see paragraph 2(m) above for further details).

(f) Protection of minorities

The Cayman Islands courts ordinarily would be expected to follow English case law precedents which permit a

minority shareholder to commence a representative action against or derivative actions in the name of the company to

challenge (a) an act which is ultra vires the company or illegal, (b) an act which constitutes a fraud against the minority

and the wrongdoers are themselves in control of the company, and (c) an irregularity in the passing of a resolution

which requires a qualified (or special) majority.

In the case of a company (not being a bank) having a share capital divided into shares, the Cayman Court may,

on the application of members holding not less than one fifth of the shares of the company in issue, appoint an

inspector to examine into the affairs of the company and to report thereon in such manner as the Cayman Court shall

direct.

Any shareholder of a company may petition the Cayman Court which may make a winding up order if the

Cayman Court is of the opinion that it is just and equitable that the company should be wound up.

Generally claims against a company by its shareholders must be based on the general laws of contract or tort

applicable in the Cayman Islands or their individual rights as shareholders as established by the company’s

memorandum and articles of association.


— V-14 —

(g) Management

The Cayman Companies Law contains no specific restrictions on the power of directors to dispose of assets of a

company. However, as a matter of general law, every officer of a company, which includes a director, managing

director and secretary, in exercising his powers and discharging his duties must do so honestly and in good faith with a

view to the best interests of the company and exercise the care, diligence and skill that a reasonably prudent person

would exercise in comparable circumstances.

(h) Accounting and auditing requirements

A company shall cause proper books of account to be kept with respect to (i) all sums of money received and

expended by the company and the matters in respect of which the receipt and expenditure takes place; (ii) all sales and

purchases of goods by the company; and (iii) the assets and liabilities of the company.

Proper books of account shall not be deemed to be kept if there are not kept such books as are necessary to give

a true and fair view of the state of the company’s affairs and to explain its transactions.

(i) Exchange control

There are no exchange control regulations or currency restrictions in the Cayman Islands.

(j) Taxation

Pursuant to section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, the Company has

obtained an undertaking from the Governor-in-Cabinet:

(1) that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income,

gains or appreciation shall apply to the Company or its operations; and

(2) that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable on or

in respect of the shares, debentures or other obligations of the Company.

The undertaking for the Company is for a period of twenty years from 2 August, 2005.

The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or

appreciations and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to

be material to the Company levied by the Government of the Cayman Islands save certain stamp duties which may be

applicable, from time to time, on certain instruments executed in or brought within the jurisdiction of the Cayman

Islands. The Cayman Islands are not party to any double tax treaties.

(k) Stamp duty on transfers

No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands companies except

those which hold interests in land in the Cayman Islands.

(l) Loans to directors

There is no express provision in the Cayman Companies Law prohibiting the making of loans by a company to

any of its directors.

(m) Inspection of corporate records

Members of the Company will have no general right under the Cayman Companies Law to inspect or obtain

copies of the register of members or corporate records of the Company. They will, however, have such rights as may be

set out in the Company’s Articles.


— V-15 —

An exempted company may, subject to the provisions of its articles of association, maintain its principal register

of members and any branch registers at such locations, whether within or without the Cayman Islands, as the directors

may, from time to time, think fit. There is no requirement under the Cayman Companies Law for an exempted company

to make any returns of members to the Cayman Registrar. The names and addresses of the members are, accordingly,

not a matter of public record and are not available for public inspection.

(n) Winding up

A company may be wound up by either an order of the Cayman Court or by a special resolution of its members.

The Cayman Court has authority to order winding up in a number of specified circumstances including where it is, in

the opinion of the Cayman Court, just and equitable to do so.

A company may be wound up voluntarily when the members so resolve in general meeting by special resolution,

or, in the case of a limited duration company, when the period fixed for the duration of the company by its

memorandum expires, or the event occurs on the occurrence of which the memorandum provides that the company is to

be dissolved. In the case of a voluntary winding up, such company is obliged to cease to carry on its business from the

time of passing the resolution for voluntary winding up or upon the expiry of the period or the occurrence of the event

referred to above.

For the purpose of conducting the proceedings in winding up a company and assisting the Cayman Court, there

may be appointed one or more than one person to be called an official liquidator or official liquidator; and the Cayman

Court may appoint to such office such person or persons, either provisionally or otherwise, as it thinks fit, and if more

persons than one are appointed to such office, the Cayman Court shall declare whether any act hereby required or

authorized to be done by the official liquidator is to be done by all or any one or more of such persons. The Cayman

Court may also determine whether any and what security is to be given by an official liquidator on his appointment; if

no official liquidator is appointed, or during any vacancy in such office, all the property of the company shall be in the

custody of the Cayman Court. In the case of a members’ voluntary winding up of a company, the company in general

meeting must appoint one or more liquidators for the purpose of winding up the affairs of the company and distributing

its assets.

Upon the appointment of a liquidator, the responsibility for the company’s affairs rests entirely in his hands and

no future executive action may be carried out without his approval. A liquidator’s duties are to collect the assets of the

company (including the amount (if any) due from the contributories), settle the list of creditors and, subject to the

rights of preferred and secured creditors and to any subordination agreements or rights of set-off or netting of claims,

discharge the company’s liability to them (pari passu if insufficient assets exist to discharge the liabilities in full) and

to settle the list of contributories (shareholders) and divide the surplus assets (if any) amongst them in accordance with

the rights attaching to the shares.

As soon as the affairs of the company are fully wound up, the liquidator must make up an account of the

winding up, showing how the winding up has been conducted and the property of the company has been disposed of,

and thereupon call a general meeting of the company for the purposes of laying before it the account and giving an

explanation thereof. This final general meeting shall be called by Public Notice (as defined in the Cayman Companies

Law) or otherwise as the Cayman Registrar may direct.

(o) Reconstructions

There are statutory provisions which facilitate reconstructions and amalgamations approved by a majority in

number representing seventy-five (75) per cent. in value of shareholders or class of shareholders or creditors, as the

case may be, as are present at a meeting called for such purpose and thereafter sanctioned by the Cayman Court. Whilst

a dissenting shareholder would have the right to express to the Cayman Court his view that the transaction for which

approval is sought would not provide the shareholders with a fair value for their shares, the Cayman Court is unlikely

to disapprove the transaction on that ground alone in the absence of evidence of fraud or bad faith on behalf of

management.


— V-16 —

(p) Compulsory acquisition

Where an offer is made by a company for the shares of another company and, within four months of the offer,

the holders of not less than ninety (90) per cent. of the shares which are the subject of the offer accept, the offeror may

at any time within two months after the expiration of the said four months, by notice in the prescribed manner require

the dissenting shareholders to transfer their shares on the terms of the offer. A dissenting shareholder may apply to the

Cayman Court within one month of the notice objecting to the transfer. The burden is on the dissenting shareholder to

show that the Cayman Court should exercise its discretion, which it will be unlikely to do unless there is evidence of

fraud or bad faith or collusion as between the offeror and the holders of the shares who have accepted the offer as a

means of unfairly forcing out minority shareholders.

(q) Indemnification

Cayman Islands law does not limit the extent to which a company’s articles of association may provide for

indemnification of officers and directors, except to the extent any such provision may be held by the court to be

contrary to public policy (e.g. for purporting to provide indemnification against the consequences of committing a

crime).

4. GENERAL

Conyers Dill & Pearman, the Company’s special legal counsel on Cayman Islands law, have

sent to the Company a letter of advice summarising certain aspects of Cayman Islands company law.

This letter, together with a copy of the Cayman Companies Law, is available for inspection as

referred to in the paragraph headed ‘‘Documents available for inspection’’ in Appendix VIII. Any

person wishing to have a detailed summary of Cayman Islands company law or advice on the

differences between it and the laws of any jurisdiction with which he is more familiar is

recommended to seek independent legal advice.


— V-17 —

I. ESTABLISHMENT OF A REAL ESTATE DEVELOPMENT ENTERPRISE

According to the ‘‘Law of the People’s Republic of China on Administration of Urban Real

Estate’’ (the ‘‘Urban Real Estate Law’’) promulgated by the Standing Committee of the National

People’s Congress in January 1995, a real estate developer is defined as an enterprise which engages

in the development and sale of real estate for the purpose of making profits. Under the ‘‘Regulations

on Administration of Development of Urban Real Estate’’ (the ‘‘Development Regulations’’)

promulgated by the State Council in July 1998, an enterprise which is to engage in development of

real estate shall satisfy the following requirements: 1) its registered capital shall be RMB1 million

or more; and 2) have four or more full-time professional real estate/construction technicians and two

or more full-time accounting officers, each of whom shall hold the relevant qualification certificate.

The local government of a province, autonomous region or municipality directly under the central

government may, based on local circumstances, impose more stringent requirements on the registered

capital and the professional personnel of a real estate developer. Under the ‘‘Regulations on Real

Estate Developments of Guangdong Province’’ issued by the Standing committee of Guangdong

Provincial People’s Congress in 1997, the registered capital of a real estate developer in the

Guangdong Province (‘‘Guangdong’’) shall be RMB3 million or more.

To establish a real estate development enterprise, the developer should apply for registration

with the administration for industry and commerce. The real estate developer must also report its

establishment to the real estate development authority in the location of the registration authority,

within 30 days of the receipt of its Business License. Where a foreign-invested enterprise is to be

established to engage in the development and sale of real estate, the relevant requirements of the

laws and administrative regulations regarding foreign-invested enterprises must also be observed and

relevant examination and approvals be handled.

Under the ‘‘Foreign Investment Industrial Guidance Catalogue’’ promulgated by the Ministry of

Commerce (the ‘‘MOFCOM’’) and the National Development and Reform Commission (the

‘‘NDRC’’) in November 2004, the development and construction of ordinary residential units falls

within the category of industries in which foreign investment is encouraged, whereas the

development of a whole land lot which shall be operated only by Sino-foreign equity joint

venture or Sino-foreign co-operative joint venture, and the construction and operation of high end

hotels, villas, premium office buildings, international conference centers and large theme parks falls

within the category of industries in which foreign investment is subject to restrictions, while other

real estate development falls within the category of industry in which foreign investment is

permitted. A foreign investor intending to engage in the development and sale of real estate may

establish a joint venture, cooperative venture or wholly owned enterprise by the foreign investor in

accordance with the laws and administrative regulations regarding foreign-invested enterprise. Prior

to its registration, the enterprise must be approved by the commerce authorities, upon which

approval an Approval Certificate for a Foreign-Invested Enterprise will be issued.

Under the Notice on Adjusting the Portion of Capital Fund for Fixed Assets Investment of

Certain Industries issued by the State Council on April 26, 2004, the portion of capital fund of real

estate projects (excluding economical housing projects) has been increased from 20% or above to

35% or above.

APPENDIX VI SUMMARY OF PRC LAWS RELATINGTO THE PROPERTY SECTOR

— VI-1 —

II. QUALIFICATIONS OF A REAL ESTATE DEVELOPER

Under the ‘‘Provisions on Administration of Qualifications of Real Estate Developers’’ (the

‘‘Provisions on Administration of Qualifications’’) promulgated by the Ministry of Construction in

March 2000, a real estate developer shall apply for registration of its qualifications according to

such the Provisions on Administration of Qualifications. An enterprise may not engage in

development and sale of real estate without a qualification classification certificate for real estate

development. The construction authority under the State Council oversees the qualifications of real

estate developers throughout the country, and the real estate development authority under a local

government on or above the county level shall oversee the qualifications of local real estate

developers.

In accordance with the Provisions on Administration of Qualifications, real estate developers

are classified into four classes. The class 1 qualifications shall be subject to preliminary examination

by the construction authority under the people’s government of the relevant province, autonomous

region or municipality directly under the central government and then final approval of the

construction authority under the State Council. Procedures for approval of developers of class 2 or

lower qualifications shall be formulated by the construction authority under the people’s government

of the relevant province, autonomous region or municipality directly under the central government.

A developer that passes the qualification examination will be issued a qualification certificate of the

relevant class by the qualification examination authority.

Under the Development Regulations, the real estate development authorities shall examine

applications for registration of qualifications of a real estate developer when it reports its

establishment, by considering its assets, professional personnel and business results. A real estate

developer shall only undertake real estate development projects in compliance with the approved

qualification registration.

After a newly established real estate developer reports its establishment to the real estate

development authority, the latter shall issue a Provisional Qualification Certificate to the eligible

developer within 30 days of its receipt of the above report. The Provisional Qualification Certificate

shall be effective in one year as from its issuance. The real estate developer shall apply for

qualification classification by the real estate development authority within one month before expiry

of the Provisional Qualification Certificate.

A developer of any qualification classification may only engage in the development and sale of

real estate within its approved scope of business and may not engage in business which is limited to

another classification. A class 1 real estate developer is not restricted as to the scale of real estate

project to be developed and may undertake a real estate development project anywhere in the

country. A real estate developer of class 2 or lower may undertake a project with a gross floor area

of less than 250,000 sq.m. and the specific scope of business shall be as confirmed by the

construction authority under the people’s government of the relevant province, autonomous region or

municipality.

III. DEVELOPMENT OF A REAL ESTATE PROJECT

Under the ‘‘Foreign Investment Industrial Guidance Catalogue’’ promulgated by MOFCOM and

NDRC in November 2004, the development and construction of ordinary residential units falls within

the category of industries in which foreign investment is encouraged, whereas the development of a

whole land lot and the construction and operation of high end hotels, villas, premium office


— VI-2 —

buildings, international conference centers and large theme parks falls within the category of

industries in which foreign investment is subject to restrictions, while other real estate development

falls within the category of industry in which foreign investment is permitted. According to the

Interim Provisions on Approving Foreign Investment Project promulgated by NDRC in October

2004, NDRC shall examine and approve the foreign investment projects with total investment of

USD100 million or more within the category of industries in which foreign investment is encouraged

or permitted and those with total investment of USD50 million or more within the category of

industries in which foreign investment is subject to restrictions as classified in the ‘‘Foreign

Investment Industrial Guidance Catalogue’’, while the local development and reform authorities shall

examine and approve the foreign investment projects with total investment less than USD100 million

within the category of industries in which foreign investment is encouraged or permitted and those

with total investment less than USD50 million within the category of industries in which foreign

investment is subject to restrictions as classified in the ‘‘Foreign Investment Industrial Guidance

Catalogue’’.

Under the ‘‘Interim Regulations of the People’s Republic of China on Assignment and Transfer

of the Use Right of State-owned Urban Land’’ (‘‘Interim Regulations on Assignment and Transfer’’)

promulgated by the State Council in May 1990, a system of assignment and transfer of the right to

use State-owned land is adopted. A land user shall pay an assignment price to the State as

consideration for the assignment of the right to use a land site within a certain term, and the land

user may transfer, lease out, mortgage or otherwise commercially exploit the land use right within

the term of use. Under the Interim Regulations on Assignment and Transfer and the Urban Real

Estate Law, the land administration authority under the local government of the relevant city or

county shall enter into an assignment contract with the land user to provide for the assignment of

land use right. The land user shall pay the assignment price as provided by the assignment contract.

After payment in full of the assignment price, the land user shall register with the land

administration authority and obtain a Land Use Right Certificate which evidences the acquisition of

land use rights. The Urban Real Estate Law and the Development Regulations provide that land use

rights for a site intended for real estate development shall be obtained through assignment except for

land use rights which may be obtained through appropriation pursuant to PRC laws or the

stipulations of the State Council.

When carrying out the feasibility study for a construction project, a construction entity shall

make a preliminary application for construction on the relevant site to the land administration

authority of the same level as the project approval authority, in accordance with the ‘‘Measures for

Administration of Examination and Approval for Construction Sites’’ promulgated by the Ministry of

Land and Resources in March 1999 and the ‘‘Measures for Administration of Preliminary

Examination of Construction Project Sites’’ promulgated by the Ministry of Land and Resources

in July 2001 and as amended in October 2004 respectively. After receiving the preliminary

application, the land administration authority shall carry out preliminary approval of various matters

relating to the construction project in compliance with the overall zoning plans and land supply

policy of the State, and shall the issue a preliminary approval report in respect of the project site.

The land administration authority under the people’s government of the relevant city or county shall

sign a land use right assignment contract with the land user and issue an Approval for Construction

Site to the construction entity.


— VI-3 —

Under the ‘‘Measures for Control and Administration of Assignment and Transfer of Right to

Use Urban State-owned Land’’ promulgated by the Ministry of Construction in December 1992, the

assignee to an assignment contract, i.e. a real estate developer, shall legally apply for a Permit for

Construction Site Planning from the municipal planning authority with the assignment contract.

After obtaining a Permit for Construction Site Planning, a real estate developer shall organize

the necessary planning and design work having regard to planning and design requirements. For the

planning and design proposal in respect of a real estate development project, the relevant report and

approval procedures required by the ‘‘Law of the People’s Republic of China on Municipal

Planning’’ promulgated by the Standing Committee of the National People’s Congress in December

1989, and local statutes on municipal planning must be followed and a Permit for Construction

Works Planning must be obtained from the municipal planning authority.

In accordance with the ‘‘Regulations for the Administration of Demolition and Removal of

Urban Housing’’, which were promulgated by the State Council in June 2001, if the demolition and

removal of housing need proceed before the commencement of construction of the real estate project

contemplated, upon obtaining approvals for a construction project, construction plan and State-

owned land use rights, a real estate development organization may apply to the municipal, district or

county people’s government of the place where the real estate is located for a permit for housing

demolition and removal. Upon granting an approval and issuing a demolition and removal permit,

the real estate administration department shall issue a demolition and removal notice to the

inhabitants of the area to be demolished. The demolition and removal party shall implement the

demolition and removal within the area and period specified in the housing demolition and removal

permit. If the demolition and removal party fails to complete the demolition and removal works

within the permitted period, it shall, within 15 days prior to the expiry of the permit, apply to the

original approval department in charge of demolition and removal for an extension.

During the demolition and removal period announced by the department in charge of

demolition and removal, the demolition and removal party and the parties subject to demolition and

removal shall enter into a written agreement for compensation and resettlement in respect of the

demolition and removal. If the demolition and removal party, the parties subject to demolition and

removal and the housing lessee cannot reach an agreement, any party concerned may apply to the

original approval department in charge of demolition and removal for a ruling. Such ruling shall be

rendered within 30 days of the application. If any party disagrees with the ruling, it may initiate

proceedings in the People’s Court. Pursuant to law, if the demolition and removal party has provided

monetary compensation or housing to the party subject to demolition and removal or the party

subject to demolition and removal has provided monetary compensation or housing to a lessee, the

demolition and removal shall not be stopped.

Compensation for housing demolition and removal may be effected by way of monetary

compensation or exchange of property rights. If the monetary compensation method is used, the

amount of compensation shall be assessed on the basis of the real property market price determined

by the location, uses and the gross area of the housing to be demolished. If property right exchange

is used, the demolition and removal party and the party subject to demolition and removal shall, on

the basis of the location, uses and the gross area of the housing to be demolished, calculate the

amount of compensation which shall be made for the housing to be demolished, the real property

price of the housing to be exchanged for the housing to be demolished, and work out the difference

between the two.


— VI-4 —

In addition to paying the demolition and removal compensation, the demolition and removal

party shall pay removal allowance to the parties subject to demolition and removal.

After a real estate developer has carried out the above work, the site is ready for the

commencement of construction works, the progress of demolition and relocation of existing

buildings complies with construction needs and funds for the construction have been made available,

the developer shall apply for a Permit for Commencement of Works from the construction authority

under the local people’s government above the county level according to the ‘‘Measures for

Administration of Granting Permission for Commencement of Construction Works’’ promulgated by

the Ministry of Construction in October 1999 and as amended in July 2001.

A real estate project developed by a real estate developer shall comply with the relevant laws

and other statutes, requirements on construction quality, safety standards and technical guidance on

survey, design and construction work, as well as provisions of the relevant contract. After

completion of works for a project, the real estate developer shall organize an acceptance

examination according to the Development Regulation and the ‘‘Interim Provisions on Acceptance

Examination Upon Completion of Buildings and Municipal Infrastructure’’ (‘‘Acceptance

Examination Measures’’) promulgated by the Ministry of Construction in June 2000, and shall

also report details of the acceptance examination according to the ‘‘Interim Measures for Reporting

Details Regarding Acceptance Examination Upon Completion of Buildings and Municipal

Infrastructure’’ promulgated by the Ministry of Construction in April 2000. A real estate

development project may only be delivered after passing the necessary acceptance examination,

and may not be delivered before the necessary acceptance examination is conducted or without

passing such an acceptance examination. For a housing estate or other building complex project, an

acceptance examination shall be conducted upon completion of the whole project and where such a

project is developed in phases, an acceptance examination may be carried out for each completed

phase.

IV. LAND FOR PROPERTY DEVELOPMENT

The provisions of the Regulations on the Development, Operation and Management of Property

provide that, except for land use rights which may be obtained through allocation pursuant to PRC

laws or the stipulations of the State Council, land for property development shall be obtained by

assignment. Under the ‘‘Regulations on the Grant of state-owned Land Use Rights through

Competitive Bidding, Auction and Listing-for-Sale’’ promulgated by the Ministry of Land and

Resources in May 2002, land for commercial use, tourism, entertainment and commodity housing

development shall be assigned by competitive bidding, public auction or Listing-for-sale and, in the

event that a land parcel for uses other than commerce, tourism, entertainment and commodity

housing development has two or more prospective purchasers after the promulgation of the relevant

land supply schedule, the assignment of the land parcel shall be performed by competitive bidding,

public auction or Listing-for-sale. Under the foresaid regulations, the assignor shall prepare the

public trading and competitive bidding documents and shall make an announcement 20 days prior to

the day of public auction to announce the basic particulars of the land parcel and the time and venue

of the public auction. The assignor shall conduct a qualification verification of the bidding

applicants and auction applicants, accept an open public trading to determine the winning tender; or

hold an auction to ascertain a winning bidder. The assignor and the winning tender or winning

bidder shall then enter into a confirmation, and the assignor and the winning tender or winning

bidder shall then enter into a contract for State-owned land use right assignment.


— VI-5 —

V. SALE OF COMMODITY BUILDINGS

Under the ‘‘Measures for Administration of Sale of Commodity Buildings’’ promulgated by the

Ministry of Construction in April 2001, sale of commodity buildings can include both post-

completion and pre-completion sales.

Any pre-completion sale of commodity buildings shall be conducted in accordance with the

‘‘Measures for Administration of Pre-completion Sale of Commodity Buildings’’ (the ‘‘Pre-

completion Sale Measures’’) promulgated by the Ministry of Construction in November 1994 and

as amended in August 2001 and July 2004 respectively, and the Development Regulations. The Pre-

completion Sale Measures provides that pre-completion sale of commodity buildings is subject to

certain procedures. According to the Development Regulations and the Pre-completion Sale

Measures, a permit shall be obtained before a commodity building may be put to pre-completion

sale. A developer intending to sell a commodity building before its completion shall make the

necessary pre-completion sale registration with the real estate development authority of the relevant

city or county to obtain a Permit for Pre-completion Sale of commodity buildings. A commodity

building may only be sold before completion provided that: 1) the assignment price has been paid in

full for the assignment of the land use rights involved and a land use rights certificate has been

obtained; 2) a Permit for Construction Works Planning and a Permit for Commencement of Works

have been obtained; 3) the funds invested in the development of the commodity buildings put to pre-

completion sale represent 25% or more of the total investment in the project and the progress of

works and the completion and delivery dates have been ascertained; and 4) the pre-completion sale

has been registered and a Permit for Pre-completion Sale of Commodity Buildings has been

obtained. In addition, according to the Regulations on Administration of Pre-completion Sale of

Commodity Buildings of Guangdong Province promulgated by the Standing Committee of

Guangdong Provincial People’s Congress in July 1998 and as amended in August 2000 and the

Notice on Adjusting Conditions of Image and Progress for Commodity Building Pre-sale Project in

Guangdong Province issued by Guangdong Provincial Construction Bureau in January 2001, the

following conditions shall be fulfilled for pre-completion sale of commodity buildings in Guangdong

province: 1) a real property development qualification certificate and a business license have been

obtained; 2) the construction quality and safety monitoring procedures have been performed; 3) the

structural construction and the toping-out must have been completed in respect of properties of not

more than seven stories, and at least two-thirds of the structural construction must have been

completed in respect of properties of more than seven stories; 4) a special property pre-completion

sale account with a commercial bank in the place where the project is located has been opened; and

5) the properties pre-completion sale project and its land use rights are free from third party rights.

Commodity buildings may be put to post-completion sale only when the preconditions for such

sale have been satisfied. Before the post-completion sale of a commodity building, a real estate

developer shall submit the Real Estate Development Project Manual and other documents evidencing

the satisfaction of preconditions for post-completion sale to the real estate development authority for

its record.

VI. TRANSFER OF REAL ESTATE

According to the Urban Real Estate Law and the ‘‘Provisions on Administration of Transfer of

Urban Real Estate’’ promulgated by the Ministry of Construction in August 1995 and as amended in

August 2001, a real estate owner may sell, bequeath or otherwise legally transfer real estate to

another person or legal entity. When transferring a building, the ownership of the building and the

land use rights to the site on which the building is situated are transferred. The parties to a transfer


— VI-6 —

shall enter into a real estate transfer contract in writing and register the transfer with the real estate

administration authority having jurisdiction over the location of the real estate within 90 days of the

execution of the transfer contract.

Where the land use rights were originally obtained by assignment, the real property may only

be transferred on the condition that: 1) the assignment price has been paid in full for the assignment

of the land use rights as provided by the assignment contract and a land use right certificate has

been obtained; 2) development has been carried out according to the assignment contract; and in the

case of a project in which buildings are being developed, development representing more than 25%

of the total investment has been completed, or in case of a whole land lot development project,

construction works has been carried out as planned, water supply, sewerage, electricity supply, heat

supply, access roads, telecommunications and other infrastructure or utilities have been made

available, and the site has been levelled and made ready for industrial or other construction

purposes.

If the land use rights were originally obtained by assignment, the term of the land use rights

after transfer of the real estate shall be the remaining portion of the original term provided by the

land use right assignment contract after deducting the time that has been used by the former land

users. In the event that the transferee intends to change the use of the land provided in the original

assignment contract, consent shall first be obtained from the original assignor and the planning

administration authority under the local government of the relevant city or county and an agreement

to amend the land use right assignment contract or a new land use right assignment contract shall be

signed in order to, inter alia, adjust the land use right assignment price accordingly.

If the land use rights were originally obtained by allocation, transfer of the real property shall

be subject to the approval of the government vested with the necessary approval power as required

by the State Council. After the People’s Government vested with the necessary approval power

approves such a transfer, the transferee shall complete the formalities for transfer of the land use

rights, unless the relevant statutes require no transfer formalities, and pay the transfer price

according to the relevant statutes.

VII. LEASES OF BUILDINGS

Under the Urban Real Estate Law and the ‘‘Measures for Administration of Leases of Buildings

in Urban Areas’’ promulgated by the Ministry of Construction in May 1995, the parties to a lease of

a building shall enter into a lease contract in writing. A system has been adopted to register the

leases of buildings. When a lease contract is signed, amended or terminated, the parties shall register

the details with the real estate administration authority under the local government of the city or

county in which the building is situated.

VIII. MORTGAGES OF REAL ESTATE

Under the Urban Real Estate Law and the ‘‘Measures for Administration of Mortgages of Urban

Real Estate’’ promulgated by the Ministry of Construction in May 1997 and as amended in August

2001, when a mortgage is created on the ownership of a building legally obtained, a mortgage shall

be simultaneously created on the land use right of the land on which the building is situated. The

mortgager and the mortgagee shall sign a mortgage contract in writing. A system has been adopted

to register the mortgages of real estate. After a real estate mortgage contract has been signed, the

parties to the mortgage shall register the mortgage with the real estate administration authority at the

location where the real estate is situated. A real estate mortgage contract shall become effective on


— VI-7 —

the date of registration of the mortgage. If a mortgage is created on the real estate in respect of

which a Building Ownership Certificate has been obtained legally, the registration authority shall

make an entry under the ‘‘third party rights’’ item on the original Building Ownership Certificate and

then issue a Certificate of Third Party Rights to a building to the mortgagee. If a mortgage is created

on the commodity building put to pre-completion sale or on works in progress, the registration

authority shall record the details on the mortgage contract. If construction of a real property is

completed during the term of a mortgage, the parties involved shall re-register the mortgage of the

real property after issuance of the certificates evidencing the rights and ownership to the real estate.

According to the ‘‘Notice of the People’s Bank of China on Regulating Home Financing

Business’’ promulgated by the People’s Bank of China (the ‘‘PBOC’’) in June 2001, all banks must

comply with the following requirements before granting residential development loans, individual

home mortgage loans and individual commercial flat loans:

1. Housing development loans from banks shall only be granted to real estate development

enterprises with adequate development assets and higher credit ratings. Such loans shall

be offered to residential projects with good market potential. While the borrowing

enterprise must have an amount of capital no less than 30% of the total investment

required of the project, the project itself must have been issued with a ‘‘Land Use Permit

for State-Owned Land’’, ‘‘Construction Land Planning Permit’’, ‘‘Construction Works

Planning Permit’’ and ‘‘Construction Works Commencement Permit’’.

2. In respect of the grant of individual home mortgage loans, the ratio between the loan

amount and actual value of the security (the ‘‘Mortgage Ratio’’) shall never exceed 80%.

Where an individual applies for a home purchase loan to buy a pre-sale property, the said

property must have achieved the stage of ‘‘topping-out of the main structure completed’’

for multi-story buildings and ‘‘two-thirds of the total investment completed’’ for high-rise

buildings.

3. In respect of the grant of individual commercial flat loans, the Mortgage Ratio under the

application for commercial flat loans shall not exceed 60% with a maximum loan period

of 10 years and the subject commercial flat already completed.

The People’s Bank of China issued the Circular on Further Strengthening the Management of

Loans for Property Business in June 2003 to specify the requirements for banks to provide loans for

the purposes of residential development, individual home mortgage and individual commodity houses

as follows:

1. Property development loans should be granted to property developers who are qualified

for property development, rank high in credibility and have no overdue payment for

construction. For property developers with commodity houses of high vacancy rate and

debt ratio, strict approval procedures shall be applied for their new property development

loans and their activities shall also be in the focus of attention.

2. Commercial banks shall not grant loans to property developers to pay off land premium.


— VI-8 —

3. Commercial banks may only provide housing loans to individual buyers when the main

structural buildings have been topped out. When a borrower applies for individual home

loans for his first residential unit, the first installment remains to be 20%. In respect of

his loan application for additional purchase of residential unit(s), the percentage of the

first installment shall be increased.

4. When a borrower applies for mortgaged loan of individual commodity house, the

mortgage shall not be more than 60%. In addition, the term of loan may not be more than

10 years and the commodity house shall be duly completed and accepted after inspection.

In the Circular on Facilitating the Continuously Healthy Development of Property Market

issued by the State Council in August 2003, a series of measures are contained for the government

to control the property market. They include, but not limiting to, strengthening the construction and

management of economical houses, increasing the supply of ordinary commodity houses and

controlling the construction of high-end commodity houses. Besides, the government also staged a

series of measures for the loan of housing development. They include, but not limiting to, putting

more effort at provision of loans, improving the guarantee mechanism of individual home loans and

strengthening the monitor over property loans. It is expected that the circular will have positive

effect on the development of the PRC property market in the long run by facilitating the

continuously healthy growth of property market.

Pursuant to the Guidance on Risk Management of Property Loans Granted by Commercial

Banks issued by China Banking Regulatory Commission in September 2004, commercial banks may

not provide any loan in any form for a project without the State-owned Land Use Rights Certificate,

Construction Land Use Planning Permit, Construction Works Planning Permit and Construction

Works Commencement Permit. Any property developer applying for property development loans

shall have at least 35% of capital required for the development and a commercial bank should

maintain a strict loan system for considering applications for property development loans.

IX. REAL ESTATE MANAGEMENT

Under the ‘‘Measures for the Administration of Qualifications of Real Estate Management

Enterprises’’ promulgated by the Ministry of Construction in March 2004, a real estate management

enterprise shall apply for assessment of qualifications by the qualification approval authority. An

enterprise which passes such a qualification assessment will be issued a Qualification Certificate

evidencing the qualification classification by the authority. No enterprise may engage in real estate

management without undertaking a qualification assessment conducted by the authority and then

obtaining a Qualification Certificate.

X. INSURANCE

There is no mandatory provision in the PRC laws, regulations and government rules which

require a property developer to take out insurance policies for its real estate developments.

According to the common practice of the property industry in Guangdong, construction companies

are usually required to submit insurance proposals in the course of tendering and bidding for

construction projects. Construction companies shall pay for the insurance premium at their own costs

and take out insurance to cover their liabilities, such as third party’s liability risk, employer’s

liability risk, risk of non-performance of contract in the course of construction and all kinds of risks


— VI-9 —

associated with the construction and installation works throughout the construction period. The

insurance cover for all the aforementioned risks shall cease immediately after the completion and

acceptance upon inspection of construction.

XI. MAJOR TAXES APPLICABLE TO REAL ESTATE DEVELOPERS

1. Income Tax

According to the the Income Tax Law of The People’s Republic of China for Enterprises

with Foreign Investment and Foreign Enterprises which was promulgated by National People’s

Congress on 9 April 1991 and its detailed rules promulgated by State Council in June 1991, the

income tax on enterprises with foreign investment shall be computed on the taxable income at

the rate of thirty percent, and local income tax shall be computed on the taxable income at the

rate of three percent. Pursuant to the Provisional Regulations of the People’s Republic of China

on Enterprise Income Tax issued by the State Council in December 1993 and the Detailed

Implementation Rules on the Provisional Regulations of The People’s Republic of China on

Land Appreciation Tax issued by MOF in February 1994, the income tax rate applicable to

enterprises is 33%.

2. Business Tax

Pursuant to the ‘‘Interim Regulations of the People’s Republic of China on Business Tax’’

promulgated by the State Council in 1993, the tax rate of the transfer of immovable properties,

their superstructures and attachments is 5%.

3. Land Appreciation Tax

According to the requirements of the Provisional Regulations of The People’s Republic of

China on Land Appreciation Tax (the ‘‘Provisional Regulations’’) which was promulgated on 13

December 1993 and effected on 1 January 1994, and the Detailed Implementation Rules on the

Provisional Regulations of The People’s Republic of China on Land Appreciation Tax (the

‘‘Detailed Implementation Rules’’) which was promulgated and effected on 27 January 1995,

any appreciation amount gained from taxpayer’s transfer of property shall be subject to land

appreciation tax. Land appreciation tax shall adopt four levels of progressive rates that are:

30% for the appreciation amount not exceeding 50% of the sum of deductible items; 40% for

the appreciation amount exceeding 50% but not exceeding 100% of the sum of deductible

items; 50% for the appreciation amount exceeding 100% but not exceeding 200% of the sum of

deductible items; and 60% for the appreciation amount exceeding 200% of the sum of

deductible items. The related deductible items aforesaid include the following:

. amount paid for obtaining the land use right;

. costs and expenses for development of land;

. costs and expenses of new buildings and ancillary facilities, or estimated prices of

old buildings and constructions;

. related tax payable for transfer of property;

. other deductible items as specified by MOF.


— VI-10 —

According to the requirements of the Provisional Regulations, the Detailed

Implementation Rules and the ‘‘Notice issued by the Ministry of Finance in respect of the

Levy and Exemption of Land Appreciation Tax for Development and Transfer Contracts signed

before 1 January 1994’’ which was announced by the Ministry of Finance on 27 January 1995,

Land Appreciation Tax shall be exempted under any one of the following circumstances:

(1) Taxpayers constructing ordinary standard residences for sale (i.e. the residences built

in accordance with the local standard for general civilian used residential properties.

Deluxe apartments, villas, resorts etc. are not under the category of ordinary

standard residences), where the appreciation amount does not exceed 20% of the sum

of deductible items;

(2) Real estate taken over and repossessed according to laws due to the construction

requirements of the State;

(3) Due to redeployment of work or improvement of living standard, individuals transfer

originally self-used residential property, of which they have been living there for 5

years or more, and after obtaining tax authorities’ approval;

(4) For real estates assignments which were signed before 1 January 1994, whenever the

properties are transferred, the Land Appreciation Tax shall be exempted;

(5) Either when the real estates assignments were signed before 1 January 1994 or when

the project proposal has been approved and that capital was injected for development

in accordance with the conditions agreed, the Land Appreciation Tax shall be

exempted if the properties are transferred within 5 years after 1 January 1994 for the

first time. The date of signing the assignment shall be the date of signing the Sale

and Purchase Agreement. Particular real estates projects which are approved by the

Government for the development of the whole piece of land and long-term

development, of which the properties are transferred for the first time after the 5-

year tax-free period, after auditing being conducted by the local financial and tax

authorities, and approved by Ministry of Finance and State Taxation Bureau, the tax-

free period would then be appropriately prolonged.

On 24 December 1999, the Ministry of Finance and the State Taxation Bureau issued the

‘‘Notice in respect of the extension of the period for the Land Appreciation Tax Exemption

Policy’’ that extended the period for the Land Appreciation Tax exemption policy as mentioned

in paragraph (5) hereinabove to the end of 2000.

After the enactment of the Provisional Regulations and the Detailed Implementation

Rules, due to the longer period for the real estates development and transfer, many districts,

while they were implementing the regulations and rules, did not force the real estates

development enterprises to declare and pay the Land Appreciation Tax. Therefore, in order to

assist the local tax authorities in the collection of Land Appreciation Tax, the Ministry of

Finance, State Taxation Bureau, Ministry of Construction and State Land Administration

Bureau had separately and jointly issued several notices to restate the following: After the

assignments are signed, the taxpayers should declare the tax to the local tax authorities where

the real estates are located, and pay the Land Appreciation Tax in accordance with the amount

as calculated by the tax authority and the time as required. For those who fail to acquire proof


— VI-11 —

as regards the tax paid or the tax exemption from the tax authorities, the real estate

administration authority shall not process the relevant title change procedures, and shall not

issue the real estate title certificate.

The State Taxation Bureau also issued the ‘‘Notice issued by the State Taxation Bureau in

respect of the Serious Handling of Administration Work in relation to the Collection of Land

Appreciation Tax’’ on 10 July 2002 to request local tax authorities to modify the management

system of Land Appreciation Tax collection and operation details, to build up sound taxpaying

declaration system for Land Appreciation Tax, to modify the methods of pre-levying for the

pre-sale of real estates. That notice also pointed out that either for the real estates assignments

which were signed before 1 January 1994 or where the project proposal has been approved and

capital was injected for development, the privilege policy for Land Appreciation Tax exemption

for the properties that are transferred within 5 years after 1 January 1994 for the first time is

expired, and such tax shall be levied again.

4. Deed Tax

Pursuant to the ‘‘Interim regulations of the People’s Republic of China on Deed Tax’’

promulgated by the State Council in July 1997, the transferee, whether an individual or

otherwise, of the title to a land site or building in the PRC shall be the obliged taxpayer for

deed tax. The rate of deed tax is 3%–5%. The governments of provinces, autonomous regions

and municipalities directly under the central government may, within the foresaid range,

determine and report their effective tax rates to the Ministry of Finance and the State

Administration of Taxation for the record. Pursuant to the ‘‘Implementation Provisions on Deed

Tax in Guangdong Province’’ promulgated by the People’s Government of Guangdong in May

1998, the rate of deed tax within Guangdong is 3%.

5. Urban Land Use Tax

Pursuant to the ‘‘Interim Regulations of the People’s Republic of China on Land Use Tax

in respect of Urban Land ‘‘ promulgated by the State Council in September 1988, the land use

tax in respect of urban land is levied according to the area of relevant land. The annual tax on

every square metre of urban land shall be between RMB0.2 and RMB10.

6. Buildings Tax

Under the ‘‘Interim Regulations of the People’s Republic of China on Buildings Tax’’

promulgated by the State Council in September 1986, buildings tax shall be 1.2% if it is

calculated on the basis of the residual value of a building, and 12% if it is calculated on the

basis of the rental.

7. Stamp Duty

Under the ‘‘Interim regulations of the People’s Republic of China on Stamp Duty’’

promulgated by the State Council in August 1988, for building property transfer instruments,

including those in respect of property ownership transfer, the duty rate shall be 0.05% of the

amount stated therein; for permits and certificates relating to rights, including real estate title

certificates and land use rights certificates, stamp duty shall be levied on an item basis of

RMB5 per item.


— VI-12 —

8. Municipal Maintenance Tax

Under the ‘‘Interim Regulations of the People’s Republic of China on Municipal

Maintenance Tax’’ promulgated by the State Council in 1985, and taxpayer, whether an

individual or otherwise, of product tax, value-added tax or business tax shall be required to pay

municipal maintenance tax. The tax rate shall be 7% for a taxpayer whose domicile is in an

urban area, 5% for a taxpayer whose domicile is in a county and a town, and 1% for a taxpayer

whose domicile is not in any urban area or county or town. Under the Circular Concerning

Temporary Exemption from Municipal Maintenance Tax and Education Surcharge For

Enterprises with Foreign Investment and Foreign Enterprises issued by the State Taxation

Bureau on 25 February 1994, the municipal maintenance tax shall not be applicable to

enterprises with foreign investment for time being, until further explicit stipulations are issued

by the State Council.

9. Education Surcharge

Under the ‘‘Interim Provisions on Imposition of Education Surcharge’’ promulgated by the

State Council in April 1986, and taxpayer, whether an individual or otherwise, of product tax,

value-added tax or business tax shall pay an education surcharge, unless such obliged taxpayer

is instead required to pay a rural area education surcharge as provided by the ‘‘Notice of the

State Council on Raising Funds for Schools in Rural Areas’’. Under the Circular Concerning

Temporary Exemption from Municipal Maintenance Tax and Education Surcharge For

Enterprises with Foreign Investment and Foreign Enterprises issued by the State Taxation

Bureau on 25 February 1994 and the Supplementary Circular Concerning Imposition of

Education Surcharge issued by the State Council on 12 October 1994, the education surcharge

shall not be applicable to enterprises with foreign investment for time being, until further

explicit stipulations are issued by the State Council.

XII. MEASURES ON STABILIZING HOUSING PRICE

The General Office of the State Council promulgated the ‘‘Circular on Stabilizing Housing

Price’’ in March 2005, requiring measures to be taken to restrain the housing price from increasing

too fast and to promote the healthy development of the real estate market. The ‘‘Opinions on Work

of Stabilizing Housing Price’’ jointly issued by the Ministry of Construction, NDRC, the Ministry of

Finance, the Ministry of Land and resources, PBOC, the State Administration of Taxation and the

China Banking Regulatory Commission in April 2005 provides that:

1. Where the housing price grows too fast, while the supply of ordinary commodity houses

with medium or low price and economical houses is insufficient, the housing construction

should mainly involve projects of ordinary commodity houses with medium or low price

and economical houses. The construction of low-density, high-quality houses shall be

strictly controlled. With respect to construction projects of medium-or-low-price ordinary

commodity houses, before land supplying, the municipal planning authority shall,

according to controlling detailed planning, set forth such conditions for planning and

design as height, plot ratio and green space, while the real estate authority, together with

other relevant authorities, shall set forth such controlling requirements as sale price, type

and area. Such conditions and requirements will be set up as preconditions of land

assignment to ensure the supply of houses with medium or low price and houses with

medium or small area. The local government must strengthen the supervision of planning


— VI-13 —

permit for real estate development projects. Housing projects that have not been

commenced within two years must be examined again, and those that turn out to be not in

compliance with the planning permits will be revoked.

2. Where the price of land for residential use and residential house grows too fast, the

proportion of land for residential use to the total land supply should be appropriately

raised, and the land supply for the construction of ordinary commodity houses with

medium or low price and economical houses should be especially increased. Land supply

for villa construction shall continue to be suspended, and land supply for high-end

housing property construction shall be strictly restricted.

3. Land idle fee shall be imposed on land that has not been developed for one year from the

contractual construction commencement date. Land use right of land that has not been

developed for two years will be withdrawn without compensation.

4. Commencing from June 1, 2005, business tax upon transferring a residential house by an

individual within two years from purchasing will be levied on the basis of the full amount

of the income therefrom. For an individual having transferred an ordinary residential

house for two years or more from purchasing, the business tax will be exempted. For an

individual having transferred a house other than ordinary residential house for two years

or more from purchasing, the business tax will be levied on the basis of the difference

between the income from selling the house and the purchase price.

5. Ordinary residential houses with medium or small area and medium or low price may

enjoy such preferential policies as planning permit, land supply, credit and taxation.

Houses enjoying these preferential policies must satisfy the following conditions in

principle: the plot ratio of the residential district is above 1.0, the floor area of one single

unit is less than 120 sq.m., and the actual transfer price is lower than 1.2 time of the

average transfer price of houses located on the land of the same level. The local

government of a province, autonomous region or municipality directly under the central

government may, based on actual circumstances, set up the specific standard for ordinary

residential houses enjoying the preferential policies. Under the ‘‘Circular on Setting up

the Standard for Ordinary Residential House in Guangdong Province’’ issued by

Guangdong Provincial Construction Bureau in June 2005, ordinary houses in

Guangdong Province enjoying preferential policies must also satisfy the following

conditions: the plot ratio of the residential district is above 1.0, the gross floor area of

one single unit is less than 120 sq.m. or the internal gross floor area of a single unit is

less than 144 sq.m., and the actual transfer price is lower than 1.44 time of the average

transfer price of houses located on the land of the same level.

6. The transfer of uncompleted commodity properties by any pre-sale purchaser shall be

forbidden. A system shall be adopted to require purchasers to buy properties in their real

names. Any commodity property pre-sale contract shall be filed through the Internet

immediately after its execution.


— VI-14 —

A. FURTHER INFORMATION ABOUT THE COMPANY

1. Incorporation

The Company was incorporated in the Cayman Islands under the Companies Law as an

exempted company with limited liability on 14 July 2005. The Company has established a

place of business in Hong Kong at 20/F., 238 Nathan Road, Kowloon, Hong Kong and is

registered in Hong Kong under Part XI of the Companies Ordinance, with Wai Ching Sum of

20/F., 238 Nathan Road, Kowloon, Hong Kong appointed as the authorized representative of

the Company for the acceptance of service of process and notices on behalf of the Company in

Hong Kong. As the Company is incorporated in the Cayman Islands, it operates subject to the

Companies Law and to its constitution, which comprises a memorandum of association and the

Articles. A summary of various provisions of the constitution of the Company and relevant

aspects of the Companies Law is set out in Appendix V to this prospectus.

2. Change in share capital

The authorized share capital of the Company as at the date of its incorporation was

HK$390,000 divided into 390,000 shares of HK$1.00 each. On 4 August 2005, 2 shares were

allotted and issued nil-paid to Chen Zhuo Lin and Luk Sin Fong, Fion respectively. On 17

October 2005, every issued and unissued share of HK$1.00 each in the capital of the Company

was subdivided into 10 Shares of HK$0.10 each and the authorized share capital of the

Company was increased from HK$390,000 to HK$1,000,000,000.

Pursuant to the Reorganization, on 23 November 2005, our Company acquired the entire

issued capital of Eastern Supreme from the Founding Shareholders, the consideration of which

was satisfied by the paying up of 20 nil-paid Shares held by Chen Zhuo Lin and Luk Sin Fong,

Fion at par and the issue and allotment of 199,999,980 new Shares to the Founding

Shareholders based on their respective percentage shareholding in Eastern Supreme at that

time.

Save for aforesaid and as mentioned in the paragraph headed ‘‘Resolutions in writing of

the shareholders of the Company passed on 23 November 2005’’ below, there has been no

alteration in the share capital of the Company since its incorporation.

3. Resolutions in writing of the shareholders of the Company passed on 23 November

2005

Pursuant to the resolutions in writing passed by the shareholders of the Company on 23

November 2005 :

(a) the Company approved and adopted the Articles;

APPENDIX VII STATUTORY AND GENERAL INFORMATION

— VII-1 —

(b) conditional on (i) the Listing Committee of the Stock Exchange granting the listing

of, and permission to deal in, the Shares in issue and to be issued as mentioned in

this prospectus (including any additional Shares which may be issued pursuant to the

exercise of the Over-allotment Option or options which may be granted under the

Share Option Scheme) and (ii) the obligations of the Underwriters under the

Underwriting Agreements becoming unconditional and not being terminated in

accordance with the terms therein or otherwise, in each case on or before such dates

as may be specified in the Underwriting Agreements:

(i) the Global Offering was approved and the Directors were authorized to allot

and issue the new Shares in the Global Offering;

(ii) the Over-allotment Option was approved and the Directors were authorized to

effect the same and to allot and issue the Over-allotment Shares upon the

exercise of the Over-allotment Option;

(iii) the rules of the Share Option Scheme, the principal terms of which are set out

in the paragraph headed ‘‘1. Share Option Scheme’’ under the section headed

‘‘D. Other information’’ in Appendix VII, were approved and adopted and the

Directors were authorized to grant options to subscribe for Shares thereunder

and to allot, issue and deal with Shares pursuant to the exercise of options

granted under the Share Option Scheme; and

(iv) conditional on the share premium account of the Company being credited as a

result of the Global Offering, the Directors were authorized to capitalise an

amount of HK$229,150,000 from the amount standing to the credit of the share

premium account of the Company as a result of the Global Offering and to

appropriate such amount as capital to pay up in full at par 2,291,500,000

Shares for allotment and issue to the entity whose name appears on the register

of members of the Company at the close of business on the date of this

prospectus or in accordance with the direction of such entity;

(c) a general unconditional mandate was given to the Directors to allot, issue and deal

with (including the power to make an offer or agreement, or grant securities which

would or might require Shares to be allotted and issued), otherwise than pursuant to

a right issue or pursuant to any scrip dividend schemes or similar arrangements

providing for the allotment and issue of Shares in lieu of the whole or part of a

dividend on Shares in accordance with the Articles or pursuant to the grant of

options under the Share Option Scheme or other similar arrangement or pursuant to a

specific authority granted by the Shareholders in general meeting, unissued Shares

with a total nominal value not exceeding 20% of the aggregate of (i) the total

nominal value of the share capital of the Company in issue immediately following

completion of the Global Offering and the Capitalization Issue; and (ii) the total

nominal value of share capital of the Company which may be issued pursuant to the

Over-allotment Option, such mandate to remain in effect until the conclusion of the

next annual general meeting of the Company, or the expiration of the period within

which the next annual general meeting of the Company is required by the Articles or

any applicable laws to be held, or until revoked or varied by an ordinary resolution

of the Shareholders in general meeting, whichever occurs first;


— VII-2 —

(d) a general unconditional mandate was given to the Directors authorising them to

exercise all powers of the Company to repurchase on the Stock Exchange or on any

other stock exchange on which the securities of the Company may be listed and

which is recognized by the SFC and the Stock Exchange for this purpose such

number of Shares as will represent up to 10% of the aggregate of (i) the total

nominal amount of the share capital of the Company in issue immediately following

completion of the Global Offering and the Capitalization Issue; and (ii) the total

nominal value of share capital of the Company which may be issued pursuant to the

Over-allotment Option, such mandate to remain in effect until the conclusion of the

next annual general meeting of the Company, or the expiration of the period within

which the next annual general meeting of the Company is required by the Articles or

any applicable laws to be held, or until revoked or varied by an ordinary resolution

of the Shareholders in general meeting, whichever occurs first; and

(e) the general unconditional mandate mentioned in paragraph (c) above was extended

by the addition to the aggregate nominal value of the share capital of the Company

which may be allotted or agreed conditionally or unconditionally to be allotted by

the Directors pursuant to such general mandate of an amount representing the

aggregate nominal value of the share capital of the Company repurchased by the

Company pursuant to the mandate to repurchase Shares referred to in paragraph (d)

above.

4. Corporate reorganization

The companies comprising the Group underwent a reorganization in preparation for the

listing of the Shares on the Stock Exchange. The reorganization involved the following:

(i) Establishment of BVI companies to acquire interest of PRC companies

various companies in the BVI have been established by:

(a) the original shareholders of the PRC companies which were injected into our

Group, who are not PRC residents; and/or

(b) in the case of those original shareholders who are PRC residents, their spouses

(who are not PRC residents).

Their shareholdings in the BVI companies have been established to match their

shareholdings in the PRC companies which were injected into our Group.

the PRC property development project companies, property management

companies and interior decoration company involved in the Reorganization are:

. Property development project companies

— Baiyun Agile Co.

— Guangzhou Agile Co.

— Majestic Garden Co.


— VII-3 —

— Panyu Agile Co.

— Huadu Agile Co.

— Nanhai Agile Co.

— Greenville Co.

— Ever Creator Co.

. Property management companies

— Huadu Property Management Co.

— Guangzhou Property Management Co.

— Nanhai Property Management Co.

— Zhongshan Property Management Co.

. Interior decoration company

— Fashion Decoration Co.

the BVI companies then acquired the equity interests in the PRC property

development project companies, property management companies and interior

decoration company pursuant to various share transfer agreements and

documents pursuant to certain acquisitions and mergers dated May or June

2005. The consideration for these transfers was determined by reference to the

appraised net asset value of the respective PRC companies as of 30 September

2004 or 31 December 2004;

except for Baiyun Agile Co., Guangzhou Agile Co., Panyu Agile Co. and

Huadu Agile Co., all the equity interests in the PRC companies were

transferred to the BVI companies. The interests in the BVI companies were

then transferred to our Group. After the share transfers, these PRC companies

(save for the aforesaid 4 companies) were converted into wholly foreign owned

enterprises;

Baiyun Agile Co. was a sino-foreign cooperative joint venture enterprise

established by Agile International Co., Ltd. and

(Guangdong Lingnan Economic Development Ltd.) (‘‘Guangdong Lingnan’’), a

third party PRC company, in which Agile International Co., Ltd. agreed to

contribute the registered capital in cash which is required to be fully paid by

June 2006. Guangdong Lingnan contributed land use rights for the project.

Guangdong Lingnan will no longer be entitled to profit distribution from

Baiyun Agile Co. after receiving a fixed return of RMB15,470,000 from Baiyan

Agile Co. Pursuant to the Reorganization, Agile International Co., Ltd.

transferred its interests in Baiyun Agile Co. to a BVI company, Pomaine

International Limited, and after the transfer, Baiyun Agile Co. remains a sino-

foreign cooperative joint venture enterprise. The joint venture partners are

Pomaine International Limited and Guangdong Lingnan;


— VII-4 —

Guangzhou Agile Co. was also a sino-foreign cooperative joint venture

enterprise established by Agile International Co., Ltd. and

(Guangzhou Tonghe Real Estate Development

Ltd.) (‘‘Guangzhou Tonghe’’), a third party PRC company. Agile

International Co., Ltd. agreed to contribute the registered capital in cash

which is required to be fully paid by June 2006. Guangzhou Tonghe

contributed land use rights for the project. Guangzhou Tonghe shall receive

fixed return of RMB67,701,400 from Guangzhou Agile Co. and shall no longer

be entitled to profit distribution of Guangzhou Agile Co. Pursuant to the

Reorganization, Agile International Co., Ltd. transferred its interests in

Guangzhou Agile Co. to a BVI company, Hefty Wealth Group Limited, and

after the transfer, Guangzhou Agile Co. remains a sino-foreign cooperative

joint venture enterprise and the joint venture partners are Hefty Wealth Group

Limited and Guangzhou Tonghe;

according to Guangzhou local requirements, part of the equity interests of

property development companies established in Guangzhou are required to be

held by PRC companies. As a result, Panyu Agile Co. and Huadu Agile Co. are

required to comply with such requirements. Panyu Agile Co. was originally a

sino-foreign equity joint venture enterprise held 25% by Agile International

Co., Ltd. and 75% by Zhongshan Group Co. Pursuant to the Reorganization,

Agile International Co., Ltd. transferred its 25% interest in Panyu Agile Co. to

a BVI company, Mexon Holdings Limited, and Zhongshan Group Co.

transferred its 73% in Panyu Agile Co. to another BVI company, Maxsino

Investments Limited. The remaining 2% has been transferred to Nanhai Co., a

PRC company held by two Chinese citizens, Chen Qingwei and Lu Zanchu.

After the said share transfers, Panyu Agile Co. remains a sino-foreign equity

joint venture enterprise and the shareholders are Mexon Holdings Limited,

Maxsino Investments Limited and Nanhai Co., which hold 25%, 73% and 2%

respectively;

Huadu Agile Co. was originally a PRC limited liability company held 90% by

Zhongshan Group Co. and 10% by Lu Liqing. Pursuant to the Reorganization

and in order to comply with Guangzhou local requirement, Lu Liqing

transferred 2% of its interest in Huadu Agile Co. to Nanhai Co., a PRC

company held by two Chinese citizens, Chen Qingwei and Lu Zanchu.

Zhongshan Group Co. and Lu Liqing then transferred the remaining 98%

interest to a BVI company, Chieffield Global Limited. After the share transfers,

Huadu Agile Co. was converted into a sino-foreign equity joint venture

enterprise, in which Chieffield Global Limited holds 98% and Nanhai Co. holds

2%.

(ii) Establishment of Overseas Holding Companies

As of 23 November 2005 and prior to the Reorganization, Chen Zhuo Lin and

Luk Sin Fong, Fion held the entire issued share capital of Eastern Supreme on

a 50 : 50 basis and Eastern Supreme holds the entire interests in 3 major BVI

companies, namely Forever Fame, Genesis Global and Top Delight;


— VII-5 —

Forever Fame, Genesis Global and Top Delight acquired the BVI companies

engaging in property business, property management business and interior

decoration business as mentioned in paragraph (i) from the Founding

Shareholders and Eastern Supreme have allotted and issued new shares to the

Founding Shareholders as consideration, the value of which was calculated with

reference to the net asset value of the relevant BVI companies.

(iii) Incorporation of the Company

In preparation for the Global Offering, the Company was incorporated on 14

July 2005;

As part of our Reorganization, on 23 November 2005, our Company acquired

Eastern Supreme from the Founding Shareholders and allotted and issued

199,999,980 Shares to them and credit as fully paid-up the 20 nil-paid Shares

held by Chen Zhuo Lin and Luk Sin Fong, Fion as consideration. Our

Reorganization in anticipation of the Global Offering was completed as at the

date of this prospectus.

(iv) Incorporation of Top Coast

Top Coast was set up and held by Chen Zhuo Lin and Luk Sin Fong, Fion in

the British Virgin Islands.

On 23 November 2005, the Founding Shareholders transferred their Shares to

Top Coast and Top Coast then established the Chen Family Trust on 23

November 2005 as trustee and declared that the beneficial entitlement of each

beneficiary in the Chen Family Trust, namely Chen Zhuo Lin, Chan Cheuk Yin,

Luk Sin Fong, Fion, Chan Cheuk Hung, Chan Cheuk Hei and Chan Cheuk Nam

shall be 25%, 19%, 17%, 13%, 13% and 13% respectively. Further details of

the Chen Family Trust are set out in the section headed ‘‘The Chen Family

Trust’’ on page 62 of this prospectus.

5. Changes in share capital of subsidiaries

The Company’s subsidiaries are referred to in the Accountants’ Report, the text of which

is set out in Appendix I to this prospectus. The following sets out the changes to the share

capital made by the subsidiaries of the Company during the two years preceding the date of

this prospectus:

(a) Guangzhou Baiyun Agile Real Estate

Development Ltd.

(i) On 4 February 2002, Baiyun Agile Co. was established in the PRC as a sino-

foreign co-operative joint venture with a registered share capital of

US$3,775,000, in which Agile International Co., Ltd. shall contribute the

registered capital in cash and Guangdong Lingnan Economic Development Ltd.

contributed land use rights.

(ii) The Group’s interest in Baiyun Agile Co. is now held through Pomaine

International Limited, a wholly-owned subsidiary of the Company.


— VII-6 —

(b) Guangzhou Agile Real Estate Development Ltd.

(i) On 23 October 2000, Guangzhou Agile Co. was established in PRC as a sino-

foreign co-operative joint venture with a registered capital of US$14,480,000,

in which Agile International Co., Ltd. shall contribute the registered capital in

cash and Guangdong Lingnan Economic Development Ltd. contributed land use

rights.

(ii) The Group’s interest in Guangzhou Agile Co. is now held through Hefty

Wealth Group Limited, a wholly-owned subsidiary of the Company.

(c) Zhongshan Agile Majestic Garden Real Estate

Development Ltd.

(i) On 5 January 1998, Majestic Garden Co. was established in PRC as a sino-

foreign equity joint venture with a registered capital of HK$100 million and

was owned as to 49% by Zhongshan Group Co. and as to 51% by Agile

International Co., Ltd..

(ii) On 27 May 2002, the registered capital of Majestic Garden Co. has been

increased to HK$110 million and was owned as to 49% by Zhongshan Group

Co. and as to 51% by Agile International Co., Ltd.

(iii) On 21 October 2004, the registered capital of Majestic Garden Co. has been

increased to HK$120 million and is now owned as to 51% by Eternal Sun

International Limited and as to 49% by Rovex Holdings Ltd., both wholly-

owned subsidiaries of the Company.

(d) Guangzhou Panyu Agile Real Estate Development

Ltd.

(i) On 27 March 2000, Panyu Agile Co. was established in PRC as a sino-foreign

equity joint venture with a registered capital of RMB100 million and is now

owned as to 73% by Maxsino Investments Ltd., as to 25% by Mexon Holdings

Limited, both wholly-owned subsidiaries of the Company, and as to 2% by

Nanhai Co.

(e) Guangzhou Huadu Agile Real Estate

Development Ltd.

(i) On 19 January 2001, Huadu Agile Co. was established in PRC as a limited

liability company with a registered capital of RMB20 million and was owned

as to 90% by Zhongshan Group Co. and as to 10% by Lu Liqing.

(ii) On 15 August 2005, the registered capital of Huadu Agile Co. has been

increased to RMB30 million and now owned as to 98% by Chieffield Global

Limited, our wholly owned subsidiary and as to 2% by Nanhai Co.


— VII-7 —

(f) Foshan Nanhai Agile Real Estate Development

Ltd.

(i) On 27 November 2000, Nanhai Agile Co. was established in PRC as a limited

liability company with a registered capital of RMB30 million and is wholly

owned Sino Casa International Limited, a wholly-owned subsidiary of the

Company.

(g) Zhongshan Greenville Real Estate Development

Ltd.

(i) On 20 January 2001, Greenville Co. was established in PRC as a limited


as to 20% by Lu Liqing, as to 30% by Luk Sin Fong, Fion, as to 20% by Zheng

Huiqiong and as to 30% by Chan Cheuk Hei.

(ii) On 30 June 2005, the registered capital of Greenville Co. has been increased to

RMB42 million and is now wholly owned by Intersino Holdings Limited, a

wholly-owned subsidiary of the Company.

(h) Zhongshan Ever Creator Real Estate Development

Ltd.

(i) On 6 November 2003, Ever Creator Co. was established in PRC as a limited


as to 90% by Zhongshan Agile Property Development Co., Ltd., as to 5% by

Chan Siu Hang and as to 5% by Chan Siu Na.

(ii) On 12 May 2004, the registered capital of Ever Creator Co. has been increased

to RMB90 million and is now wholly owned by Prospero International Group

Limited, a wholly-owned subsidiary of the Company.

(i) Guangzhou Huadu Agile Property

Management Services Co., Ltd.

(i) On 23 April 2003, Huadu Property Management Co. was established in PRC as

a limited liability company with a registered capital of RMB0.5 million and is

now wholly owned by Boldham Holdings Limited, a wholly-owned subsidiary

of the Company.

(j) Guangzhou Agile Property Management Services

Co., Ltd.

(i) On 18 April 2003, Guangzhou Property Management Co. was established in

PRC as a limited liability company with a registered capital of RMB1 million

and is now wholly owned by Primeast International Limited, a wholly-owned

subsidiary of the Company.


— VII-8 —

(k) Foshan Nanhai Agile Property

Management Services Co., Ltd.

(i) On 20 September 2002, Nanhai Property Management Co. was established in

PRC as a limited liability company with a registered capital of RMB0.5 million

and is now wholly owned by Evertron International Limited, a wholly-owned

subsidiary of the Company.

(l) Zhongshan Agile Property Management Services

Co., Ltd.

(i) On 26 June 1997, Zhongshan Property Management Co. was established in PRC

as a limited liability company with a registered capital of RMB0.3 million and

was owned as to 20% by Lu Liqing, 20% by Chan Cheuk Yin, 30% by Chan

Cheuk Hei and 30% by Luk Sin Fong, Fion.

(ii) On 30 July 2005, the registered capital of Zhongshan Property Management Co.

has been increased to RMB13.3 million and is now wholly owned by Makel

International Limited, a wholly-owned subsidiary of the Company.

(m) Zhongshan Fashion Decoration Co., Ltd.

(i) On 30 March 2000, Fashion Decoration Co. was established in PRC as a

limited liability company with a registered capital of RMB5 million and was

owned as to 60% by Lu Liqing and as to 40% by Chan Siu Na.

(ii) On 20 August 2005, the registered capital of Fashion Decoration Co. has been

increased to RMB5.25 million and is wholly owned by Sinorinc Investment

Limited, a wholly-owned subsidiary of the Company.

(n) Pomaine International Limited (‘‘Pomaine’’)

(i) On 10 January 2005, Pomaine was established in the British Virgin Islands as a

limited liability company. Prior to the Reorganization, it has an issued share

capital of US$10.00 made up of 10 shares of US$1.00 each and owned as to

50% by Chen Zhuo Lin and 50% by Luk Sin Fong, Fion.

(ii) On 25 September 2005, Pomaine, in consideration of the acquisition of equity

interest in Baiyun Agile from Hong Kong Agile, issued 10 new shares of

US$1.00 each to Chen Zhuo Lin and Luk Sin Fong, Fion on a 50 : 50 basis as

directed by Hong Kong Agile.

(o) Hefty Wealth Group Limited (‘‘Hefty Wealth’’)

(i) On 28 January 2005, Hefty Wealth was established in the British Virgin Islands

as a limited liability company. Prior to the Reorganization, it has an issued

share capital of US$10.00 made up of 10 shares of US$1.00 each and owned as

to 50% by Chen Zhuo Lin and 50% by Luk Sin Fong, Fion.


— VII-9 —

(ii) On 25 September 2005, Hefty Wealth, in consideration of the acquisition of

equity interest in Guangzhou Agile from Hong Kong Agile, issued 10 new

shares of US$1.00 each to Chen Zhuo Lin and Luk Sin Fong, Fion on a 50 : 50

basis as directed by Hong Kong Agile.

(p) Eternal Sun International Limited (‘‘Eternal Sun’’)

(i) On 19 January 2005, Eternal Sun was established in the British Virgin Islands


share capital of US$10,000.00 made up of 10,000 shares of US$1.00 each and

owned as to 50% by Chen Zhuo Lin and 50% by Luk Sin Fong, Fion.

(ii) On 25 September 2005, Eternal Sun, in consideration of the acquisition of 51%

equity interest in Majestic Garden Co. from Hong Kong Agile, issued 10,000

new shares of US$1.00 each to Chen Zhuo Lin and Luk Sin Fong, Fion on a

50 : 50 basis as directed by Hong Kong Agile.

(q) Mexon Holdings Limited (‘‘Mexon’’)

(i) On 28 January 2005, Mexon was established in the British Virgin Islands as a


capital of US$10,000.00 made up of 10,000 shares of US$1.00 each and owned

as to 50% by Chen Zhuo Lin and 50% by Luk Sin Fong, Fion.

(ii) On 25 September 2005, Mexon, in consideration of the acquisition of 25%

equity interest in Panyu Agile Co. from Hong Kong Agile, issued 10,000 new

shares of US$1.00 each to Chen Zhuo Lin and Luk Sin Fong, Fion on a 50 : 50

basis as directed by Hong Kong Agile.

(r) Rovex Holdings Limited (‘‘Rovex’’)

(i) On 19 January 2005, Rovex was established in the British Virgin Islands as a



as to 47.82% by Chan Cheuk Yin, as to 39.13% by Luk Sin Fong, Fion, as to

4.35% by each of Chan Cheuk Nam, Chan Cheuk Hei and Chan Cheuk Hung

respectively.

(ii) As part of the Reorganization, on 23 November 2005, the shareholders of

Rovex, in proportion to their then shareholding in Rovex, applied HK$42.532

million, being the entire amount of shareholders loan due from Rovex to them,

to subscribe for further shares in Rovex and Rovex issued a further 10,000

shares of US$1.00 each credited as fully paid up to Chan Cheuk Yin, Luk Sin

Fong, Fion, Chan Cheuk Nam, Chan Cheuk Hei and Chan Cheuk Hung in

proportion to their then shareholding in Rovex.

(s) Maxsino Investments Limited (‘‘Maxsino’’)

(i) On 10 January 2005, Maxsino was established in the British Virgin Islands as a




— VII-10 —


4.35% by each of Chan Cheuk Nam, Chan Cheuk Hei and Chan Cheuk Hung

respectively.


Maxsino, in proportion to their then shareholding in Maxsino, applied

HK$91.622 million, being the entire amount of shareholders loan due from

Maxsino to them, to subscribe for further shares in Maxsino and Maxsino

issued a further 10,000 shares of US$1.00 each credited as fully paid up to

Chan Cheuk Yin, Luk Sin Fong, Fion, Chan Cheuk Nam, Chan Cheuk Hei and

Chan Cheuk Hung in proportion to their then shareholding in Maxsino.

(t) Chieffield Global Limited (‘‘Chieffield’’)

(i) On 19 January 2005, Chieffield was established in the British Virgin Islands as

a limited liability company. Prior to the Reorganization, it has an issued share



13.915% by Chan Cheuk Hung, as to 3.915% by Chan Cheuk Hei and as to

3.915% by Chan Cheuk Nam respectively.


Chieffield, in proportion to their then shareholding in Chieffield, applied

HK$12 million, being the entire amount of shareholders loan due from

Chieffield to them, to subscribe for further shares in Chieffield and Chieffield

issued a further 100,000 shares of US$0.01 each credited as fully paid up to

Chan Cheuk Yin, Luk Sin Fong, Fion, Chan Cheuk Nam, Chan Cheuk Hei and

Chan Cheuk Hung in proportion to their then shareholding in Chieffield.

(u) Sino Casa International Limited (‘‘Sino Casa’’)

(i) On 4 January 2005, Sino Casa was established in the British Virgin Islands as a




13.915% by Chan Cheuk Hung, as to 3.915% by Chan Cheuk Hei and as to

3.915% by Chan Cheuk Nam respectively.

(ii) As part of the Reorganization, on 23 November 2005, the shareholders of Sino

Casa, in proportion to their then shareholding in Sino Casa, applied HK$69.81

million, being the entire amount of shareholders loan due from Sino Casa to

them, to subscribe for further shares in Sino Casa and Sino Casa issued a

further 100,000 shares of US$0.01 each credited as fully paid up to Chan

Cheuk Yin, Luk Sin Fong, Fion, Chan Cheuk Nam, Chan Cheuk Hei and Chan

Cheuk Hung in proportion to their then shareholding in Sino Casa.

(v) Prospero International Group Limited (‘‘Prospero’’)

(i) On 4 January 2005, Prospero was established in the British Virgin Islands as a




— VII-11 —


5% by Chan Cheuk Nam, as to 5.625% by Chan Cheuk Hei and as to 5% by

Chan Cheuk Hung respectively.


Prospero, in proportion to their then shareholding in Prospero, applied HK$57

million, being the entire amount of shareholders loan due from Prospero to

them, to subscribe for further shares in Prospero and Prospero issued a further

100,000 shares of US$0.01 each credited as fully paid up to Chan Cheuk Yin,

Luk Sin Fong, Fion, Chan Cheuk Nam, Chan Cheuk Hei and Chan Cheuk Hung

in proportion to their then shareholding in Prospero.

(w) Intersino Holdings Limited (‘‘Intersino’’)

(i) On 10 January 2005, Intersino was established in the British Virgin Islands as a



20% by Chan Cheuk Yin, as to 30% by Luk Sin Fong, Fion, as to 20% by Chan

Cheuk Hung and as to 30% by Chan Cheuk Hei respectively.


Intersino, in proportion to their then shareholding in Intersino, applied HK$12

million, being the entire amount of shareholders loan due from Intersino to

them, to subscribe for further shares in Intersino and Intersino issued a further

10 shares of US$1.00 each credited as fully paid up to Chan Cheuk Yin, Luk

Sin Fong, Fion, Chan Cheuk Hei and Chan Cheuk Hung in proportion to their

then shareholding in Intersino.

(x) Sinorinc Investments Limited (‘‘Sinorinc’’)

(i) On 28 January 2005, Sinorinc was established in the British Virgin Islands as a



40% by Chan Cheuk Nam and 60% by Chan Cheuk Hung respectively.


Sinorinc, in proportion to their then shareholding in Sinorinc, applied HK$8.5

million, being the entire amount of shareholders loan due from Sinorinc to

them, to subscribe for further shares in Sinorinc and Sinorinc issued a further

10 shares of US$1.00 each credited as fully paid up to Chan Cheuk Nam and

Chan Cheuk Hung in proportion to their then shareholding in Sinorinc.

(y) Profitica Group Limited (‘‘Profitica’’)

(i) On 28 January 2005, Profitica was established in the British Virgin Islands as a



51% by Chen Zhuo Lin and 49% by Luk Sin Fong, Fion respectively.


— VII-12 —


Profitica, in proportion to their then shareholding in Profitica, applied HK$3

million, being the entire amount of shareholders loan due from Profitica to

them, to subscribe for further shares in Profitica and Profitica issued a further

100 shares of US$1.00 each credited as fully paid up to Chen Zhuo Lin and

Luk Sin Fong, Fion in proportion to their then shareholding in Intersino.

(z) Eastern Supreme

(i) On 6 April 2005, Eastern Supreme was established in the British Virgin Islands


share capital of US$2.00 made up of 2 shares of US$1.00 each and owned as to

50% by Chen Zhuo Lin and 50% by Luk Sin Fong, Fion.

(ii) As part of the Reorganization, on 23 November 2005, Eastern Supreme, in

consideration of the acquisition of the BVI companies engaging in property

business, property management business now constituting part of the Group by

Forever Fame, Genesis Global and Top Delight from the Founding

Shareholders, a further 9,998 shares of US$1.00 each were issued and

allotted fully paid up to the Founding Shareholders in such proportion

calculated with reference to the net asset value of the relevant BVI

companies contributed by each of the Founding Shareholders.

Save for the subsidiaries mentioned in Appendix I and page 64 of this prospectus, the

Company has no other subsidiaries.

Save as set out above, there has been no alteration in the share capital of any of the

subsidiaries of the Company within the two years immediately preceding the date of this

prospectus.

6. Repurchase by the Company of Shares

(a) Provisions of the Listing Rules

The Listing Rules permit companies whose primary listings are on the Stock

Exchange to repurchase their securities on the Stock Exchange subject to certain

restrictions, the most important of which are summarized below:

(i) Shareholders’ approval

All proposed repurchases of securities on the Stock Exchange by a company

with a primary listing on the Stock Exchange must be approved in advance by an

ordinary resolution of shareholders, either by way of general mandate or by specific

approval of a particular transaction.

(Note: Pursuant to the written resolution passed by the shareholders of the Company on 23

November 2005, a general unconditional mandate (the ‘‘Buyback Mandate’’) was granted to

the Directors authorising the repurchase by the Company on the Stock Exchange, or on any

other stock exchange on which the securities of the Company may be listed and which is

recognized by the SFC and the Stock Exchange for this purpose, of Shares with an

aggregate nominal value not exceeding 10% of the aggregate nominal amount of the share

capital of the Company in issue and to be issued as mentioned herein, at any time until the


— VII-13 —

conclusion of the next annual general meeting of the Company, the expiration of the period

within which the next annual general meeting of the Company is required by an applicable

law or the Articles to be held or when such mandate is revoked or varied by an ordinary

resolution of the shareholders of the Company in general meeting, whichever is the

earliest.)

(ii) Source of funds

Repurchases must be funded out of funds legally available for the purpose in

accordance with the Articles of the Company and the laws of the Cayman Islands. A

listed company may not repurchase its own securities on the Stock Exchange for a

consideration other than cash or for settlement otherwise than in accordance with the

trading rules of the Stock Exchange from time to time.

(b) Reasons for repurchases

The Directors believe that it is in the best interests of the Company and its

shareholders for the Directors to have a general authority from shareholders to enable the

Company to repurchase Shares in the market. Repurchases of Shares will only be made

when the Directors believe that such repurchases will benefit the Company and its

members. Such repurchases may, depending on market conditions and funding

arrangements at the time, lead to an enhancement of the net value of the Company and

its assets and/or its earnings per Share.

(c) Funding of repurchases

In repurchasing securities, the Company may only apply funds legally available for

such purpose in accordance with the Articles of the Company and the applicable laws of

the Cayman Islands.

It is presently proposed that any repurchase of Shares would be made out of capital

paid up on the repurchased Shares, funds of the Company which would otherwise be

available for dividend or distribution and, in case of the premium payable on such

repurchase, from funds of the Company otherwise available for dividend or distribution or

out of the Company’s share premium account before the Shares are repurchased.

The Directors do not propose to exercise the Buyback Mandate to such an extent as

would, in the circumstances, have a material adverse effect on the working capital

requirements of the Company or its gearing levels which, in the opinion of the Directors,

are from time to time appropriate for the Company.

(d) Share capital

Exercise in full of the Buyback Mandate, on the basis of 3,465,260,000 Shares in

issue immediately after the listing of the Shares taking into account the over-allotment of

Shares, could accordingly result in up to 346,526,000 Shares being repurchased by the

Company during the period prior to:

(i) the conclusion of the next annual general meeting of the Company;


— VII-14 —

(ii) the expiration of the period within which the next annual general meeting of

the Company is required by any applicable law or the Articles of the Company

to be held; or

(iii) the revocation or variation of the Buyback Mandate by an ordinary resolution

of the Shareholders in general meeting,


(e) General

None of the Directors or, to the best of their knowledge, having made all reasonable

enquiries, any of their respective associates (as defined in the Listing Rules), has any

present intention to sell any Shares to the Company or its subsidiaries.

The Directors have undertaken to the Stock Exchange that, so far as the same may

be applicable, they will exercise the Buyback Mandate in accordance with the Listing

Rules and the applicable laws of the Cayman Islands.

No connected person (as defined in the Listing Rules) has notified the Company that

he or it has a present intention to sell Shares to the Company, or has undertaken not to do

so, if the Buyback Mandate is exercised.

If as a result of a securities repurchase pursuant to the Buyback Mandate, a

Shareholder’s proportionate interest in the voting rights of the Company increases, such

increase will be treated as an acquisition for the purpose of the Hong Kong Code on

Takeovers and Mergers (the ‘‘Code’’). Accordingly, a Shareholder, or a group of

Shareholders acting in concert, depending on the level of increase of the Shareholders’

interest, could obtain or consolidate control of the Company and become obliged to make

a mandatory offer in accordance with Rule 26 of the Code as a result of any such

increase. The Directors are not aware of any consequences which may arise under the

Code if the Buyback Mandate is exercised.

If the Buyback Mandate is fully exercised immediately following completion of the

Global Offering and the Capitalization Issue without taking into account any Shares which

may be allotted and issued upon the exercise of the Over-allotment Option which may fall

to be allotted and issued pursuant to the exercise of the any options which may be granted

under the Share Option Scheme, the total number of Share which will be repurchased

pursuant to the Buyback Mandate shall be 332,200,000 Shares (being 10% of the issued

share capital of the Company based on the aforesaid assumptions). The percentage

shareholding of Top Coast, the controlling shareholder of the Company will be increased

to 75% of the issued share capital of the Company immediately following the full exercise

of the Buyback Mandate. Save as aforesaid, the Directors are not aware of any

consequences of the repurchases which would give rise under the Code. Any repurchase

of Shares which results in the number of Shares held by the public being reduced to less

than the prescribed percentage of the Shares then in issue could only be implemented with

the approval of the Stock Exchange to waive the Listing Rules requirements regarding the

public shareholding referred to above. However, the Directors do not propose to exercise

the Buyback Mandate to such an extent that, in the circumstances, there is insufficient

public float as prescribed under the Listing Rules.


— VII-15 —

B. FURTHER INFORMATION ABOUT THE BUSINESS

1. Summary of material contracts

The following contracts (not being contracts in the ordinary course of business) have been

entered into by the Company or any of its subsidiaries within the two years preceding the date

of this prospectus and are or may be material:

(a) Equity transfer agreement made between Agile International Co., Ltd. as vendor and

Pomaine International Limited as purchaser on 5 June 2005 in relation to the transfer

of equity interests in Baiyun Agile Co.;

(b) Equity transfer agreement made between Agile International Co., Ltd. as vendor and

Hefty Wealth Group Limited as purchaser on 5 June 2005 in relation to the transfer

of equity interests in Guangzhou Agile Co.;

(c) Equity transfer agreement made between Agile International Co., Ltd. as vendor and

Eternal Sun International Limited as purchaser on 5 June 2005 in relation to the

transfer of equity interests in Majestic Garden Co.;

(d) Equity transfer agreement made between Zhongshan Group Co. as vendor and Rovex

Holdings Limited as purchaser on 5 June 2005 in relation to the transfer of equity

interests in Majestic Garden Co.;

(e) Equity transfer agreement made between Agile International Co., Ltd. as vendor and

Mexon Holdings Limited as purchaser on 2 June 2005 in relation to the transfer of

equity interests in Panyu Agile Co.;

(f) Equity transfer agreement made between Zhongshan Group Co. as vendor and

Maxsino Investments Limited as purchaser on 2 June 2005 in relation to the transfer

of equity interests in Panyu Agile Co.;

(g) Equity transfer agreement made between Zhongshan Group Co. and Lu Liqing as

vendors and Chieffield Global Limited as purchaser on 31 May 2005 in relation to

the transfer of equity interests in Huadu Agile Co.;

(h) Equity transfer agreement made between Zhongshan Group Co. and Lu Liqing as

vendors and Sino Casa International Limited as purchaser on 2 June 2005 in relation

to the transfer of equity interests in Nanhai Agile Co.;

(i) Equity transfer agreement made between Lu Liqing, Chan Cheuk Hei, Zheng

Huiqiong and Luk Sin Fong, Fion as vendors and Intersino Holdings Limited as

purchaser on 29 May 2005 in relation to the transfer of equity interests in Greenville

Co.;

(j) Equity transfer agreement made between Zhongshan Agile Co., Lu Liqing and Chan

Siu Na as vendors and Prospero International Group Limited as purchaser on 19 May

2005 in relation to the transfer of equity interests in Ever Creator Co.;

(k) Equity transfer agreement made between Chan Cheuk Hei, Luk Sin Fong, Fion, Chan

Cheuk Yin and Lu Liqing as vendors and Makel International Limited as purchaser

on 23 May 2005 in relation to the transfer of equity interests in Zhongshan Property

Management Co.;


— VII-16 —

(l) Equity transfer agreement made between Chan Cheuk Yin and Lu Liqing as vendors

and Primeast International Limited as purchaser on 5 June 2005 in relation to the

transfer of equity interests in Guangzhou Property Management Co.;

(m) Equity transfer agreement made between Chan Siu Na and Huadu Agile Co. as

vendors and Boldham Holdings Limited as purchaser on 31 May 2005 in relation to

the transfer of equity interests in Huadu Property Management Co.;

(n) Equity transfer agreement made between Chan Siu Na and Nanhai Agile Co. as

vendors and Evertron International Limited as purchaser on 2 June 2005 in relation

to the transfer of equity interests in Nanhai Property Management Co.;

(o) Equity transfer agreement made between Chan Siu Na and Lu Liqing as vendors and

Sinorinc Investments Limited as purchaser on 20 May 2005 in relation to the

transfer of equity interests in Fashion Decoration Co.;

(p) Trademark transfer agreement made between Zhongshan Group Co. and Majestic

Garden Co. on 5 June 2005 pursuant to which Zhongshan Group Co. agreed to

transfer the ownership rights in certain trademarks registered in the name of

Zhongshan Group Co. to Majestic Garden Co.;

(q) Trademark transfer agreement and supplemental agreement made between Zhongshan

Group Co. and Zhongshan Property Land Co. on 2 July 2005 and 5 July 2005

respectively pursuant to which Zhongshan Group Co. agreed to transfer the

ownership rights in certain trademarks registered in the name of Zhongshan Group

Co. to Zhongshan Property Land Co.;

(r) Trademark license agreement made between Zhongshan Group Co. and Majestic

Garden Co. on 25 October 2005 pursuant to which Zhongshan Group Co. agreed to

grant a license to Majestic Garden Co. to use certain trademarks registered in the

name of Zhongshan Group Co.;

(s) Trademark license agreement made between Zhongshan Group Co. and Zhongshan

Property Land Co. on 25 October 2005 pursuant to which Zhongshan Group Co.

agreed to grant a license to Zhongshan Property Land Co. to use certain trademarks

registered in the name of Zhongshan Group Co.;

(t) Reorganization Agreement made between, amongst others, the Company, the

Founding Shareholders, Top Coast, Eastern Supreme, Forever Fame, Genesis

Global and Top Delight on 23 November 2005 in relation to the reorganization of

the Group;

(u) the deed of indemnity dated 23 November 2005 given by each of Top Coast, Chen

Zhuo Lin, Chan Cheuk Yin, Luk Sin Fong, Fion, Chan Cheuk Hung, Chan Cheuk

Hei, Chan Cheuk Nam, Lu Liqing, Lu Yanping, Chan Siu Na and Zheng Huiqiong in

favour of the Company; and

(v) the Hong Kong Underwriting Agreement.


— VII-17 —

2. Intellectual property rights

(a) Trademarks

As at the Latest Practicable Date, the Group obtained the right to use each of the

following trademarks in the PRC pursuant to two trademark licence agreements both dated

25 October 2005 :

Trademarks Class Products or services covered

Registration

number Validity period

1 solid-state gas for industrial use,

acetate (chemicals), alcohol,

distilled water, raw water

reactor fuel, electro fluid,

chemical additives of motor

fuel, glass antifouling agent,

chemicals for water purification,

pesticidal chemical additives,

fax paper, raw synthetic resin,

mixed extinguishing agent,

quenching liquid, glucide,

sumach, pulp, chemo-reagent

(not for medical nor veterinary

use), fertilizer, welding

chemicals

1700045 21/01/2002–

20/01/2012

3 soap, laundry starch, cleaning

solution, shoeshine, abrasive,

cosmetic products, toothpaste,

potpourri (spice), cosmetic

products for animals’ use,

flower flavour raw materials

1443197 14/09/2000–

13/09/2010

4 fuel, motor fuel, coal, wax for

industrial use, candles, dust

disposer, petroleum gas

1728302 14/03/2002–

13/03/2012

5 solution for contact lens’ use,

chemical disinfector for toilet

use, veterinary medicine,

pesticide, disinfecting tissue,

first-aid bag, tooth filler, air

refresher

1720466 28/02/2002–

27/02/2012

6 ordinary metal alloy, metal pipe,

metal construction material,

metal track, steel wire, non-

electric metallic cable plug,

nail, window ironware,

hardware, metal lock (non-

electric)

1479034 21/11/2000–

20/11/2010


— VII-18 —


Registration


7 aquarium feed pump, timbermachining machine, machineryand appliances used inpapermaking and machinedpaper product industry; printingmachine, machinery used intextiles industry, dyeingmachine, tea-productionmachine, food-productionelectric machine, electric drinkmachine, machine for tobaccoindustry use, leather makingmachine, machinery andequipment used in bicycleindustry, machinery equipmentused in porcelain industry(including ceramics machineryfor construction), carvingmachine, battery machine,native special productsprocessor, enameling machine,bulb production machine,cellular coaling machine,kitchen electric machines,washing machines, industrialmachinery for medicineprocessing, plastic injectionmoulding machine, machineryand equipment for glass industry(including ordinary glassproduction machine), chemicalfertilizer facilities, electricmachine used in chemicalindustry, drilling machine,machinery and equipment forsmelting industry, cast ironfitting, petroleum chemicalindustry facilities, stirrer(architecture), elevator (lift), airhammer, moulding machinesteam engine, diesel engine,waterpower generator andmotor, paper clip machine,button making machine, lathe,pneumatic fixing machine,electronic industry facilities,optical cooling equipment, gasseparator, paint sprayer,generator, air compressor,axletree (machine components),electric welding machine,electric waxing machine andequipment, disintegrator(machine), packaging machine,agricultural machinery

1713659 14/02/2002–13/02/2012


— VII-19 —


Registration


8 sharpener (hand-used tool);

agricultural utensils (manual);

gardening tools (manual);

animal slaughter tools and

utensils, harpoon, hair clippers

for individual use (electric or

non-electric), hand-used tools,

adhesive extruding tool, forceps,

scissors, side arms, tableware

(knife, fork and spoon)

1661923 07/11/2001–

06/11/2011

9 computers, slot machine,

pinhole plotter for office use,

weighing apparatus, measure,

telephone, electroacoustics

components, level gauge,

taximeter, water meter,

audiovisual teaching instrument,

electric meter, scientific

satellite, optic instrument and

apparatus, power material (wire,

cable), quartz crystal,

transformer, socket, pin and

other joining (electrical

appliance connector), high and

low power switch, elevator

handling device, galvanizing

facilities, fire distinguishing

facilities, electric arc cutting

equipment, industrial radiation

facilities, safety armet, glasses,

battery charger, cartoon, iron

1706071 28/01/2002–

27/01/2012

10 bodybuilding massage

equipment; dental equipment;

electrotherapy machine;

audiphones; nursing bottle;

condom; hairpiece; orthopaedics

goods; sewing material

1715057 14/02/2002–

13/02/2012

11 illumination machinery and

device; tap-water facilities

adjustment and its safety

fittings; small-scale warmer; gas

lighter; polymerization reacting

equipment; blowpipe lamp;

water supply facilities

1748088 14/04/2002–

13/04/2012


— VII-20 —


Registration


12 land, air, sea or railway mobile

machine, automobile, decoration

in vehicles, motorcycle, bike,

cable car, golf trolley, sled

(vehicle), tire, air transportation,

yacht

1657960 28/10/2001–

27/10/2011

13 pneumatic gun (weapon); shoot

langrage; fireworks

1678465 07/12/2001–

6/12/2011

14 gem (jewellery); souvenir

badge; tie bar; watch; adornment

(jewellery)

1770321 21/05/2002–

20/05/2012

15 piano; accordion; musical

instrument; violin, electronic

organ, flute, music box, sound

adjustor (sound fixer), music

stand

1652636 21/10/2001–

20/10/2011

16 paper; copy paper (stationery);

tissue paper, white paperboard,

notebook, press publication,

picture, playing card, plastic

wrap, shredder, stationery, ink,

stamp, pen, self-adhesive paper,

drawing instruments, painting

case, electric or non-electric

typewriter, magnetic tablet,

architectural model, prayer

beads

1652720 21/10/2001–

20/10/2011

17 synthetic rubber, rubber band;

plastic pipe, board, pole, bar;

fire fighting hose; asbestos

board, deadening material, glass

fiber warming board and pipe,

rubber or plastic packaging

material (for filler and padding),

packaging strap (rolling

tobacco)

1664080 14/11/2001–

13/11/2011

18 semi-worked or unworked

leather, file, handbag, travel

bag, fur, umbrella or umbrella

ribs, walking stick, gut for

making sausages, belt (non-

finery use)

1756439 28/04/2002/

27/04/2012


— VII-21 —


Registration


19 floor board, granite, gypsum,

cement, cement pipe, ceramic

tile, firebrick and fire tile,

bitumen products for

construction use, non-metal

pipe, luminous paving material,

construction materials for glass

(excluding sanitary facilities),

non-metal building, plating

membrane glass, stone binding

agent, stone, concrete or marble

artwork, non-metal stele

1696559 14/01/2002–

13/01/2012

20 furniture, plastic packaging

container, desk, notice board,

bamboo handicrafts, furniture

non-metal components, pillow,

non-metal door fittings, plastic

food decoration, manikin

1484956 07/12/2000–

06/12/2010

21 non-precious metal containers

for domestic use; glassware for

daily use (including cups, trays,

pots and jars); porcelain,

porcelain, terra cotta or glass

artwork, clothes hanger, comb,

raw material for brush

production, toothbrush,

toothpick, cosmetic products,

glass cleaner, colored glass, pet

cage, mosquito repellent

1750977 21/04/2002–

20/04/2012

22 packaging rope; hood (non-

installation), paulin, yurt,

knitted bag, filler, textile fiber

1665150 14/11/2001–

13/11/2011

23 yarn; rayon thread and yarn;

rayon; string; gauze and string

for embroider use; nylon strap;

caddice; wool; cashmere

1673052 28/11/2001–

27/11/2011

24 textile products; textile filter;

textile hangings; sanitary

flannelet; textile furniture cover;

lavation gloves; banner;

adhesive plaster not for

stationery use; felt

1456651 14/10/2000–

13/10/2010


— VII-22 —


Registration


24 textile products; textile filter;

textile hangings; textile napkin;

furniture covering; reticulation

curtain; textile mat; lavation

mitten; banner; domestic electric

appliances covering; bathing cap

3397409 14/08/2004–

13/08/2014

25 costume; baby suit; swimming

suit; waterproof dress; theatrical

costume; mountaineering shoes;

shoes; hat; socks; gloves

(costume); tie; belt (for raiment

use); bridal veil

1689133 28/12/2001–

27/12/2011

26 lace decoration; garment

decoration; slide fastener;

hairpiece; sewing kit; man-made

flowers; garment shoulder pads;

warm adhesive paster for

patching textile; athlete’s

number; teapot warming gloves

1668683 21/11/2001–

20/11/2011

27 carpet; mat; bathroom skidproof

mat; man-made turf; mat and

carpet used in vehicles; floor

mat; rubber mat; wallpaper;

non-textile curtain

1669112 21/11/2001–

20/11/2011

28 TV games; merry-go-round in

pleasure ground; electromotion

playing car; toys; chess (games);

golf mallet; arrows and bows;

surf board; whistle; swimming

pool (for entertainment); golf

gloves; ice skates; artificial

snow for Christmas tree

decoration; fishing tackle; racket

sweatband

1704694 28/01/2002–

27/01/2012

29 meat, fish (non-living); fruit tin;

peanut butter; pickled

vegetables; eggs; dairy products;

edible grease; fruit salad; pectin

for food use; machined peanuts;

dried edible mushroom; bean

curd products

1674962 28/11/2001–

27/11/2011


— VII-23 —


Registration


30 coffee drink; tea substitute;

sugar; candies, healthy paste for

non-medical use, bread, edible

flour, noodles, corn, soybean

milk, starch foodstuff, edible

ice, salt, sauce, seasoning, yeast,

Essences for foodstuffs

(excluding etheric essences and

essential oils), meat tenderizer

for household purpose

1663150 07/11/2001–

06/11/2011

31 raw timber; raw rice, fresh

gardening herb, animals for

exhibition, fresh fruit, fresh

vegetables, plant seed, fodder,

malt for wine production,

consumer goods for animal

1666665 14/11/2001–

13/11/2011

32 beer; fruit juice; mineral water

(drink); non-alcoholic drink,

coke, tea drink (water), milk tea

(not mainly made of milk), fruit

crystal, drink essence

1655352 21/10/2001–

20/10/2011

33 ratafia (alcoholic); cider;

cocktail; alcohol (liqueur);

aquavit; rice wine; whisky; light

sparkling wine; clear wine

1675473 28/11/2001–

27/11/2011

34 tobacco herbs, match, tobacco

pipe, lighter for smoking, butane

gas filler for lighter use, filter

tip, tobacco

1658550 28/10/2001–

27/10/2011

35 advertisement; business

management and organization

consultation; promotion (as an

agent); personnel management

consultation; commercial

premises removal (information

provision); machinery and

facilities leasing for office use;

auditing; restaurant

management; import and export

agent; advertisement planning

1433816 14/08/2000–

13/08/2010


— VII-24 —


Registration


36 insurance, bank, abode

(mansion), broker, leasing

guarantee, whip-round, trustee,

realty agent, artwork valuation,

pledge

1433668 14/08/2000–

13/08/2010

37 architectural information,

architecture, quarry, interior

decoration, warming facilities

installation and repair, electric

appliances installation and

repair, furniture maintenance,

lavation, sterilisation, escalator

installation and repair

1436635 21/08/2000–

20/08/2010

39 transportation; yacht

transportation; bus

transportation; air

transportation; vehicle leasing;

stockpile of goods; diving suit

leasing; coal gas station; water

gate operational management;

parcel post; travel agency

(excluding hotel reserve);

transportation management

1703819 21/01/2002–

20/01/2012

40 material disposal information;

metal disposal; textile product

chemical treatment; lumbering

and timber machining; paper

machining; glazing coloring

machining, porcelain burning

production, food fumigation,

stuffing machining, dress

tailoring, negative development,

garbage and rubbish recycling,

air purification, water

purification, artwork binding

1723817 28/02/2002–

27/02/2012

41 education or entertaining

competition organization;

mobile library; book publishing;

entertaining activities; animal

training; education, model

provision for artist; gym

facilities provision; diving

facilities leasing; tennis leasing

1448814 21/09/2000–

20/09/2010


— VII-25 —


Registration


42 full-board hostel provision;

camping facilities provision;

hospital; steam bath; animal

feeding; gardening; legal

services; guard; engineering;

interior design

1433920 14/08/2000–

13/08/2010

1 glass antifouling agent; brick

construction damp proof agent

(excluding paint); acetate;

electro fluid; solid-state gas for

industrial use; alcohol; distilled

water

1805071 14/07/2002–

13/07/2012

2 dyes; paint; edible pigment;

printing ink; oil paint;

preservative; natural resin; coat

(oil paint); varnish; porcelain

dope

1756200 28/04/2002–

27/04/2012

3 animals’ cosmetic products;

cosmetic products; polishing

paste; cleanser; liquid shampoo;

starch for laundry purpose;

spice; cedar wood; shoeshine;

toothpaste

1775331 28/05/2002–

27/05/2012

4 industrial oil; lubricating oil;

fuel; motor fuel; coal; industrial

wax; wax, dust disposer,

petroleum gas, gasoline

1736369 28/03/2002–

27/03/2012

5 chemical disinfectant for toilet

use; first-aid bag; air refresher;

veterinary medicine; sanitary

napkin; disinfecting tissue; tooth

filler; solution for contact lens’

use

1795612 28/06/2002–

27/06/2012

6 aluminium; metal pipe; metallic

construction components; scotch

block; steel wire; iron splice

bar; nail; furniture metal

components, hardware utensils;

padlock, metal display frame,

metal container, metallic sign

board, ordinary metal stele

1747073 14/04/2002–

13/04/2012


— VII-26 —


Registration


7 electric drink machine;

disintegrator (machinery); beater

(construction); air compressor;

timber machining machine; paint

sprayer; printing machine;

machinery and appliances used

in papermaking and machined

paper products industry; electric

machinery for food production

1911799 07/11/2002–

06/11/2012

8 sharpener (hand-used tool);

agricultural utensils (manual);

gardening tools (manual);

animal slaughter tools and

utensils, harpoon, hair clippers

for individual use (motor-driven

or non-motor-driven), hand-used

tools, adhesive extruding tool,

forceps, scissors, side arms,

tableware (knife, fork and

spoon)

1757221 28/04/2002–

27/04/2012

9 photocopier (photoelectric,

static, heat); measure;

telephone; electro acoustics

components; electric meter; fire

extinguishing facilities; safety

armet; electronic anti-theft

device; power material (wire,

cable)

1918117 21/11/2004–

20/11/2014

10 massage gloves; condom;

electrotherapy machine; sewing

material; hairpiece;

bodybuilding massage

equipment; orthopaedics goods;

nursing bottle; dental

equipment; audiphones

1787197 14/06/2002–

13/06/2012


— VII-27 —


Registration


11 exhaust hood for kitchen; water

supply facilities; freezing

equipment and machine;

blowpipe lamp; gas lighter; hot-

water heater; sauna facilities;

sterilisation cupboard; lighting

machine and equipment; tap-

water facilities adjustment and

its safety fittings

1792361 21/06/2002–

20/06/2012

12 decoration in vehicles; tire;

cable car; vehicles; sled

(vehicle)

1777347 28/05/2002–

27/05/2012

13 firecracker; cartridge pouch;

starting gun powder; pneumatic

gun (weapon), shoot langrage;

signalling firework; firework;

firework products; fire-lighter;

bullet bag

1793432 21/06/2002–

20/06/2012

15 flute, electronic organ, piano;

harmonicon; music stand;

musical instrument; accordion;

violin, sound adjustor (sound

fixer), music box

1760922 07/05/2002–

06/05/2012

16 paper; notebook, copy paper

(stationery); pen, drawing

instruments; architectural model,

ink, playing card, pictures;

stationery; press publication,

stamp, paper, tissue paper

1775799 28/05/2002–

27/05/2012

17 synthetic rubber; rubber band;

plastic pipe, board, pole, bar;

fire fighting hose; asbestos

board, deadening material, glass

fiberwarming board and pipe,

rubber or plastic packaging

material (for filler and padding),

packaging strap (rolling

tobacco), non-metal hose

1755168 28/04/2002–

27/04/2012

18 semi-worked or unworked

leather; imitation leather; fur;

umbrella; walking stick; fell; fur

1800907 07/07/2002–

06/07/2012


— VII-28 —


Registration


19 ceramic tile; floor board;

luminous paving material; non-

metal drain pipe; granite;

bitumen products for

construction; firebrick; tile;

gesso; cement; cement pipe

1811186 21/07/2002–

20/07/2012

20 notice board; non-metal door

fittings; non-metal furniture

components; wood or plastic

box; raw or semi-processed

horn, tooth, shell products;

pillow; bamboo handicrafts

1766214 14/05/2002–

13/05/2012

21 warming kettle; mosquito

repellent; porcelain; cosmetic

products; non-precious metal

containers for domestic use;

clothes hanger; glassware for

daily use (including cups, trays,

pots and jars); comb; toothpick;

toothbrush

1781051 07/06/2002–

06/06/2012

22 packaging ropes; packaging

textile bags (bag); knitted bag;

hood (non-installation);

waterproof canvas; textile fiber;

yurt; rope; filler; fishing net

1791301 21/06/2002–

20/06/2012

23 yarn; rayon thread and yarn;

rayon; string; embroidering

gauze and string; nylon strap;

caddice; wool; cashmere; cotton

thread and cotton yarn

1746145 14/04/2002–

13/04/2012

24 glass cloth; bedspread; textile

towel; hada; curtain; banner;

silky artwork; lavation gloves;

felt; fabric

1776286 28/05/2002–

27/05/2012

25 mountaineering shoes 1815818 28/07/2002–

27/07/2012


— VII-29 —


Registration


26 teapot warming gloves; lace

decoration; hairpiece; slide

fastener; man-made flowers;

warm adhesive plaster for

patching textile; garment

shoulder pads; garment

decoration; athlete’s number;

sewing kit

1800233 07/07/2002–

06/07/2012

27 mat; carpet; non-textile curtain;

mat and carpet used in vehicles;

wallpaper; man-made turf; gym

mat; rubber mat; bathroom

skidproof mat

1791386 21/06/2002–

20/06/2012

29 meat, fish (non-living); fruit tin;

peanut butter; dairy products;

edible grease; fruit salad; pectin

for food use; machined peanuts;

bean curd products

1758331 28/04/2002–

27/04/2012

30 tea substitute; soybean milk;

healthy paste for non-medical

use; sauce; coffee drink; bread;

noodles; edible flour; sugar;

candies

1773964 21/05/2002–

20/05/2012

31 consumer goods for animal;

animals for exhibition; malt for

wine production; fodder; raw

rice; raw timber; fresh fruit;

fresh gardening herb; fresh

vegetables; plant seed

1768689 14/05/2002–

13/05/2012

32 beer; drink essence 1779156 28/05/2002–

27/05/2012

33 ratafia (alcoholic); cider;

cocktail; alcohol (liqueur);

aquavit; rice wine; whisky; light

sparkling wine; clear wine;

alcoholic liquid

1748828 14/04/2002–

13/04/2012


— VII-30 —


Registration


34 tobacco herbs; match; tobacco

pipe; lighter for smoking;

butane gas filler for lighter use;

filter tip; tobacco; cigarette

paper; water pipe; inexpensive

metal cigarette case

1758660 28/04/2002–

27/04/2012

35 professional consultation of

trading business; personnel

management consultation;

commercial premises removal;

computer files administration;

accounting; business

information; business

professional consultation;

marketing analysis

1950755 28/01/2003–

27/01/2013

36 insurance information; realty

agent; guarantee; pledge;

mansion management; finance

information; broker; whip-

round; trustee; artwork

valuation; abode (mansion)

1946184 28/09/2002–

27/09/2012

37 mining; vehicles maintenance

and repair; electric equipment

installation and repair;

installation and repair of

burglarproof system; furniture

maintenance; architectural

information; clothes laundry;

construction of business booths

and shops; repair of interior

decoration; sterilization

1948871 21/10/2002–

20/10/2012

39 parcel post; vehicle leasing; bus

transportation; transportation

management; stockpile of goods;

air transportation; travel agency

(excluding hotel reservation);

coal gas station; yacht

transportation; transportation

1963521 14/10/2002–

13/10/2012


— VII-31 —


Registration


40 material disposal information;

metal disposal; chemical

treatment of textile goods;

lumbering and timber

machining; paper machining;

paper machining; pattern

printing; dress tailoring; air

purification; water purification;

artwork binding

1947713 14/01/2003–

13/01/2013

35 advertisement, business

management and organization

consultation, sale (as an agent),

personnel management

consultation, commercial

premises removal (information

provision), machine and

equipment leasing for office use,

auditing, advertisement

planning, import and export

agent, restaurant management

1433870 14/08/2000–

13/08/2010

36 insurance, bank, abode

(mansion), broker, leasing

guarantee, whip-round fund,

trust, realty agent, artwork

valuation, pledge

1451988 28/09/2000–

27/07/2010

37 architectural information,

architecture, quarry, interior

decoration, heating facilities

installation and repair, electric

equipment installation and

repair, furniture maintenance,

lavation, sterilisation, escalator

installation and repair

1451943 28/09/2000–

27/09/2010

41 education; education or

entertaining competition

organization; mobile library;

book publishing; entertaining

activities; animal training;

model provision for artist; gym

facilities provision; diving

facilities leasing; tennis leasing

1442891 07/09/2000–

06/09/2010


— VII-32 —


Registration


42 full-board hostel provision;

camping facilities provision;

hospital; steam bath; animal

feeding; gardening; legal

services; guard; engineering;

interior design

1439725 28/08/2000–

27/08/2010

36 insurance information; finance

information; abode (mansion);

broker; guarantee; whip-round;

trustee; pledge; realty agent;

artwork valuation

3228141 28/02/2004–

27/02/2014

Pursuant to two trademark transfer agreements and a supplemental agreement dated 5

June 2005, 2 July 2005 and 5 July 2005 respectively, the above trademarks will be

transferred to certain subsidiaries of the Company. Applications have been made to the

PRC Trademark Office to transfer the above trademarks.

(b) Domain Name

As at the Latest Practicable Date, the Group was the registered owner of the

following domain name:

Domain name Registration date

www.agile.com.cn . . . . . . . . . . . . . . . . . . . . . . . . . . 19/12/2000

The contents at the above website do not form part of this prospectus.

Save as disclosed herein, there are no other trade or service marks, patents, other

intellectual or industrial property rights which are material to the business of the Group.

C. FURTHER INFORMATION ABOUT DIRECTORS AND SUBSTANTIAL

SHAREHOLDERS

1. Directors

(a) Disclosure of interest — interests and short positions of the Directors and the chief

executives of the Company in the Shares, underlying Shares and debentures of the

Company and its associated corporations

Immediately following completion of the Global Offering and the Capitalization

Issue and assuming that the Over-allotment Option is not exercised, the interest or short

position of Directors or chief executives of the Company in the Shares, underlying Shares

and debentures of the Company or its associated corporations (within the meaning of Part

XV of the SFO) which will be required to be notified to the Company and the Stock

Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interest or short

positions which they were taken or deemed to have under such provisions of the SFO) or


— VII-33 —

which will be required, pursuant to section 352 of the SFO, to be entered in the register

referred to therein, or which will be required, pursuant to Model Code for Securities

Transactions by Directors of Listed Companies, once the Shares are listed are as follows:

Name of Director

Company/name

of associated

corporation Capacity

Number and class of

securities

Approximate

shareholding

percentage

(%)

Chen Zhuo Lin Company Beneficiary of

a trust

2,366,930,000 Shares 71.25

Chan Cheuk Yin Company Beneficiary of

a trust

2,366,930,000 Shares 71.25

Luk Sin Fong,

Fion

Company Beneficiary of

a trust

2,366,930,000 Shares 71.25

Chan Cheuk

Hung


a trust

2,366,930,000 Shares 71.25

Chan Cheuk Hei Company Beneficiary of

a trust

2,366,930,000 Shares 71.25

Chan Cheuk

Nam


a trust

2,366,930,000 Shares 71.25

Note: All interests in the Shares are long positions.

(b) Particulars of service contracts

Each of the executive Directors has entered into a service contract with the

Company for a term of three years commencing from the Listing Date until terminated by

not less than three months’ notice in writing served by either party on the other. Each of

the executive Directors is entitled to their respective basic salaries set out below. The

executive Directors are entitled to participate in the Company’s medical benefit and

accident insurance scheme. In addition, the executive Directors are entitled to participate

in the Company’s retirement scheme. Furthermore, the executive Directors will also be

entitled to use a company car which is, in the opinion of the Board, suitable to his

position, and be reimbursed all reasonable expenses incurred in relation to the company

car (including fuel, maintenance and insurance).

Each of the independent non-executive Directors has entered into an appointment

letter with the Company for a term of one year commencing from the Listing Date. Each

of the independent non-executive Directors is entitled to their respective annual fees set

out below. The appointments are subject to the provisions of retirement and rotation of

Directors under the Articles.


— VII-34 —

(c) Directors’ remuneration

An aggregate of approximately RMB1,200,000 (approximately HK$1,152,000) was

paid to the Directors as remuneration for the year ended 31 December 2004. The current

annual director’s fees and remuneration of the executive and non-executive Directors are

as follows:

Name of Director Annual director’s fee

(HK$)

Executive Directors

Chen Zhuo Lin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,200,000

Chan Cheuk Yin . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,600,000

Luk Sin Fong, Fion . . . . . . . . . . . . . . . . . . . . . . . . . . 3,600,000

Chan Cheuk Hung . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000

Chan Cheuk Hei . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000

Chan Cheuk Nam. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000

Independent non-executive Directors

Cheng Hon Kwan. . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000

Kwong Che Keung, Gordon . . . . . . . . . . . . . . . . . . . . . 250,000

Cheung Wing Yui . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000

Under the arrangement currently in force, the aggregate amount of emoluments

payable by the Group to the Directors for the year ending 31 December 2005 will be

approximately RMB1,200,000 (approximately HK$1,152,000).

Further details of the terms of the above service contracts are set out in the

paragraph headed ‘‘Particulars of service contracts’’ in the subsection headed ‘‘Directors’’

in this section.

2. Substantial Shareholders

So far as the Directors are aware, immediately following the completion of the Global

Offering (but without taking into account Shares to be issued pursuant to the exercise of the

Over-allotment Option) and the Capitalization Issue, the following person will have an interest

or short position in the Shares and the underlying Shares which would fall to be disclosed to

the Company under provisions of Divisions 2 and 3 of Part XV of the SFO, or, directly or

indirectly, interested in 10% or more of the nominal value of any class of share capital

carrying rights to vote in all circumstances at general meetings of any other members of the

Group:

Name of Shareholder Capacity Number of securities held

Approximate

shareholding

percentage

(%)

Top Coast Investment Limited . . . . . Trustee 2,366,930,000 Shares 71.25

Note: All interests in the Shares are long positions.


— VII-35 —

3. Agency fees or commissions received

Save as disclosed in this prospectus, no commissions, discounts, brokerages or other

special terms were granted within the two years preceding the date of this prospectus in

connection with the issue or sale of any capital of any member of the Group.

4. Disclaimers

Save as disclosed herein:

(a) none of the Directors or chief executive of the Company has any interest or short

position in the Shares, underlying Shares or debentures of the Company or any of its

associated corporation (within the meaning of the SFO) which will have to be

notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of

Part XV of the SFO or which will be required, pursuant to section 352 of the SFO,

to be entered in the register referred to therein, or which will be required to be

notified to the Company and the Stock Exchange pursuant to Model Code for

Securities Transactions by Directors of Listed Companies once the Shares are listed;

(b) none of the Directors or experts referred to under the heading ‘‘Consents of experts’’

in this Appendix has any direct or indirect interest in the promotion of the Company,

or in any assets which have within the two years immediately preceding the date of

this prospectus been acquired or disposed of by or leased to any member of the

Group, or are proposed to be acquired or disposed of by or leased to any member of

the Group;

(c) none of the Directors or experts referred to under the heading ‘‘Consents of experts’’

in this Appendix is materially interested in any contract or arrangement subsisting at

the date of this prospectus which is significant in relation to the business of the

Group taken as a whole;

(d) none of the Directors has any existing or proposed service contracts with any

member of the Group (excluding contracts expiring or determinable by the employer

within one year without payment of compensation (other than statutory

compensation));

(e) taking no account of Shares which may be taken up under the Global Offering, none

of the Directors knows of any person (not being a Director or chief executive of the

Company) who will, immediately following completion of the Global Offering, have

an interest or short position in the shares or underlying shares of the Company which

would fall to be disclosed to the Company under the provisions of Divisions 2 and 3

of Part XV of SFO or be interested, directly or indirectly, in 10% or more of the

nominal value of any class of share capital carrying rights to vote in all

circumstances at general meetings of any member of the Group;

(f) none of the experts referred to under the heading ‘‘Consents of experts’’ in this

Appendix has any shareholding in any member of the Group or the right (whether

legally enforceable or not) to subscribe for or to nominate persons to subscribe for

securities in any member of the Group; and


— VII-36 —

(g) so far as is known to the Directors, none of the Directors, their respective associates

(as defined under the Listing Rules) or shareholders of the Company who are

interested in more than 5% of the issued share capital of the Company has any

interests in the five largest customers or the five largest suppliers of the Group.

D. OTHER INFORMATION

1. Share Option Scheme

(a) Purpose

The Share Option Scheme is a share incentive scheme and is established to

recognize and acknowledge the contributions the Eligible Participants (as defined in

paragraph (b) below) had or may have made to the Group. The Share Option Scheme will

provide the Eligible Participants an opportunity to have a personal stake in the Company

with the view to achieving the following objectives:

(i) motivate the Eligible Participants to optimise their performance efficiency for

the benefit of the Group; and

(ii) attract and retain or otherwise maintain on-going business relationship with the

Eligible Participants whose contributions are or will be beneficial to the long-

term growth of the Group.

(b) Who may join

The Board may, at its discretion, offer to grant an option to subscribe for such

number of new Shares as the Board may determine at an exercise price determined in

accordance with paragraph (e) below to:

(i) any full-time or part-time employees, executives or officers of the Company or

any of its subsidiaries;

(ii) any directors (including non-executive directors and independent non-executive

directors) of the Company or any of its subsidiaries;

(iii) any advisors, consultants, suppliers, customers and agents to the Company or

any of its Subsidiaries; and

(iv) such other persons who, in the sole opinion of the Board, will contribute or

have contributed to the Group, the assessment criteria of which are:

(aa) contribution to the development and performance of the Group;

(bb) quality of work performed for the Group;

(cc) initiative and commitment in performing his/her duties; and

(dd) length of service or contribution to the Group.


— VII-37 —

Upon acceptance of the option, the grantee shall pay HK$1.00 to the Company by

way of consideration for the grant. Any offer to grant an option to subscribe for Shares

may be accepted in respect of less than the number of Shares for which it is offered

provided that it is accepted in respect of a board lot of dealing in Shares on the Stock

Exchange or an integral multiple thereof and such number is clearly stated in the

duplicate offer document constituting acceptance of the option. To the extent that the

offer to grant an option is not accepted by any prescribed acceptance date, it shall be

deemed to have been irrevocably declined.

(c) Maximum number of Shares

The maximum number of Shares in respect of which options may be granted

(including Shares in respect of which options, whether exercised or still outstanding, have

already been granted) under the Share Option Scheme and under any other share option

schemes of the Company must not in aggregate exceed 10% of the total number of Shares

in issue immediately following completion of the Global Offering and the Capitalization

Issue, being 332,200,000 Shares and if the Over-allotment Option is exercised, such

number of Shares which shall be issued upon the exercise of such option, excluding for

this purpose Shares which would have been issuable pursuant to options which have

lapsed in accordance with the terms of the Share Option Scheme (or any other share

option schemes of the Company). Subject to the issue of a circular by the Company and

the approval of the Shareholders in general meeting and/or such other requirements

prescribed under the Listing Rules from time to time, the Board may:

(i) renew this limit at any time to 10% of the Shares in issue as at the date of the

approval by the Shareholders in general meeting; and/or

(ii) grant options beyond the 10% limit to Eligible Participants specifically

identified by the Board. The circular issued by the Company to the

Shareholders shall contain a generic description of the specified Eligible

Participants who may be granted such options, the number and terms of the

options to be granted, the purpose of granting options to the specified Eligible

Participants with an explanation as to how the options serve such purpose, the

information required under Rule 17.02(2)(d) and the disclaimer required under

Rule 17.02(4) of the Listing Rules.

Notwithstanding the foregoing, the Shares which may be issued upon exercise of all

outstanding options granted and yet to be exercised under the Share Option Scheme and

any other share option schemes of the Company at any time shall not exceed 30% of the

Shares in issue from time to time. No options shall be granted under any schemes of the

Company (including the Share Option Scheme) if this will result in the 30% limit being

exceeded. The maximum number of Shares in respect of which options may be granted

shall be adjusted, in such manner as the auditors of the Company or an approved

independent financial advisor shall certify to be appropriate, fair and reasonable in the

event of any alteration in the capital structure of the Company in accordance with

paragraph (q) below whether by way of consolidation, subdivision or reduction of the

share capital of the Company but in no event shall exceed the limit prescribed in this

paragraph.


— VII-38 —

(d) Maximum number of options to any one individual

The total number of Shares issued and which may fall to be issued upon exercise of

the options granted under the Share Option Scheme and any other share option schemes of

the Company (including both exercised and outstanding options) to each Eligible

Participant in any 12-month period up to the date of grant shall not exceed 1% of the

Shares in issue as at the date of grant. Any further grant of Options in excess of this 1%

limit shall be subject to:

(i) the issue of a circular by the Company containing the identity of the Eligible

Participant, the numbers of and terms of the options to be granted (and options

previously granted to such participant) the information as required under Rules

17.02(2)(d) and the disclaimer required under 17.02(4) of the Listing Rules;

and

(ii) the approval of the Shareholders in general meeting and/or other requirements

prescribed under the Listing Rules from time to time with such Eligible

Participant and his associates (as defined in the Listing Rules) abstaining from

voting. The numbers and terms (including the exercise price) of options to be

granted to such participant must be fixed before the Shareholders’ approval and

the date of the Board meeting at which the Board proposes to grant the options

to such Eligible Participant shall be taken as the date of grant for the purpose

of calculating the subscription price of the Shares. The Board shall forward to

such Eligible Participant an offer document in such form as the Board may

from time to time determine.

(e) Price of Shares

The subscription price of a Share in respect of any particular option granted under

the Share Option Scheme shall be such price as the Board in its absolute discretion shall

determine, save that such price will not be less than the highest of:

(i) the closing price of the Shares as stated in the Stock Exchange’s daily

quotation sheets on the date of grant, which must be a day on which the Stock

Exchange is open for the business of dealing in securities;

(ii) the average of the closing prices of the Shares as stated in the Stock

Exchange’s daily quotation sheets for the five business days immediately

preceding the date of grant; and

(iii) the nominal value of a Share.

(f) Granting options to connected persons

Any grant of options to a director, chief executive or substantial shareholder (as

defined in the Listing Rules) of the Company or any of their respective associates (as

defined in the Listing Rules) is required to be approved by the independent non-executive

Directors (excluding any independent non-executive Director who is the grantee of the

Options). If the Company proposes to grant options to a substantial shareholder or any

independent non-executive Director or their respective associates (as defined in the

Listing Rules) which will result in the number of Shares issued and to be issued upon


— VII-39 —

exercise of options granted and to be granted (including options exercised, canceled and

outstanding) to such person in the 12-month period up to and including the date of such

grant:

(i) representing in aggregate over 0.1% of the Shares in issue; and

(ii) having an aggregate value in excess of HK$5 million, based on the closing

price of the Shares at the date of each grant,

such further grant of options will be subject to the issue of a circular by the Company and

the approval of the Shareholders in general meeting on a poll at which all connected

persons (as defined in the Listing Rules) of the Company shall abstain from voting in

favour, and/or such other requirements prescribed under the Listing Rules from time to

time. Any vote taken at the meeting to approve the grant of such options shall be taken as

a poll.

The circular to be issued by the Company to the Shareholders pursuant to the above

paragraph shall contain the following information:

(i) the details of the number and terms (including the exercise price) of the

options to be granted to each selected Eligible Participant which must be fixed

before the shareholders’ meeting and the date of Board meeting for proposing

such further grant shall be taken as the date of grant for the purpose of

calculating the exercise price of such options;

(ii) a recommendation from the independent non-executive Directors (excluding

any independent non-executive Director who is the grantee of the options) to

the independent Shareholders as to voting;

(iii) the information required under Rule 17.02(2)(c) and (d) and the disclaimer

required under Rule 17.02(4) of the Listing Rules; and

(iv) the information required under Rule 2.17 of the Listing Rules.

(g) Restrictions on the times of grant of Options

A grant of options may not be made after a price sensitive event has occurred or a

price sensitive matter has been the subject of a decision until such price sensitive

information has been published in the newspaper. In particular, no options may be granted

during the period commencing one month immediately preceding the earlier of:

(i) the date of the Board meeting (as such date to first notified to the Stock

Exchange in accordance with the Listing Rules) for the approval of the

Company’s results for any year, half-year, quarterly or other interim period

(whether or not required under the Listing Rules); and

(ii) the deadline for the Company to publish an announcement of the results for any

year, or half-year, or quarterly or other interim period (whether or not required

under the Listing Rules)

and ending on the date of actual publication of the results announcement.


— VII-40 —

(h) Rights are personal to grantee

An option is personal to the grantee and may be exercised or treated as exercised, as

the case may be, in whole or in part. No grantee shall in any way sell, transfer, charge,

mortgage, encumber or create any interest (legal or beneficial) in favour of any third

party over or in relation to any option or attempt so to do.

(i) Time of exercise of Option and duration of the Share Option Scheme

An option may be exercised in accordance with the terms of the Share Option

Scheme at any time after the date upon which the Option is deemed to be granted and

accepted and prior to the expiry of 10 years from that date. The period during which an

option may be exercised will be determined by the Board in its absolute discretion, save

that no option may be exercised more than 10 years after it has been granted. No option

may be granted more than 10 years after the date of approval of the Share Option

Scheme. Subject to earlier termination by the Company in general meeting or by the

Board, the Share Option Scheme shall be valid and effective for a period of 10 years from

the date of its adoption.

(j) Performance target

A grantee may be required to achieve any performance targets as the Board may

then specify in the grant before any options granted under the Share Option Scheme can

be exercised.

(k) Rights on ceasing employment/death

If the grantee of an option ceases to be an employee of the Company or any of its

subsidiaries

(i) by any reason other than death or termination of his employment on the

grounds specified in paragraph (l) below, the grantee may exercise the option

up to the entitlement of the grantee as at the date of cessation (to the extent not

already exercised) within a period of one month from such cessation; or

(ii) by reason of death, his personal representative(s) may exercise the option

within a period of 12 months from such cessation,

which date shall be the last actual working day with the Company or the relevant

subsidiary whether salary is paid in lieu of notice or not, failing which it will lapse.

(l) Rights on dismissal

If the grantee of an Option ceases to be an employee of the Company or any of its

subsidiaries on the grounds that he has been guilty of serious misconduct, or has

committed any act of bankruptcy or has become insolvent or has made any arrangements

or composition with his creditors generally, or has been convicted of any criminal offence

involving his integrity or honesty, his Option will lapse and not be exercisable after the

date of termination of his employment.


— VII-41 —

(m) Rights on takeover

If a general offer is made to all the Shareholders (or all such Shareholders other than

the offeror and/or any person controlled by the offeror and/or any person acting in concert

with the offeror (as defined in the Takeovers Codes)) and such offer becomes or is

declared unconditional during the option period of the relevant option, the grantee of an

option shall be entitled to exercise the option in full (to the extent not already exercised)

at any time within 14 days after the date on which the offer becomes or is declared

unconditional.

(n) Rights on winding-up

In the event a notice is given by the Company to its members to convene a general

meeting for the purposes of considering, and if thought fit, approving a resolution to

voluntarily wind-up the Company, the Company shall forthwith give notice thereof to all

grantees and thereupon, each grantee (or his legal personal representative(s)) shall be

entitled to exercise all or any of his options (to the extent not already exercised) at any

time not later than two business days prior to the proposed general meeting of the

Company referred to above by giving notice in writing to the Company, accompanies by a

remittance for the full amount of the aggregate subscription price for the Shares in respect

of which the notice is given, whereupon the Company shall as soon as possible and, in

any event, no later than the business day immediately prior to the date of the proposed

general meeting, allot the relevant Shares to the grantee credited as fully paid and register

the grantee as holder thereof.

(o) Rights on compromise or arrangement between the Company and its members or

creditors

If a compromise or arrangement between the Company and its members or creditors

is proposed for the purposes of a scheme for the reconstruction of the Company or its

amalgamation with any other companies pursuant to the laws of jurisdictions in which the

Company was incorporated, the Company shall give notice to all the grantees of the

options on the same day as it gives notice of the meeting to its members or creditors

summoning the meeting to consider such a scheme or arrangement and any grantee may

by notice in writing to the Company accompanied by a remittance for the full amount of

the aggregate subscription price for the Shares in respect of which the notice is given

(such notice to be received by the Company not later than two business days prior to the

proposed meeting), exercise the option to its full extent or to the extent specified in the

notice and the Company shall as soon as possible in any event no later than the business

day immediately prior to the date of the proposed meeting, allot and issue such number of

Shares to the grantee which falls to be issued on such exercise of the option credited as

fully paid and register the grantee as holder thereof.

With effect from the date of such meeting, the rights of all grantees to exercise their

respective options shall forthwith be suspended. Upon such compromise or arrangement

becoming effective, all options shall, to the extent that they have not been exercised,

lapse and determine. If for any reason such compromise or arrangement does not become

effective and is terminated or lapses, the rights of grantees to exercise their respective

options shall with effect from such termination be restored in full but only upon the

extent not already exercised and shall become exercisable.


— VII-42 —

(p) Ranking of Shares

The Shares to be allotted upon the exercise of an option will not carry voting rights

until completion of the registration of the grantee (or any other person) as the holder

thereof. Subject to the aforesaid, Shares allotted and issued on the exercise of options will

rank pari passu and shall have the same voting, dividend, transfer and other rights,

including those arising on liquidation as attached to the other fully-paid Shares in issue

on the date of exercise, save that they will not rank for any dividend or other distribution

declared or recommended or resolved to be paid or made by reference to a record date

falling on or before the date of exercise.

(q) Effect of alterations to capital

In the event of any alteration in the capital structure of the Company whilst any

option may become or remains exercisable, whether by way of Capitalization issue, rights

issue, consolidation, reclassification, reconstruction, subdivision or reduction of share

capital of the Company, or otherwise howsoever, such corresponding alterations (if any)

shall be made in the number or nominal amount of Shares subject to any options so far as

unexercised and/or the subscription price per Share of each outstanding option and/or the

method of exercise of the option as the auditors of the Company or an independent

financial advisor shall certify in writing to the Board to be in their/his opinion fair and

reasonable in compliance with Rule 17.03(13) of the Listing Rules and the note thereto.

Any such alterations will be made on the basis that a grantee shall have the same

proportion of the issued share capital of the Company for which any grantee of an option

is entitled to subscribe pursuant to the options held by him before such alteration and the

aggregate subscription price payable on the full exercise of any option is to remain as

nearly as possible the same (and in any event not greater than) as it was before such

event. No such alteration will be made the effect of which would be to enable a Share to

be issued at less than its nominal value. The issue of securities as consideration in a

transaction is not to be regarded as a circumstance requiring any such alterations.

(r) Expiry of option

An option shall lapse automatically and not be exercisable (to the extent not already

exercised) on the earliest of:

(i) the date of expiry of the option as may be determined by the Board;

(ii) the expiry of any of the periods referred to in paragraphs (k), (l), (m), (n) or

(o);

(iii) subject to paragraph (n), the date of commencement of the winding-up of the

Company;

(iv) the date on which the grantee ceases to be an Eligible Participant by reason of

such grantee’s resignation from the employment of the Company or any of its

subsidiaries or the termination of his or her employment or contract on the

grounds that he or she has been guilty of serious misconduct, or has committed

any act of bankruptcy or is unable to pay his or her debts or has become

insolvent or has made any arrangement or has compromised with his or her


— VII-43 —

creditors generally, or has been convicted of any criminal offence involving his

or her integrity or honesty or has been in breach of contract. A resolution of

the Board to the effect that the employment of a grantee has or has not been

terminated on one or more of the grounds specified in this paragraph shall be

conclusive;

(v) the date on which the Board shall exercise the Company’s right to cancel the

option at any time after the grantee commits a breach of paragraph (h) above or

the options are canceled in accordance with paragraph (t) below; or

(vi) the date on which the Eligible Participant ceases to be employed by the

Company and/or any of its subsidiaries if the Eligible Participant is an

employee of the Company and/or any of its subsidiaries and ceases to be so

employed by the Company and/or any of its subsidiaries during the 12-month

period following the commencement date in respect of his or her particular

option.

(s) Alteration of the Share Option Scheme

The Share Option Scheme may be altered in any respect by resolution of the Board

except that:

(i) any alteration to the advantage of the grantees or the Eligible Participants (as

the case may be) in respect of the matters contained in Rule 17.03 of the

Listing Rules; and

(ii) any material alteration to the terms and conditions of the Share Option Scheme

or any change to the terms of options granted,

shall first be approved by the Shareholders in general meeting provided that if the

proposed alteration shall adversely affect any option granted or agreed to be granted prior

to the date of alteration, such alteration shall be further subject to the grantees’ approval

in accordance with the terms of the Share Option Scheme. The amended terms of the

Share Option Scheme shall still comply with Chapter 17 of the Listing Rules and any

change to the authority of the Board in relation to any alteration to the terms of the Share

Option Scheme must be approved by Shareholders in general meeting.

(t) Cancellation of Options

Subject to paragraph (h) above, any cancellation of options granted but not exercised

must be approved by the grantees of the relevant options.

(u) Termination of the Share Option Scheme

The Company may by resolution in general meeting or the Board at any time

terminate the Share Option Scheme and in such event no further option shall be offered

but the provisions of the Share Option Scheme shall remain in force to the extent

necessary to give effect to the exercise of any option granted prior thereto or otherwise as

may be required in accordance with the provisions of the Share Option Scheme. Options

granted prior to such termination but not yet exercised at the time of termination shall

continue to be valid and exercisable in accordance with the Share Option Scheme.


— VII-44 —

(v) Administration of the Board

The Share Option Scheme shall be subject to the administration of the Board whose

decision as to all matters arising in relation to the Share Option Scheme or its

interpretation or effect (save as otherwise provided herein) shall be final and binding on

all parties.

(w) Condition of the Share Option Scheme

The Share Option Scheme is conditional on the Listing Committee of the Stock

Exchange granting approval of the Share Option Scheme and any options which may be

granted which may be granted thereunder and the listing of and permission to deal in the

Shares which may fall to be issued pursuant to the exercise of options to be granted under

the Share Option Scheme.

(x) Disclosure in annual and interim reports

The Company will disclose details of the Share Option Scheme in its annual and

interim reports including the number of options, date of grant, exercise price, exercise

period and vesting period during the financial year/period in the annual/interim reports in

accordance with the Listing Rules in force from time to time.

(y) Present status of the Share Option Scheme

As at the Latest Practicable Date, no option had been granted or agreed to be

granted under the Share Option Scheme.

Application has been made to the Listing Committee of the Stock Exchange for the

listing of and permission to deal in the Shares which may fall to be issued pursuant to the

exercise of the options to be granted under the Share Option Scheme.

2. Estate duty, and tax indemnity

Each of Chen Zhuo Lin, Chan Cheuk Yin, Luk Sin Fong, Fion, Chan Cheuk Hung, Chan

Cheuk Hei, Chan Cheuk Nam, Lu Liqing, Lu Yanping, Chan Siu Na, Zheng Huiqiong and Top

Coast (collectively, the ‘‘Indemnifiers’’) has entered into a deed of indemnity with and in

favour of the Company (for itself and as trustee for each of its present subsidiaries) (being the

contract referred to in paragraph (u) of the subsection headed ‘‘Summary of material contracts’’

in this appendix) to provide indemnities on a joint and several basis in respect of, among other

matters, Hong Kong estate duty which might be payable by any member of the Group, by

reason of any transfer of property (within the meaning of Section 35 of the Estate Duty

Ordinance, Chapter 111 of the Laws of Hong Kong) to any member of the Group on or before

the date on which the Global Offering becomes unconditional (the ‘‘Effective Date’’).

The deed of indemnity also contain indemnities given jointly and severally by the

Indemnifiers in respect of taxation resulting from income, profits or gains earned, accrued or

received on or before the Effective Date which might be payable by any member of the Group.


— VII-45 —

The Indemnifiers will, however, not be liable under the deed of indemnity:

(i) to the extent that provision has been made for such taxation in the audited accounts

of any member of the Group up to 30 June 2005; or

(ii) to the extent that the taxation which the Company and/or the Group is/may be liable

as a result of any acts or transactions entered into in the ordinary course of its

business after the last of the conditions of the Hong Kong Public Offering has been

fulfilled, except that it is resulted from a legally binding commitment created

between the Indemnifier or the Company or any Group members on or before the

last of the conditions of the Hong Kong Public Offering has been fulfilled or any

acts or transactions entered into otherwise than in the ordinary course of its

business; or

(iii) to the extent of any provisions or reserve made for taxation in the audited accounts

of any member of the Group up to 30 June 2005 which is finally established to be an

over-provision or an excessive reserve provided that the amount of any such

provision or reserve applied to reduce the Indemnifiers’ liability in respect of

taxation shall not be available in respect of any such liability arising thereafter; or

(iv) the taxation claim arises or is incurred as a result of the imposition of taxation as a

consequence of any retrospective change in the law or practice coming into force

after the Effective Date or to the extent that such taxation claim arises or is

increased by an increase in rates of taxation after such date with retrospective effect;

or

(v) any penalty imposed on any member of the Group under Section 42 of the Estate

Duty Ordinance (Laws of Hong Kong) by reason of any member of the Group at any

time after the last of the conditions of the Hong Kong Public Offering has been

fulfilled, defaulting in any obligation to give information to the Commissioner under

Section 42(1) of the Estate Duty Ordinance, but the indemnifiers shall be liable for

any interest on the unpaid part of the estate duty.

The Directors have been advised that no material liability for estate duty is likely to fall

on the Company or any of its subsidiaries in the Cayman Islands, Hong Kong, BVI or PRC.

3. Litigation

As at the Latest Practicable Date, no member of the Group was engaged in any litigation

or arbitration of material importance and no litigation or claim of material importance is known

to the Directors to be pending or threatened by or against any member of the Group.

4. Sponsor

The Sponsor has made an application on behalf of the Company to the Listing Committee

of the Stock Exchange for a listing of, and permission to deal in, all the Shares in issue and to

be issued as mentioned in this prospectus (including any Shares which may fall to be issued

pursuant to the Share Option Scheme and the exercise of the Over-allotment Option).


— VII-46 —

5. Preliminary expenses

The preliminary expenses of the Company are estimated to be approximately US$3,000

and are payable by the Company.

6. Address for services of process as notices

Wai Ching Sum has been nominated as the authorized representative to accept service of

process and notices of the Company. The address for service of process and notices is 20/F,

238 Nathan Road, Kowloon, Hong Kong.

7. Qualification of experts

The following are the qualifications of the experts who have given opinion or advice

which are contained in this prospectus:

Name Qualifications

Morgan Stanley Asia. . . . . . . . Licensed to conduct type 1 (dealing in securities),

type 4 (advising in securities) and type 6 (advising

on corporate finance) regulated activities under the

SFO

PricewaterhouseCoopers . . . . . . Certified public accountants

Conyers Dill & Pearman . . . . . Cayman Islands attorneys-at-law

Jingtian & Gongcheng . . . . . . . PRC lawyers

C B Richard Ellis Limited . . . . Property valuers

8. Consents of experts

Each of the Sponsor, PricewaterhouseCoopers, Conyers Dill & Pearman, Jingtian &

Gongcheng and C B Richard Ellis Limited has given and has not withdrawn its written consent

to the issue of this prospectus with the inclusion of its report and/or letter and/or valuation

certificate and/or opinion and/or the references to its name included herein in the form and

context in which it is respectively included.

9. Particulars of the Selling Shareholder

Top Coast, whose registered office is situated at East Asia Chambers, P.O. Box 901, Road

Town, Tortola, British Virgin Islands and beneficially held by the Chen Family Trust, will be

selling 124,570,000 Shares, representing approximately 3.75% of the Company’s enlarged

issued share capital immediately after completion of the Global Offering and the Capitalization

Issue assuming the Over-allotment Option is not exercised.


— VII-47 —

10. Binding effect

This prospectus shall have the effect, if an application is made in pursuance hereof, of

rendering all persons concerned bound by all of the provisions (other than the penal provisions)

of Sections 44A and 44B of the Companies Ordinance so far as applicable.

11. Miscellaneous

(a) Save as disclosed in this prospectus, within the two years immediately preceding the

date of this prospectus:

(i) no share or loan capital of the Company or any of its subsidiaries has been

issued or agreed to be issued or is proposed to be fully or partly paid either for

cash or a consideration other than cash;

(ii) no share or loan capital of the Company or any of its subsidiaries is under

option or is agreed conditionally or unconditionally to be put under option;

(iii) no commissions, discounts, brokerages or other special terms have been granted

or agreed to be granted in connection with the issue or sale of any share or

loan capital of the Company or any of its subsidiaries;

(iv) no commission has been paid or is payable for subscription, agreeing to

subscribe, procuring subscription or agreeing to procure subscription of any

share in the Company or any of its subsidiaries;

(b) Save as disclosed in this prospectus, there are no founder, management or deferred

shares nor any debentures in the Company or any of its subsidiaries and no amount

or benefit had been paid or given within 2 preceding years or is intended to be paid

or given to any promoter;

(c) None of the persons named in the sub-paragraph headed ‘‘Consents of experts’’ in

this Appendix is interested beneficially or otherwise in any shares of any member of

the Group or has any right or option (whether legally enforceable or not) to

subscribe for or nominate persons to subscribe for any securities in any member of

the Group;

(d) The Directors confirm that there has been no material adverse change in the

financial or trading position or prospects of the Group since 30 June 2005 (being the

date to which the latest audited combined financial statements of the Group were

made up);

(e) There has not been any interruption in the business of the Group which may have or

has had a significant effect on the financial position of the Group in the 12 months

preceding the date of this prospectus;

(f) The branch register of members of the Company will be maintained in Hong Kong

by Tricor Investor Services Limited. Unless the Directors otherwise agree, all

transfer and other documents of title of Shares must be lodged for registration with


— VII-48 —

and registered by the Company’s share register in Hong Kong and may not be

lodged in The Cayman Islands. All necessary arrangements have been made to

enable the Shares to be admitted to CCASS;

(g) No company within the Group is presently listed on any stock exchange or traded on

any trading system;

(h) The Directors have been advised that, under the Companies Law, the use of a

Chinese name by the Company in conjunction with its English name does not

contravene the Companies Law; and

(i) The English text of this prospectus shall prevail over the Chinese text.


— VII-49 —

DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES

The documents attached to the copy of this prospectus delivered to the Registrar of Companies

in Hong Kong for registration were copies of the WHITE and YELLOW application forms, the

written consents referred to in the paragraph headed ‘‘Consents of experts’’ under the section headed

‘‘Other information’’ in Appendix VII to this prospectus, a statement of particulars of the Selling

Shareholder, the statement of adjustment of the Group to the accountants’ report and copies of the

material contracts referred to in the paragraph headed ‘‘Material contracts’’ under the section headed

‘‘Further information about the business’’ in Appendix VII to this prospectus.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the office of Sidley

Austin Brown & Wood at 39th Floor, Two International Financial Center, 8 Finance Street, Central,

Hong Kong during normal business hours up to and including 20 December, 2005 :

(a) the memorandum of association and the Articles;

(b) the accountants’ report prepared by PricewaterhouseCoopers, the text of which is set out

in Appendix I to this prospectus, and the related statement of adjustments;

(c) the letters relating to the profit forecast, the texts of which are set out in Appendix II to

this prospectus;

(d) the letter relating to the unaudited pro forma financial information of the Group, the texts

of which are set out in Appendix III to this prospectus;

(e) the audited financial statements of each of the companies comprising the Group for the

three years ended 31 December 2004 and six months ended 30 June 2005 (or for the

period since their respective dates of incorporation where it is shorter) (if any);

(f) the letter, summary of values and valuation certificates relating to the property interests

of the Group prepared by CB Richard Ellis, the texts of which are set out in Appendix IV

to this prospectus;

(g) the letter of advice prepared by Conyers Dill & Pearman summarising certain aspects of

the Cayman Islands company law as referred to at the end of Appendix V to this

prospectus;

(h) the letter prepared by Jingtian & Gongcheng, the legal advisors to our Company on PRC

law, summarising certain aspects of PRC law referred to in the section entitled ‘‘Summary

of PRC laws Relating to the Property Sector’’ in Appendix VI to this prospectus;

(i) the Companies Law;

(j) the rules of the Share Option Scheme;

(k) the material contracts referred to in the paragraph headed ‘‘1. Summary of material

contracts’’ under the section headed ‘‘B. Further information about the business’’ in

Appendix VII to this prospectus;

APPENDIX VIII DOCUMENTS DELIVERED TO THE REGISTRAR OFCOMPANIES AND AVAILABLE FOR INSPECTION

— VIII-1 —

(l) the service contracts referred to in the paragraph headed ‘‘1(b) Particulars of service

contracts’’ under the section headed ‘‘C. Further information about Directors and

Substantial Shareholders’’ in Appendix VII to this prospectus;

(m) the written consents referred to in the paragraph headed ‘‘8. Consents of experts’’ under

the section headed ‘‘D. Other information’’ in Appendix VII to this prospectus; and

(n) a statement of particulars of the Selling Shareholder.

APPENDIX VIII DOCUMENTS DELIVERED TO THE REGISTRAR OFCOMPANIES AND AVAILABLE FOR INSPECTION

— VIII-2 —

AGILE PROPERTY HOLDINGS LIMITED - Morningstar

Documents

Transcript of AGILE PROPERTY HOLDINGS LIMITED - Morningstar