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A Premium Brand Property

Developer in Zhengzhou City

CENTRALAND LIMITED
*
(Incorporated in Bermuda on 28 September 2007)
(Company Registration No: 40770)

Invitation in respect of 245,000,000 New Shares


of HK$0.40 each as follows:
(i)

5,000,000 Offer Shares at S$0.50 each by


way of public offer; and

(ii)

240,000,000 Placement Shares at S$0.50


each by way of placement,

payable in full on application.

OUR BUSINESS
We are a premium brand property developer in Zhengzhou city, the provincial
capital of Henan Province, which is one of the most populated provinces in
the PRC.
We are engaged principally in the development and sale of residential and
commercial properties. In addition, we also derive rental income through
leasing some of our properties.
Currently, we are involved in two main property developments: Guoling
Shanshui (), a self-contained, high-end integrated property
development, and J-Expo (), a commercial property project
with retail and office units.

OUR PROPERTY DEVELOPMENTS


Guoling Shanshui ()

* For identification purposes only

Issue Manager

Guoling Shanshui () is our Groups self-contained, high-end


integrated property development targeted for sale primarily to the
middle and higher-income purchasers.

(Company Registration No: 200404514G)

Underwriter and Placement Agent

(Company Registration No: 197000447W)

PROSPECTUS DATED 22 JANUARY 2008

With a total site area of approximately 1.87 million sq m, Guoling Shanshui


() is located approximately 5 km away from the south bank of the
Yellow River, where the Yellow River Scenic Area () is located
and 15 minutes drive away via a highway by city dwellers from Zhengzhou
city.

(registered by the Monetary Authority of Singapore on 22 January 2008)


This document is important. If you are in any doubt as to the action you should take,
you should consult your legal, financial, tax or other professional adviser.
We have made an application to the Singapore Exchange Securities Trading Limited
(SGX-ST) for permission to deal in and for quotation of the ordinary shares of HK$0.40
each (the Shares) in the capital of CentraLand Limited (the Company) already issued
and the new Shares (the New Shares) which are the subject of this Invitation (as defined
herein). Such permission will be granted when we have been admitted to the Official List
of SGX-ST. The dealing in and quotation of the Shares will be in Singapore dollars.
Acceptance of applications will be conditional upon, inter alia, permission being granted
to deal in, and for quotation of, all of the existing issued Shares, and the New Shares. If
the completion of the Invitation does not occur because the SGX-STs permission is not
granted or for any other reasons, monies paid in respect of any application accepted
will be returned to you, subject to applicable laws, at your own risk, without interest or
any share of revenue or other benefit arising therefrom and you will not have any claims
whatsoever against us, the Issue Manager, the Underwriter or the Placement Agent (all
as defined herein).
The SGX-ST assumes no responsibility for the correctness of any of the statements made
or opinions expressed or reports contained in this Prospectus. Admission to the Official
List of the SGX-ST is not to be taken as an indication of the merits of the Invitation, our
Company and its subsidiaries, our Shares and the New Shares.
A copy of this Prospectus has been lodged with and registered by the Monetary
Authority of Singapore (the Authority) on 19 December 2007 and 22 January
2008 respectively. The Authority assumes no responsibility for the contents of this
Prospectus. Registration of this Prospectus by the Authority does not imply that
the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or
regulatory requirements, have been complied with. The Authority has not, in any
way, considered the merits of our Shares or the New Shares, as the case may be,
being offered for investment.

CentraLand Limited
No. 86 South Bank of Yellow River
Huiji District
Zhengzhou city
Henan Province
The Peoples Republic of China 450042
Tel: +86 (371) 6389 0406
Fax: +86 (371) 6389 0345

The Bermuda Monetary Authority has given its consent to the issue of the New Shares
pursuant to the Invitation on the terms referred to in this Prospectus. A copy of this
Prospectus will be filed with the Registrar of Companies in Bermuda. The Bermuda
Monetary Authority in granting such permission and the Registrar of Companies
in Bermuda in accepting this Prospectus for filing accept no responsibility for the
financial soundness of our Group (as defined herein) or any proposal or for the
correctness of any of the statements made or opinions expressed herein or any
other documents.
Investing in our Shares involves risks which are described in the section
entitled Risk Factors in this Prospectus. No Shares will be allotted on the
basis of this Prospectus later than six months after the date of registration
of this Prospectus by the Authority.

Guoling Shanshui () will be built in various phases and comprise


low-density luxury detached houses, townhouses, apartments and
commercial retail units. Leveraging on the scenic landscape including
lakes, rivers, natural floral and fauna and also the existing miniature
replicas of famous Chinese historical architectures, Guoling Shanshui
() is designed according to our vision of creating a self-contained,
high-end development, featuring modern resort-theme home concept.
As at 7 December 2007, we have completed construction of Phase I and
Phase II of Guoling Shanshui (), occupying a total site area and
saleable GFA of approximately 276,735 sq m and 160,828 sq m respectively.
Details of the two phases are set out below:
Name of
Property
Development

Type of
Development

Total site
area (sq m)

Total
saleable
GFA (sq m)

Total GFA
sold as of 7
December
2007 (sq m)

Project
Completion
Date

Phase I: Mufu
()

Low-rise
apartments

40,085

39,289

36,922

4Q2005

Phase I:
Yongfu
()

Low-density luxury
detached houses

66,316

18,665

18,204

2Q2007

Phase II:
Huguang
Shanse
()

Low-rise
apartments and
commercial retail
units

97,334

67,701

60,637

3Q2007

Phase II:
Xinyu Lanwan
()

Low-rise
apartments and
townhouses

73,000

35,173

26,839

3Q2007

276,735

160,828

142,602

Total

A Premium Brand Property


Developer in Zhengzhou City

CENTRALAND LIMITED
*
(Incorporated in Bermuda on 28 September 2007)
(Company Registration No: 40770)

Invitation in respect of 245,000,000 New Shares


of HK$0.40 each as follows:
(i)

5,000,000 Offer Shares at S$0.50 each by


way of public offer; and

(ii)

240,000,000 Placement Shares at S$0.50


each by way of placement,

payable in full on application.

OUR BUSINESS
We are a premium brand property developer in Zhengzhou city, the provincial
capital of Henan Province, which is one of the most populated provinces in
the PRC.
We are engaged principally in the development and sale of residential and
commercial properties. In addition, we also derive rental income through
leasing some of our properties.
Currently, we are involved in two main property developments: Guoling
Shanshui (), a self-contained, high-end integrated property
development, and J-Expo (), a commercial property project
with retail and office units.

OUR PROPERTY DEVELOPMENTS


Guoling Shanshui ()

* For identification purposes only

Issue Manager

Guoling Shanshui () is our Groups self-contained, high-end


integrated property development targeted for sale primarily to the
middle and higher-income purchasers.

(Company Registration No: 200404514G)

Underwriter and Placement Agent

(Company Registration No: 197000447W)

PROSPECTUS DATED 22 JANUARY 2008

With a total site area of approximately 1.87 million sq m, Guoling Shanshui


() is located approximately 5 km away from the south bank of the
Yellow River, where the Yellow River Scenic Area () is located
and 15 minutes drive away via a highway by city dwellers from Zhengzhou
city.

(registered by the Monetary Authority of Singapore on 22 January 2008)


This document is important. If you are in any doubt as to the action you should take,
you should consult your legal, financial, tax or other professional adviser.
We have made an application to the Singapore Exchange Securities Trading Limited
(SGX-ST) for permission to deal in and for quotation of the ordinary shares of HK$0.40
each (the Shares) in the capital of CentraLand Limited (the Company) already issued
and the new Shares (the New Shares) which are the subject of this Invitation (as defined
herein). Such permission will be granted when we have been admitted to the Official List
of SGX-ST. The dealing in and quotation of the Shares will be in Singapore dollars.
Acceptance of applications will be conditional upon, inter alia, permission being granted
to deal in, and for quotation of, all of the existing issued Shares, and the New Shares. If
the completion of the Invitation does not occur because the SGX-STs permission is not
granted or for any other reasons, monies paid in respect of any application accepted
will be returned to you, subject to applicable laws, at your own risk, without interest or
any share of revenue or other benefit arising therefrom and you will not have any claims
whatsoever against us, the Issue Manager, the Underwriter or the Placement Agent (all
as defined herein).
The SGX-ST assumes no responsibility for the correctness of any of the statements made
or opinions expressed or reports contained in this Prospectus. Admission to the Official
List of the SGX-ST is not to be taken as an indication of the merits of the Invitation, our
Company and its subsidiaries, our Shares and the New Shares.
A copy of this Prospectus has been lodged with and registered by the Monetary
Authority of Singapore (the Authority) on 19 December 2007 and 22 January
2008 respectively. The Authority assumes no responsibility for the contents of this
Prospectus. Registration of this Prospectus by the Authority does not imply that
the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or
regulatory requirements, have been complied with. The Authority has not, in any
way, considered the merits of our Shares or the New Shares, as the case may be,
being offered for investment.

CentraLand Limited
No. 86 South Bank of Yellow River
Huiji District
Zhengzhou city
Henan Province
The Peoples Republic of China 450042
Tel: +86 (371) 6389 0406
Fax: +86 (371) 6389 0345

The Bermuda Monetary Authority has given its consent to the issue of the New Shares
pursuant to the Invitation on the terms referred to in this Prospectus. A copy of this
Prospectus will be filed with the Registrar of Companies in Bermuda. The Bermuda
Monetary Authority in granting such permission and the Registrar of Companies
in Bermuda in accepting this Prospectus for filing accept no responsibility for the
financial soundness of our Group (as defined herein) or any proposal or for the
correctness of any of the statements made or opinions expressed herein or any
other documents.
Investing in our Shares involves risks which are described in the section
entitled Risk Factors in this Prospectus. No Shares will be allotted on the
basis of this Prospectus later than six months after the date of registration
of this Prospectus by the Authority.

Guoling Shanshui () will be built in various phases and comprise


low-density luxury detached houses, townhouses, apartments and
commercial retail units. Leveraging on the scenic landscape including
lakes, rivers, natural floral and fauna and also the existing miniature
replicas of famous Chinese historical architectures, Guoling Shanshui
() is designed according to our vision of creating a self-contained,
high-end development, featuring modern resort-theme home concept.
As at 7 December 2007, we have completed construction of Phase I and
Phase II of Guoling Shanshui (), occupying a total site area and
saleable GFA of approximately 276,735 sq m and 160,828 sq m respectively.
Details of the two phases are set out below:
Name of
Property
Development

Type of
Development

Total site
area (sq m)

Total
saleable
GFA (sq m)

Total GFA
sold as of 7
December
2007 (sq m)

Project
Completion
Date

Phase I: Mufu
()

Low-rise
apartments

40,085

39,289

36,922

4Q2005

Phase I:
Yongfu
()

Low-density luxury
detached houses

66,316

18,665

18,204

2Q2007

Phase II:
Huguang
Shanse
()

Low-rise
apartments and
commercial retail
units

97,334

67,701

60,637

3Q2007

Phase II:
Xinyu Lanwan
()

Low-rise
apartments and
townhouses

73,000

35,173

26,839

3Q2007

276,735

160,828

142,602

Total

OUR PROPERTY DEVELOPMENTS (CONTD)

FINANCIAL HIGHLIGHTS

Revenue

We expect to commence development of Phase III of Guoling Shanshui


(), which will have a total site area of approximately 174,000 sq m
and planned GFA of approximately 245,000 sq m, by 1H2008 and target for
completion by end of 2009. We are currently at the project conceptualisation
and planning and design stage.

(RMB million)

89.9%

1,364.1%
276.5

Phase III is expected to be constructed over two stages and shall comprise
low-rise apartments, townhouses and commercial units.

150.8

145.6

As of 7 December 2007, the total site area of our land held for future
developments within Guoling Shanshui () is approximately 1.4
million sq m with an estimated aggregate GFA of 2.9 million sq m.

10.3
FY2004

FY2005

FY2006

Guoling Shansuis () Land Bank (Site Area)

Six months
ended
30 June 2006

Six months
ended
30 June 2007

Net Profit
Phase I & II (Completed)
276,735 sq m

(RMB million)

15%
9%

54.5

Phase III (To be developed)


174,412 sq m

23.2

18.9

76%
Land for Future Development
1,406,880 sq m
-10.4
FY2004

-5.7
FY2005

J-Expo ()

J-Expo (), our Groups first commercial development, will


be a building for the wholesale of commodities () such as mobile
phones, stationery, accessories, cosmetics and household goods by
wholesalers.
J-Expo () is located within walking distance to the
Zhengzhou Railway Station () and the Zhengzhou Long
Distance Central Bus Station (), and is also located
within possibly one of the most vibrant wholesale centres in central
PRC.
With a total site area of approximately 9,771 sq m, J-Expo (
) comprises a basement, five-storey of 2,560 retail units and sevenstorey of 192 office units, as well as an open-air car park with 320 parking
lots. We intend to retain ownership of levels 4 and 5 of the building upon
its completion, for lease to third parties to generate rental returns.

Construction of the project commenced in January 2007, and completion is


expected by 1H2008. Pre-sales commenced in April 2007.

FY2006

Six months
ended
30 June 2006

Six months
ended
30 June 2007

FY: Financial Year ended 31 December

OUR COMPETITIVE STRENGTHS


Premium Brand Property Developer in Zhengzhou City Focused on the
Development of Residential and Commercial Properties
Properties targeted at middle and higher-income purchasers, with an emphasis
on quality designs, materials, finishings and construction
Our experience and ability to develop residential properties, and the recognition
accorded to us by the property industry and buyers alike, enable us to market
our properties at a premium
Numerous awards and certificates awarded to us by various governmental
agencies in the PRC and independent accrediting bodies for the high quality
standards of our operations and construction

OUR PROPERTY DEVELOPMENTS (CONTD)

FINANCIAL HIGHLIGHTS

Revenue

We expect to commence development of Phase III of Guoling Shanshui


(), which will have a total site area of approximately 174,000 sq m
and planned GFA of approximately 245,000 sq m, by 1H2008 and target for
completion by end of 2009. We are currently at the project conceptualisation
and planning and design stage.

(RMB million)

89.9%

1,364.1%
276.5

Phase III is expected to be constructed over two stages and shall comprise
low-rise apartments, townhouses and commercial units.

150.8

145.6

As of 7 December 2007, the total site area of our land held for future
developments within Guoling Shanshui () is approximately 1.4
million sq m with an estimated aggregate GFA of 2.9 million sq m.

10.3
FY2004

FY2005

FY2006

Guoling Shansuis () Land Bank (Site Area)

Six months
ended
30 June 2006

Six months
ended
30 June 2007

Net Profit
Phase I & II (Completed)
276,735 sq m

(RMB million)

15%
9%

54.5

Phase III (To be developed)


174,412 sq m

23.2

18.9

76%
Land for Future Development
1,406,880 sq m
-10.4
FY2004

-5.7
FY2005

J-Expo ()

J-Expo (), our Groups first commercial development, will


be a building for the wholesale of commodities () such as mobile
phones, stationery, accessories, cosmetics and household goods by
wholesalers.
J-Expo () is located within walking distance to the
Zhengzhou Railway Station () and the Zhengzhou Long
Distance Central Bus Station (), and is also located
within possibly one of the most vibrant wholesale centres in central
PRC.
With a total site area of approximately 9,771 sq m, J-Expo (
) comprises a basement, five-storey of 2,560 retail units and sevenstorey of 192 office units, as well as an open-air car park with 320 parking
lots. We intend to retain ownership of levels 4 and 5 of the building upon
its completion, for lease to third parties to generate rental returns.

Construction of the project commenced in January 2007, and completion is


expected by 1H2008. Pre-sales commenced in April 2007.

FY2006

Six months
ended
30 June 2006

Six months
ended
30 June 2007

FY: Financial Year ended 31 December

OUR COMPETITIVE STRENGTHS


Premium Brand Property Developer in Zhengzhou City Focused on the
Development of Residential and Commercial Properties
Properties targeted at middle and higher-income purchasers, with an emphasis
on quality designs, materials, finishings and construction
Our experience and ability to develop residential properties, and the recognition
accorded to us by the property industry and buyers alike, enable us to market
our properties at a premium
Numerous awards and certificates awarded to us by various governmental
agencies in the PRC and independent accrediting bodies for the high quality
standards of our operations and construction

Land Banks and Properties under Development Located in Good


Locations

Ability to identify and acquire land at good locations in Zhengzhou city

Guoling Shanshui () suburban area, away from the city centre and
surrounded by scenic views

J-Expo () centre of Zhengzhou city, within walking distance


to Zhengzhou Railway Station () and Zhengzhou Long Distance
Central Bus Station ()

Experienced and Established Management Team

Management team established good working relationships with business


partners, contractors and government authorities in the PRC

Managements acumen and understanding of the PRC market trends,


especially in Zhengzhou city, have helped in identifying significant
development opportunities

Strong Sales and Marketing Capabilities

Adopt various effective approaches to increase sales, including advertising,


direct marketing, promotional banners and billboards

Set up on-site sales and reception centres with showflats, where


possible

PROSPECTS
Our Directors believe that we will continue to enjoy growth in the residential
and commercial property industry in Zhengzhou city over the next few years
for the following reasons:

Increased investment in real estate developments in Zhengzhou city

Growth in population in Zhengzhou city

Increased purchasing power for real estate in Zhengzhou city

STRATEGY AND FUTURE PLANS


Continue to Focus on Development of Residential and Commercial
Property Projects

Maintain our core business focus on the development of residential and


commercial properties
o To leverage on our industry experience, market knowledge and reputation
as a premium property developer

STRATEGY AND FUTURE PLANS (CONTD)


Establish Public Recognition as a Premium Brand Property
Developer
Focus on building our brand name and promote our integrated property
developments
Prudently look into diversifying our products portfolio by responding to
changing market conditions and customer preferences
Continue to use innovative concepts and creative designs
o Emphasis on quality workmanship, interior design and integrated
landscaping to meet demands of our target middle and higher-income
customers

Maintain a Sufficient Project Pipeline Through Acquisitions, Joint


Ventures or Business Alliances
Intend to continue to acquire new and suitable land in Zhengzhou city,
and where opportunity arises, other cities in the central part of the PRC
Actively seek such opportunities through the direct acquisition of land, or
indirectly through acquisition of companies which own the land that is of
interest to us
o May also consider joint ventures or business alliances with such
companies to jointly develop land

Continue to Focus on Zhengzhou City and to Explore New


Geographical Areas
Intend to use our existing geographical advantage in Zhengzhou city to
continue expanding our existing land bank
To consider expansion into new geographical areas in the central part of
the PRC, which are undergoing increasing urbanisation
o Capitalise on the growth potential of the property markets in such cities
and drive our expansion plans
Continue to focus on the Zhengzhou city region
o Leverage on our reputation as a premium brand property developer to
ensure our sustained development

Promote Effective Management


Intend to actively recruit quality managers with good track records and
professionals with relevant and necessary experience
Intend to study and adopt successful management models and to train our
managers and staff to be service-oriented to increase our competitiveness

TABLE OF CONTENTS
PAGE
CORPORATE INFORMATION ......................................................................................................

DEFINITIONS ................................................................................................................................

SELLING RESTRICTIONS ............................................................................................................

11

DETAILS OF THE INVITATION


LISTING ON THE SGX-ST ......................................................................................................

12

INDICATIVE TIMETABLE FOR LISTING ..................................................................................

16

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS ..............................

17

PROSPECTUS SUMMARY ..........................................................................................................

18

THE INVITATION ..........................................................................................................................

21

EXCHANGE RATES ......................................................................................................................

22

USE OF PROCEEDS AND EXPENSES OF THE INVITATION ....................................................

23

MANAGEMENT AND UNDERWRITING AND PLACEMENT ARRANGEMENTS ......................

25

PLAN OF DISTRIBUTION ............................................................................................................

27

CLEARANCE AND SETTLEMENT ..............................................................................................

28

RISK FACTORS
RISKS RELATING TO OUR BUSINESS ..................................................................................

29

RISKS RELATING TO OUR INDUSTRY ..................................................................................

38

RISKS RELATING TO THE PROPERTY INDUSTRY IN THE PRC ........................................

39

RISKS RELATING TO THE PRC ..............................................................................................

41

RISKS RELATING TO INVESTMENT IN OUR SHARES ........................................................

43

INVITATION STATISTICS ..............................................................................................................

45

SELECTED FINANCIAL INFORMATION ......................................................................................

47

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND


RESULTS OF OPERATIONS
OVERVIEW ..............................................................................................................................

50

REVIEW OF RESULTS OF OPERATIONS ..............................................................................

56

REVIEW OF FINANCIAL POSITIONS ....................................................................................

62

LIQUIDITY AND CAPITAL RESOURCES ................................................................................

64

MATERIAL CAPITAL EXPENDITURES AND DIVESTMENTS ................................................

68

FOREIGN EXCHANGE EXPOSURE ........................................................................................

68

DIVIDEND POLICY ........................................................................................................................

69

PAGE
EXCHANGE CONTROL
FOREIGN EXCHANGE CONTROLS IN THE PRC ..................................................................

70

FOREIGN EXCHANGE CONTROLS IN BERMUDA ................................................................

71

CAPITALISATION AND INDEBTEDNESS ....................................................................................

72

DILUTION ......................................................................................................................................

74

ADJUSTED APPRAISED NTA ......................................................................................................

76

SHARE CAPITAL ..........................................................................................................................

77

SHAREHOLDERS ........................................................................................................................

81

MORATORIUM ..............................................................................................................................

83

RESTRUCTURING EXERCISE ....................................................................................................

84

GROUP STRUCTURE ..................................................................................................................

86

INTRODUCTION TO ZHENGZHOU CITY ....................................................................................

89

GENERAL INFORMATION ON OUR GROUP


HISTORY ..................................................................................................................................

92

BUSINESS OVERVIEW ............................................................................................................

96

BUSINESS OPERATIONS ........................................................................................................

96

PROPERTY DEVELOPMENT PROCESS ................................................................................

99

DETAILS OF OUR PROPERTY DEVELOPMENTS ................................................................

105

PROPERTIES HELD FOR INVESTMENT ................................................................................

113

SALES AND MARKETING ........................................................................................................

114

RESEARCH AND DEVELOPMENT ........................................................................................

114

STAFF TRAINING POLICY ......................................................................................................

114

INTELLECTUAL PROPERTY ..................................................................................................

115

MAJOR CONTRACTORS ........................................................................................................

118

MAJOR CUSTOMERS ..............................................................................................................

119

CREDIT MANAGEMENT ..........................................................................................................

119

SEASONALITY ........................................................................................................................

119

COMPETITION ........................................................................................................................

119

COMPETITIVE STRENGTHS ..................................................................................................

120

AWARDS AND CERTIFICATES ................................................................................................

121

LICENCES, PERMITS, APPROVALS AND GOVERNMENT REGULATIONS ........................

122

INSURANCE ............................................................................................................................

124

ENVIRONMENT AND SAFETY FEATURES ............................................................................

124

PROSPECTS ............................................................................................................................

124

STRATEGY AND FUTURE PLANS ..........................................................................................

126

ii

PAGE
DIRECTORS, MANAGEMENT AND STAFF
MANAGEMENT REPORTING STRUCTURE ..........................................................................

128

DIRECTORS ............................................................................................................................

129

EXECUTIVE OFFICERS ..........................................................................................................

134

REMUNERATION ......................................................................................................................

136

EMPLOYEES ............................................................................................................................

137

SERVICE AGREEMENTS ........................................................................................................

137

INTERESTED PERSON TRANSACTIONS


PAST INTERESTED PERSON TRANSACTIONS ....................................................................

139

POTENTIAL CONFLICTS OF INTEREST ................................................................................

141

REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS ............

142

OTHER TRANSACTION ............................................................................................................

143

CORPORATE GOVERNANCE ......................................................................................................

144

PURCHASE BY OUR COMPANY OF OUR OWN SHARES ........................................................

146

ATTENDANCE AT GENERAL MEETINGS ..................................................................................

147

TAKE-OVERS ................................................................................................................................

148

GENERAL AND STATUTORY INFORMATION


INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS ............................................

149

SHARE CAPITAL ......................................................................................................................

151

LITIGATION ................................................................................................................................

153

MATERIAL CONTRACTS ..........................................................................................................

154

MISCELLANEOUS ....................................................................................................................

156

CONSENTS ..............................................................................................................................

156

DOCUMENTS AVAILABLE FOR INSPECTION ........................................................................

157

STATEMENT BY OUR DIRECTORS ........................................................................................

158

APPENDIX A
REPORT FROM THE JOINT REPORTING ACCOUNTANTS ON THE AUDITED COMBINED
FINANCIAL INFORMATION OF THE GROUP FOR THE FINANCIAL YEARS ENDED
31 DECEMBER 2004, 31 DECEMBER 2005, 31 DECEMBER 2006 AND SIX MONTHS
ENDED 30 JUNE 2007 ..................................................................................................................

A-1

APPENDIX B
REPORT FROM THE JOINT REPORTING ACCOUNTANTS ON THE UNAUDITED PRO
FORMA FINANCIAL INFORMATION OF THE GROUP FOR THE FINANCIAL YEAR ENDED
31 DECEMBER 2006 AND SIX MONTHS ENDED 30 JUNE 2007 ..............................................

B-1

APPENDIX C
VALUERS REPORT DATED 19 DECEMBER 2007 WITH RESPECT TO VALUATION AS OF
30 JUNE 2007 ................................................................................................................................

iii

C-1

PAGE
APPENDIX D
SUMMARY OF MEMORANDUM OF ASSOCIATON AND SELECTED BYE-LAWS OF THE
COMPANY ....................................................................................................................................

D-1

APPENDIX E
SUMMARY OF BERMUDA COMPANY LAW ..............................................................................

E-1

APPENDIX F
TAXATION ....................................................................................................................................

F-1

APPENDIX G
SUMMARY OF RELEVANT PRC LAWS AND REGULATIONS ..................................................

G-1

APPENDIX H
TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE ..............

iv

H-1

CORPORATE INFORMATION
BOARD OF DIRECTORS

Li Wei
(Non-Executive Chairman)
Yan Tao
(Executive Director and Chief Executive Officer)
Wang Jian
(Executive Director and Chief Operating Officer)
Liu Xuemei
 (Executive Director)
Wang Zhimin
(Executive Director)
Tan Siok Sing (Independent Director)
Tan Siok Chin (Independent Director)
Li Danny Fui Lung (Independent Director)

COMPANY SECRETARIES

Ho Hin Yip, ACCA, HKICPA


Ira Stuart Outerbridge III, FCIS*
Abdul Jabbar Bin Karam Din, LLB, Hons

REGISTERED OFFICE

Clarendon House
2 Church Street
Hamilton HM 11
Bermuda

HEAD OFFICE AND PRINCIPAL


PLACE OF BUSINESS

No. 86 South Bank of Yellow River


Huiji District
Zhengzhou City
Henan Province
The Peoples Republic of China 450042

REGISTRAR FOR THE INVITATION


AND SINGAPORE SHARE
TRANSFER AGENT

Boardroom Corporate & Advisory Services Pte. Ltd.


3 Church Street
#08-01 Samsung Hub
Singapore 049483

BERMUDA SHARE REGISTRAR

Codan Services Limited


Clarendon House
2 Church Street
Hamilton HM 11
Bermuda

ISSUE MANAGER

Boulton Capital Asia Pte. Limited


20 Cecil Street
#19-03 Equity Plaza
Singapore 049705

UNDERWRITER AND PLACEMENT


AGENT

UOB Kay Hian Private Limited


80 Raffles Place #30-01
UOB Plaza 1
Singapore 048624

Ira Stuart Outbridge III will resign as joint Company Secretary upon listing of our Shares on the SGX-ST and will be appointed
as Assistant Secretary of our Company.

SOLICITORS TO THE INVITATION

Rajah & Tann LLP


4 Battery Road
#26-01 Bank of China Building
Singapore 049908

SOLICITORS TO THE ISSUE


MANAGER, UNDERWRITER AND
PLACEMENT AGENT

KhattarWong
80 Raffles Place #25-01
UOB Plaza 1
Singapore 048624

LEGAL ADVISERS TO THE


COMPANY ON PRC LAW

Jingtian & Gongcheng


15th Floor, Union Plaza
20 Chaoyangmenwai Street
Chaoyang District, Beijing
The Peoples Republic of China 100020

LEGAL ADVISERS TO THE


COMPANY ON HONG KONG LAW

Chiu & Partners


41st Floor, Jardine House
1 Connaught Place
Hong Kong

LEGAL ADVISERS TO THE


COMPANY ON BERMUDA LAW

Conyers Dill & Pearman


50 Raffles Place #18-04
Singapore Land Tower
Singapore 048623

JOINT REPORTING ACCOUNTANTS :

Grant Thornton
Certified Public Accountants
13th Floor, Gloucester Tower
The Landmark
15 Queens Road Central
Hong Kong
Foo Kon Tan Grant Thornton
Certified Public Accountants
47 Hill Street #05-01
Singapore Chinese Chamber of Commerce & Industry
Building
Singapore 179365

AUDITORS

Grant Thornton
Certified Public Accountants
13th Floor, Gloucester Tower
The Landmark
15 Queens Road Central
Hong Kong

INDEPENDENT VALUERS

CB Richard Ellis Limited


34th Floor Central Plaza
18 Harbour Road
Wanchai
Hong Kong

RECEIVING BANK

Standard Chartered Bank


6 Battery Road
Level 22
Singapore 049909

PRINCIPAL BANKERS

China Merchants Bank Co. Ltd.


26 Huanghe Road
Zhengzhou City
Henan Province
The Peoples Republic of China 450002
China Citic Bank Co., Ltd.
18 Weisi Road
Zhengzhou City
Henan Province
The Peoples Republic of China 450003

DEFINITIONS
In this Prospectus and the accompanying Application Forms and, in relation to Electronic Applications,
the instructions appearing on the screens of ATM and IB websites of the relevant Participating Banks, the
following definitions apply where the context so admits:

Our Group Companies


Company or CentraLand

CentraLand Limited
*, a company
incorporated as an exempted company in Bermuda on
28 September 2007. The terms we, our, our Company or
us have correlative meaning

Everwell

Everwell International Holdings Limited


, a company incorporated in Hong Kong and whollyowned by Piaget

Group or Proforma Group

Our Company and its subsidiaries following the completion of


the Restructuring Exercise

Henan Jinzhi

Henan Jinzhi Establishment Co., Ltd.


, a limited liability company incorporated in the PRC and
wholly-owned by Zhengzhou Great View

Piaget

Piaget Management Ltd, a company incorporated in the BVI


and wholly-owned by our Company

Zhengzhou Great View

Zhengzhou Huanghe Great View Royal Garden Co., Ltd.


, a wholly foreign-owned enterprise
incorporated in the PRC and wholly-owned by Everwell

Authority

The Monetary Authority of Singapore

CB Richard Ellis

CB Richard Ellis Limited

CDP

The Central Depository (Pte) Limited

CIM X

CIM X Limited

CPF

The Central Provident Fund

Easy Solution

Easy Solution Limited

Ember Vision

Ember Vision Limited

Issue Manager

Boulton Capital Asia Pte. Limited

Marble Focus

Marble Focus Limited

Overseas Market

Overseas Market Group Limited

PBOC

The Peoples Bank of China

Other Corporations and Agencies

For identification purposes only

Placement Agent or Underwriter


or UOB Kay Hian

UOB Kay Hian Private Limited

Queen Hope

Queen Hope Holdings Limited

SAFE

State Administration for Foreign Exchange

SCCS

Securities Clearing & Computer Services (Pte) Ltd of


Singapore

SGX-ST

Singapore Exchange Securities Trading Limited

State Council

State Council

1H

First half of the financial year, ending 30 June

2H

Second half of the financial year, ending 31 December

Adjusted Appraised NTA

The adjusted appraised NTA of our Group as at 30 June 2007


as described in the section entitled Adjusted Appraised NTA
of this Prospectus

Application Forms

The printed application forms to be used for the purpose of


the Invitation and which form part of this Prospectus

Application List

The list of applications for subscription for the New Shares

associates

(a)

General

(b)

In relation to an entity, means:


(i)

in a case where the entity is a substantial


shareholder, controlling shareholder, substantial
interest-holder or controlling interest-holder, its
related corporation, related entity, associated
company or associated entity; or

(ii)

in any other case, (A) a director or an equivalent


person, (B) where the entity is a corporation, a
controlling shareholder of the entity, (C) where
the entity is not a corporation, a controlling
interest-holder of the entity, (D) a subsidiary, a
subsidiary entity, an associated company, or an
associated entity, or (E) a subsidiary, a
subsidiary entity, an associated company, or an
associated entity, of the controlling shareholder
or controlling interest-holder, as the case may
be, of the entity; and

In relation to an individual, means:


(i)

his immediate family;

(ii)

a trustee of any trust of which the individual or


any member of the individuals immediate family
is (A) a beneficiary or, (B) where the trust is a
discretionary trust, a discretionary object, when
the trustee acts in that capacity; or

(iii)

any corporation in which he and his immediate


family (whether directly or indirectly) have
interests in voting shares of an aggregate of not
less than 30% of the total votes attached to all
voting shares.

The terms associated company, associated entity,


controlling interest-holder, related corporation, related
entity, subsidiary, subsidiary entity and substantial
interest-holder shall have the same meanings ascribed to
them respectively in the Securities and Futures (Offers of
Investments) (Shares and Debentures) Regulations 2005

ATM

Automated teller machines of a Participating Bank

Audit Committee

The audit committee of our Company

Bermuda Companies Act

The Companies Act 1981 of Bermuda

Board

Board of Directors of our Company

business trust

Has the same meaning as in Section 2 of the Business Trusts


Act, Chapter 31A of Singapore

BVI

British Virgin Islands

Bye-laws

Bye-laws of our Company, as amended, supplemented or


modified from time to time

Combined Financial Information

The Report from the Joint Reporting Accountants on the


Audited Combined Financial Information of the Group for the
financial years ended 31 December 2004, 31 December
2005, 31 December 2006 and Six months ended 30 June
2007

Companies Act

The Companies Act, Chapter 50 of Singapore

Controlling Shareholder

In relation to a corporation, means:


(a)

a person who has an interest in the voting shares of a


corporation and who exercises control over the
corporation; or

(b)

a person who has an interest of 15% or more of the


aggregate of the nominal amount of all the voting
shares in a corporation, unless he does not exercise
control over the corporation

Directors

The directors of our Company as at the date of this


Prospectus

Electronic Applications

Applications for the Offer Shares made through an ATM or


the IB website of one of the relevant Participating Banks in
accordance with the terms and conditions of this Prospectus

entity

Has the same meaning as in Section 2 of the Securities and


Futures Act

EPS

Earnings per share

Executive Directors

The executive Directors of our Company as at the date of this


Prospectus

Executive Officers

The executive officers of our Company as at the date of this


Prospectus

FY

Financial year ended or, as the case may be, ending


31 December

GFA

Gross floor area

GST

Singapore goods and services tax

Our integrated property development, Guoling Shanshui

Guoling Hotspring Hotel

Henan Guoling Hotspring Vacation Hotel


, a hotel located in our Guoling Shanshui
development

IB

Internet Banking

IFRS

International Financial Reporting Standards

Independent Directors

The independent Directors of our Company as at the date of


this Prospectus

Invitation

The invitation by our Company to the public to subscribe for


the New Shares, subject to and on the terms and conditions
of this Prospectus

Issue Price

S$0.50 for each New Share

LAT

Land appreciation tax

Latest Practicable Date

7 December 2007, being the latest practicable date prior to


the lodgment of this Prospectus with the Authority

Li Wei

Our Non-Executive Chairman, Mr Li Wei

Listing Manual

Listing Manual of the SGX-ST

Liu Xuemei

Our Sales Director, Ms Liu Xuemei

Management and Underwriting


Agreement

The Management and Underwriting Agreement signed


between our Company,
the Issue Manager and the
Underwriter dated 22 January 2008

Market Day

A day on which the SGX-ST is open for trading in securities

NAV

Net asset value

Guoling Shanshui

New Shares

The 245,000,000 new Shares for which our Company invites


applications to subscribe for pursuant to the Invitation, subject
to and on the terms and conditions of this Prospectus

Non-executive Directors

The non-executive Directors of our Company (including


Independent Directors) as at the date of this Prospectus

NTA

Net tangible assets

Offer

The offer by our Company of the Offer Shares to the public in


Singapore for subscription at the Issue Price, subject to and
on the terms and conditions of this Prospectus

Offer Shares

5,000,000 of the New Shares which are the subject of the


Offer

Participating Banks

United Overseas Bank Limited and its subsidiary, Far Eastern


Bank Limited (the UOB Group), DBS Bank Ltd (including
POSB) (DBS Bank) and Oversea-Chinese Banking
Corporation Limited (OCBC)

PER

Price earnings ratio

Periods Under Review

The period which comprises FY2004, FY2005, FY2006 and


the six months ended 30 June 2007

Placement

The placement by the Placement Agent on behalf of our


Company of the Placement Shares at the Issue Price, subject
to and on the terms and conditions of this Prospectus

Placement Agreement

The Placement Agreement signed between our Company and


the Placement Agent dated 22 January 2008

Placement Shares

240,000,000 of the NewShares which are the subject of the


Placement

PRC or China

The Peoples Republic of China which, for the purposes of


this Prospectus, excludes Hong Kong and Macau Special
Administrative Regions of the PRC, and Taiwan

PRC GAAP

Generally accepted accounting principles in the PRC

Pre-Invitation Investors

CIM X, Easy Solution and Queen Hope

Pro Forma NAV

NAV based on the Pro Forma Report

Pro Forma Report

The Report from the Joint Reporting Accountants on the


Unaudited Pro Forma Financial Information of the Group for
the financial year ended 31 December 2006 and Six months
ended 30 June 2007

Prospectus

This prospectus dated 22 January 2008 issued by our


Company in respect of the Invitation

Restructuring Exercise

The corporate restructuring exercise undertaken in


connection with the Invitation, as described in the section
entitled Restructuring Exercise in this Prospectus

Securities Account

The securities account maintained by a Depositor with CDP


but does not include a securities sub-account

Securities and Futures Act

The Securities and Futures Act, Chapter 289 of Singapore

Shareholders

Registered holders of Shares

Shares

Ordinary shares of HK$0.40 each in the capital of our


Company

Substantial Shareholder

A person who has an interest or interests in one or more


voting Shares in our Company; and the total votes attached to
those Share(s) represents not less than 5.0% of the total
votes attached to all the voting Shares in our Company

Valuers Report

The valuation report of CB Richard Ellis dated 19 December


2007 as set out in Appendix C to this Prospectus

Wang Jian

Our Executive Director and Chief Operating Officer,


Mr Wang Jian

Wang Peng

Our Controlling Shareholder, Mr Wang Peng

Wang Zhimin

Our Executive Director and Finance Director, Mr Wang Zhimin

Yan Tao

Our Executive Director and Chief Executive Officer, Mr Yan


Tao

HK$

Hong Kong dollars

$ or S$ and cents

Singapore dollars and cents respectively

RMB and RMB cents

Renminbi and cents respectively

US$

United States dollars

km

Kilometres

Metres

sq ft

Square feet

sq km

Square kilometres

sq m

Square metres

% or per cent.

Per centum

Currencies

Units

Any reference in this Prospectus, Application Forms and the Electronic Applications to any statute or
enactment is a reference to that statute or enactment for the time being amended or re-enacted. Any
word defined under the Companies Act, the Securities and Futures Act, the Bermuda Companies Act or
any statutory modification thereof and used in this Prospectus, Application Forms and the Electronic
Applications shall have the meaning assigned to it under the Companies Act, the Securities and Futures
Act, the Bermuda Companies Act or such statutory modification, as the case may be.
Any reference in this Prospectus, Application Forms and the Electronic Applications to Shares being
allotted to an applicant includes allotment to CDP for the account of that applicant.
Any reference to a time of day in this Prospectus is a reference to Singapore time unless otherwise
stated.
The expressions we, us, our, ourselves, or other grammatical variations thereof shall, unless
otherwise stated, mean our Company and our subsidiaries.
The terms Depositor, Depository Agent and Depository Register shall have the meanings ascribed to
them respectively in Section 130A of the Companies Act.
Words importing the singular shall, where applicable, include the plural and vice versa and words
importing the masculine gender shall, where applicable, include the feminine and neuter genders.
References to persons shall include corporations.
Any discrepancies between the amounts listed and the totals thereof are due to rounding. Accordingly,
figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which
precede them.
Certain names with Chinese characters have been translated into English names. Such translations are
provided solely for the convenience of investors. The English names may not have been registered with
the relevant PRC authorities and should not be construed as representations that the English names
actually represent the Chinese characters.
As indicated in this Prospectus, certain facts and statistics in this Prospectus relating to the real estate
market and economic data are extracted or derived from publicly available industry, government and
research publications, as indicated in this Prospectus. Our Directors have confirmed that such statistical
data in this Prospectus have been extracted from the relevant sources in their proper form and context.
Our Directors have not verified the accuracy of the information extracted nor have they obtained the
specific consent of these sources for inclusion of such data in this Prospectus for the purposes of
Section 249 of the Securities and Futures Act. Accordingly, the relevant sources would not be liable
under Sections 253 and 254 of the Securities and Futures Act for the information extracted from their
publications and used in this Prospectus. Our Directors are also not aware of any disclaimers made by
the relevant sources in relation to the reliance on the contents of their publications listed above.

10

SELLING RESTRICTIONS
This Prospectus does not constitute an offer, solicitation or invitation to subscribe for our Shares in any
jurisdiction in which such offer, solicitation or invitation is unlawful or is not authorised or to any person to
whom it is unlawful to make such offer, solicitation or invitation. No action has been or will be taken under
the requirements of the legislation or regulations of, or of the legal or regulatory authorities of, any
jurisdiction, except for the filing and/or registration of this Prospectus in Singapore and Bermuda in order
to permit a public offering of our Shares and the public distribution of this Prospectus in Singapore. The
distribution of this Prospectus and the offering of our Shares in certain jurisdictions may be restricted by
the relevant laws in such jurisdictions. Persons who may come into possession of this Prospectus are
required by us, the Issue Manager, the Underwriter and the Placement Agent to inform themselves
about, and to observe and comply with, any such restrictions.
Selling Restrictions in Hong Kong
This Prospectus does not constitute an offer to the public in Hong Kong to subscribe for the New Shares.
This Prospectus has not been and will not be registered with the Registrar of Companies in Hong Kong.
Accordingly, except as mentioned below, this Prospectus may not be issued, circulated or distributed in
Hong Kong.
A copy of this Prospectus may, however, be issued by the Placement Agent or its designated subplacement agents to a limited number of prospective applicants for the Placement Shares in Hong Kong
in a manner which does not constitute an offer of the Placement Shares to the public in Hong Kong or an
issue, circulation or distribution in Hong Kong of a prospectus for the purposes of the Companies
Ordinance (Chapter 32 of the Laws of Hong Kong). The offer of the Placement Shares is personal to the
person named in the accompanying Application Form, and application for the Placement Shares will only
be accepted from such person. An application for the Placement Shares is not invited from any persons
in Hong Kong other than a person to whom a copy of this Prospectus has been issued by the Placement
Agent or its designated sub-placement agents, and if made, will not be accepted, unless the applicant
satisfies the Placement Agent or its respective designated sub-placement agents that he is a person
whose ordinary business is to buy or sell shares, whether as principal or agent.
No person to whom a copy of this Prospectus is issued may issue, circulate or distribute this Prospectus
in Hong Kong or make or give a copy of this Prospectus to any other person, other than their legal,
financial, tax or other appropriate advisers who are subject to a duty of confidentiality to such person.
The Placement Agent has agreed with our Company that it (and its sub-placement agents, if any) has
not offered or sold, and will not offer or sell, in Hong Kong, by means of any document, any of our
Shares other than to a person whose ordinary business is to buy or sell shares, whether as principal or
agent, or in circumstances which do not constitute an offer of the Placement Shares to the public within
the meaning of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong).
This Prospectus may not be issued in Hong Kong other than to a person whose ordinary business is to
buy or sell shares, whether as principal or agent.
Selling Restrictions in the PRC
This Prospectus does not constitute an offer, solicitation or invitation to subscribe for the New Shares or
any other securities of our Company in the PRC. Under the laws of the PRC, such offer, solicitation or
invitation to the PRC citizens is unlawful. The distribution of this Prospectus and the offering of the New
Shares in the PRC are not permitted under the laws of the PRC.

11

DETAILS OF THE INVITATION


LISTING ON THE SGX-ST
We have applied to the SGX-ST for permission to deal in, and for quotation of, all our Shares already
issued and the New Shares on the Official List of the SGX-ST. Such permission will be granted when our
Company has been admitted to the Official List of the SGX-ST. Acceptance of applications for the New
Shares will be conditional upon permission being granted by the SGX-ST to deal in and for the quotation
of all our issued Shares and the New Shares. If the said permission is not granted, monies paid in
respect of any application accepted will be returned to you at your own risk, without interest or any share
of revenue or other benefit arising therefrom, and you will not have any claim against us, the Issue
Manager, the Underwriter or the Placement Agent.
The SGX-ST assumes no responsibility for the correctness of any of the statements made, reports
contained or opinions expressed in this Prospectus. Admission to the Official List of the SGX-ST is not to
be taken as an indication of the merits of the Invitation, our Company, our subsidiaries or our Shares.
A copy of this Prospectus has been lodged with and registered by the Authority. The Authority assumes
no responsibility for the contents of this Prospectus. Registration of this Prospectus by the Authority does
not imply that the Securities and Futures Act, or any other legal or regulatory requirements, have been
complied with. The Authority has not, in any way, considered the merits of the shares or units of shares,
as the case may be, being offered for investment.
We are subject to the provisions of the Securities and Futures Act and the Listing Manual regarding
corporate disclosure. In particular, if after this Prospectus is registered but before the close of the
Invitation, we become aware of:
(a)

a false or misleading statement in this Prospectus;

(b)

an omission from this Prospectus of any information that should have been included in it under
Section 243 of the Securities and Futures Act; or

(c)

a new circumstance that has arisen since this Prospectus was lodged with the Authority which
would have been required by Section 243 of the Securities and Futures Act to be included in this
Prospectus, if it had arisen before this Prospectus was lodged,

and that is materially adverse from the point of view of an investor, we may lodge a supplementary or
replacement prospectus with the Authority pursuant to Section 241 of the Securities and Futures Act and
will file a copy of such prospectus with the Registrar of Companies in Bermuda.
Where prior to the lodgment of the supplementary or replacement prospectus, applications have been
made under this Prospectus to subscribe for the New Shares and:
(a)

where the New Shares have not been issued to the applicants, our Company shall:
(i)

within two days (excluding any Saturday, Sunday or public holiday) from the date of the
lodgment of the supplementary or replacement prospectus, give the applicants notice in
writing of how to obtain, or arrange to receive, a copy of the supplementary or replacement
prospectus, as the case may be, and provide the applicants with an option to withdraw their
applications; and take all reasonable steps to make available within a reasonable period, the
supplementary or replacement prospectus, as the case may be, to the applicants who have
indicated that they wish to obtain, or who have arranged to receive, a copy of the
supplementary prospectus or replacement prospectus;

12

(b)

(ii)

within seven days from the date of lodgment of the supplementary or replacement
prospectus, give the applicants the supplementary or replacement prospectus, as the case
may be, and provide the applicants with an option to withdraw their applications; or

(iii)

treat the applications as withdrawn and cancelled, in which case the applications shall be
deemed to have been withdrawn and cancelled, and within seven days from the date of
lodgment of the supplementary or replacement prospectus, pay the applicants all monies
the applicants have paid on account of their applications for the New Shares (without
interest or any share of revenue or other benefit arising therefrom); or

where New Shares have been issued to the applicants but trading has not commenced:
(i)

our Company shall within seven days from the date of lodgment of the supplementary or
replacement prospectus, give the applicants the supplementary or replacement prospectus,
as the case may be, and provide the applicants with an option to return to our Company the
New Shares, which they do not wish to retain title in; or

(ii)

as our Company is required pursuant to the Securities and Futures Act to treat the issue of
the New Shares as void, in which case the issue is required to be deemed void and our
Company shall, subject to compliance with the Bermuda Companies Act and our Bye-laws,
within seven days from the date of lodgment of the supplementary or replacement
prospectus, return all monies paid in respect of any application, without interest or a share
of revenue or benefit arising therefrom.An applicant who wishes to exercise his option under
paragraph (a)(ii) to withdraw his application shall, within 14 days from the date of lodgment
of the supplementary or replacement prospectus, notify our Company of this and return all
documents, if any, purporting to be evidence of title of those New Shares, whereupon our
Company shall, within seven days from the receipt of such notification, pay to him all monies
paid by him on account of his application for those Shares without interest or a share of
revenue or benefit arising therefrom, at the applicants risk.

An applicant who wishes to exercise his option under paragraph (b)(i) to return the New Shares issued to
him shall, within 14 days from the date of lodgment of the supplementary or replacement prospectus,
notify our Company of this and return all documents, if any, purporting to be evidence of title to those
New Shares, to our Company, whereupon our Company shall, subject to compliance with the Bermuda
Companies Act, within seven days from the receipt of such notification and documents, if any, pay to him
all monies paid by him for those Shares, without interest or a share of revenue or benefit arising
therefrom, at the applicants risk and the issue of those Shares shall be deemed to be void.
Under the Securities and Futures Act, the Authority may, in certain circumstances issue a stop order (the
Stop Order) to our Company, directing that no Shares or no further Shares to which this Prospectus
relates, be allotted, issued or sold. Such circumstances will include a situation where this Prospectus
(i) contains a statement, which in the opinion of the Authority is false or misleading, (ii) omits any
information that should be included in accordance with the Securities and Futures Act, (iii) does not, in
the opinion of the Authority comply with the requirements of the Securities and Futures Act or (iv) if the
Authority is of the opinion that it is in the public interest to do so.
Where applications to subscribe for the New Shares to which this Prospectus relates have been made
prior to the Stop Order, and:
(a)

where the New Shares have not been issued to the applicants, the applications shall be deemed
to have been withdrawn and cancelled and our Company shall within 14 days from the date of the
Stop Order, pay to the applicants all monies the applicants have paid on account of their
applications for the New Shares (without interest or any share of revenue or other benefit arising
therefrom); or

(b)

where the New Shares have been issued to the applicants but trading has not commenced, the
Securities and Futures Act provides that the issue of our Shares shall be deemed to be void and
our Company is required to, within 14 days from the date of the Stop Order, pay to the applicants
all monies paid by them for the New Shares.

13

If our Company is required by applicable Singapore laws to cancel issued New Shares and repay
application monies to applicants (including instances where a stop order under the Securities and
Futures Act is issued), subject to compliance with the Bermuda Companies Act, our Company will
purchase the New Shares at the Issue Price. Information relating to the purchase of Shares by our
Company is set out in the section entitled Purchase by our Company of our own Shares in this
Prospectus.
Where monies are to be returned to applicants for the New Shares, it shall be paid to the applicants
without interest or share of revenue or other benefit arising therefrom, and at the applicants own risk and
applicants will not have any claim against our Company, the Issue Manager, the Underwriter or the
Placement Agent.
The Bermuda Monetary Authority has given its consent to the issue of the New Shares pursuant to the
Invitation on the terms referred to in this Prospectus. A copy of this Prospectus will be filed with the
Registrar of Companies in Bermuda. The Bermuda Monetary Authority in granting such permission and
the Registrar of Companies in Bermuda in accepting this Prospectus for filing accept no responsibility for
the financial soundness of our Group or any proposal or for the correctness of any of the statements
made or opinions expressed in this Prospectus or any other documents.
This Prospectus has been seen and approved by our Directors, and they individually and collectively
accept full responsibility for the accuracy of the information given in this Prospectus and confirm, having
made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and the
opinions expressed in this Prospectus are fair and accurate in all material respects as at the date of this
Prospectus and that there are no material facts the omission of which would make any statements in this
Prospectus misleading, and that the profit forecast (if any) has been stated by the Directors after due and
careful enquiry.
No person has been or is authorised to give any information or to make any representation not contained
in this Prospectus in connection with the Invitation and, if given or made, such information or
representation must not be relied upon as having been authorised by us, the Issue Manager, the
Underwriter or the Placement Agent. Neither the delivery of this Prospectus and the Application Forms
nor the Invitation shall, under any circumstances, constitute a continuing representation or create any
suggestion or implication that there has been no change in our affairs or in the statements of fact or
information contained in this Prospectus since the Latest Practicable Date. Where such changes occur,
we may make an announcement of the same to the SGX-ST and will comply with the requirements of the
Securities and Futures Act. All applicants should take note of any such announcement and, upon release
of such an announcement, shall be deemed to have notice of such changes. Save as expressly stated in
this Prospectus, nothing herein is, or may be relied upon as, a promise or representation as to our future
performance or policies.
This Prospectus has been prepared solely for the purpose of the Invitation and may not be relied upon
by any persons other than the applicants in connection with their application for the New Shares for any
other purpose. This Prospectus does not constitute an offer, solicitation or invitation to subscribe
for the New Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or
is not authorised or to any person to whom it is unlawful to make such offer, solicitation or
invitation.

14

Copies of this Prospectus and the Application Forms may be obtained on request, subject to availability,
during office hours from:
Boulton Capital Asia Pte. Limited
20 Cecil Street
#19-03 Equity Plaza
Singapore 049705

UOB Kay Hian Private Limited


80 Raffles Place #30-01
UOB Plaza 1
Singapore 048624

and from members of the Association of Banks in Singapore, members of the SGX-ST and merchant
banks in Singapore. A copy of this Prospectus is also available on:
(a)

the SGX-ST website http://www.sgx.com; and

(b)

the Authoritys OPERA website at http://masnet.mas.gov.sg/opera/sdrprosp.nsf.

The Application List will open at 10.00 a.m. on 30 January 2008 and will remain open until noon
on the same day or for such further period or periods as our Directors may, in consultation with
the Issue Manager, in their absolute discretion decide, subject to any limitation under all
applicable laws. In the event a supplementary prospectus or replacement prospectus is lodged,
the Application List will remain open for at least 14 days after the lodgment of the supplementary
or replacement prospectus.
Where applications have been made for the New Shares prior to the lodgment of the supplementary or
replacement prospectus, we shall, within seven days from the date of lodgment of the supplementary or
replacement prospectus, either:
(a)

provide the applicants with a copy of the supplementary or replacement prospectus and provide
the applicants with an option to withdraw their applications; or

(b)

treat the applications as withdrawn and cancelled and return all monies paid, without interest or
any share of revenue or other benefit arising therefrom, in respect of any application accepted
within seven days from the date of lodgment of the supplementary or replacement prospectus.

Any applicant who wishes to exercise his option to withdraw his application shall, within 14 days from the
date of lodgment of the supplementary or replacement prospectus, notify us whereupon we shall, within
seven days from the receipt of such notification, return the application monies without interest or any
share of revenue or other benefit arising therefrom at your own risk.
Details for the procedure for application for the New Shares are set out in Appendix H of this
Prospectus.

15

INDICATIVE TIMETABLE FOR LISTING


An indicative timetable is set out below for your reference:
INDICATIVE TIME AND DATE

EVENT

30 January 2008, 12.00 noon

Close of Application List

31 January 2008

Balloting of applications, if necessary (in the event of


over-subscription for the Offer Shares)

1 February 2008, 9.00 a.m.

Commence trading on a ready basis

11 February 2008

Settlement date for all trades done on a ready basis

The above timetable is only indicative as it assumes that the date of closing of the Application List will
take place on 30 January 2008, the date of admission of our Company to the Official List of the SGX-ST
will be 1 February 2008, the SGX-STs shareholding spread requirement will be complied with and the
New Shares will be issued and fully paid-up prior to 1 February 2008.
The above timetable and procedure may be subject to such modifications as the SGX-ST may in its
discretion decide, including the decision to permit trading on a ready basis.
In the event of any changes in the closure of the Application List or the time period during which the
Invitation is open, we will publicly announce the same:
(i)

through a SGXNET announcement to be posted on the Internet on the SGX-ST website


http://www.sgx.com; and

(ii)

in a local English newspaper, such as The Straits Times or The Business Times.

Investors should consult the SGX-ST announcement of the ready listing date on the Internet (on
the SGX-ST website http://www.sgx.com) INTV or newspapers, or check with their brokers on the
date on which trading on a ready basis will commence.
We will publicly announce the level of subscription for the New Shares and the basis of allotment
of the New Shares, as soon as it is practicable after the closure of the Application List through
the channels in (i) and (ii) above.

16

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS


All statements contained in this Prospectus, statements made in press releases and oral statements that
may be made by us or our officers, Directors or employees acting on our behalf, that are not statements
of historical fact, constitute forward-looking statements. You can identify some of these statements by
forward-looking terms such as expect, believe, plan, intend, estimate, forecast, project, future,
probable, possible, anticipate, may, will, would, and could or similar words. However, you should
note that these words are not the exclusive means of identifying forward-looking statements. All
statements regarding our expected financial position, business strategy, plans and prospects are forwardlooking statements. These forward-looking statements, including statements as to our revenue and
profitability, cost measures, planned strategy and any other matters discussed in this Prospectus
regarding matters that are not historical facts are only predictions. These forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements.
Given the risks and uncertainties that may cause our actual future results, performance or achievements
to be materially different from that expected, expressed or implied by the forward-looking statements in
this Prospectus, undue reliance must not be placed on these statements.
Neither our Company, the Issue Manager, the Underwriter and the Placement Agent nor any other
person represents or warrants that our Groups actual future results, performance or achievements will
be as discussed in those statements. Our actual results may differ materially from those anticipated in
these forward-looking statements as a result of the risks faced by us.
Our Company, the Issue Manager, the Underwriter and the Placement Agent disclaim any responsibility
to update any forward-looking statements or publicly announce any revisions to those forward-looking
statements to reflect future developments, events or circumstances for any reason, even if new
information becomes available or other events occur in the future. We are, however, subject to the
provisions of the Securities and Futures Act and the Listing Manual regarding corporate disclosure. In
particular, pursuant to Section 241 of the Securities and Futures Act, if after this Prospectus is registered
but before the close of the Invitation, we become aware of (a) a false or misleading statement or matter
in this Prospectus; (b) an omission from this Prospectus of any information that should have been
included in it under Section 243 of the Securities and Futures Act; or (c) a new circumstance that has
arisen since this Prospectus was lodged with the Authority and would have been required by Section 243
of the Securities and Futures Act to be included in this Prospectus, if it had arisen before this Prospectus
was lodged, and that is materially adverse from the point of view of an investor, we may lodge a
supplementary or replacement prospectus with the Authority.

17

PROSPECTUS SUMMARY
The information contained in this summary is derived from, and should be read in conjunction with, the
full text of this Prospectus. As it is a summary, it does not contain all of the information that prospective
investors should consider before investing in our Shares. Prospective investors should read this entire
Prospectus carefully, especially the matters set out in the section entitled Risk Factors in this
Prospectus and our financial statements and related notes before deciding on whether or not to invest in
our Shares.
Under no circumstances should any information in this Prospectus summary be regarded as a
representation or warranty by our Company, the Issue Manager and the Underwriter and Placement
Agent that such information will not change.
OUR BUSINESS
Our Company was incorporated in Bermuda on 28 September 2007 under the Bermuda Companies Act
as exempted company with limited liability, under the name of CentraLand Limited.
The principal activity of our Group is the development and sale of residential and commercial properties.
Our subsidiaries, Zhengzhou Great View and Henan Jinzhi, are currently qualified to undertake projects
with an individual GFA of up to 250,000 sq m and up to 100,000 sq m, respectively.
Our Groups portfolio of completed properties, properties under development, properties to be developed
in the near future and land held for future development are currently all located in Zhengzhou city, Henan
Province of the PRC. As at the Latest Practicable Date, we have an aggregate saleable GFA of
approximately 160,828 sq m of completed properties, approximately 65,890 sq m saleable GFA of
properties under development, approximately 245,000 sq m planned GFA of properties to be developed
in the near future and approximately 1,406,880 sq m of land held for future development, with an
estimated GFA of 2.9 million sq m. Our Group has obtained the land use rights certificates in respect of
each of our completed property developments, our properties under development, properties to be
developed in the near future and land held for future development.
Our Group is currently involved in two main property developments, they are namely:
(i)

Guoling Shanshui

(ii)

J-Expo

, a self-contained, high-end integrated property development; and


, a commercial property project with retail and office units.

Further details are set out in the section entitled General Information on Our Group Business
Operations in this Prospectus.
COMPETITIVE STRENGTHS
We believe that our competitive strengths are as follows:
z

we are a premium brand property developer in Zhengzhou city focused on the development of
residential and commercial properties;

our land banks and properties under development are located in good locations;

we have an experienced and established management team; and

we have a dedicated sales and marketing team with strong sales and marketing capabilities.

For more details, please refer to the section entitled General Information on Our Group Competitive
Strengths in this Prospectus.

18

STRATEGY AND FUTURE PLANS


To capture the emerging business opportunities, we intend to adopt the strategy and future plans as set
out below:
z

continue to focus on the development of residential and commercial property projects;

establish public recognition as a premium brand property developer;

maintain a sufficient project pipeline through acquisitions, joint ventures or business alliances;

continue to focus on Zhengzhou city and to explore new geographical areas; and

promote effective management.

For more details, please refer to the section entitled General Information on Our Group Strategy and
Future Plans in this Prospectus.
OUR FINANCIAL PERFORMANCE
The following table presents a summary of the financial highlights of our Group and should be read in
conjunction with the Combined Financial Information as set out in Appendix A to this Prospectus.
Selected items from the Operating Results of our Group
FY2004

Audited
FY2005

FY2006

Unaudited
Audited
Six months
Six months
ended 30 June ended 30 June
2006
2007

(RMB000)

(RMB000)

(RMB000)

(RMB000)

(RMB000)

Revenue

145,604

276,468

10,250

150,805

Gross profit

62,682

177,500

6,527

86,473

Gross profit margin (%)

43.05

64.20

63.68

57.34

(10,367)

44,011

151,696

(3,276)

73,704

(8,294)

15,132

45,431

(4,623)

17,827

EPS (RMB cents)(1)

(0.52)

0.95

2.84

(0.29)

1.11

Adjusted EPS (RMB cents) (2)

(0.45)

0.82

2.46

(0.25)

0.97

(Loss)/Profit before taxation


(Loss)/Profit attributable to equity
holders of our Company

Notes:
(1)

For comparative purposes, the EPS for the Periods Under Review has been computed based on (loss)/profit attributable to
equity holders of our Company for the respective years/periods and our pre-Invitation share capital of 1,600,000,000 Shares.

(2)

The adjusted EPS for the Periods Under Review on a fully diluted basis has been computed based on (loss)/profit
attributable to equity holders of our Company for the respective years/period and our post-Invitaton share capital of
1,845,000,000 Shares.

19

Selected items from the Financial Positions of our Group


Audited
As at 31
December 2006

Audited
As at 30
June 2007

(RMB000)

(RMB000)

Non-current assets
275,965

281,272

911,259

1,099,974

589,108

762,236

322,151

337,738

598,116

619,010

37.38

38.69

Current assets
Current liabilities
Net current assets
Net assets
NAV per Share (RMB cents)(1)
Note:
(1)

For comparative purposes, our NAV per Share as at 31 December 2006 and 30 June 2007 have been computed based on
our net assets and our pre-Invitation share capital of 1,600,000,000 Shares.

WHERE YOU CAN FIND US


Our registered office is at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda and our
business address is at No. 86 South Bank of Yellow River, Huiji District, Zhengzhou City, Henan Province,
The Peoples Republic of China 450042
. Our telephone number is +86 (371) 6389 0406 and our facsimile number is
+86 (371) 6389 0345.

20

THE INVITATION
Issue Size

Invitation comprising 245,000,000 New Shares by way of public offer


and placement. The New Shares will, upon issue and allotment, rank
pari passu in all respects with the existing issued Shares.

Issue Price

S$0.50 for each New Share.

The Offer

The Offer comprises an invitation by our Company to the public in


Singapore to subscribe for the 5,000,000 Offer Shares at the Issue
Price, subject to and on the terms and conditions of this Prospectus.

The Placement

The Placement comprises a placement of 240,000,000 Placement


Shares at the Issue Price, subject to and on the terms and conditions
of this Prospectus.

Purpose of the Invitation

Our Directors believe that the listing of our Company and the
quotation of our Shares on the SGX-ST will enhance the public image
of our Group locally and overseas and enable us to tap the capital
markets for the expansion of our operations.
The Invitation will also provide members of the public, our
management, employees and business associates as well as those
who have contributed to our success with an opportunity to participate
in the equity of our Company.

Listing Status

Our Shares will be quoted on the Official List of the SGX-ST in


Singapore dollars, subject to admission of our Company to the Official
List of the SGX-ST and permission for dealing in and for quotation of
our Shares being granted by the SGX-ST and the Authority not
issuing a Stop Order.

21

EXCHANGE RATES
The table below sets out the highest and lowest exchange rates for RMB/S$ and HK$/S$, for each of the
past six calendar months, prior to the Latest Practicable Date. The table indicates how many RMB or
HK$ it would take to buy one S$.
RMB/S$
Highest
Lowest

HK$/S$
Highest
Lowest

June 2007

5.006

4.897

5.113

5.054

July 2007

5.029

4.972

5.200

5.110

August 2007

5.019

4.924

5.188

5.056

September 2007

5.061

4.928

5.240

5.093

October 2007

5.168

5.049

5.360

5.223

November 2007

5.178

5.086

5.406

5.339

The following table sets forth, for each of the financial years indicated, the average and closing exchange
rates for RMB/S$ and HK$/S$. The average exchange rates were calculated by using the average of the
closing exchange rates on the last day of each month during each financial year. Where applicable, the
exchange rates in this table are used for the translation of our Groups financial statements disclosed
elsewhere in this Prospectus.
RMB/S$
Average
Closing

HK$/S$
Average
Closing

FY2004

4.898

5.071

4.610

4.763

FY2005

4.924

4.852

4.674

4.663

FY2006

5.019

5.088

4.891

5.069

1H2006

4.994

5.051

4.825

4.907

1H2007

5.052

4.975

5.111

5.109

The above exchange rates have been calculated with reference to exchange rates quoted from
Bloomberg L.P. and should not be construed as representations that the HK$ and RMB amounts actually
represent such S$ amounts or could be converted into S$ at the rate indicated or at any other rate and
vice versa (1).
As at the Latest Practicable Date, the closing exchange rates for HK$/S$ and RMB/S$ were
HK$5.410:S$1.00 and RMB5.140:S$1.00 respectively.
Please refer to the section entitled Exchange Controls of this Prospectus for a description of the
exchange controls that exist in the PRC and Bermuda.
Note:
(1)

We have not asked Bloomberg L.P. for their consent for the inclusion of the exchange rates quoted under this section and
Bloomberg L.P. is thereby not liable for these statements under Sections 253 and 254 of the Securities and Futures Act. Our
Company has included the above exchange rates in their proper term and context in this Prospectus and has not verified the
accuracy of these statements.

22

USE OF PROCEEDS AND EXPENSES OF THE INVITATION


USE OF PROCEEDS
The estimated net proceeds from the issue of the New Shares (after deducting the estimated expenses
incurred in relation to the Invitation) is approximately S$113.9 million (RMB585.4 million(1)). We intend to
use such proceeds in the following manner:
(i)

approximately S$38.3 million (RMB196.9 million(1)) to acquire land directly from the government or
other entities or indirectly through the acquisition of companies owning land use rights(2);

(ii)

approximately S$70.6 million (RMB362.9 million(1)) to increase the paid-up registered capital of
Zhengzhou Great View from approximately US$50.0 million to US$99.0 million which shall be used
by Zhengzhou Great View to acquire land directly from the government or other entities or
indirectly through the acquisition of companies owning land use rights(2); and

(iii)

the balance as general working capital for our Group.

Notes:
(1)

Based on the exchange rate of S$1.00 to RMB5.140 as at the Latest Practicable Date.

(2)

Our Group is in the process of identifying suitable land parcels in Zhengzhou city to acquire for residential and/or commercial
property developments and has not entered into any agreement for such acquisitions. We expect to identify suitable land
parcels for acquisition by the end of 2008.

For further details of the above, please refer to the sections entitled Capitalisation and Indebtedness
and General Information on Our Group Prospects of this Prospectus.
Pending the deployment of the net proceeds from the issue of the New Shares as aforesaid, the net
proceeds may be placed in short-term deposits with banks or financial institutions, as our Directors may,
in their absolute discretion, deem fit.
In the opinion of our Directors, no minimum amount must be raised by the Invitation. In the event the
Invitation is cancelled, such amounts proposed to be provided for the items above will be provided out of
our existing bank facilities and/or funds generated from our operations or we may scale down our future
development plans.

23

EXPENSES OF THE INVITATION


The estimated amount of expenses of the Invitation and of the application for listing to be borne by us,
including underwriting and placement commission, brokerage, management, audit and legal fees,
advertising and printing expenses, listing fees payable to the SGX-ST and the Authority and all other
incidental expenses in relation to this Invitation is approximately S$8.6 million. The following table sets
out the breakdown of the use of proceeds and the estimated expenses incurred:
Estimated
amount

(S$000)

As a percentage of
gross proceeds
from the issue of
the New Shares
(%)

Acquisition of land directly or indirectly through the acquisition


of companies owning land use rights

38,296

31.26

Increase registered capital of Zhengzhou Great View

70,600

57.63

General working capital requirements

5,000

4.08

113,896

92.97

142

0.12

Professional fees

3,792

3.10

Underwriting commission, placement commission and brokerage

3,675

3.00

995

0.81

8,604

7.03

Use of proceeds

Total

Expenses to be borne by Company


Listing fees

Miscellaneous expenses
Total

In the event that the amount set aside to meet our Companys portion of the estimated expenses listed
above is in excess of the actual expenses incurred in connection with the Invitation, such excess will be
applied towards our working capital purposes.

24

MANAGEMENT AND UNDERWRITING AND PLACEMENT ARRANGEMENTS


Pursuant to the Management and Underwriting Agreement, our Company appointed the Issue Manager
to manage the Invitation, and the Underwriter to underwrite the Offer Shares. The Issue Manager will
receive management fees from our Company for its services rendered in connection with the Invitation.
Pursuant to the Management and Underwriting Agreement, the Underwriter has agreed to underwrite the
Offer Shares for a commission of 2.75% of the Issue Price for each Offer Share, payable by our
Company. The Underwriter may, at its discretion, appoint one or more sub-underwriters for the Offer
Shares. Brokerage will be paid by our Company to members of the SGX-ST, merchant banks and
members of the Association of Banks in Singapore in respect of accepted applications made on
Application Forms bearing their respective stamps, or to Participating Banks in respect of successful
applications made through Electronic Applications at the rate of 0.25% (UOB Group and OCBC) or 0.5%
(DBS Bank) of the Offer Price for each Offer Share. In addition, DBS Bank will levy a minimum brokerage
fee of S$5,000.
Pursuant to the Placement Agreement, the Placement Agent has agreed to subscribe for and/or procure
subscriptions for the Placement Shares for a placement commission of 3.00% of the Issue Price for each
Placement Share, payable by our Company. The Placement Agent may at its discretion, appoint one or
more sub-placement agents for the Placement Shares. Subscribers of Placement Shares may be
required to pay a brokerage of up to 1.00% of the Issue Price (subject to GST, currently at 7.0%, if
applicable).
Save as aforesaid and under the section entitled Plan of Distribution of this Prospectus, no commission,
discount or brokerage, has been paid or other special terms granted within the two years preceding the
date of this Prospectus or is payable to any Director, promoter, expert, proposed Director or any other
person for subscribing or agreeing to subscribe or procuring or agreeing to procure subscriptions for any
shares in or debentures of our Company.
The Management and Underwriting Agreement may be terminated by the Issue Manager or the
Underwriter at any time on or prior to the close of the Application List on the occurrence of certain events
including, inter alia, any change, or any development involving a prospective change, in local, national or
international, financial (including stock market, foreign exchange market, international bank or interest
rates or money market), political, industrial, economic, legal or monetary conditions, taxations or
exchange controls, which events or events shall, in the opinion of the Issue Manager or the Underwriter
(exercised in good faith and in the reasonable opinion of the Issue Manager or the Underwriter, as the
case may be):
(a)

result or be likely to result in a material adverse fluctuation or adverse conditions in the stock
market in Singapore or elsewhere;

(b)

be likely to materially prejudice the success of the offer or subscription of the New Shares
(whether in the primary market or in respect of dealings in the secondary market);

(c)

make it materially impracticable, inadvisable, inexpedient or uncommercial to proceed with any of


the transactions contemplated in the Management and Underwriting Agreement;

(d)

be likely to have a material adverse effect on the business, trading position, operations or
prospects of our Company or of our Group as a whole;

(e)

be such that no reasonable underwriter would have entered into the Management and
Underwriting Agreement; or

25

(f)

make it uncommercial or otherwise contrary to or outside the usual commercial practices of


underwriters in Singapore for the Underwriter to observe or perform or be obliged to observe or
perform the terms of the Management and Underwriting Agreement.

Notwithstanding the above, the Management and Underwriting Agreement may be terminated by the
Issue Manager or the Underwriter if, inter alia, at any time:
(i)

up to the date of commencement of trading of our Shares on the Official List of the SGX-ST, a
Stop Order is issued by the Authority pursuant to Section 242 of the Securities and Futures Act; or

(ii)

after the registration of this Prospectus with the Authority but before the close of the Application
List, our Company fails and/or neglects to lodge a supplementary prospectus or replacement
prospectus if required to do so pursuant to Section 243 of the Securities and Futures Act.

The Placement Agreement is conditioned upon the Management and Underwriting Agreement not having
been terminated or rescinded pursuant to the provisions of the Management and Underwriting
Agreement and may be terminated on the occurrence of certain events, including those specified above.
In the event that the Management and Underwriting Agreement is terminated, our Company reserves the
right, at the absolute discretion of our Directors, to cancel the Invitation.
Pursuant to the Management and Underwriting Agreement, our Company shall not, for a period of
12 months from the date of listing of our Company on the SGX-ST, issue any new Shares without the
prior written consent of the Underwriter (such consent not to be unreasonably withheld).
Save as disclosed in the section entitled Shareholders of this Prospectus, we do not have any material
relationships with any of the Issue Manager, Underwriter or Placement Agent.

26

PLAN OF DISTRIBUTION
The Issue Price is determined by us, in consultation with the Issue Manager, based on market conditions
and estimated market demand for our Shares determined through a book-building process. The Issue
Price is the same for all New Shares and is payable in full on application.
Offer Shares
The Offer Shares are made available to the members of the public in Singapore for subscription at the
Issue Price. The terms, conditions and procedures for application and acceptance are described in
Appendix H to this Prospectus.
In the event of an under-subscription for the Offer Shares as at the close of the Application List, that
number of Offer Shares not subscribed for shall be made available to satisfy excess applications for the
Placement Shares to the extent there is an over-subscription for the Placement Shares as at the close of
the Application List.
In the event of an over-subscription for the Offer Shares as at the close of the Application List and/or the
Placement Shares are fully subscribed for or over-subscribed as at the close of the Application List, the
successful applications for the Offer Shares will be determined by ballot or otherwise as determined by
our Directors and approved by the SGX-ST.
Pursuant to the terms and conditions contained in the Management and Underwriting Agreement, the
Underwriter has agreed to underwrite our Offer Shares.
Placement Shares
Application for the Placement Shares may only be made by way of an Application Form. The terms,
conditions and procedures for application and acceptance are described in Appendix H to this
Prospectus.
Pursuant to the terms and conditions in the Placement Agreement, the Placement Agent has agreed to
subscribe and/or procure subscribers for the Placement Shares at the Issue Price.
In the event of an under-subscription for the Placement Shares as at the close of the Application List, the
number of Placement Shares not subscribed for shall be made available to satisfy excess applications for
the Offer Shares to the extent that there is an over-subscription for the Offer Shares as at the close of
the Application List.
Subscription for the New Shares
None of our existing Shareholders or Directors intends to subscribe for Shares in the Invitation.
None of our Companys management or employees intends to subscribe for Shares in the Invitation
amounting to 5% or more of the New Shares.
To the best of our knowledge, we are not aware of any person who intends to subscribe for Shares in the
Invitation amounting to 5% or more of the New Shares. However, through a book-building process to
assess market demand for our Shares, there may be person(s) who may indicate an interest to subscribe
for Shares amounting to 5% or more of the New Shares. If such person(s) were to make an application
for Shares amounting to 5% or more of the New Shares and subsequently be allotted such number of
Shares, we will make the necessary announcements at an appropriate time. The final allocation of
Shares will be in accordance with the shareholding spread and distribution guidelines as set out in Rule
210 of the Listing Manual.
Further, no Shares shall be allotted on the basis of this Prospectus later than six months after the date of
registration of this Prospectus by the Authority.

27

CLEARANCE AND SETTLEMENT


Upon listing and quotation on the SGX-ST, our Shares will be traded under the book-entry settlement
system of CDP, and all dealings in and transactions of the Shares through the SGX-ST will be effected in
accordance with the terms and conditions for the operation of Securities Accounts with CDP, as
amended from time to time.
Our Shares will be registered in the name of CDP or its nominee and held by CDP for and on behalf of
persons who maintain, either directly or through depository agents, Securities Accounts with CDP.
Depositors and Depository Agents will not be treated, under our Bye-laws and the Bermuda Companies
Act, as members of our Company in respect of the number of Shares credited to their respective
securities accounts, and may not be accorded the full rights of membership, such as voting right, the
right to appoint proxies, or the right to receive shareholders circulars, proxy forms, annual reports and
prospectuses. In such an event, Depositors and Depository Agents will be accorded only such rights as
CDP may make available to them pursuant to CDPs terms and conditions to act as depository for foreign
securities.
Persons holding our Shares in Securities Accounts with CDP may withdraw the number of Shares they
own from the book-entry settlement system in the form of physical share certificates. Such share
certificates will, however, not be valid for delivery pursuant to trades transacted on the SGX-ST, although
they will be prima facie evidence of title and may be transferred in accordance with our Bye-laws. A fee of
S$10.00 for each withdrawal of 1,000 Shares or less and a fee of S$25.00 for each withdrawal of more
than 1,000 Shares is payable upon withdrawing the Shares from the book-entry settlement system and
obtaining physical share certificates. In addition, a fee of S$2.00 or such other amount as our Directors
may decide, is payable to the share registrar for each share certificate issued and a stamp duty of
S$10.00 is also payable where our Shares are withdrawn in the name of the person withdrawing our
Shares or S$0.20 per S$100 or part thereof of the last-transacted price where it is withdrawn in the
name of a third party. Persons holding physical share certificates who wish to trade on SGX-ST must
deposit with CDP their share certificates together with the duly executed and stamped instruments of
transfer in favour of CDP, and have their respective Securities Accounts credited with the number of
Shares deposited before they can effect the desired trades. A fee of S$20.00 is payable upon the deposit
of each instrument of transfer with CDP.
Transactions in our Shares under the book-entry settlement system will be reflected by the sellers
Securities Account being debited with the number of Shares sold and the buyers Securities Account
being credited with the number of Shares acquired. No transfer of stamp duty is currently payable for the
Shares that are settled on a book-entry basis.
A Singapore clearing fee for trades in our Shares on the SGX-ST is payable at the rate of 0.04 per cent.
(0.04%) of the transaction value subject to a maximum of S$600 per transaction. The clearing fee,
instrument of transfer deposit fee and share withdrawal fee may be subject to GST, currently at 7.0 per
cent. (7.0%), if applicable.
Dealings of our Shares will be carried out in Singapore dollars and will be effected for settlement on CDP
on a scripless basis. Settlement of trades on a normal ready basis on the SGX-ST generally takes
place on the third Market Day following the transaction date, and payment for the securities is generally
settled on the following business day. CDP holds securities on behalf of investors in Securities Accounts.
An investor may open a direct account with CDP or a sub-account with a CDP agent. The CDP agent
may be a member company of the SGX-ST, bank, merchant bank or trust company.

28

RISK FACTORS
Prospective investors should carefully consider and evaluate the following considerations and all the
other information contained in this Prospectus before deciding to invest in our Shares. If any of the
following considerations and uncertainties develop into actual events, our business, results of operations
and financial condition could be materially and adversely affected. In such cases, the trading price of our
Shares could decline due to any of these considerations and uncertainties, and you may lose all or part
of your investment in our Shares. To the best of the knowledge and belief of our Directors, all risk factors
which are material to investors in making an informed judgement in our Company have been set out
below.
This Prospectus also contains forward-looking statements having direct and/or indirect implications on
our future performance. Our actual results may differ materially from those anticipated by those forwardlooking statements due to certain factors including the risks and uncertainties faced by us, as described
below and elsewhere in this Prospectus.
RISKS RELATING TO OUR BUSINESS

Inability to identify or acquire land for development at commercially acceptable prices


We derive the majority of our revenue from the sale of properties that we have developed. As such, we
believe that maintaining a sizable and high-quality land bank for future development is critical to
sustaining our growth. We cannot assure you that we will be able to identify and acquire attractive sites in
the future at commercially acceptable prices, or at all. In the PRC, the supply of land is controlled by
government authorities, and our ability to acquire land use rights and their corresponding acquisition
costs will be affected by government policies toward land supply, development and pricing. The central
and local governments regulate the means by which property developers obtain land for development.
See Appendix G Summary of Relevant PRC Laws and Regulations to this Prospectus for a
description of the material laws and regulations in the PRC that apply to the acquisition of land use
rights. In particular, the central government introduced regulations in May 2002 that require government
departments and agencies to grant state-owned land use rights for residential and commercial property
development by public tender, auction or listing-for-sale. We believe the new regulations have contributed
to an increase in the acquisition costs to property developers throughout China. Our inability to identify
and acquire attractive new sites at commercially acceptable prices could impair our ability to compete
with other property developers and materially and adversely affect our ability to grow our business and
maintain our profitability.

The land use rights for our future development sites will not be vested until we have received the
relevant land use rights certificates
Under current PRC land grant policies, the relevant authorities will not issue the land use rights
certificate for a piece of land until the developer has paid the land premium in full, completed the
resettlement process and is in compliance with other land grant conditions. Although we have obtained
the land use rights certificates for all our completed property developments, properties under
development, properties to be developed in the near future and land held for future development, the
land use rights for any land that we may acquire in the future will not be vested in us until we have
received the corresponding land use rights certificates. Furthermore, we cannot assure you that there will
not be delays in the authorities issuance of the land use rights certificates and that the delays will not
materially and adversely affect our operations, including our ability to deliver properties to our customers
in a timely fashion.

Failure or delay in the delivery of our property developments and increase in costs in completing
constructions
Our Groups primary business is in the development of residential properties and commercial properties
in the Henan Province. The period span of a property development can last more than one year,
depending on the size of the development. Consequently, changes in the business environment during
the length of the project may affect the revenue and cost of the development which may directly depress
the profit margin of a project.

29

Factors which affect the profitability of a project may include but are not limited to: risks that government
approvals (such as those relating to commencement of construction and pre-sale) may take more time
than expected to be obtained; construction may not be completed on schedule or within budget;
fluctuations in prices of construction materials; and the properties may not achieve the anticipated sales.
The time taken and the costs involved in completing construction can be adversely affected by many
factors including but not limited to: failure to meet the requisite standards of building construction; labour
shortage; adverse weather condition; natural disaster; labour dispute; dispute with contractor; accident;
variation of blueprints; and change in government priorities and policies.
If any of our property developments (including the land parcels contained therein), as a result of our
failure or prolonged delay in the delivery of such property developments, are forced sold by our creditors
in the market, we may not be able to recover our costs incurred and investments made with respect to
such property developments.
The sales derived from, and the values of, property development projects may be adversely affected by a
number of factors, including but not limited to: international, regional and local economic climate; local
real estate conditions; changes in perceptions by property buyers, businesses, retailers or shoppers in
terms of the convenience and attractiveness of the projects; competition from other available properties;
changes in market rates for comparable projects; and increased operating costs. If any of the aforesaid
property development risks develop, our financial performance would be materially and adversely
affected.

Liabilities in connection with our pre-sale policies


The practice of pre-sales i.e. selling properties prior to the receipt of construction completion and
examination certificate, is widely adopted in the PRC property market industry. There are certain risks
relating to the pre-sale of properties. For example, our Group may fail to complete a project which has
been fully or partially pre-sold. In such circumstances, we may find ourselves liable to purchasers of presold units for losses suffered by them. There is no guarantee that these losses will not exceed the
purchase price paid in respect of the pre-sold units. In addition, if any project is not completed on time,
the purchasers of its pre-sold units may be entitled to compensation for late delivery. If the delay extends
beyond a certain pre-agreed period, these purchasers will further be entitled to terminate the pre-sale
agreements and claim damages. There may therefore be circumstances which result in liabilities arising
from pre-sale arrangements, which in turn would affect the results of operations and financial condition of
our Group.
Proceeds from the pre-sale of our properties are an important source of funds for our property
developments and have an impact on our liquidity position. On 5 August 2005, PBOC recommended in a
report entitled 2004 Real Estate Financing Report
that the practice of preselling uncompleted properties be discontinued, on the grounds that it creates significant market risks
and transactional irregularities. While the recommendation has not been adopted by any PRC
governmental authority and has no mandatory effect, we cannot assure you that the PRC governmental
authority will not ban or impose material limitations on the practice of pre-selling of uncompleted
properties in the future. Future implementation of any restrictions on our ability to pre-sell our properties,
including any requirements to increase the amount of up-front expenditure we must incur prior to
obtaining the pre-sale permit, would extend the time required for recovery of our capital outlay and would
force us to seek alternative means to finance the various stages of our property developments. This, in
turn, could have a material and adverse effect on our business, cash flow, financial condition and results
of operations.

Inability to generate adequate return on or impairment arising from a fall in value of our
investment properties
Property investment (where we engage in renting out some of our properties) is not the main focus of our
Groups business but is subject to varying degrees of risk. The returns available from any real estate
depend to a large degree on the amount of capital appreciation generated, income earned from the
rental of the relevant properties as well as the expenses incurred. Our Groups financial position may also
be adversely affected by a fall in value of any such property investments. The sales derived from and the
values of such property investments may be adversely affected by a number of factors, including but not

30

limited to changes in market condition and rental rates, the ability to collect rent due to bankruptcy or
insolvency of tenants or otherwise and the need to periodically repair and re-let space and the costs
thereof. In the event that the property investment aspect of our Groups business expands and we are not
able to generate adequate returns, our Groups profits and financial position will be adversely affected.

Inadequate financing for our land acquisition or property developments


A significant part of our Groups business operations is in property development which is a capital
intensive business. One of the major factors which can affect our ability to acquire land and to complete
the property developments as planned is the adequacy of financing. Our Group finances the property
development projects mainly from pre-sale proceeds, borrowings from third parties (including financial
institutions) and internal financing. If expected results of pre-sale of such projects are not achieved, the
financing costs of the projects could rise significantly. As at the Latest Practicable Date, our outstanding
borrowings amounted to RMB40.0 million. There is no assurance that we will not experience difficulties in
obtaining financing and renewing credit facilities granted by financial institutions in the future. The PRC
government has in recent years taken a variety of policy initiatives in the financial sector to further tighten
lending procedures for real estate developers. The PBOC issued the Circular on Further Strengthening
the Management of Loans for Property Business
on 5 June 2003 which, amongst other things:
(a)

restricts PRC commercial banks from advancing loans to fund the payment of land premium;

(b)

restricts PRC commercial banks from granting loans for the development of luxury residential
properties such as villas; and

(c)

restricts property developers from using borrowings obtained from any local bank to fund property
developments outside the region.

In April 2005, the Ministry of Construction (the MOC), the National Development and Reform
Commission (the NDRC) and several other regulatory bodies of the PRC government jointly issued the
Opinions on Stabilising Residential Property Prices
, which, among
other things, require commercial banks to strictly enforce PRC laws on granting loans for property
developments, including the requirement of thorough credit investigation before approving loans for
property developments.
On 27 September 2007, PBOC and the China Banking Regulatory Commission jointly issued a Notice on
Strengthening Commodity Real Estate Credit Financing Administration
, according to which, commercial banks should not provide loans to real estate projects unless
the relevant developer have paid at least 35% of the investment amount of the relevant projects with its
own capital.
In addition, PBOC raised the benchmark one-year lending rate several times and the rate as at the
Latest Practicable Dateis 7.29%. We cannot assure you that 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. 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 internallysourced cash. As a result, we may not have adequate resources to fund land acquisitions or property
developments, or to service our financing obligations, and our business and financial condition may be
materially adversely affected. In such event, and if we are unable to successfully obtain alternate sources
of financing to meet operating costs, including debt servicing and capital expenditures, our business
operations will be adversely affected.

31

Geographical concentration in the PRC and in Zhengzhou city specifically; uncertainty in


expanding into new cities in the PRC and strain on resources resulting from rapid expansion
Our Groups operations, property developments and property investments are currently heavily focused
in Zhengzhou city, the PRC. As such, our Companys investments may be affected by downturns in the
general economic conditions and specifically in the real estate market of the PRC and in Zhengzhou city
specifically. We also plan to develop projects in new geographical locations in the PRC, besides
Zhengzhou city, in the future. We cannot assure you that we will be able to operate in these new areas
successfully.
Our plan to rapidly expand and the need to integrate operations arising from our expansion, may place a
significant strain on our managerial, operational and financial resources and further contribute to an
increase in our financing requirements.

Property valuations may materially differ from prices that can be acheived
The valuation of our property interests as of 30 June 2007 prepared by CB Richard Ellis is contained in
Appendix C to this Prospectus. These valuations are based upon certain assumptions that are subjective.
With respect to properties under development, the valuations are based, amongst other things, on
assumptions that (a) the properties will be completed or developed as currently proposed and (b) all
regulatory and governmental approvals for the proposals will be or have been obtained. With respect to
properties held for future development, the valuations are based, amongst other things, on the
assumption that (a) the property interests will be sold in its existing state with the benefit of vacant
possession, (b) the relevant Group company is entitled to sell the properties at no extra land premium
and (c) all premiums have been paid in connection with such properties. Unanticipated changes in
relation to particular properties, or changes in general or local economic or regulatory conditions or other
relevant factors could affect such valuations and the returns that we can realise from these properties.
The actual values that we derive from these properties may materially differ from the values attributed to
them in the valuation report prepared by CB Richard Ellis.

If financing becomes more costly or otherwise less attractive, our sales and pre-sales will be
affected
A majority of purchasers of our residential properties rely on financing to fund their purchases. An
increase in interest rates may significantly increase the cost of financing, thus adversely impacting the
affordability of residential properties. In addition, the PRC government and commercial banks may also
increase the downpayment 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
issued a
regulation on 2 September 2004 to limit mortgage loans on properties to 80.0% of the sale price of the
underlying properties. Further, on 17 March 2005, PBOC set the minimum property mortgage loan rates
at 0.9 times the corresponding benchmark lending rates and this was further changed to 0.85 times on
19 August 2006. In addition, monthly mortgage payment is limited to 50.0% of an individual borrowers
income and monthly debt service payments are limited to 55.0% of such individual borrowers monthly
income. If the availability or attractiveness of mortgage financing is further reduced or limited, many of
our prospective customers may not be able to purchase our properties. In addition, pursuant to the
Notice on Strengthening Commodity Real Estate Credit Financing Administration
and the Supplemental Notice on Strengthening Commodity Real Estate Credit
Financing Administration
 jointly issued by PBOC and the
China Banking Regulatory Commission on 27 September 2007 and 5 December 2007, purchasers and
their families (which would include husband and wife and their minor offsprings) of their second (or more)
residential properties who have already purchased one or more residential buildings through mortgage
and the GFA per family member of whom is higher than the local average standards, are required to
make minimum down payments of 40.0% and the interest rate on mortgage loans for second or more
residential properties to should be 1.1 or more times the benchmark one-year lending rate. As for
apartments for commercial use, the down payment has been raised to a high 50.0% while mortgage
loans for commercial buildings will be no less than 1.1 times the benchmark one-year lending rate. As a
result, our business, financial condition and results of operations could be materially and adversely
affected.

32

Guarantee of purchasers mortgage facilities repayments


Our Group enters into arrangements with various domestic banks in the PRC to provide mortgage
facilities to purchasers of our properties prior to completion. In line with the consumer banking practices
in the PRC, our Group is required to provide guarantees to these banks in respect of these mortgage
facilities offered to purchasers of our properties. Such guarantees lapse once the relevant property
ownership certificates are issued and given to the relevant mortgagee banks, as the mortgages are then
secured against properly issued legal titles to the properties. During the period of guarantee, if a
purchaser defaults on a loan, our Group has to pay the repayment instalments due and outstanding from
the purchaser to the relevant mortgagee bank under the loan, with the mortgagee bank then assigning
its rights under that loan and the mortgage to our Group and, subject to registration, our Group will have
full recourse to the property. In line with industry practice, our Group does not conduct independent credit
checks on purchasers but will rely on the credit checks conducted by the mortgagee banks. Should there
be substantial defaults on the loans during the period of the guarantee and we do not manage to re-sell
these properties or re-sell them at prices that are above the loan amounts repaid, our Groups financial
condition and results of operations may be materially and adversely affected. As of 31 December 2005,
31 December 2006 and 30 June 2007, outstanding guarantees in respect of mortgages provided to our
customers amounted to RMB48.5 million, RMB141.0 million and RMB226.3 million respectively. There
was no outstanding guarantee as at 31 December 2004.

Liability to our customers for damages if we do not apply for individual property ownership
certificates on behalf of our customers in a timely manner
Property developers in the PRC are typically required to deliver to purchasers the relevant individual
property ownership certificates about one year after delivery of the properties unless otherwise specified
in the relevant sale and purchase agreement. Real estate developers, including ourselves, generally elect
to specify the deadline for the application of the individual property ownership certificates upon the
provision of the necessary documents by the customers to allow sufficient time for the relevant
application processes.
Under current regulations, we are required to submit the 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 a
stipulated period after delivery of the properties, the relevant property sale and purchase agreements,
identification documents of the purchasers and proof of payment of deed tax, together with the general
property ownership certificate, for the bureaus review and the issuance of the individual property
ownership certificates.
No material claim has been brought against us by any purchaser for late application of the individual
property ownership certificates on behalf of our customers in the past three years. However, we cannot
assure you that we will not in the future become liable to purchasers for late application of the individual
property ownership certificates on behalf of our customers through our own fault or for any other reasons
beyond our control.

Limited operating history


Our PRC operating subsidiaries, Zhengzhou Great View and Henan Jinzhi, were fully acquired by our
Group in 2007 and 2006 respectively. As at the Latest Practicable Date, we have successfully completed
construction of only Phase I and Phase II of Guoling Shanshui
, with a total GFA of 142,602
sq m having been sold. As such, we have a limited operating history. Accordingly, it is more difficult for
potential investors to assess our likely future performance and our past operating results may not be
indicative of our future financial performance.

Dependence on key personnel


Our success to date has been largely due to the contributions and expertise of our Chief Executive
Officer, Yan Tao, our Chief Operating Officer, Wang Jian, as well as our other Executive Directors and
Executive Officers. Our continued success is dependent, to a large extent, on our ability to retain the
services of our Executive Directors and Executive Officers. The loss of the services of Yan Tao, Wang

33

Jian or any of our other Executive Directors and Executive Officers without a suitable and timely
replacement or the inability to attract and retain other qualified personnel would adversely affect our
operations and hence, our revenue and profits. Please refer to the section entitled Directors,
Management and Staff Service Agreements of this Prospectus for further details.

Reliance on independent contractors to provide us with various services


We do not engage main contractors in our construction projects. We engage independent third party
contractors directly to provide us with various services including construction, piling and foundation,
building and property fitting-out works, installation of air-conditioning units and elevators and interior
decoration. Our projects are usually undertaken by independent contractors based in Zhengzhou city
selected by way of open tender, the process of which is regulated by the House Construction and City
Infrastructure Project Construction Tender Management Method
(the Tender Regulations). According to the Tender Regulations, the Tender Appraisal
Committee to be organised by our Group shall include our representatives and relevant specialists
selected by our Group from a list certified by the construction administration authorities. The number of
members of the Tender Appraisal Committee shall be an odd number and shall consist of at least five
members. The relevant specialists shall make up no less than two-third of the membership of the Tender
Appraisal Committee. Our Group will set the tender conditions according to the written tender report
provided by the Tender Appraisal Committee, and after the tender, our Group and the successful
tenderer will sign a written contract according to the terms of the tender.
We cannot give any assurance that the services rendered by any of the independent third party
contractors will always be satisfactory or match the targeted quality level we want. Furthermore, there is
a risk that any of our contractors may experience financial or other difficulties which may affect their
ability to carry out construction works, thus delaying the completion of our Groups development projects
or resulting in additional costs to our Group. Should any of the independent third party contractors fail to
meet the required standards and suitable replacement contractors are not engaged in time, our business,
financial conditions and results of operations may be materially and adversely affected. Any such failure
on the part of our independent third party contractors may also result in adverse publicity for our Group
which in turn may result in an adverse impact on our Groups prospects and growth.

Failure to obtain the necessary qualification certificates


In accordance with the Regulations on Administration of Urban Real Estate Development
(the Development Regulations), property developers in the PRC are
required to obtain the relevant class of qualification certificates for the development of certain types of
properties and certain size of property developments. The Development Regulations provide that when a
property developer engages in the development and sale of real estate without any qualification
certificate or beyond the scope of its qualification, it will be ordered to rectify the default within a time limit
set by the real estate development authorities of the local government on or above the county level and
in the meantime a fine ranging from RMB50,000 to RMB100,000 will also be imposed. If the property
developer fails to rectify the default within the time limit, its business licence will be revoked by the
Administration for Industry and Commerce.
Our subsidiary, Zhengzhou Great View, is qualified to undertake real estate development projects with an
individual GFA of up to 250,000 sq m, with such qualification being subject to renewal after 31 March
2009. Our other subsidiary, Henan Jinzhi, is qualified to undertake real estate development projects with
an individual GFA of up to 100,000 sq m and the validity period for such qualification certificate is from
27 March 2007 to 31 March 2008. Should we fail to rectify any default, obtain or renew the requisite
qualification certificates, our business operations will be adversely affected.
Please refer to the section entitled General Information on Our Group Licences, Permits, Approvals
and Government Regulations of this Prospectus for further details.

Failure to obtain or material delays in obtaining the requisite governmental approvals for our
property developments may adversely affect our business and results of operations
The real estate industry in the PRC is heavily regulated by the PRC government. Developers must
comply with a variety of legal and regulatory requirements, as well as the policies and procedures
established by local authorities to implement such laws and regulations. To undertake and complete a

34

property development, a real estate developer must obtain 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 confirmations of completion and acceptance. Each approval is dependent on the
satisfaction of a set of conditions.
We have not experienced any material delays in obtaining such governmental approvals in respect of our
property developments that would have a material adverse effect on our business or results of
operations. However, we cannot assure you that we will not encounter significant problems in satisfying
the conditions 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 related 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, resulting in a material
adverse effect on our business, financial condition and results of operations.

Failure to obtain the requisite building certificate for one of our investment properties
We have not been granted the requisite building ownership certificate by The Real Estate Administration
Bureau of Zhengzhou City
(the Real Estate Administration Bureau) to various
buildings occupying a total GFA of 16,586 sq m of land. These include the Guoling Hotspring Hotel
building and facilities located in Guoling Shanshui
. According to relevant PRC regulations,
properties without valid building ownership certificates may not be leased.
Zhengzhou Great View has applied but has not been granted the requisite building ownership certificate
by the Real Estate Administration Bureau for the abovementioned properties.
Our Groups PRC legal counsel, Jingtian & Gongcheng, is of the opinion that according to current
regulation in PRC, in the event Zhengzhou Great View is unable to obtain the necessary building
ownership certificate, the Real Estate Administration Bureau would have the right to request the
occupants of such properties, which do not have the proper construction permits and building ownership
certificates, to relocate from such properties. The Real Estate Administration Bureau also has the right to
impose penalties on the landlord for breaching the relevant applicable laws. The maximum penalty which
may be imposed by the Real Estate Administration Bureau is to order such properties to be demolished.
Zhengzhou Great View has already submitted relevant applications for the requisite building ownership
certificate relating to the relevant premise in August 2007 and expects to obtain the building ownership
certificate by the end of 2008. Further, it has been confirmed by The Real Estate Administration Bureau
of Zhengzhou city
that there is no legal obstacle for Zhengzhou Great View to (i)
obtain the relevant building ownership certificate for the aforesaid buildings or (ii) transfer the aforesaid
buildings, should it decide to do so. However, there is no guarantee that Zhengzhou Great View will be
able to obtain such building ownership certificate and a penalty may be imposed on Zhengzhou Great
View. Further, Zhengzhou Great View would not be able to transfer its ownership of the buildings before it
obtained the requisite building ownership certificates.
For the years ended 31 December 2004, 31 December 2005 and 31 December 2006 and the six months
ended 30 June 2007, the revenue of Guoling Hotspring Hotel amounted to approximately nil, RMB0.5
million, RMB2.5 million and RMB1.8 million respectively.

Difficulty in predicting future performance due to fluctuating operating results


Our results of operations have varied significantly in the past and may continue to fluctuate significantly
from period to period in the future. In FY2004, FY2005, and FY2006 and the six months ended 30 June
2007, our revenue was nil, RMB145.6 million, RMB276.5 million, and RMB150.8 million respectively, and
net loss attributable to our equity holders in FY2004 was RMB8.3 million and net profit attributable to our
equity holders in FY2005, FY2006 and the six months ended 30 June 2007 was RMB15.1 million,
RMB45.4 million, and RMB17.8 million respectively.

35

As we derive a substantial portion of our revenue from the sale of properties, our results of operations
are affected by the demand for our properties and the price at which we are able to sell them. The
demand for and pricing of the properties are in turn, to a large extent, affected by the general conditions
of the property markets. In addition, we recognise proceeds from the sale of a property as revenue only
upon the delivery of the property. Therefore, our revenue and profit during any given period reflects the
quantity of properties delivered during that period and is affected by any peaks or troughs of our property
delivery schedule and may not be indicative of the actual demand for our properties during that period.
Our revenue and profit during any given period generally reflect property investment decisions made by
purchasers at some significant time in the past, typically at least in the prior fiscal period. As a result, we
believe that our operating results for any period are not necessarily indicative of results that may be
expected for any future period.

Legal proceedings arising from our operations


We may be involved from time to time in disputes with various parties involved in the development and
sale of our properties such as contractors, sub-contractors, suppliers, construction companies,
purchasers and other parties. These disputes may lead to legal and other proceedings, and may cause
us to suffer additional costs and delays. In addition, we may have disagreements with regulatory bodies
in the course of our operations, which may subject us to administrative proceedings and unfavourable
decrees that result in financial losses and delay the construction or completion of our projects.

Lack of insurance coverage for our properties


Our Group has not purchased any insurance cover for our commercial property under development,
J-Expo
. Although we have purchased insurance cover for Guoling Shanshui
,
there are certain types of losses for which we are unable to obtain insurance cover (such as liabilities
from war and civil disorder, earthquake, typhoon, flooding or other natural disasters) on commercially
practicable terms. We also do not take out insurance coverage for non-performance of contracts during
construction and other risks associated with construction and installation work during the construction
period. Therefore, there may be circumstances in which our Group will not be covered or compensated
for losses, damages and liabilities, therefore adversely affecting the results of operations and financial
condition of our Group.
Please refer to the section entitled General Information on Our Group Insurance of this Prospectus
for further details.

Relevant PRC tax authorities may challenge the basis in which we calculate our LAT obligations
Under PRC tax laws and regulations, our PRC subsidiaries are subject to LAT, which is collected by local
tax authorities. Pursuant to Article 2 of the Provisional Regulations of the PRC on Land Appreciation Tax
(the LAT Regulations), all income received from the sale or
transfer of land use rights relating to state-owned land, buildings and their attached facilities in the PRC
by all units and individuals is subject to LAT at progressive rates ranging from 30% to 60% of the
appreciation value as defined by the relevant tax laws. Certain exemptions are available for the sale of
ordinary standard residential houses
if the appreciation values do not exceed 20% of the
total deductible items as defined in the relevant tax laws. Sale of commercial properties are not eligible
for such exemption. LAT is not levied on real estate properties constructed and held by such units or
individuals for its own use or for lease.
We estimate and make provision for the full amount of applicable LAT in accordance with the relevant
PRC tax laws and the LAT Regulations, but we only pay a portion of such provision each year as
required by the local tax authorities. For each of FY2004, FY2005, FY2006 and the six months ended 30
June 2007, we made a provision for LAT in the amount of nil, RMB17.7 million, RMB60.1 million and
RMB28.9 million respectively. For the same periods, we made LAT payments in the amount of nil,
RMB1.5 million, RMB2.6 million and RMB10.9 million, respectively, based on the LAT rates of 1.5%
(residential properties) and 3.5% (commercial properties) of the total sales consideration of real estate
properties sold, as imposed by the local tax authorities. Although we believe such provisions are
sufficient, we cannot assure you that the central PRC tax authorities will agree with the basis in which we
calculate our LAT obligations. The method in which the local tax authorities has implemented to calculate
the LAT may result in a lower sum of LAT payable than if the LAT is determined based on the
appreciation value of the properties as suggested under the LAT Regulations. In which case, the central

36

PRC tax authorities may order our Group to pay the outstanding LAT and accordingly, our net profits after
tax will be adversely affected. Further, on 28 December 2006, the State Administration of Taxation issued
the Notice on the Administration of the Settlement of Land Appreciation Tax of Property Development
(the LAT Notice) which came
Enterprises
into effect on 1 February 2007. Such notice provides further clarifications as to the settlement of LAT.
Local provincial tax authorities can formulate their own implementation rules according to the notice and
local situations. In the event that the implementation rules promulgated in the cities in which our projects
are located require us to settle all the unpaid LAT, our cash flow may be adversely affected. Further, the
LAT Notice also stipulates that the local tax authorities may order real estate developers to pay LAT if a
property project has not been sold within three years from the grant of sale or pre-sale permit. However,
as we do not have to apply for sale or pre-sale permits for real estate properties constructed and held by
us for our own use or for lease, such properties will not be subject to LAT.
Going forward, we intend to continue accumulating the provisions made for the full amount of applicable
LAT in accordance with the relevant PRC tax laws and the LAT Regulations and will not write-back such
excess provisions unless and until the relevant PRC tax laws and/or the LAT Regulations are amended
by the central PRC tax authorities to the effect that our Group will not be required to pay the outstanding
LAT.

Forfeiture of land use rights


Under the PRC laws, where a developer fails to comply with or develop land according to the terms of
the land grant contract (including those relating to payment of fees, land use or the time for
commencement and completion of the development of the land), the relevant government authority may
give a warning to or impose a penalty on the developer or forfeit the land use rights granted to the
developer. There can be no assurance that circumstances leading to a possible breach of terms of the
land grant contract, e.g. delay in the payment of the land grant fees or delay in the commencement of the
development of the land for more than two years since the stipulated date of commencement in the land
grant contract that may lead to the forfeiture of land use rights, will not arise or forfeiture action may not
be taken by the relevant authority in the future. Therefore, if we are affected by circumstances which
would cause us to breach the terms of the land grant contract and our land use rights are forfeited by the
government, our Groups business and prospects will be adversely affected.

The total GFA of some of our property developments may have exceeded the original authorised
area and the excess GFA is subject to governmental approval and payment of additional land
premium
When the PRC government grants the land use rights for a piece of land, it will specify in the land grant
contract the use of the land and the total GFA that the developer may develop on this land. The actual
GFA constructed, however, might have exceeded the total GFA authorised in the land grant contract due
to factors such as subsequent planning and design adjustments. The amount of GFA in excess of the
authorised amount is subject to approval when the relevant authorities inspect the properties after their
completion and the developer may be required to pay additional land premium in respect of this excess
GFA. If we fail to obtain the completion certificate due to such excess GFA, we will not be allowed to
deliver the relevant properties or recognise the revenue from the relevant presold properties and may
also be subject to liabilities under the pre-sale contracts. We cannot assure you that the total constructed
GFA of our existing projects under development or any future property developments will not exceed the
relevant authorised GFA upon completion or that we will be able to pay the additional land premium and
obtain the completion certificate on a timely basis.

Natural disasters, wars, terrorist attacks, riots, civil commotions, widespread communicable
diseases and other events beyond the control of our Company
Our Company may be adversely affected by natural disasters, wars, terrorist attacks, riots, civil
commotions, widespread communicable diseases (such as human avian flu and severe acute respiratory
syndrome (SARS)) and other events beyond the control of our Company.
We may be adversely affected by the effects of human avian flu, SARS or another epidemic or outbreak.
There have been recent reports of outbreaks of a highly pathogenic human avian flu, caused by the
H5N1 virus, in certain regions of Asia and Europe. An outbreak of human avian flu in the human
population could result in a widespread health crisis that could adversely affect the economies and

37

financial markets of many countries, particularly in Asia. Additionally, any recurrence of SARS, a highly
contagious form of atypical pneumonia, similar to the occurrence in 2003 which affected China, Hong
Kong, Taiwan, Singapore, Vietnam and certain other countries, would also have similar adverse effects.
These outbreaks of contagious diseases, and other adverse public health developments in China, would
have a material adverse effect on our business operations. These could include disruptions to the
transportation of our raw materials, as well as temporary closure of our construction sites. Such closures
or travel or shipment restrictions would severely disrupt our business operations and adversely affect our
financial condition and results of operations. We have not adopted any written preventive measures or
contingency plans to combat any future outbreak of human avian flu, SARS or any other epidemic.

Resettlement costs and negotiations may add costs and/or cause delays to our development
projects
We may purchase land from both the PRC government and private entities. Where occupied land is
obtained from the PRC government, resettlement costs are usually included in the land premium
payable. On the other hand, where occupied land is obtained from private entities, we may have to
compensate owners and residents for the costs of resettlement, calculated in accordance with formulae
prescribed by the relevant PRC authorities. There is no assurance that the relevant PRC authorities will
not change its compensation formulae, which may result in increased costs for property developers. In
such an event, our results of operation and financial position may be adversely affected.
In accordance with the City Housing Resettlement Administration Regulations
and the applicable local regulations, a property developer in the PRC is required to enter into written
agreements with the owners or residents of existing buildings to be demolished for development to
provide compensation for the relocation and resettlement of such owners and residents. Any delay in the
resettlement process such as delays in reaching agreement on compensation may result in delays to the
development project. Any such delays to the development project may lead to an increase in
development costs and a delay in the expected cash inflow resulting from pre-sale of the relevant project,
which may in turn adversely affect our business, financial position and results of operations. Furthermore,
if we fail to reach an agreement on resettlement with the owners and residents of the land which we wish
to acquire, any party may apply to the relevant housing resettlement authorities for a ruling on the
amount of compensation, which will in turn also delay our development projects and result in the
incurrence of additional costs.
In addition, on 30 August 2007, the new Urban Real Estate Administration Law
provided that the State Council shall promulgate relevant housing resettlement regulations in order to
protect the rights and interests of the existing owners or residents. As at the date of this Prospectus, the
State Council has not promulgated such regulations and there is no assurance that we will not incur
addition resettlement costs or experience delay in our development projects as a result of the new
regulations.
RISKS RELATING TO OUR INDUSTRY

Illiquidity of real estate investments


As real estate investments are relatively illiquid, a real estate companys ability to promptly sell one or
more properties in its portfolio in response to changing economic, financial and investment conditions is
limited. The real estate market is affected by many forces, such as general economic conditions,
availability of financing, interest rates and other factors, including, supply and demand, that are beyond
its control. Our Company cannot predict whether it will be able to sell any property for the price or on the
terms set by it, or whether any price or other terms offered by a prospective purchaser would be
acceptable to our Company. Additionally, our Company cannot predict the length of time needed to find a
willing purchaser and to close the sale of a property.

Development Risks
Property developments typically require substantial capital outlays during the construction periods, and it
may take months or years before positive cash flows, if any, can be generated by pre-sale of properties
to be completed or sale of completed properties. The time and costs required to complete a property
development may increase substantially due to many factors beyond our control, including the shortage,
or increased cost of material, equipment, technical skills and labour, adverse weather conditions, natural

38

disasters, labour 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,
singly or in aggregate, may lead to a delay in, or the failure of, the completion of a property development
and result in costs substantially exceeding those originally budgeted. Failure to complete a property
development according to its original plan, if at all, may have an adverse effect on our reputation and
could give rise to potential liabilities. As a result, our returns on investments, if any, might not be timely
recognised or might be lower than originally expected.
RISKS RELATING TO THE PROPERTY INDUSTRY IN THE PRC

The PRC property market and related infrastructure and mechanisms have not been fully
developed
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 the Henan 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 extremely difficult to predict how much and when demand will develop, as many
social, political, economic, legal and other factors, most of which are beyond our control, may affect the
development of the market. The level of uncertainty is increased by the limited availability of accurate
financial and market information as well as the overall low level of transparency in the PRC.
Anti-speculation measures imposed by the PRC government may discourage investors from acquiring
new properties. 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 addition, risk of property over-supply is increasing in parts of China, where property investment,
trading and speculation have become overly active. In the event of actual or perceived over-supply,
property prices may fall drastically, and our revenue and profitability will be adversely affected.

Heavy dependence on the performance of the property market in the PRC, particularly in Henan
Province
Our business and prospects depend on the performance of the PRC property market. Any housing
market downturn in the PRC generally or in the regions where we have property developments could
adversely affect our business, results of operations and financial condition. Our property developments
are predominantly located in the Henan Province. Although we are pursuing further business
opportunities in other locations in the PRC, especially in the central part of the PRC, we intend to
maintain and increase our market share in the Henan Province.
Demand for private residential properties in the PRC, particularly in the Henan Province, has been
growing rapidly in recent years, but such growth is often coupled with volatility in market conditions and
fluctuations in property prices. We cannot assure you that property development and investment activities
will continue at past levels or that we will be able to benefit from the future growth in the property market
in the Henan Province or the PRC. Any adverse developments in national and local economic conditions
as measured by such factors as employment levels, job growth, consumer confidence, interest rates and
population growth in the Henan Province, particularly in the places where our projects are located, may
reduce demand and depress prices for our properties and would have a material adverse effect on our
results of operations and financial condition.

Susceptibility to austerity measures that significantly influence the property business in the PRC
in general
The PRC government has exercised and continues to exercise significant influence over the PRCs
economy in general, which, among others, affects the property sector in the PRC. From time to time, the
PRC government adjusts its monetary and economic policies to prevent and curtail the overheating of
the national and provincial economies, which may affect the real estate markets that we operate in. Any
action by the PRC government concerning the economy or the real estate sector in particular could have
a material adverse effect on our financial condition and results of operations. The central and local
authorities may continue to adjust interest rates, tax rates and other economic policies or impose other
regulations or restrictions that may have an adverse effect on the property market in the PRC, which may
adversely affect our business. For instance, purchasers of our residential properties are increasingly

39

relying on mortgages to fund their purchases. An increase in interest rates may increase the cost of such
mortgage financing, thus reducing the attractiveness of mortgages as a source of financing for property
purchasers and adversely affecting the affordability of residential properties. In such an event, our
business and results of operations will be adversely affected.
On 11 July 2006, the PRC government issued a Circular on Standardising the Admittance and
Administration of Foreign Capital in the Property Market
which set out new requirements and restriction on foreign investment in the real estate market and
purchase of real estate properties in China by foreign institutions or individuals. One such restriction is
that a foreign investor developing or operating real estate in the PRC would be required to establish a
foreign investment real estate enterprise with a registered capital of not less than 50% of its total
investment amount if the total investment amount is more than US$10.0 million. Please refer to
Appendix G Summary of Relevant PRC Laws and Regulations to this Prospectus for more details of
the new regulation.

Increasing competition that could adversely affect our business and financial position
In recent years, a large number of property developers have begun to undertake property development
and investment projects in the Henan Province and elsewhere in the PRC. In addition, a number of
international developers have expanded their operations into China, including a number of leading
Hong Kong and Singapore real estate development and investment groups. Many of these developers,
both private and state-owned, have significant financial, managerial, marketing and other resources, as
well as experience in property and land development. Competition between property developers is
intense and may result in, among other things, increased costs of the acquisition of land for development,
oversupply of properties in certain parts of China, a decrease in property prices, a slow down in the rate
at which new property developments will be approved and/or reviewed by the relevant government
authorities, an increase in construction costs and difficulty in obtaining high quality contractors and
qualified employees. Any such consequences may adversely affect our business, results of operations
and financial position. In addition, the real estate market in China is rapidly changing. If we cannot
respond to changes in market conditions more swiftly or effectively than our competitors do, our ability to
generate revenue, our financial condition and our results of operations will be adversely affected.

Lack of reliable and updated information on property market conditions in the PRC
We are subject to property market conditions in the PRC generally and the Henan Province in particular.
Currently, reliable and up-to-date information is not generally available in the PRC and in the Henan
Province specifically on the amount and nature of property development and investment activities, the
demand for such development, the supply of new properties being developed or the availability of land
and buildings suitable for development and investment. Consequently, our investment and business
decisions may not always have been, and may not be in the future, be based on accurate, complete and
timely information. Inaccurate information may adversely affect our business decisions, which could
materially and adversely affect our results of operations and financial condition.

Interest rate movements and changes in commodity prices


We face risks in relation to interest rate movements and changes in commodity prices in particular as a
result of the debts undertaken by us to finance our developments and the consumption of large quantities
of building materials, including raw iron, steel and concrete, in our property development operations. As
at 31 December 2004, 31 December 2005, 31 December 2006 and 30 June 2007, our Groups interestbearing bank and other borrowings amounted to approximately RMB187.3 million, RMB215.1 million,
RMB237.0 million and RMB190.0 million respectively and the interest payments of such interest bearing
bank and other borrowings amounted to approximately RMB6.2 million, RMB15.1 million, RMB17.7 million
and RMB7.4 million respectively. All of such debts are denominated in RMB. Changes in interest rates
will affect our interest income and interest expense from short term deposits and other interest-bearing
financial assets and liabilities. This could in turn have a material and adverse effect on our net profits.
Furthermore, an increase in interest rates would also adversely affect the willingness and ability of
prospective customers to purchase our properties, our ability to service loans that we have guaranteed
and our ability to raise and service long-term debt. In addition, we also face risks of changes in
commodity prices. As a property developer, in general, we enter into fixed or guaranteed maximum price
construction contracts with independent construction companies, each of which concerns the
development of a significant part of our overall development project. These contracts typically cover both
the supply of the building materials and the construction of the facility, for a construction period of one to

40

three years. Commodity costs amount for approximately 70.0% of our cost of sales. Therefore, should the
price of building materials increase significantly prior to our entering into a fixed or guaranteed maximum
price construction contract, we might be required to pay more to prospective contractors, which could
materially and adversely affect our results of operations and financial condition.

Change in government policies applicable to the procurement of land use rights


The central and local PRC government continue to exercise a substantial degree of control and influence
over the real estate market through the enactment of regulations and policies that affect the land use
rights. On 9 May 2002 and 28 September 2007 respectively, the PRC Ministry of Land Resources
promulgated the Regulations on the Assignment of State-owned Land-Use Rights Through Competitive
Bidding, Auction and Listing-for-Sale
which was effective on
1 July 2002 and the Regulations on the Assignment of Land-Use Right of State-owned Construction
Land Through Competitive Bidding, Auction and List-for-Sale
which was effective on 1 November 2007, under which state-owned land use rights for industrial,
commercial, tourism, entertainment, office and commercial/residential purposes and state-owned land
use right for other purposes with more than two applicants must be obtained through competitive bidding,
public auction or public notices. There is no assurance that we will be able to successfully obtain any
land use rights through such bidding, public auction or public notices in the future and our failure to
further enlarge our land bank will adversely affect our growth, business prospects and operations.
RISKS RELATING TO THE PRC

Changes in the social, political and economic conditions in the PRC


All of our Groups assets and all of our Groups revenue are derived from our business operations located
in the PRC. Accordingly, any significant slowdown in the PRC economy or decline in demand for our
properties from customers in the PRC will have an adverse effect on our business, financial conditions
and results of our operations. Furthermore, any unfavourable changes in the social and political
conditions of the PRC may also adversely affect our business and operations.
Since the adoption of the open door policy in 1978 and the socialist market economy in 1993, the
PRC government has been reforming and is expected to continue to reform its economic and political
systems. Any changes in the social, political and economic policy of the PRC government may lead to
changes in the laws and regulations or the interpretation of the same, as well as changes in the foreign
exchange regulations, taxation and import and export restrictions, which may in turn adversely affect our
financial performance. We cannot predict whether changes in PRCs 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.

Introduction of new laws or changes to existing laws by the PRC government


Our operations in the PRC are subject to the laws and regulations promulgated by the PRC government.
The PRC legal system is a codified legal system made up of the PRC Constitution, written laws,
regulations, circulars, directives and other government orders. The PRC government is still in the process
of developing its legal system so as to meet the needs of investors and to encourage foreign investment.
As the PRC economy is undergoing development generally at a faster pace than its legal system, some
degree of uncertainty exists in connection with whether and how existing law and regulations will apply to
certain events or circumstances. In particular, unlike common law jurisdictions like Singapore, decided
cases do not form part of the legal structure of the PRC and thus have no binding effect. The
administration of the PRC laws and regulations may be subject to a certain degree of discretion by the
executive authorities. This has resulted in the outcome of dispute resolutions not being as consistent or
predictable as in the other more developed jurisdictions and it may be difficult to obtain a swift and
equitable enforcement of laws in the PRC, or obtain enforcement of judgment by a court of another
jurisdiction.
Furthermore, in line with its transformation from a centrally-planned economy to a more free market
oriented economy, the PRC government is still in the process of developing a comprehensive set of laws
and regulations. As the legal system in the PRC is still evolving, laws and regulations or the interpretation
of the same may be subject to change and such change may take place at a faster pace compared with
countries with more developed legal systems. The introduction of any new and/or more stringent laws
and regulations relevant to our business and operations may significantly escalate our compliance and
maintenance costs or our costs of operation.

41

In particular, on 29 June 2007, the Standing Committee of the National Peoples Congress of the PRC
adopted the Employment Contract Law
which will come
into effect on 1 January 2008. The new Employment Contract Law
introduces several
changes to the rights and obligations of employers and employees, including according greater protection
for employees in the event of termination by employers. Further, the Employment Contract Law
provides that the internal employment rules of a company should be formed in consultation
with all the employees or the employee representative of the company. It is expected that further
implementation rules and notices may be issued to offer more guidance on the scope and
implementation of the Employment Contract Law
and we cannot predict that the new law
will not adversely affect our future business, results of operations or financial condition.
Please refer to Appendix G Summary of Relevant PRC Laws and Regulations to this Prospectus for a
description of some of the government regulations that we are subject to.

Expected increase in competition following the PRCs entry into the World Trade Organisation
(WTO)
Following the PRCs entry into the WTO, our Directors believe that trade tariffs and import controls of
foreign goods and services into the PRC will be lowered or removed over time. With the lowering of
import tariffs and barriers, there will be more competition arising from the entry of foreign competitors.
The increased competition may result in increased costs for the acquisition of land use rights for
development, an oversupply of properties in certain parts of the PRC and a slowdown in the rate at
which new property developments will be approved and/or reviewed by the relevant government
authorities, all of which may adversely affect the business and financial performance of our Group.

Foreign exchange control in the PRC


Our PRC subsidiaries are subject to the relevant PRC rules and regulations on currency conversion. In
the PRC, SAFE regulates the conversion of RMB into foreign currencies. Currently, foreign invested
enterprises (FIEs) are required to apply to SAFE for Foreign Exchange Registration Certificates for
FIEs. With such registration certifications, FIEs are allowed to open foreign currency accounts including
the basic account and capital account. Currently, conversion within the scope of the basic account,
for purposes such as the remittance of foreign currencies for payment of dividends, can be effected
without the approval of SAFE. However, the conversion of currency in the capital account, for capital
items such as direct investments, loans and securities, still requires the approval of SAFE.
Our subsidiary, Zhengzhou Great View, is an FIE and the ability of Zhengzhou Great View to pay
dividends or make other distributions to us may be restricted by, among other things, the availability of
funds, and statutory and other legal restrictions including PRC foreign exchange control restrictions. In
the event the ability of Zhengzhou Great View to make distributions to our Company is restricted, it may
have an adverse effect on our ability to distribute dividends to our shareholders in the future.
Please refer to the section entitled Exchange Controls of this Prospectus for further details.

Fluctuations in the value of the Renminbi


The value of the Renminbi against the United States dollar and other currencies may fluctuate and is
affected by, among other things, changes in Chinas political and economic conditions. The conversion of
Renminbi into foreign currencies, including United States 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 Renminbi
to the United States dollar. Under the new policy, the Renminbi is permitted to fluctuate within a narrow
and managed band against certain foreign currencies. This change in policy has resulted in an
appreciation of the Renminbi against the United States dollar. Any significant revaluation of the Renminbi
may materially and adversely affect our cash flow, revenue, earnings and financial position, and the value
of, and any dividends payable on, the Shares in foreign currency terms. For example, an appreciation of
the Renminbi against the U.S. dollar or the Singapore dollar would make any new Renminbi denominated
investments or expenditures more costly to us, to the extent that we would need to convert United States
dollars or Singapore dollars into Renminbi for such purposes.

42

RISKS RELATING TO INVESTMENT IN OUR SHARES

Our main operations and significant assets are located in the PRC and thus it could be difficult to
enforce a Singapore judgement against us, our Executive Directors and our Executive Officers
Our operating subsidiaries, Zhengzhou Great View and Henan Jinzhi, are incorporated in the PRC, and
our main operations and assets are located in the PRC. In addition, all of our Executive Directors and our
Executive Officers are non-residents of Singapore, and substantially all the assets of these persons are
located outside Singapore. As a result, it could be difficult for investors to effect service of process in
Singapore if they wish to make a claim against our Company or our Executive Directors or any of our
Executive Officers, or to enforce a judgement obtained in Singapore against our Company or our
Executive Directors or our Executive Officers.

Dependency on distributions from our subsidiaries


We are a holding company and conduct our core business operations through our subsidiaries. The
profits available for distribution by us to our Shareholders are dependent on the profits available for
distribution by our subsidiaries to us. Profits available for distribution by our subsidiaries established in
the PRC are determined in accordance with PRC GAAP, and such profits differ from those which would
be calculated using IFRS for the purposes of dividend distribution in certain significant respects. Such
differences include the use of different bases of recognition of revenue and expenses. In addition, under
the relevant PRC financial regulations, profits available for distribution are determined after contributions
to various statutory reserve funds required under PRC law. These restrictions could affect the amount of
distributions that we receive from our subsidiaries or restrict our ability to pay dividends to our
shareholders. Our inability to receive and pay dividends could have a material adverse effect on our
financial condition and capital resources, as well as the trading price of our Shares.

Future sale of Shares could adversely affect the Share price


Any future sale or availability of Shares can have a downward pressure on our Share price. The sale of a
significant amount of Shares in the public market after the Invitation, or the perception that such sales
may occur, could materially affect the market price of Shares. These factors also affect our ability to sell
additional equity securities. Except as otherwise described in the section entitled Moratorium in this
Prospectus, there will be no restriction on the ability of the Substantial Shareholders to sell their Shares
either on the SGX-ST or otherwise.
The proceeds from the sale of our Shares in the initial public offering may not be sufficient to fully
implement all our business strategies outlined in the section entitled General Information on Our Group
Strategy and Future Plans. Under such circumstances, secondary issues of securities may be
necessary to raise the required capital. If new Shares placed to new and/or existing shareholders are
issued after the offering, they may be priced at a discount to the then prevailing market price of our
Shares trading on the SGX-ST, in which case, existing shareholders equity interest may be diluted. If we
fail to utilise the new equity to generate a commensurate increase in earnings, our EPS will be diluted,
and this could lead to a decline in our share price. Any additional debt financing may, apart from
increasing interest expense and gearing, contain restrictive covenants with respect to dividends, future
fund raising exercises and other financial and operational matters.

Our share price may fluctuate following this Invitation


The market price of the Shares may fluctuate significantly and rapidly as a result of, amongst others, the
following factors, some of which are beyond our control:
z

variations of our operating results;

changes in securities analysts estimates of our financial performance;

announcements by us of significant acquisitions, strategic alliances or joint ventures;

additions or departures of key personnel;

fluctuations in stock market prices and volume;

43

involvement in litigation; and

general economic and stock market conditions.

No prior market for our Shares


Prior to this Invitation, there has been no prior market for our Shares. The Issue Price may not be
indicative of the market price for our Shares after the completion of this Invitation. We have applied to the
SGX-ST for the listing of and quotation for our Shares on the Official List of the SGX-ST. However, no
assurance can be given that an active trading market for our Shares will develop or, if developed, will be
sustained.

Control by Ember Vision and Marble Focus may limit your ability to influence the outcome of
decisions requiring the approval of Shareholders
Upon the completion of the Invitation, our Groups Directors and Controlling Shareholders, Li Wei and
Wang Peng, through Ember Vision and Marble Focus, will beneficially own in the aggregate
approximately 69.4% of the issued Shares. As a result, these persons, if they act together, will be able to
exercise significant influence over all matters requiring Shareholders approval, including the election of
directors and the approval of significant corporate transactions. These persons will also have veto power,
if they act together, with respect to any shareholders action or approval requiring a majority vote except
where they are required by the rules of the Listing Manual to abstain from voting. Such concentration of
ownership may also have the effect of delaying, preventing or deterring a change in control of our Group
which may benefit our Groups Shareholders.

New investors will incur immediate dilution and may experience further dilution
Our Issue Price of S$0.50 per Share is substantially higher than our Groups NAV per Share as at 30
June 2007 of 12.9 cents (as adjusted for the net proceeds from the Invitation). If we were liquidated
immediately following this Invitation, each investor subscribing to this Invitation would receive less than
the price paid for their Shares. Please refer to the section entitled Dilution in this Prospectus for further
details.

Rights and protection accorded to our Shareholders may be different from those applicable to
shareholders of a Singapore-incorporated company
We are incorporated in Bermuda as an exempted company under the Bermuda Companies Act. The
Companies Act may provide shareholders of Singapore-incorporated companies rights and protection of
which there may be no corresponding or similar provisions under the Bermuda Companies Act. As such,
if you invest in our Shares, you may or may not be accorded the same level of shareholder rights and
protection that a shareholder of a Singapore-incorporated company may be accorded under the
Companies Act. We have set out in Appendix E a summary of certain provisions under the Bermuda
company law and in Appendix D a summary of the Memorandum of Association and selected Bye-laws
of our Company. Explanatory statements on specific issues have been set out in the sections entitled
Purchase by our Company of our own Shares, Attendance at General Meetings and Take-overs of
this Prospectus. Each of the summaries and explanatory statements is not intended to be and does not
constitute legal advice and any person wishing to have advice on the differences between the Bermuda
Companies Act and the Companies Act and/or the laws of any jurisdiction with which he is not familiar is
recommended to seek independent legal advice. Copies of the Memorandum of Association and the Byelaws of our Company are available for inspection at such place and time as set out in the section entitled
General and Statutory Information Documents Available for Inspection of this Prospectus.

Exchange rate fluctuation


Our Shares will be quoted in Singapore dollars on the SGX-ST. Dividends (if any) in respect of our
Shares will be paid in Singapore dollars. Fluctuations in the exchange rate between the Singapore dollar
and other currencies (including the Renminbi) will affect, among other things, the foreign currency value
of the proceeds which a Shareholder would receive upon sale in Singapore of our Shares and the foreign
currency value of dividend distributions.

Singapore taxes may differ from the tax laws of other jurisdictions
Prospective investors should consult their tax advisers concerning the overall tax consequences of
acquiring, owning or selling our Shares. Singapore tax law may differ from the tax laws of other
jurisdictions, including the PRC. Please refer to Appendix F Taxation to this Prospectus for more
information.
44

INVITATION STATISTICS
Issue Price

S$0.50 (equivalent to
approximately
RMB2.57(1))

NTA(2)
The NTA per Share based on the balance sheet of our Group as at 30
June 2007:
(a)

before adjusting for the estimated net proceeds of the Invitation


and based on the pre-Invitation share capital of 1,600,000,000
Shares

6.97 cents

(b)

after adjusting for the estimated net proceeds of the Invitation and
based on the post-Invitation share capital of 1,845,000,000 Shares

12.21 cents

Premium of Issue Price over the NTA per Share:


(a)

before adjusting for the estimated net proceeds of the Invitation


and based on the pre-Invitation share capital of 1,600,000,000
Shares

617%

(b)

after adjusting for the estimated net proceeds of the Invitation and
based on the post-Invitation share capital of 1,845,000,000 Shares

310%

Adjusted Appraised NTA


Adjusted Apprasied NTA as at 30 June 2007 as detailed in the section
entitled Adjusted Apprasied NTA of this Prospectus based on our
Companys pre-Invitation share capital of 1,600,000,000 Shares

56.4 cents

Discount of Issue Price to the Adjusted Appraised NTA per Share based on
our Companys pre-Invitation share capital of 1,600,000,000 Shares

11.3%

EPS
Historical net EPS of our Group for FY2006 based on the pre-Invitation
share capital of 1,600,000,000 Shares

0.57 cents

Historical net EPS of our Group for FY2006 based on the pre-Invitation
share capital of 1,600,000,000 Shares, assuming that the Service
Agreements (as set out in the section entitled Directors, Management
and Staff Service Agreements in this Prospectus) had been in place
in FY2006

0.54 cents

Price Earnings Ratio


Historical net PER based on the historical net EPS of our Group for
FY2006

87.7 times

Historical net PER based on the historical net EPS of our Group for
FY2006 assuming that the Service Agreements (as set out in the section
entitled Directors, Management and Staff Service Agreements of this
Prospectus) had been in place in FY2006 from the beginning of FY2006

92.6 times

45

Net Operating Cash Flow(3)


Historical net operating cash flow per Share of our Group for FY2006
based on the pre-Invitation share capital of 1,600,000,000 Shares

0.93 cents

Historical net operating cash flow per Share of our Group for FY2006
based on the pre-Invitation share capital of 1,600,000,000 Shares
assuming that the Service Agreements had been in place since the
beginning of FY2006

0.91 cents

Price to Cash Flow Ratio


Historical price to net operating cash flow based on the historical net
operating cash flow per Share (using the pre-Invitation share capital of
1,600,000,000 Shares) for FY2006

53.8 times

Historical price to net operating cash flow based on the historical net
operating cash flow per Share (using the pre-Invitation share capital of
1,600,000,000 Shares) for FY2006 assuming that the Service
Agreements had been in place since the beginning of FY2006

55.0 times

Market Capitalisation
Market capitalisation based on the Issue Price and the post-Invitation
share capital of 1,845,000,000 Shares

S$922.5 million

Notes:
(1)

Calculation based on the exchange rate of RMB5.140:S$1.00 as at the Latest Practicable Date.

(2)

The NTA computation excludes land use rights, goodwill and deferred tax assets, and have been translated at the closing
exchange rate of RMB4.975:S$1.00 as at 30 June 2007.

(3)

Net operating cash flow for FY2006 is defined as the net cash flow generated from operating activities of our Group.

46

SELECTED FINANCIAL INFORMATION


The following selected Group financial information should be read in conjunction with the full text of this
Prospectus, including the section entitled Managements Discussion and Analysis of Financial
Conditions and Results of Operations and the Combined Financial Information as set out in Appendix A
to this Prospectus.
OPERATING RESULTS OF OUR GROUP(1)
FY2004

Audited
FY2005

FY2006

Unaudited
Audited
Six months
Six months
ended 30 June ended 30 June
2006
2007

(RMB000)

(RMB000)

(RMB000)

(RMB000)

(RMB000)

Revenue
Cost of sales

145,604
(82,922)

276,468
(98,968)

10,250
(3,723)

150,805
(64,332)

Gross profit

62,682

177,500

6,527

86,473

Other income
Selling expenses
Administrative expenses
Other operating expenses

1,340
(3,674)
(7,425)
(24)

4,247
(9,514)
(12,642)
(158)

3,870
(6,671)
(21,965)
(550)

1,998
(4,070)
(7,435)
(296)

2,348
(3,986)
(8,077)
(1,681)

(Loss)/Profit from operations

(9,783)

44,615

152,184

(3,276)

75,077

Finance costs

(584)

(604)

(488)

(1,373)

(Loss)/Profit before taxation(2)


Income tax expenses

(10,367)

44,011
(25,099)

151,696
(97,193)

(3,276)
(2,468)

73,704
(50,499)

(Loss)/Profit for the year/period

(10,367)

18,912

54,503

(5,744)

23,205

Attributable to:
Equity holders of our Company
Minority interests

(8,294)
(2,073)

15,132
3,780

45,431
9,072

(4,623)
(1,121)

17,827
5,378

(10,367)

18,912

54,503

(5,744)

23,205

EPS (RMB cents) (3)

(0.52)

0.95

2.84

(0.29)

1.11

Adjusted EPS (RMB cents) (4)

(0.45)

0.82

2.46

(0.25)

0.97

Notes:
(1)

The financial results of our Group for the Periods Under Review have been prepared on the basis that our Group structure
had been in place as set out in Note 3 to the Combined Financial Information.

(2)

Had the Service Agreements (set out in the section entitled Directors, Management and Staff Service Agreements of this
Prospectus) been in place since 1 January 2006, the profit before taxation and net profit attributable to equity holders of our
Company for FY2006 would have been approximately RMB149.7 million and RMB43.5 million respectively.

(3)

For comparative purposes, EPS for the Periods Under Review have been computed based on the net profit attributable to
equity holders of our Company for the year and our pre-Invitation share capital of 1,600,000,000 Shares.

(4)

The adjusted EPS for the Periods Under Review has been computed based on the net profit attributable to equity holders of
our Company for the year and our post-Invitation share capital of 1,845,000,000 Shares.

47

OPERATING RESULTS OF OUR GROUP(1)


(translated to Singapore Dollars)

FY2004

Audited
FY2005

FY2006

Unaudited
Audited
Six months
Six months
ended 30 June ended 30 June
2006
2007

(S$000)

(S$000)

(S$000)

(S$000)

(S$000)

Revenue
Cost of sales

29,570
(16,840)

55,084
(19,719)

2,052
(745)

29,851
(12,734)

Gross profit

12,730

35,365

1,307

17,117

400
(815)
(1,489)
(59)

465
(789)
(1,599)
(333)

Other income
Selling expenses
Administrative expenses
Other operating expenses

274
(750)
(1,516)
(5)

863
(1,932)
(2,567)
(32)

771
(1,329)
(4,376)
(110)

(Loss)/Profit from operations

(1,997)

9,062

30,321

Finance costs

(656)

14,861

(119)

(123)

(97)

(Loss)/Profit before taxation(2)


Income tax expenses

(2,116)

8,939
(5,097)

30,224
(19,365)

(Loss)/Profit for the year/period

(2,116)

3,842

10,859

(1,150)

4,593

Attributable to:
Equity holders of our Company
Minority interests

(1,693)
(423)

3,074
768

9,051
1,808

(926)
(224)

3,528
1,065

(2,116)

3,842

10,859

(1,150)

4,593

EPS (cents) (3)

(0.11)

0.19

0.57

(0.06)

0.22

Adjusted EPS (cents) (4)

(0.09)

0.17

0.49

(0.05)

0.19

(656)
(494)

(272)
14,589
(9,996)

Notes:
(1)

The financial results of our Group for the Periods Under Review have been prepared on the basis that our Group structure
had been in place as set out in Note 3 to the Combined Financial Information and has been translated to Singapore Dollars
based on the average exchange rate for each of the Periods Under Review.

(2)

Had the Service Agreements (set out in the section entitled Directors, Management and Staff Service Agreements of this
Prospectus) been in place since 1 January 2006, the profit before taxation and net profit attributable to equity holders of our
Company for FY2006 would have been approximately S$29.8 million and S$8.7 million respectively, determined based on the
average exchange rate of FY2006.

(3)

For comparative purposes, EPS for the Periods Under Review have been computed based on the net profit attributable to
equity holders of our Company for the year and our pre-Invitation share capital of 1,600,000,000 Shares.

(4)

The adjusted EPS for the Periods Under Review has been computed based on the net profit attributable to equity holders of
our Company for the year and our post-Invitation share capital of 1,845,000,000 Shares.

48

FINANCIAL POSITION OF OUR GROUP(1)


Audited

Audited

Audited

Audited

As at 31
December 2006
(RMB000)

As at 30
June 2007
(RMB000)

As at 31
December 2006
(Translated into
S$000)

As at 30
June 2007
(Translated into
S$000)

Non-current assets
Property, plant & equipment
Investment properties
Land use rights
Goodwill
Deferred tax assets

178,176
40,042
614
38,703
18,430

175,419
41,306
609
38,703
25,235

35,019
7,870
121
7,607
3,622

35,260
8,303
122
7,779
5,072

275,965

281,272

54,239

56,536

169,375
35,061
106,286
98,062
4,470
16,118
409,734
10,693
61,460

118,185
43,909
106,391
52,758

58,141
409,734
10,674
300,182

33,289
6,891
20,890
19,273
879
3,168
80,529
2,102
12,079

23,756
8,826
21,385
10,605

11,687
82,359
2,146
60,338

911,259

1,099,974

179,100

221,102

2,442
138,386
99,087
237,000
112,193

1,388
24,311
386,583
190,000
159,954

480
27,199
19,475
46,580
22,051

279
4,887
77,705
38,191
32,152

589,108

762,236

115,785

153,214

Net current assets

322,151

337,738

63,315

67,888

Net assets

598,116

619,010

117,554

124,424

Represented by:
Equity attributable to our Companys
equity holders
Minority interests

579,390
18,726

596,380
22,630

113,874
3,680

119,875
4,549

Total equity

598,116

619,010

117,554

124,424

37.38
n.a.
36.19
n.a.

38.69
n.a.
37.66
n.a.

n.a.
7.35
n.a.
7.11

n.a.
7.78
n.a.
7.57

Current assets
Deposits paid
Properties held for development
Properties held under development
Properties held for sale
Trade receivables
Prepayments and other receivables
Due from a shareholder
Restricted bank deposits
Cash and bank balances

Current liabilities
Trade payables
Accruals and other payables
Receipts in advance
Interest-bearing bank and other borrowings
Tax payable

NAV per Share (RMB cents) (2)


NAV per Share (cents) (2)
Pro Forma NAV Share (RMB cents) (2)(3)
Pro Forma NAV Share (cents) (2)(3)
Notes:
(1)

The financial position of our Group has been prepared on the basis that the current Group structure had been in place as set
out in Note 3 to the Combined Financial Information and has been translated to Singapore Dollars based on the closing
exchange rate for each of the Periods Under Review.

(2)

For comparative purposes, our NAV per Share and Pro Forma NAV per Share as at 31 December 2006 and 30 June 2007
have been computed based on our pre-Invitation share capital of 1,600,000,000 Shares.

(3)

The Pro Forma NAV per Share is based on the Pro Forma Report as set out in Appendix B to this Prospectus.

49

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND


RESULTS OF OPERATIONS
The following discussion and analysis of our Groups financial position and results of operations should
be read in the Combined Financial Information as set out in Appendix A to this Prospectus. This
discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our
Groups actual results may differ significantly from those projected in the forward-looking statements.
Factors that may cause future results to differ significantly from those projected in the forward-looking
statements include, but are not limited to, those discussed below and elsewhere in this Prospectus,
particularly in the section entitled Risk Factors.
OVERVIEW
We are a premium brand property developer in Zhengzhou city, the capital of Henan Province, which is
one of the most populated provinces in the PRC. We are engaged principally in the business of
development and sale of residential properties and commercial properties. In addition, we lease out
some of our properties, from which we derive rental income. As an integrated property developer and in
order to diversify our earning mixes, we also develop commercial properties, including commercial retail
shops and office buildings, in prime location for both sale and leasing purposes.
We commenced the construction of Phase I of Guoling Shanshui
, comprising Mufu
and Yongfu
, in November 2004. Phase I comprises 472 units of low-rise apartments and 65 units
of low-density luxury detached houses with an aggregate saleable GFA of 39,289 sq m and 18,665 sq m,
respectively. Pre-sale of our Phase I properties commenced in December 2004 and sale of these
properties were recognised in 2H2005 whenever each of the completed units was delivered to the
respective purchasers. Construction work of Phase II of Guoling Shanshui
, comprising
Huguang Shanse
and Xinyu Lanwan
, which has a total of 701 units of low-rise
apartments, 93 units of townhouses and 52 units of commercial retail units with an aggregate saleable
GFA of 72,282 sq m, 22,531 sq m and 8,061 sq m respectively, commenced in October 2005. Pre-sale of
our Phase II properties commenced in November 2005 and sale of these properties were recognised in
2H2006 as and when each of the completed units was delivered to the respective purchasers.
In November 2006, we acquired the entire equity interests in Henan Jinzhi which is engaged in the
development of commercial properties. Its commercial development, J-Expo
, comprises
2,560 retail units and 192 office units. Pre-sale of these units commenced in April 2007 and construction
is expected to be completed by 1H2008. As such, sale of these properties is expected to be recognised
in FY2008 upon delivery of our completed properties to the purchasers.
In addition, we leased some of our own properties to third parties from which we derive rental income. In
particular, we entered into a hotel management agreement with a third party, Pingdingshan City Fang
Yuan Tian Tian Yugang Restaurant Co., Ltd
, to manage our
Guoling Hotspring Hotel. We also entered into a lease agreement with another third party, Shanshui Golf
Club
), to lease
(formerly known as Henan Sinian Golf Club
a parcel of land to them to operate a golf academy.
Revenue
Audited
FY2004

As a %
of total
revenue

Audited
FY2005

As a %
of total
revenue

Audited
FY2006

As a %
of total
revenue

(RMB000)

(%)

(RMB000)

(%)

(RMB000)

(%)

Sale of properties
Rental income

142,984
2,620

98.2
1.8

269,708
6,760

97.6
2.4

Total

145,604

100.0

276,468

100.0

50

Unaudited
Six months
ended 30
June 2006
(RMB000)

As a %
of total
revenue
(%)

Audited
Six months
ended 30
June 2007
(RMB000)

As a %
of total
revenue

6,870
3,380

67.0
33.0

146,885
3,920

97.4
2.6

10,250

100.0

150,805

100.0

(%)

Our revenue is primarily derived from proceeds arising from the sale of our properties and the rental
income from leasing our properties.
We recognise revenue from the sale of properties when the significant risks and rewards of the
ownership of properties have been transferred to the purchasers. This takes place, when the relevant
properties have been completed and delivered to the purchasers. In addition, our rental income from
leasing properties is recognised on a straight line basis over the lease terms.
Consistent with the practice of the property development industry in the PRC, we typically enter into
purchase contracts with our customers while the properties are still under construction but after satisfying
the conditions for pre-sale of our properties in accordance with the relevant PRC laws and regulations.
For further details, please refer to section entitled General Information on Our Group Business
Operations Property Development Process Sales and Marketing. In general, it takes up to two years
between the time we commence pre-sale of our properties under development and the delivery of the
relevant completed properties to the purchasers. We do not recognise any receipt of the purchase
consideration from the pre-sale of our properties as revenue until such properties are completed and
delivered to the purchasers, even though we receive payments at various stages prior to delivery of
properties to the purchasers. Before the delivery of a pre-sold property, the purchase consideration
received from our customer before the delivery of a pre-sold property is recorded as Receipts in
advance under Current Liabilities on our combined balance sheets. As the receipts of purchase
consideration from the sale of properties are recognised as revenue upon the delivery of properties to
our purchasers, the timing of such deliveries may not only affect the amount and growth rate of our
revenue but may also cause the quantum of our Receipts in advance to vary from period to period.
For each of the Periods Under Review, our revenue generated from the sale of properties amounted to
approximately nil, RMB143.0 million, RMB269.7 million and RMB146.9 million, respectively, in connection
with the delivery of an aggregate saleable GFA of approximately nil, 41,153 sq m, 44,804 sq m and
31,779 sq m, respectively representing an average realised selling price per sq m (calculated by dividing
the revenue from the sale of properties by the aggregate saleable GFA sold) of nil, RMB3,474,
RMB6,020 and RMB4,622, respectively.
The following tables summarise the number of units, saleable GFA, and average realised selling price by
the different types of properties sold for each of FY2005, FY2006, 1H2006 and 1H2007.
FY2005
Phase II

Phase I
Guoling
Shanshui

No. of
Units
sold

(units)
Low-rise
apartments
Low-density
luxury detached
houses
Townhouses
Commercial
retail units
Total

Saleable
Total
Average
GFA
Revenue realised
sold
selling
price
per sq m
(sq m) (RMB000) (RMB)

No. of
Units
sold

(units)

Total

Saleable
Total
Average
GFA
Revenue realised
sold
selling
price
per sq m
(sq m) (RMB000) (RMB)

No. of
Units
sold

(units)

Saleable
Total
Average
GFA
Revenue realised
sold
selling
price
per sq m
(sq m) (RMB000) (RMB)

392

32,698

89,463

2,736

N/A

N/A

N/A

N/A

392

32,698

89,463

2,736

31
N/A

8,455
N/A

53,521
N/A

6,330
N/A

N/A
N/A

N/A
N/A

N/A
N/A

N/A
N/A

31
N/A

8,455
N/A

53,521
N/A

6,330
N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

423

41,153

142,984

3,474

N/A

N/A

N/A

N/A

423

41,153

142,984

3,474

51

FY2006
Phase II

Phase I
Guoling
Shanshui

No. of
Units
sold

(units)
Low-rise
apartments
Low-density luxury
detached houses
Townhouses
Commercial retail
units
Total

Saleable
Total
Average
GFA
Revenue realised
sold
selling
price
per sq m
(sq m) (RMB000) (RMB)

No. of
Units
sold

(units)

Saleable
Total
Average
GFA
Revenue realised
sold
selling
price
per sq m
(sq m) (RMB000) (RMB)

Total

7,827

2,597

187

18,286

66,072

3,613

228

21,300

73,899

3,469

19
N/A

5,772
N/A

49,193
N/A

8,523
N/A

N/A
48

N/A
11,116

N/A
88,570

N/A
7,968

19
48

5,772
11,116

49,193
88,570

8,523
7,968

N/A

N/A

N/A

N/A

41

6,616

58,046

8,773

41

6,616

58,046

8,773

60

8,786

57,020

6,490

276

36,018

212,688

5,905

336

44,804

269,708

6,020

1H2006
Phase II

No. of
Units
sold

Saleable
Total
Average
GFA
Revenue realised
sold
selling
price
per sq m
(sq m) (RMB000) (RMB)

No. of
Units
sold

(units)

Total

No. of
Units
sold

(units)

Saleable
Total
Average
GFA
Revenue realised
sold
selling
price
per sq m
(sq m) (RMB000) (RMB)

18

1,275

3,378

2,649

10

1,038

3,492

3,363

28

2,313

6,870

2,970

N/A
N/A

N/A
N/A

N/A
N/A

N/A
N/A

N/A
N/A

N/A
N/A

N/A
N/A

N/A
N/A

N/A
N/A

N/A
N/A

N/A
N/A

N/A
N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

18

1,275

3,378

2,649

10

1,038

3,492

3,363

28

2,313

6,870

2,970

No. of
Units
sold

(units)
Low-rise
apartments
Low-density luxury
detached houses
Townhouses
Commercial retail
units

Total

Saleable
Total
Average
GFA
Revenue realised
sold
selling
price
per sq m
(sq m) (RMB000) (RMB)

1H2007
Phase II

Phase I
Guoling
Shanshui

(units)

Saleable
Total
Average
GFA
Revenue realised
sold
selling
price
per sq m
(sq m) (RMB000) (RMB)

3,014

(units)
Low-rise
apartments
Low-density luxury
detached houses
Townhouses
Commercial retail
units

No. of
Units
sold

41

Phase I
Guoling
Shanshui

Total

Saleable
Total
Average
GFA
Revenue realised
sold
selling
price
per sq m
(sq m) (RMB000) (RMB)

No. of
Units
sold

(units)

Total

Saleable
Total
Average
GFA
Revenue realised
sold
selling
price
per sq m
(sq m) (RMB000) (RMB)

No. of
Units
sold

(units)

Saleable
Total
Average
GFA
Revenue realised
sold
selling
price
per sq m
(sq m) (RMB000) (RMB)

678

1,495

2,205

249

26,470

109,358

4,132

257

27,148

110,853

4,083

8
N/A

2,324
N/A

19,810
N/A

8,525
N/A

N/A
9

N/A
2,307

N/A
16,222

N/A
7,030

8
9

2,324
2,307

19,810
16,222

8,525
7,030

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

16

3,002

21,305

7,098

258

28,777

125,580

4,364

274

31,779

146,885

4,622

For each of the Periods Under Review, depending on the size of the projects and the type of properties
developed, the aggregate GFA sold varies from one year to another. We are currently developing our
commercial property, J-Expo
, located in Erqi District
, a prime location within
walking distance to Zhengzhou Railway Station
and Zhengzhou Long Distance Central Bus
Station
and the sale of these properties, including for the first time, office
buildings, is expected to contribute to our revenue mix in FY2008 after the properties have been
completed and delivered.

52

Key factors affecting our financial results


Our Groups performance is generally not subject to seasonality. The major factors affecting our financial
performance are as follows:
(i)

inability to identify or acquire land for development: our continuing growth will largely depend on
our ability to identify and acquire suitable land for development in a timely manner and at
commercially acceptable prices;

(ii)

failure or delay in the delivery of our property developments: the length of time to complete the
construction of a property development may take many months or possibly years. While the presale of a property may generate positive cash flow for us in the period the fund is received, no sale
is recognised until the property has been completed and delivered to our customers. This may
cause significant fluctuations in our revenue from one year to another due to the timing of
completion of our property developments. As a result, our exposure to price volatility of
construction materials may be increased. An increase in the cost of our construction materials
such as steel and cement may have a negative impact on our profitability if we cannot pass on the
increased costs to our customers as the cost of construction materials constitutes the biggest
component in our cost of sales;

(iii)

general economic environment in the PRC: conditions in the property markets in which we operate
change from time to time and are affected significantly by the general economic, political and
regulatory developments in the PRC, in particular, in Henan Province; and

(iv)

ability to compete with our competitors: our revenue will be affected if we fail to compete
successfully with other property developers in terms of pricing, design, quality, location and timely
project delivery.

Please refer to the section entitled Risk Factors of this Prospectus for other factors which may affect our
operations and financial results.
Cost of sales
Our cost of sales includes costs incurred directly for our property development activities. A breakdown of
the main components of our cost of sales, and our cost of sales as a percentage of our total revenue for
each of the Periods Under Review are as follows:
Breakdown of cost of sales
Audited
FY2004

(RMB000)

As a %
of total
cost of
sales
(%)

Audited
FY2005

(RMB000)

As a %
of total
cost of
sales
(%)

Audited
FY2006

(RMB000)

As a %
of total
cost of
sales
(%)

Unaudited
Six months
ended 30
June 2006
(RMB000)

As a %
of total
cost of
sales
(%)

Audited
Six months
ended 30
June 2007
(RMB000)

As a %
of total
cost of
sales
(%)

Land costs
Construction costs
Capitalised borrowing
costs
Business tax

3,675
62,320

4.4
75.2

4,736
67,954

4.8
68.7

158
2,652

4.2
71.2

3,093
45,788

4.8
71.2

9,628
7,299

11.6
8.8

12,413
13,865

12.5
14.0

412
501

11.1
13.5

8,107
7,344

12.6
11.4

Cost of sales

82,922

100.0

98,968

100.0

3,723

100.0

64,332

100.0

Our cost of sales includes land costs, construction costs, capitalised borrowing costs and business tax.
For each project, these costs are recognised in proportion to the GFA sold. Prior to their completion and
delivery, properties under development are included in our combined balance sheets at the lower of costs
or net realisable value. In FY2004, none of our costs were incurred and charged to our combined income
statements as we did not recognise any sale of our properties during that period.

53

Land costs
Our land costs include costs of acquisition of the rights to occupy, use and develop land, and primarily
represent land premiums incurred in connection with a land grant from the government or land obtained
in the secondary property market. Typically, we obtain our land banks through the following methods:
(1)

acquiring directly from the local government land bureau through public tender, auction or listing
for sale;

(2)

acquiring companies that hold land reserves; and

(3)

purchasing land from other companies.

Currently we hold land use rights to land of approximately 1,606,396 sq m of which 1,596,625 sq m is for
residential usage and 9,771 sq m for commercial usage.
Land costs accounted for approximately nil, 4.4%, 4.8% and 4.8% of our total costs of sales in each of
the Periods Under Review, respectively.
Construction costs
Our construction costs are made up of costs for the design and construction of a development project,
which include payments made to various independent construction companies for the construction work
carried out for us. The major component of construction costs is the cost of construction materials such
as steel, cement, and labour costs. Construction costs accounted for approximately nil, 75.2%, 68.7%
and 71.2% of our total costs of sales in each of the Periods Under Review, respectively.
Capitalised borrowing costs
Capitalised borrowing costs represent interest costs arising from short-term and long-term borrowings to
finance specific property developments. Borrowing costs are mainly affected by the level of interest rates
charged by the financial institutions and the quantum of the borrowings to finance the project
developments. Capitalised borrowing costs accounted for approximately nil, 11.6%, 12.5% and 12.6% of
our total costs of sales in each of the Periods Under Review, respectively.
Business tax
Our subsidiaries in the PRC are subject to local business tax of 5.0% of the purchase consideration
received from purchasers.
Other income
Other income comprises mainly interest income on our fixed deposits and bank balances, as well as
income from the usage of our sports facilities and cinema inside Guoling Shanshui
.
Operating expenses
Our operating expenses comprise sale and distribution expenses and administrative expenses.
Sale and distribution expenses comprise mainly advertising and promotional expenses relating to sale of
properties, sales and marketing staff costs. Sale and distribution expenses constitute approximately
33.0%, 42.6%, 22.9% and 29.0% of our total operating expenses for each of the Periods Under Review,
respectively.
Administrative expenses comprise mainly depreciation, staff costs, utilities and legal and consultancy
fees. Administrative expenses constitute approximately 66.8%, 56.7%, 75.3% and 58.8% of our total
operating expenses for each of the Periods Under Review, respectively.
Finance costs
Finance costs comprise mainly interest charges on our short-term bank borrowings. These loans, which
bear interest rates of approximately 5.8% throughout the Periods Under Review, were procured for our
general working capital needs and were not used to fund any specific development projects.

54

Income tax expenses


Our Group is subject to enterprise income tax and LAT in the PRC. A breakdown of our income tax
expenses for the Periods Under Review are as follows:
Audited
FY2004
(RMB000)

Audited
FY2005
(RMB000)

Audited
Unaudited
Audited
FY2006
Six months
Six months
(RMB000) ended 30 June ended 30 June
2006
2007
(RMB000)
(RMB000)

Enterprise income tax


LAT

11,441
17,714

51,459
60,108

813
1,655

28,445
28,859

Deferred tax

29,155
(4,056)

111,567
(14,374)

2,468

57,304
(6,805)

Total

25,099

97,193

2,468

50,499

Enterprise income tax


The enterprise income tax refers to the tax chargeable at the prevailing tax rate of 33.0% in respect of
the assessable profits derived from our Groups operation in the PRC. For each of the Periods Under
Review, our effective tax rate referring to the enterprise income tax was approximately nil, 26.0%, 33.9%
and 38.6%, respectively.
LAT
Under PRC laws and regulations, our subsidiaries in the PRC engaging in property development are
subject to LAT, which is collected by the local tax authorities. Pursuant to Article 2 of the Provisional
Regulations of the PRC on Land Appreciation Tax
(LAT
Regulations), all income received from the sale or transfer of state-owned land use rights, buildings and
their attached facilities in the PRC by all units and individuals is subject to 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 standard residential houses
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 this exemption. LAT is not levied on real estate properties
constructed and held by such units or individuals for its own use or for lease. Whether a property
qualifies for the ordinary standard residential houses exemption is determined by the local government
taking into consideration the propertys plot ratio, aggregate GFA and sales price. Sales of low-density
luxury detached houses, townhouses and commercial retail shops typically have higher appreciation
values, and are generally subject to higher LAT rates, compared with less expensive properties.
On 28 December 2006, the State Administration of Taxation issued the Notice on the Administration of
the Settlement of Land Appreciation Tax of Property Development Enterprises
which came into effect on 1 February 2007. Such notice provides
further clarifications as to the settlement of LAT. Local provincial tax authorities can formulate their own
implementation rules according to the notice and local situations. Futher, the LAT Notice also stipulates
that the local tax authorities may order real estate developers to pay LAT if a property project has not
been sold within three years from the grant of sale or pre-sale permit. However, as we do not have to
apply for sale or pre-sale permits for real estate properties constructed and held by us for our own use or
for lease, such properties will not be subject to LAT.
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 the LAT Regulations, but only pay a portion of
such provisions each year as required by the local tax authorities under prevailing practice. The method
in which the local tax authorities has implemented to calculate the LAT may result in a lower sum of LAT
payable than if the LAT is determined based on the appreciation value of the properties as suggested
under the LAT Regulations. In which case, the central PRC tax authorities may order our Group to pay
the outstanding LAT and accordingly, for each of the Periods Under Review, we made provisions for LAT
in the amount of nil, RMB17.7 million, RMB60.1 million and RMB28.9 million, respectively. For the same
periods, we made LAT payments, including prepayments, in the amount of nil, RMB1.5 million, RMB2.6
million and RMB10.9 million, respectively, based on the LAT rates of 1.5% (residential properties) and
3.5% (commercial properties) of the total sales consideration of the real estate properties sold as
imposed by the local tax authorities.
55

Going forward, we intend to continue accumulating the provisions made for the full amount of applicable
LAT in accordance with the relevant PRC tax laws and the LAT Regulations and will not write-back such
excess provisions unless and until the relevant PRC tax laws and/or the LAT Regulations are amended
by the central PRC tax authorities to the effect that our Group will not be required to pay the outstanding
LAT.
Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a principal
taxation rate of 25% for the Periods Under Review. The deferred tax assets arose due to the temporary
differences between the amount of LAT provided and the amount of LAT reported to the local tax
authority for the Periods Under Review.
Foreign exchange exposure
Our Groups sales and purchases are wholly denominated in RMB and our functional and reporting
currency is also in RMB. Operationally, we are not exposed significantly to any foreign currency risks.
However, any dividends declared in the future by our Company will be in RMB and paid in S$.
Inflation
Inflation did not have a material impact on our revenue or operating costs for the Periods Under Review.
REVIEW OF RESULTS OF OPERATIONS
Our operations are carried out solely in Zhengzhou city, Henan Province, the PRC. Accordingly, no
separate analysis of geographical segment is presented. We have prepared a table as shown below
which sets forth the revenue generated from completed development projects for each of the Periods
Under Review. This table should be read in conjunction with the Combined Financial Information and
related notes included elsewhere in Appendix A to this Prospectus.
Breakdown of revenue from our completed development projects:
Project

Audited
FY2004
(RMB000)

As a %
of total
revenue
(%)

Audited
FY2005
(RMB000)

As a %
of total
revenue
(%)

Audited
FY2006
(RMB000)

As a %
of total
revenue
(%)

Unaudited
Six months
ended 30
June 2006
(RMB000)

Phase I
Phase II

N/A
N/A

142,984
N/A

100.0
N/A

57,020
212,688

21.1
78.9

3,378
3,492

Total

N/A

142,984

100.0

269,708

100.0

6,870

As a %
of total
revenue
(%)

Audited
Six months
ended 30
June 2007
(RMB000)

As a %
of total
revenue
(%)

49.2
50.8

21,305
125,580

14.5
85.5

100.0

146,885

100.0

Guoling Shanshui

Review Of Past Performance


FY2005 vs FY2004

Revenue
FY2005
Phase II

Phase I
Guoling
Shanshui

No. of
Units
sold
(units)

Saleable
GFA
sold
(sq m)

Low-rise apartments
Low-density luxury detached houses

392
31

Total

423

Revenue

(RMB000)

No. of
Units
sold
(units)

Saleable
GFA
sold
(sq m)

32,698
8,455

89,463
53,521

N/A
N/A

41,153

142,984

N/A

Total
Revenue

(RMB000)

No. of
Units
sold
(units)

Saleable
GFA
sold
(sq m)

Revenue

(RMB000)

N/A
N/A

N/A
N/A

392
31

32,698
8,455

89,463
53,521

N/A

N/A

423

41,153

142,984

Pre-sale of Phase I of Guoling Shanshui


commenced in December 2004 comprising
472 units of low-rise apartments and 65 units of low-density luxury detached houses with an aggregate
saleable GFA of 39,289 sq m and 18,665 sq m, respectively. During the initial launch, our Group
undertook a series of active advertising and promotional campaigns to raise awareness of Guoling
Shanshui
.
56

No revenue was recorded in FY2004. Our revenue was approximately RMB145.6 million in FY2005
comprising revenue from sale of properties and rental income of approximately RMB143.0 million and
RMB2.6 million respectively. The revenue recorded in FY2005 was mainly attributable to the following:

Recognition of sale of Phase I of Guoling Shanshui


Sale of properties within Phase I of Guoling Shanshui
was recognised upon the delivery of
each of the complete units to the respective purchaser. We recognised sale of 392 units of low-rise
apartments and 31 units of low-density luxury detached houses comprising an aggregate GFA of
approximately 32,698 sq m and 8,455 sq m, respectively, which accounted for approximately RMB89.5
million and RMB53.5 million or approximately 61.4% and 36.8% of our revenue, respectively, in FY2005.
The overall aggregate GFA sold was approximately 41,153 sq m.

Average selling price of the low-rise apartments units and low-density luxury detached houses
The average selling prices of the low-rise apartments and low-density luxury detached houses were
approximately RMB2,736 per sq m and RMB6,330 per sq m, respectively. The overall average selling
price was approximately RMB3,474 per sq m.

Rental income
In addition, we recorded rental income of RMB2.6 million, representing approximately 1.8% of our
revenue in FY2005 as a result of leasing some of our properties to unrelated third parties to operate a
golf academy and a hotel. No rental income was recorded in FY2004 as the lease of these properties
commenced only in the second half of 2005.

Cost of sales and gross profit margin


In FY2004, we did not recognise any cost of completed properties as no revenue from the sale of
properties was realised. In FY2005, our costs incurred in completing properties amounted to
approximately RMB82.9 million which were attributable to the development of the sold properties at
Phase I of Guoling Shanshui
. In FY2005, we recorded a gross profit margin of approximately
42.0% from the sale of properties.

Other income
Our other income increased by approximately RMB2.9 million or 223.1% from RMB1.3 million in FY2004
to RMB4.2 million in FY2005. The increase was mainly due to the increase in income from the sports
and leisure facilities, which commenced operations only in September 2004, by approximately RMB2.1
million and gain on disposal of fixed assets by RMB0.5 million. The sports and leisure facilities include a
gymnasium, basketball court, tennis court, badminton court, video game arcade, cinema and rockclimbing facilities.

Operating expenses
Our Groups operating expenses increased by approximately RMB11.2 million or 100.6% from RMB11.1
million in FY2004 to RMB22.3 million in FY2005.
Sales and distribution expenses increased by approximately RMB5.8 million or 156.8% from RMB3.7
million in FY2004 to RMB9.5 million in FY2005. The main reasons for the increase in sales and
distribution expenses were the increase in advertising and promotional expenses by approximately
RMB4.5 million resulting from the marketing and promotional activities undertaken for the launch of our
properties at Guoling Shanshui
, and the logo design fee incurred for Guoling Shanshui
amounting to RMB0.7 million. In addition, an increase in the average number of sales and
marketing staff also led to the upsurge in staff costs amounting to approximately RMB0.3 million.
Administrative expenses increased by approximately RMB5.2 million or 70.3% from RMB7.4 million in
FY2004 to RMB12.6 million in FY2005. The increase in administrative expenses was primarily
attributable to an increase in depreciation charges amounting to RMB2.4 million in respect of property,
plant and equipment and investment properties. In addition, salaries and benefits paid to our managerial
and administrative personnel increased by approximately RMB1.9 million as a result of an increase of
approximately 50 headcount on average due to the expansion of our business. Further, our utility
expenses also increased by approximately RMB0.8 million.
57

Finance costs
Our finance costs arising from bank and other borrowings for our Groups daily working capital remained
approximately the same at approximately RMB0.6 million in both FY2004 and FY2005. The loan quantum
and interest rate also remained relatively the same for both FY2004 and FY2005.

Profit before taxation and profit before taxation margin


Our profit before taxation for FY2005 reached approximately RMB44.0 million, which represents a profit
before taxation margin of approximately 30.2%, whereas we recorded a loss of approximately RMB10.4
million for FY2004 as no revenue from the sale of properties was recognised. The profit in FY2005 was
due to the sale of developed properties in Phase I of Guoling Shanshui
and the recognition of
those sales as revenue in FY2005.

Income tax expenses


Our income tax expenses amounted to approximately RMB25.1 million in FY2005. No income tax
expenses were recorded in FY2004 because the recognition of sale of our properties commenced in
FY2005. Our Groups overall effective income tax rate was 57.0%, which is higher than the enterprise
income tax rate of 33%, due mainly to provision for LAT, which represents approximately 70.6% of the
total income tax expenses.
FY2006 vs FY2005

Revenue
FY2006
Phase II

Phase I
Guoling
Shanshui

Low-rise apartments
Low-density luxury detached houses
Townhouses
Commercial retail units
Total

No. of
Units
sold
(units)

Saleable
GFA
sold
(sq m)

41
19
N/A
N/A
60

Revenue

(RMB000)

No. of
Units
sold
(units)

Saleable
GFA
sold
(sq m)

3,014
5,772
N/A
N/A

7,827
49,193
N/A
N/A

187
N/A
48
41

8,786

57,020

276

Total
Revenue

(RMB000)

No. of
Units
sold
(units)

Saleable
GFA
sold
(sq m)

Revenue

(RMB000)

18,286
N/A
11,116
6,616

66,072
N/A
88,570
58,046

228
19
48
41

21,300
5,772
11,116
6,616

73,899
49,193
88,570
58,046

36,018

212,688

336

44,804

269,708

Leveraging on the success of Phase I of Guoling Shanshui


, we embarked on the pre-sale of
Phase II of Guoling Shanshui
in November 2005. Phase II comprises 701 units of low-rise
apartments, 93 units of townhouses and 52 units of commercial retail units with an aggregate saleable
GFA of 72,282 sq m, 22,531 sq m, and 8,061 sq m, respectively.
Our revenue increased strongly by approximately RMB130.9 million or 89.9% from approximately
RMB145.6 million in FY2005 to approximately RMB276.5 million in FY2006, which comprises revenue
recognised from sale of properties in Phase I and Phase II of Guoling Shanshui
and rental
income. The increase in revenue was mainly due to the recognition of sale of properties from Phase II of
approximately RMB212.7 million which accounted for 76.9% of our revenue in FY2006.
The increase in revenue was mainly attributable to the following:

Recognition of sale of Phase I and Phase II of Guoling Shanshui


Sale of Phase I and Phase II properties continued to be recognised as and when each of the completed
units was delivered to the respective purchaser. We recognised sale of 41 units of low-rise apartments
and 19 units of low-density luxury detached houses of Phase I comprising an aggregate GFA of
approximately 3,014 sq m and 5,772 sq m, respectively which accounted for approximately RMB57.0
million or 20.6% of our revenue in FY2006. We also recognised sale of 187 units of low-rise apartments,
48 units of townhouses and 41 commercial retail units of Phase II comprising an aggregate GFA of
approximately 18,286 sq m, 11,116 sq m and 6,616 sq m, respectively which accounted for
approximately RMB212.7 million or 76.9% of our revenue in FY2006. Despite a decrease of 87 units of

58

properties sold in FY2006 in comparison with FY2005, the aggregate GFA sold of approximately 44,804
sq m was an increase of 3,651 sq m or 8.9% in comparison with FY2005. This was mainly due to the
inclusion of townhouses and commercial retail units sold.

Increased in average selling price


The overall average selling prices of our properties sold was approximately RMB6,020 per sq m. This is
an increase of approximately RMB2,546 per sq m or 73.3% in comparison with FY2005. Besides
benefiting from the overall improvement of property market conditions in Zhengzhou city, we also
experienced an increase in overall selling prices due to the sale of our Phase II properties. In addition to
low-rise apartments, Phase II also include new offerings such as townhouses and commercial retail units
which commanded higher selling prices than low-rise apartments and low-density luxury detached
houses in Phase I.
The average selling prices of our low-rise apartments increased by approximately 26.8% or RMB733 per
sq m, from RMB2,736 per sq m in FY2005 to RMB3,469 per sq m in FY2006. During FY2006, we sold
187 units of low-rise apartments with average selling prices of RMB3,613 per sq m in Phase II of Guoling
Shanshui
and 41 units of low-rise apartments with average selling prices of RMB2,597 per sq
m in Phase I of Guoling Shanshui
.
The average selling prices of our low-density luxury detached houses increased by approximately 34.6%
or RMB2,193 per sq m, from RMB6,330 sq m in FY2005 to RMB8,523 per sq m in FY2006. This was in
line with our strategy of retaining choice units with better surroundings and landscaping for selective
sales. During the year, we sold 19 units of our low-density luxury detached houses as compared to 31 in
FY2005.
The average selling prices of our townhouses and commercial retail units were approximately RMB7,968
per sq m and RMB8,774 per sq m respectively. These averages selling prices were significantly higher
than the average selling prices of the low rise apartments in FY2005.

Increase in rental income


Our rental income increased by approximately RMB4.2 million or 161.5% from approximately RMB2.6
million in FY2005 to approximately RMB6.8 million in FY2006. The increase was because we recognised
a full year rental income in FY2006. We leased out some of our properties to two independent parties to
operate a golf academy and a hotel, commencing in July 2005 and September 2005, respectively.

Cost of sales and gross profit margin


Our cost of sales increased by approximately RMB16.1 million or 19.4% from approximately RMB82.9
million in FY2005 to approximately RMB99.0 million in FY2006. The increase was due to the recognition
of cost of sales in line with the completion and sale of the properties in Phase II of Guoling Shanshui
.
Our gross profit margin increased by approximately 21.2 percentage points from 43.0% in FY2005 to
64.2% in FY2006. The increase in gross profit margin was mainly attributable to the fact that we sold
more townhouses and commercial shops in FY2006 which commanded higher gross profit margin as
compared to sale of our low-rise apartments. In addition, the average selling price in FY2006 of low-rise
apartments and low-density luxury detached houses of the properties in Phase I of Guoling Shanshui
increased as compared to FY2005, with no material increase in average cost of sales per sq
m sold. As a result, the gross profit margin was further improved.

Other income
Our other income decreased by approximately RMB0.3 million or 7.1% from approximately RMB4.2
million in FY2005 to approximately RMB3.9 million in FY2006. There was no gain on disposal of fixed
assets during the year.

Operating expenses
Our Groups operating expenses increased by approximately RMB6.9 million or 30.8% from
approximately RMB22.3 million in FY2005 to approximately RMB29.2 million in FY2006.

59

Sales and distribution expenses decreased by approximately RMB2.8 million or 29.5% from
approximately RMB9.5 million in FY2005 to approximately RMB6.7 million in FY2006. This was mainly
due to the decrease in advertising and promotional expenses by approximately RMB2.4 million as we
had already actively promoted and marketed our properties at Guoling Shanshui
in FY2005.
Administrative expenses increased by approximately RMB9.4 million or 73.7% from approximately
RMB12.6 million in FY2005 to approximately RMB22.0 million in FY2006. This was mainly due to the
increase in legal and professional fees of approximately RMB6.3 million resulting from the acquisition of
our subsidiary, Henan Jinzhi. Our depreciation charges also increased by approximately RMB2.6 million
in respect of property, plant and equipment and investment properties.

Finance costs
Our finance costs decreased slightly by approximately RMB0.1 million or 16.7% from approximately
RMB0.6 million in FY2005 to approximately RMB0.5 million in FY2006. The loan quantum and interest
rate remained relatively the same for both FY2004 and FY2005.

Profit before taxation and profit before taxation margin


Our profit before taxation increased by approximately RMB107.7 million or 244.7% from approximately
RMB44.0 million in FY2005 to approximately RMB151.7 million in FY2006, representing an increase of
24.7 percentage points in profit before taxation margin from 30.2% in FY2005 to 54.9% in FY2006. The
increase in profit before taxation and profit before taxation margin were mainly due to the recognition of
sale of properties from Phase II, Guoling Shanshui
and rental income and the improvement in
our gross profit margins as a result of higher average selling price of our properties sold.

Income tax expenses


Our income tax expenses increased by approximately RMB72.1 million or 287.2% from approximately
RMB25.1 million in FY2005 to approximately RMB97.2 million in FY2006 as a result of a higher
chargeable income brought about by a substantial increase in profit before tax attained in FY2006. Our
Groups overall effective income tax rate increased from 57.0% in FY2005 to 64.1% in FY2006, which is
higher than the enterprise income tax rate of 33.0%, mainly due to the provision for LAT, which
represents approximately 61.8% of the total income tax expense.
1H2007 vs 1H2006

Revenue
1H2007
Phase II

Phase I
Guoling
Shanshui

Low-rise apartments
Low-density luxury detached houses
Townhouses
Commercial retail units
Total

No. of
Units
sold
(units)

Saleable
GFA
sold
(sq m)

8
8
N/A
N/A
16

Revenue

(RMB000)

No. of
Units
sold
(units)

Saleable
GFA
sold
(sq m)

678
2,324
N/A
N/A

1,495
19,810
N/A
N/A

249
N/A
9

3,002

21,305

258

Total
Revenue

(RMB000)

No. of
Units
sold
(units)

Saleable
GFA
sold
(sq m)

Revenue

(RMB000)

26,470
N/A
2,307

109,358
N/A
16,222

257
8
9

27,148
2,324
2,307

110,853
19,810
16,222

28,777

125,580

274

31,779

146,885

Our revenue increased strongly by approximately RMB140.6 million or 1,371.3% from RMB10.3 million in
1H2006 to RMB150.8 million in 1H2007, which comprises revenue recognised from sale of properties in
Phase I and Phase II of Guoling Shanshui
and rental income. The robust growth in revenue
was mainly due to the recognition of sale of properties of Phase II of Guoling Shanshui
of
approximately RMB125.6 million which accounted for 83.3% of our revenue in 1H2007. The increase in
revenue was mainly attributable to the following:

60

Recognition of sale of Phase I and Phase II of Guoling Shanshui


Sale of Phase I and Phase II properties continued to be recognised as revenue as and when each of the
completed units was delivered to the respective purchaser. We experienced an increase in revenue from
sale of properties of Phase I and Phase II of approximately RMB140.0 million or 2,029.0% from
approximately RMB6.9 million in 1H2006 to approximately RMB146.9 million. The increase was mainly
due to the recognition of 257 units of low-rise apartments, 8 units of low-density luxury detached houses
and 9 units of townhouses sold in 1H2007. This represents an increase of 229 units of low-rise
apartments, 8 units of low-density luxury detached houses and 9 units of townhouses sold in 1H2007 in
comparison with 1H2006, which equates to an overall increase of 246 units of properties sold in 1H2007.
In line with the increase in number of units sold, the aggregate GFA sold also increased by approximately
29,466 sq m or 1,273.9% from approximately 2,313 sq m in 1H2006 to approximately 31,779 sq m in
1H2007.

Increased in average selling price


The average selling price of our low-rise apartments were approximately RMB4,083 per sq m in 1H2007,
an increase of RMB1,113 per sq m or 37.5% in comparison with 1H2006 of approximately RMB2,970 per
sq m. This is because our Group sold more low-rise apartments in Phase II of Guoling Shanshui
in 1H2007 as compared to 1H2006 and the average selling prices of the low-rise apartments
in Phase II of Guoling Shanshui
are higher than the selling prices of the low-rise apartments
in Phase I of Guoling Shanshui
. The higher average selling prices are a result of (i) an overall
increase in property prices in Zhengzhou city; and (ii) the low-rise apartments in Phase II of Guoling
Shanshui
are being better situated and with better scenary.
There were no recognition of sale of low-density luxury detached houses and townhouses in 1H2006,
The average selling prices of our low-density luxury detached houses and townhouses were
approximately RMB8,525 per sq m and RMB7,030 sq m respectively in 1H2007. These lifted our overall
average selling price for 1H2007.
The overall average selling prices of our properties sold was approximately RMB4,622 per sq m. This is
an increase of approximately RMB1,652 per sq m or 55.6% in comparison with 1H2006 average selling
price of RMB2,970 per sq m.

Increase in rental income


In addition, our rental income increased slightly by approximately RMB0.5 million or 14.7% from
approximately RMB3.4 million in 1H2006 to approximately RMB3.9 million in 1H2007 mainly due to the
fact that we raised our annual rental income by approximately RMB1.0 million for leasing out our hotel
properties.

Cost of sales and gross profit margin


Our cost of sales increased by approximately RMB60.6 million or 1,637.8% from approximately RMB3.7
million in 1H2006 to approximately RMB64.3 million in 1H2007. There is no material increase in the
average unit cost of construction material during the year. The increase was due to the recognition of
cost of sales in line with the completion and sale of the properties in Phase II of Guoling Shanshui
in 1H2007.
Our gross profit margin decreased by approximately 6.4 percentage points from 63.7% in 1H2006 to
57.3% in 1H2007. Our rental income, which enjoys a much higher gross profit margin than sale of
properties, accounted for 33.0% and 2.6% respectively in 1H2006 and 1H2007. The change in product
mix resulted in the drop of gross profit margin. However, the effect was partially offset by improvement of
gross profit margin of sale of properties, due to the lift in overall average selling price without material
increase in average cost of sales per sq m sold.

Other income
Our other income increased slightly by approximately RMB0.3 million or 15.0% from approximately
RMB2.0 million in 1H2006 to approximately RMB2.3 million in 1H2007. The increase was mainly due to
the increase in income from the usage of our sports and leisure facilities by approximately RMB0.5
million.

61

Operating expenses
Our Groups operating expenses increased by approximately RMB1.9 million or 16.1% from
approximately RMB11.8 million in 1H2006 to approximately RMB13.7 million in 1H2007.
Sales and distribution expenses decreased by approximately RMB0.1 million or 2.4% from approximately
RMB4.1 million in 1H2006 to approximately RMB4.0 million in 1H2007. This was mainly due to the
decrease in overall advertising and promotional expenses by approximately RMB0.3 million. We lowered
the advertising expenses on our properties at Guoling Shanshui
by approximately RMB2.5
million as we had already actively promoted and marketed our properties in previous years. However, this
was partly offset by the increase in advertising and promotional expenses by approximately RMB2.2
million in marketing our commercial properties at J-Expo
which are expected to be
completed in early 2008.
Administrative expenses increased by approximately RMB0.7 million or 9.5% from approximately RMB7.4
million in 1H2006 to approximately RMB8.1 million in 1H2007. This was mainly due to an increase in our
office expense, utilities and staff costs after the acquisition of Henan Jinzhi in late 2006.
In 1H2007, our Group also incurred a loss of approximately RMB253,000 on the disposal of a subsidiary
and incurred approximately RMB900,000 for the sponsorship of property safety promotional campaigns
held by the local government.

Finance costs
Our finance costs amounted to approximately RMB1.3 million in 1H2007. No finance costs were
recorded in 1H2006 as we had sufficient internal funds to operate our business. The bank borrowings in
1H2007 was to support our increased working capital requirement arising from increased business
activities after the acquisition of our subsidiary, Henan Jinzhi, in late 2006.

Profit before taxation and profit before taxation margin


Our profit before taxation for 1H2007 reached approximately RMB73.7 million, representing a profit
before taxation margin of approximately 48.9% whereas we recorded a loss of approximately RMB3.3
million for 1H2006 because a low level of revenue from the sale of properties was recognised. The
records of profit for 1H2007 was mainly due to the recognition of sale of properties from Phase I and II of
Guoling Shanshui
. Our gross profit increased significantly by approximately RMB79.9 million
from 1H2006 to 1H2007, wherease our total operating expenses increased slightly by approximately
RMB1.9 million only. The combined effect let us change from a loss to profit position.

Income tax expenses


Our income tax expenses increased by approximately RMB48.0 million or 1,920.0% from approximately
RMB2.5 million in 1H2006 to approximately RMB50.5 million in 1H2007 as a result of a higher
chargeable income brought about by a substantial increase in profit before tax attained in 1H2007. Our
Groups effective income tax rate decreased from 75.3% in 1H2006 to 68.5% in 1H2007, which was
mainly due to the recognition of deferred tax assets in FY2007 amounting to approximately RMB6.8
million. Both rates were higher than the enterprise income tax rate of 33%, mainly due to provision of
LAT, which represents approximately 57.1% of total income tax expenses.
REVIEW OF FINANCIAL POSITIONS

Non-current Assets
Our non-current assets as at 31 December 2006 amounted to approximately RMB276.0 million,
comprising mainly property, plant and equipment, investment properties leased to third parties and
deferred tax assets.
Our investment properties are held to earn rental income and/or for capital appreciation. They are
measured at its cost less any accumulated depreciation and any accumulated impairment losses as at
the balance sheet date. As at 31 December 2006, our investment properties comprised mainly our
Guoling Hotspring Hotel and a parcel of land held to earn rental income and future capital appreciation.
The net book value of our investment properties was approximately RMB40.0 million, which accounted
for 14.5% of our non-current assets.
62

As at 31 December 2006, our property, plant and equipment had a collective net book value of
RMB178.2 million and accounted for 64.6% of our non-current assets. The properties owned by our
Group comprise mainly the sports facilities and a cinema. Our plant and equipment include furniture,
fixtures, equipment and motor vehicles. As at 31 December 2006, our goodwill amounted to
approximately RMB38.7 million as a result of the acquisition of our subsidiary, Henan Jinzhi, in late 2006,
which accounted for 14.0% of our non-current assets.
As at 30 June 2007, our non-current assets increased by approximately RMB5.3 million from
approximately RMB276.0 million to approximately RMB281.3 million and constituted 20.4% of total
assets. The increase was mainly due to the recognition of deferred tax assets and incurrence of
renovation works on the Guoling Hotspring Hotel amounted to approximately RMB6.8 million and
RMB2.0 million resepectively during the period. Deferred tax assets increased as the variance between
the amount of LAT provided and the amount of LAT reported increased as at 30 June 2007 when
compared with that as at 31 December 2006. The increase was partially offset by the depreciation
chages of approximately RMB3.9 million on properties, plant and equipment and investment properties.

Current assets
As at 31 December 2006, our current assets amounted to approximately RMB911.3 million and
accounted to 76.8% of our total assets. They comprised mainly amount due from a shareholder, deposits
paid, properties held under development, properties held for sale, properties held for development, cash
and bank balances and prepayments and other receivables, and restricted bank deposits.
Amount due from a shareholder, which represents the outstanding capital investment not yet injected to
our Group, amounted to approximately RMB409.7 million and accounted for 45.0% of our total current
assets. This is in relation to the capital injection by Yan Tao, our Executive Director and Chief Executive
Officer, into our Group (as described under step 2 of the section entitled Restructuring Exercise of the
Prospectus). The amount due from a shareholder as at 31 December 2006 and 30 June 2007
represented the outstanding amount of capital injection by Yan Tao, which was subsequently settled by
end of September 2007.
Deposits paid for acquisition of land use rights, amounted to approximately RMB169.4 million and
accounted for 18.6% of our total current assets. These deposits are paid by our Group before the public
tender, auction or bidding process to acquire land parcels and in the event our Group is not successful in
the tender, auction or bid, the deposits will be refunded to us. Properties held under development, which
includes the cost of land, interest capitalised, and development and related costs, amounted to
approximately RMB106.3 million and accounted for 11.7% of our total current assets. Properties held for
sale, which are completed but unsold units as at 31 December 2006, amounted to approximately
RMB98.1 million and accounted for 10.8% of our total current assets. Our cash and bank balances
amounted to approximately RMB61.5 million and accounted for 6.7% of our total current assets.
Properties held for development amounted to approximately RMB35.1 million and accounted for 3.9% of
our total current assets. Our prepayments and other receivables amounted to approximately RMB16.1
million and accounted for 1.8% of our total current assets. Restricted bank deposits, which represent
guaranteed deposits for the mortgage loan facilities granted by the banks to the purchasers of our
Groups properties, amounted to approximately RMB10.7 million, and accounted for 1.2% of our total
current assets.
As at 30 June 2007, our current assets increased by approximately RMB188.7 million from approximately
RMB911.3 million as at 31 December 2006 to approximately RMB1,100.0 million and constituted 79.6%
of our total assets. This was mainly due to the increase in our cash and bank balances by approximately
RMB238.7 million as a result of receipts of sales proceeds from the purchasers in connection with our
Groups pre-sale of properties, mainly from the pre-sale of our commercial retail units and office units as
at 30 June 2007. The increase in our total current assets was also due to the increase in our
prepayments and other receivables by approximately RMB42.0 million, resulting mainly from the
prepayment of enterprise income tax, business tax and LAT amounting to approximately RMB33.8 million
as a result of pre-sale of J-Expo
, and advance payment made to contractors for J-Expo
amounting to approximately RMB8.5 million. Properties held for development increased
by approximately RMB8.8 million or 25.1% due mainly to the acquisition of land use rights at May 2007.
The increase in our total current assets was partially offset by a decrease in our properties held for sale
by approximately RMB45.3 million as we recognised some of the properties in Guoling Shanshui
as revenue in 1H2007, and decrease of deposits paid by approximately RMB51.2 million
because of refund of deposits paid in FY2006, which resulted from the withdrawal of an intention to
acquire 2 parcels of land in 1H2007.
63

Current liabilities
Our current liabilities comprised bank and other borrowings, accruals and other payables, receipts in
advance, tax payable and trade payable (such as payments to contractors and suppliers).
As at 31 December 2006, our total current liabilities amounted to approximately RMB589.1 million. Bank
and other borrowings amounted to approximately RMB237.0 million or 40.2% of our total current
liabilities. Accrual and other payables amounted to approximately RMB138.4 million or 23.5% of our total
current liabilities. Receipts in advance amounted to approximately RMB99.1 million or 16.8% of our total
current liabilities. Tax payables amounted to approximately RMB112.2 million or 19.0% of our total current
liabilities.
As at 30 June 2007, our total current liabilities increased by approximately RMB173.1 million from
approximately RMB589.1 million as at 31 December 2006 to approximately RMB762.2 million. This was
mainly due to the increase in our receipts in advance by approximately RMB287.5 million largely as a
result of the pre-sale of commercial retail units in J-Expo
. In addition, the increase was
also due to the increase in our tax payable by approximately RMB47.8 million, mainly resulting from
additional provision of LAT during 1H2007. The increase in our total current liabilities was partially offset
by a decrease in accruals and other payables by approximately RMB114.1 million as we settled the
remaining payments for the acquisition of our subsidiary, Henan Jinzhi, and a decrease in bank and other
borrowings by approximately RMB47.0 million as we repaid some of the borrowings upon expiry.

Shareholders equity
Our shareholders equity comprise of issued share capital, capital reserve, accumulated profits and
minority interests.
As at 31 December 2006, our shareholders equity amounted to approximately RMB579.4 million and our
minority interests amounted to approximately RMB18.7 million, representing the 20.0% equity interest of
Zhengzhou Great View by Henan Hanhai Establishment Co., Ltd.
.
As at 30 June 2007, our total equity increased by approximately RMB20.9 million from approximately
RMB598.1 million as at 31 December 2006 to approximately RMB619.0 million due to the net profit after
tax attributable to 1H2007 which amounted to approximately RMB17.8 million and an increase of our
minority interests by approximately RMB5.4 million.
LIQUIDITY AND CAPITAL RESOURCES
Our growth and operations have been funded through a combination of shareholders equity, cash
generated from operating activities and bank borrowings. Our principal uses of cash have mainly been for
meeting our capital expenditures, working capital requirements, operating expenses, repayment of bank
borrowings and financial expenses. We have been able to service our loan repayments on a timely basis.
As at the Latest Practicable Date, our cash and bank balances amounted to approximately RMB580.9
million.
Our Directors are of the opinion that, after taking into account our cash and bank balances position,
available bank facilities, bank loans and cash from operating activities, we have adequate working capital
as at the date of lodgment of this Prospectus for our present requirements.
Cash Flow Summary
RMB000
Net cash (used in)/ generated from
operating activities
Net cash used in investing activities
Net cash generated from/ (used in)
financing activities
Net increase in cash and cash
equivalents
Cash and cash equivalents at
beginning of financial year/period
Cash and cash equivalents at end of
financial year/period

FY2004

FY2005

FY2006

1H2006

(103,706)
(53,425)

48,393
(36,893)

75,040
(18,296)

(6,377)
(3,500)

298,912
(5,729)

166,888

7,827

(25,933)

30,270

(54,461)

9,757

19,327

30,811

20,393

238,722

1,565

11,322

30,649

30,649

61,460

11,322

30,649

61,460

51,042

300,182

64

1H2007

Net cash generated from/(used in) operating activities

FY2004
We recorded a net cash outflow from operating activities of approximately RMB103.7 million in FY2004
which comprised operating loss before changes in working capital of approximately RMB7.4 million,
adjusted for net working capital outflows of approximately RMB96.4 million and interest received of
approximately RMB0.1 million. The net working capital outflows were the result of:
(i)

an increase in properties held under development of approximately RMB53.7 million due mainly to
the construction of the properties in Phase I of Guoling Shanshai
which had not been
completed as at 31 December 2004;

(ii)

an increase in properties held for development of approximately RMB36.9 million due mainly to
acquisition of land for future development purpose;

(iii)

a decrease in accruals and other payables of approximately RMB9.0 million due mainly to the
repayment by Zhengzhou Great View of advances from its then minority shareholder, Henan
Hanhai Investment Co., Ltd.
; and

(iv)

an increase in prepayments, other receivables and deposits paid of approximately RMB8.2 million
due mainly to increase in prepayment of advertising and deposits paid for fixed assets.

The above working capital outflows were partially offset by an increase in trade payables of
approximately RMB11.4 million as we commenced our construction work of the properties in Phase I of
Guoling Shanshai
in the course of the year.

FY2005
We recorded a net cash inflow from operating activities of approximately RMB48.4 million in FY2005
which comprised operating profit before changes in working capital of approximately RMB49.0 million
and interest received of approximately RMB0.5 million, adjusted for net working capital inflows of
approximately RMB5.9 million and income taxes paid of approximately RMB7.0 million. The net working
capital inflows were the result of the following:
(i)

a decrease in properties held under development of approximately RMB53.3 million as most of our
Phase I properties were completed and transferred to properties held for sale;

(ii)

an increase in receipts in advance of approximately RMB51.9 million mainly due to the proceeds
from the sale of our Phase I properties in Guoling Shanshui
which had not yet been
delivered to our purchasers as at 31 December 2005; and

(iii)

an increase in trade and other payables of approximately RMB18.4 million as we commenced our
construction work of the properties in Phase II of Guoling Shanshui
in the course of the
year.

The above-mentioned working capital inflows were partially offset by:


(i)

an increase in properties held for sale of approximately RMB76.7 million due mainly to the
completion of our Phase I properties in Guoling Shanshui
as at 31 December 2005;

(ii)

an increase in prepayments, other receivables and deposits paid of approximately RMB36.5 million
due mainly to increase in prepayment of advertising (an increase of approximately RMB1.9 million)
and deposits paid for the acquisition of land use rights (an increase of approximately RMB34.2
million); and

(iii)

an increase in restricted bank deposits of approximately RMB4.6 million, which was in line with our
revenue commenced to be recognised in FY2005 from our business activities.

65

FY2006
We recorded a net cash inflow from operating activities of approximately RMB75.0 million in FY2006
which comprised operating profit before changes in working capital of approximately RMB159.4 million
and interest received of approximately RMB0.3 million, adjusted for net working capital outflows of
approximately RMB63.1 million and income taxes paid of approximately RMB21.5 million. The net
working capital outflows were the result of:
(i)

an increase in prepayments, trade and other receivables and deposits paid amounting to
approximately RMB121.3 million, due mainly to the deposits paid for the acquisition of land use
rights for properties development;

(ii)

an increase in properties held for sale of approximately RMB21.4 million due mainly to the
completion of construction of our Phase II properties in Guoling Shanshui
and the
availability of such properties for sale as at 31 December 2006;

(iii)

a decrease of trade payables of approximately RMB20.6 million as the payables related to the
construction of the properties at Phase II of Guoling Shanshui
was mostly repaid in the
course of the year; and

(iv)

an increase in restricted bank deposits of approximately RMB6.0 million, which was in line with our
higher revenue recognised in FY2006 from our business activities.

The above working capital outflows were partially offset by:


(i)

an increase in accruals and other payables of approximately RMB58.1 million due mainly to the
remaining payments for the acquisition of our subsidiary, Henan Jinzhi; and

(ii)

an increase in receipts in advance of approximately RMB47.2 million due mainly to the proceeds
from pre-sale of our Phase II properties in Guoling Shanshui
.

1H2007
We recorded a net cash inflow from operating activities of approximately RMB298.9 million in 1H2007
which comprised operating profit before changes in working capital of approximately RMB79.1 million,
interest received of approximately RMB0.2 million and net working capital inflows of approximately
RMB229.2 million adjusted for income taxes paid of approximately RMB9.5 million. The net working
capital inflows were the result of:
(i)

an increase in receipts in advance of approximately RMB287.5 million due mainly to the proceeds
from pre-sale of our commercial retail shops in J-Expo
;

(ii)

a decrease in properties held for sale of approximately RMB45.3 million due mainly to the
recognition of the sale of our Phase II properties in Guoling Shanshui
which were
delivered to the purchasers; and

(iii)

a decrease in prepayments, other receivables and deposits paid of approximately RMB9.2 million
due mainly to the refund of deposits paid in FY2006 of approximately RMB50.0 million, which
resulted from the withdrawal of an intention to acquire 2 parcels of land in 1H2007. The effect was
partially offset by the prepayment of enterprise income tax, business tax and LAT amounting to
approximately RMB33.8 million as a result of pre-sale of J-Expo
, and advance
payment made to contractors for J-Expo
amounting to approximately RMB8.5
million.

The above working capital inflows were partially offset by a decrease in accruals and other payables of
approximately RMB113.3 million due mainly to the settlement of the remaining payments for the
acquisition of our subsidiary, Henan Jinzhi.

66

Net cash used in investing activities

FY2004
We recorded a net cash outflow from investing activities of approximately RMB53.4 million in FY2004.
This was due to the construction costs of office buildings and sports and leisure facilities and the
purchase of fixed assets such as motor vehicles, furniture and equipment.

FY2005
We recorded a net cash outflow from investing activities of approximately RMB36.9 million in FY2005.
This was mainly due to the construction costs of office buildings and sports and leisure facilities and the
purchase of fixed assets such as motor vehicles, furniture and equipment for a total of approximately
RMB38.8 million. These cash outflows were partially offset by the proceeds of the disposal of our fixed
assets which amounted to approximately RMB1.9 million.

FY2006
We recorded a net cash outflow from investing activities of approximately RMB18.3 million in FY2006.
This was mainly due to the payment of approximately RMB12.5 million resulting from the acquisition of
our subsidiary, Henan Jinzhi, and the purchase of fixed assets of approximately RMB5.8 million.

1H2007
We recorded a net cash outflow from investing activities of approximately RMB5.7 million in 1H2007. This
was mainly due to the purchase of fixed assets of approximately RMB2.5 million and the net cash outflow
in respect of the disposal of our entire 90.0% interests in Henan Guoling Hotspring Vacation Hotel
Management Co., Ltd.
(Guoling Management) (formerly known
as Henan Sinian Yingzhou Resort Hotel Management Co., Ltd
),
which amounted to approximately RMB3.3 million. A net cash outflow for the aforesaid disposal was
recorded as the consideration received from the disposal (approximately RMB9.0 million) was lesser than
the cash and bank balances in Guoling Management (approximately RMB12.3 million).
Net cash generated from financing activities

FY2004
Net cash inflows from financing activities amounted to approximately RMB166.9 million in FY2004 as a
result of an increase in new bank and other borrowings for a total of approximately RMB202.6 million.
These inflows were partially offset by repayment of bank and other borrowings for a total of
approximately RMB29.5 million and interest paid of approximately RMB6.2 million.

FY2005
Net cash inflows from financing activities amounted to approximately RMB7.8 million in FY2005 as a
result of capital contribution by a minority shareholder of a subsidiary of approximately RMB1.1 million
and an increase in new bank and other borrowings for a total of approximately RMB220.1 million. These
inflows were partially offset by repayment of bank and other borrowings for a total of approximately
RMB192.3 million, repayment to a related party of approximately RMB6.0 million and interest paid of
approximately RMB15.1 million.

FY2006
Net cash outflows from financing activities amounted to approximately RMB25.9 million in FY2006 as a
result of dividend paid to a minority shareholder of a subsidiary of approximately RMB0.1 million,
repayment of bank and other borrowings for a total of approximately RMB215.1 million and interest paid
of approximately RMB17.7 million. These outflows were partially offset by an increase in new bank and
other borrowings for a total of approximately RMB207.0 million.

1H2007
Net cash outflows from financing activities amounted to approximately RMB54.4 million in 1H2007 as a
result of repayment of bank and other borrowings for a total of approximately RMB187.0 million and
interest paid of approximately RMB7.4 million. These outflows were partially offset by an increase in new
bank and other borrowings for a total of approximately RMB140.0 million.
67

MATERIAL CAPITAL EXPENDITURES AND DIVESTMENTS


Our material capital expenditures and divestments for each of FY2004, FY2005, FY2006 and for the
period from 1 January 2007 up to the Latest Practicable Date were as follows:

(RMB000)

FY2004

Acquisitions
- Leasehold buildings
- Furniture & fixture, and office equipment
- Motor vehicles
- Investment properties

72,849
970
2,098

Divestments
- Furniture & fixture, and office equipment

FY2006

1 January 2007 to
the Latest
Practicable Date

87,986
2,652
2,391
39,947

2,477
349
837
2,093

395
130
140
1,964

1,897

FY2005

Acquisitions
Acquisitions of leasehold buildings in FY2004, FY2005 and FY2006 relate mainly to the acquisitions of
the sports facilities such as a sports centre and rock-climbing facility, a cinema and miniature replicas of
famous Chinese historical architectures, all of which are situated in Guoling Shanshui
.
Acquisitions of investment properties in FY2005, FY2006 and from 1 January 2007 to the Latest
Practicable Date relate mainly to the acquisition of the 14 hotel villas and 4 restaurants in Guoling
Shanshui
.
Save as disclosed above and in the section entitled Capitalisation and Indebtedness of this Prospectus,
we have no other material plans for capital expenditure or divestment of capital investments or
commitments as at the Latest Practicable Date.
FOREIGN EXCHANGE EXPOSURE
Our reporting currency is in RMB. Our operating subsidiaries, Zhengzhou Great View and Henan Jinzhi,
carry out their operations in the PRC. Accordingly, the functional currency of our subsidiaries is RMB and
they maintain their books and records in RMB. Transactions in currencies other than the functional
currency during the period, if any, will be translated into the functional currency at exchange rates in
effect at the time of the transactions. Monetary assets and liabilities denominated in currencies other than
the functional currency at the balance sheet date, if any, will be translated into the functional currency in
effect at the balance sheet date. Exchange gains and losses are dealt with in the profit and loss accounts
of our Group.
For the Periods Under Review, all our purchases and sales are denominated in RMB. However, to the
extent that we may enter into transactions in currencies other than RMB in the future, our financial results
may be subject to fluctuations between such foreign currencies and RMB. Currently we do not have a
formal hedging policy with respect to our foreign exchange exposure. We have not used any financial
hedging instruments to manage our foreign exchange risk. We will continue to monitor our foreign
exchange exposure and may employ hedging instruments to manage our foreign exchange exposure
should the need arise.

68

DIVIDEND POLICY
Subject to the Bermuda Companies Act, shareholders in general meeting may from time to time declare
a dividend or other distribution but no dividend or distribution shall be declared in excess of the amount
recommended by our Directors. Subject to the Bermuda Companies Act, our Directors may also from
time to time declare a dividend or other distribution.
Our Company was incorporated on 28 September 2007 and has not distributed any cash dividend on our
Shares since our incorporation.
Our Group currently does not have a formal dividend policy. The form, frequency and amount of future
dividends on our Shares will depend on our earnings and financial position, our results of operations, our
capital needs, our plans for expansion and other factors as our Directors may deem appropriate. The
dividends that our Directors may recommend or declare in respect of any particular financial year or
period will be subject to the factors outlined below as well as any other factors deemed relevant by our
Directors:
(a)

the level of our cash and retained earnings;

(b)

our actual and projected financial performance;

(c)

our projected levels of capital expenditure and other investment plans; and

(d)

restrictions on payment of dividends imposed on us by our financing arrangements (if any).

Information relating to taxes payable on dividends are set out in Appendix F Taxation to this
Prospectus.
Our Company will declare dividends, if any, and make payment of the dividends in Singapore dollars.

69

EXCHANGE CONTROL

FOREIGN EXCHANGE CONTROLS IN THE PRC


Major reforms have been introduced to the foreign exchange control system of the PRC since 1993.
On 28 December 1993, the PBOC, with the authorisation of the State Council issued the Notice on
Further Reform of the Foreign Exchange Control System
which
came into effect on 1 January 1994. Other new regulations and implementation measures include the
Regulations on the Foreign Exchange Settlement, Sale and Payments
which were promulgated on 20 June 1996 and took effect on 1 July 1996 and which contain detailed
provisions regulating the settlement, sale and payment of foreign exchange by enterprises, individuals,
foreign organisations and visitors in the PRC and the Regulations of the PRC on Foreign Exchange
Control
which were promulgated on 1 January 1996 and took effect on
1 April 1996 and which contain detailed provisions in relation to foreign exchange control.
On 21 July 2005, the PBOC issued Public Announcement of the PBOC on Reforming the RMB
Exchange Rate Regime
, which stated that from
21 July 2005 China will reform the exchange rate regime by moving into a managed floating exchange
rate regime based on market supply and demand with reference to a basket of currencies. RMB will no
longer be pegged to the US dollar and the RMB exchange rate regime will be improved with greater
flexibility.
Under these new regulations, the previous dual exchange rate system for RMB was abolished and a
unified floating exchange rate system based largely on supply and demand was introduced. The PBOC
publishes the RMB exchange rate against the US$ daily and other major foreign currencies daily. Such
rate is to be set by reference to the RMB/US$ and other major foreign currencies trading price on the
previous day on the inter-bank foreign exchange market.
The foreign exchange earnings of all PRC enterprises, other than those foreign investment enterprises
(FIE), who are allowed to retain a part of their regular foreign exchange earnings or specifically
exempted under the relevant regulations, are to be sold to designated banks. Foreign exchange earnings
obtained from borrowings from foreign institutions or issues of shares or bonds denominated in foreign
currency need not be sold to designated banks, but must be kept in foreign exchange bank accounts of
designated banks unless specifically approved otherwise.
At present, control of the purchase of foreign exchange is relaxed. Enterprises within the PRC which
require foreign exchange for their ordinary trading and non-trading activities, import activities and
repayment of foreign debts may purchase foreign exchange from designated banks if the application is
supported by the relevant documents. Furthermore, FIEs may distribute profit to their foreign investors
with funds in their foreign exchange bank accounts kept with designated banks. Should such foreign
exchange be insufficient, enterprises may purchase foreign exchange from designated banks upon the
presentation of the resolutions of the directors on the profit distribution plan of the particular enterprise.
When conducting foreign exchange transactions, the designated banks may, based on the exchange rate
published by the PBOC and subject to certain limits, freely determine the applicable exchange rate.
The China Foreign Exchange Trading Centre (CFETC) was formally established and came into
operation on 1 April 1994. CFETC has set up a computerised network with sub-centres in several major
cities, thereby forming an interbank market in which designated PRC banks can trade and settle their
foreign currencies. Prior to 1 December 1998, FIE may upon their own choice enter into exchange
transactions through a swap centre or through designated PRC banks. On 25 October 1998, PBOC and
SAFE issued a joint announcement on the abolishment of foreign exchange swap business which stated
that from 1 December 1998, foreign exchange transactions will have to be conducted through designated
banks. In addition, some swap centres would be abolished while others which are already linked up with
CFETC by the computerised network will be merged with CFETC and sub-centres to the CFETC.

70

On 14 January 1997, the Regulations of the PRC on Foreign Exchange Control


was amended such that the payment in and transfer of foreign exchange for current international
transactions will no longer be subject to the PRC government control or restrictions.
In addition, on 21 October 2005, SAFE promulgated the Notice Concerning the Foreign Exchange
Administration in the Financing and Round-trip Investment Conducted by PRC Residents via Special
Purpose Vehicle Companies
(the SAFE Notice No. 75). Under the SAFE Notice No. 75, PRC residents have to
register their foreign investments with the local SAFE prior to the incorporation or taking control of
special purpose companies (the SPV) and prior to the alteration registration through which such SPV
acquires the PRC residents assets for the financing of foreign investments.
Other than the above-mentioned registration requirement, the SAFE Notice No. 75 also requires PRC
residents who are majority shareholders in the overseas invested companies to register, modify or record
with the local foreign exchange authority within 30 days from the date of any increase/decrease of
capital, share transfer, mergers/demergers, change in long-term equity or debts investments and outward
guarantees in the SPV. Moreover, profits, dividends and foreign exchange relating to capital changes
received by PRC residents from the SPV shall be repatriated to the PRC within 180 days of receiving
such amounts. For SPVs which were incorporated or restructured prior to the issue of the new rules, the
SAFE Notice No. 75 requires the domestic residents to complete the supplemental registration before
31 March 2006.
When a PRC resident violates the provisions in SAFE Notice No. 75 and it constitutes an evasion of any
foreign exchange regulations, SAFE will penalise in accordance with the relevant foreign exchange rules
and regulations.
FOREIGN EXCHANGE CONTROLS IN BERMUDA
Please refer to Appendix E Summary of Bermuda Company Law to this Prospectus for more details
on the Bermuda exchange controls laws.

71

CAPITALISATION AND INDEBTEDNESS


The following table shows the cash and bank balances, pledged deposits, capitalisation and
indebtedness of our Group:
(a)

as at 30 June 2007, based on the combined balance sheet as set out in Appendix A to this
Prospectus;

(b)

as at the Latest Practicable Date, based on our unaudited management accounts as adjusted for
the Restructuring Exercise; and

(c)

as at the Latest Practicable Date, adjusted to give effect to the proceeds from the issuance of the
New Shares pursuant to the Invitation, after deducting our share of the estimated expenses related
to the Invitation and taking into account the application of the proceeds from the issue of the New
Shares (Adjusted Unaudited).

You should read this in conjunction with the Combined Financial Information as set out in Appendix A to
this Prospectus.
Audited as at
30 June 2007

Unaudited as at
the Latest
Practicable Date

(RMB000)
Restricted bank deposits
Cash and bank balances

Adjusted
Unaudited as at
the Latest
Practicable Date

10,674
300,182

16,420
580,946

16,420
1,166,371

Indebtedness
Interest-bearing bank borrowings secured
and non-guaranteed
Interest-bearing other borrowings - unsecured
and non-guaranteed

90,000

40,000

40,000

100,000

Total indebtedness

190,000

40,000

40,000

Total shareholders equity

619,010

1,020,600

1,606,025

Total capitalisation and indebtedness

809,010

1,060,600

1,646,025

As at 30 June 2007, our non-guaranteed bank borrowings amounted to RMB90.0 million and were
secured by the pledge of our Groups entire land use rights, certain properties held for development,
certain properties held under development and certain properties held for sale. Our other borrowings
amounted to RMB100.0 million and were non-guaranteed and unsecured. These bank and other
borrowings bear interests ranging from 5.85% to 7.20% per annum.
As at the Latest Practicable Date, our bank borrowings amounted to RMB40.0 million were secured by
the pledge of certain of our Groups properties held for development. These bank borrowings bear
interests of 7.23% per annum.
As at Latest Practicable Date, all of our total bank facilities have been fully utilised. Details of our total
bank borrowings amounting to RMB40.0 million are set out in the table below:
Bank

Amount of Loan
(RMB million)

Interest Rate
(%)

Maturity Date

40.0

7.23

9 July 2008

China Citic Bank Co., Ltd.

72

As at the Latest Practicable Date, based on the management accounts of our Group, there were no
material changes in our capitalisation and indebtedness as disclosed above, save for:
(a)

the increase in our cash and cash equivalents by approximately RMB280.7 million from RMB300.2
million as at 30 June 2007 to RMB580.9 million as at the Latest Practicable Date;

(b)

changes in bank borrowings as detailed above; and

(c)

changes in our retained earnings arising from our day to day operations in the ordinary course of
our business.

Based on the above and to the best of their knowledge, our Directors are of the opinion that we have
adequate working capital for our present requirements after taking into account the present banking
facilities, shareholders funds and internal cash resources as at the Latest Practicable Date.
Capital Commitments
As at 30 June 2007 and as at the Latest Practicable Date, we have the capital commitments as follows:
As at 30 June 2007

Contracted but not provided for in respect of


the construction works for our properties
under development, J-Expo


RMB000

As at the Latest
Practicable Date
RMB000

150,819

81,359

Contingent Liabilities
As at the Latest Practicable Date, we have financial guarantee contracts of RMB272.5 million in respect
of mortgage facilities granted by certain banks relating to the mortgage loans arranged for certain
purchasers of our Groups properties. Pursuant to the terms of the guarantees, upon default in mortgage
payments by these purchasers, our Group is responsible to repay the outstanding mortgage principals
together with accrued interest and penalty owned by the defaulted purchasers to the bankers and our
Group is entitled take over the legal title and possession of the related properties. Our Groups
guarantee periods start from the date of grant of the relevant mortgage loans and end when the property
purchasers obtain the property ownership certificates which are then pledged with the banks.
Save for the foregoing, as at the Latest Practicable Date, we have no other borrowings or indebtedness
and liabilities under acceptances or acceptance credits, mortgages, charges, obligations under finance
leases, guarantees.

73

DILUTION
Dilution is the amount by which the Issue Price paid by subscribers of our New Shares in this Invitation
exceeds our NAV per Share after the Invitation. The NAV of our Group as at 30 June 2007 before
adjusting for the net proceeds from the issue of New Shares (the Adjusted NAV) and based on our preInvitation Share capital of 1,600,000,000 Shares was approximately 7.78 cents per Share.
Based on the issue of 245,000,000 New Shares at the Issue Price pursuant to the Invitation and after
deducting our share of the estimated issue expenses, the Adjusted NAV of our Group as at 30 June
2007 based on our post-Invitation Share capital of 1,845,000,000 would have been approximately
12.92 cents per Share. This represents an immediate increase in NAV of approximately 5.14 cents per
Share to our existing Shareholders and an immediate dilution in NAV of approximately 37.08 cents per
Share to our new investors.
The following table illustrates this per Share dilution:
Per Share
cents
Issue Price

50

NAV per Share as at 30 June 2007 before adjusting for our portion of
the net proceeds from the Invitation

7.78

Increase in NAV attributable to the Invitation

5.14

NAV after the Invitation

12.92

Dilution in NAV to new investors

37.08

Dilution in NAV to new investor as a percentage of the Issue Price

74.2%

The following table summarises the total number of Shares acquired by our Directors and/or Substantial
Shareholders and the Pre-Invitation Investors (after adjusting for the Restructuring Exercise, details of
which are set out in the section entitled Restructuring Exercise of this Prospectus) during the period of
three years prior to the date of this Prospectus, the total consideration paid by them and the average
price per Share to our Directors and Substantial Shareholders, Pre-Invitation Investors and to the new
investors pursuant to the Invitation.
Number of Shares
Acquired

Total Cash
Consideration
(S$)(3)

Average Price
Per Share
(cents)

Directors and/or Substantial Shareholders


Ember Vision Limited(1)
Marble Focus Limited(2)

896,000,000
384,000,000

n.m.(5)
74,175,428

n.m.(5)
19.3

Pre-Invitation Investors(4)
CIM X Limited
Easy Solution Limited
Queen Hope Holdings Limited
New Investors

160,000,000
96,000,000
64,000,000
245,000,000

64,813,481
38,888,089
25,925,392
122,500,000

40.5
40.5
40.5
50.0

Notes:
(1)

Ember Vision is an investment company incorporared in the BVI and is wholly-owned, in the proportion of 57.15% and
42.85%, by our Non-Executive Chairman, Li Wei, and Wang Peng, respectively.

(2)

Marble Focus is an investment company incorporated in the BVI and is wholly-owned by its sole director and our Executive
Director and Chief Executive Officer, Yan Tao.

74

(3)

Based on the exchange rate of S$1.00:US$0.6943 as at the Latest Practicable Date.

(4)

This amount includes the subscription price paid by Overseas Market, a company wholly-owned by Li Wei and Wang Peng,
for shares in Piaget. These shares were subsequently transferred to the Pre-Invitation Investors when they exchanged their
exchangeable notes for the said shares pursuant to the terms of the respective exchangeable notes, details of which are set
out in the section entitled Restructuring Exercise of this Prospectus.

(5)

These amounts are not meaningful.

75

ADJUSTED APPRAISED NTA


The following Adjusted Appraised NTA of our Group is based on the Pro Forma Report as set out in
Appendix B to this Prospectus, and adjusted as follows:
RMB000
Unaudited pro forma NTA of our Group as at 30 June 2007(1)

538,038

Surplus arising from valuation of our properties on hand. Please refer to the
Valuers Report in Appendix C to this Prospectus

9,106,442

(2)

Less: Provision for LAT on revaluation surplus(3)

(3,642,577)

Revaluation surplus after LAT provision

5,463,865

Less: Provision for deferred tax on revaluation surplus after LAT provision

(4)

(1,365,966)

Estimated net surplus from revaluation

4,097,899

Adjusted Appraised NTA after taking into consideration the estimated


net surplus from revaluation

4,635,937

Adjusted Appraised NTA per Share based on our Companys pre-Invitation share
capital of 1,600,000,000 Shares in RMB
Adjusted Appraised NTA per Share based on our Companys pre-Invitation share
capital of 1,600,000,000 Shares in cents(5)
Estimated net proceeds from the issue of the New Shares
Adjusted Appraised NTA after factoring in the estimated net proceeds

2.90

56.4
585,425
5,221,362

Adjusted Appraised NTA per Share based on our Companys post-Invitation


share capital of 1,845,000,000 after factoring in the estimated net proceeds in RMB

2.83

Adjusted Appraised NTA per Share based on our Companys post-Invitation


share capital of 1,845,000,000 after factoring in the estimated net proceeds in cents(5)

55.1

Notes:
(1)

The pro forma NTA computation excludes land use rights, goodwill and deferred tax assets.

(2)

The surplus arising on the valuation of our Groups interests in these properties is calculated based on the appraised value
of such interests as at 30 June 2007 as stated in the Valuers Report in Appendix C to this Prospectus, and adjusting for our
Groups attributable interests in these properties after the Restructuring Exercise.

(3)

The provision of the LAT is calculated on the basis of LAT provision for the revaluation of our Groups property interest as at
30 June 2007 as adjusted for the Groups attributable interests in these properties after the Restructuring Exercise, and the
assumed LAT rate of 40%.

(4)

The provision of the deferred tax on revaluation surplus after LAT provision is calculated on the basis of the prevailing rates
of 25%.

(5)

Calculation based on the exchange rate of RMB5.140:S$1.00 as the Latest Practicable Date.

76

SHARE CAPITAL
Our Company (Registration No. 40770) was incorporated in Bermuda on 28 September 2007 under the
Bermuda Companies Act as an exempted company under the name of CentraLand Limited. As at the
date of incorporation, the authorised share capital of our Company was HK$100,000 divided into 666,666
ordinary shares of HK$0.15 each. On 11 October 2007 (Date of Organisation), 1,000 ordinary shares
of HK$0.15 each in the share capital of our Company were allotted and issued nil-paid to Ember Vision.
The Date of Organisation is the date on which our Company held its organisational meetings and, for the
purposes of completing the organisation of our Company, our Directors had on 12 October 2007 passed
resolutions to, inter alia, appoint certain officers of our Company and to deal with certain postincorporation matters. Under Bermuda law, a Bermuda exempted company is organised when its
organisational meetings have been held to, among other things, accept the initial subscription of shares
and appoint directors. A Bermuda exempted company may not commence or carry out business or
exercise any borrowing powers unless and until it is organised. Further, a company is incorporated
without directors and persons whose names are subscribed to the memorandum of association are
deemed to be provisional directors with only limited powers to deal with certain preliminary administrative
matters. Therefore, a Bermuda exempted company will be considered organised and be in a position to
commence its business activities only when it has held meetings to deal with the initial subscription of
shares and appointment of directors.
Pursuant to written resolutions dated 8 December 2007, our then sole shareholder approved, inter alia,
the following:
(a)

the increase of our authorised share capital from HK$100,000 to HK$150,000 divided into
1,000,000 ordinary shares of HK$0.15 each;

(b)

the allotment and issue of 999,000 nil-paid new ordinary shares of HK$0.15 each to Ember Vision;

(c)

the consolidation of every eight ordinary shares of HK$0.15 each into one ordinary share of
HK$1.20 (the Share Consolidation); and

(d)

the sub-division of every one ordinary share of HK$1.20 into three shares of HK$0.40 each (the
Share Subdivision).

Pursuant to written resolutions dated 12 December 2007, our then sole shareholder approved, inter alia,
the following:
(a)

the increase in the authorised share capital of our Company from HK$150,000 divided into
375,000 Shares to HK$2,000,000,000 divided into 5,000,000,000 Shares;

(b)

crediting as fully paid the 375,000 nil-paid Shares held by Ember Vision and the allotment and
issue of 1,599,625,000 new Shares credited as fully paid, to Ember Vision, Marble Focus, CIM X,
Easy Solution and Queen Hope as part of our Companys Restructuring Exercise (details of which
are set out in the section entitled Restructuring Exercise of this Prospectus), subject to our
Companys receipt of the Bermuda Monetary Authoritys permission to issue the said
1,599,625,000 new Shares;

Pursuant to written resolutions dated 19 December 2007, our shareholders approved, inter alia, the
following:
(a)

the adoption of a new set of Bye-laws of our Company;

(b)

the allotment and issue of the New Shares which are the subject of the Invitation. The New
Shares, when allotted, issued and fully paid-up, will rank pari passu in all respects with the existing
issued and fully paid-up Shares; and

77

(c)

that authority be given to our Directors to:


(i)

allot and issue Shares (other than the New Shares) whether by way of rights, bonus or
otherwise (including Shares as may be issued pursuant to any Instrument (as defined
below) made or granted by our Directors while this resolution is in force notwithstanding that
the authority conferred by this resolution may have ceased to be in force at the time of issue
if such Shares); and/or

(ii)

make or grant offers, agreements or options (collectively, the Instruments) that might or
would require Shares to be issued, including but not limited to the creation and issue of
warrants, debentures or other instruments convertible into Shares, at any time and upon
such terms and conditions and for such purposes and to such persons as our Directors may
think fit for the benefit of our Company,

provided that the aggregate number of Shares issued pursuant to such authority (including Shares
issued pursuant to any Instrument), shall not exceed 50% of the post-Invitation issued share
capital of our Company, and provided further that the aggregate number of such Shares to be
offered other than on a pro-rata basis in pursuance to such authority (including Shares issued
pursuant to any Instrument) to our then existing Shareholders shall not exceed 20% of the postInvitation issued share capital of our Company, and unless revoked or varied by our Company in
general meeting, such authority shall continue in full force until the conclusion of our next annual
general meeting or the date by which our next annual general meeting is required by law or by our
Bye-laws to be held, whichever is earlier.
For the purposes of this resolution, the post-Invitation issued share capital shall mean the
enlarged issued share capital of our Company immediately after the Invitation and after adjusting
for: (i) new Shares arising from the conversion or exercise of any convertible securities; (ii) new
Shares arising from exercising share options or vesting of share awards outstanding or subsisting
at the time such authority is given, provided the options or awards were granted in compliance with
the Listing Manual of the SGX-ST; and (iii) any subsequent consolidation or sub-division of our
Shares.
The aforesaid Bermuda Monetary Authoritys permission was obtained on 14 November 2007.
As at 12 December 2007, our Company has only one class of shares, being ordinary shares of HK$0.40
each of which 1,600,000,000 have been issued and fully paid-up. The rights and privileges of our Shares
are stated in our Bye-laws. There are no founder, management, deferred or unissued shares reserved
for the issuance for any purpose. No person has been, or is entitled to be, given an option to subscribe
for or purchase any securities of our Company or any of its subsidiaries. As at the Latest Practicable
Date, no option to subscribe for shares in our Company has been granted to, or was exercised by, any of
our Directors. There are no shares held by or on behalf of our Company or by our subsidiaries.
The present issued and paid-up capital of our Company is HK$640,000,000 divided into 1,600,000,000
Shares. Upon the allotment of the New Shares, the resultant issued and paid-up share capital of our
Company will be increased to HK$738,000,000 divided into 1,845,000,000 Shares.

78

Details of the changes in the issued and paid-up share capital of our Company since incorporation and
the resultant issued and paid-up share capital immediately after the Invitation are as follows:

Purpose of issue/changes

Number of
resultant
issued
ordinary
shares

Number of
new ordinary
shares issued

Par value
(HK$)

Resultant
issued and
paid-up
share capital
(HK$)

Issued ordinary shares of HK$0.15 each nil-paid as


at the Date of Organisation

0.15

1,000

1,000

150 (nil-paid)

Issued ordinary shares of HK$0.15 each nil-paid on


8 December 2007

0.15

999,000

1,000,000

150,000
(nil-paid)

Consolidation of every eight shares of HK$0.15


each into one ordinary share of HK$1.20 on 8
December 2007

1.20

125,000

150,000
(nil-paid)

Subdivision of every one ordinary share of HK$1.20


into three shares of HK$0.40 each on 8 December
2007

0.40

375,000

150,000
(nil-paid)

Crediting as fully paid the 375,000 ordinary shares


of HK$0.40 each that were issued nil-paid upon the
completion of the Restructuring Exercise

0.40

375,000

150,000

Issued and fully paid-up Shares allotted and issued


pursuant to the Restructuring Exercise

0.40

1,599,625,000

1,600,000,000

640,000,000

New Shares to be issued pursuant to the Invitation

0.40

245,000,000

1,845,000,000

738,000,000

Post-Invitation share capital

0.40

1,845,000,000

738,000,000

The authorised share capital and the shareholders equity of our Company as at the Date of
Organisation, after the Restructuring Exercise and after the issue of the New Shares pursuant to the
Invitation are set forth below. These statements should be read in conjunction with the Combined
Financial Information as set out in Appendix A of this Prospectus.

As at the
Date of
Organisation
(HK$)

Immediately after
the increase in
authorised share
capital and the
Restructuring
Immediately
Exercise
after the Invitation
(HK$)
(HK$)

AUTHORISED SHARE CAPITAL


Ordinary Shares of HK$0.15 each
Ordinary Shares of HK$0.40 each

100,000

2,000,000,000

2,000,000,000

150 (nil-paid) (1)

640,000,000

11,658,069

738,000,000
564,725,000
11,658,069

651,658,069

1,314,383,069

SHAREHOLDERS EQUITY
Issued and fully paid-up share capital
Share premium(2)
Contributed surplus (3)
Total Shareholders equity

79

Notes:
(1)

1,000 ordinary shares of HK$0.15 each issued nil-paid.

(2)

Based on the exchange rate of HK$5.410:S$1.00 as at the Latest Practicable Date in respect of the Issued Price of the New
Shares being issued in S$. No representation is made that the HK$ amount stated can be converted in S$ at such rate
indicated or any other rate or at all.

(3)

Contributed surplus arose as a result of the Restructuring Exercise and represents the difference between the combined
NAV of Piaget and its subsidiaries acquired over the nominal value of our Shares issued. For the purpose of preparing the
above disclosure, the combined NAV of Piaget and its subsidiaries acquired was calculated based on the combined financial
statements as at 30 June 2007. The final amount of the contributed surplus will be adjusted by reference to the combined
NAV of Piaget and its subsidiaries acquired as at 12 December 2007 (being the date of completion of the Restructuring
Exercise) and based on the exchange rate of HK$1.00:RMB0.9499 as at the Latest Practicable Date. No representation is
made that the HK$ amount stated can be converted in RMB at such rate indicated or any other rate or at all.

80

SHAREHOLDERS
The Shareholders of our Company and their respective shareholdings immediately before the Invitation
(as at 12 December 2007) and immediately after the Invitation are set out as follows:
Before the Invitation
Direct Interest
Deemed Interest
Number of
Number of
Shares
Shares
(000)
%
(000)
%

After the Invitation


Direct Interest
Deemed Interest
Number of
Number of
Shares
Shares
(000)
%
(000)
%

Directors
Li Wei

(1) (2)

896,000

56.0

896,000

48.6

(3)

384,000

24.0

384,000

20.8

Wang Jian

Wang Zhimin

Liu Xuemei

Tan Siok Sing

Tan Siok Chin

Li Danny Fui Lung

Ember Vision Limited(2)

896,000

56.0

896,000

48.6

Marble Focus Limited

384,000

24.0

384,000

20.8

160,000

10.0

160,000

8.7

96,000

6.0

96,000

5.2

896,000

56.0

896,000

48.6

64,000

4.0

64,000

3.5

Public

245,000

13.3

TOTAL

1,600,000

100.0

1,845,000

100.0

Yan Tao

Holders of 5% or more

(3)

CIM X Limited

(4) (5)

Easy Solution Limited


Wang Peng

(6)

(1) (2)

Others
Queen Hope Holdings Limited(7)

Notes:
(1)

Wang Peng, is the son of the cousin of our Non-Executive Chairman, Li Wei.

(2)

Ember Vision is an investment company incorporated in the BVI on 19 July 2006 and is wholly owned, in the proportion of
57.15% and 42.85%, by our Non-Executive Chairman, Li Wei, and Wang Peng respectively. Li Wei and Wang Peng are
deemed to have an interest in all Shares held by Ember Vision.

(3)

Marble Focus is an investment company incorporated in the BVI on 4 July 2006 and is wholly owned by its sole director and
our Executive Director and Chief Executive Officer, Yan Tao. Yan Tao is deemed to have an interest in all the Shares held by
Marble Focus.

(4)

CIM X is an investment holding company incorporated in the BVI on 8 February 2007. Centurion Investment Management
Holdings (BVI) Limited, an investment holding company incorporated in the BVI on 11 January 2005 was appointed by CIM X
as the investment manager responsible for managing its investment on a discretionary basis. CIM X has two classes of
shares, namely voting ordinary shares and non-voting preference shares. The one issued voting ordinary share is held by
Centurion Investment Management Holdings (BVI) Limited as the investment manager for CIM X and the non-voting
preference shares are held as to 31.20% by Mr Loh Kim Kang, David (Mr Loh), 24.54% by Mr Han Seng Juan (Mr Han),
17.11% by Mr Cheung Yick Chung, 6.67% by Mr Yeo Boon Hing and the rest by several other accredited investors.

81

(5)

Centurion Investment Management Holdings (BVI) Limited is the wholly owned subsidiary of Centurion Holdings (B.V.I)
Limited, which is equally owned by Mr Loh Kim Kang, David and Mr Han Seng Juan. Each of Mr Loh, Mr Han, Centurion
Holdings (BVI) Limited and Centurion Investment Management Holdings (BVI) Limited is deemed to be interested in the
shares held by CIM X. Mr Loh and Mr Han are trading representatives of UOB Kay Hian Private Limited. They are also
maternal cousins. Mr Loh and Mr Han are not related to our Directors, Executive Officers or Controlling Shareholders.

(6)

Easy Solution is an investment company incorporated in BVI on 2 January 2007 and is wholly owned by its sole director,
Mr Chow Sau Tung, who is not related to our Directors, Executive Officers or Controlling Shareholders. Mr Chow Sau Tung is
deemed to have an interest in all the Shares held by Easy Solution.

(7)

Queen Hope is an investment company incorporated in BVI on 12 December 2006 and is wholly owned by its sole director,
Ms Lui Oi Hung, who is not related to our Directors, Executive Officers or Controlling Shareholders. Ms Lui Oi Hung is
deemed to have an interest in all the Shares held by Queen Hope.

The Shares held by our Directors and Substantial Shareholders do not carry different voting rights from
the New Shares which are the subject of the Invitation. To the best of our knowledge, none of our
Directors are aware of any arrangement, the operation of which may at a subsequent date result in a
change in control of our Company.
None of our Pre-Invitation Investors are related to one another or to or any of our Directors, Controlling
Shareholders and Executive Officers.
Save as disclosed above, our Company is not directly or indirectly owned or controlled, whether severally
or jointly, by any person or government.
Save as disclosed in the section entitled Restructuring Exercise of this Prospectus, there has been no
significant change in the percentage of ownership of our Shares since our incorporation.
Save as disclosed above, none of our Directors and our Substantial Shareholders are related to one
another.
None of our Directors and Executive Officers was appointed pursuant to an arrangement or
understanding with any of our Substantial Shareholders, customers or suppliers.
No option to subscribe for shares in, or debentures of, our Company or our subsidiaries has been
granted to, or was exercised by, any Director or Executive Officer within the two financial years preceding
the date of this Prospectus.
Save as disclosed herein, no person has, or has the right to be given, an option to subscribe for or
purchase any shares in or debentures of our Company or any of our subsidiaries.
There has not been any public take-over offer by a third party in respect of our Shares or by our
Company in respect of shares of another corporation or units of a business trust which has occurred
between 28 September 2007, which is the date of incorporation of our Company, and the Latest
Practicable Date.

82

MORATORIUM
To demonstrate their commitment to our Group, each of Ember Vision and Marble Focus which holds
approximately 896,000,000 Shares and 384,000,000 Shares respectively, representing 48.6% and 20.8%
of our Companys post-Invitation share capital respectively, has undertaken not to dispose of or transfer
or enter into any agreement that will directly or indirectly constitute or will be deemed as a disposal of
any part of their respective shareholdings in our Company for a period of six months commencing from
the date of admission of our Company to the Official List of the SGX-ST, and each of them will not
dispose of or transfer or enter into any agreement that will directly or indirectly constitute or will be
deemed as a disposal of any part of their respective shareholdings in our Company to below 50% of the
abovementioned shareholdings in our Company in the six months thereafter.
Li Wei and Wang Peng who together hold the entire issued and paid-up share capital of Ember Vision in
the proportion of 57.15% and 42.85% respectively, have each undertaken not to dispose of or transfer or
enter into any agreement that will directly or indirectly constitute or will be deemed as a disposal of any
part of his respective interests in Ember Vision for a period of twelve months commencing from the date
of admission of our Company to the Official List of the SGX-ST.
Yan Tao who holds the entire issued and paid-up share capital of Marble Focus, has undertaken not to
dispose of or transfer or enter into any agreement that will directly or indirectly constitute or will be
deemed as a disposal of any part of his interest in Marble Focus for a period of twelve months
commencing from the date of admission of our Company to the Official List of the SGX-ST.
CIM X, which holds 160,000,000 Shares representing 8.7% of our Companys post-Invitation share
capital, has undertaken to comply with the moratorium set forth in Rule 229(3) of the Listing Manual and
therefore undertaken not to dispose of or transfer or enter into any agreement that will directly or
indirectly constitute or will be deemed as a disposal of any part of its 30,374,000 Shares representing
1.65% of our Companys post-Invitation share capital for a period of six months commencing from the
date of admission of our Company to the Official List of the SGX-ST.
Easy Solution and Queen Hope which hold 96,000,000 and 64,000,000 Shares respectively, representing
5.2% and 3.5% respectively of our Companys post-Invitation share capital, have each undertaken not to
dispose of or transfer or enter into any agreement that will directly or indirectly constitute or will be
deemed as a disposal of any part of their respective shareholdings in our Company for a period of six
months commencing from the date of admission of our Company to the Official List of the SGX-ST.
Each of (i) Centurion Investment Management Holdings (BVI) Limited which holds the one voting
ordinary share in CIM X; (ii) Mr Loh Kim Kang, David and Mr Han Seng Juan who each holds 31.20%
and 24.54% of the non-voting preference shares in CIM X respectively; (iii) Mr Chow Sau Tung who holds
the entire issued and paid-up share capital of Easy Solution; and (iv) Ms Lui Oi Hung who holds the
entire issued and paid-up share capital of Queen Hope has given his/its respective undertaking that he/it
will not dispose of or transfer or enter into any agreement that will directly or indirectly constitute or will
be deemed as a disposal of any part of his/ its respective interest in the respective companies for a
period of six months commencing from the date of admission of our Company to the Official List of the
SGX-ST.

83

RESTRUCTURING EXERCISE
To streamline and rationalise our corporate structure and shareholding structure in preparation for our
listing on the SGX-ST, we implemented a restructuring exercise prior to the Invitation (the Restructuring
Exercise), resulting in our Company becoming the holding company of our Group.
The following steps were taken in the Restructuring Exercise:
1.

Shareholdings of Our Subsidiary, Piaget, prior to the Restructuring Exercise and the
Transfer of Shareholding Interests in Ember Vision by Li Wei to Wang Peng
Prior to the Restructuring Exercise, all the issued shares of our subsidiary, Piaget, were held
entirely by Ember Vision, a company incorporated in the BVI as an investment holding company.
Ember Vision was jointly owned by Li Wei and Wang Peng in the proportion of 90.0% and 10.0%
respectively. Wang Peng is the son of Li Weis cousin.
On 12 September 2007, Li Wei, our Non-Executive Chairman, transferred 32.85% equity interest in
Ember Vision held by him to Wang Peng for nominal consideration of US$1.00 per share. Upon
completion of the aforesaid transfer, Ember Vision was owned by Li Wei and Wang Peng in the
proportion of 57.15% and 42.85% respectively.

2.

Subscription of Piaget Shares by Yan Tao


On 20 October 2006, the sole director of Piaget approved, inter alia, the, subscription by Yan Tao
or a company wholly-owned by Yan Tao of 300 ordinary shares of no par value in the capital of
Piaget (Piaget Shares), representing 30.0% of then enlarged share capital of Piaget, at an
aggregate consideration of US$51.5 million, determined on willing buyer willing seller and arms
length basis. Upon completion of the subscription, Marble Focus, a BVI investment holding
company wholly owned by Yan Tao, was allotted and issued 300 Piaget Shares.
Following the completion of the subscriptions referred to above, the entire issued share capital of
Piaget was owned by Ember Vision and Marble Focus in the proportion of 70.0% and 30.0%
respectively.

3.

Incorporation of Overseas Market and its Subscription of Piaget Shares


Overseas Market was incorporated on 3 July 2007 in the BVI as an investment holding company.
Overseas Market has 10 issued shares (the Overseas Market Shares) of US$1.00 each, of which
Li Wei and Wang Peng owned 9 and 1 Overseas Market Shares respectively.
On 4 August 2007, the sole director of Piaget approved, inter alia, the, subscription by Overseas
Market of 250 Piaget Shares, representing 20.0% of then enlarged share capital of Piaget, at the
consideration of US$360,000 per share resulting in an aggregate consideration of US$90.0 million
based on the net asset value of Zhengzhou Great View as at 31 October 2006. Upon completion
of the subscription, the entire shareholding interests of Piaget were held by Ember Vision, Marble
Focus and Overseas Market in the proportion of 56.0%, 24.0% and 20.0% respectively.

4.

Subscription and issuance of Exchangeable Notes


On 3 August 2007, Overseas Market, Piaget, Ember Vision, Marble Focus, Li Wei, Wang Peng, Yan
Tao and CIM X entered into a subscription agreement (the CIM Subscription Agreement) for the
issuance of exchangeable notes with an aggregate principal value of US$45.0 million (the CIM
Exchangeable Notes) by Overseas Market to CIM X.
Under the CIM Subscription Agreement, the parties agreed, inter alia, that:
(i)

the CIM Exchangeable Notes were exchangeable into Piaget Shares held by Overseas
Market in the event of the listing of our Company on the SGX-ST, on the terms and
conditions of the CIM Subscription Agreement and the exchangeable note instrument, also
entered into by the parties to the CIM Subscription Agreement; and

(ii)

Li Wei, Wang Peng and Yan Tao (collectively, as guarantors) would guarantee, inter alia, the
due payment by Overseas Market of the principal amount and interest accruing on the CIM
Exchangeable Notes (if any), as and when the same should become due and payable.
84

On 7 August 2007, Overseas Market issued the CIM Exchangeable Notes to CIM X and the
aggregate consideration of US$45.0 million was satisfied in full by the CIM X in cash.
On 1 September 2007, Overseas Market, Piaget, Ember Vision, Marble Focus, Li Wei, Wang Peng,
Yan Tao and the other Pre-Invitation Investors (other than CIM X) entered into a subscription
agreement (the Pre-Invitation Subscription Agreement) for the issuance of exchangeable notes
with an aggregrate principal value of US$45.0 million (the Pre-Invitation Exchangeable Notes) by
Overseas Market to the other Pre-Invitation Investors (other than CIM X) on the same terms as the
CIM Subscription Agreement.
On 1 September 2007, Overseas Market issued the Pre-Invitation Exchangeable Notes to the
other Pre-Invitation Investors (other than CIM X) and the aggregate consideration of US$45.0
million was satisfied in full by these Pre-Invitation Investors in cash.
On 12 December 2007, the Pre-Invitation Investors exchanged their CIM and Pre-Invitation
Exchangeable Notes for an aggregate of 250 Piaget Shares held by Overseas Market (the
Exchange). Details of the amount of the CIM and Pre-Invitation Exchangeable Notes held and
the shareholding of the Pre-Invitation Investors in Piaget after the Exchange are set out below:
Before Conversion

After Conversion

Exchangeable
Notes
(US$)

Number of
Piaget Shares

% shareholding
in Piaget

CIM X Limited

45,000,000

125

10.0%

Easy Solution Limited

27,000,000

75

6.0%

Queen Hope Holdings Limited

18,000,000

50

4.0%

Total

90,000,000

250

20.0%

Pre-Invitation Investor

Upon completion of the Exchange, Ember Vision, Marble Focus, CIM X, Easy Solution and Queen
Hope respectively held 56.0%, 24.0%, 10.0%, 6.0% and 4.0% of the total issued share capital of
Piaget.
5.

Acquisition of Piaget and Share Swap


On 12 December 2007, our Company, as purchaser, and the shareholders of Piaget comprising
Ember Vision, Marble Focus and the Pre-Invitation Investors, as vendors, entered into a share
swap agreement (the Share Swap Agreement). The terms of the Share Swap Agreement were
determined on willing buyer willing seller basis and carried out on arms length basis. Pursuant to
the Share Swap Agreement, our Company acquired the entire issued and paid-up share capital of
Piaget comprising 1,250 Piaget Shares from the then shareholders of Piaget. The consideration for
the said acquisition was satisfied by (i) the crediting as fully paid, at par, the 375,000 nil-paid
ordinary shares of HK$0.40 each in our Company held by Ember Vision; and (ii) the allotment and
issue of an aggregate of 1,599,625,000 new ordinary shares of HK$0.40 each in the capital of our
Company, credited as fully paid. Upon completion of the Share Swap Agreement on 12 December
2007, the resultant shareholding of our Company was as follows:

Name of allottee

Number of Shares

% of the issued and paid


capital of our Company

Ember Vision Limited

896,000,000

56.0%

Marble Focus Limited

384,000,000

24.0%

CIM X Limited

160,000,000

10.0%

Easy Solution Limited

96,000,000

6.0%

Queen Hope Holdings Limited

64,000,000

4.0%

1,600,000,000

100.0%

Total

Our current Group structure following the completion of the various steps in the Restructuring
Exercise is described in the section entitled Group Structure of this Prospectus.
85

GROUP STRUCTURE
Shareholding and corporate structure of Zhengzhou Great View prior to the Restructuring Exercise:

Li Wei

Wang Peng

90.0%

10.0%

Ember Vision Limited(1)


100.0%

Piaget Management Ltd


100.0%

Everwell International Holdings Limited(2)


100.0%

Zhengzhou Huanghe Great View Royal Garden Co. Ltd



100.0%

Henan Jinzhi Estalishment Co. Ltd.


(3)

Notes:
(1)

On 5 October 2006, Piaget acquired the entire issued share capital of Everwell from Li Wei and Wang Peng for an aggregate
consideration of HK$10,000 and further, on 12 October 2006, Piaget allotted and issued 600 ordinary shares of Piaget as
fully paid-up shares to Ember Vision, which was jointly owned by Li Wei and Wang Peng, for a nominal consideration of
US$1.00 per share.

(2)

On 8 May 2006, Everwell entered into a share transfer agreement with Henan Hanhai Establishment Co., Ltd.
(Hanhai Establishment) to acquire 10.0% of Hanhai Establishments interest in Zhengzhou Great View at a
consideration to be determined based on an independent valuation (the 1st Hanhai Agreement). On 25 December 2006,
Everwell and Hanhai Establishment entered into another share transfer agreement to replace the 1st Hanhai Agreement,
pursuant to which Hanhai Establishment would dispose of its entire 20.0% equity interest in Zhengzhou Great View to
Everwell with all benefits attaching thereto as at 1 July 2007 at a consideration of approximately US$91.4 million based on
the net asset value of Zhengzhou Great View as determined by an independent valuer on 31 October 2006. The
shareholders of Hanhai Establishment are Mr Sun Tao
and Ms Li Wenshan
, who respectively hold 65% and
35% of the registered capital of Hanhai Establishment (the Hanhai Establishment Shareholders). Mr Sun Tao
and
Ms Li Wenshan
are unrelated third parties who are not related to our Company or any of our Directors, Controlling
Shareholders and Executive Officers.

(3)

On 21 November 2006, Zhengzhou Great View acquired 100% equity interest in Henan Jinzhi at a consideration of
approximately RMB52.8 million. For more information on the aforesaid acquisition, please refer to the section entitled
General Information on Our Group History of this Prospectus.

86

Our Group structure immediately following the Restructuring Exercise and after the invitation is set out
below:
Li Wei

Wang Peng

57.15%

42.85%

Ember Vision Limited

48.6%

Yan Tao

Public

CIM X Limited

100.0%

8.7%

Easy Solution
Limited

Marble Focus Limited

20.8%

5.2%

CentraLand Limited

100.0%

Piaget Management Ltd

100.0%

Everwell International Holdings Limited

100.0%

Zhengzhou Huanghe Great View Royal Garden Co. Ltd

100.0%

Henan Jinzhi Establishment Co. Ltd.

87

Queen Hope
Holdings Limited
3.5%

13.3%

The details of our subsidiaries are set out as follows:

Name of Company

Date, Place of
Incorporation
and Operation
Period (if relevant)

Principal
Business / Principal
Place of Business

Piaget Management Ltd

28 September 2006, BVI

Investment Holding

100.0%

Everwell International
Holdings Limited

27 September 2002,
Hong Kong

Investment Holding

100.0%

Zhengzhou Huanghe
Great View Royal Garden
Co., Ltd.

25 December 1995, PRC

Operation period
of 50 years ending
24 December 2045
Development of
properties / PRC

100.0%

Henan Jinzhi Establishment


Co., Ltd.

30 October 1997, PRC

Operation period of
20 years ending
8 July 2016
Development of
properties / PRC

100.0%

Equity held by our


Company/Group

None of our subsidiaries are listed on any stock exchange. We do not have any associated companies.

88

INTRODUCTION TO ZHENGZHOU CITY


The PRC Economy in General(1)
The PRC economy has seen rapid growth over the last two decades. The PRC gross domestic product
(GDP) growth in 2006 reached a historic high of 10.7%. The economic development in the PRC has led
to an increase in the annual average disposable income of the PRC urban residents, which in turn has
led to an increase in the PRC spending power and consumption levels.
The PRC citizens income and spending levels are expected to continue to grow, thus creating more
growth opportunities in the PRC. It is expected that market liberalisation and restructuring efforts will be
in place to sustain GDP growth. Further, the PRC has been urbanising rapidly. The expansion of urban
areas has resulted in significant infrastructure investments as well as the promotion of real estate
development.
The Real Estate Market in the PRC
For the period between 2000 and 2005, both the average prices as well as the quantity of properties sold
in the PRC increased. Between 2000 and 2005, the average real estate prices saw an increase of about
50.0%. The thriving PRCs economy over the past decade contributed significantly to the growth
experienced by the PRC property market.
Although our Directors believe that economic growth in the PRC and the higher standard of living
resulting from such growth will lead to a greater demand for private properties in the PRC, it is not
possible to predict with certainty that such correlations exist as there are many social, political, economic
and legal factors which may affect the development of the property market. The PRC property market,
including the Zhengzhou city real estate market, may experience oversupply and property price
fluctuations.
Further, the PRC government advanced six new measures (National Six Policies) on 17 May 2006,
aiming to increase the small to medium-sized housing supply, and regulate the real estate market by tax,
housing loan and land policies. The National Six Policies were also aimed at curbing excessive
speculation in the PRC real estate market and to promote healthy and sustainable growth in the PRC
real estate market. Pursuant to the National Six Policies, 15 supplementary instructions were issued by
the PRC government on 24 May 2006 to provide further details regarding housing size, tax, loan and
mortgage ratio requirements.
Henan Province in General(1)
Henan Province is located in the central region of the PRC and occupies an area of about 167,000 sq
km, with an estimated population of approximately 97.0 million. The provincial capital of Henan Province
is Zhengzhou city. Henan Province was, in the past, a centre of Chinese civilisation, being home to three
of the seven ancient cities of China, namely Anyang, Luoyang, and Kaifeng.
Henan Province has both heavy and light industries. Its heavy industries include chemical works and
tractor plants while its light industries include the production of textiles, appliances and electronic
equipment. Coal is abundantly found in Henan and provides one of the main sources of energy, powering
the growing industries in Henan, particularly in Zhengzhou city, Luoyang and Pingdingshan. Besides
coal, aluminium, petroleum, natural gas and iron are also mined and extracted in the province.
Zhengzhou City in General(1)
Zhengzhou city, the provincial capital of the Henan Province, is situated in the central part of the PRC,
south of the Yellow River
. Zhengzhou city is located in the more densely populated central region
of Henan. Located about 760 km south of Beijing and 480 km east of Xian, Zhengzhou city occupies an
area of approximately 7,446 sq km, with a population of approximately 7.2 million as at 2006.
Zhengzhou city is a flourishing industrial city and has been one of the major industrial cities in the PRC
since 1949. The citys main industries are the manufacture of textiles and other items including
locomotives, cigarettes, fertiliser, processed meats, agricultural machinery, and electrical equipment.

89

Situated at the PRCs greatest transportation intersection, Zhengzhou city is well-connected with the
other parts of the PRC and plays an important role as the largest railroad centre in the PRC. Through its
established transportation network of many highways and a railway system, Zhengzhou city is
strategically located at the intersection of the principal north-south railroad line (the Jingguang Railway
) and the highway which connects Beijing in the north to Zhuhai in the south, and the east-west
railroad line (the Longhai Railway
) and highway which interlinks Shanghai in the east to Urmuqi
in the west. Nearly all trains pass through Zhengzhou city en-route to Beijing, Shanghai and Xian. Even
within Zhengzhou city, the public transportation system is well-developed, with buses operating
throughout the city and the main terminal at the railway station.
Apart from being a key national transportation hub and a flourishing city, Zhengzhou city has also taken
great pride in being rich in cultural heritage and boasts of its scenic landscape of lush greenery and
water. Its long history leaves the city with more than 1,400 cultural relics, 26 of which are key sights
under the protection of the state. One of these relics includes the Shaolin Temple, where the Shaolin
Kung Fu originated. The Shaolin Temple is situated at the foot of Mount Songshan, one of Chinas 44 key
scenic areas, and attracts tourists from all over the world.
Zhengzhou Citys Economy and Development
Zhengzhou citys economy has witnessed exponential growth in recent years. The annual average
disposable income of the Zhengzhou city urban residents has also increased, which in turn has led to an
increase in spending power and consumption levels.
Zhengzhou city has been urbanising rapidly and the expansion of urban areas has resulted in significant
infrastructure investments. The transportation infrastructure has also improved rapidly and Zhengzhou
city is also quickly flourishing as a commercial centre. With the construction of new commercial buildings
including the Zhengzhou Conference and Exhibition Centre
, the commercial and
business district of Zhengzhou city has expanded greatly.
While Zhengzhou city is developing into a mature and stable economic market with a high average
disposable income and consumption per capita, efforts are also being made for Zhengzhou city to
participate in the protection of the environment. As at 2006, Zhengzhou city has approximately 50 public
parks. Environmental protection can also be seen in the recycling rate of industrial waste water reaching
an all-time high of 91.0% in 2006.
Zhengzhou City Real Estate Market
The real estate market in Zhengzhou city is at a stage of expansion. This is a result of the citys
expanding population and economic size. Zhengzhou city has a population of approximately 7.2 million.
Riding on the high GDP growth and the Zhengzhou governmental policies aimed at encouraging
consumer spending, there is an increasing demand for real estate in Zhengzhou city. Recognised as one
of the pillar industries by the Zhengzhou city government, the property industry in Zhengzhou city plays
an important factor for the continued economic growth of the city.
As illustrated in the table below, the total GFA of properties sold in Zhengzhou city amounted to
approximately 2.60 million sq m in 2002 and approximately 7.15 million sq m in 2006, representing an
increase of 175.2% from that in 2002.
Year

2002

2003

2004

2005

2006

GFA of properties sold in Zhengzhou city


(million sq m)

2.60

3.71

4.96

5.32

7.15

Source: The Annual Analysis Report of Zhengzhou Municipal Real Estate Market for Year 2006
(2)

Based on The Annual Analysis Report of Zhengzhou Municipal Real Estate Market for Year 2006
(2)
, the average sale price of properties in Zhengzhou city has
increased from RMB2017 per sq m in 2002 to RMB2974 in 2006, representing an increase of 47.4%.

90

4000

15.00

3000

10.00

2000

5.00

1000

0.00

2001

2002

2003

2004

2005

2006

-5.00

Percentage change in
sale price (%)

RMB per sq m

Average sale price of the properties sold in Zhengzhou city

Source: The Annual Analysis Report of Zhengzhou Municipal Real Estate Market for Year 2006
(2)

The demand for resale residential properties in Zhengzhou city remains strong. The aggregate GFA of
resale residential properties sold in 2005 was 960,000 sq m which increased significantly to 1,500,000
sq m in 2006. This increase in turnover has led to people recognising the investment value of properties
in Zhengzhou city. Investment in the Zhengzhou city real estate development increased by 36.8% from
that of 2005 to approximately RMB22.99 billion in 2006.
Zhengzhou Citys Economic Prospects
According to Zhengzhou citys 11th 5-Year Plan Compendium
achieve, amongst others, the following:

, Zhengzhou city aims to

In the period between 2005 and 2010, Zhengzhou citys GDP will grow at 13.0% per annum,
reaching RMB304.0 billion in 2010.

During the same period, the average disposable income of its urban residents will grow at 11.3%
per annum.

Strengthen the regulation of overall real estate supply volume, develop more offices in central and
old districts, and build residential housing and retail centres at the urban fringe areas.

Further develop and strengthen the citys industry, with a focus on the service industry, improving
the overall structure of industry, increase job opportunities and increase comprehensive
competitiveness.

Create a more integrated and modern transportation and communications network which will
consist of airport, seaport, expressways and express railroads by 2010, and to rationalise the city
and transport network planning.

Notes:
(1)

The information relating to the PRC, Henan Province and Zhengzhou city as set out herein is based on our managements
general research.

(2)

The Market Research Department, Information Centre of Zhengzhou City Real Estate Administration Bureau
, which published the Annual Analysis Report of Zhengzhou Municipal Real Estate
Market for Year 2006
, has not consented to the inclusion of this statement, table or
compilation, as the case may be, for the purposes of Section 249 of the Securities and Futures Act and is thereby not liable
for this statement under Sections 253 and 254 of the Securities and Futures Act. The Directors have not verified the accuracy
of the contents of this statement/data. The Directors have included this statement, table or compilation, as the case may be,
in its proper form and context in this Prospectus. Our Directors are not aware of any disclaimers made by Market Research
Department, Information Centre of Zhengzhou City Real Estate Administration Bureau
, which published the Annual Analysis Report of Zhengzhou Municipal Real Estate Market for Year 2006
, in relation to the reliance on the contents of the statement, table or compilation, as
the case may be.

91

GENERAL INFORMATION ON OUR GROUP

HISTORY
Our Company was incorporated on 28 September 2007 under the Bermuda Companies Act as an
exempted company with limited liability. On 12 December 2007, we completed our Restructuring
Exercise, details of which are set out in the section entitled Restructuring Exercise of this Prospectus.
Pursuant to the completion of our Restructuring Exercise, our Company became a holding company of
our Group.
Zhengzhou Great View

Transfer of Equity Interests in Zhengzhou Great View


The history of our Group can be traced back to the incorporation of Zhengzhou Great View on
23 December 1995 with a registered capital of US$5.0 million. The initial shareholders of Zhengzhou
Great View were Straco Investment Pte. Ltd., Zhengzhou Tourism Resources Development Corporation
, Singapore Technologies Industrial Corporation Limited, Straco
International Investment & Management Pte Ltd, HN-Sin International Holdings Limited, which was
holding its equity interests in Zhengzhou Great View on trust for Henan Yuxin International Co.,Ltd.
(Henan Yuxin), and Poly Technology Co., Ltd.
(collectively,
the Initial Shareholders). They respectively owned 25.0%, 20.0%, 20.0%, 10.0%, 10.0% and 15.0% of
the registered capital of Zhengzhou Great View. All the Initial Shareholders, including Henan Yuxin, are
unrelated third parties who are not related to our company or any of our Directors, Controlling
Shareholders and Executive Officers.
Various shareholding changes took place since Zhengzhou Great Views incorporation and on
27 September 2003, our subsidiary, Everwell, entered into a share rights transfer agreement (the Straco
Share Transfer Agreement) with Straco Corporation Private Limited (subsequently known as Straco
Corporation Limited) (Straco Corporation) for the acquisition of Straco Corporations 70.0% equity
interest in the capital of Zhengzhou Great View, at a consideration of US$1.00. Under the terms of the
Straco Share Transfer Agreement, Everwell agreed, inter alia, to cause the repayment of RMB33.9 million
in full and final settlement of the loans made by Straco Holding Pte Ltd and Straco (HK) Limited to
Zhengzhou Great View. The aforesaid acquisition was completed on 25 November 2003.
Thereafter, Everwell entered into a share transfer agreement with Henan Yuxin on 28 November 2003 for
the acquisition of Henan Yuxins 10.0% equity interest in Zhengzhou Great View, with all benefits
attaching thereto as at 31 December 2003, for an aggregate consideration of approximately RMB3.6
million based on the registered capital of Zhengzhou Great View. The acquisition was effective since
31 December 2003.
Following the series of aforesaid acquisitions, with Everwell owning 80.0% of its equity interests,
Zhengzhou Great View applied to the relevant authorities for the conversion from composite use to
residential use of various parcels of land within Guoling Shanshui
in 2005.
By December 2006, Everwell acquired the remaining 20.0% equity interest in Zhengzhou Great View
from Henan Hanhai Establishment Co., Ltd.
(Hanhai Establishment), with all
benefits attaching thereto as at 1 July 2007, at an aggregate consideration of approximately US$91.4
million, based on the net asset value of Zhengzhou Great View of approximately RMB3,600 million on
31 October 2006, as determined by an independent valuer. The acquisition was effective from 1 July
2007.
Following the acquisition of the aforesaid 20.0% equity interest in Zhengzhou Great View, Everwell owns
100.0% of the equity interests in Zhengzhou Great View.

92

Business Operations
In 1995, Zhengzhou Great View acquired parcels of land in Huiji District
, located approximately
20km northwest from the Zhengzhou city centre and approximately 5km from the south bank of the
Yellow River where the Yellow River Scenic Area
, a favourite tourist spot, is located.
Zhengzhou Great View constructed a theme park consisting of miniature replicas of famous Chinese
historical architectures and a hotel on these parcels of land. Zhengzhou Great View began operating the
theme park in September 1997. However, the theme parks business failed to take off and was making
losses when our subsidiary, Everwell, took over majority control of Zhengzhou Great View in November
2003. Everwell took over the business operations of Zhengzhou Great View to take advantage of the
unique architectures and scenic environment surrounding the project and its proximity to tourist spots
and historical sites to create a self-contained, high-end integrated development, Guoling Shanshui
, complete with luxury residential homes, hotel with conference and exhibition facilities, sports
facilities, shops, restaurants, police post and round-the-clock security. We also opened the theme park to
the public with free admission to increase awareness.
When Everwell took over the business operations of Zhengzhou Great View, our Executive Director and
Chief Operating Officer, Wang Jian, was appointed as its general manager to oversee its overall
operations, bringing along with him his wealth of experience as the general manager of another property
development company in Zhengzhou city. Also, our Sales Director, Liu Xuemei, who has over 10 years of
experience in the sales and marketing industry and who started her career as a sales manager in a
property development company in the Henan Province, was appointed as the sales director of
Zhengzhou Great View soon after.
Development of Guoling Shanshui
commenced in July 2004 with the expansion and
refurbishment of the existing hotel, Guoling Hotspring Hotel, within the theme park, resulting in a newer,
larger and more modern luxury hotel set in the midst of nature parks and with a panoramic view of the
lake. The expansion and refurbishment by our Group of the Guoling Hotspring Hotel was completed in
September 2005 and it offers facilities such as exhibition, convention and meeting facilities, as well as
four restaurants.
As our Group did not have any expertise in hotel management, we entered into a hotel management
agreement with a third party, Pingdingshan City Fang Yuan Tian Tian Yugang Restaurant Co., Ltd
(Tiantian Yugang), on 12 September 2005 to manage the
Guoling Hotspring Hotel (the Hotel Management Agreement). The Hotel Management Agreement was
valid from September 2005 to December 2007.
As the Guoling Hotspring Hotel was successfully managed by Tiantian Yugang and our Groups focus is
on property development, we decided to transfer our entire shareholding interests in Henan Guoling
Hotspring Vacation Hotel Management Co., Ltd.
(Guoling
Management) (formerly known as Henan Sinian Yingzhou Resort Hotel Management Co., Ltd
), the entity which has the management operation and economic
interests of the Guoling Hotspring Hotel, to Tiantian Yugang for an aggregate consideration of RMB9.0
million, based on the registered capital of Guoling Management, pursuant to a share transfer agreement
dated 23 June 2007. Following such transfer, we will remain solely as landlord in relation to the Guoling
Hotspring Hotel. On 1 July 2007, we entered into a lease agreement (the Hotel Lease Agreement) with
Guoling Management to lease the Guoling Hotspring Hotel premises, exhibition, convention and meeting
facilities and restaurants to Guoling Management for a monthly rental of RMB350,000, until 30 June
2010. Currently, the Guoling Hotspring Hotel comprises of 14 hotel villas which were converted into 157
hotel rooms by Guoling Management in stages. The aforesaid conversion was completed on
4 January 2008 and our Group was responsible for its costs, which amounted to approximately
RMB2.4 million.
Concurrently with the refurbishment of the Guoling Hotspring Hotel, our Group commenced construction
in November 2004 of Phase I of Guoling Shanshui
, which comprises 472 units of low-rise
apartments (Mufu
) and 65 units of low-density luxury detached houses (Yongfu
), with an
aggregate saleable GFA of approximately 57,954 sq m. The construction of the final stages of Mufu
and Yongfu
was completed in the fourth quarter of 2005 and the second quarter of 2007
respectively and as at the Latest Practicable Date, we have sold (including units contracted for sale but
pending formal assignment and delivery) 447 units of low-rise apartments in Mufu
and 64 units of

93

the low-density luxury detached houses in Yongfu


. Anticipating a potential increase in property
prices and to maximise our profit margin, the sale of the remaining units of low-rise apartments in Mufu
and low-density luxury detached houses in Yongfu
were held back and are expected to be
sold by 1H2008.
We commenced construction of Phase II of Guoling Shanshui
in October 2005. Phase II
comprises Huguang Shanse
and Xinyu Lanwan
which have respectively (i) 573
units of low-rise apartments and 52 commercial retail units and (ii) 128 units of low-rise apartments and
93 units of townhouses. The construction of the final stage of Phase II of Guoling Shanshui
was completed in the third quarter of 2007 and has an aggregate saleable GFA of 106,874 sq m. As at
the Latest Practicable Date, we have sold (including units contracted for sale but pending formal
assignment and delivery) 517 units of the low-rise apartments and 41 units of the commercial retail units
in Huguang Shanse
and 118 units of low-rise apartments and 64 units of townhouses in
Xinyu Lanwan
.
For further details of our completed property developments, please refer to the section entitled General
Information on Our Group Details of Our Property Developments.
On 2 June 2005, Zhengzhou Great View also established the Shanshui Golf Club
(formerly known as Henan Sinian Golf Club
) (Shanshui Golf Club), with the
intention of operating a golf academy. Eventually, as our management decided that the operation of a golf
academy does not correspond with our Groups focus as a property developer, we entered into a
investment transfer agreement with Zhengzhou Xiyasi Scientific and Educational Technology
Development Co., Ltd.
for the transfer of Zhengzhou Great Views
entire investments in Shanshui Golf Club on 25 June 2005 to Zhengzhou Xiyasi Scientific and
Educational Technology Development Co., Ltd.
, at a consideration of
RMB10.0 million which corresponds with the original investment amount of Zhengzhou Great View (the
Golf Transfer).
Following the Golf Transfer, Zhengzhou Great View entered into a lease agreement on 1 July 2005 with
Shanshui Golf Club to lease approximately 354,630 sq m of land to them to operate a golf academy. The
amount of rental payable by Shanshui Golf Club is RMB4.24 million per annum. The lease agreement
expired on 31 December 2007 and we did not extend the lease but will instead use the parcels of land
for our future developments.
Henan Jinzhi

Transfer of Equity Interests in Henan Jinzhi


Henan Jinzhi was established on 30 October 1997 as Henan Warrant Investment Management Co., Ltd.
as an investment and financial consultancy, with Mr Fu Xin
,
Ms Wang Hai Ling
, Mr Zhong Wei Pu
and Henan Kairui Advertising Co., Ltd.
as its initial shareholders.
The shareholders of Henan Jinzhi subsequently underwent various transfers of equity interests in Henan
Jinzhi and the business scope was ultimately changed to that of real estate development.
On 21 November 2006, Zhengzhou Great View entered into (i) a share transfer agreement with Henan
Hesheng Enterprise Development Co., Ltd.
, Mr Li Wenjun
and
Ms Yan Fang
to acquire their aggregate 40.0% shareholdings in Henan Jinzhi and (ii) a share
transfer agreement with Bridge Trust and Investment Co., Ltd.
(collectively with
Henan Hesheng Enterprise Development Co., Ltd.
, Mr Li Wenjun
and Ms Yan Fang
, the Henan Jinzhi Shareholders) to acquire its 60.0% shareholdings in Henan
Jinzhi. The aggregate considerations for the aforesaid transfers were approximately RMB52.8 million and
the acquisitions were effective from 21 November 2006 and resulted in Zhengzhou Great View owning
the entire equity interest in Henan Jinzhi.

94

Transfer of Henan Jinzhis Equity Interests in Zhengzhou City Heyi Pawn Co., Ltd
(Heyi Pawn)
Prior to the acquisition of equity interests in Henan Jinzhi by Zhengzhou Great View, Henan Jinzhi has
25.0% equity interests in Heyi Pawn, an entity in the pawn business. Subsequent to the aforesaid
acquisition, Henan Jinzhi entered into a share transfer agreement dated 20 May 2007 with an unrelated
third party, Zhengzhou Haojiali Food Co., Ltd.
(Haojiali Food), for the transfer
of Henan Jinzhis entire 25.0% equity interests in Heyi Pawn to Haojiali Food for a consideration of
RMB1.25 million, based on registered capital of Heyi Pawn.

Business Operations
Our subsidiary, Zhengzhou Great View, acquired the entire equity interests in Henan Jinzhi to expand our
Groups business to include commercial property development. At the time of the acquisition, a parcel of
land of approximately 10,079 sq m located in Erqi District
previously owned by Henan Jinzhi, in
the heart of Zhengzhou city, was repossessed by the Land and Resources Bureau of Zhengzhou City
for the proposed construction of a light-rail transport system across the land.
Pursuant to the terms of the share transfer agreements entered into by Zhengzhou Great View with the
Henan Jinzhi Shareholders, it was agreed, inter alia, that Zhengzhou Great View would appeal to the
relevant government authority for the release of the land to Henan Jinzhi and would pay the Henan Jinzhi
Shareholders a further consideration of RMB40.0 million in the event that Zhengzhou Great Views
appeal is successful, in addition to the initial agreed consideration of approximately RMB12.8 million. In
December 2006, 9,771 sq m of the aforesaid parcel of land was returned to Henan Jinzhi, which
obtained the necessary land use rights certificate, and the acquisition was completed in the same month
for an aggregate consideration of RMB52.8 million, determined based on an independent valuation.
Henan Jinzhi commenced construction of its first commercial property development, J-Expo
, in January 2007 and construction is expected to be completed by 1H2008. J-Expo
will be a commercial building used mainly for the wholesale of commodities
such as mobile phones, stationery, accessories, cosmetics, household goods by wholesalers, comprising
a basement, five-storey of retail units and seven-storey of office units with a total of 2,560 retail units, 192
office units and 320 open-air parking lots. Being located in the Erqi District
which is in the heart
of Zhengzhou city, it is within walking distance to the Zhengzhou Railway Station
and the
Zhengzhou Long Distance Central Bus Station
. J-Expo
is also
located within the main wholesale centre of Zhengzhou city which is possibly one of the most vibrant
wholesale centres in the whole of central PRC. As at the Latest Practicable Date, we have contracted to
sell 1,618 retail units and 67 office units with a total saleable GFA of 35,606 sq m and intend to retain
levels 4 and 5 of the development upon its completion for lease to third parties.
For further details of our completed property developments, please refer to the section entitled General
Information on Our Group Details of Our Property Developments.

95

BUSINESS OVERVIEW
The prinicipal activity of our Group is the development and sale of residential and commercial properties.
Our subsidiaries, Zhengzhou Great View and Henan Jinzhi, are currently qualified to undertake projects
with an individual GFA of up to 250,000 sq m and up to 100,000 sq m respectively.
Our Groups portfolio of completed properties, properties under development, properties to be developed
in the near future and land held for future development are currently all located in Zhengzhou city, Henan
Province of the PRC. As at the Latest Practicable Date, we have an aggregate saleable GFA of
approximately 160,828 sq m of completed properties, approximately 65,890 sq m saleable GFA of
properties under development, approximately 245,000 sq m planned GFA of properties to be developed
in the near future and approximately 1,406,880 sq m of land held for future development, with an
estimated GFA of 2.9 million sq m. Our Group has obtained the land use rights certificates in respect of
each of our completed property developments, our properties under development, properties to be
developed in the near future and land held for future development. Further, we are also in the process of
obtaining the land use rights to a parcel of approximately 560,000 sq m (835
) of land from the Land
and Resources Bureau of Zhengzhou City
, for which we have reached a
compensation agreement with the local government. However, the acquisition of the aforesaid parcel of
land is subject to (i) the conversion of the approved use of the aforesaid land from agricultural use to
residential use; and (ii) the payment of land premium and other prescribed fees and compliance with
other applicable procedures as required under PRC laws.
Our Group intends to continue to acquire land use rights by (i) acquiring directly from the government
land bureau; (ii) purchasing from other companies; and (iii) acquiring companies which hold land
reserves.
BUSINESS OPERATIONS
Property Development
We are a premium brand property developer of residential properties and commercial properties in
Zhengzhou city. Currently, all our property development projects are located in this region. In future, we
may consider expanding our land bank and presence in Zhengzhou city as well as pursue strategic
business opportunities in other fast growing cities or regions in the central part of the PRC.
Our Group is currently involved in two main property developments, they are namely:
(i)

Guoling Shanshui

(ii)

J-Expo

, a self-contained, high-end integrated property development; and


, a commercial property project with retail and office units.

Integrated Property Developments


Our integrated property development, Guoling Shanshui
, has a total site area of
approximately 1.87 million sq m and is targeted for sale primarily to the middle and higher-income
purchasers.
This is a large-scale project located in Huiji District
, approximately 20 km northwest from the
Zhengzhou city centre and approximately 5 km from the south bank of the Yellow River, where the Yellow
River Scenic Area
is located. This new sub-urban, premier and high-end residential area
can be easily accessed via a highway by city dwellers from Zhengzhou city seeking a peaceful nature
haven, which journey should take no more than 15 minutes.
Under our Groups masterplans, Guoling Shanshui
will be built in various phases comprising
low-density luxury detached houses, townhouses, apartments and commercial retail units that interweave
contemporary luxury with the exquisite charm of historical China. Leveraging on the scenic landscape
including lakes, rivers, natural floral and fauna and also the existing miniature replicas of famous Chinese
historical architectures, this development is designed according to our vision of creating a self-contained,
high-end development, featuring modern resort-theme home concept with sports facilities, playground,
police post, clinic and round-the-clock security. The owners of the commercial units shall operate the
commercial retail units as supermarket, hair and beauty salon, pet shop, laundry shop, gift shop and

96

clinic. Located within our integrated development, the Guoling Hotspring Hotel, with exhibition and
conference facilities, will also provide non-residents with opportunities to stay in this exquisite
development.
The Guoling Hotspring Hotel is managed by a third party, Henan Guoling Hotspring Vacation Hotel
Management Co., Ltd.
(formerly known as Henan Sinian Yingzhou
Resort Hotel Management Co., Ltd
) whilst we remain solely as
owner in relation to the land and buildings occupied by the Guoling Hotspring Hotel and its facilities.
We have completed construction of Phase I and Phase II of Guoling Shanshui
which, in
aggregate, comprise 93 townhouses, 1,173 low-rise apartments, 65 low-density luxury detached houses
and 52 commercial retail units with an aggregate saleable GFA of approximately 160,828 sq m. To
ensure high quality in workmanship and finishing, exquisite designs and innovative landscaping, we had
engaged an international design group, the Werkhart International Group, and the Urban and Rural
Planning & Design Research Institute of Zhejiang University
to assist in
the property design and project landscape planning respectively. We believe that as a result, we are able
to command good sale prices for these two phases of our development.
Further, we have entered into an agreement with Henan Shanshui Property Management Co., Ltd.
(Shanshui Property), a professional property management company, to
provide property management for these two phases of our development. Shanshui Property is jointly
owned by Henan Hanhai Establishment Co., Ltd.
and Henan Hanhai Investment
Co., Ltd.
. Under PRC laws, the individual owners of the properties have a right
to engage or dismiss a property management company. As such, following the establishment of an
owners management committee by the property owners of Guoling Shanshui
, the owners
management committee may proceed to engage other property management companies. Further,
pursuant to the aforesaid agreement entered into by us with Shanshui Property, the agreement will
automatically terminate upon the engagement of a new property management company by the owners
management committee. As such, we will not be liable to compensate Shanshui Property for its dismissal
in such an event.
Please refer to the section entitled General Information on Our Group Details of Our Property
Developments for further details of our integrated property development.

Commercial Developments
Our commercial property development, J-Expo
, is being developed by our subsidiary,
Henan Jinzhi, to be a commercial building for the wholesale of commodities
such as mobile
phones, stationery, accessories, cosmetics, household goods by wholesalers in the Zhengzhou city.
J-Expo
is located in Erqi District
, in the heart of the Zhengzhou city and within
walking distance to the Zhengzhou Railway Station
and the Zhengzhou Long Distance
Central Bus Station
. J-Expo
is also located within the main
wholesale centre of Zhengzhou city and is possibly one of the most vibrant wholesale centre in the whole
of central PRC.
Further, Zhengzhou city, being the transportation hub of the PRC where major national railway lines and
transnational bus routes converge, is the transportation and commodity distribution centre in central
PRC. Due to its strategic location, we believe that people from all parts of the PRC come to Zhengzhou
city to purchase wholesale goods for resale in their own provinces and cities. As such, J-Expo
is very ideally located.
J-Expo
comprises a basement, five-storey of retail units and seven-storey of office units
and each retail floor is developed with a high ceiling to provide for a mezzanine floor to facilitate storage
of goods or to be used as an office. We commenced construction of J-Expo
in January
2007 and construction is expected to be completed by 1H2008. Upon completion, it will have an
aggregate saleable GFA of approximately 65,890 sq m and will comprise 2,560 retail units and 192 office
units, with an open-air carpark with 320 parking lots. We are also in the process of identifying suitable
sites for the development of other commercial projects.

97

Please refer to the section entitled General Information on Our Group Details of Our Property
Developments for further details on our commercial property development.
Property Investment
As part of our strategy to generate an additional and recurrent revenue stream, we will retain ownership
of two floors of the retail units in our commercial development, J-Expo
, as investment
properties for lease. This will allow us to take advantage of the growth potential of the commercial
property segment in Zhengzhou city. In addition, we also lease the Guoling Hotspring Hotel located
within Guoling Shanshui
to a third party to generate rental returns. We intend to build up a
portfolio of investment properties selectively and progressively, while continuing to grow our core
residential and commercial property development business.
Please refer to the section entitled General Information on Our Group Properties Held for Investment
for further details on our investment properties.

98

PROPERTY DEVELOPMENT PROCESS


The diagram below summarises the stages and elements of our property development process.
3 months

Project planning and


preliminary work

Land acquisition
-

site evaluation/
identification
market analysis
feasibility study
acquiring land

4 months

in-depth market
analysis
product positioning
develop plan
design

8-24 months

Design
-

Construction

schematic design
structural design
construction
design
drawings
landscape design
interior design

contractor
selection
procurement of
supplies
construction
supervision
completion
inspection

afterwards

After-sales services

Pre-sales and sales*


-

marketing to
existing and
potential
customers
pre-sale permit
application
sales and sales
management
delivery of property

mortgage and
registration
assistance
customer services
customer functions
and surveys
statistical analysis
customer database

Approval Process

Strategy Development
Property development begins with the formulation of our overall development strategies and investment
plan. Our board and senior management will undertake an in-depth deliberation and consideration of
certain key matters: the macro-economic policies and development plans of the PRC government and
the likely impact on the economic growth and development of the city concerned and particularly, the
impact on the real estate market in that city; the economic growth and prospects and the demand and
supply conditions in the real estate market of the area concerned; and the level of our proposed
investment commitment in the city within a three to five year time frame. Once our overall development
and investment strategy is formed, we then analyse reports and investment proposals submitted by the
management team after which we determine the amount of investment we are prepared to commit to the
project.

Site Identification and Market Research


We place a strong emphasis on site selection and continued expansion of our existing land bank and
consider it fundamental to the success of a property development. The factors we will take into account in
their decision-making process include, inter alia, the following:
z

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 and greenery,
schools, rivers and commercial facilities); and

cost, investment and financial return ratios of the potential developments.

After site selection, a project committee comprising members selected by our Chief Executive Officer,
Yan Tao, including the project leader, the engineering manager and the budgeting manager, will be
formed to carry out a feasibility study on the identified land. Such feasibility study comprises market
research and analysis on the supply of and demand for both residential and commercial properties in
that particular area. Upon completion of the feasibility study, we will conduct an analysis of the property
market conditions of the identified site and the cost of acquiring such a site. The project committee will
also prepare a proposal to include information on the type of property development suitable for the
identified site and the market, details relating to cost and financing of the acquisition and development,
and specific considerations that our Group should consider. The proposal will then be considered by the
investment committee, who will then make the final decision whether or not to acquire the identified site.
99

Land Acquisition
We typically acquire land use rights for development through public tender or auction as 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 listingfor-sale.
In a listing-for-sale of state-owned land use rights, the grantor makes a listing announcement, lists the
essential transaction requirements for the land available for sale and the listing period, at the designated
place for the conduct of such a transaction. The grantor shall then accept bids while updating the listing
price, and finally determine who shall be the successful bidder according to the bids received at the end
of the listing period. In the event that there are two or more bids at the end of the listing period, the
grantor shall organise a live bidding where the bid shall go to the highest bidder.
Where land use rights are granted by way of a tender, an evaluation committee will evaluate the tenders
that have been submitted to decide upon the most competitive tender. The relevant authorities will
normally consider not only the tender price, but also the credit history and qualifications of each bidder
and their proposals. 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 will be 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.
We fund our land acquisitions primarily through internal resources, bank loans and proceeds from sales
and pre-sales.

Project Conceptualisation, Planning and Design


Concurrently with the acquisition of a site, we will undertake project conceptualisation and overall design
of the development. Our in-house product development team based in Zhengzhou city where our
properties are located is responsible for the management of the project conceptualisation, planning and
design for our property developments. Our product development team comprises more than 25
professionals, including architects, landscape specialists, planning experts, interior designers, as well as
structural, civil, mechanical and electrical engineers. The design process includes architectural, exterior
and interior design, engineering and landscaping.
Our product development team also works in collaboration with external professional firms throughout the
design process. In selecting these firms, we consider their reputation for reliability and quality, their
pricing, references and design proposals. Design contractors are typically selected through a tender
process for each project. The product development team constantly monitors the progress and quality of
the design teams to ensure they meet our required standards. The team is also responsible for
overseeing and ensuring that our property projects are completed on time and in accordance with our
strict quality requirements.
In conceptualising and designing a property development, we will consider the following principal factors:
z

relevant city planning and building parameters imposed by the PRC government;

target market segment and product positioning;

the surrounding environment of the site;

plot ratio as approved by the relevant government authorities;

100

total site area;

advice and recommendations of professional advisors including architects and planning experts;
and

the proposed type of development, whether residential or commercial.

Once we determine the concept and overall design of our proposed development, the design firm whom
we will engage will set to work on the details of the interior design.
Upon the completion of the conceptualisation process, we will submit our concept for the development to
the local city planning authorities for approval and apply for the Permit for Construction Land Use
Planning
. Once our concept has been approved and we have obtained the Permit
for Construction Land Use Planning
, we will commence site survey, planning and
overall design of the project. We will also apply for a Permit for Construction Project Planning
, which upon grant, indicates the PRC governments approval of our design for the
development and which enables us to apply for a Permit for Commencement of Construction
to allow construction work to commence.

Construction Work
We typically contract out our construction work of our development projects to independent construction
companies selected through tender process, based on their reputation, track record, experience of the
relevant project team members and cost competitiveness.
The tender process is governed by the Property Development and Municipal Facilities Construction
Tender Management Regulations
promulgated in
June 2001. Please refer to Appendix G on a summary of the relevant PRC laws and regulations for
further details of the laws and regulations governing tender processes in the PRC.
We engage reputable construction companies in the Zhengzhou city and in particular, we have
established a reliable relationship with The Fourth Construction Company of China Construction Seventh
Engineering Bureau
(Fourth Construction Company). Fourth
Construction Company has been one of our major construction contractors since 2004 and has
successfully bidded for the construction work of several of our projects. In addition to selecting a primary
lead contractor for our projects, we also engage secondary contractors to provide some of the required
construction work in order to foster competition and mitigate the risks of over reliance on one lead
contractor. The terms of the construction contracts that we enter into with Fourth Construction Company
are consistent with the terms of the construction contracts that we enter into with other construction
contractors. Fourth Construction Company and other construction contractors provide various services,
including piling and foundation works, and construction works. We believe that Fourth Construction
Company has enabled us to consistently achieve the quality objectives of our premium brand
development projects over the years and this has helped us to enhance our reputation and brand equity.
We enter into construction contracts with construction companies selected via a competitive bidding
process based on the terms of the tender documents.
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.
As of the Latest Practicable Date, there has been no instance of our contractors experiencing financial or
other difficulties which resulted in the delay of our Groups development projects and we have not had
any major disputes with any of our contractors. All construction progress payment claims are verified by
professional quantity surveyors engaged by us.

101

Project Management
We have a project management team responsible for the management and supervision of the
construction of our property developments in accordance with the relevant PRC regulations. We also
engage project management companies to manage and supervise each individual project. We believe
that our in-house project management system has enabled our projects to be developed efficiently and
cost effectively.
We strive to create and ensure a safe working environment. In line with this, we have established strict
internal workflow policies and safety monitoring procedures to ensure that we comply with the
compliance of all relevant PRC laws and regulations in the PRC.
Our project management team is also responsible for ensuring that the construction of our properties
progresses in a timely manner. Construction work is constantly monitored through regular on-site
inspections and progress reports.
In line with our prudent financial management philosophy, we ensure that the construction of our property
developments is carried out in a cost-effective manner. We have stringent financial controls and actively
manage and control our costs through careful budget planning processes such as reviews of project
expenditure reports. Our project management team ensures that our cost control policies are effectively
applied in the construction process of our property developments.

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.
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.

Sales and Marketing


Our principal customers of the residential development are individual purchasers of residential properties
from the PRC. We primarily target middle and high-income purchasers, such as senior-level managers
and entrepreneurs.
We have also established a sales and marketing department to strategise, supervise and manage the
sales activities of our Group. We adopt a variety of measures to reach potential customers, including
advertising through traditional media such as television, radio and newspaper as well as carrying out
direct marketing such as mailing flyers to target customers. We also put up promotional banners and
billboards around our property developments and site areas which can be easily seen by the public.
The majority of our products are sold through pre-sale activities (i.e. selling property in advance of our
construction completion). In line with our marketing strategy, we generally conduct pre-sale of our
developments in accordance with the applicable PRC laws. We must obtain from the relevant government
authorities the Permit for Pre-completion Sale of Commodity Buildings
(pre-sale
permits) before we can commence sale of our properties.
We commence pre-sale of our properties when the following conditions are met:
(a)

the selling developer holds a valid legal person certificate and a qualification certificate for real
estate development enterprises;

102

(b)

the relevant land use rights certificates, the permit for construction project planning and the permit
for commencement of certificate have been obtained; and

(c)

the pre-sale permit has been obtained.

Under the Measures for Administration of Pre-completion Sale of Urban Commodity Buildings
promulgated by the Ministry of Construction in July 2004, pre-sale permits will
only be granted if:
(a)

the assignment price for the relevant land use rights has been fully paid and the relevant land use
rights certificates have been obtained;

(b)

permit for construction project planning and the permit for commencement of construction have
been obtained; and

(c)

at least 25% of the total amount to be invested in the development has been paid and the progress
of works and the completion and delivery dates have been ascertained.

Sales are generally carried out subject to the following conditions being met:
(a)

related basic facilities, including water, electricity, heat, gas and communication, shall be qualified
for delivery and use. Other basic facilities and public facilities shall be qualified for use or the
completion schedule and delivery date of each has been set;

(b)

property management plan has been implemented;

(c)

the development units shall have passed completion, inspection and acceptance; and

(d)

receipt of the completion inspection certificate.

As at the Latest Practicable Date, there has been no instance of delay in the completion of any of our
projects, which properties have been the subject of pre-sales.
We set selling prices for our properties after taking into account local market trends, costs of
development, expected investment returns and prevailing supply and demand conditions. We adopt a
standard contract to be entered into between us and the purchaser. Our standard contract specifies the
GFA of the property sold, purchase price, method and manner of payment, and date and manner of
delivery of the completed property. There are also provisions for examination, acceptance and
certification to be carried out by relevant government authorities before delivery of the completed
property.
For details on our sales and marketing activities, please refer to the section entitled General Information
on Our Group Sales and Marketing of this Prospectus.

Payment Arrangements
We require from each purchaser of our residential property an initial payment of at least 30.0% of the
sale price and from each purchaser of our commercial property an initial payment of at least 50.0% of
the sale price, upon the execution of a sale and purchase of property contract. The balance of the
purchase price is satisfied by a lump sum payment of the entire balance, either with or without mortgage
facilities arranged with banks. Regardless of the payment method, the purchase price must be paid in full
to us before completion of the development.
The mortgage payment terms for sale and pre-sale of properties are substantially the same. Under
normal circumstances, a maximum thirty (30) year mortgage loan for up to 70.0% of the sale price may
be available to the purchasers of residential properties and a maximum thirty (30) year mortgage loan for
up to 50.0% of the sale price may be available to the purchasers of commercial properties.

103

We may enter into arrangements with certain domestic banks to provide mortgage financing schemes for
purchasers to take out a mortgage. In line with the prevailing consumer banking practices in the PRC,
banks generally only extend mortgage financing to our purchasers on the condition that we guarantee
their loans until the building ownership certificate has been issued and the mortgage is registered.
Typically, these guarantees will be released upon the earlier of (i) the issuance of the building ownership
certificate, the registration of the mortgage and the delivery of the building ownership certificate to the
purchaser; and (ii) the full settlement of mortgage loans between the mortgage banks and the
purchasers of our properties. As at the Latest Practicable Date, there has been no instance of our
purchasers defaulting on their loans which result in our Group having to repay the guarantees.

Completion and After-Sales Services


We strive to deliver completed properties to our customers in a timely fashion and in accordance with the
terms and conditions of our sale and purchase agreements. As such, we monitor closely the progress of
the construction of our property development projects and once our completed developments have been
examined, accepted and certified by the relevant government authorities, we will proceed to deliver the
completed properties to our customers.
Prior to the delivery of our completed properties, the following conditions must be fulfilled:
(a)

the completion inspection certificate has been received; and

(b)

the development units have met the requirements for delivery as stipulated in the sale and
purchase agreements which we enter into with our customers.

We provide after-sales services through our customer service department and a third-party property
management company. As part of our after-sales services, we assist our customers with the title
registration for their properties. We have a customer service department at each of our development
projects to handle customer feedback. We believe that the provision of quality after-sales service
enhances our brand equity and goodwill, and helps to generate new sales and customer referrals for our
properties.

104

105

1.

Phase I: Mufu

and Yongfu

, occupying a total site area and


are set out below:

The construction of our Yongfu


project also took place in stages and the first stage commenced in November 2004. Pre-sales commenced in
December 2004 and the construction of the last stage was completed in the second quarter of 2007. Yongfu
comprises 65 units of low-density
luxury detached houses, occupies a total site area of 66,316 sq m and has a saleable GFA of approximately 18,665 sq m. As at the Latest Practicable
Date, we have received the relevant construction works completion certified reports from the Zhengzhou Municipal Construction Committee
in respect of 47 of the units in our Yongfu
project and have sold (including units contracted for sale but pending formal
assignment and delivery) 64 units of the low-density luxury detached houses with an average selling price of RMB7,531 per sq m. We are in the process
of applying for the construction works completion certified reports from the Zhengzhou Municipal Construction Committee
for the
other 18 units. Further, the remaining 1 unsold unit of low-density luxury detached houses occupy a saleable GFA of approximately 461 sq m.

Our Mufu
project comprises 472 units of low-rise apartments, occupies a total site area of 40,085 sq m and has a saleable GFA of approximately
39,289 sq m. Each block of low-rise apartments is 4-storey high. Its construction took place in various stages with the first stage commencing in
November 2004 and the construction of the last stage was completed in the fourth quarter of 2005. Pre-sales commenced in December 2004. As at
Latest Practicable Date, we have received the relevant construction works completion certified reports from the Zhengzhou Municipal Construction
Committee
for our Mufu
project and have sold (including units contracted for sale but pending formal assignment and delivery)
447 units of low-rise apartments with an average selling price of RMB2,713 per sq m. The remaining 25 units of the low-rise apartments occupy a
saleable GFA of approximately 2,367 sq m.

Guoling Shanshui

As at the Latest Practicable Date, we have completed construction of Phase I and Phase II of Guoling Shanshui
saleable GFA of approximately 276,735 sq m and 160,828 sq m respectively. Details of the two phases of Guoling Shanshui

Completed Properties

DETAILS OF OUR PROPERTY DEVELOPMENTS

106

2.

Phase II: Huguang Shanse

and Xinyu Lanwan

The construction of Xinyu Lanwan


also took place in various stages with the first stage commencing in October 2005 and the construction of
the last stage was completed in the third quarter of 2007. Pre-sales of this project commenced in November 2005. This project comprises of 128 low-rise
apartments and 93 townhouses occupying an aggregate site area of approximately 73,000 sq m with a saleable GFA of 35,173 sq m. As of the Latest
Practicable Date, 118 low-rise apartments and 64 townhouses have been sold (including units contracted for sale but pending formal assignment and
delivery), with an average selling price of RMB3,992 per sq m and RMB7,872 per sq m respectively. The remaining 10 low-rise apartments and
29 townhouses occupy an aggregate saleable GFA of approximately 990 sq m and 7,343 sq m respectively. We are also in the process of applying for the
construction works completion certified report from the Zhengzhou Municipal Construction Committee
.

Our Huguang Shanse


project occupies a total site area of 97,334 sq m with a saleable GFA of approximately 67,701 sq m and comprises of
573 low-rise apartments and 52 commercial retail units. Its construction took place in various stages and the first stage commenced in October 2005. Presales commenced in November 2005 and the construction of the last stage was completed in the third quarter of 2007. As of the Latest Practicable Date,
517 low-rise apartments and 41 commercial retail units have been sold (including units contracted for sale but pending formal assignment and delivery),
with an average selling price of RMB3,974 per sq m and RMB8,774 per sq m respectively. The remaining 56 low-rise apartments and 11 commercial retail
units occupy an aggregate saleable GFA of approximately 5,619 sq m and 1,446 sq m respectively. We are in the process of applying for the construction
works completion certified report from the Zhengzhou Municipal Construction Committee
.

Guoling Shanshui

107

Guxing Town North,


Jing-Guang Railway
West
/
Low-density luxury
detached houses

Phase I: Yongfu

Total

Phase II: Xinyu


Lanwan

/
Low-rise
apartments and
townhouses

8-1 Guxing Town,


Mang Shan District,
Zhengzhou City (West
of Zheng Mang Road,
South Bank of Yellow
River)

/
Low-rise
apartments and
commercial retail units

8-1 Guxing Town,


Mang Shan District,
Zhengzhou City (West
of Zheng Mang Road,
South Bank of Yellow
River)

Guxing Town North,


Jing-Guang Railway
West
/
Low-rise apartments

Phase I: Mufu

Phase II: Huguang


Shanse

Location/ Type of
development

Name of Property
development

5 May 2067

5 May 2067

15 December 2065

15 December 2065

Date of expiry of
Land Use Rights

276,735

73,000

97,334

66,316

40,085

Total site
area
(sq m)

167,135

38,091

69,176

19,991

39,877

160,828

35,173

67,701

18,665

39,289

Total GFA Total


(sq m)
saleable
GFA
(sq m)

The tables below summarises the details of our completed property developments.

142,602

26,839

60,637

18,204

36,922

Total GFA
sold (as of
Latest
Practicable
Date) (sq m)

100.0%

100.0%

100.0%

100.0%

Groups
effective
equity
interest

October 2005

October 2005

November 2004

November 2004

Third quarter
of 2007

Third quarter
of 2007

Second quarter
of 2007

Fourth quarter
of 2005

Project
Project
Commencement Completion
Date
Date

108

, which occupies the site area and saleable GFA

As at the Latest Practicable date, we have not entered into any lease agreements in relation to levels 4 and 5 of the development.

As of the Latest Practicable Date, we have contracted to sell 1,618 of the retail units and 67 of the office units with an average selling price of RMB16,872 per
sq m and RMB6,053 per sq m respectively. We intend to retain ownership of levels 4 and 5 of the building, comprising 768 retail units and with an aggregate
saleable GFA of 18,297 sq m, for lease to third parties to generate rental returns upon its completion. As such, excluding the units in levels 4 and 5 of the
building, 174 retail units and 125 office units occupying approximately 4,521 sq m and 7,466 sq m of saleable GFA respectively remains unsold.

J-Expo
is our Groups first commercial development, comprising a basement, five-storey of 2,560 retail units and seven-storey of 192 office
units, as well as an open-air car park with 320 parking lots. Developed by our subsidiary, Henan Jinzhi, this project commenced construction in January 2007
and is expected to complete by 1H2008. Pre-sales commenced in April 2007.

Note: Artist Impression

As at the Latest Practicable Date, we are developing our Groups commercial property, J-Expo
of approximately 9,771 sq m and 65,890 sq m respectively.

Properties Under Development

109

(1)

1 November
2046

9,771

Date of expiry Total site


of Land Use
area
Rights
(sq m)

65,890(1)

65,890

Total GFA Total


(sq m)
saleable
GFA
(sq m)

35,606

Total GFA
sold (as of
Latest
Practicable
Date) (sq m)

65,890
(1)

GFA
Completed
as at Latest
Practicable
Date (sq m)
100.0%

Groups
effective
equity
interest

January 2007

1H2008

Project
Estimated
Commencement Completion
Date
Date

As at the Latest Practicable Date, we have completed construction of the building concrete framework and the construction will be completed upon the necessary utilities fittings.

Fushou Street East,


Yuanling Street North
/
Commercial building
comprising retail units,
offices and an open-air
carpark

J-Expo

Note:

Location/ Type of
development

Name of Property
development

The tables below summarises the details of our property under development, J-Expo

110

by 1H2008. Phase III of Guoling Shanshui

is expected to

Location/ Type of
development

Lucheng Street North,


Zhengmang Road West
/
Low-rise apartments,
townhouses and
commercial units

Name of Property
development

Phase III

5 May 2047

Date of expiry
of Land Use
Rights

Details of our Phase III project are set out below.

The total site area of Phase III is approximately 174,000 sq m.

174,412

Estimated
site area
(sq m)

245,000

Planned GFA
(sq m)

100.0%

Groups
effective
equity
interest

1H2008

Estimated
Commencement
Date

End 2009

Estimated
Completion
Date

The construction of the first stage of Phase III, which has a planned GFA approximately of 80,000 sq m out of the total estimated GFA of approximately 245,000
sq m of the entire Phase III, is expected to commence in 1H2008. The project is expected to be constructed over two stages, with the second stage having a
planned GFA of approximately 165,000 sq m. The second stage is to be completed by the end of 2009. We are currently at the project conceptualisation and
planning and design stage.

We expect to commence development of Phase III of Guoling Shanshui


comprise of low-rise apartments, townhouses and commercial units.

Properties To Be Developed In The Near Future

Land Held For Future Development (2)


As at the Latest Practicable Date, the total site area of our land held for future developments is
approximately 1,406,880 sq m with an estimated aggregate GFA of 2.9 million sq m. These parcels of
land are located within Guoling Shanshui
and our management expects this current landbank
to be sufficient for at least seven years given our current pace of development.
Details of these parcels of land held for future development are set out below.
Groups
effective
equity
interest
(%)

Development Site

Type of development

Date of expiry of
Land Use Rights

Estimated
site area
(sq m)

South of Mangshan District,


Daliugou Reservior North-west

Composite

15 December 2045

250,079

100.0

Guxing Town North, Jing-Guang


Railway West

Residential

15 December 2065

48,143

100.0

Guxing Town North, Jing-Guang


Railway West

Residential

15 December 2065

25,377

100.0

Guxing Town North, Jing-Guang


Railway West

Residential

15 December 2065

13,032

100.0

Guxing Town North, Jing-Guang


Railway West

Residential

15 December 2065

3,376

100.0

West of Zheng Mang Road,


South Bank of Yellow River

Composite

5 May 2047

45,131

100.0

Zheng Mang Highway West,


South Bank of Yellow River

Composite

5 May 2047

97,595

100.0

Zheng Mang Highway West,


South Bank of Yellow River

Residential

5 May 2067

395

100.0

Zheng Mang Highway West,


South Bank of Yellow River

Composite

5 May 2047

65,839

100.0

Zheng Mang Highway West,


South Bank of Yellow River

Residential

5 May 2067

12,000

100.0

Zheng Mang Highway West,


South Bank of Yellow River

Composite

5 May 2047

54,309

100.0

(1)

(1)

(1)

111

Groups
effective
equity
interest
(%)

Development Site

Type of development

Date of expiry of
Land Use Rights

Estimated
site area
(sq m)

Zheng Mang Highway West,


South Bank of Yellow River

Residential

5 May 2067

79,001

100.0

West of Zheng Mang Road,


South Bank of Yellow River

Residential

5 May 2067

17,635

100.0

West of Zheng Mang Road,


South Bank of Yellow River

Residential

5 May 2067

3,245

100.0

Hucun Village, Guangwu Town,


Xingyang City

Residential

14 December 2065

213,852

100.0

Hucun Village, Guangwu Town,


Xingyang City

Residential

14 December 2065

92,260

100.0

Hucun Village, Guangwu Town,


Xingyang City

Residential

14 December 2065

22,809

100.0

West of Zheng Mang Road,


South Bank of Yellow River

Residential

5 May 2067

362,802

100.0

(1)

Total

1,406,880

Notes:
(1)

Part of these parcels of land were leased to Shanshui Golf Club


(formerly known as Henan Sinian Golf
Club
) for operation of a golf academy. The lease agreement expired on 31 December 2007 and we
did not extend the lease but will instead use the parcels of land for our future developments. For more details on the lease to
Shanshui Golf Club, please refer to the sections entitled General Information on Our Group History and General
Information on Our Group Properties Held for Investment of this Prospectus.

(2)

Further, we are also in the process of obtaining the land use rights to a parcel of approximately 560,000 sq m (835
)
land from the Land and Resources Bureau of Zhengzhou City
, of which we have reached
compensation agreement with the local government. However, the acquisition of the aforesaid parcel of land is subject
(i) the conversion of the approved use of the aforesaid land from agricultural use to residential use; and (ii) the payment
land premium and other prescribed fees and compliance with other applicable procedures as required under PRC laws.

112

of
a
to
of

PROPERTIES HELD FOR INVESTMENT


Our subsidiary, Zhengzhou Great View, owns the buildings and facilities of the Guoling Hotspring Hotel in
Guoling Shanshui
and the land on which it is situated. We have leased the Guoling Hotspring
Hotel to an unrelated third party, Henan Guoling Hotspring Vacation Hotel Management Co., Ltd.
(Guoling Management) (formerly known as Henan Sinian
Yingzhou Resort Hotel Management Co., Ltd
), to generate rental
returns. The lease agreement was entered into on 1 July 2007 and will expire on 30 June 2010 (the
Hotel Lease Agreement). Pursuant to the Hotel Lease Agreement, RMB350,000 is payable by Guoling
Management to Zhengzhou Great View monthly.
The Guoling Hotspring Hotel faces two lakes, has a total of 14 hotel villas which are in the process of
being converted into 157 guest rooms and has facilities such as exhibition and convention halls and
meeting rooms and four restaurants. The hotel guests are also allowed to use the sports facilities in
Guoling Shanshui
.
The aggregate net book value of the Guoling Hotspring Hotel as at 30 June 2007 amounted to
approximately RMB41.3 million and it has an aggregate GFA of approximately 10,886 sq m and a site
area of 15,333 sq m.
In addition, our Group also leased a parcel of land within Guoling Shanshui
with an
aggregate site area of approximately 354,630 sq m to an unrelated third party, Shanshui Golf Club
(formerly known as Henan Sinian Golf Club
) (Shanshui
Golf Club), to operate a golf academy (the Golf Academy). The lease agreement was entered into on
1 July 2005 and expired on 31 December 2007 (the Golf Academy Lease Agreement). Pursuant to the
Golf Academy Lease Agreement, RMB4.24 million was payable by Shanshui Golf Club to Zhengzhou
Great View annually. Our Group did not extend the lease upon its expiry and will retain the land for future
developments. For more details, please refer to the sections entitled General Information on Our Group
History and General Information on Our Group Land Held for Future Development of this
Prospectus.
The following are the details of our properties held for investment purposes:
Location

Guoling Shanshui

Site Area
(sq m)

GFA
(sq m)

Lessee

Use

Period of
Lease

Rent
(RMB000)

15,333

10,886

Henan Guoling Hotspring


Vacation Hotel
Management Co., Ltd.

Hotel

From 1 July 2007


to 30 June 2010

350
per month

Golf
academy

From 1 July 2005 to


31 December 2007

4,240
per annum

(formerly known as
Henan Sinian Yingzhou
Resort Hotel
Management Co., Ltd

)
Guoling Shanshui

354,630

1,500

Shanshui Golf Club


(formerly known as
Henan Sinian Golf Club
)

Apart from the Guoling Hotspring Hote, as mentioned in the section entitled General Information on Our
Group Properties Under Development of this Prospectus, our Group also intends to retain ownership
of levels 4 and 5 of our J-Expo
development upon its completion to lease to third parties
to generate rental proceeds.

113

SALES AND MARKETING


Our Groups overall sales and marketing activities are carried out by our integrated property sales team
and our commercial property sales team which are both headed by our Sales Director, Liu Xuemei, who
is also responsible for strategising our sales and marketing activities with the assistance of third party
professional marketing advisers. As at the Latest Practicable Date, our integrated property sales team
comprises 22 permanent staff and our commercial property sales team comprises of 5 permanent staff.
In addition, we typically employ contract staff who handle our sales activities at our commercial property
show flats. Such contracts usually last for three months and we will provide the relevant training to each
contract staff. All our current sales staff are also located in Zhengzhou city but may be deployed to other
cities whenever their services are required.
We also work together with real estate agencies in strategising and promoting the sale of units within our
J-Expo
development. We have sold a substantial portion of our units in J-Expo
through real estate agencies, which are paid commissions 2.5% of the total sale price.
Our developments are primarily targeted at middle and higher-income purchasers, investors and retailers
and our sales and marketing team will focus on maintaining and developing our Group as a premium
brand property developer. In addition, we advertise our development projects in local newspapers, over
the internet, and on the television and radio and carry out direct marketing such as mailing flyers to
target customers. We also put up promotional banners around our property developments and site areas
which can be easily seen by the public. In addition, we set up on-site sales and reception centres with
showflats, where possible, on display for potential purchasers visit and evaluation and sample units at
off-site promotional centres.
In future, when we expand our business operations to other PRC cities, we intend to establish our
CentraLand
brand name through extensive public relation activities in these cities. For
example, we may arrange for press conference during the execution of the relevant land acquisition
agreements, invite internationally acclaimed architects or designers to hold design forums and advertise
in the local media persistently. We can also arrange for potential customers in these new cities to make
exploratory trips and visit our Groups completed projects for them to witness the quality of our finished
product.
RESEARCH AND DEVELOPMENT
Our Groups nature of business does not require us to carry out extensive research and development
and we have not carried out any significant research and development for the past three financial years.
However, in order to ensure that we remain competitive, we review our internal processes and constantly
keep abreast of new concepts and trends relevant to the industry, so as to improve our property
development processes.
STAFF TRAINING POLICY
We believe that our employees are key to the growth of our Group. As such, we believe in training and
equipping our staff to ensure they stay competent and relevant in their respective areas of work. There
are 5 main avenues in which our staff may obtain the necessary training or exposure:
(i)

Attend our Groups in-house orientation and training programme to allow our staff to better
understand our Groups background, culture and/or policies and our various property projects;

(ii)

Attend short-term external trainings and seminars organised by relevant institutions;

(iii)

Secondment to different departments within our Group for a period of one to six months;

(iv)

Further studies by taking up relevant courses in which case, we have programmes in place to
allow them to take no-pay leave or work part-time and in certain circumstances, our Group may
provide subsidies for their course fees; and

(v)

Study trips to other cities in the PRC to enable our management and specialised employees to
inspect and survey quality property developments in these cities.

The amount of expenditures incurred for staff training for the last three financial years ended 31 December
2006 and up to the Latest Practicable Date as a percentage of our revenue was insignificant.

114

INTELLECTUAL PROPERTY
Our business or profitability is not dependent on any intellectual property, such as trade marks, patent,
patent rights, licences and processes or other intangible assets. We have not paid or received royalties for
any licence or use of any intellectual property.
Our subsidiary, Zhengzhou Great View, had filed applications for the following trademarks to be registered
in the PRC, and as at the Latest Practicable Date, the registration of such trademarks is still pending:

Trademark

Application No.

Class

Application Date

6302264

35

28 September 2007

6302276

35

28 September 2007

6302279

35

28 September 2007

6302282

36

28 September 2007

6302283

36

28 September 2007

6302285

36

28 September 2007

6305303

37

29 September 2007

6305305

37

29 September 2007

6305308

37

29 September 2007

6305311

37

29 September 2007

6305313

37

29 September 2007

6305315

37

29 September 2007

6305317

37

29 September 2007

6305374

35

29 September 2007

6307224

35

30 September 2007

6307228

35

30 September 2007

6307249

35

30 September 2007

6307274

36

30 September 2007

6307276

36

30 September 2007

6307278

36

30 September 2007

6307280

36

30 September 2007

115

Trademark

Application No.

Class

Application Date

6310265

43

8 October 2007

6310266

42

8 October 2007

6311914

44

8 October 2007

6311915

43

8 October 2007

6311916

42

8 October 2007

6311917

41

8 October 2007

6311918

40

8 October 2007

6311919

39

8 October 2007

6311920

38

8 October 2007

6311921

43

8 October 2007

6311922

42

8 October 2007

6311923

19

8 October 2007

6311935

43

8 October 2007

6311936

42

8 October 2007

6311937

43

8 October 2007

6311938

42

8 October 2007

6311939

44

8 October 2007

6311940

43

8 October 2007

6311941

41

8 October 2007

6311942

40

8 October 2007

6311943

39

8 October 2007

6311952

42

8 October 2007

6311954

38

8 October 2007

6311955

19

8 October 2007

116

Trademark

Application No.

Class

Application Date

6311956

44

8 October 2007

6311957

43

8 October 2007

6311958

41

8 October 2007

6311959

40

8 October 2007

6311960

39

8 October 2007

6311961

38

8 October 2007

6311962

19

8 October 2007

6311963

42

8 October 2007

Our subsidiary, Henan Jinzhi, had filed applications for the following trademarks to be registered in the
PRC, and as at the Latest Practicable Date, the requisition of such trademarks is still pending:

Trademark

Application No.

Class

Application Date

5988195

45

9 April 2007

5988196

43

9 April 2007

5988198

41

9 April 2007

5988199

39

9 April 2007

5988200

37

9 April 2007

5988201

36

9 April 2007

5988202

35

9 April 2007

5988203

19

9 April 2007

5988204

16

9 April 2007

5988197

42

9 April 2007

6311944

44

8 October 2007

117

Trademark

Application No.

Class

Application Date

6311945

43

8 October 2007

6311946

42

8 October 2007

6311947

41

8 October 2007

6311948

40

8 October 2007

6311949

39

8 October 2007

6311950

38

8 October 2007

6311953

19

8 October 2007

6307255

35

30 September 2007

6307261

36

30 September 2007

6307267

37

30 September 2007

MAJOR CONTRACTORS
The following table sets forth our contractors accounting for 5% or more of our total construction costs for
each of the Periods Under Review:
Percentage of total construction costs (%)
Contractors

FY2004

FY2005

FY2006

1H2007

The Fourth Construction Company of China


Construction Seventh Engineering Bureau

41.1

37.6

38.4

Henan Huachen Construction Co., Ltd

16.2

17.3

Henan Provincial No.5 Construction


Engineering Co., Ltd.

6.9

6.3

Our construction work is typically contracted out to independent construction companies selected through
a tender process for each property development.
Generally, our contracts with our contractors will stipulate a schedule of progress payments. Typically, we
will make payment within two weeks upon the receipt of invoice, subject to the satisfactory inspection of
the completed works by our engineers.
None of our Directors or Substantial Shareholders or any of their associates is related to or has any
interest, direct or indirect in our major contractors listed above. We have no arrangements or
understandings with any of our major contractors pursuant to which any of our Directors or Executive
Officers was selected as a Director or Executive Officer.

118

MAJOR CUSTOMERS
None of our customers accounted for 5% or more of our revenue in each of the Periods Under Review.
We are not dependent on any of our customers.
We have no arrangements or understandings with any of our customers pursuant to which any of our
Directors or Executive Officers was selected as a Director or Executive Officer of our Company.
Our business or profitability is not materially dependent on any industrial, commercial or financial contract
(including a contract with a customer or supplier).
For more information on the acquisition of our Groups property developments by our Directors, Executive
Officers or Substantial Shareholders or their associates, please refer to the section entitled Interested
Person Transactions of this Prospectus.
CREDIT MANAGEMENT
Purchasers may pay for their purchases of our Groups property by way of a lump sum payment or
through partial payments coupled with mortgage financing. In the event that our purchasers purchase the
property through partial payments coupled with mortgage financing, they are required to make upfront
payments of not less than 30.0% of the property sale price at the time of entering into the sale and
purchase contracts and the remaining balance before the delivery of property to the purchasers.
Save as disclosed below, during the Relevant Period, we have been able to receive the remaining
balance within two months from the signing of the sale and purchase property contracts on the
disbursement by the lending financial institutions, upon their processing of the mortgage loan
applications. In October 2006, we had delivered two properties to their respective purchasers prior to the
receipt of the remaining balance of the purchase considerations which resulted in an account receivable
of approximately RMB4.5 million as 31 December 2006. The delay in recept of the aforesaid remaining
balance was a result of the delay in the purchasers obtaining the necessary mortgage financing due to
an administrative oversight on our part in providing the necessary documentations to the lending financial
institutions to process the mortgage financing. By January 2007, we have received all the remaining
balance of RMB4.5 million.
The collection of outstanding purchase consideration or debts is closely monitored by our accounts
department.
SEASONALITY
For each of the Periods Under Review, we did not experience any significant seasonal trends. Our
Directors believe that there is no apparent seasonality factor affecting the property development industry
and our Groups business is not affected by any seasonality factor.
COMPETITION
We operate in a competitive environment and we are subject to competition from existing competitors and
new market entrants in the future. We believe that the high-end residential property development market
is capital intensive and requires specialised industry knowledge. We believe that our major competitors in
the development of high-end residential properties in Zhengzhou city are Jianye Residential Group
(China) Co., Ltd
and Henan Xinyuan Real Estate Co., Ltd.
. Our competitor in the development of commercial properties in Zhengzhou city
is believed to be Henan Datang Real Estate Co., Ltd.
. Apart from these
competitors, other competitors may also emerge in the cities that we operate in future.
We believe that the principal competitive factors influencing the property development industry generally
and in the Zhengzhou city where we operate include the experience and capabilities of the management
team, the concept of the projects, the quality, workmanship and exquisivity and variety of designs of the
projects, the location of the properties, the marketing strategies adopted by the developers, the timing of
the launch of the property projects and the pricing scheme adopted by the developers.

119

As a premium brand property developer of residential and commercial properties in Zhengzhou city, we
compete by continually strengthening our brand name and market position, ensuring that we acquire
suitably attractive sites for development, maintaining a short development cycle in order to achieve capital
efficiency and identifying market trends to meet the demands of our customers. Even though we operate
in a highly competitive environment, we believe that our competitive advantages will distinguish us from
our competition.
COMPETITIVE STRENGTHS
We believe that competition in our businesses is largely based on, amongst others, quality, price, product
range, customer service and delivery capability.
We have identified the following key competitive strengths that contribute to our ability to compete in our
businesses:
Premium Brand Property Developer in Zhengzhou City Focused on the Development of
Residential and Commercial Properties
We believe we are a premium brand property developer, focused on developing residential and
commercial properties targeted at middle and higher-income purchasers, with an emphasis on quality
designs, materials, finishings and construction through collaboration with leading architects, designers
and contractors. Our design teams are responsible for the development of the new designs for our
property development projects and we engaged the internationally acclaimed interior designer, the
Werkhart International Group, for the interior design of Guoling Shanshui
and may continue to
engage internationally acclaimed designers for our future projects. Our designs and planning concepts
are carefully catered to meet the needs of our target customers, and are novel and innovative.
We believe that our reputation as a developer of high-end residential properties contribute to the value
appreciation of our properties. We typically develop and sell our properties in multiple phases with the
average sale prices increasing with each subsequent phase. Our experience and ability to develop
residential properties, as well as the recognition accorded to us by the property industry and buyers alike,
enable us to market our properties at a premium.
The numerous awards and certificates awarded to us by various governmental agencies in the PRC and
independent accrediting bodies reflect the public recognition we have gained for the high quality
standards of our operations and construction. These distinctions enable us to command a strong market
presence in Zhengzhou city where our properties are located and have been instrumental in establishing
our brand name as one associated with quality and innovative developments.
Land Banks and Properties under Development Located in Good Locations
We are able to identify and acquire land at good locations in Zhengzhou city. Guoling Shanshui
is located in a suburban area, away from the city centre and surrounded by scenic views,
while our commercial property, J-Expo
, is located at the centre of Zhengzhou city, within
walking distance to Zhengzhou Railway Station
and Zhengzhou Long Distance Central Bus
Station
and in the vicinity of the commercial centre.
Experienced and Established Management Team
We are led by an experienced and established management team which has relevant and diverse
experience in the property development industry. Our Executive Director and Chief Operating Officer,
Wang Jian, and our Sales Director, Liu Xuemei, have an aggregate of almost 20 years in the property
development industry. Our Sales Director, Liu Xuemei, has various personal awards and was named an
outstanding individual in the property industry in central PRC. Further, our management team is led by
Yan Tao who has vast entrepreneurial experience and is an accomplished businessman with strong
managerial and networking skills.

120

Our management team has established good working relationships with our business partners,
contractors and government authorities in the PRC. We believe our managements acumen and
understanding of the PRC market trends, especially in Zhengzhou city, have helped us identify significant
development opportunities in Zhengzhou city, enabling us to acquire sites at reasonable prices, thereby
allowing us to benefit from the rapid market growth and leading us to continued success.
Strong Sales and Marketing Capabilities
We have a dedicated sales and marketing team which is lead by our Sales Director, Liu Xuemei, and it
comprises 27 experienced sales and marketing employees. We adopt various effective approaches to
increase our sales, including advertising our development projects in local newspapers, over the internet,
and on the television and radio and carry out direct marketing such as mailing flyers to target customers.
We also put up promotional banners and billboards around our property developments and site areas
which can be easily seen by the public. In addition, we set up on-site sales and reception centres with
showflats, where possible, on display for potential purchasers visit and evaluation and sample units at offsite promotional centres.
AWARDS AND CERTIFICATES
Over the years, our Group has been accorded a number of certificates and prestigious awards as set out
below:
Date

Awards and Certifications Awarding

Authority/Accrediting Body

March 2005

Top Ten Design Award


awarded to Guoling Shanshui

Xinhua News Agency


and Residential Magazine

June 2005

China Innovation Model Project


awarded to Guoling Shanshui

Global Real Estate Institute


, National
Association of Realtors USA
, Science &
Technology Committee, Ministry of
Construction
,
Technology Development Center,
Ministry of Construction
, Urban
Development Committee of China Real
Estate Association China Construction
China Property

20 August 2005

Guoling Shanshui
was given
special mention for the following awards:
(i) The Nomination Award of The LivCom
Award, (ii) The China LivCom Project
Award and (iii) The Environmental
Creation and Preservation Project Award

LivCom

24 November 2005

2005 China Top 10 Luxury Flats


awarded to Guoling Shanshui

Chinese Real Estate and Housing


Research Association, Ministry of
Construction

January 2007

2006 Central Plain Top Properties


awarded to Zhengzhou
Great View

China Real Estate Union of


Mainstream Media
, China Housing
Communication Union of Mainstream
Media
,
Henan Press Media Union Rivers
Newspaper

121

Date

Awards and Certifications Awarding

Authority/Accrediting Body

5 February 2007

Henan Province Green Community


Award
awarded
to Guoling Shanshui

Henan Province Environmental


Protection Bureau

27 March 2007

Qualification Certificate for Real Estate


Development Enterprise
No. 41013405 granted to Henan Jinzhi

Henan Provincial Construction Office

June 2007

Leading Community in National Green


Community Creation Activity
awarded to
Guoling Shanshui

State Environmental Protection


Administration

11 July 2007

Qualification Certificate for Real Estate


Development Enterprise
No. 41016452 granted to Zhengzhou
Great View

Henan Provincial Construction Office

2007

International Heritage Award


awarded to Guoling Shanshui

Oriental Today Newspaper

2007

Top 10 Property Enterprises of Central


Plain for Year 2006
awarded to Zhengzhou Great View

Oriental Today Newspaper

LICENCES, PERMITS, APPROVALS AND GOVERNMENT REGULATIONS


Save as disclosed below, as at the Latest Practicable Date, we have obtained all the necessary business
permits, licences, certificates and approvals for our business operations in the PRC and we are in
compliance with all applicable PRC laws and regulations which are material to our business operations. In
particular, Zhengzhou Great View has obtained a Qualification Certificate for Real Estate Development
Enterprise
with which, it is qualified to undertake real estate development
projects with an individual GFA of up to 250,000 sq m, subject to renewal after 31 March 2009 and
Henan Jinzhi has obtained a Qualification Certificate for Real Estate Development Enterprise
with which, it is qualified to undertake real estate development projects with
an individual GFA of up to 100,000 sq m, subject to renewal after 31 March 2008. Such qualification
certificates are subject to annual review by the relevant authority.
In accordance with the Administration Rules on the Qualifications of Real Estate Development
Enterprises
promulgated by the Ministry of Construction of PRC
on 29 March 2000, Zhengzhou Great View and Henan Jinzhi have to satisfy
various requirements to obtain a renewal of their respective Qualification Certificates for Real Estate
Development Enterprise
. Some of these requirements include:
(i)

Zhengzhou Great View and Henan Jinzhi should maintain at least 20 and 5 administrative
professionals respectively who are duly qualified in architecture, finance, real estate development
or economics in their respective employment and at least 3 of the aforesaid professionals should
be qualified full-time accounting professionals;

(ii)

They should not have a history of material accidents resulting from the quality (or lack of) of its
construction works; and

(iii)

They should maintain a quality guarantee system and provide purchasers with the Residential
Buildings Quality Guarantee Manual
and Residential Buildings Users Manual
.

Further, as Zhengzhou Great View has obtained the Qualification Certificate for Real Estate Development
Enterprise
with a larger GFA, it is to ensure, amongst others, that it has
completed development of at least 150,000 sq m of GFA in the three years prior to the application for
renewal.
122

Henan Jinzhi is in the process of gathering all relevant documents for the renewal application of its
qualification certificate and we expect to submit the renewal application by the end of January 2008.
Based on the confirmations provided by the Henan Provincial Construction Office
that
Zhengzhou Great View and Henan Jinzhi are in compliance with all the necessary requirements of their
qualification certificates and had not committed any violation of PRC laws which could lead to the
withdrawal of their qualification certificates, our Groups PRC legal counsel, Jingtian & Gongcheng, are of
the view that there will be no legal obstacle for Zhengzhou Great View and Henan Jinzhi to pass the
annual examination of its real estate development qualification and to renew their respective Qualification
Certificates for Real Estate Development Enterprise
so long as they remain in
compliance of and do not violate PRC laws.
In addition, we have obtained the following key permits for each of our completed properties and
properties under development and will have to apply for the same for each of our future property
development projects:
(i)

Permit for Construction Land Use Planning

(ii)

Permit for Construction Project Planning

(iii)

Permit for Commencement of Construction

(iv)

Permit for Pre-sale of Commodity Buildings

;
;
; and
.

A summary of the relevant PRC laws and regulations relevant to our Group is set out in Appendix G of
this Prospectus.
Stop work order and fine of Zhengzhou Great View
Zhengzhou Great View had commenced construction on approximately 130,000 sq m
of a
560,000 sq m
parcel of land before it obtained the necessary land use rights. As a result,
Zhengzhou Great View was issued a stop work order on 18 March 2006 by the Land and Resources
Inspection Team of Zhengzhou City
and was imposed a penalty of
RMB230,000. For more information on the aforesaid parcel of land, please refer to the section entitled
General Information on Our Group Business Overview of this Prospectus.
Zhengzhou Great View had on 17 April 2006 paid the penalty in full and there has not been any further
action by the said authority. Construction works on the said land have been put on hold until the requisite
land use rights have been obtained. We believe that this is an isolated case and going forward, such
incidents should not occur again.
Regulation on the mergers and acquisition of domestic enterprises by foreign investors
On 8 August 2006, six PRC regulatory agencies, including the Ministry of Commerce of the PRC and the
China Securities Regulatory Commission (CSRC), promulgated a new regulation with respect to the
mergers and acquisitions of domestic enterprises by foreign investors (the M&A Regulation) that
became effective on 8 September 2006. Article 40 of the M&A Regulation (Article 40) requires that an
offshore special purpose vehicle (SPV) formed for listing purposes and controlled directly or indirectly by
PRC companies or individuals, such as our Company, shall obtain the approval of the CSRC prior to the
listing and trading of such SPVs securities on an overseas stock exchange. On 21 September 2006, the
CSRC published on its official website procedures specifying documents and materials required to be
submitted to it by SPVs seeking CSRC approval of their overseas listings.
Based on its understanding of current PRC laws, regulations and rules and the procedures announced on
21 September 2006 and its consultation with the CSRC, our Groups PRC legal counsel, Jingtian &
Gongcheng, has advised us that the Invitation and the Listing do not require CSRC approval because the
acquisition of the 80.0% equity interest in Zhengzhou Great View by Everwell was completed before
8 September 2006, the effective date of the M&A Regulation, whilst the acquisition of the remaining
20.0% equity interest in Zhengzhou Great View by Everwell does not fall within the ambit of the M&A
Regulation.

123

INSURANCE
There are no mandatory requirements in the PRC laws, regulations and government rules which require
a property developer to take out insurance policies for its real estate developments or which are
applicable to our Group apart from motor vehicle insurance, pension, unemployment and medical
insurance for our employees which our Group has purchased accordingly. However, we maintain
insurance for destruction of or damage to all our buildings and facilites within Guoling Shanshui
, whether leased or completed and pending delivery.
We currently do not maintain insurance coverage over our commercial property under development,
J-Expo
. Upon the completion of the construction of J-Expo
, we intend
to maintain insurance for the destruction of or damage to the unsold properties and the properties
retained to general rental proceeds in J-Expo
.
We believe that our mode of operation is in line with conventional practice in the PRC property
development industry and are of the opinion that these insurance policies are adequate for our business
and operations, and will review our insurance coverage annually.
ENVIRONMENT AND SAFETY FEATURES
We are subject to PRC national and local environmental laws and regulations governing air pollution,
noise emissions, water and waste discharge and other environmental matters. Major environmental laws
and regulations to which we are subject include the Regulations on the Administration of Environmental
Protection of Construction Project
, the Procedures on the Administration of
Environmental Protection of Construction Projects
and the Provisions on
the Inspection and Acceptance of Environmental Protection of Construction Projects
.
Our property developments are required to undergo environmental assessments and we must submit
environmental impact study reports to the relevant government authorities before approval is granted for
the development of the property. The environmental impact study reports include various standards and
procedures that we must comply with during the compliance period of each of our projects. Upon
completion of a property development, the government authorities will inspect the site to ensure our
compliance with applicable environmental standards. The inspection report is presented together with
other specified documents to the local construction administration authorities for their record.
Our project development department is in charge of coordinating the preparation of the environmental
impact study reports by qualified environmental assessment agencies and the governmental inspection
and acceptance by the relevant government authorities.
We have developed our own sewage and environmental protection system for Guoling Shanshui
. In this regard, we have obtained the Registration Certificate of Pollutant Discharge
from the Zhengzhou Municipal Environmental Protection Bureau
which is valid from July 2007 to July 2008 and the renewal of such certificate is subject to
annual review by the Zhengzhou Municipal Environmental Protection Bureau
.
There has not been any major accident at any construction site operated by us since our establishment.
To the best of our Directors knowledge, we have complied with applicable environmental laws and
regulations and have not breached any applicable environmental laws or regulations since our
establishment.
PROSPECTS
Our Directors believe that we will continue to enjoy growth in the residential and commercial property
industry in Zhengzhou city over the next few years for the following reasons:
z

Increase investment in real estate developments based on the Zhengzhou Municipal National
Economic and Social Development Statistical Gazette for 2006
(1)
, the total investment in real estate developments in Zhengzhou city amounted to
RMB22.99 billion in 2006. This is 36.8% higher than in 2005.

124

Growth in population in Zhengzhou city according to the Zhengzhou Statistical Yearbook 2007
(2)
, Zhengzhou citys population was 708 million in 2004 and has reached 724
million in 2006.

Increase purchasing power for real estate in Zhengzhou city the rapid growth of the economy in
Zhengzhou city has resulted in a significant improvement in living standards. According to the
(2)
Zhengzhou Statistical Yearbook 2007
, the disposal income per capita of
urban residents in the Zhengzhou city has increased from RMB9,667 in 2004 to RMB12,187 in
2006.

Notes:
(1)

The Zhengzhou Statistics Bureau


, which published the Zhengzhou Municipal National Economic and Social
Development Statistical Gazette for 2006
has not consented to the inclusion of
this statement, table or compilation, as the case may be, for the purposes of Section 249 of the Securities and Futures Act
and is thereby not liable for this statement under Sections 253 and 254 of the Securities and Futures Act. The Directors have
not verified the accuracy of the contents of this statement/data. The Directors have included this statement, table or
compilation, as the case may be, in its proper form and context in this Prospectus. Our Directors are not aware of any
disclaimers made by Zhengzhou Statistics Bureau
, which published the Zhengzhou Municipal National
Economic and Social Development Statistical Gazette for 2006
in relation to the
reliance on the contents of the statement, table or compilation, as the case may be.

(2)

The Zhengzhou Statistics Bureau


, which compiled the Zhengzhou Statistical Yearbook 2007
has not consented to the inclusion of this statement, table or compilation, as the case may be, for the purposes of
Section 249 of the Securities and Futures Act and is thereby not liable for this statement under Sections 253 and 254 of the
Securities and Futures Act. The Directors have not verified the accuracy of the contents of this statement/data. The Directors
have included this statement, table or compilation, as the case may be, in its proper form and context in this Prospectus. Our
Directors are not aware of any disclaimers made by the Zhengzhou Statistics Bureau
, which compiled the
Zhengzhou Statistical Yearbook 2007
in relation to the reliance on the contents of the statement, table or
compilation, as the case may be.

We believe in maintaining a sizeable land bank for future growth and have accumulated approximately
1,406,880 sq m of site area, with an estimated aggregate GFA of 2.9 million sq of land for future
development which we expect to be sufficient for at least next seven years given our current pace of
development. Our Directors are of the opinion that we will be able to successfully acquire suitable sites for
future developments.
Accordingly, our Directors believe that there will continue to be strong demand for residential and
commercial properties like ours and our Group is adequately positioned to benefit from the strong demand
and as such, our Directors are confident of our Groups prospects.
Trend Information of our Group
Commencing 1 January 2007 and up to the Latest Practicable Date, we have sold (including units
contracted for sale but pending formal assignment and delivery):
-

Phase I, Mufu
: 14 residential units for an aggregate consideration of RMB2.9 million. The
average selling price was RMB2,391 per sq m. As at the Latest Practicable Date, there were
25 residential units unsold.

Phase I, Yongfu
: 14 residential units for an aggregate consideration of RMB34.4 million. The
average selling price was RMB8,646 per sq m. As at the Latest Practicable Date, there was
1 residential unit unsold.

Phase II, Huguang Shanse


: 330 residential units for an aggregate consideration of
RMB148.6 million. The average selling price was RMB4,159 per sq m. As at the Latest Practicable
Date, there were 56 residential units and 11 commercial units unsold.

Phase II, Xinyu Lanwan


: 134 residential units for an aggregate consideration of RMB77.5
million. The average selling price was RMB4,929 per sq m. As at the Latest Practicable Date, there
were 39 residential units unsold.

J-Expo : 67 office units and 1,618 retail units for an aggregate consideration of RMB23.3 million and
RMB535.9 million, respectively. The average selling price was RMB6,053 per sq m and RMB16,872
per sq m, respectively. As at the Latest Practicable Date, there were 125 office units and 174 retail
units unsold. We are retaining 768 retail units for lease to third parties. The construction of the project
will be completed in 1H2008 and the units sold will be ready for delivery thereafter.
125

Our management observed that the average selling prices of our residential and commercial projects
have been increasing generally and believe that such trend should at least maintain for the current
financial year.
Going forward, our management expects that the costs of property development will increase in the
foreseeable future, due to high demand for building materials arising from rapid urbanisation. Besides, an
upward trend in the interest rates resulting from the implementation of further monetary policies to tighten
the grant of loans for property developments to prevent overheating, is expected.
Further, pursuant to the PRC Enterprise Tax Law
enacted by the National
Peoples Congress on 16 March 2007, the enterprise income tax rates for both domestic and foreign
enterprise are unified at 25.0% with effect from 1 January 2008. This is a decrease from the enterprise
income tax rate of 33.0% which was previously applicable to our subsidiaries, Zhengzhou Great View and
Henan Jinzhi. As the implementation measures on the transitional policy of preferential tax rate have not
been announced by the relevant government authorities, we are unable to meaningfully estimate the
financial impact of the new tax law to our Group.
Save as disclosed above and in the sections entitled Risk Factors, Managements Discussion and
Analysis of Financial Conditions and Results of Operations, Introduction to Zhengzhou City, General
Information on Our Group Our Property Developments and General Information on Our Group
Prospects of this Prospectus respectively, and barring any unforeseen circumstances, our Directors are
not aware of any other trends in constructions, sales and inventory, contract values or other known
trends, uncertainties, demands, commitments, or events that are reasonably likely to have a material and
adverse effect on our revenue, profitability, liquidity or capital resources, or that would cause financial
information disclosed in this Prospectus to be not necessarily indicative of our future operating results or
financial condition.
Please also refer to the section entitled Cautionary Note Regarding Forward-Looking Statements of this
Prospectus.
Order Books
Due to the nature of our business and as our properties are not built to order, we do not have order
books.
STRATEGY AND FUTURE PLANS
Our goal is to strengthen our position as one of the leading property developers in central PRC. To
achieve our goal, we plan to adopt the following strategies to drive our future growth and increase
shareholder value.
Our future plans for the growth and expansion of our businesses are described below:
Continue to Focus on Development of Residential and Commercial Property Projects
We intend to maintain our core business focus on the development of residential and commercial
properties to leverage on our industry experience, market knowledge and reputation as a premium
property developer. We believe our strategy of focusing on the development of both residential and
commercial properties will mitigate the risk of over-reliance on purely residential developments.
Establish Public Recognition as a Premium Brand Property Developer
Through the provision of after-sales services, sales and marketing, focusing on quality and innovative
property developments and conducting market research and analysis, we intend to focus on building our
brand name and promote our integrated property developments. We will also prudently look into
diversifying our products portfolio by responding to changing market conditions and customer preferences
while continuing to use innovative concepts and creative designs, with emphasis on quality workmanship,
interior design and integrated landscaping to meet the demands of our target middle and higher-income
customers.

126

Maintain a Sufficient Project Pipeline Through Acquisitions, Joint Ventures or Business Alliances
We have a current residential land bank of approximately of 1,406,880 sq m, with an estimated aggregate
GFA of 2.9 million sq m and have we intend to continue to acquire new and suitable land in Zhengzhou
city, and where opportunity arises, other cities in the central part of PRC, to support our Groups
continuous growth potential. We will actively seek such opportunities through the direct acquisition of land
and may also do so indirectly through acquisition of companies which own the land that is of interest to
us, or through joint ventures or business alliances with such companies to jointly develop land. We believe
that such a strategy will provide an efficient and effective means for us to add to our portfolio of property
developments and expand our revenues base.
Continue to Focus On Zhengzhou City and to Explore New Geographical Areas
We are one of the leading residential property developers in Zhengzhou city and have acquired the entire
interest of Henan Jinzhi, which is a commercial property developer. We select the sites for our projects
very carefully and strategically, and we intend to use our existing geographical advantage in Zhengzhou
city to continue expanding our existing land bank and to consider expansion into new geographical areas
in the central part of the PRC, including the following provinces: Henan, Shaanxi, Hubei, Hunan, Jiangxi
and Anhui. We believe this will help reduce our exposure to market fluctuations in any particular regional
market in the PRC.
We will continue to focus on the Zhengzhou city region and leverage our reputation as a premium brand
property developer to ensure our sustained development. Apart from Zhengzhou city, we will also look
into expanding our presence in central part of the PRC which are undergoing increasing urbanisation
where we believe there is a growing demand for premium brand properties and with a view to capitalise
on the growth potential of the property markets in such cities and to drive our expansion plans in the
future.
Promote Effective Management
We intend to actively recruit quality managers with good track records and professionals with relevant and
necessary experience. This will facilitate the strengthening of our relationships with contractors and
designers and ensure comprehensive development plans, designs and project management of our
development projects. We intend to study and adopt successful management models and to train our
managers and staff to be service-oriented to increase our competitiveness.

127

DIRECTORS, MANAGEMENT AND STAFF

MANAGEMENT REPORTING STRUCTURE

Board of Directors

Chief Executive Officer


Yan Tao

Sales Director
Liu Xuemei

Chief Project
Planning and
Development
Officer
Cui Yudong

Chief Operating Officer


Wang Jian

Chief
Agricultural and
Engineering
Officer
Li Xiaowei

128

Finance Director
Wang Zhimin

Chief Human
Resource and
Administrative
Officer
Ding Gang

Financial
Controller and
Joint Company
Secretary
Ho Hin Yip

DIRECTORS
Our Board of Directors is entrusted with the responsibility for the overall management of our Group. Our
Directors particulars are listed below:
Name

Age

Address

Principal Occupation

Li Wei

39

Room 16, Building No. 7, 71 Weilai Avenue, Jinshui


District, Zhengzhou City, Henan Province, PRC

Non-Executive Chairman

Yan Tao

39

Room 7, Building No. 5, 2 Huanghe Road, Jinshui


District, Zhengzhou City, Henan Province, PRC

Executive Director and Chief


Executive Officer

Wang Jian

46

Block 1, 86 South Bank of Yellow River, Huiji


District, Zhengzhou City, Henan Province, PRC

Executive Director and Chief


Operating Officer

Wang Zhimin

39

140 Zhongyuan Road, Puyang City, Henan


Province, PRC

Finance Director

Liu Xuemei

35

Block 51, 94 Guanchen Street West, Guanchen


District, Zhengzhou City, Henan Province, PRC

Sales Director

Tan Siok Sing

53

45 Greenfield Drive, Singapore 457945

Businessman

Tan Siok Chin

37

41 Ewe Boon Road #04-43, Singapore 259335

Advocate & Solicitor

Li Danny Fui Lung

54

Flat 15A, Yee Ga Court, 62 Bonham Road,


Hong Kong

Certified Public
Accountant

Information on the business and working experience of our Directors is set out below:
Li Wei
Li Wei is our Non-Executive Chairman and is responsible for overseeing the business direction and
development of our Group. Li Wei started his career in July 1990 at Henan Bureau of Quality and
Technical Supervision
, a government unit in Henan Province for the inspection
of the product quality of local manufacturers, and was responsible for the marketing of this government
unit until May 1995. From June 1995 to August 1999, Li Wei was appointed chairman of Henan Province
Tianlong Industrial Co., Ltd
, a company engaged in the trading and sale of
ice-cream products, and concurrently, from June 1997 to December 2001, he was appointed legal
representative and executive director of Henan Synear Frozen Food Co., Ltd.
a company engaged in the manufacture and sale of frozen food products. Upon the incorporation
of Henan Synear Food Joint Stock Co., Ltd.
in December 2001, he was
appointed as its legal representative and executive director responsible for planning its business direction
and development until April 2006. Since September 2005, Li Wei was also appointed director of
Zhengzhou Synear Food Co., Ltd
, a company engaged in the manufacture and
sale of frozen food and ice-cream products, and was responsible for the planning of business direction
and development of the group. He was also the legal representative and executive director of our
subsidiary, Zhengzhou Great View until 2006. Li Wei was appointed the director of our Group companies,
Everwell and Piaget on 18 December 2002 and 28 September 2006 respectively. When Synear Food
Holdings Limited, a company listed on the mainboard of the SGX-ST, was incorporated on 23 February
2006, Li Wei was appointed its director and the executive chairman of the group, responsible for the
planning of the business direction and development of the group. Li Wei graduated from Zhengzhou
University
in 1990 with a degree in journalism.

129

Yan Tao
Yan Tao is our Executive Director and Chief Executive Officer and is responsible for overseeing the
overall business direction and development of our Group. Yan Tao started his career in October 1991 at
Zhengzhou City Jinshui District Sanitary and Anti-epidemic Station
as a
trainee until March 1995. Thereafter in March 1995, Yan Tao joined Zhengzhou City Bafang Hesheng
Electrical Co., Ltd.
as a sales manager. From March 1995 to December 2000,
he undertook various positions within Zhengzhou City Bafang Hesheng Electrical Co., Ltd.
and became its general manager, responsible for overseeing the overall
operations of the company. He was also appointed as the companys legal representative between March
1999 and December 2000. Subsequently, in January 2001 to October 2006, Yan Tao joined Henan
Province Bafang Hesheng Electrical Co., Ltd.
as its general manager and
was responsible for overseeing the overall operations of the company. From February 2003 to July 2007,
he was appointed as the legal representative of the company. In April 2005 to August 2007, Yan Tao was
appointed by Luoyang City Bafang Zaoyue Electrical Co., Ltd.
as the
legal representative and executive director of the company and was responsible for overseeing the
companys overall operations. In October 2006, Yan Tao was appointed as the chief executive officer of
our subsidiary, Zhengzhou Great View, and was responsible for overseeing its overall operations. Upon
the acquisition of Henan Jinzhi by Zhengzhou Great View in September 2007, Yan Tao was also
appointed the executive director of Henan Jinzhi. Pursuant to the Restructuring Exercise, Yan Tao was
appointed as the Chief Executive Officer of our Group. Yan Tao obtained his diploma in radiology from
Henan Medical University
in 1988.
Wang Jian
Wang Jian is our Executive Director and Chief Operating Officer and is responsible for overseeing the
overall operations of our Group. From February 1987 to September 1999, Wang Jian was the assistant
foreman of Henan Suji Joint-Stock Co., Ltd.
, a company engaged in machinery
manufacturing, and was assisting in the production operations. Thereafter, he joined Zhongfu (Group)
International Co., Ltd.
, a property development company, as their general
manager from September 1999 to October 2003 and was overseeing the overall operations of the
company. From August 2004 to April 2007, Wang Jian was the legal representative of Henan Shanshui
Property Management Co., Ltd.
. Concurrently, from August 2005 to June
2007, he was the legal representative of Henan Guoling Hotspring Vacation Management Co., Ltd.
(formerly known as Henan Sinian Yingzhou Resort Hotel Management
Co., Ltd
). In October 2003, Wang Jian was appointed by our
subsidiary, Zhengzhou Great View, as the general manager and was responsible for overseeing the
overall operations of Zhengzhou Great View. Pursuant to the Restructuring Exercise, Wang Jian was
appointed as the Executive Director and Chief Operating Officer of our Group. Wang Jian obtained his
diploma in business administration from Henan Radio & Television University
in
in 1994.
1986. He later graduated with a degree in economics from Chinese Party School
Wang Zhimin
Wang Zhimin is our Finance Director and is responsible for overseeing the overall accounting and
finance operations of our Group. He has over 16 years of experience in the accounting and finance
industry. He first started his career as an accountant at China Construction Bank
in
September 1990. Between September 1990 and April 2000, Wang Zhimin worked through various
positions in China Construction Bank
and was later promoted to credit department
manager. In April 2000, Wang Zhimin was appointed as senior manager of Puyang Changxin Certified
Public Accountants Co., Ltd.
and was responsible for overseeing the
auditing operations until January 2003. Thereafter in January 2003, he became the senior manager of
Guangdong Gaoyu Certified Public Accountants Co., Ltd.
and was
responsible for overseeing the auditing operations until October 2003. In October 2003, Wang Zhimin
joined our subsidiary, Zhengzhou Great View, as finance manager and was responsible for overseeing
the overall accounting and finance operations of Zhengzhou Great View. Pursuant to the Restructuring
Exercise, Wang Zhimin was appointed as our Finance Director. Wang Zhimin graduated with a degree in
finance from Henan Finance College
in 1996. Wang Zhimin is also a certified public
accountant with The Chinese Institute of Certified Public Accountants in the PRC since 2000.

130

Liu Xuemei
Liu Xuemei is our Sales Director and is responsible for overseeing the overall sales and marketing
operations of our Group. She has over 10 years of experience in the sales and marketing industry. She
started her career as a sales manager in a property development company, Henan Deyi Property
Development Co., Ltd.
, from September 1996 until December 2002.
Between January 2003 and January 2005, Liu Xuemei joined Beijing Yingmeishe International Public
Relations and Consultancy Co., Ltd.
as a deputy general
manager where she was responsible for assisting in the management of the overall operations of the
company. Thereafter in February 2005, Liu Xuemei joined our subsidiary, Zhengzhou Great View and
was responsible for overseeing its overall sales and marketing operations. Pursuant to the Restructuring
Exercise, Liu Xuemei became the Sales Director of our Group. Liu Xuemei graduated with a degree in
marketing from Zhongzhou University
in 1994 and is also a graduate from the Henan Finance
College
where she obtained a degree in business administration in 1996.
Tan Siok Sing
Tan Siok Sing was appointed as our Independent Director on 12 December 2007. He started his career
in July 1980 with City Development Ltd, a property development company, as a project and marketing
trainee. Thereafter, he went to The University of Tennessee, United States of America and graduated with
a Masters in Business Administration in 1984. In October 1985, he joined then Tsang and Ong
Stockbrokers Pte Ltd (later restructured as Sun Yuan Holdings Pte Ltd) as its executive director and was
responsible for establishing in-house training courses for dealers and remisiers, supervising the research
department, and providing advisory work in merger & acquisition transactions, initial public offers and
corporate finance related works to various clients and business entities. Thereafter in November 2003,
he joined Ei-Nets Ltd, an information technologies company listed on the SGX-ST (Sesdaq), as its
executive director for 2 years and was responsible for the companys corporate finance development and
licensing of patented information technology in the PRC. Since November 2005, Tan Siok Sing was
appointed executive director of Regalindo Resources Pte Ltd, an energy resources and minerals trading
company, and spearheaded the trading of Indonesian coal and minerals in the southern PRCs regional
market. He has more than 18 years of experience in the financial industry.
Tan Siok Chin
Tan Siok Chin was appointed as an Independent Director of our Company on 12 December 2007. She is
an advocate and solicitor practising in Singapore. Currently she is a Director of ACIES Law Corporation,
a firm advocates and solicitors, heading its corporate practice group. Prior to joining ACIES Law
Corporation, she practised as a partner in Messrs Rajah & Tann (now known as Rajah & Tann LLP), a
firm of advocates and solicitors. She has over 13 years of experience in legal practice. Her main areas of
practice are corporate finance, mergers and acquisitions, capital markets and commercial matters. She
graduated from the National University of Singapore with a Bachelor of Laws (Honours) degree.
Li Danny Fui Lung
Li Danny Fui Lung was appointed as our Independent Director on 12 December 2007. He graduated with
a Bachelor of Science (Honours) degree from University of Hong Kong in 1975, subsequently obtained a
postgraduate certificate in accountancy from University of Stirling, Scotland in 1977 and qualified as a
Chartered Accountant in 1980 with Ernst & Whinney in Scotland (Ernst & Whinney subsequently became
Ernst & Young, one of the big four international accounting firms). He has over 30 years experience in the
accounting profession and has worked as accountant, finance manager, controller and internal auditor in
major multinational companies in Hong Kong, including Swire & Maclaine Ltd, Kredietbank NV and
United Parcel Services, which is the largest parcel delivery and logistic company in the United States of
America. Li Danny Lui Fung is the sole proprietor of Messrs Danny Li & Company, a certified public
accountants firm in Hong Kong, and has been practicing as a certified public accountant in Hong Kong
for more than six years. Li Danny Lui Fung has also been an independent director of See Corporation
Limited, a company listed on the Stock Exchange of Hong Kong and has been acting as the chairman of
the companys audit committee since October 2001. He is a member of the Hong Kong Institute of
Certified Public Accountants, the Institute of Chartered Accountants in Scotland and the Institute of
Chartered Accountants in Australia.

131

The list of present and past directorships of each Director over the last five years excluding those held in
our Company, is set out below:
Name

Present directorships

Past directorships

Li Wei

Group Companies

Group Companies

Everwell International Holdings Limited


Piaget Management Ltd

Zhengzhou Huanghe Great


View Royal Garden Co., Ltd.

Other Companies

Other Companies

Ember Vision Limited


Synear Food Holdings Limited
Zhengzhou Synear Food Co., Ltd.

Henan Province Tianlong Industrial Co., Ltd.

Art Advanced Group Limited


Clear Profit International Limited
Overseas Market Group Limited

Zhongfu (Henan) Frozen Food Co., Ltd.

Henan Synear Frozen Food Co., Ltd.

Guangzhou Synear Food Co., Ltd.


Henan Synear Food Joint Stock Co., Ltd.
Hangzhou Fenghai Frozen Food Trading
Co., Ltd.
Beijing Synear Chuangxin Food Sales
Co., Ltd.
Fuzhou Danian Food Co., Ltd.
Henan Xiaolian Food Co., Ltd.
Henan Hanhai Investment Co., Ltd.

Yan Tao

Group Companies

Group Companies

Zhengzhou Huanghe Great


View Royal Garden Co., Ltd.

Nil

Henan Jinzhi Establishment Co., Ltd.

Wang Jian

Other Companies

Other Companies

Marble Focus Limited

Luoyang City Bafang Zaoyue Electrical


Co., Ltd.
Zhengzhou City Bafang Hesheng Electrical
Co., Ltd.
Henan Province Bafang Hesheng Electrical
Co., Ltd.

Group Companies

Group Companies

Zhengzhou Huanghe Great


View Royal Garden Co., Ltd.

Nil

Other Companies

Other Companies

Nil

Henan Shanshui Property Management


Co., Ltd.
Henan Guoling Hotspring
Vacation Management Co., Ltd.
(formerly known as Henan Sinian
Yingzhou Resort Hotel Management
Co., Ltd
)

132

Name

Present directorships

Past directorships

Wang Zhimin

Group Companies

Group Companies

Zhengzhou Huanghe Great


View Royal Garden Co., Ltd.

Nil

Other Companies

Other Companies

Nil

Nil

Group Companies

Group Companies

Zhengzhou Huanghe Great


View Royal Garden Co., Ltd.

Nil

Other Companies

Other Companies

Nil

Nil

Group Companies

Group Companies

Nil

Nil

Other Companies

Other Companies

Shong Sing Pte. Ltd.


Sun Yuan Holding Pte Ltd
Millennium Securities Pte Ltd
Sun Yuan Investments Pte Ltd
Millennium Securities Nominees Pte Ltd
Sun Yuan Overseas Pte Ltd
Sun Yuan (Indonesia) Pte Ltd
Regalindo Resources Pte Ltd
Li Heng Chemical Fibre
Technologies Limited

Realistix Laboratories Pte Ltd


Asia Cigar Trading Company Pte Ltd
Cigar Y Puros (Singapore) Pte Ltd
Smart Antenae Asia Pte Ltd
Englo Real Estate Development Pte. Ltd.
Ei-Infocomm Pte. Ltd.
Ei-Media Pte. Ltd.
Ei-Infrastructure Pte. Ltd.
Ei-Nets Ltd
Concept Cuisine Pte. Ltd.
Ei-Academy Pte. Ltd.
Ei-Surveillance Pte. Ltd.

Group Companies

Group Companies

Nil

Nil

Other Companies

Other Companies

Liu Xuemei

Tan Siok Sing

Tan Siok Chin

ACIES Law Corporation


Boulton Capital Asia Pte. Limited
Design Studio Furniture Manufacturer Ltd
Cosmosteel Holdings Ltd
Kauai Investments Pte Ltd
Li Danny Fui Lung

Group Companies

Group Companies

Nil

Nil

Other Companies

Other Companies

See Corporation Limited


Success Chance Limited

Nil

133

EXECUTIVE OFFICERS
The day to day operations of our Company are entrusted to an experienced and qualified team of
Executive Officers who are responsible for the different functions of our Group. The particulars of our
Executive Officers are set out below:
Name

Age

Address

Position

Cui Yudong

52

Block 3, 182 Gangdu Street, Jinshui


Zhengzhou City, Henan Province, PRC

District,

Chief Project Planning


and Development Officer

Li Xiao Wei

42

Room 30, Building No. 3, 1 Shiminxincun Street North,


Jinshui District, Zhengzhou City, Henan Province, PRC

Chief Architectural and


Engineering Officer

Ding Gang

40

Room 28, Building No. 6, 6 Weier Road, Jinshui District,


Zhengzhou City, Henan Province, PRC

Chief Human Resource


and Adminstrative Officer

Ho Hin Yip

34

Flat A, 11/F, Block 1, 34 Sands Street, Hong Kong

Financial Controller and


Joint Company Secretary

Information on the business and working experience of our Executive Officers is set out below:
Cui Yudong
Cui Yudong is our Chief Project Planning and Development Officer and is responsible for the overall
project planning and development of our Group. Cui Yudong started his career in October 1984 as a
foreman with Zhengzhou City Food Co., Ltd.
, a company engaged in manufacturing
food, until April 1990. Between April 1990 and October 1993, he was appointed by a food manufacturer,
Zhengzhou City Sea Products Co., Ltd.
, as their general manager and was responsible
for the overall management of the company. Thereafter in October 1993, he joined Zhengzhou Travel
Resources Development Co., Ltd
, a company engaged in the development
of tourism-related assets, as their project manager and was responsible for the management of the
companys projects until October 2003. In October 2003, Cui Yudong was appointed by our subsidiary,
Zhengzhou Great View, as the chief project planning and development officer and was responsible for its
overall project planning and development. Pursuant to the Restructuring Exercise, Cui Yudong was
appointed as the Chief Project Planning and Development Officer of our Group. Cui Yudong graduated
with a diploma in landscape from Shangqiu Agricultural School
in 1981.
Li Xiaowei
Li Xiaowei is our Chief Architectural and Engineering Officer and is responsible for the architectural
designing and planning of our Groups projects. He has over 10 years of experience in the project
construction and engineering industry. He started his career in July 1985 as a project manager with
and was
Henan Province Diwu Construction and Engineering Co., Ltd.
responsible for the companys projects until September 1989. Thereafter from September 1989 to
Septemeber 1999, Li Xiaowei joined Zhengzhou Travel Resources Development Co., Ltd.
, a company engaged in the development of tourism-related assets, as their
senior engineer and was responsible for the construction and engineering of the companys projects.
Since September 1999, Li Xiaowei was appointed by our subsidiary, Zhengzhou Great View, as the chief
architectural and engineering officer and was responsible for overseeing the overall architectural planning
and design of the companys projects. Pursuant to the Restructuring Exercise, Li Xiaowei was appointed
as the Chief Architectural and Engineering Officer of our Group. Li Xiaowei graduated with a degree in
industrial and national construction from Zhengzhou Industrial College
in 1993 and is a
registered civil construction engineer with the Zhengzhou Municipal Government
since
1999.

134

Ding Gang
Ding Gang is our Chief Human Resource and Administrative Officer and is responsible for the human
resource and administrative management of our Group. In July 1990, Ding Gang started his career with
Henan Bureau of Quality and Technical Supervision
, a government unit in
Henan Province for the inspection of the product qualtiy of local manufacturers, as their quality control
officer until January 1996. From January 1996 to September 2005, he joined Ping An Insurance (Group)
Company of China, Ltd. Zhengzhou Branch
as their
administrative manager and was responsible for the companys administration operations. Thereafter, in
September 2005, Ding Gang was appointed by our subsidiary, Zhengzhou Great View, as the chief
human resource and administrative officer and was responsible for overseeing the overall human
resource and administrative operations of the company. Pursuant to the Restructuring Exercise, Ding
Gang was appointed as the Chief Human Resource and Administrative Officer of our Group. Ding Gang
obtained his degree in law in Central University for Nationalities
in 1990.
Ho Hin Yip
Ho Hin Yip is our Financial Controller and Joint Company Secretary and is responsible for the
management of the overall finance & accounting operations of our Group. In addition, he is responsible
for implementing internal controls and corporate governance and practices, as well as liaising with
external parties and regulatory bodies in respect of our Groups financial matters. From July 1997 to May
2002, he worked as an auditor in Deloitte Touche Tohmatsu. From June 2002 to January 2004, Ho Hin
Yip was appointed as worked as assistant internal audit manager of Eton Management Limited and was
responsible for the internal control and review of the group. Thereafter in January 2004 to October 2004,
he was appointed chief compliance officer of Regent Pacific Limited and was in charge of the internal
control review and legal compliance of the group. From October 2004 to September 2007, he was the
financial controller of Pine Agritech Limited, a company listed on the SGX-ST and engaged in the
manufacture and sale of soybean-based products. Pursuant to the Restructuring Exercise, Ho Hin Yip
was appointed Financial Controller and Joint Company Secretary of our Group. Ho Hin Yip graduated
from The Chinese University of Hong Kong with a bachelors degree in professional accountancy. He is a
practicing member of the Hong Kong Institute of Certified Public Accountants and an associate member
of the Association of Chartered Certified Accountants in the United Kingdom.
Save as disclosed below, none of the Executive Officers has any present and past directorships over the
past five years:
Name

Present directorships

Past directorships

Cui Yudong

Group Companies

Group Companies

Nil

Zhengzhou Huanghe Great View Royal


Garden Co., Ltd.

Other Companies

Other Companies

Nil

Nil

Group Companies

Group Companies

Nil

Nil

Other Companies

Other Companies

Nil

Nil

Li Xiao Wei

135

Name

Present directorships

Past directorships

Ding Gang

Group Companies

Group Companies

Nil

Nil

Other Companies

Other Companies

Nil

Henan Guoling Hotspring


Vacation Management Co., Ltd.
(formerly known as Henan Sinian
Yingzhou Resort Hotel Management
Co., Ltd
)

Ho Hin Yip

Group Companies

Group Companies

Nil

Nil

Other Companies

Other Companies

Nil

Nil

None of our Directors and Executive Officers are related by blood or marriage to one another nor are
they so related to any Substantial Shareholder of our Company. To the best of our knowledge and belief,
there are no arrangements or undertakings with any Substantial Shareholders, customers, suppliers or
others, pursuant to which any of our Directors and Executive Officers was appointed.
REMUNERATION
The compensation paid to our Directors and our Executive Officers for services rendered to us and our
subsidiaries on an individual basis and in remuneration bands during FY2005, FY2006 and expected to
be paid for the current financial year is as follows:
FY2005(1)(3)

FY2006(1)(3)

Names

Estimated amount for


current FY2007(1)(2)(3)

Directors
Li Wei

(4)

Band A

Yan Tao

(4)

Band A

Wang Jian

Band A

Band A

Band A

Wang Zhimin

Band A

Band A

Band A

Liu Xuemei

Band A

Band A

Band A

Tan Siok Sing

Band A

Tan Siok Chin

Band A

Li Danny Fui Lung

Band A

Li Xiao Wei

Band A

Band A

Band A

Ding Gang

Band A

Band A

Band A

Cui Yudong

Band A

Band A

Band A

Ho Hin Yip

Band A

Executive Officers

Notes:
(1)

To determine the remuneration band for each of our Directors and Executive Officers, we have used the average exchange
rates FY2005, FY2006 and as at the Latest Practicable Date of RMB4.924:S$1.00, RMB5.019:S$1.00 and
RMB5.140:S$1.00 respectively.

136

(2)

The estimated amount under FY2007 does not take into account the incentive bonus that our Executive Directors are entitled
to receive under their respective Service Agreements, further details of which are set out in the section entitled Directors,
Management and Staff Service Agreements in this Prospectus.

(3)

Band A means compensation of an amount between S$0 and S$249,999.

(4)

Li Wei was the legal representative and executive director of Zhengzhou Great View until 2006 whilst Yan Tao was appointed
as the chief executive officer of Zhengzhou Great View in October 2006. Both Li Wei and Yan Tao did not receive any
remuneration in FY2006.

We have not set aside or accrued any amounts for our employees to provide for pension, retirement or
similar benefits.
EMPLOYEES
As at the Latest Practicable Date, we had a workforce of approximately 166 full-time employees.
Our employees are not unionised. The relationship and cooperation between the management and staff
have been good and are expected to continue in the future. There has not been any incidence of work
stoppages or labour disputes which affected our operations.
The functional distribution of our full-time employees as at 31 December 2004, 31 December 2005,
31 December 2006 and the Latest Practicable Date were as follows:

As at 31
December
2004

As at 31
December
2005

As at 31
December
2006

As at
the Latest
Practicable
Date

Function
Management

Administration and Finance

16

16

15

17

Marketing and Sales

26

28

26

27

Operations

27

51

36

32

Project Management

84

90

83

81

155

190

166

166

Total

As at the Latest Practicable Date, all our employees are located in Zhengzhou city, Henan Province.
The fall in the number of employees after 31 December 2005 was primarily due to the outsourcing of our
security unit within Guoling Shanshui
to the third party property management company,
Henan Shanshui Property Management Co., Ltd.
.
The average number of temporary employees employed by our Group in FY2006 is about 16 and these
temporary employees are usually employed by the sales and marketing and project management
departments.
SERVICE AGREEMENTS
Our Company has entered into separate service agreements (the Service Agreements) with each of our
Executive Directors, Yan Tao, Wang Jian, Wang Zhimin and Liu Xuemei, for a period of three years with
effect from the date of the listing of our Company on the SGX-ST (unless otherwise terminated by either
party giving not less than three months notice to the other). We may also forthwith terminate their
respective Service Agreements if any of these Executive Directors are guilty of any grave misconduct,
becomes bankrupt or otherwise is guilty of conduct tending to bring himself/herself or our Company into
disrepute. None of these Executive Directors will be entitled to any benefits upon termination of their
respective Service Agreements.
137

Pursuant to the terms of their respective Service Agreements, each of Yan Tao, Wang Jian, Wang Zhimin
and Liu Xuemei is entitled to a monthly salary of RMB80,000, RMB60,000, RMB40,000 and RMB40,000
respectively. All traveling, accommodation, entertainment expenses and other out-of-pocket expenses
reasonably incurred by the Executive Directors in the process of discharging their duties on behalf of our
Group will be borne by our Company.
Each of our Executive Directors, Yan Tao, Wang Jian, Wang Zhimin and Liu Xuemei, is also entitled, in
respect to each financial year commencing from FY2008, to a shared performance bonus (the
Performance Bonus Pool), which is calculated based on the consolidated net profit after tax and
extraordinary items (NPAT) (before deducting for such Performance Bonus Pool and before deducting
remuneration paid to the executive directors pursuant to their respective service agreements) of our
Group as follows:
NPAT Attained

Performance Bonus Pool

(i)

For the first RMB200 million

1.0% of the NPAT

(ii)

More than RMB200 million but up to


and including RMB300 million

RMB2.0 million plus 1.5% of the amount of NPAT in


excess of RMB200 million

(iii)

More than RMB300 million

RMB3.0 million plus 2.0% of the amount of NPAT in excess


of RMB300 million

Out of the total amount of Performance Bonus Pool, the Executive Directors shall be entitled to a share
of the Performance Bonus Pool calculated as follows:
Executive Directors Bonus = A/B x Performance Bonus Pool
Where:
A:

The annual salary of the Executive Director; and

B:

Total annual salary of all the executive directors of our Company.

Directors fees do not form part of the terms of the Service Agreements as these require the approval of
Shareholders at our Companys annual general meeting.
Had the Service Agreements been in place since the beginning of FY2006, the aggregate remuneration
paid to our Executive Directors would have been approximately RMB3.2 million instead of RMB0.2 million
and our profit before taxation for our Group would have been approximately RMB149.7 million instead of
approximately RMB151.7 million.
Save as disclosed above, there are no existing or proposed service agreements between our Company,
our subsidiaries and any of our Directors. There are no existing or proposed service agreements entered
or to be entered into by our Directors with our Company or any of its subsidiaries which provide for
benefits upon termination of employment.

138

INTERESTED PERSON TRANSACTIONS


In general, transactions between our Group and any of its interested persons (namely, the Directors,
Chief Executive Officer and Controlling Shareholders of our Company and their associates) are known as
interested person transactions. The following discussion sets out our material interested person
transactions during the last three financial years and for the period from 1 January 2007 up to the Latest
Practicable Date, with the term interested persons construed accordingly.
Save for the interested person transactions discussed below and as set out in the section entitled
Restructuring Exercise of this Prospectus, there are no other material interested person transactions
undertaken by our Group within the last three financial years and for the period from 1 January 2007 up
to the Latest Practicable Date.
PAST INTERESTED PERSON TRANSACTIONS
(a)

Sale of properties to various interested persons


The following are particulars of the various sale of properties in Guoling Shanshui
interested persons:

Date of
agreement

Group
entity involved
in the sale

Type and
area (GFA)
of property

Details of
interested
person

2 January 2005

Zhengzhou
Great View

Residential
Liu Xuemei,
property
Sales Director
unit/ 112 sq m

2 January 2005

Zhengzhou
Great View

Residential
Ms Niu Yun
property
the wife of our
unit/ 137 sq m Controlling
Shareholder,
Wang Peng

18 January 2005

Total
consideration

to

Date of
completion
of acquisition

RMB296,522

30 September
2005

RMB231,988

30 September
2005

Zhengzhou
Great View

Residential
Wang Jian,
RMB426,560
property
Executive Director and
unit/ 155 sq m Chief Operating Officer

30 September
2005

26 August 2005

Zhengzhou
Great View

Residential
Yan Tao,
property
Executive Director,
unit/ 337 sq m Chief Executive Officer
and Controlling
Shareholder

30 December
2005

8 December 2005

Zhengzhou
Great View

Commercial
retail
unit/ 98 sq m

Wang Jian,
RMB870,064
Executive Director and
Chief Operating Officer

30 October
2006

8 December 2005

Zhengzhou
Great View

Commercial
retail
unit/ 50 sq m

Ms Niu Yun
,
RMB447,480
the wife of our
Controlling Shareholder,
Wang Peng

30 October
2006

26 December 2005

Zhengzhou
Great View

Residential
Wang Zhimin,
property
Finance Director
unit/ 129 sq m

RMB2,720,000

RMB238,000

26 December
2005

In addition to the above, Zhengzhou Great View has also sold a total of four residential property
units in Guoling Shanshui
to our Executive Officers for an aggregate consideration of
RMB1,581,116.

139

The prevailing market rates were used to determine the sale prices of the abovementioned
property transactions. Our Directors are of the view that the above sale of properties were made
on normal commercial terms that were negotiated on arms length basis and not prejudicial to the
interests of our Company and its minority shareholders.
(b)

Security for facilities provided to Henan Sinian Establishment Joint Stock Co., Ltd.
(formerly known as Henan Synear Food Joint Stock Co., Ltd.
) (Henan Synear)
Henan Synear is a company incorporated in the PRC and our Non-Executive Chairman and
Controlling Shareholder, Li Wei, and our Controlling Shareholder, Wang Peng, are substantial
shareholders of Henan Synear, and they hold respectively 72.3% and 14.9% of the registered
capital of Henan Synear.
The following credit facilities were provided to Henan Synear in the past three financial years
ended 31 December 2006 and these facilities were secured by the property owned by our
subsidiary, Zhengzhou Great View (the Zhengzhou Great View Property):
Facilities Granted
FY2004
RMB000

FY2005
RMB000

FY2006
RMB000

Industrial and Commercial Bank of China, Zhengzhou City,


Zhenghua Road Sub-Branch

20,000

20,000

Shanghai Pudong Development Bank,


Zhengzhou City Sub-Branch

40,000

45,000

Bank of Communications, Zhengzhou City


Sub-Branch

20,000

18,790

Banks/ Financiers

The largest aggregate outstanding amount secured by the Zhengzhou Great View Property during
the last three financial years ended 31 December 2006 and for the period from 1 January 2007 up
to the Latest Practicable Date was approximately RMB85.0 million.
The above facilities ceased to be secured by Zhengzhou Great View Property as at 29 September
2006. These transactions are not on arms length basis and no amounts are payable to Zhengzhou
Great View for providing the securities.
(c)

Guarantee provided by Henan Synear for loan to Zhengzhou Great View


On 11 July 2005, a loan of RMB100.0 million was provided by Bridge Trust and Investment Co.,
Ltd.
, a trust investment company, to our subsidiary, Zhengzhou Great
View. This loan was guaranteed by Henan Synear.
The loan was fully repaid in FY2006. No amount was paid to Henan Synear for the provision of the
guarantee.

(d)

Engagement of Henan Shanshui Property Management Co., Ltd.


(Shanshui Property) to provide property management for Phases I and II of Guoling
Shanshui
Shanshui Property is a company incorporated in the PRC and is principally engaged in the
business of property management. Our Group currently engages Shanshui Property to manage
Phase I and Phase II of Guoling Shanshui
pursuant to a property management
agreement dated 30 June 2006 (the Property Management Agreement) valid until the formation
of an owners management committee by the property owners of Guoling Shanshui
.
Pursuant to the Property Management Agreement, a one-off management fee of RMB1.0 million is
payable by our Group to Shanshui Property. Following the establishment of the aforesaid owners
management committee, they may proceed to engage other property management companies.
Please refer to the section entitled General Information on Our Group Business Operations
Property Development of this Prospectus for more information.

140

Wang Jian is the former legal representative of Shanshui Property and the registered capital of
Shanshui Property is jointly held by Henan Hanhai Investment Co., Ltd.
(Hanhai Investment) and Henan Hanhai Establishment Co., Ltd.
(Hanhai Establishment) in the proportion of 80.0% and 20.0% respectively. Since April 2007,
Wang Jian ceased to be the legal representative of Shanshui Property.
Hanhai Investment is a company incorporated in the PRC and is currently 100.0% owned by
Shenzhen City Yuhao Investment Co., Ltd.
(Shenzhen Yuhao).
Shenzhen Yuhao and its shareholders are not related to our Company or any of our Directors,
Controlling Shareholders and Executive Officers.
The shareholders of Hanhai Establishment are Mr Sun Tao
and Ms Li Wenshan
,
who respectively hold 65.0% and 35.0% of the registered capital of Hanhai Establishment. Mr Sun
Tao
and Ms Li Wenshan
are unrelated third parties who are not related to our
Company or any of our Directors, Controlling Shareholders and Executive Officers.
Our Directors are of the view that the engagement of Shanshui Property by our Group to provide
property management services was on an arms length basis.
(e)

Advances from Henan Province Bafang Hesheng Electrical Co., Ltd.


(Henan Bafang) to Henan Jinzhi
Yan Tao was the legal representative of Henan Bafang, which shareholders are Yan Tao and Mr
Liang Mingli
in the percentage of 50.7% and 49.3% respectively. Yan Tao ceased to be
the legal representative of Henan Bafang since July 2007. Mr Liang Mingli
is not related
to our Company or any of our Directors, Controlling Shareholders and Executive Officers.
On 4 August 2006, Henan Bafang extended advances of RMB30.0 million to our subsidiary, Henan
Jinzhi, for working capital purposes. These advances were unsecured, at an interest rate of 5.85%
per annum and were repayable by 21 March 2007. The advances, which was carried out on an
arms length basis and have been fully repaid on 21 March 2007. We do not expect to enter into
similar transactions in the future following our listing on the Official List of the SGX-ST.

POTENTIAL CONFLICTS OF INTEREST

Henan Sinian Establishment Joint Stock Co., Ltd.


Henan Synear Food Joint Stock Co., Ltd.

(formerly known as
) (Henan Synear)

Henan Synear is a company incorporated in the PRC and our Non-Executive Chairman and Controlling
Shareholder, Li Wei, and our Controlling Shareholder Wang Peng, are substantial shareholders of Henan
Synear, and they hold respectively 72.3% and 14.9% of the registered capital of Henan Synear.
Henan Synear has been granted the land use rights to various premises in Zhengzhou city, they are
located at No. 2, Hongfengli, Zhengzhou City
and Shamen Road, Jinshui District,
Zhengzhou City
specifically. These premises, which have an aggregate building
floor area of approximately 65,000 sq m and comprise factory premises, warehouses and staff quarters,
are currently being leased to Synear Food Holdings Limited (Synear) pursuant to a lease agreement
dated 31 March 2006 as supplemented by two supplemental lease agreements dated 14 April 2006 and
4 May 2006 (collectively, the Lease Agreement).
Under the Lease Agreement, Synear leased the premises from Henan Synear for a period of 20 years
commencing from 1 January 2006. Notwithstanding the above, upon expiry of the initial three year term
commencing from 1 January 2006, the lease may be terminated at the option of Synears subsidiary,
Zhengzhou Synear Food Co., Ltd.
, by giving at least six months notice to Henan
Synear.
In the event that the Lease Agreement is terminated, Henan Synear will have the premises at its
disposal. Henan Synear has no intention of re-developing the aforesaid premises and would lease or sell
the land should the Lease Agreement be terminated. On 12 October 2007, Henan Synear executed an

141

agreement to grant to Zhengzhou Great View (or its nominee) the first right of refusal to acquire the
aforesaid land at a consideration which will be determined based on independent valuation and such
acquisition is subject to the approval of our Companys shareholders in a general meeting, if necessary.
Further, on 15 October 2007, some of our Directors and Controlling Shareholders, namely Li Wei, Wang
Peng, Yan Tao, Ember Vision and Marble Focus (collectively, the Relevant Shareholders and Directors)
executed a non-competition undertaking (the Non-Competition Undertaking) in favour of our Group.
Under the Non-Competition Undertaking, the Relevant Shareholders and Directors respectively
undertook to our Company, inter alia:
(i)

not to carry out or participate in any business which is similar to our Groups core business of
property development;

(ii)

not to carry out any business which is in competition or may be in competition, whether directly or
indirectly, with our Group and not to in any way solicit any employee, customer, contractors or
subcontractors of our Group; and

(iii)

not to use the name or logo of our Group including but not limited to CentraLand, Zhengzhou
Great View,
or any of its trademarks, and not to use any name or logo of our Group in
such a way as to be capable of being or likely to be confused with the name and branding of our
Group.

In view of the above, our Directors are of the view that there is no potential conflict of interest in the
aforesaid situation.
Further, except for one of our Independent Directors, all our Directors or their associates have interests
in property investments in or outside the PRC. These Directors have confirmed that such property
investments are personal investments and they do not directly or indirectly compete with the business of
our Group. Also, property investment is currently not the main focus of our Groups business.
One of our Independent Directors also has interests in property developments outside the PRC. The
Director has confirmed that such property developments are of a much smaller scale than our Groups
and they do not directly or indirectly compete with the business of our Group. Further, our Group
currently has no plan to expand its property development business to outside the PRC.
Save as disclosed above, none of our Directors, Controlling Shareholders and Executive Officers or their
associates has any material interest, direct or indirect, in:
(i)

any company carrying out the same business or deals in similar products as our Company or any
of our subsidiaries;

(ii)

any enterprise or company that is our Groups customer or supplier of goods or services; and

(iii)

any transaction to which we are a party.

REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS


Review by Audit Committee
Our Audit Committee will review all other existing and future interested person transactions, if any, on at
least a half-yearly basis to ensure that they are carried out on normal commercial terms and are not
prejudicial to the interests of our shareholders.
Our Audit Committee will also review all interested person transactions to ensure that the then prevailing
rules and regulations of the SGX-ST (in particular Chapter 9 of the Listing Manual) are complied with. We
will also endeavour to comply with the principles of and best practices set out in the Listing Manual.

142

OTHER TRANSACTION
Material transaction which involves our Company or its subsidiaries but which does not fall within the
ambit of the definition of an interested person transaction under Chapter 9 of the Listing Manual, has
been included in this section.
Purchase of quick freeze food products by our subsdiary, Everwell, from Henan Province
Zhengzhou City Grain & Oil Import and Export Company
(HP
Import & Export Co) which purchased the quick freeze food products from Henan Synear
Our subsidiary, Everwell had been selling quick freeze food products produced by Henan Synear (the
Synear Products) to PARKnSHOP
(PnS), a Hong Kong supermarket chain from
January 2003 to 9 April 2006.
Everwell purchased the Synear Products from Henan Province Zhengzhou City Grain & Oil Import and
Export Company
(HP Import & Export Co) for sale to PnS. HP
Import & Export Co in turn purchased the Synear Products from Henan Synear.
In FY2004, FY2005 and FY2006, sale of the Synear Products by HP Import & Export Co to Everwell
amounted to approximately RMB11 million, RMB13 million and RMB3 million respectively, and sale of the
Synear Products by Everwell to PnS amounted to approximately RMB15 million, RMB18 million and
RMB5 million respectively.
The respective sale transactions between Henan Synear and HP Import & Export Co and between HP
Import & Export Co and Everwell were on an arms length basis and on normal commercial terms which
were no less favourable to our Company as compared to what could be sold to other independent third
parties.
Everwell has, since 10 April 2006, ceased selling Synear Products.

143

CORPORATE GOVERNANCE
Our Memorandum of Association and Bye-laws provide that the Board shall consist of not less than two
Directors. None of our Directors are appointed for any fixed terms, but each of our Directors are required
to retire at least once every three years. Hence, the maximum term for each Director is three years.
Directors who retire are eligible to stand for re-election.
The Directors recognise the importance of corporate governance and the offering of high standards of
accountability to the Shareholders of our Company. We have therefore set up the following committees:
Nominating Committee
Our Nominating Committee comprises Li Danny Fui Lung, Tan Siok Chin and Tan Siok Sing. The
Chairman of the Nominating Committee is Tan Siok Chin. Our Nominating Committee will be responsible
for (i) re-nomination of our Directors having regard to the Directors contribution and performance; (ii)
determining annually whether or not a Director is independent; and (iii) deciding whether or not a Director
is able to and has been adequately carrying out his duties as a Director. The Nominating Committee will
decide how the Boards performance is to be evaluated and propose objective performance criteria,
subject to the approval of the Board, which address how the Board has enhanced long term
Shareholders value. The performance evaluation will also include consideration of our Companys share
price performance over a five-year period vis--vis the Singapore Straits Times Index and a benchmark
index of its industry peers. The Board will also implement a process to be carried out by the Nominating
Committee for assessing the effectiveness of the Board as a whole and for assessing the contribution by
each individual Director to the effectiveness of the Board and the Nominating Committee shall review Yan
Taos suitability and performance as Chief Executive Officer for FY2008 and FY2009 and make the
necessary disclosure to the Shareholders in our annual reports. Each member of the Nominating
Committee shall abstain from voting on any resolutions in respect of the assessment of his performance
or re-nomination as Director.
Remuneration Committee
Our Remuneration Committee comprises Li Danny Fui Lung, Tan Siok Chin and Tan Siok Sing. The
Chairman of the Remuneration Committee is Tan Siok Sing. Our Remuneration Committee will
recommend to the Board a framework of remuneration for the Directors and key Executive Officers, and
determine specific remuneration packages for each Executive Director. The recommendations of our
Remuneration Committee on the remuneration of Directors and Chairman should be submitted for
endorsement by the entire Board. All aspects of remuneration, including but not limited to Directors fees,
salaries, allowances, bonuses, options and benefits in kind shall be covered by our Remuneration
Committee. Each member of the Remuneration Committee shall abstain from voting any resolutions in
respect of his remuneration package.
Audit Committee
Our Audit Committee comprises Li Danny Fui Lung, Tan Siok Chin and Tan Siok Sing. The Chairman of
the Audit Committee is Li Danny Fui Lung. Our Audit Committee shall meet periodically to perform the
following functions:
(a)

review the audit plans of our Companys external auditors, and where applicable, our internal
auditors, including the results of our auditors review and evaluation of our system of internal
controls;

(b)

review the external auditors reports;

(c)

review the co-operation given by our Companys officers to the external auditors;

(d)

review the financial statements of our Company and our Group before their submission to the
Board for approval;

144

(e)

review and discuss with auditors any suspected fraud, irregularity or infringement of any relevant
laws, rules or regulations, which has or is likely to have a material impact on our Groups operating
results or financial position and our managements response;

(f)

consider the appointment and/or re-appointment of external auditors;

(g)

review interested person transactions, falling within the scope of Chapter 9 of the Listing Manual, if
any;

(h)

review any potential conflicts of interest;

(i)

review and approve our Groups hedging policies and instruments (if any);

(j)

undertake such other reviews and projects as may be requested by the Board and report to the
Board its findings from time to time on matters arising and requiring the attention of our Audit
Committee; and

(k)

undertake generally such other functions and duties as may be required by law or the Listing
Manual, as may be applicable from time to time.

Apart from the above functions, the Audit Committee shall commission and review the findings of internal
investigations into matters where there is any suspected fraud or irregularity, or failure of internal controls
or infringement of any law, rule or regulation which has or is likely to have a material impact on our
Groups operating results and/or financial position. In addition, all future transactions with related parties
shall comply with the requirements of the Listing Manual. Each member of the Audit Committee shall
abstain from voting on any resolutions in respect of matters in which he is interested.

145

PURCHASE BY OUR COMPANY OF OUR OWN SHARES


Under the laws of Bermuda, a company may, if authorised by its Memorandum of Association or byelaws, purchase its own shares and the purchased shares may be cancelled or held as treasury shares.
Our Company has such power to purchase our own Shares pursuant to paragraph 7 of our
Memorandum of Association and Bye-law 3(2) of our Bye-laws. Such power to purchase our own Shares
shall, subject to the Bermuda Companies Act, our Memorandum of Association and if applicable the
rules and regulations of the SGX-ST and other regulatory authorities, be exercisable by the directors of
our Company upon such terms and subject to such conditions as they think fit, in accordance with Byelaw 3(2) (which requires the prior approval of our members in general meeting to be obtained for such
purchase).
Under the laws of Bermuda, such purchases may only be effected out of the capital paid-up on the
purchased Shares or out of the funds of our Company otherwise available for dividend or distribution or
out of the proceeds of a fresh issue of Shares made for that purpose. Any premium payable on such a
purchase over the par value of the Shares to be purchased must be provided for out of the funds of our
Company otherwise available for dividend or distribution or out of our Companys share premium account
before the Shares are purchased. Any amount due to a shareholder on a purchase by our Company of
our own Shares may (i) be paid in cash; (ii) be satisfied by the transfer of any part of the undertaking or
property of our Company having the same value; or (iii) be satisfied partly under (i) and partly under (ii).
Further, such purchase may not be made if, on the date on which the purchase is to be effected, there
are reasonable grounds for believing that our Company is, or after the purchase would be, unable to pay
our liabilities as they become due. Shares purchased by our Company may either be cancelled (in which
event, our Companys issued, but not our authorised, capital will be diminished accordingly) or, may be
held as treasury shares. Under the laws of Bermuda, if a company holds shares as treasury shares the
company shall be entered in the register of members as the member holding the shares but the company
is not permitted to exercise any rights in respect of those shares and no dividend or other distribution
(whether in cash or otherwise) shall be paid or made to the company in respect of such shares.
For further details, please see Purchase of shares and warrants by a company and its subsidiaries of
Appendix E - Summary of Bermuda Company Law to this Prospectus.

146

ATTENDANCE AT GENERAL MEETINGS


Under the Bermuda Companies Act, only those persons who agree to become members of a Bermuda
company and whose names are entered on the register of members of such a company are considered
members, with rights to attend and vote at general meetings. Depositors holding Shares through CDP
are not recognised as members of our Company, and do not have a right under the Bermuda Companies
Act to attend and to vote at general meetings of our Company. In the event that Depositors wish to
attend and vote at general meetings of our Company, CDP will have to appoint them as proxies, pursuant
to the Bye-laws and the Bermuda Companies Act.
In accordance with Bye-law 77(1), unless CDP specifies otherwise in a written notice to our Company,
CDP shall be deemed to have appointed as CDPs proxies each of the Depositors who are individuals
and whose names are shown in the records of CDP, as at a time not earlier than forty-eight (48) hours
prior to the time of the relevant general meeting, supplied by CDP to our Company. Therefore,
Depositors who are individuals can attend and vote at the general meetings of our Company without the
lodgment of any proxy form. Depositors who cannot attend a meeting personally may enable their
nominees to attend as CDPs proxies by completing and returning appropriate proxy forms. Depositors
who are not individuals can only be represented at a general meeting of our Company if their nominees
are appointed as CDPs proxies. Proxy forms appointing nominees of Depositors as proxies of CDP
would need to be executed by CDP as member and must be deposited at the place and within the time
frame specified by our Company to enable the nominees to attend and vote at the relevant general
meeting of our Company.

147

TAKE-OVERS
There are presently no Bermuda laws or regulations of general application which will require persons
who acquire significant holdings in our Shares to make take-over offers for our Shares or to notify us.
However, pursuant to the Securities and Futures Act, Sections 138, 139 and 140 of the Securities and
Futures Act and the Singapore Code on Take-overs and Mergers (collectively the Singapore Take-over
and Merger Laws and Regulations) apply to take-over offers of companies which are incorporated
outside Singapore and all or any of the shares of which are listed for quotation on a securities exchange
(as defined in the Securities and Futures Act). Accordingly, the Singapore Take-over and Merger Laws
and Regulations will apply to take-over offers for our Shares for so long as our Shares are listed on a
securities exchange, which includes the SGX-ST.

148

GENERAL AND STATUTORY INFORMATION

INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS


1.

The names, addresses, ages and principal occupations of each of our Directors and Executive
Officers are set out in the section entitled Directors, Management and Staff of this Prospectus.

2.

Information on the business and working experience of each of our Directors and Executive
Officers are set out in the section entitled Directors, Management and Staff of this Prospectus.

3.

Save as disclosed below, none of our Directors or Executive Officers is or was involved in any of
the following events:
(i)

during the last ten years, an application or a petition under any bankruptcy laws of any
jurisdiction filed against him or against a partnership of which he was a partner at the time
when he was a partner or at any time within two years from the date he ceased to be a
partner;

(ii)

during the last ten years, an application or a petition under any law of any jurisdiction filed
against an entity (not being a partnership) of which he was a director or an equivalent
person or a key executive, at the time when he was a director or an equivalent person or a
key executive of that entity or at any time within two years from the date he ceased to be a
director or an equivalent person or a key executive of that entity, for the winding-up or
dissolution of that entity or, where that entity is the trustee of a business trust, that business
trust, on the ground of insolvency;

(iii)

any unsatisfied judgements against him;

(iv)

a conviction of any offence, in Singapore or elsewhere, involving fraud or dishonesty which


is punishable with imprisonment, or has been the subject of any criminal proceedings
(including any pending criminal proceedings of which he is aware) for such purpose;

(v)

a conviction of any offence, in Singapore or elsewhere, involving a breach of any law or


regulatory requirement that relates to the securities or futures industry in Singapore or
elsewhere, or has been the subject of any criminal proceedings (including pending criminal
proceedings of which he is aware) for such breach;

(vi)

during the last ten years, judgement entered against him in any civil proceeding in
Singapore or elsewhere involving a breach of any law or regulatory requirement that relates
to the securities or futures industry in Singapore or elsewhere, or a finding of fraud,
misrepresentation or dishonesty on his part, or has been the subject of any civil proceedings
(including any pending civil proceedings of which he is aware) involving an allegation of
fraud, misrepresentation or dishonesty on his part;

(vii)

a conviction in Singapore or elsewhere of any offence in connection with the formation or


management of any entity or business trust;

(viii)

disqualification from acting as a director or an equivalent person of any entity (including the
trustee of a business trust), or from taking part directly or indirectly in the management of
any entity or business trust;

(ix)

the subject of any order, judgement or ruling of any court, tribunal or governmental body
permanently or temporarily enjoining him from engaging in any type of business practice or
activity;

149

(x)

to his knowledge, been concerned with the management or conduct, in Singapore or


elsewhere, of affairs of:
(a)

any corporation which has been investigated for a breach of any law or regulatory
requirement governing corporations in Singapore or elsewhere;

(b)

any entity (not being a corporation) which has been investigated for a breach of any
law or regulatory requirement governing such entities in Singapore or elsewhere;

(c)

any business trust which has been investigated for breach of any law or regulatory
requirement governing business trusts in Singapore or elsewhere; or

(d)

any entity or business trust which has been investigated for a breach of any law or
regulatory requirement that relates to the securities or futures industry in Singapore or
elsewhere,

in connection with any matter occurring or arising during the period when he was so
concerned with the entity or business trust; and
(xi)

the subject of any current or past investigation or disciplinary proceedings, or has been
reprimanded or issued any warning, by the Authority or any other regulatory authority,
exchange, professional body or government agency, whether in Singapore or elsewhere.

Affairs relating to Guangzhou Synear Food Co., Ltd (


and Wang Peng were shareholders

) which Li Wei

Li Wei and Wang Peng were shareholders of Guangzhou Synear Food Co., Ltd
(Guangzhou Synear). Li Wei was also its legal representative. Li Wei and Wang Peng
disposed of their entire equity interests in Guangzhou Synear representing 70% and 20%
respectively of the registered capital of Guangzhou Synear to two individuals on 16 March 2005.
Li Wei also ceased to be its legal representative. Despite their equity interests in Guangzhou
Synear during the said period and Li Weis position as legal representative, they were not involved
in its day-to-day operations.
In January 2003, the Guangzhou Industrial and Commercial Administrative Bureau
imposed an administrative penalty of RMB80,000 on Guangzhou Synear for the
inappropriate accounting of rebates to customers. Guangzhou Synear has paid the penalty in full.
Li Wei and Wang Peng have been advised that the granting of properly booked rebates (i.e.
discounts) as a form of sales strategy is acceptable, pursuant to the Anti-Unfair Competition Law
of the Peoples Republic of China.
As at the Latest Practicable Date, none of Li Wei and Wang Peng are directors, legal
representatives and/or equity holders of Guangzhou Synear.
4.

No option to subscribe for shares in, or debentures of, our Company has been granted to, or was
exercised by, any Director or Executive Officer within the last financial year

5.

No person has, or has the right to be given, an option to subscribe for any securities of our
Company or our subsidiaries.

6.

Save as disclosed in the section entitled Interested Person Transactions of this Prospectus, no
Director or expert is (i) interested, directly or indirectly, in the promotion of, or in any assets
acquired or disposed of by, or leased to, our Company within two years preceding the Latest
Practicable Date, or in any proposal for such acquisition or disposal or leased as aforesaid; or
(ii) interested where the interest consists in being a partner in a firm or a holder of shares in or
debentures of a corporation interested in the same.

150

7.

Save as disclosed in the section entitled Interested Person Transactions of this Prospectus, no
Director has any interest in any existing contract or arrangement which is significant in relation to
our business taken as a whole.

8.

There is no shareholding qualification for Directors in the Bye-laws of our Company.

9.

No sum or benefit has been paid or has been agreed to be paid to any Director or expert who is a
partner of any firm in which a Director or expert or any corporation in which such Director or
expert holds shares or debentures, in cash or shares or otherwise by any person (i) (in the case of
a Director) to induce him to become, or to qualify him as our Director or otherwise for the services
rendered by him or such firm or corporation in connection with the promotion or formation of our
Company; or (ii) (in the case of an expert) for services rendered by him or such firm or corporation
in connection with the promotion or formation of our Company.

SHARE CAPITAL
10.

Save as disclosed below and set out in the section entitled Share Capital in this Prospectus,
there were no changes in the issued and paid-up capital of our Company, its subsidiaries and
subsidiary entities within the three years preceding the date of lodgment of this Prospectus.
CentraLand Limited
Date

Purpose

Amount

Resultant Issued
Share Capital

Number of
ordinary shares

Par
Value

1,000

HK$0.15

HK$150
(nil-paid)

HK$150
(nil-paid)

Consideration

11 October 2007

Organisation

8 December 2007

Issue of further shares

999,000

HK$0.15

HK$149,850
(nil-paid)

HK$150,000
(nil-paid)

12 December 2007

Crediting as fully
paid the existing
375,000
nil-paid
Shares (being the
1,000,000 nil-paid
shares post-Share
Consolidation and
post-Share
Subdivision)
pursuant
to
the
Restructuring
Exercise for the
acquisition of the
entire issued share
capital of Piaget

375,000

HK$0.40

HK$150,000

HK$150,000

12 December 2007

Allotment and issue


of
new
Shares
pursuant
to
the
Restructuring
Exercise for the
acquisition of the
entire issued share
capital of Piaget

1,599,625,000

151

HK$0.40 HK$639,850,000 HK$640,000,000

Piaget Management Ltd


Date

Purpose

Amount

Resultant Issued
Share Capital

Number of
ordinary shares

Par
Value

Consideration

28 September 2006 First allotment

100

US$100.00

US$100

12 October 2006

Allotment and issue


of new ordinary
shares pursuant to
subscription
by
Ember Vision

600

US$600

US$700

20 October 2006

Allotment and issue


of new ordinary
shares pursuant to
subscription
by
Marble Focus

300

US$51,500,000

US$51,500,700

4 August 2007

Allotment and issue


of new ordinary
shares pursuant to
subscription
by
Overseas Market

250

US$90,000,000 US$141,500,700

Everwell International Holdings Limited


Date

Purpose

Amount

27 September 2002 Incorporation


18 December 2002

Allotment and issue


of new ordinary
shares pursuant to
subscription by Li
Wei and Wang Peng

Resultant Issued
Share Capital
(HK$)

Number
of shares

Par Value
(HK$)

Consideration
(HK$)

1.00

2.00

2.00

9,998

1.00

9,998

10,000

Zhengzhou Huanghe Great View Royal Garden Co., Ltd.


Date

Purpose

Amount (US$)

Resultant Issued
Share Capital

Number of
ordinary shares

Par
Value

Consideration

23 December

Registered capital on
registration

N.A.

N.A.

N.A.

US$5,000,000
(fully paid on
24 October 1996)

18 June 2007

Increase
registered capital

N.A.

N.A.

N.A.

US$99,000,000
(US$49,999,980
paid up on
6 September
2007

in

152

Henan Jinzhi Establishment Co., Ltd.


Date

Purpose

Amount (US$)

Resultant Issued
Share Capital

Number
of shares

Par
Value

Consideration

30 October 1997

Registered capital on
registration

N.A.

N.A.

N.A.

RMB10,000,000
(fully paid on
22 October 1997)

11 August 2006

Increase
registered capital

N.A.

N.A.

N.A.

RMB25,000,000
(fully paid on 10
August 2006)

in

11.

Save as disclosed above and in the section entitled Share Capital in this Prospectus, no shares
or debentures were issued or were agreed to be issued by our Company for cash or for a
consideration other than cash during the last two years.

12.

There has been no previous issue of Shares by us or offer for sale of our Shares to the public
within the two years preceding the Latest Practicable Date.

LITIGATION
13.

Save as disclosed below, our Company was not engaged in any legal or arbitration proceedings in
the last 12 months before the date of the lodgment of this Prospectus, as plaintiff or defendant in
respect of any claims or amounts which are material in the context of the Invitation and our
Directors have no knowledge of any proceedings pending or threatened against our Company or
any facts likely to give rise to any litigation, claims or proceedings which might materially affect the
financial position or profitability of our Group.

Stop work order and fine of Zhengzhou Great View


Zhengzhou Great View had commenced construction on approximately 130,000 sq m
of a
560,000 sq m
parcel of land before it obtained the necessary land use rights. As a result,
Zhengzhou Great View was issued a stop work order on 18 March 2006 by the Land and
Resources Inspection Team of Zhengzhou City
and was imposed a
penalty of RMB230,000. For more information on the aforesaid parcel of land, please refer to the
section entitled General Information on Our Group Business Overview of this Prospectus.
Zhengzhou Great View had on 17 April 2006 paid the penalty in full and there has not been any
further action by the said authority. Construction works on the said land have been put on hold
until the requisite land use rights have been obtained. We believe that this is an isolated case and
going forward, such incidents should not occur again.

Litigation between Zhengzhou Great View and Henan Jinzhi


On 19 November 2004, Zhengzhou Great View (as debtor) and Henan Jinzhi (as creditor) entered
into a Court Enforcement Notarisation Letter numbered (2004) Zheng Hui Zheng Jing Zi No.256
notarised by Zhengzhou City Huiji District Notarisation Office
(the Court Enforcement Notarisation Letter), pursuant to which, Zhengzhou
Great View agreed to pay the sum of RMB 7.0 million to Henan Jinzhi for the provision of
consultancy services by Henan Jinzhi to Zhengzhou Great View in relation to its property
development business. On 13 December 2004, on the application by Henan Jinzhi, the Henan
Province Zhengzhou City Middle Level Peoples Court
issued a
Notice of Court Enforcement
numbered (2005) Zheng Zhi Er Zi No.22
to inform Zhenghzou Great View that it will enforce the aforesaid Court
Enforcement Notarisation Letter. Subsequently, in March 2005, the parties entered into an
agreement to terminate the aforesaid court enforcement procedure and Zhengzhou Great View is
not required to pay the aforesaid sum to Henan Jinzhi.

153

Dispute between Zhengzhou Great View and Xiong Suqin pursuant to purchase agreement
On 2005, Xiong Suqin
, on behalf of Zhengzhou City Guancheng District Kangli Stainless
Steel Kitchen Appliances Sales Office
(Kangli Kitchen
Appliances), filed a claim against our subsidiary, Zhengzhou Great View, alleging Zhengzhou
Great Views non-payment of the sum of RMB244,339 pursuant to a sale and purchase agreement
entered into between Kangli Kitchen Appliances and Zhengzhou Great View on 19 August 2004 for
the supply of kitchen applicances by Kangli Kitchen Appliances to Zhengzhou Great View.
Zhengzhou Great View was of the view that the kitchen appliances supplied by Kangli Kitchen
Appliances were not up to the standard as agreed between the parties and thus refused to pay the
aforesaid outstanding sum.
On 3 November 2005, the parties came to an agreement and the Peoples Court of Huiji District
Zhengzhou City issued the Civil Mediation Notice (2005) Number 211
, according to which, Zhengzhou Great View agreed to pay Kangli Kitchen
Appliances RMB215,346 and the litigation fees of RMB6,250 to resolve the dispute. As at the
Latest Practicable Date, Zhengzhou Great View has paid in full the aforesaid sums.
MATERIAL CONTRACTS
14.

The following contracts not being contracts entered into in the ordinary course of business have
been entered into by our Company and our subsidiaries within the two years preceding the date of
lodgment of this Prospectus and are or may be material:
(a)

The share transfer agreement dated 25 December 2006 entered into by Everwell with
Hanhai Establishment to acquire its entire 20.0% equity interest in Zhengzhou Great View at
an aggregate consideration of US$91.4 million based on the net asset value of Zhengzhou
Great View as determined by an independent valuer on 31 October 2006. Please refer to the
sections entitled Group Structure and General Information of Our Group - History of this
Prospectus for further details.

(b)

The share transfer agreement dated 23 June 2007 entered into by Zhengzhou Great View
with Pingdingshan City Fang Yuan Tian Tian Yugang Restaurant Co., Ltd
(Tiantian Yugang) for the transfer of our entire equity interest in Henan
Sinian Yingzhou Resort Hotel Management Co., Ltd
(now known as Henan Guoling Hotspring Vacation Hotel Management Co., Ltd.
) (Guoling Management), by Zhengzhou Great View
to Tiantian Yugang, for an aggregate consideration of RMB9.0 million. Please refer to the
section entitled General Information of Our Group - History of this Prospectus for further
details.

(c)

The share transfer agreement dated 25 June 2005 entered into by Zhengzhou Great View
with Zhengzhou Xiyasi Scientific and Educational Technology Development Co., Ltd.
for the transfer of its entire investments in Shanshui Golf
(formerly known as Henan Sinian Golf Club
Club
) (Shanshui Golf Club), by Zhengzhou Great View to Zhengzhou Xiyasi Scientific
and Educational Technology Development Co., Ltd.
, for
an aggregate consideration of RMB10.0 million. Please refer to the section entitled General
Information of Our Group - History of this Prospectus for further details.

(d)

The two share transfer agreements, both dated 21 November 2006, entered into by
Zhengzhou Great View with (i) Henan Hesheng Enterprise Development Co., Ltd.
, Mr Li Wenjun
and Ms Yan Fang
and (ii) Bridge
Trust and Investment Co., Ltd.
, respectively, to acquire their
shareholdings in Henan Jinzhi for an aggregate consideration of RMB52.8 million. Please
refer to the section entitled General Information of Our Group - History of this Prospectus
for further details.

154

(e)

The share transfer agreement entered into on 20 May 2007 by Henan Jinzhi with
Zhengzhou Haojiali Food Co., Ltd.
(Haojiali Food) for the
transfer of Henan Jinzhis entire 25.0% equity interests in Zhengzhou City Heyi Pawn Co.,
Ltd
(Heyi Pawn) to Haojiali Food for a consideration of
RMB1.25 million, based on registered capital of Heyi Pawn). Please refer to the section
entitled General Information of Our Group - History of this Prospectus for further details.

(f)

The agreement dated 12 October 2007 entered into between Henan Sinian Establishment
Joint Stock Co., Ltd.
(formerly known as Henan Synear Food
Joint Stock Co., Ltd.
) (Henan Synear) and our Company to
grant Zhengzhou Great View (or its nominee) the first right of refusal to acquire the relevant
parcels of land owned by Henan Synear at a consideration which will be determined based
on independent valuation. Please refer to the section entitled Interested Person
Transactions Potential Conflicts of Interest of this Prospectus for further details.

(g)

The Subscription Agreement dated 3 August 2007 entered into between Overseas Market,
Piaget, Ember Vision, Marble Focus, Li Wei, Wang Peng, Yan Tao and CIM X for the
issuance of exchangeable notes by Overseas Market to CIM X, amounting to US$45.0
million. Please refer to the section entitled Restructuring Exercise Subscription and
issuance of Exchangeable Notes of this Prospectus for further details.

(h)

The exchangeable note instrument dated 7 August 2007 entered into between Overseas
Market, Piaget, Ember Vision, Marble Focus, Li Wei, Wang Peng, Yan Tao and CIM X
relating to the terms and conditions of the exchangeable notes to be issued by Overseas
Market to CIM X. Please refer to the section entitled Restructuring Exercise Subscription
and issuance of Exchangeable Notes of this Prospectus for further details.

(i)

The Subscription Agreement dated 1 September 2007 entered into between Overseas
Market, Piaget, Ember Vision, Marble Focus, Li Wei, Wang Peng, Yan Tao, Easy Solution
and Queen Hope for the issuance of exchangeable notes by Overseas Market to Easy
Solution and Queen Hope, amounting in aggregate to US$45.0 million. Please refer to the
section entitled Restructuring Exercise Subscription and issuance of Exchangeable
Notes of this Prospectus for further details.

(j)

The exchangeable note instrument dated 1 September 2007 entered into between Overseas
Market, Piaget, Ember Vision, Marble Focus, Li Wei, Wang Peng, Yan Tao, Easy Solution
and Queen Hope relating to the terms and conditions of the exchangeable notes to be
issued by Overseas Market to Easy Solution and Queen Hope. Please refer to the section
entitled Restructuring Exercise Subscription and issuance of Exchangeable Notes of this
Prospectus for further details.

(k)

The Share Swap Agreement dated 12 December 2007 between our Company and the
shareholders of Piaget comprising Ember Vision, Marble Focus and the Pre-Invitation
Investors for the acquisition by our Company of the entire issued and paid up share capital
of Piaget comprising 1,250 shares of no par value. The acquisition was completed on 12
December 2007. Please refer to the section entitled Restructuring Exercise - Acquisition of
Piaget and Share Swap of this Prospectus for further details.

(l)

The Management and Underwriting Agreement dated 22 January 2008 between our
Company, the Issue Manager and the Underwriter for the management of the Invitation and
for the underwriting of the Offer Shares.

(m)

The Placement Agreement dated 22 January 2008 between our Company and the
Placement Agent for the placement of the Placement Shares.

(n)

The depository agreement dated 22 January 2008 between our Company and CDP
pursuant to which CDP will act as central depository for our securities for trades in the
securities through the SGX-ST.

155

MISCELLANEOUS
15.

There has been not been any public takeover offer by a third party in respect of our Shares, or by
our Company in respect of shares of another corporation or units of another business trust, which
has occurred during the period between 28 September 2007, which is the date of incorporation of
our Company, and the Latest Practicable Date.

16.

No amount of cash or securities or benefit has been paid or given to any promoter within the two
years preceding the Latest Practicable Date or is proposed or intended to be paid or given to any
promoter at any time.

17.

No expert is employed on a contingent basis by our Company or any of our subsidiaries, has a
material interest, whether direct or indirect, in the shares of our Company or our subsidiaries, or
has a material economic interest, whether direct or indirect, in our Company, including an interest
in the success of the Offer.

18.

Save as disclosed set out in the sections entitled Risk Factors and Managements Discussion
and Analysis of Financial Conditions and Results of Operations of this Prospectus, the financial
condition and operations of our Group are not likely to be affected by any of the following:
(a)

known trends or known demands, commitments, events or uncertainties that will result in or
are reasonably likely to result in our Groups liquidity increasing or decreasing in any
material way;

(b)

material commitments for capital expenditure;

(c)

unusual or infrequent events or transactions or any significant economic changes that will
materially affect the amount of reported income from operations; and

(d)

known trends or uncertainties that have had or that we reasonably expect to have a material
favourable or unfavourable impact on revenues or operating income.

19.

Save as disclosed in the Combined Financial Information as set out in Appendix A to this
Propectus, our Directors are not aware of any event which has occurred since 30 June 2007 up to
the Latest Practicable Date, which may have a material effect on the financial position and results
provided in the Combined Financial Information as set out in Appendix A.

20.

We currently have no intention of changing the auditors of the companies in our Group, which
have been our auditors since our Companys incorporation, after the listing of our Company on the
SGX-ST, details of which are set out below:
Name, Membership and Address

Professional Body

Grant Thornton
Certified Public Accountants
13th Floor, Gloucester Tower
The Landmark
15 Queens Road Central
Hong Kong

Hong Kong Institute of


Certified Public Accountants

Partner-in-charge/
Professional Qualification
Andrew Lam
Certified Public Accountant
(Practising)

CONSENTS
21.

Each of the Joint Reporting Accountants has given and has not withdrawn their respective written
consents to the issue of this Prospectus with the inclusion herein of the Combined Financial
Information as set out in Appendix A and the Pro Forma Report as set out in Appendix B in the
form and context in which it is included and references to their name in the form and context in
which they appear in this Prospectus and to act in such capacity in relation to this Prospectus.

156

Details of the Joint Reporting Accountants are as follows:

Name, Membership and Address

Professional Body

Partner-in-charge/
Professional Qualification

Foo Kon Tan Grant Thornton


Certified Public Accountants
47 Hill Street #05-01
Singapore Chinese Chamber of
Commerce & Industry Building
Singapore 179365

Institute of Certified Public


Accountants of Singapore

Lim Shien Ching Henry


Certified Public Accountant

Grant Thornton
Certified Public Accountants
13th Floor, Gloucester Tower
The Landmark
15 Queens Road Central
Hong Kong

Hong Kong Institute of


Certified Public Accountants

Andrew Lam
Certified Public Accountant
(Practising)

22.

Each of the Issue Manager, the Underwriter and the Placement Agent has given and has not
withdrawn its written consent to the issue of this Prospectus with the inclusion herein of its name
in the form and context in which it appears in this Prospectus and to act in such capacity in
relation to this Prospectus.

23.

CB Richard Ellis, the independent valuers, has given and has not withdrawn its written consent to
the issue of this Prospectus with the inclusion herein of the Valuers Report in the form and context
in which it is included and references to their name in the form and context in which they appear in
this Prospectus and to act in such capacity in relation to this Prospectus. The Valuers Report was
prepared by CB Richard Ellis for the purpose of incorporation in this document.

24.

Jingtian & Gongcheng, the Legal Advisers to our Company on PRC law, has given and and has
not withdrawn its written consent to the issue of this Prospectus with the inclusion herein of its
name, references and the statements attributed to them in the form and context in which they
appear in the sections Risk factors Failure to obtain the requisite building certificate for one of
our investment properties, General Information on our Group Licences, Permits, Approvals and
Government Regulations and General Information on our Group Licences, Permits, Approvals
and Government Regulations Regulations on the mergers and acquisition of domestic
enterprises by foreign investors of this Prospectus and to act in such capacity in relation to this
Prospectus.

25.

Each of the Issue Manager, the Underwriter, the Placement Agent, the Solicitors to the Invitation,
the Legal Advisers to our Company on PRC Law, the Legal Advisers to our Company on Hong
Kong Law, the Legal Advisers to our Company on Bermuda Law, the Solicitors to the Issue
Manager, Underwriter and Placement Agent, the Bermuda Share Registrar, the Registrar for the
Invitation and Singapore Share Transfer Agent, the Independent Valuers, the Receiving Bank and
the Principal Banker do not make, or purport to make, any statement in this Prospectus or any
statement upon which a statement in this Prospectus is based and, to the maximum extent
permitted by law, expressly disclaim and take no responsibility for any liability to any person which
is based on, or arises out of, the statements, information or opinions in this Prospectus.

DOCUMENTS AVAILABLE FOR INSPECTION


26.

Copies of the following documents may be inspected at the office of Rajah and Tann LLP, at
4 Battery Road, #26-01, Bank of China Building, Singapore 049908 during normal business hours
for a period of 6 months from the date of registration of this Prospectus:
(a)

the Memorandum of Association and Bye-laws of our Company;

(b)

the Combined Financial Information as set out in Appendix A of this Prospectus;

(c)

the Pro Forma Report as set out in Appendix B of this Prospectus;

157

(d)

the material contracts referred to in paragraph 14 of this section;

(e)

the letters of consent referred to in paragraphs 21, 22, 23 and 24 of this section;

(f)

the Service Agreements referred to in the section entitled Directors, Management and Staff
Service Agreements in this Prospectus;

(g)

the CB Richard Ellis Valuation Report as set out in Appendix C to this Prospectus; and

(h)

the Bermuda Companies Act.

STATEMENT BY OUR DIRECTORS


27.

This Prospectus has been seen and approved by our Directors and they collectively and
individually accept the full responsibility for the accuracy of the information given in this Prospectus
and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief,
that the facts stated and the opinions expressed herein are fair and accurate in all material
respects as of the date hereof and there are no other facts the omission of which would make any
statements herein misleading, and that this Prospectus constitutes full and true disclosure of all
material facts about the Invitation and our Group.

158

APPENDIX A

REPORT FROM THE JOINT REPORTING ACCOUNTANTS ON THE AUDITED


COMBINED FINANCIAL INFORMATION OF THE GROUP FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2004, 31 DECEMBER 2005, 31 DECEMBER 2006
AND SIX MONTHS ENDED 30 JUNE 2007
22 January 2008
The Board of Directors
CentraLand Limited
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda

Dear Sirs
This report has been prepared for inclusion in the prospectus dated 22 January 2008 (Prospectus) in
connection with the invitation in respect of offer of shares of CentraLand Limited (the Company).
We have audited the accompanying combined financial statements of the Company and its subsidiaries
(collectively the Group), as set out in Appendix A on pages A-3 to A-45. The combined financial
statements comprise the combined balance sheets of the Group as at 31 December 2004, 2005 and
2006 and 30 June 2007, the combined income statements, combined statements of changes in equity
and combined cash flow statements of the Group for each of the years ended 31 December 2004, 2005
and 2006 and six months ended 30 June 2007 (the Relevant Periods) and a summary of significant
accounting policies and other explanatory notes (the Combined Financial Information).
Directors responsibility for the Combined Financial Information
The Companys directors are responsible for the preparation and fair presentation of these Combined
Financial Information in accordance with International Financial Reporting Standards (IFRS). This
responsibility includes: designing, implementing and maintaining internal control relevant to the
preparation and fair presentation of the Combined Financial Information that are free from material
misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and
making accounting estimates that are reasonable in the circumstances.
Joint Reporting Accountants responsibility
Our responsibility is to express an opinion on the Combined Financial Information based on our audit. We
conducted our audit in accordance with International Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
as to whether the Combined Financial Information are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosure in
the Combined Financial Information. The procedures selected depend on the auditors judgement,
including the assessment of the risk of material misstatement of the Combined Financial Information,
whether due to fraud or error. In making those risk assessments, the auditors consider internal control
relevant to the entitys preparation and fair presentation of the Combined Financial Information in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by
directors, as well as evaluating the overall presentation of the Combined Financial Information.

A-1

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
For the purpose of this report, the unaudited comparative combined income statement, combined
statement of changes in equity and combined cash flow statement of the Group for the six months ended
30 June 2006 have been extracted from the unaudited combined management financial information and
we have not carried out a review nor audit of those financial information. The unaudited combined
management financial information is the responsibility of the directors of the Company.
Opinion
In our opinion, the Combined Financial Information, for the purpose of this report and prepared on the
basis set out in note 3 of this report, present fairly, in all material respects, the Groups combined results,
combined statements of changes in equity and combined cash flows for each of the Relevant Periods,
and the Groups combined financial positions as at 31 December 2004, 2005 and 2006 and 30 June
2007 and have been properly prepared in accordance with IFRS.

Yours faithfully

Foo Kon Tan Grant Thornton


Certified Public Accountants
Singapore

Grant Thornton
Certified Public Accountants
Hong Kong

Partner: Henry Lim

Partner: Andrew Lam

A-2

Combined income statements


For the three years ended 31 December 2004, 2005 and 2006 and
six months ended 30 June 2007
Notes

Year ended 31 December

2004
RMB000

Revenue
Cost of sales

Gross profit

Six months ended


30 June

2005
RMB000

2006
RMB000

2006
RMB000
(Unaudited)

2007
RMB000

145,604
(82,922)

276,468
(98,968)

10,250
(3,723)

150,805
(64,332)

62,682

177,500

6,527

86,473

Other income
Selling expenses
Administrative expenses
Other operating expenses

1,340
(3,674)
(7,425)
(24)

4,247
(9,514)
(12,642)
(158)

3,870
(6,671)
(21,965)
(550)

1,998
(4,070)
(7,435)
(296)

2,348
(3,986)
(8,077)
(1,681)

(Loss)/Profit from operations


Finance costs

8
9

(9,783)
(584)

44,615
(604)

152,184
(488)

(3,276)

75,077
(1,373)

(Loss)/Profit before taxation


Income tax expenses

10

(10,367)

44,011
(25,099)

151,696
(97,193)

(3,276)
(2,468)

73,704
(50,499)

(10,367)

18,912

54,503

(5,744)

23,205

(8,294)
(2,073)

15,132
3,780

45,431
9,072

(4,623)
(1,121)

17,827
5,378

(10,367)

18,912

54,503

(5,744)

23,205

(0.52)

0.95

2.84

(0.29)

1.11

(Loss)/Profit for the year/period


Attributable to:
Equity holders of the Company
Minority interests

(Loss)/Earnings per share for


profit/(loss) attributable to
the equity holders of the
Company during the
year/period - Basic
(RMB cents)

11

A-3

Combined balance sheets


As at 31 December 2004, 2005 and 2006 and 30 June 2007
Notes
2004
RMB000

At 31 December
2005
2006
RMB000
RMB000

At 30 June
2007
RMB000

ASSETS AND LIABILITIES


Non-current assets
Property, plant and equipment
Investment properties
Land use rights
Goodwill
Deferred tax assets

12
13
14
15
28

187,059

636

179,799
39,281
625

4,056

178,176
40,042
614
38,703
18,430

175,419
41,306
609
38,703
25,235

187,695

223,761

275,965

281,272

10,724
36,920
72,826

2,874

11,322

44,900
36,684
34,095
76,679

5,972

4,645
30,649

169,375
35,061
106,286
98,062
4,470
16,118
409,734
10,693
61,460

118,185
43,909
106,391
52,758

58,141
409,734
10,674
300,182

134,666

233,624

911,259

1,099,974

12,254
3,653

23,027
11,259
51,866

2,442
138,386
99,087

1,388
24,311
386,583

187,260
5,967

115,100

22,144

237,000

112,193

190,000

159,954

209,134

223,396

589,108

762,236

Net current (liabilities)/assets

(74,468)

10,228

322,151

337,738

Total assets less current liabilities

113,227

233,989

598,116

619,010

100,000

113,227

133,989

598,116

619,010

11
110,929

11
126,363

409,745
169,645

409,745
186,635

Minority interests

110,940
2,287

126,374
7,615

579,390
18,726

596,380
22,630

Total equity

113,227

133,989

598,116

619,010

Current assets
Deposits paid
Properties held for development
Properties held under development
Properties held for sale
Trade receivables
Prepayments and other receivables
Due from a shareholder
Restricted bank deposits
Cash and bank balances

16
17
18
19
20
21
22
23(a)
23(b)

Current liabilities
Trade payables
Accruals and other payables
Receipts in advance
Interest-bearing bank and other
borrowings
Due to a related party
Tax payable

24
25
26
27

Non-current liabilities
Interest-bearing bank and other
borrowings

26

Net assets
EQUITY
Equity attributable to the
Companys equity holders
Share capital
Reserves

29

A-4

Combined statements of changes in equity


For the three years ended 31 December 2004, 2005 and 2006 and
six months ended 30 June 2007
Equity attributable to the Companys shareholders
Share
capital
RMB000

At 1 January 2004
Loss for the year

Capital
reserve
RMB000
(Note 30(a))

Statutory
reserves
RMB000
(Note 30(b))

Minority
interests

Total
equity

Retained
earnings
RMB000

Total
RMB000

RMB000

RMB000

11

73,614

44,053
(8,294)

117,678
(8,294)

3,971
(2,073)

121,649
(10,367)

Total income and expenses


recognised during the year
Capital contributions

1,556

(8,294)

(8,294)
1,556

(2,073)
389

(10,367)
1,945

At 31 December 2004 and


1 January 2005
Profit for the year

11

75,170

35,759
15,132

110,940
15,132

2,287
3,780

113,227
18,912

765

1,052

15,132

(1,515)

15,132
765
(463)

3,780
1,085
463

18,912
1,850

11

75,935

1,052

49,376
45,431

126,374
45,431

7,615
9,072

133,989
54,503

409,734

45,431

45,431
409,734

9,072

54,503
409,734

8,510

(10,659)

(2,149)

(110)
2,149

(110)

409,745

75,935

9,562

84,148
17,827

579,390
17,827

18,726
5,378

598,116
23,205

17,827

17,827

5,378

23,205

(765)

(72)

(837)

(60)
(1,414)

(60)
(2,251)

409,745

75,170

9,490

101,975

596,380

22,630

619,010

Total income and expenses


recognised during the year
Capital contributions
Transfer to statutory reserves
At 31 December 2005 and
1 January 2006
Profit for the year
Total income and expenses
recognised during the year
Capital contributions
Dividend paid to a minority
shareholder
Transfer to statutory reserves
At 31 December 2006 and
1 January 2007
Profit for the period
Total income and expenses
recognised during the period
Dividend paid to a minority
shareholder
Disposal of a subsidiary
At 30 June 2007

A-5

Combined statements of changes in equity (Continued)


For the three years ended 31 December 2004, 2005 and 2006 and
six months ended 30 June 2007
Equity attributable to the Companys shareholders
Share
capital
RMB000

For the six months ended


30 June 2006 (Unaudited)
At 1 January 2006
Profit for the period
Total income and expenses
recognised during the period
Dividend paid to a minority
shareholder
Transfer to statutory reserves
At 30 June 2006

Capital
reserve
RMB000
(Note 30(a))

Statutory
reserves
RMB000
(Note 30(b))

Minority
interests

Total
equity

Retained
earnings
RMB000

Total
RMB000

RMB000

RMB000

11

75,935

1,052

49,376
(4,623)

126,374
(4,623)

7,615
(1,121)

133,989
(5,744)

(4,623)

(4,623)

(1,121)

(5,744)

80

(112)

(32)

(50)
32

(50)

11

75,935

1,132

44,641

121,719

6,476

128,195

A-6

Combined cash flow statements


For the three years ended 31 December 2004, 2005 and 2006 and
six months ended 30 June 2007
Notes

Year ended 31 December


2004
RMB000

2005
RMB000

2006
RMB000

(10,367)

44,011

151,696

Six months ended


30 June
2006
2007
RMB000
RMB000
(Unaudited)

Cash flows from


operating activities
(Loss)/Profit before taxation
Adjustments for:
Interest income
Interest expenses
Depreciation
Loss on disposal of a subsidiary
Amortisation of land use rights
Operating (loss)/profit before
working capital changes
(Increase)/decrease in properties
held for development
(Increase)/decrease in properties
held under development
(Increase)/decrease in properties
held for sale
(Increase)/decrease in trade
receivables
(Increase)/decrease in
prepayments, other receivables
and deposits paid
(Increase)/decrease in
restricted bank deposits
Increase/(decrease) in trade
payables
(Decrease)/increase in accruals
and other payables
Increase in receipts in advance

7
9
8
8

(114)
584
2,503

11

(542)
604
4,872

11

(310)
488
7,494

11

(7,383)

48,956

159,379

(36,920)

236

1,623

(53,707)

53,258

(8,153)

(76,679)

(736)
(21,383)
(4,470)

(3,276)
(142)

3,090

5
(323)
10,635
927
(39,596)

73,704
(168)
1,373
3,946
253
5
79,113
(8,848)
5,923
45,304
4,470

(36,509)

(116,843)

(178,820)

9,167

(4,645)

(6,048)

(4,256)

19

11,382

10,773

(20,585)

(16,124)

(9,039)

7,606
51,866

58,090
47,221

33,685
194,784

(1,054)
(113,303)
287,496

Cash (used in)/generated from


operations
Income taxes paid
Interest received

(103,820)

114

54,862
(7,011)
542

96,248
(21,518)
310

912
(7,431)
142

308,287
(9,543)
168

Net cash (used in)/generated


from operating activities

(103,706)

48,393

75,040

(6,377)

298,912

A-7

Combined cash flow statements (Continued)


For the three years ended 31 December 2004, 2005 and 2006 and
six months ended 30 June 2007
Notes

Year ended 31 December


2004
RMB000

2005
RMB000

2006
RMB000

(12,540)

1,897

Six months ended


30 June
2006
2007
RMB000
RMB000
(Unaudited)

Cash flows from


investing activities
Acquisition of a subsidiary, net
of cash acquired
Proceeds from disposal of
property, plant and equipment
Purchases of property, plant
and equipment
Disposal of a subsidiary, net
of cash disposed of

Net cash used in investing


activities

31

(53,426)
32(b)

(53,425)

(38,790)

(36,893)

(5,756)

(3,500)

(2,453)
(3,276)

(18,296)

(3,500)

(5,729)

(110)

(50)

(60)

205,000
2,000
(113,100)
(102,000)

(17,723)

105,000
2,000
(65,000)
(2,000)

(9,680)

40,000
100,000
(155,000)
(32,000)

(7,401)

Cash flows from financing


activities
Dividend paid to a minority
shareholder of a subsidiary
Capital contributed by a minority
shareholder of a subsidiary
New bank borrowings
New other borrowings
Repayment of bank borrowings
Repayment of other borrowings
Repayment to a related party
Interest paid

40,000
162,600
(9,500)
(20,000)

(6,212)

Net cash generated from/


(used in) financing activities

166,888

7,827

(25,933)

30,270

(54,461)

9,757

19,327

30,811

20,393

238,722

1,565

11,322

30,649

30,649

61,460

11,322

30,649

61,460

51,042

300,182

Net increase in cash and cash


equivalents
Cash and cash equivalents
at beginning of year/period
Cash and cash equivalents
at end of year/period

A-8

1,085
118,100
102,000
(45,000)
(147,260)
(5,967)
(15,131)

Notes to the combined financial statements


1.

INTRODUCTION
The Combined Financial Information of the Group have been prepared for inclusion in the
Prospectus of the Company issued for the invitation (the Invitation) by the Company in respect of
the offer of 245,000,000 new shares of HK$0.40 each at S$0.50 per share in the Company for
cash.

2.

THE COMPANY
The Company was incorporated in Bermuda under the Company Act 1981 of Bermuda on 28
September 2007 as an exempted company with limited liability under the name of CentraLand
Limited.
At the date of incorporation, the authorised share capital of the Company was HK$100,000 divided
into 666,666 ordinary shares of HK$0.15 each. On 11 October 2007, 1,000 ordinary shares of
HK$0.15 each were allotted and issued nil paid at par to Ember Vision Limited (Ember Vision).
The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton
HM11, Bermuda. The principal place of business of the Company is located at No. 86 South Bank
of Yellow River, Huiji District, Zhengzhou City, Henan Province, the Peoples Republic of China,
excluding Hong Kong and Macau (the PRC). The Company does not have a place of business in
Singapore as at the date of this report.
The principal activity of the Company is investment holding. The principal activities of the
Companys subsidiaries are set out in note 3 to the combined financial statements.
Pursuant to written resolutions dated 8 December 2007, the then sole shareholder approved, inter
alia, the following:
(a)

the increase of the authorised share capital from HK$100,000 to HK$150,000 divided into
1,000,000 ordinary shares of HK$0.15 each;

(b)

the allotment and issue of 999,000 nil-paid new ordinary shares of HK$0.15 each to Ember
Vision;

(c)

the consolidation of every eight ordinary shares of HK$0.15 each into one ordinary share of
HK$1.20; and

(d)

the sub-division of every one ordinary share of HK$1.20 into three shares of HK$0.40 each.

Pursuant to written resolutions dated 12 December 2007, the then sole shareholder approved,
inter alia, the following:
(a)

the increase in the authorised share capital of the Company from HK$150,000 divided into
375,000 shares to HK$2,000,000,000 divided into 5,000,000,000 shares;

(b)

crediting as fully paid the 375,000 nil-paid shares held by Ember Vision and the allotment
and issue of 1,599,625,000 new shares credited as fully paid, to Ember Vision, Marble
Focus Limited (Marble Focus), CIM X Limited (CIM X), Easy Solution Limited (Easy
Solution) and Queen Hope Holdings Limited (Queen Hope) as part of the Companys
Restructuring Exercise as defined below (CIM X, Easy Solution and Queen Hope
collectively, the Pre-Invitation Investors), subject to the Companys receipt of the Bermuda
Monetary Authoritys permission to issue the said 1,599,625,000 new shares;

Pursuant to written resolutions dated 19 December 2007, the shareholders approved, inter alia,
the following:
(a)

the adoption of a new set of bye-laws of the Company;

A-9

Notes to the combined financial statements (Continued)


2.

THE COMPANY (Continued)


(b)

the allotment and issue of the new shares which are the subject of the Invitation. The new
shares, when allotted, issued and fully paid-up, will rank pari passu in all respects with the
existing issued and fully paid-up shares; and

(c)

that authority be given to the directors to:


i.

allot and issue shares (other than the new shares) whether by way of rights, bonus or
otherwise (including shares as may be issued pursuant to any Instruments (as
defined below) made or granted by the directors while this resolution is in force
notwithstanding that the authority conferred by this resolution may have ceased to be
in force at the time of issue if such shares); and/or

ii.

make or grant offers, agreements or options (collectively, the Instruments) that might
or would require shares to be issued, including but not limited to the creation and
issue of warrants, debentures or other instruments convertible into shares, at any time
and upon such terms and conditions and for such purposes and to such persons as
the directors may think fit for the benefit of the Company,

provided that the aggregate number of shares issued pursuant to such authority (including
shares issued pursuant to any instrument), shall not exceed 50% of the post-Invitation
issued share capital of the Company and provided further that the aggregate number of
such shares to be offered other than on a pro-rata basis in pursuance to such authority
(including shares issued pursuant to any instrument) to the then existing shareholders shall
not exceed 20% of the post-Invitation issued share capital of the Company, and unless
revoked or varied by the Company in general meeting, such authority shall continue in full
force until the conclusion of the next annual general meeting or the date by which the next
annual general meeting is required by law or by the bye-laws to be held, whichever is earlier.
For the purposes of this resolution, the post-Invitation issued share capital shall mean the
enlarged issued share capital of the Company immediately after the Invitation and after
adjusting for: (i) new shares arising from the conversion or exercise of any convertible
securities; (ii) new shares arising from exercising share options or vesting of share awards
outstanding or subsisting at the time such authority is given, provided that the options or
awards were granted in compliance with the Listing Manual of the Singapore Exchange
Securities Trading Limited; and (iii) any subsequent consolidation or sub-division of the
shares.
As at the date of this report, the authorised share capital of the Company is HK$2,000,000,000,
divided into 5,000,000,000 ordinary shares of HK$0.40 each. The issued and paid-up share
capital of the Company is HK$640,000,000, divided into 1,600,000,000 ordinary shares of
HK$0.40 each.

A-10

Notes to the combined financial statements (Continued)


3.

THE REORGANISATION AND BASIS OF PRESENTATION


A reorganisation exercise was undertaken by the Group to rationalise the corporate structure for
the Invitation (the Restructuring Exercise). The following steps were carried out in the
Restructuring Exercise:
(a)

Shareholdings of a subsidiary, Piaget Management Limited (Piaget), prior to the


Restructuring Exercise and the transfer of shareholding interests in Ember Vision by
Mr Li Wei to Mr Wang Peng
Prior to the Restructuring Exercise, all the issued shares of the subsidiary, Piaget, were held
entirely by Ember Vision, a company incorporated in the British Virgin Islands (BVI) as an
investment holding company. Ember Vision was jointly owned by Mr Li Wei and Mr Wang
Peng in the proportion of 90.0% and 10.0% respectively. Mr Wang Peng is the son of Mr Li
Weis cousin.
On 12 September 2007, Mr Li Wei, the non-executive chairman of the Company, transferred
32.85% equity interest in Ember Vision held by him to Mr Wang Peng for nominal
consideration of US$1.00 per share. Upon completion of the aforesaid transfer, Ember
Vision was owned by Mr Li Wei and Mr Wang Peng in the proportion of 57.15% and 42.85%
respectively.

(b)

Subscription of Piagets shares by Mr Yan Tao


On 20 October 2006, the sole director of Piaget approved, inter alia, the, subscription by Mr
Yan Tao or a company wholly-owned by Mr Yan Tao of 300 ordinary shares of no par value
in the capital of Piaget (Piaget Shares), representing 30.0% of then enlarged share capital
of Piaget, at an aggregate consideration of US$51.5 million, determined on willing buyer
willing seller and arms length basis. Upon completion of the subscription, Marble Focus, a
BVI investment holding company wholly-owned by Mr Yan Tao, was allotted and issued 300
Piaget Shares.
Following the completion of the subscriptions referred to above, the entire issued share
capital of Piaget was owned by Ember Vision and Marble Focus in the proportion of 70.0%
and 30.0% respectively.

(c)

Incorporation of Overseas Market Group Limited (Overseas Market) and its


subscription of Piaget Shares
Overseas Market was incorporated on 3 July 2007 in the BVI as an investment holding
company. Overseas Market has 10 issued shares (the Overseas Market Shares) of
US$1.00 each, of which Mr Li Wei and Mr Wang Peng owned 9 and 1 Overseas Market
Shares respectively.
On 4 August 2007, the sole director of Piaget approved, inter alia, the, subscription by
Overseas Market of 250 Piaget Shares, representing 20.0% of then enlarged share capital
of Piaget, at the consideration of US$360,000 per share resulting in an aggregate
consideration of US$90.0 million based on the net asset value of Zhengzhou Huanghe
Great View Royal Garden Company Limited (Zhengzhou Huanghe) as at 31 October 2006.
Upon completion of subscription, the entire shareholding interests of Piaget were held by
Ember Vision, Marble Focus and Overseas Market in the proportion of 56.0%, 24.0% and
20.0% respectively.

A-11

Notes to the combined financial statements (Continued)


3.

THE REORGANISATION AND BASIS OF PRESENTATION (Continued)


(d)

Subscription and issuance of exchangeable notes


On 3 August 2007, Overseas Market, Piaget, Ember Vision, Marble Focus, Mr Li Wei, Mr
Wang Peng, Mr Yan Tao and CIM X entered into a subscription agreement (the CIM
Subscription Agreement) for the issuance of exchangeable notes with an aggregate
principal value of US$45.0 million (the CIM Exchangeable Notes) by Overseas Market to
CIM X.
Under the CIM Subscription Agreement, the parties agreed, inter alia, that:
(i)

the CIM Exchangeable Notes were exchangeable into Piaget Shares held by
Overseas Market in the event of the listing of the Company on the Singapore
Exchange Securities Trading Limited, on the terms and conditions of the CIM
Subscription Agreement and the exchangeable note instrument, also entered into by
the parties to the CIM Subscription Agreement; and

(ii)

Mr Li Wei, Mr Wang Peng and Mr Yan Tao (collectively, as guarantors) would


guarantee, inter alia, the due payment by Overseas Market of the principal amount
and interest accruing on the CIM Exchangeable Notes (if any), as and when the same
should become due and payable.

On 7 August 2007, Overseas Market issued the CIM Exchangeable Notes to CIM X and the
aggregate consideration of US$45.0 million was satisfied in full by the CIM X in cash.
On 1 September 2007, Overseas Market, Piaget, Ember Vision, Marble Focus, Mr Li Wei, Mr
Wang Peng, Mr Yan Tao and the other Pre-Invitation Investors (other than CIM X) entered
into a subscription agreement (the Pre-Invitation Subscription Agreement) for the issuance
of exchangeable notes with an aggregate principal value of US$45.0 million (the PreInvitation Exchangeable Notes) by Overseas Market to the other Pre-Invitation Investors
(other than CIM X) on the same terms as the CIM Subscription Agreement.
On 1 September 2007, Overseas Market issued the Pre-Invitation Exchangeable Notes to
the other Pre-Invitation Investors (other than CIM X) and the aggregate consideration of US$
45.0 million was satisfied in full by these Pre-Invitation Investors in cash.
On 12 December 2007, the Pre-Invitation Investors exchanged their CIM and Pre-Invitation
Exchangeable Notes for an aggregate 250 Piaget Shares held by Overseas Market (the
Exchange).
Upon completion of the Exchange, Ember Vision, Marble Focus, CIM X , Easy Solution and
Queen Hope respectively held 56.0%, 24.0%, 10.0%, 6.0% and 4.0% of the total issued
share capital of Piaget.
(e)

Acquisition of Piaget and share swap


On 12 December 2007, the Company, as purchaser, and the shareholders of Piaget
comprising Ember Vision, Marble Focus and the Pre-Invitation Investors, as vendors,
entered into a share swap agreement (the Share Swap Agreement). The terms of the
Share Swap Agreement were determined on willing buyer willing seller basis and carried out
on arms length basis. Pursuant to the Share Swap Agreement, the Company acquired the
entire issued and paid-up share capital of Piaget comprising 1,250 Piaget Shares from the
then shareholders of Piaget. The consideration for the said acquisition was satisfied by (i)
the crediting as fully paid, at par, the 375,000 nil-paid ordinary shares of HK$0.4 each in the
Company held by Ember Vision; and (ii) the allotment and issue of an aggregate of
1,599,625,000 new ordinary shares of HK$0.40 each in the capital of the Company, credited
as fully paid.

A-12

Notes to the combined financial statements (Continued)


3.

THE REORGANISATION AND BASIS OF PRESENTATION (Continued)


As at the date of this report, the Company has direct and indirect interests in the following
subsidiaries, each of which is a limited liability company:
Issued and
paid-up
share/
registered
capital

Equity
interest
held

Notes

Date and place of


incorporation/
establishment

Principal
activities
and place of
operations

28 September 2006
BVI

Investment
holding, BVI

US$141,500,700

100%

(a)

Everwell International
Holdings Limited
(Everwell)

27 September 2002
Hong Kong

Investing holding,
Hong Kong

HK$10,000

100%

(b)

Zhengzhou Huanghe
Great View Royal
Garden Company
Limited

25 December 1995
Property
PRC
development, sales,
management and
investment holding,
PRC

US$49,999,980

100%

(c),(e)

RMB25,000,000

100%

(d),(f)

Name
Subsidiaries

Directly held:
Piaget Management
Limited

Indirectly held:

Henan Jinzhi
Establishment
Company
Limited (Henan
Jinzhi)

30 October 1997
PRC

Property
development and
sales, PRC

Notes:
(a)

There is no audit requirement in the BVI.

(b)

Everwell was established with an issued capital of HK$2 in Hong Kong on 27 September 2002. On 18 December
2002, pursuant to subscription by Mr Li Wei and Mr Wang Peng, there was allotment and issue of 9,998 new ordinary
shares of HK$1.00 each, resulting in issued capital of HK$10,000. The statutory financial statements, prepared in
accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public
Accountants, of this company for the years ended 31 December 2004, 2005 and 2006 were audited by Yip Leung &
So Limited and were qualified for non-preparation of consolidated financial statements.

(c)

Zhengzhou Huanghe was established with a registered capital of US$5,000,000 in the PRC on 25 December 1995
and its registered capital was paid-up in full on 24 October 1996. On 18 June 2007, the registered capital of
Zhengzhou Huanghe was approved to be increased from US$5,000,000 to US$99,000,000. As the date of this
report, registered capital of US$49,999,980 has been paid up.

(d)

Henan Jinzhi was established with a registered capital of RMB10,000,000 in the PRC on 30 October 1997 and its
registered capital was paid-up in full on 22 October 1997. On 11 August 2006, the registered capital of Henan Jinzhi
was approved to be increased from RMB10,000,000 to RMB25,000,000 and this registered capital has been paid up
on 10 August 2006.

(e)

The statutory financial statements, prepared in accordance with the generally accepted accounting principles in the
PRC, of this company for the years ended 31 December 2004, 2005 and 2006 were audited by Zhengzhou Yonghao
Unite Certified Public Accountant Co., Ltd. and were unqualified.

(f)

The statutory financial statements, prepared in accordance with the generally accepted accounting principles in the
PRC, of this company for the years ended 31 December 2004, 2005 and 2006 were audited by Henan Jianye Unite
Certified Public Accountant Co., Ltd. and were unqualified.

A-13

Notes to the combined financial statements (Continued)


3.

THE REORGANISATION AND BASIS OF PRESENTATION (Continued)


The operations of the Group were carried out by Zhengzhou Huanghe which was established with
limited liability in the PRC.
Everwell was incorporated on 27 September 2002 in Hong Kong and was mainly engaged in
investment holdings and trading of frozen food products. Pursuant to the Restructuring Exercise,
the operations of trading of frozen food products of Everwell and Henan Jinzhis investment in an
associate were not transferred to the Group. They are collectively referred to as the Nontransferred Operations.
The financial information of the Non-transferred Operations have not been included in the
Combined Financial Information throughout the Relevant Periods as they have distinct and
separate management personnel, maintained separate accounting records and have been
financed historically as if they were autonomous.
The Group is regarded as a continuing entity resulting from the Restructuring Exercise since all of
the entities which took part in the Restructuring Exercise were controlled by the same ultimate
shareholders before and immediately after the Restructuring Exercise with the exception of (i)
Henan Jinzhi was acquired by the Group on 21 November 2006 (the Acquired Interests); and (ii)
Henan Guoling Hotspring Vacation Hotel Management Co., Ltd. was disposed by the Group on 23
June 2007. Consequently, immediately after the Restructuring Exercise, there was a continuation
of the risks and benefits to the ultimate shareholders that existed prior to the Restructuring
Exercise. The Restructuring Exercise has been accounted for as a reorganisation under common
control in a manner similar to pooling of interests except for the Acquired Interests which have
been accounted for since the date of acquisition. Accordingly, the combined financial statements
for the years ended 31 December 2004, 2005 and 2006 and six months ended 30 June 2007 have
been prepared on the basis of merger accounting and comprise the financial statements of the
subsidiaries which were under common control of the ultimate shareholders that existed prior to
the Restructuring Exercise except for the Acquired Interests.
The Combined Financial Information has been prepared based on the audited consolidated
financial statements of Zhengzhou Huanghe for the years ended 31 December 2004, 2005 and
2006 and six months ended 30 June 2007, and where appropriate, unaudited management
accounts of all companies now comprising the Group. The directors of the respective companies
of the Group at the years/period ended 31 December 2004, 2005 and 2006 and 30 June 2007 are
responsible for preparing these audited consolidated financial statements of Zhengzhou Huanghe
and the unaudited management accounts of the subsidiaries now comprising the Group for the
years/period ended 31 December 2004, 2005 and 2006 and 30 June 2007, which give a true and
fair view.

A-14

Notes to the combined financial statements (Continued)


4.

SIGNIFICANT ACCOUNTING POLICIES


Statement of compliance
The Combined Financial Information have been prepared in accordance with the International
Financial Reporting Standards (IFRSs), which collective term includes all applicable individual
International Financial Reporting Standards, International Accounting Standards and
Interpretations as promulgated by the International Accounting Standards Board (IASB), and
have been consistently applied throughout the Relevant Periods.
Basis of preparation of the Combined Financial Information
IFRS 1, First-time Adoption of International Financial Reporting Standards, has been applied in
preparing these Combined Financial Information. These combined financial statements are the
first set of financial statements prepared in accordance with IFRS by the Group.
The accounting policies set out below have been applied consistently to all periods presented in
these combined financial statements and in preparing an opening IFRS balance sheet at 1
January 2004 for the purpose of the first set of IFRS financial statements. The accounting policies
have been applied consistently by the Group.
The Group has not early adopted the following IFRSs that have been issued but are not yet
effective. The adoption of such IFRSs will not result in substantial changes to the Groups
accounting policies.
IAS 1 (Revised)
IAS 23 (Revised)
IFRS 8
IFRIC 11
IFRIC 12
IFRIC 13
IFRIC 14

Capital Disclosures1
Borrowing Costs1
Operating segments1
IFRS 2: Group and Treasury Share Transactions2
Service Concession Arrangements3
Customer Loyalty Programmes4
IAS 19: The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction3

Notes:
1
2
3
4

Effective
Effective
Effective
Effective

for
for
for
for

annual
annual
annual
annual

periods
periods
periods
periods

beginning
beginning
beginning
beginning

on
on
on
on

or
or
or
or

after
after
after
after

1
1
1
1

January 2009
March 2007
January 2008
July 2008

The combined financial statements have been prepared in accordance with the significant
accounting policies set out below. The combined financial statements have been prepared under
the historical cost convention. The preparation of the combined financial statements in conformity
with IFRS requires the use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Groups accounting policies. The areas
involving higher degree of judgement or complexity, or areas where assumptions and estimates
are significant to the combined financial statements are disclosed in note 5. The principal
accounting policies adopted are as follows:
(a)

Subsidiaries
Subsidiaries are all entities over which the Company has the power to control the financial
and operating policies. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Company controls
another entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Company. They are de-consolidated from the date that control ceases.

A-15

Notes to the combined financial statements (Continued)


4.

SIGNIFICANT ACCOUNTING POLICIES (Continued)


(a)

Subsidiaries (Continued)
In addition, acquired subsidiaries are subject to application of the purchase method. This
involves the revaluation at fair value of all identifiable assets and liabilities, including
contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not
they were recorded in the financial statements of the subsidiary prior to acquisition. On
initial recognition, the assets and liabilities of the subsidiary are included in the combined
balance sheet at their revalued amounts, which are also used as the bases for subsequent
measurement in accordance with the Group accounting policies.
Upon the reassessment on the identification and measurement of the acquirees identifiable
assets, liabilities and contingent liabilities and the measurement of the cost of the business
combination, the excess of the Groups interest in the net fair value of the acquirees
identifiable assets, liabilities and contingent liabilities over costs is recognised immediately in
the combined income statement after that reassessment.
Inter-company transactions, balances and unrealised gains on transactions between Group
companies are eliminated. Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred. Adjustments have been made
to the financial statements of the subsidiaries where necessary to ensure consistency with
the policies adopted by the Group.
Minority interest represents the portion of the profit or loss and net assets of a subsidiary
attributable to equity interests that are not owned by the Group and are not the Groups
financial liabilities.
Minority interests are presented in the combined balance sheet within equity, separately
from the equity attributable to the equity holders of the Company. Profit or loss attributable
to the minority interests are presented separately in the combined income statement as an
allocation of the Groups results. Where losses applicable to the minority exceeds the
minority interests in the subsidiarys equity, the excess and further losses applicable to the
minority are allocated against the minority interest to the extent that the minority has a
binding obligation and is able to make an additional investment to cover the losses.
Otherwise, the losses are charged against the Groups interests. If the subsidiary
subsequently reports profits, such profits are allocated to the minority interest only after the
minoritys share of losses previously absorbed by the Group has been recovered.

(b)

Property, plant and equipment


Property, plant and equipment, other than construction in progress, are stated at cost less
accumulated depreciation and impairment losses. The cost of an asset comprises its
purchase price and any directly attributable costs of bringing the asset to the working
condition and location for its intended use.
Depreciation is calculated on the straight-line basis to write off the cost of property, plant
and equipment, less any estimated residual values, over the following estimated useful lives:
Leasehold buildings
Furniture, fixtures and office equipment
Motor vehicles

The shorter of the lease terms and 30 years


5 years
5 to 10 years

The assets residual values and useful lives are reviewed, and adjusted if appropriate, at
each balance sheet date.
The gain or loss arising on retirement or disposal is determined as the difference between
the sales proceeds and the carrying amount of the asset and is recognised in the combined
income statement.
A-16

Notes to the combined financial statements (Continued)


4.

SIGNIFICANT ACCOUNTING POLICIES (Continued)


(b)

Property, plant and equipment (Continued)


Construction in progress represents factory buildings under construction, which is stated at
cost less any impairment losses and is not depreciated. Cost comprises direct costs of
construction, installation and testing. Construction in progress is reclassified to the
appropriate category of property, plant and equipment or investment properties when
completed and ready for use.
Subsequent costs are included in the assets carrying amount or recognised 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
costs, such as repairs and maintenance are charged to the combined income statement
during the financial period in which they are incurred.

(c)

Investment properties
Property that is held for long-term rental yields or for capital appreciation or both is classified
as investment property.
The Group has applied the cost model to its investment properties. Investment properties
held are measured initially at its cost, including related transaction cost. After initial
recognition, investment properties are carried at cost less any accumulated depreciation and
any accumulated impairment losses.
Depreciation is calculated on the straight-line basis to write off the cost of investment
properties over its estimated useful life. The principal annual rate used for this purpose is as
follows:
Buildings

The shorter of the lease terms and 30 years

The gain or loss on disposal or retirement of an investment property recognised in the


combined income statement is the difference between the net sales proceeds and the
carrying amount of the relevant asset.
(d)

Operating leases
(i)

Classification of assets leased to the Group


Assets that are held by the Group under leases which transfer to the Group
substantially all the risks and rewards of ownership are classified as being held under
finance leases. Leases which do not transfer substantially all the risks and rewards of
ownership to the Group are classified as operating leases, with the following
exceptions:

(ii)

property held under operating leases that would otherwise meet the definition
of an investment property is classified as an investment property on a propertyby-property basis and, if classified as investment property, is accounted for as if
held under a finance lease (see note 4(c)).

Operating lease charges as the lessee


Where the Group has the rights to use the assets held under operating leases,
payments made under the leases are charged to the combined income statement on
a straight line basis over the lease terms except where an alternative basis is more
representative of the pattern of benefits to be derived from the leased assets. Lease
incentives received are recognised in the combined income statement as an integral
part of the aggregate net lease payments made. Contingent rental are charged to the
combined income statement in the accounting period in which they are incurred.

A-17

Notes to the combined financial statements (Continued)


4.

SIGNIFICANT ACCOUNTING POLICIES (Continued)


(d)

Operating leases (Continued)


(iii)

Assets leased out under operating leases as the lessor


Assets leased out under operating leases are measured and presented according to
the nature of the assets. Initial direct costs incurred in negotiating and arranging an
operating lease are added to the carrying amount of the leased asset and recognised
as an expense over the lease term on the same basis as the rental income.
Rental income receivable from operating leases is recognised in the combined
income statement on a straight-line basis over the periods covered by the lease term,
except where an alternative basis is more representative of the pattern of benefits to
be derived from the use of the leased asset. Lease incentives granted are recognised
in the combined income statement as an integral part of the aggregate net lease
payments receivable. Contingent rentals are recognised as income in the accounting
period in which they are earned.

(e)

Goodwill
Goodwill represents the excess of the cost of a business combination over the Groups
interest in the net fair value of the acquirees identifiable assets, liabilities and contingent
liabilities. The cost of the business combination is measured at the aggregate of the fair
values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group, plus any costs directly attributable to the business
combination.
Goodwill is stated at cost less accumulated impairment losses. Goodwill is allocated to
cash-generating units and is tested annually for impairment.
Any excess of the Groups interest in the net fair value of the acquirees identifiable assets,
liabilities and contingent liabilities over the cost of a business combination is recognised
immediately in profit or loss.
On subsequent disposal of a subsidiary, the attributable amount of goodwill capitalised is
included in the determination of the amount of gain or loss on disposal.

(f)

Impairment of assets
Goodwill arising on an acquisition of subsidiary, property, plant and equipment and land use
rights are subject to impairment testing.
Goodwill is tested for impairment at least annually, irrespective of whether there is any
indication that it is impaired. All other assets are tested for impairment whenever there are
indications that the assets carrying amount may not be recoverable.
An impairment loss is recognised as an expense immediately for the amount by which the
assets carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of fair value, reflecting market conditions less costs to sell, and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessment of time value of money
and the risk specific to the asset.

A-18

Notes to the combined financial statements (Continued)


4.

SIGNIFICANT ACCOUNTING POLICIES (Continued)


(f)

Impairment of assets (Continued)


For the purpose of assessing impairment, where an asset does not generate cash inflows
largely independent from those from other assets, the recoverable amount is determined for
the smallest group of assets that generate cash inflows independently (i.e. a cashgenerating unit). As a result, some assets are tested individually for impairment and some
are tested at cash-generating unit level. Goodwill in particular is allocated to those cashgenerating units that are expected to benefit from synergies of the related business
combination and represent the lowest level within the Group at which the goodwill is
monitored for internal management purpose.
Impairment losses recognised for cash-generating units, to which goodwill has been
allocated, are credited initially to the carrying amount of goodwill. Any remaining impairment
loss is charged pro rata to the other assets in the cash generating unit, except that the
carrying value of an asset will not be reduced below its individual fair value less cost to sell,
or value in use, if determinable.
An impairment loss on goodwill is not reversed in subsequent periods. In respect of other
assets, an impairment loss is reversed if there has been a favourable change in the
estimates used to determine the assets recoverable amount and only to the extent that the
assets carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(g)

Properties held for development


Properties held for development represent leasehold land for development for future sale in
the ordinary course of business. Cost comprises the cost of land use rights and other costs
directly attributable to bringing the leasehold land to the condition necessary for it to be
ready for development. Properties held for development are stated at the lower of cost and
net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business less
estimated costs of completion and estimated selling expenses.

(h)

Properties held under development


Properties held under development for future sale in the ordinary course of business, are
included in current assets and stated at the lower of cost and net realisable value. Cost
comprises the acquisition cost of land, aggregate cost of development, materials and
supplies, wages and other direct expenses, an appropriate proportion of overheads and
borrowing costs capitalised (note 4 (r)).
Net realisable value is the estimated selling price in the ordinary course of business less
estimated costs of completion and estimated selling expenses.
No depreciation is provided on properties held under development.
On completion, the properties are transferred to properties held for sale.

(i)

Properties held for sale


In case of completed properties developed by the Group, cost is determined by
apportionment of the total development costs for that development project, attributable to the
unsold properties. The cost of completed properties held for sale comprises all costs of
purchase, cost of conversion and other costs incurred in bringing the inventories to their
present location and condition.

A-19

Notes to the combined financial statements (Continued)


4.

SIGNIFICANT ACCOUNTING POLICIES (Continued)


(i)

Properties held for sale (Continued)


Properties held for sale are stated at the lower of cost and net realisable value. Net
realisable value is the estimated selling price in the ordinary course of business less
estimated selling expenses.

(j)

Financial assets
The Group classifies its financial assets as loans and receivables.
Management determines the classification of its financial assets at initial recognition
depending on the purpose for which the financial assets were acquired and where allowed
and appropriate, re-evaluates this designation at every reporting date.
All financial assets are recognised when, and only when, the Group becomes a party to the
contractual provisions of the instrument. When financial assets are recognised initially, they
are measured at fair value plus directly attributable transaction costs.
Derecognition of financial assets occurs when the rights to receive cash flows from the
investments expire or are transferred and substantially all of the risks and rewards of
ownership have been transferred. At each balance sheet date, financial assets are reviewed
to assess whether there is objective evidence of impairment. If any such evidence exists,
impairment loss is determined and recognised based on the classification of the financial
asset.
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. Loans and receivables are subsequently
measured at amortised cost using the effective interest method, less any impairment losses.
Amortised cost is calculated taking into account any discount or premium on acquisition and
includes fees that are an integral part of the effective interest rate and transaction cost.

(k)

Impairment of financial assets


At each balance sheet date, financial assets carried at amortised cost are reviewed to
determine whether there is any objective evidence of impairment. If any such evidence
exists, the amount of the loss is measured as the difference between the assets carrying
amount and the present value of estimated future cash flows (excluding future credit losses
that have not been incurred) discounted at the financial assets original effective interest rate
(i.e. the effective interest rate computed at initial recognition). The amount of the loss is
recognised in profit or loss of the period in which the impairment occurs.
If, in subsequent period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment was recognised, the
previously recognised impairment loss is reversed to the extent that it does not result in a
carrying amount of the financial asset exceeding what the amortised cost would have been
had the impairment not been recognised at the date the impairment is reversed. The
amount of the reversal is recognised in profit or loss of the period in which the reversal
occurs.

(l)

Provisions, contingent liabilities and contingent assets


Provisions are recognised when the Group has a present obligation (legal or constructive)
as a result of a past event, and it is probable that an outflow of economic benefits will be
required to settle the obligation and a reliable estimate can be made. Where the time value
of money is material, provisions are stated at the present value of the expenditure expected
to settle the obligation.

A-20

Notes to the combined financial statements (Continued)


4.

SIGNIFICANT ACCOUNTING POLICIES (Continued)


(l)

Provisions, contingent liabilities and contingent assets (Continued)


All provisions are reviewed at each balance sheet date and adjusted to reflect the current
best estimate.
Where it is not probable that an outflow of economic benefits will be required, or the amount
cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the
probability of outflow of economic benefits is remote. Possible obligations, whose existence
will only be confirmed by the occurrence or non-occurrence of one or more uncertain future
events not wholly within the control of the Group are also disclosed as contingent liabilities
unless the probability of outflow of economic benefits is remote.
Contingent liabilities are recognised in the course of the allocation of purchase price to the
assets and liabilities acquired in a business combination. They are initially measured at fair
value at the date of acquisition and subsequently measured at the higher of the amount that
would be recognised in a comparable provision as described above and the amount initially
recognised less any accumulated amortisaton, if appropriate.

(m)

Financial liabilities
Financial liabilities include interest-bearing bank and other borrowings, trade payables, other
payables, and amount due to a related party. They are included in combined balance sheet
line items under current liabilities.
Financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the instrument. All interest related charges are recognised as an expense in
financial costs in the combined income statement. A financial liability is derecognised when
the obligation under the liability is discharged or cancelled or expires.
Borrowings are recognised initially at fair value, net of transaction costs incurred. Financial
liabilities are subsequently stated at amortised cost; any difference between the proceeds
(net of transaction costs) and the redemption value is recognised in the combined income
statement over the period of the borrowings using the effective interest method.
Trade and other payables are recognised initially at their fair value and subsequently
measured at amortised cost, using the effective interest method.
Financial liabilities are classified as current liabilities unless the Group has an unconditional
right to defer settlement of the liability for at least twelve months after the balance sheet
date.

(n)

Share capital
Ordinary shares are classified as equity. Share capital is determined using the nominal
value of shares that have been issued. Any transaction costs associated with the issuing of
shares are deducted from the proceeds (net of any related income tax benefits) to the extent
that they are incidental cost directly attributable to the equity transaction.

(o)

Foreign currencies
Items included in the financial statements of each of the Groups entities are measured
using the currency of the primary economic environment in which the entity operates (the
functional currency). The combined financial statements are presented in Renminbi
(RMB), which is the Companys functional and presentation currency.

A-21

Notes to the combined financial statements (Continued)


4.

SIGNIFICANT ACCOUNTING POLICIES (Continued)


(o)

Foreign currencies (Continued)


Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions. 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
recognised in the combined income statement.
In the combined financial statements, all separate financial statements of subsidiaries,
originally presented in a currency different from the Groups presentation currency, have
been converted into RMB. Assets and liabilities have been translated into RMB at the
closing rate at the balance sheet date. Income and expenses have been converted into the
Groups presentation currency at the average rates over the reporting period. Any
differences arising from this procedure have been dealt with in the currency translation
reserve in equity.

(p)

Cash and cash equivalents


For the purpose of the combined cash flow statements, cash and cash equivalents comprise
cash on hand and in banks and demand deposits, less bank overdrafts which are repayable
on demand and form an integral part of the Groups cash arrangement.
For the purpose of combined balance sheet classification, cash and bank balances
comprise cash on hand and in banks and demand deposits repayable on demand with any
banks or other financial institutions. Cash includes deposits denominated in foreign
currencies.

(q)

Revenue recognition
Revenue arising from sale of properties held for sale are recognised when the significant
risks and rewards of ownership of these properties held for sale have been transferred to
the purchasers and the Group retains neither continuing involvement to the degree usually
associated with ownership nor effective control over properties held for sale. Deposits and
instalments received from purchasers prior to this stage and pre-sale are included in current
liabilities and are not recognised as revenue.
Rental income receivable under operating leases is recognised in the combined income
statement in equal instalments over the accounting periods covered by the lease terms,
except where an alternative basis is more representative of the pattern of benefits to be
derived from the leased asset. Lease incentives granted are recognised in the combined
income statement as an integral part of the aggregate net lease payments receivable.
Contingent rentals are recognised as income in the accounting period in which they are
earned.
Revenue from admission tickets sold are recognised when tickets are accepted and
surrendered by the customers.
Interest income from bank deposits is recognised on a time proportion basis by reference to
the principal outstanding and the rate applicable.

A-22

Notes to the combined financial statements (Continued)


4.

SIGNIFICANT ACCOUNTING POLICIES (Continued)


(r)

Borrowing costs
Borrowing costs are expenses in the combined income statement in the period in which they
are incurred, except to the extent that they are capitalised as being directly attributable to
the acquisition, construction or production of an asset which necessarily takes a substantial
period of time to get ready for its intended use or sale.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences
when expenditure for the asset is being incurred, borrowing costs are being incurred and
activities that are necessary to prepare the asset for its intended use or sale are in progress.
Capitalisation of borrowing costs is suspended or ceases when substantially all the activities
necessary to prepare the qualifying asset for its intended use or sale are interrupted or
completed.

(s)

Income tax
Income tax for the year comprises current and deferred tax.
Current tax is the expected tax payable on the taxable income for the year using tax rates
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous
years.
Deferred tax is the tax expected to be payable or recoverable on differences between the
carrying amounts of assets and liabilities in the financial statements and the corresponding
tax bases used in the computation of taxable profit, and is accounted for using the balance
sheet liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences, and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the temporary difference
arises from the initial recognition of assets and liabilities in a transaction that affects neither
the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and
reduced to the extent that it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered. Any such reduction is reversed to
the extent that it becomes probable that sufficient taxable profit will be available.
Deferred tax assets and liabilities are not discounted. Deferred tax is calculated at the tax
rates that are expected to apply in the period when the liability is settled or the asset
realised. Deferred tax is charged or credited to the combined income statement, except
when it relates to items charged or credited directly to equity, in which case the deferred tax
is also dealt with in equity.

(t)

Retirement benefits
Pursuant to the relevant regulations of the PRC government, the Group participates in a
local municipal government retirement benefits scheme (the Scheme), whereby the
subsidiaries of the Company in the PRC are required to contribute a certain percentage of
the basic salaries of their employees to the Scheme to fund their retirement benefits. The
local municipal government undertakes to assume the retirement benefits obligations of all
existing and future retired employees of the subsidiaries of the Company. The only
obligation of the Group with respect to the Scheme is to pay the ongoing required
contributions under the Scheme mentioned above. Contributions under the Scheme are
charged to the combined income statement as incurred. There are no provisions under the
Scheme whereby forfeited contributions may be used to reduce future contributions.

A-23

Notes to the combined financial statements (Continued)


4.

SIGNIFICANT ACCOUNTING POLICIES (Continued)


(u)

Related parties
A party is considered to be related to the Group if:

(v)

(i)

directly, or indirectly through one or more intermediaries, the party (1) controls, is
controlled, or is under common control with, the Company/Group; (2) has an interest
in the Company that gives it significant influence over the Company/Group; or (3) has
joint control over the Company/Group;

(ii)

the party is an associate;

(iii)

the party is a jointly-controlled entity;

(iv)

the party is a member of the key management personnel of the Company or its
parent;

(v)

the party is a close member of the family of any individual referred to in (i) or (iv);

(vi)

the party is an entity that is controlled, jointly controlled or significantly influenced by


or for which significant voting power in such entity resides with, directly or indirectly,
any individual referred to in (iv) or (v); or

(vii)

the party is a post-employment benefit plan for the benefit of employees of the
Company/Group, or of any entity that is a related party of the Company/Group.

Segment reporting
A segment is a distinguishable component of the Group that is engaged either in providing
products or services (business segment), or in providing products or services within
particular economic environment (geographical segment), which is subject to risks and
rewards that are different from those of other segments.
Segment results, assets and liabilities include items directly attributable to a segment as well
as those that can be allocated on a reasonable basis.

A-24

Notes to the combined financial statements (Continued)


5.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS


Estimates and judgements are continually evaluated and are based on historical experience as
adjusted for current market conditions and other factors.
(a)

Critical accounting estimates and assumptions


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 have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year are discussed
below:
(i)

Income taxes
The Group is subject to income taxes in the PRC. Significant judgement is required in
determining the provision for income taxes. There are many transactions and
calculations for which the ultimate tax determination is uncertain during the ordinary
course of business. The Group recognises liabilities for anticipated tax based on
estimates of whether additional taxes will be due. Where the final tax outcome of
these matters is different from the amounts that were initially recorded, such
differences will impact the income tax and deferred tax provision in the period in
which such determination is made.

(ii)

Properties held for sale


Properties held for sale are valued using the cost method, which value properties held
for sale at the lower of cost or net realisable value. Cost is determined using the
weighted average method. The estimated net realisable value is generally market
price less selling expenses. Provision is made when net realisable value of properties
held for sale is assessed to be below cost. This assessment requires the use of
estimates.

(iii)

Land appreciation tax (LAT)


The Group is subject to LAT in the PRC. However, the implementation and settlement
of this tax varies among various tax jurisdictions in cities of the PRC, and the Group
has not finalised its LAT calculation and payments with any local tax authorities in the
PRC. Accordingly, significant judgement is required in determining the amount of land
appreciation and its related LAT. The Group recognised LAT based on managements
best estimates according to the understanding of the tax rules.

(b)

Critical judgements in applying the entitys accounting policies


Revenue recognition
The Group has recognised revenue from sale of properties held for sale during the Relevant
Periods as disclosed in note 7. The assessment of when an entity has transferred the
significant risks and rewards of ownership to buyer requires examination of the
circumstances of the transaction. In most cases, the transfer of risks and rewards of
ownership coincides with the transfer of the legal title or the passing of possession to the
buyer or a completion certificate is issued by the relevant government authorities. The Group
believes that its recognition basis of sales as set out in note 4(q) is appropriate .

A-25

Notes to the combined financial statements (Continued)


6.

SEGMENT INFORMATION
Property development is the only business segment of the Group. No geographical segment
analysis is presented as less than 10% of the Groups operating profit, and assets and capital
expenditure is attributable to markets located outside the PRC. Accordingly, no separate business
and geographical segment information is prepared.

7.

REVENUE AND OTHER INCOME


The principal activity of the Company is investment holding. The principal activities of its
subsidiaries are set out in note 3. An analysis of the Groups revenue and other income is as
follows:
Year ended 31 December
2004
RMB000

Revenue
Sales of properties
Rental income

Other income
Interest income
Admission income of club facilities
Others

8.

Six months
ended 30 June

2005
RMB000

2006
RMB000

2006
RMB000
(Unaudited)

2007
RMB000

142,984
2,620

269,708
6,760

6,870
3,380

146,885
3,920

145,604

276,468

10,250

150,805

114
1,226

542
3,295
410

310
3,004
556

142
1,536
320

168
2,018
162

1,340

4,247

3,870

1,998

2,348

(LOSS)/PROFIT FROM OPERATIONS


Year ended 31 December
2004
RMB000

Six months
ended 30 June

2005
RMB000

2006
RMB000

2006
RMB000
(Unaudited)

2007
RMB000

75,623

85,103

3,222

56,988

286
44

306
542

244
161

125
43

213
162

2,616
2,503
11

4,592
4,872
11

3,747
7,494
11

2,055
3,090
5

2,086
3,946
5

(Loss)/Profit from operations is


arrived at after charging:
Cost of properties held for sale
recognised as expense
Directors remuneration:
Fees
Other emoluments
Retirement scheme contribution
Staff costs (including directors
remuneration and retirement
scheme contribution)
Depreciation *
Amortisation of land use rights *

Amount has been included in administrative expenses on the face of the combined income statements.

A-26

Notes to the combined financial statements (Continued)


9.

FINANCE COSTS
Year ended 31 December
2004
RMB000

Interest charges on:


Bank loans wholly repayable
within five years
Other loans wholly repayable
within five years
Less: Amount capitalised in
properties held under development

10.

2006
RMB000

2006
RMB000
(Unaudited)

2007
RMB000

1,402

4,115

9,791

3,765

5,276

4,810

11,016

7,932

5,915

2,125

6,212

15,131

17,723

9,680

7,401

(5,628)

(14,527)

(17,235)

(9,680)

(6,028)

584

2005
RMB000

Six months
ended 30 June

604

488

1,373

The borrowing costs were capitalised at a rate of 6.52% per annum, 6.54% per annum and 6.00% per annum, for the
years ended 31 December 2004, 2005 and 2006, respectively, and at a rate of 6.53% per annum for the six months
ended 30 June 2007.

INCOME TAX EXPENSES


Year ended 31 December
2004
RMB000

Current tax:
Enterprise income tax in the
PRC for the year/period
Land appreciation tax (LAT)
in the PRC

Deferred tax (note 28)

Six months
ended 30 June

2005
RMB000

2006
RMB000

2006
RMB000
(Unaudited)

11,441

51,459

813

28,445

17,714

60,108

1,655

28,859

29,155

111,567

2,468

57,304

(4,056)

(14,374)

25,099

97,193

2,468

2007
RMB000

(6,805)
50,499

The PRC income tax is computed according to the relevant laws and regulations in the PRC. The
applicable income tax rate for the Groups PRC subsidiaries was 33% throughout the Relevant
Periods.

A-27

Notes to the combined financial statements (Continued)


10.

INCOME TAX EXPENSES (Continued)


Under the Provisional Regulations on LAT implemented upon the issuance of the Provisional
Regulations of the PRC on 27 January 1995, all gains arising from transfer of real estate property
in the PRC effective from 1 January 1994 are subject to LAT 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 borrowing costs and all allowable property development
expenditures.
Reconciliation between tax expense and accounting profit/(loss) at the applicable tax rate of 33%
is as follows:
Year ended 31 December

(Loss)/Profit before taxation


Tax at PRC enterprise income
tax rate of 33%
Tax effect of income not taxable
for tax purpose
Tax effect of expenses not
deductible for tax purpose
LAT
Tax effect of LAT
Tax expenses for the year/period

11.

Six months
ended 30 June

2004
RMB000

2005
RMB000

2006
RMB000

(10,367)

44,011

151,696

(3,276)

73,704

(3,421)

14,524

50,060

(1,081)

24,322

(6,647)

(14,553)

3,421

17,714
(492)

2,440
60,108
(862)

2,440
1,655
(546)

28,859
(542)

25,099

97,193

2,468

50,499

2006
RMB000
(Unaudited)

2007
RMB000

(2,140)

(LOSS)/EARNINGS PER SHARE


Basic (loss)/earnings per share is calculated based on (loss)/profit attributable to equity holders of
the Company for the respective years/period and the pre-Invitation share capital of the Company.
The Companys pre-Invitation share capital of 1,600,000,000 shares were assumed to be in issue
throughout the entire period presented.
As there were no potential ordinary shares during each of the years or period covered in this
report, no diluted earnings per share is presented.

A-28

Notes to the combined financial statements (Continued)


12.

PROPERTY, PLANT AND EQUIPMENT


Furniture,
fixtures and
Leasehold
office
buildings
equipment
RMB000
RMB000

Motor
vehicles
RMB000

Construction
in progress
RMB000

Total
RMB000

At 1 January 2004
Cost
Accumulated depreciation

21,157
(1,996)

399
(133)

106
(73)

116,677

138,339
(2,202)

Net book amount

19,161

266

33

116,677

136,137

Opening net book amount


Additions
Disposals
Depreciation
Transfer

19,161

(2,253)
72,849

266
970
(1)
(110)

33
2,098

(140)

116,677
50,358

(72,849)

136,137
53,426
(1)
(2,503)

Closing net book amount

89,757

1,125

1,991

94,186

187,059

Cost
Accumulated depreciation

94,006
(4,249)

1,368
(243)

2,204
(213)

94,186

191,764
(4,705)

Net book amount

89,757

1,125

1,991

94,186

187,059

89,757
1,301

(3,527)
86,685

1,125
2,652
(1,897)
(262)

1,991
2,391

(417)

94,186
32,446

(86,685)

187,059
38,790
(1,897)
(4,206)

(39,947)

(39,947)

Year ended 31 December 2004

At 31 December 2004 and


1 January 2005

Year ended 31 December 2005


Opening net book amount
Additions
Disposals
Depreciation
Transfer
Transfer to investment
properties (note13)

174,216

1,618

3,965

179,799

Cost
Accumulated depreciation

181,992
(7,776)

2,123
(505)

4,595
(630)

188,710
(8,911)

Net book amount

174,216

1,618

3,965

179,799

Opening net book amount


Additions
Addition from a subsidiary
acquired (note 31)
Depreciation
Transfer
Transfer to investment
properties (note13)

174,216
243

1,618
349

3,965
837

4,327

179,799
5,756

Closing net book amount

171,422

1,925

4,829

Closing net book amount


At 31 December 2005 and
1 January 2006

Year ended 31 December 2006

(5,271)
2,234

A-29

278
(320)

598
(571)

(2,234)

876
(6,162)

(2,093)

(2,093)

178,176

Notes to the combined financial statements (Continued)


12.

PROPERTY, PLANT AND EQUIPMENT (Continued)


Furniture,
fixtures and
Leasehold
office
buildings
equipment
RMB000
RMB000

Motor
vehicles
RMB000

Construction
in progress
RMB000

Total
RMB000

At 31 December 2006 and


1 January 2007
Cost
Accumulated depreciation

184,469
(13,047)

2,750
(825)

6,030
(1,201)

193,249
(15,073)

Net book amount

171,422

1,925

4,829

178,176

Opening net book amount


Additions
Depreciation
Transfer
Transfer to investment
properties (note13)

171,422
175
(2,689)
220

1,925
94
(204)

4,829

(353)

Closing net book amount

169,128

1,815

4,476

175,419

Cost
Accumulated depreciation

184,864
(15,736)

2,844
(1,029)

6,030
(1,554)

193,738
(18,319)

Net book amount

169,128

1,815

4,476

175,419

Period ended 30 June 2007

2,184

(220)

178,176
2,453
(3,246)

(1,964)

(1,964)

At 30 June 2007

Leasehold buildings held by the Group are located in the PRC and are held under medium to long
term leases.
As at 31 December 2004, 2005 and 2006 and 30 June 2007, leasehold buildings with a net book
value of approximately RMB89,757,000, RMB174,216,000, RMB171,422,000 and
RMB169,128,000, respectively, are still in the process of obtaining the building ownership
certificates. These buildings are erected on lands for which the relevant land use rights certificates
have been obtained by the Group. Based on the legal opinion from the Groups legal advisors, the
directors consider that the Group has already obtained the right to use these buildings.

A-30

Notes to the combined financial statements (Continued)


13.

INVESTMENT PROPERTIES
Buildings
RMB000
At 1 January 2005
Cost
Accumulated depreciation

Net book amount

Year ended 31 December 2005


Opening net book amount
Transfer from property, plant and equipment (note 12)
Depreciation

39,947
(666)

Closing net book amount

39,281

At 31 December 2005 and 1 January 2006


Cost
Accumulated depreciation

39,947
(666)

Net book amount

39,281

Year ended 31 December 2006


Opening net book amount
Transfer from property, plant and equipment (note 12)
Depreciation

39,281
2,093
(1,332)

Closing net book amount

40,042

At 31 December 2006 and 1 January 2007


Cost
Accumulated depreciation

42,040
(1,998)

Net book amount

40,042

Period ended 30 June 2007


Opening net book amount
Transfer from property, plant and equipment (note 12)
Depreciation

40,042
1,964
(700)

Closing net book amount

41,306

At 30 June 2007
Cost
Accumulated depreciation

44,004
(2,698)

Net book amount

41,306

The Groups investment properties are located in the PRC and are held under medium to long
term leases.

A-31

Notes to the combined financial statements (Continued)


13.

INVESTMENT PROPERTIES (Continued)


As at 31 December 2004, 2005 and 2006 and 30 June 2007, investment properties included
certain buildings with a net book value of approximately RMBnil, RMB39,281,000, RMB40,042,000
and RMB41,306,000 are still in the process of obtaining the building ownership certificates. These
buildings are erected on lands for which the relevant land use rights certificates have been
obtained by the Group. As the Group has not yet obtained all of the building ownership certificates
for the investment properties during the Relevant Periods, the Group is unable to transfer the title
of the Groups investment properties in the market. Accordingly, the directors consider that the fair
value of the Groups investment properties could not be determined reliably. However, based on
the legal opinion from the Groups legal advisors, the directors consider that the Group has already
obtained the right to use and lease these buildings.

14.

LAND USE RIGHTS


At 31 December

At 30 June

2004
RMB000

2005
RMB000

2006
RMB000

2007
RMB000

Cost
Accumulated amortisation

647

647
(11)

647
(22)

647
(33)

Net book amount

647

636

625

614

Opening net book amount


Amortisation

647
(11)

636
(11)

625
(11)

614
(5)

Closing net book amount

636

625

614

609

Cost
Accumulated amortisation

647
(11)

647
(22)

647
(33)

647
(38)

Net book amount

636

625

614

609

At beginning of the year/period

For the year/period

At end of the year/period

Land use rights represented leasehold interests in land located in the PRC and are held under
medium to long term leases.
As at 31 December 2004, 2005 and 2006 and 30 June 2007, the entire land use rights of the
Group were pledged to secure bank loans granted to the Group (note 26).

A-32

Notes to the combined financial statements (Continued)


15.

GOODWILL
The amount of goodwill recognised in the combined balance sheets, arising from the acquisition of
a subsidiary, is as follows:
At 31 December

At 30 June

2004
RMB000

2005
RMB000

2006
RMB000

2007
RMB000

Gross carrying amount


Accumulated impairment

38,703

Net carrying amount

38,703

Opening net carrying amount


Acquisition of a subsidiary (note 31)
Impairment losses

38,703

38,703

Closing net carrying amount

38,703

38,703

Gross carrying amount


Accumulated impairment

38,703

38,703

Net carrying amount

38,703

38,703

At beginning of the year/period

For the year/period

At end of the year/period

Impairment testing of goodwill


Goodwill acquired through business combination has been primarily allocated to the cash
generating unit (CGU) for impairment test, i.e. property development.
The recoverable amount of the CGU is determined based on value-in-use calculations. The
calculation uses cash flow projections based on financial budgets approved by management
covering a five-year period. The discount rate applied to the cash flow projections was 10% (2006:
10%). Cash flow beyond the five-year period are extrapolated using the estimated growth rate. The
growth rate does not exceed the projected long-term average growth rate for property development
industry in the PRC.
Key assumptions were used in the value in use calculation of the CGU for the year ended
31 December 2006 and six months ended 30 June 2007. The following described each key
assumption on which management has based its cash flow projections to undertake impairment
testing of goodwill:

Stable gross margins Management determined gross margin based on past experience in this
market and its expectations for market development.
Discount rates The discount rates used are before tax and reflect specific risks relating to the
respective industries.

A-33

Notes to the combined financial statements (Continued)


16.

DEPOSITS PAID
The amount represented the Groups deposits paid for the acquisition of land use rights for
properties development.

17.

PROPERTIES HELD FOR DEVELOPMENT


Leasehold land located in the PRC included in the balance of properties held for development of
approximately RMB20,106,000, RMB18,954,000, RMB24,801,000 and RMB9,334,000, were
pledged to secure bank loans of the Group at 31 December 2004, 2005 and 2006 and 30 June
2007 respectively (note 26).
Properties held for development included leasehold interests in land located in the PRC under
medium to long term leases.

18.

PROPERTIES HELD UNDER DEVELOPMENT


At 31 December

Leasehold interests in land located


in the PRC at cost
Development costs
Borrowing costs capitalised

At 30 June

2004
RMB000

2005
RMB000

2006
RMB000

2007
RMB000

3,077
64,289
5,460

4,157
24,685
5,253

60,666
45,620

50,496
55,895

72,826

34,095

106,286

106,391

Leasehold interests in land are located in the PRC and are held under medium to long term
leases.
Certain of the Groups properties held under development of approximately RMB3,077,000,
RMB4,157,000, RMB60,666,000 and RMB50,496,000, were pledged to secure bank loans of the
Group at 31 December 2004, 2005 and 2006 and 30 June 2007 respectively (note 26).
19.

PROPERTIES HELD FOR SALE


Properties held for sale included leasehold interests in land located in the PRC under medium to
long term leases.
As at 31 December 2004, 2005 and 2006 and 30 June 2007, certain properties held for sale with
the net carrying amount of approximately RMBnil, RMBnil, RMB9,651,000 and RMB9,651,000
respectively were pledged to secure bank loans of the Group (note 26).

20.

TRADE RECEIVABLES
At 31 December

Trade receivables

A-34

At 30 June

2004
RMB000

2005
RMB000

2006
RMB000

2007
RMB000

4,470

Notes to the combined financial statements (Continued)


21.

PREPAYMENTS AND OTHER RECEIVABLES


At 31 December
2004
RMB000
Prepayments
Other receivables

22.

2005
RMB000

At 30 June
2006
RMB000

2007
RMB000

2,600
274

3,752
2,220

8,433
7,685

48,566
9,575

2,874

5,972

16,118

58,141

DUE FROM A SHAREHOLDER


At 31 December

Due from a shareholder

At 30 June

2004
RMB000

2005
RMB000

2006
RMB000

2007
RMB000

409,734

409,734

The amount was due from Marble Focus, a BVI investment holding company wholly-owned by
Mr Yan Tao. The amount was unsecured, interest free and repayable on demand.
23.

RESTRICTED BANK DEPOSITS AND CASH AND BANK BALANCES


(a)

Restricted bank deposits


Restricted bank deposits represent guaranteed deposits for the mortgage loan facilities
granted by the banks to the purchasers of the Groups properties. Restricted bank deposits
are all denominated in RMB.

(b)

Cash and bank balances


The Group had cash and bank balances in the PRC denominated in RMB amounting to
approximately RMB11,281,000, RMB30,608,000, RMB61,419,000 and RMB300,141,000 as
at 31 December 2004, 2005 and 2006 and 30 June 2007 respectively. The Renminbi is not
freely convertible into foreign currencies. Under the PRC Foreign Exchange Control
Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange
Regulations, the Group is permitted to exchange Renminbi for foreign currencies through
banks that are authorised to conduct foreign exchange business.

24.

ACCRUALS AND OTHER PAYABLES


At 31 December
2004
RMB000
Accruals
Other payables

25.

2005
RMB000

At 30 June
2006
RMB000

2007
RMB000

1,787
1,866

1,909
9,350

1,782
136,604

1,780
22,531

3,653

11,259

138,386

24,311

RECEIPTS IN ADVANCE
Receipts in advance represented instalments of sales proceeds received from buyers in
connection with the Groups pre-sales of properties. Receipts in advance are expected to be
recognised as revenue of the Group within one year from the balance sheet date.

A-35

Notes to the combined financial statements (Continued)


26.

INTEREST-BEARING BANK AND OTHER BORROWINGS


At 31 December

Bank loans secured


Other loans

Bank loans repayable:


Within one year
Other loans repayable:
Within one year
In the second to fifth years, inclusive
Less: Portion classified as current liabilities
Non-current portion

At 30 June

2004
RMB000

2005
RMB000

2006
RMB000

2007
RMB000

40,000
147,260

113,100
102,000

205,000
32,000

90,000
100,000

187,260

215,100

237,000

190,000

40,000

113,100

205,000

90,000

147,260

2,000
100,000

32,000

100,000

147,260
(187,260)

102,000
(115,100)

32,000
(237,000)

100,000
(190,000)

100,000

The Groups bank loans are secured by the pledge of the Groups entire land use rights (note 14),
certain properties held for development (note 17), certain properties held under development
(note 18) and certain properties held for sale (note 19).
The Groups other borrowings are unsecured throughout the Relevant Periods except that certain
of the Groups other loan of RMB100,000,000 was guaranteed by Henan Synear Food Joint Stock
Company Limited (Henan Synear), an entity of which Mr Li Wei is a director and shareholder, as
at 31 December 2005.
As at 31 December 2006, the Groups other borrowings of approximately RMB30,000,000 was
advanced by
. Mr Yan Tao, a director and
shareholder of the Company, was a shareholder and legal representative of
for the year
ended 31 December 2006.
The Groups bank loans and other borrowings bear interests at fixed rates ranging from 5.84% to
7.20%, 5.58% to 7.50%, 5.85% to 6.14% and 5.85% to 7.20% per annum as at 31 December
2004, 2005 and 2006 and 30 June 2007 respectively.

A-36

Notes to the combined financial statements (Continued)


27.

DUE TO A RELATED PARTY


At 31 December

Due to a related party

At 30 June

2004
RMB000

2005
RMB000

2006
RMB000

2007
RMB000

5,967

The amount was due to


, a former shareholder of Zhengzhou
Huanghe. The amount was unsecured, interest free and repayable on demand.
28.

DEFERRED TAX ASSETS


Deferred taxation is calculated in full on temporary differences under liability method using a
principal taxation rate of 25% during the Relevant Periods.
The movement in deferred tax assets during the Relevant Periods is as follows:
Land appreciation tax
At 31 December
2004
RMB000

29.

2005
RMB000

At 30 June
2006
RMB000

2007
RMB000

At beginning of the year/period


Recognised in the combined income
statement (note 10)

4,056

18,430

4,056

14,374

6,805

At end of the year/period

4,056

18,430

25,235

SHARE CAPITAL
The Company was incorporated in Bermuda on 28 September 2007. Details of the changes of the
share capital of the Company are set out in note 2.
The share capital balances as at 31 December 2004, 2005 and 2006 and 30 June 2007
represented the combined share capital of the Group.

30.

RESERVES
(a)

Capital reserve
The capital reserve at 31 December 2004, 2005 and 2006 and 30 June 2007 represented
the excess of paid-in capital of the companies comprising the Group.

(b)

Statutory reserves
In accordance with the relevant laws and regulations of the PRC, the subsidiaries of the
Company established in the PRC are required to transfer 10% of their profit after taxation
prepared in accordance with the accounting regulation in the PRC to the statutory reserve
until the reserve balance reaches 50% of the respective registered capital. Such reserve
may be used to reduce any losses incurred or for capitalisation as paid-up capital.
In addition, the subsidiaries of the Company established in the PRC are required to transfer
5% of their profit after taxation prepared in accordance with the accounting regulations in
the PRC to the statutory public welfare reserve. The use of the statutory public welfare
reserve is restricted to capital expenditure for employees facilities. This statutory public
welfare reserve is non-distributable except upon liquidation of the PRC subsidiaries.

A-37

Notes to the combined financial statements (Continued)


31.

BUSINESS COMBINATION
Acquisition of a subsidiary
Details of the subsidiary acquired during the year ended 31 December 2006 were as follows:
On 21 November 2006, Zhengzhou Huanghe acquired 100% of the equity interest of Henan Jinzhi
which is engaged in the property development business. The acquired subsidiary contributed
revenue of RMB nil and net loss of approximately RMB2,217,000 to the Group for the period from
21 November 2006 to 31 December 2006. If the acquisition had occurred on 1 January 2006, the
Groups revenue would have been approximately RMB276,468,000 and profit would have been
approximately RMB49,608,000 for the year ended 31 December 2006. These pro forma
information are for illustrative purposes only and are not necessarily an indication of the other
income and results of operations of the Group that actually would have been achieved had the
acquisition been completed on 1 January 2006, nor are they intended to be a projection of future
results.
Details of identified net assets acquired and goodwill arising on acquisition of Henan Jinzhi were
as follows:
RMB000
Total purchase consideration
Fair value of net identified assets acquired as shown below

52,782
(14,079)

Goodwill

38,703

The identifiable assets and liabilities arising from the acquisition are as follows:

Property, plant and equipment


Properties held under development
Prepayments, deposits paid and other receivables
Cash and bank balances
Other loans
Accruals and other payables

Fair value
RMB000

Acquirees
carrying
amount
RMB000

876
54,220
17,778
40,242
(30,000)
(69,037)

876
54,220
17,778
40,242
(30,000)
(69,037)

Net assets

14,079

Net identifiable assets acquired

14,079

Purchase consideration settled in cash


Cash and cash equivalents in a subsidiary acquired

(52,782)
40,242

Net cash outflow on acquisition

(12,540)

A-38

Notes to the combined financial statements (Continued)


32.

NOTE TO COMBINED CASH FLOW STATEMENTS


(a)

Major non-cash transaction


During the years ended 31 December 2004, 2005 and 2006 and six months ended 30 June
2007, certain property, plant and equipment of approximately RMBnil, RMB39,947,000,
RMB2,093,000 and RMB1,964,000 were transferred to investment properties respectively.

(b)

Disposal of a subsidiary
On 23 June 2007, the Group disposed of its entire 90% equity interest in Henan Guoling
Hotspring Vacation Hotel Management Co., Ltd. The net assets of the subsidiary at the date
of disposal were as follows:
RMB000
Cash and bank balances
Accruals and other payables

12,276
(1,609)

Minority interests

10,667
(1,414)

Loss on disposal of a subsidiary

9,253
(253)

Total consideration

9,000

Satisfied by:
Cash

9,000

An analysis of net outflow of cash and cash equivalents in respect of the disposal of a subsidiary is as
follows:
Cash received
Cash and bank balances disposed of

9,000
(12,276)

Net outflow of cash and cash equivalents in


respect of the disposal of a subsidiary

A-39

(3,276)

Notes to the combined financial statements (Continued)


33.

COMMITMENTS AND OPERATING LEASE ARRANGEMENTS


(a)

Capital commitments
In addition to those disclosed elsewhere in the combined financial statements, the Group
had the following commitments at 31 December 2004, 2005 and 2006 and 30 June 2007.
At 31 December
2004
RMB000
Contracted but not provided for in
respect of
- properties held for development
- properties held under development

(b)

At 30 June

2005
RMB000

2006
RMB000

2007
RMB000

1,433

100,000
48,365

933
11,117

150,819

1,433

148,365

12,050

150,819

Future operating lease arrangements


The Group leases its investment properties under operating lease arrangements. Leases for
investment properties are negotiated for terms ranging from two to three years.
The Group had future aggregate minimum lease receipts under non-cancellable operating
leases in respect of properties as follows:
At 31 December
2004
RMB000
Not later than one year
Later than one year but not later than
five years

(c)

2005
RMB000

At 30 June
2006
RMB000

2007
RMB000

6,760

8,140

2,120

8,140

14,900

8,140

2,120

During the Relevant Periods, the Group had no significant operating lease commitments.

A-40

Notes to the combined financial statements (Continued)


34.

FINANCIAL GUARANTEE CONTRACTS


The Group had the following financial guarantee contracts as at the end of each of the Relevant
Periods:
At 31 December
2004
RMB000
Guarantees in respect of mortgage
facilities for certain purchasers

At 30 June

2005
RMB000

2006
RMB000

2007
RMB000

48,460

141,010

226,290

These represented the guarantees in respect of mortgage facilities granted by certain banks
relating to the mortgage loans arranged for certain purchasers of the Groups properties. Pursuant
to the terms of the guarantees, upon default in mortgage payments by these purchasers, the
Group is responsible to repay the outstanding mortgage principals together with accrued interest
and penalty owed by the defaulted purchasers to the banks and the Group is entitled to take over
the legal title and possession of the related properties. The Groups guarantee period starts from
the dates of grant of the relevant mortgage loans and ends when the property purchasers obtain
the property ownership certificates which are then pledged with the banks. At the end of each of
the Relevant Periods, no provision for the Groups obligation under the guarantee contracts has
been made as the directors considered that it was not probable that the repayment of the
mortgage loans would be in default.
35.

FINANCIAL RISK MANAGEMENT OBJECTIVES - POLICIES


The Group does not have written risk management policies and guidelines. However, the board of
directors meets periodically to analyse and formulate measures to manage the Groups exposure
to market risk, including principally changes in interest rates and currency exchange rates.
Generally, the Group employs a conservative strategy regarding its risk management. As the
directors of the Company consider that the Groups exposure to market risk is kept at a minimum
level, the Group has not used any derivatives or other instruments for hedging purposes. The
Group does not hold or issue derivative financial instruments for trading purposes.
The financial assets of the Group comprise primarily trade receivables, other receivables, due from
a shareholder and cash and cash balances. The financial liabilities of the Group comprise trade
payables, other payables, due to a related party and interest-bearing bank and other borrowings.
(a)

Interest rate risk


The Group has no significant interest-bearing assets except restricted bank deposits and
cash and bank balances. The Groups interest rate risk arises from borrowings. The interest
rates and terms of repayment of the borrowings are disclosed in note 26.

(b)

Foreign currency risk


The Groups exposure to risk resulting from changes in foreign currency exchange rates is
minimal.

(c)

Credit risk
The carrying amounts of trade and other receivables represent the Groups maximum
exposure to credit risk in relation to its financial assets. No other financial assets carry a
significant exposure to credit risk.

A-41

Notes to the combined financial statements (Continued)


35.

FINANCIAL RISK MANAGEMENT OBJECTIVES POLICIES (Continued)


(d)

Fair value
The fair value of the Groups financial assets and liabilities are not materially different from
their carrying amounts because of the immediate or short term maturity of these financial
instruments. The fair value of borrowings is not disclosed because the carrying value is not
materially different from the fair value.

(e)

Liquidity risk
The Groups objective is to ensure adequate funds to meet commitments associated with its
financial liabilities. Cash flows are closely monitored on an ongoing basis. The Group will
raise funds from the realisation of its assets if required.

(f)

Summary of financial assets and liabilities by category


The carrying amounts of the Groups financial assets and liabilities as recognised at the
balance sheet dates of the Relevant Periods under review may also be categorised as
follows. See notes 4(j) and 4(m) for explanations about how the category of financial
instruments affects their subsequent measurement.
Financial Assets

At 31 December
2004
RMB000

2005
RMB000

At 30 June
2006
RMB000

2007
RMB000

Current assets
Loans and receivables
- Trade and other receivables
- Amount due from a shareholder
Restricted bank deposits
Cash and bank balances

274

2,220

12,155
409,734

9,575
409,734

274

11,322

2,220
4,645
30,649

421,889
10,693
61,460

419,309
10,674
300,182

11,596

37,514

494,042

730,165

Financial Liabilities

At 31 December

At 30 June

2004
RMB000

2005
RMB000

2006
RMB000

2007
RMB000

14,120
187,260
5,967

32,377
115,100

139,046
237,000

23,919
190,000

207,347

147,477

376,046

213,919

100,000

207,347

247,477

376,046

213,919

Current liabilities
Financial liabilities measured at
amortised cost
- Trade and other payables
- Interest-bearing bank and other borrowings
- Due to a related party

Non-current liabilities
- Interest-bearing bank and other borrowings

A-42

Notes to the combined financial statements (Continued)


35.

FINANCIAL RISK MANAGEMENT OBJECTIVES POLICIES (Continued)


(g)

Financial result by category of financial instruments


Net gains/(losses) from financial assets and financial liabilities by category of financial
instruments are set out below.
Year ended 31 December

Six months
ended 30 June

2004
RMB000

2005
RMB000

2006
RMB000

2006
RMB000
(Unaudited)

142

2007
RMB000

Restricted bank deposits and


cash and bank balances
Financial liabilities measured
at amortised cost

114

542

310

(584)

(604)

(488)

(1,373)

Net result from financial assets


and financial liabilities

(470)

(62)

(178)

142

(1,205)

A-43

168

Notes to the combined financial statements (Continued)


36.

RELATED PARTY TRANSACTIONS


In addition to those disclosed elsewhere in these combined financial statements, the Group had
the following transactions carried out with related parties:
(i)

During the year ended 31 December 2005, the Group sold four residential units to Mr Wang
Jian, Mr Wang Zhimin, Ms Liu Xuemei and Mr Yan Tao, directors of the Company, amounted
to RMB427,000, RMB238,000, RMB297,000 and RMB2,720,000 respectively. In addition,
the Group sold two residential units to Mr Ding Gang, top management of the Company and
Ms Niu Yun, spouse of the controlling Shareholder, Mr Wang Peng amounted to
approximately RMB205,000 and RMB232,000 respectively. The sales to Mr Wang Jian,
Mr Wang Zhimin, Ms Liu Xuemei, Mr Yan Tao, Mr Ding Gang and Ms Niu Yun gave rise to
gross profits of approximately RMB176,000, RMB29,000, RMB116,000, RMB1,627,000,
RMB85,000 and RMB9,000 respectively.

(ii)

During the year ended 31 December 2006, the Group sold two residential units to Mr Wang
Jian and Ms Niu Yun and two residential units to Mr Li Xiao Wei, top management of the
Company, amounted to approximately RMB870,000, RMB447,000 and RMB1,072,000
respectively. The sales to Mr Wang Jian, Ms Niu Yun and Mr Li Xiao Wei gave rise to gross
profits of approximately RMB717,000, RMB369,000 and RMB657,000 respectively.

(iii)

During the period ended 30 June 2007, the Group sold a residential unit to Mr Ding Gang,
amounted to approximately RMB304,000. The sales to Mr Ding Gang gave rise to gross
profits of approximately RMB92,000.

(iv)

Certain of the Groups other borrowings of RMB100,000,000 was guaranteed by Henan


Synear, an entity of which Mr Li Wei is a director and shareholder, as at 31 December 2005.

(v)

The Group has guaranteed certain bank loans of approximately RMB80,000,000,


RMB83,790,000, RMBnil, RMBnil made to Henan Synear as at 31 December 2004, 2005
and 2006 and 30 June 2007 respectively.

(vi)

On 30 June 2006, the Group has signed a property management agreement with Henan
Shanshui Property Management Co., Ltd (Property Management Agreement). Pursuant to
the Property Management Agreement, the Group paid a one-off management fee of
RMB1.0 million to Henan Shanshui Property Management Co., Ltd. Mr Wang Jian, a director
of the Company, was the legal representative of Henan Shanshui Property Management
Co., Ltd until April 2007.

(vii)

Compensation of key management personnel


Year ended 31 December

Total remuneration of
directors and other
members of key
management
- short-term employee
benefits

Six months
ended 30 June

2004
RMB000

2005
RMB000

2006
RMB000

2006
RMB000
(Unaudited)

2007
RMB000

692

768

837

488

417

A-44

Notes to the combined financial statements (Continued)


37.

CAPITAL MANAGEMENT
The Groups objectives when managing capital are:
(a)

To safeguard the Groups ability to continue as a going concern, so that it continues to


provide returns and benefits for stakeholders;

(b)

To support the Groups stability and growth; and

(c)

To provide capital for the purpose of strengthening the Groups risk management capability.

The Group actively and regularly reviews and manages its capital structure to ensure optimal
capital structure and shareholder returns, taking into consideration the future capital requirements
of the Group and capital efficiency, prevailing and projected profitability, projected operating cash
flows, projected capital expenditures and projected strategic investment opportunities. The Group
currently does not adopt any formal dividend policy.
Management regards total equity as capital. The amount of capital as at 31 December 2004, 2005,
2006 and 30 June 2007 amounted to RMB113,227,000, RMB133,989,000, RMB598,116,000 and
RMB619,010,000 respectively, which the management considers as optimal having consider the
projected capital expenditures and the projected strategic investment opportunities.
38.

SUBSEQUENT EVENTS
In addition to those disclosed elsewhere in these combined financial statements, the Group had
the following significant subsequent events which took place subsequent to 30 June 2007 and up
to the date of this report:
(i)

Pursuant to the PRC enterprise income tax law passed by the Tenth National Peoples
Congress on 16 March 2007, the new enterprise income tax rates for domestic and foreign
enterprises are unified at 25 per cent. and will be effective from 1 January 2008. The impact
of such change of enterprise income tax rate on the Groups combined financial statements
will depend on detailed pronouncements that are subsequently issued.
Since
implementation measure on transitional policy of preferential tax rate granted according to
current tax law and administrative regulations was not yet announced, the Group cannot
reasonably estimate the financial impact of the new tax law to the Group at this stage.

(ii)

On 1 July 2007, Everwell acquired the remaining 20% equity interest in Zhengzhou
Huanghe at a consideration of approximately US$91.4 million based on the net asset value
of Zhengzhou Huanghe as determined by an independent valuer on 31 October 2006.

(iii)

The Group had undertaken the Reorganisation as set out in note 3 above.

A-45

APPENDIX B

REPORT FROM THE JOINT REPORTING ACCOUNTANTS ON THE UNAUDITED


PRO FORMA FINANCIAL INFORMATION OF THE GROUP FOR THE FINANCIAL
YEAR ENDED 31 DECEMBER 2006 AND SIX MONTHS ENDED 30 JUNE 2007
22 January 2008
The Board of Directors
CentraLand Limited
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
Dear Sirs
We report on the unaudited pro forma financial information of CentraLand Limited (the Company) and
its subsidiaries (collectively, the Group) as set out in Appendix B on pages B-3 to B-11 of the
prospectus (the Prospectus).
The unaudited pro forma financial information have been prepared on the basis of the assumptions set
out on pages B-9 to B-10 and the adjustments described on pages B-10 to B-11 to show what:
(i)

the financial results of the Group for the financial year ended 31 December 2006 and six months
ended 30 June 2007 would have been if the significant assets acquired and disposed by the
Group and capital structure changes had occurred on 1 January 2006;

(ii)

the financial positions of the Group as at 31 December 2006 and 30 June 2007 would have been if
the significant assets acquired and disposed by the Group and capital structure changes had
occurred on 31 December 2006 and 30 June 2007 respectively; and

(iii)

the cash flows of the Group for the financial year ended 31 December 2006 and six months ended
30 June 2007 would have been if the significant assets acquired and disposed by the Group and
capital structure changes had occurred on 1 January 2006.

The unaudited pro forma financial information have been prepared for illustrative purposes only and,
because of their nature, may not give a true picture of the Groups actual financial positions, results, cash
flows or equity changes after the acquisition and disposal of the significant assets, and capital structure
changes.
The unaudited pro forma financial information are the responsibility of the directors of the Company. Our
responsibility is to express an opinion on the unaudited pro forma financial information based on our
work.
We carried out our procedures in accordance with Statements on Auditing Practice 24: Auditors and
Public Offering Documents. Our work, which involved no independent examination of the unaudited pro
forma financial information, consisted primarily of comparing the unaudited pro forma financial
information to the audited combined financial statements of the Group for the financial year ended 31
December 2006 and six months ended 30 June 2007, considering the evidence supporting the
adjustments and discussing the unaudited pro forma financial information with the directors of the
Company.

B-1

In our opinion:(a)

the unaudited pro forma financial information have been properly prepared from the combined
financial statements of the Group which were prepared in accordance with International Financial
Reporting Standards;

(b)

the unaudited pro forma financial information have been properly prepared in a manner consistent
with both the format of the combined financial statements and the accounting policies of the
Group;

(c)

each material adjustment made to the information used in the preparation of the unaudited pro
forma financial information is appropriate for the purpose of preparing such financial information;
and

(d)

the unaudited pro forma financial information have been properly prepared on the basis of the
assumptions set out on pages B-9 to B-10 after making the adjustments described on pages B-10
to B-11.

This report has been prepared for inclusion in the Prospectus of the Company in connection with the
initial public offering of the shares of the Company.

Yours faithfully

Foo Kon Tan Grant Thornton


Certified Public Accountants
Singapore

Grant Thornton
Certified Public Accountants
Hong Kong

Partner: Henry Lim

Partner: Andrew Lam

B-2

UNAUDITED PRO FORMA COMBINED INCOME STATEMENT


FOR THE YEAR ENDED 31 DECEMBER 2006
The unaudited pro forma combined income statement of the Group for the financial year ended
31 December 2006, and the pro forma adjustments made, are set out below.

Audited
Combined
Income
Statement
RMB000

Pro forma
adjustments
(note 3)
RMB000

Pro forma
adjustments
(note 4)
RMB000

Pro forma
adjustments
(note 5)
RMB000

Unaudited
Pro forma
Combined
Income
Statement
RMB000

(2,520)

273,948

Revenue

276,468

Cost of sales

(98,968)

(98,968)

Gross profit

177,500

174,980

Other income
Selling expenses
Administrative expenses
Other operating expenses

3,870
(6,671)
(21,965)
(550)

Profit from operations


Finance costs

152,184
(488)

Profit before taxation


Income tax expenses

151,696
(97,193)

Profit for the year

54,503

Attributable to:
Equity holders of the Company
Minority interests

45,431
9,072

Earnings per share


basic (RMB cents) #

(26)
(4,895)

219
(193)

3,844
(6,671)
(26,641)
(743)
144,769
(488)

861

144,281
(96,332)
47,949

(4,895)

8,947
(8,947)

(1,534)
(125)

47,949

54,503

47,949

2.84

3.00

These pro forma earnings per share were computed based on the pro forma profit attributable to equity holders and the preinvitation number of shares of 1,600,000,000 shares.

The annexed notes form an integral part of and should be read in conjunction with these financial information.

B-3

UNAUDITED PRO FORMA COMBINED INCOME STATEMENT


FOR SIX MONTHS ENDED 30 JUNE 2007
The unaudited pro forma combined income statement of the Group for six months ended 30 June 2007,
and the pro forma adjustments made, are set out below.

Audited
Combined
Income
Statement
RMB000

Pro forma
adjustments
(note 4)
RMB000

Pro forma
adjustments
(note 5)
RMB000

Unaudited
Pro forma
Combined
Income
Statement
RMB000

(1,800)

149,005

Revenue

150,805

Cost of sales

(64,332)

(64,332)

Gross profit

86,473

84,673

Other income
Selling expenses
Administrative expenses
Other operating expenses

2,348
(3,986)
(8,077)
(1,681)

Profit from operations


Finance costs

75,077
(1,373)

Profit before taxation


Income tax expenses

73,704
(50,499)

Profit for the period

23,205

Attributable to:
Equity holders of the Company
Minority interests

17,827
5,378

Earnings per share basic (RMB cents)

(14)
109
415

2,334
(3,986)
(7,968)
(1,266)
73,787
(1,373)

575

72,414
(49,924)
22,490

5,296
(5,296)

(633)
(82)

22,490

23,205

22,490

1.11

1.41

These pro forma earnings per share were computed based on the pro forma profit attributable to equity holders and the preinvitation number of shares of 1,600,000,000 shares.

The annexed notes form an integral part of and should be read in conjunction with these financial information.

B-4

UNAUDITED PRO FORMA COMBINED BALANCE SHEET


AS AT 31 DECEMBER 2006
The unaudited pro forma combined balance sheet of the Group as at 31 December 2006, and the pro
forma adjustments made, are set out below.
Audited
Combined
Balance
Sheet
RMB000
ASSETS AND LIABILITIES
Non-current assets
Property, plant and equipment
Investment properties
Land use rights
Goodwill
Deferred tax assets

Current assets
Deposits paid
Properties held for development
Properties held under development
Properties held for sale
Trade receivables
Prepayments and other receivables
Due from a shareholder
Restricted bank deposits
Cash and bank balances

Pro forma
adjustments
(note 4)
RMB000

178,176
40,042
614
38,703
18,430

Pro forma
adjustments
(note 5)
RMB000

Pro forma
adjustments
(note 6)
RMB000

(7,754)

170,422
40,042
614
38,703
18,430

275,965

268,211

169,375
35,061
106,286
98,062
4,470
16,118
409,734
10,693
61,460

169,375
35,061
106,286
98,062
4,470
25,118
409,734
10,693
760,987

9,000

(4,048)

703,575

911,259
Current liabilities
Trade payables
Accruals and other payables
Receipts in advance
Interest-bearing bank and
other borrowings
Tax payable

Unaudited
Pro forma
Combined
Balance
Sheet
RMB000

2,442
138,386
99,087

1,619,786

720,000

237,000
112,193

2,442
858,374
99,087

(12)

237,000
112,120

(73)

589,108

1,309,023

Net current assets

322,151

310,763

Total assets less current liabilities

598,116

578,974

Net assets

598,116

578,974

EQUITY
Equity attributable to the
Companys equity holders
Minority interests

579,390
18,726

Total equity

598,116

(702,457)
(17,543)

(1,534)
(1,183)

703,575

578,974

578,974

The annexed notes form an integral part of and should be read in conjunction with these financial information.

B-5

UNAUDITED PRO FORMA COMBINED BALANCE SHEET


AS AT 30 JUNE 2007
The unaudited pro forma combined balance sheet of the Group as at 30 June 2007, and the pro forma
adjustments made, are set out below.

Audited
Combined
Balance
Sheet
RMB000
ASSETS AND LIABILITIES
Non-current assets
Property, plant and equipment
Investment properties
Land use rights
Goodwill
Deferred tax assets

Current assets
Deposits paid
Properties held for development
Properties held under development
Properties held for sale
Prepayments and other receivables
Due from a shareholder
Restricted bank deposits
Cash and bank balances

Pro forma
adjustments
(note 4)
RMB000

Pro forma
adjustments
(note 6)
RMB000

175,419
41,306
609
38,703
25,235

175,419
41,306
609
38,703
25,235

281,272

281,272

118,185
43,909
106,391
52,758
58,141
409,734
10,674
300,182

118,185
43,909
106,391
52,758
58,141
409,734
10,674
1,003,757

703,575

1,099,974
Current liabilities
Trade payables
Accruals and other payables
Receipts in advance
Interest-bearing bank and other borrowings
Tax payable

Unaudited
Pro forma
Combined
Balance
Sheet
RMB000

1,388
24,311
386,583
190,000
159,954

1,803,549

1,388
744,311
386,583
190,000
159,954

720,000

762,236

1,482,236

Net current assets

337,738

321,313

Total assets less current liabilities

619,010

602,585

Net assets

619,010

602,585

EQUITY
Equity attributable to the
Companys equity holders
Minority interests

596,380
22,630

Total equity

619,010

(697,370)
(22,630)

703,575

602,585

602,585

The annexed notes form an integral part of and should be read in conjunction with these financial information.

B-6

UNAUDITED PRO FORMA COMBINED CASH FLOW STATEMENT


FOR THE YEAR ENDED 31 DECEMBER 2006
The unaudited pro forma combined cash flow statement of the Group for the financial year ended 31
December 2006, and the pro forma adjustments made, are set out below.
Audited
Combined
Cash flow
Statement
RMB000
Cash flows from operating activities
Profit before taxation
Adjustments for:
Interest income
Interest expenses
Depreciation
Loss on disposal of a subsidiary
Amortisation of land use rights
Operating profit before working
capital changes
Decrease in properties held
for development
Increase in properties held
under development
Increase in properties held for sale
Increase in trade receivables
Increase in prepayments, other
receivables and deposits paid
Increase in restricted bank deposits
Decrease in trade payables
Increase in accruals and
other payables
Increase in receipts in advance

Cash generated from operations


Income taxes paid
Interest received
Net cash generated from
operating activities
Cash flows from investing activities
Acquisition of a subsidiary,
net of cash acquired
Purchases of property, plant
and equipment
Disposal of a subsidiary, net of
cash disposed of

Net cash used in investing activities


Cash flows from financing activities
Dividend paid to a minority shareholder
of a subsidiary
Capital contributed by shareholders
New bank borrowings
New other borrowings
Repayment of bank borrowings
Repayment of other borrowings
Interest paid

Net cash (used in)/ generated


from financing activities

Pro forma
adjustments
(note 3)
RMB000

151,696

(4,895)

(310)
488
7,494

11

Pro forma
adjustments
(note 5)
RMB000

Pro forma
adjustments
(note 6)
RMB000

(2,520)

Unaudited
Pro forma
Cash flow
Statement
RMB000
144,281
(310)
488
7,494
1,659
11

1,659

159,379

153,623

1,623

1,623

(736)
(21,383)
(4,470)

(736)
(21,383)
(4,470)

(116,843)
(6,048)
(20,585)

(116,843)
(6,048)
(20,585)

58,090
47,221

4,895

96,248
(21,518)
310

62,985
47,221
95,387
(20,657)
310

861

75,040

75,040

(12,540)

(12,540)

(5,756)

(5,756)

(4,158)

(4,158)

(18,296)

(22,454)

(110)

205,000
2,000
(113,100)
(102,000)
(17,723)

110
703,575

703,575
205,000
2,000
(113,100)
(102,000)
(17,723)

(25,933)

677,752

Net increase in cash and


cash equivalents
Cash and cash equivalents
at beginning of year

30,811

730,338

30,649

30,649

Cash and cash equivalents


at end of year

61,460

(4,048)

703,575

760,987

The annexed notes form an integral part of and should be read in conjunction with these financial information.

B-7

UNAUDITED PRO FORMA COMBINED CASH FLOW STATEMENT


FOR SIX MONTHS ENDED 30 JUNE 2007
The unaudited pro forma combined cash flow statement of the Group for six months ended 30 June
2007, and the pro forma adjustments made, are set out below.

Cash flows from operating activities


Profit before taxation
Adjustments for:
Interest income
Interest expenses
Depreciation
Loss on disposal of a subsidary
Amortisation of land use rights
Operating profit before working capital changes
Increase in properties held for development
Decrease in properties held under development
Decrease in properties held for sale
Decrease in trade receivables
Decrease in prepayments, other receivables
and deposits paid
Decrease in restricted bank deposits
Decrease in trade payables
Decrease in accruals and other payables
Increase in receipts in advance

Audited
Combined
Cash flow
Statement
RMB000

Pro forma
adjustments
(note 5)
RMB000

73,704

(1,290)

(168)
1,373
3,946
253
5

9,167
19
(1,054)
(113,303)
287,496
308,287
(9,543)
168

Net cash generated from operating activities

298,912

Cash flows from investing activities


Purchases of property, plant and equipment
Disposal of a subsidiary, net of cash disposed of

(2,453)
(3,276)

Net cash used in investing activities

(5,729)

(60)

40,000
100,000
(155,000)
(32,000)
(7,401)

Unaudited
Pro forma
Cash flow
Statement
RMB000

72,414
(168)
1,373
3,946

(253)

79,113
(8,848)
5,923
45,304
4,470

Cash generated from operations


Income taxes paid
Interest received

Cash flows from financing activities


Dividend paid to a minority shareholder
of a subsidiary
Capital contributed by shareholders
New bank borrowings
New other borrowings
Repayment of bank borrowings
Repayment of other borrowings
Interest paid

Pro forma
adjustments
(note 6)
RMB000

77,570
(8,848)
5,923
45,304
4,470
(2,368)

6,799
19
(1,054)
(113,303)
287,496
304,376
(8,968)
168

575

295,576

(2,453)

3,276

(2,453)

60
703,575

703,575
40,000
100,000
(155,000)
(32,000)
(7,401)

Net cash (used in)/generated from


financing activities

(54,461)

649,174

Net increase in cash and cash equivalents

238,722

942,297

61,460

61,460

Cash and cash equivalents at beginning of period


Cash and cash equivalents at end of period

300,182

703,575

1,003,757

The annexed notes form an integral part of and should be read in conjunction with these financial information.

B-8

NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION


1.

INTRODUCTION
The unaudited pro forma financial information for the financial year ended 31 December 2006 and
six months ended 30 June 2007 has been prepared for inclusion in the Prospectus in connection
with the initial public offering of the shares of CentraLand Limited (the Company).
The unaudited pro forma financial information of the Group for the financial year ended 31
December 2006 and six months ended 30 June 2007 are expressed in Renminbi (RMB), being
the reporting currency of the companies within the Group, and have been prepared in accordance
with the historical cost convention.

2.

BASIS OF PREPARATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION


(a)

The unaudited pro forma combined income statements have been prepared to illustrate
what the financial results of the Group for the year ended 31 December 2006 and six
months ended 30 June 2007 would have been if (i) 100% equity interest in Henan Jinzhi
Establishment Company Limited (Henan Jinzhi) and (ii) 20% equity interest in Zhengzhou
Huanghe Great View Royal Garden Company Limited (Zhengzhou Huanghe) have been
acquired; and (iii) Henan Guoling Hotspring Vacation Hotel Management Company Limited
(Guoling Management) has been disposed; and (iv) the subscription agreements for
shares in Piaget Management Limited (Piaget) at aggregate consideration of
US$90,000,000 have occurred since 1 January 2006.

(b)

The unaudited pro forma combined balance sheets have been prepared to illustrate what
the financial positions of the Group as at 31 December 2006 and 30 June 2007 would have
been if (i) 100% equity interest in Henan Jinzhi and (ii) 20% equity interest in Zhengzhou
Huanghe have been acquired; and (iii) Guoling Management has been disposed; and (iv)
the subscription agreements for shares in Piaget at aggregate consideration of
US$90,000,000 have occurred on 31 December 2006 and 30 June 2007 respectively.

(c)

The unaudited pro forma combined cash flow statements have been prepared to illustrate
what the cash flows of the Group for the year ended 31 December 2006 and six months
ended 30 June 2007 would have been if (i) 100% equity interest in Henan Jinzhi and (ii)
20% equity interest in Zhengzhou Huanghe have been acquired; and (iii) Guoling
Management has been disposed; and (iv) the subscription agreements for shares in Piaget
at aggregate consideration of US$90,000,000 have occurred since 1 January 2006.

(d)

The unaudited pro forma financial information has been prepared based on the audited
combined financial statements of the Group for the financial year ended 31 December 2006
and six months ended 30 June 2007, after giving effect to the pro forma adjustments that
are considered appropriate as set out in the unaudited pro forma combined balance sheets,
unaudited pro forma combined income statements and unaudited pro forma combined cash
flow statements.

(e)

The unaudited pro forma financial information has been prepared based on the
reorganisation as disclosed in Note 3 to the audited combined financial statements of the
Group for the financial year ended 31 December 2006 and six months ended 30 June 2007.

(f)

The unaudited pro forma financial information has been prepared for illustrative purposes
only and, because of its nature, may not give a true picture of the actual financial positions,
results and cash flows of the Group.

B-9

NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION (Continued)


2.

3.

BASIS OF PREPARATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION


(Continued)
(g)

The unaudited pro forma financial information has been prepared in accordance with the
accounting policies of the Company, as set out in the audited combined financial statements
of the Group for the financial years ended 31 December 2004, 2005 and 2006 and six
months ended 30 June 2007 as set out in Appendix A of this Prospectus.

(h)

Pursuant to Section 23 of Part IX of the Fifth Schedule of the Securities and Futures
Regulations, the unaudited pro forma financial information for the financial year ended 31
December 2006 and six months ended 30 June 2007 were based on the audited combined
financial statements of the Company and its subsidiaries, which are prepared in accordance
with International Financial Reporting Standards (IFRS). The audited combined financial
statements were not subject to any qualifications.

ACQUISITION OF 100% EQUITY INTEREST IN HENAN JINZHI


On 21 November 2006, Zhengzhou Huanghe acquired 100% equity interest in Henan Jinzhi at a
consideration of RMB52,782,000. Pro forma adjustments are raised to recognise the pro forma
effect of the results from 1 January 2006 to 20 November 2006 of Henan Jinzhi to the unaudited
pro forma combined income statement and unaudited pro forma combined cash flow statement for
the year ended 31 December 2006. No pro forma adjustment was made to the unaudited pro
forma combined income statement and unaudited pro forma cash flow statement for six months
ended 30 June 2007 as the acquisition was completed on 21 November 2006.
As the recognition of pro forma effect of the results of Henan Jinzhi has no material impact on the
combined balance sheets, no adjustment was made to unaudited pro forma combined balance
sheets.

4.

ACQUISITION OF 20% EQUITY INTEREST IN ZHENGZHOU HUANGHE


On 1 July 2007, Everwell International Holdings Limited (Everwell) acquired the remaining 20%
equity interest in Zhengzhou Huanghe. Pro forma adjustments are raised to eliminate the pro
forma effect of the share of results and reserves of the minority interest to the unaudited pro forma
combined income statements and unaudited pro forma combined balance sheets.
Assuming the consideration of RMB720,000,000 will be settled after 30 June 2007, the pro forma
effect of the elimination of minority interest has no impact on the combined cash flow statements
for the year ended 31 December 2006 and six months ended 30 June 2007. No adjustment was
made to unaudited pro forma combined cash flow statements in this regard.

5.

DISPOSAL OF GUOLING MANAGEMENT


On 23 June 2007, Zhengzhou Huanghe disposed its 90% equity interest in Guoling Management.
Pro forma adjustments are raised to eliminate the pro forma effect of results for the year ended
31 December 2006 and for the period from 1 January 2007 to 22 June 2007 of Guoling
Management to the unaudited pro forma combined income statements and unaudited pro forma
combined cash flow statements.
Pro forma adjustments are also raised to eliminate the pro forma effect of consolidation of the
assets and liabilities of Guoling Management as at 31 December 2006 to the unaudited pro forma
combined balance sheet as at 31 December 2006. No pro forma adjustment was made to the
unaudited pro forma combined balance sheet as at 30 June 2007 as the disposal was completed
on 23 June 2007.

B-10

NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION (Continued)


6.

SUBSCRIPTION AGREEMENTS FOR SHARES IN PIAGET


On 3 August 2007, Overseas Market Group Limited (Overseas Market), Piaget, Ember Vision
Limited (Ember Vision), Marble Focus Limited (Marble Focus), Mr Li Wei, Mr Wang Peng,
Mr Yan Tao and CIM X Limited (CIM X) entered into a subscription agreement (the CIM
Subscription Agreement) for the issuance of exchangeable notes with an aggregate principal
value of US$45.0 million (the CIM Exchangeable Notes) by Overseas Market to CIM X.
On 7 August 2007, Overseas Market issued the CIM Exchangeable Notes to CIM X and the
aggregate consideration of US$45.0 million was satisfied in full by the CIM X in cash.
On 1 September 2007, Overseas Market, Piaget, Ember Vision, Marble Focus, Mr Li Wei, Mr Wang
Peng, Mr Yan Tao, Easy Solution Limited and Queen Hope Holdings Limited entered into a
subscription agreement (the Pre-Invitation Subscription Agreement) for the issuance of
exchangeable notes with an aggregrate principal value of US$45.0 million (the Pre-Invitation
Exchangeable Notes) by Overseas Market to the other pre-invitation investors (other than CIM X)
on the same terms as the CIM Subscription Agreement.
On 1 September 2007, Overseas Market issued the Pre-Invitation Exchangeable Notes to the
other pre-invitation investors (other than CIM X) and the aggregate consideration of US$45.0
million was satisfied in full by these pre-invitation investors in cash.
On 12 December 2007, the pre-invitation investors exchanged their CIM and Pre-Invitation
Exchangeable Notes for an aggregate 250 Piaget shares held by Overseas Market (the
Exchange).
Upon completion of the Exchange, Ember Vision, Marble Focus, CIM X, Easy Solution and Queen
Hope respectively held 56.0%, 24.0%, 10.0%, 6.0% and 4.0% of the total issued share capital of
Piaget.
Pro forma adjustments are raised to recognise the pro forma effect of conversion of the
exchangeable notes to the unaudited pro forma combined balance sheets and the unaudited pro
forma combined cash flow statements.
As the recognition of the pro forma effect of conversion of the exchangeable notes has no impact
on the combined income statements, no adjustment was made to unaudited pro forma combined
income statements.

7.

ACQUISITION OF PIAGET AND SHARE SWAP


On 12 December 2007, the Company, as purchaser, and the shareholders of Piaget comprising
Ember Vision, Marble Focus and the pre-invitation investors, as vendors, entered into a share
swap agreement (the Share Swap Agreement). The terms of the Share Swap Agreement were
determined on willing buyer willing seller basis and carried out on arms length basis. Pursuant to
the Share Swap Agreement, the Company acquired the entire issued and paid-up share capital of
Piaget comprising 1,250 Piaget Shares from the then shareholders of Piaget. The consideration
for the said acquisition was satisfied by (i) the crediting as fully paid, at par, the 375,000 nil-paid
ordinary shares of HK$0.4 each in the Company held by Ember Vision; and (ii) the allotment and
issue of an aggregate of 1,599,625,000 new ordinary shares of HK$0.40 each in the capital of the
Company, credited as fully paid. As the share swap has no impact to the unaudited pro forma
combined income statements, unaudited pro forma combined balance sheets and unaudited pro
forma combined cash flow statements, no pro forma adjustment was made in this regard.

B-11

APPENDIX C

VALUERS REPORT DATED 19 DECEMBER 2007


WITH RESPECT TO VALUATION AS OF 30 JUNE 2007
The following is the text of a letter with the summary of values and valuation certificate received from CB
Richard Ellis Limited, prepared for the purpose of incorporation in the Prospectus, in connection with
their valuation as at 30 June 2007 of all the property interests of our Group.

19 December 2007

The Board of Directors


CentraLand Limited
Clarendon House
2 Church Street
Hamilton. HM11
Bermuda
Dear Sirs,
In accordance with your instructions for us to value the property interests held by CentraLand Limited
(the Company) and its subsidiaries (hereinafter together know as the Group) in the Peoples Republic
of China (the PRC). We confirm that we have carried out inspections, made relevant inquiries 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 30 June 2007 (the date of valuation).
Our valuation is our opinion of Market Value which is defined to mean the estimated amount for which a
property interests should exchange on the date of valuation between a willing buyer and a willing seller in
an arms-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). In
valuing the property interests of the Group, we have complied with all the requirements contained in Part
VII of Chapter 2 of the Listing Manual (the Exchange Listing Rules) issued by the Singapore Exchange
Securities Trading Limited.
Our valuation has been made on the assumption that the owner sells the properties on the open market
without the benefit or burden of a deferred term contract, leaseback, joint venture, management
agreement or any similar arrangement, which would serve to affect the values of the property interests.
C-1

For the purpose of area measurement in our valuation, Saleable Gross Floor Areas (Saleable GFAs)
refer to the internal floor areas and common areas exclusively allocated to that unit including balconies
and other similar features comprising common areas such as staircases and lift lobbies. Non-saleable
Gross Floor Areas (Non-saleable GFAs) refer to the floor areas 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 GFAs and Non-saleable GFAs, excluding GFAs for underground car parks.
Unless otherwise stated, all the property interests are valued by the direct 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 prices 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 I, which are held by the Group for occupation in the PRC, we
have valued each of these property interests by the direct comparison method assuming sale of each of
these property interests in its existing state with the benefit of vacant possession and by making
reference to comparable sale transactions as available in the relevant.
For the property interests in Group II, which are held by the Group for investment, we have valued each
of these property interests by the direct comparison method assuming a sale of each of these property
interests in its existing state with the benefit of vacant possession and by making reference to
comparable sale transactions as available in the relevant markets; we also valued the property interests
by the capitalisation method by taking into account the current rent passing of the property interests and
the reversionary potential of the tenancies.
In valuing the property interests in Group III, 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
method. We have assumed sale of each of these property interests in its existing state with the benefit of
vacant possession and by making reference to comparable sale 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.
In our valuation, completed real estate developments are those in which the Completed Construction
Works Certified Reports of the building(s) or Building Ownership Certificates thereof is (are) issued 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.
In valuing the property interests in Group IV, 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 Groups latest development schemes provided to us. We have assumed that
approvals from relevant authorities for the proposals have been obtained. In arriving at our opinion of
value, we have adopted the direct comparison method by making reference to comparable sales
evidence as available in the relevant market to arrive the capital value of the property as if the property is
completed at the date of valuation 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 been completed at the date of valuation.
In our valuation, the property under development are those in which the Construction Works
Commencement Permit(s) of the building(s) thereof has (have) been issued while the Completed
Construction Works Certified Report of the building(s) thereof is (are) not issued.
For the property interests in Group V, 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 method 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.
In our valuation, the property for future development are those the Construction Works Commencement
Permit(s) is (are) not issued while the Land Use Rights Certificate(s) has (have) been obtained.

C-2

For the property interests in Group VI, which are other property interests acquired by the Group in the
PRC. Although the Group have entered into agreements with relevant owner of the property or
government authority, the Group has not yet obtained the 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.
In the course of our valuation for the property interests in the PRC, we have relied on the legal opinion
provided by the Groups 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.
We have relied to a considerable extent on information given by the Group, in particular, but not limited
to, the sales records, the records of unsold units, 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 in
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 Group, 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 were any tests 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 neither 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 Renminbi (RMB).
We enclose herewith a summary of values and our valuation certificate.

Yours faithfully,
For and on behalf of
CB Richard Ellis Limited

Kam Hung YU
Senior Managing Director
Valuation & Advisory Services
Note:

Mr. Yu is the President 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 25 years of valuation experience in Hong Kong, the
PRC and the Asia Pacific Region.

C-3

SUMMARY OF VALUES

Property Interests

Capital Value in
existing state as at
30 June 2007

Interests
attributable
to the Group

(RMB)

Capital Value
attributable to the Group
as at 30 June 2007
(RMB)

Group I Property interests held by the Group for occupation in the PRC
1.

A sports centre and cinema,


Guoling Shanshui,
Guxing Town North,
Jing-Guang Railway West,
Huiji District, Zhengzhou City,
Henan Province,
the Peoples Republic of China

No Commercial Value

Group I Sub-total:

No Commercial Value

Group II Property interests held by the Group for investment in the PRC
2.

Various commercial buildings,


hotel villas and a golf office
building,
Guoling Shanshui,
Guxing Town North,
Jing-Guang Railway West,
Huiji District, Zhengzhou City,
Henan Province,
the Peoples Republic of China

No Commercial Value

Group II Sub-total:

No Commercial Value

Group III Property interests held by the Group for sale in the PRC
3.

Various low-rise apartment


units in Phase I, Mufu,
Guoling Shanshui ,
Guxing Town North,
Jing-Guang Railway West,
Huiji District, Zhengzhou City,
Henan Province,
the Peoples Republic of China

12,000,000

100%

12,000,000

4.

Various low-density luxury


detached houses in Phase I,
Yongfu, Guoling Shanshui ,
Guxing Town North,
Jing-Guang Railway West,
Huiji District, Zhengzhou City,
Henan Province,
the Peoples Republic of China

9,500,000

100%

9,500,000

Group III Sub-total:

21,500,000

C-4

Property Interests

Capital Value in
existing state as at
30 June 2007

Interests
attributable
to the Group

Capital Value
attributable to the Group
as at 30 June 2007

(RMB)

(RMB)

Group IV Property interests held by the Group under development in the PRC
5.

Various low-density luxury


detached houses in Phase I,
Yongfu, Guoling Shanshui ,
Guxing Town North,
Jing-Guang Railway West,
Huiji District, Zhengzhou City,
Henan Province,
the Peoples Republic of China

18,000,000

100%

18,000,000

6.

Various low-rise apartment units


and commercial retail units in
Phase II, Huguang Shanse,
Guoling Shanshui ,
Zheng Mang Highway West,
South Bank of Yellow River,
Huiji District, Zhengzhou City,
Henan Province,
the Peoples Republic of China

62,000,000

100%

62,000,000

7.

Various townhouses and low-rise


apartment units in Phase II,
Xinyu Lanwan, Guoling Shanshui ,
Zheng Mang Highway West,
South Bank of Yellow River,
Huiji District, Zhengzhou City,
Henan Province,
the Peoples Republic of China

84,000,000

100%

84,000,000

8.

Various retail units and office units


in J-Expo, No.8 Xinglong Street
(East of Fu Shou Street,
North of Yuan Ling Street),
Zhengzhou City,
Henan Province,
the Peoples Republic of China

1,001,000,000

100%

1,001,000,000

Group IV Sub-total:

1,165,000,000

Group V Property interests held by the Group for future development in the PRC
9.

Reserved land located in


No. 86 South Bank of the
Yellow River,
Zhengzhou City,
Henan Province,
the Peoples Republic of China

8,123,000,000

C-5

100%

8,123,000,000

Group V Sub-total:

8,123,000,000

Property Interests

Capital Value in
existing state as at
30 June 2007

Interests
attributable
to the Group

(RMB)

Capital Value
attributable to the Group
as at 30 June 2007
(RMB)

Group VI Other Property interests acquired by the Group in the PRC


10.

A parcel of land (West of Jing


Guang Railway, North of Xi
Shan Road),
Zhengzhou City,
Henan Province,
the Peoples Republic of China

No Commercial Value

C-6

Group VI Sub-total:

No Commercial Value

Grand Total:

9,309,500,000

Group I Property interests held by the Group for occupation in the PRC
VALUATION CERTIFICATE

Property

Description and tenure

Details of
occupancy

Capital value in
existing state as at
30 June 2007
(RMB)

1.

A sports centre and


cinema, Guoling
Shanshui ,
Guxing Town North,
Jing-Guang
Railway West,
Huiji District,
Zhengzhou City,
Henan Province,
the Peoples Republic
of China

The property comprises a


sports centre and cinema. The
total gross floor area of the
property is approximately
4,200 sq.m.

The property is
currently occupied by
the Group.

No Commercial Value

The property is situated on


two parcels of land with an
aggregrate area of
approximately 556,397.7
sq.m. (the Site) which forms
part of Guoling Shanshui.
The total gross floor area and
the gross floor area
breakdown of the property is
as follows:
Use

Approximate
GFA (sq.m)

Sports Center
Cinema
Total

2,400
1,800
4,200

The Site is held under various


Land Use Rights Certificates
for the latest expiring on 5
May 2067.
Notes:
a)

Pursuant to the following Land Use Rights Certificates, the land use rights of the following sites have
been granted to the Group.
Land Use Rights
Certificate Number.

Date of
Issuance

Site Area

Date of Expiry

(sq.m.)
Zheng Guo Yong
(2005) Zi No.187
Zheng Guo Yong
(2005) Zi No.0185

b)

28 March 2005

110,261.40

5 May 2047

28 March 2005

446,136.30

5 May 2067

Total:

556,397.70

We have been provided with a legal opinion on the property prepared by the Groups legal advisor, which
contains, inter alia, the following information:
i.

The Group has paid the land premium in respect of the Site in full and pursuant to various 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)

C-7

ii.

The Group has not obtained the building ownership of the property

c)

Zhengzhou Great View., the owner of the property, is a wholly foreign-owned enterprise established in
accordance with the laws of the PRC, in which the Group has a 100% equity interests.

d)

In the course of our valuation, we have ascribed no commercial value to the property as the Building
Ownership Certificate(s) has not yet been obtained. Had the Company obtained the Building Ownership
Certificate(s), the capital value in existing state of the property as at 30 June 2007 would be
RMB20,400,000(100% interests attributable to the Group: RMB20,400,000)

C-8

Group II Property interests held by the Group for investment in the PRC
VALUATION CERTIFICATE

Property

Description and tenure

Details of
occupancy

Capital value in
existing state as at
30 June 2007
(RMB)

2.

Various commercial
buildings, hotel villas
and a golf office
building, Guoling
Shanshui ,
Guxing Town North,
Jing-Guang
Railway West,
Huiji District,
Zhengzhou City,
Henan Province,
the Peoples Republic
of China

The property comprises 4


commercial buildings, 14 hotel
villas and a golf office
building. The total gross floor
area of the property is
approximately 12,385.64
sq.m.
The property is situated on
four parcels of land with an
aggregrate area of
approximately 629,917.6
sq.m. (the Site) which forms
part of Guoling Shanshui.

The total gross floor area and


the gross floor area
breakdown of the property is
as follows:
Use

Approximate
GFA (sq.m)

Commercial
Buildings
Hotel Villas
Office
Total

6,393.64
4,492
1500
12,385.64

The Site is held under various


Land Use Rights Certificates
for the latest expiring on 5
May 2067.

The hotel villas with


total gross floor area
of approximately
4,492 sq.m.,and
commercial buildings
which are used for
food and beverage
purpose with gross
floor area of
approximately
6,393.64 sq.m are
rented at a monthly
rent of RMB 350,000
from 1 July 2007 to
30 June 2010.

No Commercial Value

The office building


has been rented
together with a parcel
of land to the
Shanshui Golf Club,
formerly known as
Henan Sinan Golf
Club at the annual
rent of RMB4,240,000
and as advised by the
Group, such lease
agreement will be
terminated on 31 Dec
2007.
The remaining portion
of the property is
currently occupied by
the Group.

Notes:
a)

Pursuant to the following Land Use Rights Certificates, the land use rights of the following sites have
been granted to the Group.
Land Use Rights
Certificate Number.

Date of
Issuance

Site Area

Date of Expiry

(sq.m.)
Zheng Guo Yong
(2005) Zi No.187
Zheng Guo Yong
(2005) Zi No.0185
Zheng Guo Yong
(2004) Zi No.1457
Zheng Guo Yong
(2004) Zi No.1456

28 March 2005

110,261.40

5 May 2047

28 March 2005

446,136.30

05 May 2067

28 December 2004

25,376.80

15 December 2065

28 December 2004

48,143.10

15 December 2065

Total:

629,917.60

C-9

b)

We have been provided with a legal opinion on the property prepared by the Groups legal advisor, which
contains, inter alia, the following information:
i.

The Group has paid the land premium in respect of the Site in full and pursuant to various 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)

ii.

The Group has not obtained the building ownership of the property

iii.

For the tenanted portions of the property:


(a)

The Group has not obtained the ownership right of the property;

(b)

According to the Confirmation in Relation to the Ownership of Real Estates of Zhengzhou


Huanghe Great View Royal Garden Co., Ltd numbered Zheng Fang Di Han 2007 No. 115
issued by Zhengzhou Municipal Real Estate Administration Bureau dated 24 August 2007, in
which Zhengzhou REAB confirmed that Huanghe Great View was approved to lease the
aforesaid buildings to the Golf Club, we are of the view that the aforesaid lease is valid and
enforceable under PRC laws and Huanghe Great View will not face any penalties in relation to
the lease

(c)

The tenancy agreements entered into between the Group and various tenants are legal, valid
and legally binding on both parties.

c)

Zhengzhou Great View, the owner of the property, is a wholly foreign-owned enterprise established in
accordance with the laws of the PRC, in which the Group has a 100% equity interests.

d)

In the course of our valuation, we have ascribed no commercial value to the property as the Building
Ownership Certificate(s) has not yet commenced. Had the Company obtain the Building Ownership
Certificate(s), the capital value of the commercial buildings, hotel villas and golf office building in existing
state of the project as at 30 June 2007 would be RMB35,400,000, RMB52,600,000 and RMB4,500,000
respectively (100% interests attributable to the Group totally: RMB92,500,000)

C-10

Group III Property interests held by the Group for sale in the PRC
VALUATION CERTIFICATE

Property

Details of
occupancy

Description and tenure

Capital value in
existing state as at
30 June 2007
(RMB)

3.

Various low-rise
apartment units in
Phase I, Mufu,
Guoling Shanshui,
Guxing Town North,
Jing-Guang
Railway West,
Huiji District,
Zhengzhou City,
Henan Province,
the Peoples Republic
of China

The property comprises 31


low-rise apartment units with
saleable gross floor area
approximately 2,898.86 sq.m..

The property is
currently vacant.

12,000,000
(100% interests
attributable to the Group:
RMB12,000,000)

Phase I, Mufu (the


Development) occupying a
site with an area of
approximately 40,084.5 sq.m.
(the Site) has been
developed with a total gross
floor area of approximately
39,877.38 sq.m.. The total
saleable gross floor area of
the Development is
approximately 39,288.78
sq.m. and the non-saleable
gross floor area is
approximately 588.6 sq.m..
The Development was
completed in April, 2006.
The Site is held under a Land
Use Rights Certificate for a
term expiring on 15 December
2065 for residential use.

Notes:
a)

Pursuant to the Land Use Rights Grant Contract, the land use rights, with a total site area of
approximately 454,139.3 sq.m where the Site is located therein, has been granted to the Group, at a total
consideration of RMB6,812,090.
Land Use Rights Grant
Contract Number

Site Area

Date of Contract

(sq.m)
N/A
b)

454,139.3

15 December 1995

Pursuant to the Land Use Rights Certificate Zheng Guo Yong (2004) No. 1458 dated 27 December 2004
issued by Zhengzhou Municipal Bureau of State Land and Resources, the land use rights of the Site with
a site area of approximately 40,084.5 sq.m. has been granted to the Group for residential use with a term
of 70 years and will be expiring on 15 December 2065.

C-11

c)

We have been provided with a legal opinion on the property prepared by the Groups legal advisor, which
contains, inter alia, the following information:
i.

The Group has paid the land premium in respect of the Site in full and 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).

ii.

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.

iii.

Zhengzhou Great View, the owner of the property, is a wholly-foreign-owned enterprise established
in accordance with the laws of the PRC, in which the Group has a 100% equity interests.

C-12

VALUATION CERTIFICATE

Property

Details of
occupancy

Description and tenure

Capital value in
existing state as at
30 June 2007
(RMB)

4.

Various low-density
luxury detached
houses in Phase I,
Yongfu, Guoling
Shanshui ,
Guxing Town North,
Jing-Guang
Railway West,
Huiji District,
Zhengzhou City,
Henan Province,
the Peoples Republic
of China

The property comprises 3 lowdensity luxury detached


houses with saleable gross
floor area approximately
730.75 sq.m..

The property is
currently vacant.

9,500,000
(100% interests
attributable to the Group:
RMB9,500,000)

Phase I, Yongfu (the


Development) occupying a
site with an area of
approximately 66,315.8 sq.m.
(the Site) has been
developed with a total gross
floor area of approximately
19,991.17 sq.m.. The total
saleable gross floor area of
the Development is
approximately 18,665 sq.m.
and the non-saleable gross
floor area is approximately
1,326.17 sq.m..
The Development was
completed in May 2007.
The Site is held under a Land
Use Rights Certificate for a
term expiring on 15 December
2065 for residential use.

Notes:
a)

Pursuant to the Land Use Rights Grant Contract, the land use rights, with a total site area of
approximately 990.847.3 sq.m where the Site is located therein, has been granted to the Group, at a
consideration of RMB14,862,710.
Land Use Rights Grant
Contract Number

Site Area

Date of Contract

(sq.m)
N/A
b)

990,847.3

15 December 1995

Pursuant to the following Land Use Rights Certificates, the property is held in the name of the Group.
Land Use Rights
Certificate Number.

Date of
Issuance

Site Area

Date of Expiry

(sq.m.)
Zheng Guo Yong
(2004) No. 1454
Zheng Guo Yong
(2004) No. 1455

27 December 2004

48,979.3

15 December 2065

27 December 2004

17,336.5

15 December 2065

Total:

66,315.8

C-13

c)

We have been provided with a legal opinion on the property prepared by the Groups legal advisor, which
contains, inter alia, the following information:
i.

The Group has paid the land premium in respect of the Site in full and 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).

ii.

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.

iii.

Zhengzhou Great View, the owner of the property, is a wholly-foreign-owned enterprise established
in accordance with the laws of the PRC, in which the Group has a 100% equity interests.

C-14

Group IV Property interests held by the Group under development in the PRC
VALUATION CERTIFICATE

Property

Details of
occupancy

Description and tenure

Capital value in
existing state as at
30 June 2007
(RMB)

5.

Various low-density
luxury detached
houses in Phase I,
Yongfu, Guoling
Shanshui ,
Guxing Town North,
Jing-Guang
Railway West,
Huiji District,
Zhengzhou City,
Henan Province,
the Peoples Republic
of China

The property comprises 4 lowdensity luxury detached


houses with saleable gross
floor area approximately
1,383.21 sq.m..

The property is
currently vacant

18,000,000
(100% interests
attributable to the Group:
RMB18,000,000)

Phase I, Yongfu (the


Development) occupying a
site with an area of
approximately 66,315.8 sq.m.
(the Site) has been
developed with a total gross
floor area of approximately
19,991.17 sq.m.. The total
saleable gross floor area of
the Development is
approximately 18,665 sq.m.
and the non-saleable gross
floor area is approximately
1,326.17 sq.m..
The Site is held under a Land
Use Rights Certificate for a
term expiring on 15 December
2065 for residential use.

Notes:
a)

Pursuant to the Land Use Rights Grant Contract, the land use rights, with a total site area of
approximately 990.847.3 sq.m where the Site is located therein, has been granted to the Group, at a
consideration of RMB14,862,710
Land Use Rights Grant
Contract Number

Site Area

Date of Contract

(sq.m)
N/A
b)

990,847.3

15 December 1995

Pursuant to the following Land Use Rights Certificates, the property is held in the name of the Group.
Land Use Rights
Certificate Number.

Date of
Issuance

Site Area

Date of Expiry

(sq.m.)
Zheng Guo Yong
(2004) No. 1454
Zheng Guo Yong
(2004) No. 1455

27 December 2004

48,979.3

15 December 2065

27 December 2004

17,336.5

15 December 2065

Total:

66,315.8

C-15

c)

d)

We have been provided with a legal opinion on the property prepared by the Groups legal advisor, which
contains, inter alia, the following information:
i.

The Group has paid the land premium in respect of the Site in full and 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).

ii.

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.

iii.

Zhengzhou Great View, the owner of the property, is a wholly-foreign-owned enterprise established
in accordance with the laws of the PRC, in which the Group has a 100% equity interests.

A summary of major certificates/approvals is shown as follows:


i.
ii.
iii.
iv.
v.
vi.
vii.

Land Use Rights Transfer Contract


Land Use Rights Certificate
Construction Land Use Planning Permit
Construction Works Planning Permit
Construction Works Commencement Permit
Pre-sale Permit
Construction Works Completion Certified Report

C-16

Yes
Yes
Yes
Yes
Yes
Yes
N/A

VALUATION CERTIFICATE

Property

Details of
occupancy

Description and tenure

Capital value in
existing state as at
30 June 2007
(RMB)

6.

Various low-rise
apartment units and
retail units in Phase
II, Huguang Shanse,
Guoling Shanshui ,
Zheng Mang Highway
West, South Bank of
Yellow River,
Huiji District,
Zhengzhou City,
Henan Province,
the Peoples Republic
of China

The property comprises 181


low-rise apartment units and
11 retail units with a total
gross floor area of
approximately 18,594.53
sq.m. and 1,445.55 sq.m.
respectively.

The property is
currently vacant.

62,000,000
(100% interests
attributable to the Group:
RMB62,000,000)

As advised by the Group,


Phase II, Huguang Shanse
(the Development) occupying
a site with an area of
approximately 97,333.82
sq.m. (the Site) are planned
to be developed with a total
gross floor area of
approximately 69,176.30
sq.m.. The total saleable gross
floor area of the property is
approximately 67,701.71
sq.m. and non-saleable gross
floor area of the property is
approximately 1,474.59 sq.m..
The site is held under a Land
Use Rights Certificate for a
term expiring on 5 May 2067.

Notes:
a)

Pursuant to the Land Use Rights Grant Contract, the land use rights, with a total site area of
approximately 990.847.3 sq.m, where the site is located therein, has been granted to the Group.
Land Use Rights Grant
Contract Number

Site Area

Date of Contract

(sq.m)
N/A
b)

990,847.3

15 December 1995

Pursuant to the following Land Use Rights Certificates, the property is held in the name of the Group.
Land Use Rights
Certificate Number.

Date of
Issuance

Site Area

Date of Expiry

(sq.m.)
Zheng Guo Yong
(2005) No. 0185
Zheng Guo Yong
(2005) No. 0189
Zheng Guo Yong
(2005) No. 0191

28 March 2005

446,136.3

5 May 2067

28 March 2005

54,912

5 May 2067

28 March 2005

55,635.6

5 May 2067

Total:

556,683.9

C-17

c)

64 apartment units with a saleable gross floor area of approximately 6,786.29 sq.m. of the property are
subject to various agreements for sale and purchase in a total consideration of RMB26,265,465. Capital
Value in respect of this portion of the property is stated at total consideration aforesaid, and has been
considered in our valuation shown above.

d)

As advised by the Group, the outstanding construction cost as of 30 June 2007 is about RMB1,773,800.

e)

We have been provided with a legal opinion on the property prepared by the Groups legal advisor, which
contains, inter alia, the following information:

f)

i.

The Group has paid the land premium in respect of the Site in full and pursuant to various 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).

ii.

The Group has obtained from the PRC Government all requisite approvals in respect of the
construction of the property.

iii.

Portions of the property comprising 64 units with a saleable gross floor area of approximately
6,786.29 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.

Zhengzhou Great View, the owner of the property, is a wholly-foreign-owned enterprise established
in accordance with the laws of the PRC, in which the Group has a 100% equity interests.

A summary of major certificates/approvals is shown as follows:


i.
ii.
iii.
iv.
v.
vi.
vii.

Land Use Rights Transfer Contract


Land Use Rights Certificate
Construction Land Use Planning Permit
Construction Works Planning Permit
Construction Works Commencement Permit
Pre-sale Permit
Construction Works Completion Certified Report

C-18

Yes
Yes
Yes
Yes
Yes
Yes
N/A

VALUATION CERTIFICATE

Property

Details of
occupancy

Description and tenure

Capital value in
existing state as at
30 June 2007
(RMB)

7.

Various townhouses
and low-rise
apartment units in
Phase II, Xinyu
Lanwan, Guoling
Shanshui ,
Zheng Mang Highway
West, South Bank of
Yellow River,
Huiji District,
Zhengzhou City,
Henan Province,
the Peoples Republic
of China

The property comprises 36


townhouses units and 84 lowrise apartment units with
saleable gross floor area of
approximately 9,107.97 sq.m.
and 8,931.33 sq.m.
respectively.

The property is
currently vacant.

84,000,000
(100% interests
attributable to the Group:
RMB84,000,000)

As advised by the Group,


Phase II, Xingyu Lanwan (the
Development) occupying a
site with an area of
approximately 73,000.37
sq.m. (the Site) are planned
to be developed with a total
gross floor area of
approximately 38,091.5 sq.m..
The total saleable gross floor
area of the property is
approximately 35,172.91
sq.m. and non-saleable gross
floor area of the property is
approximately 2,918.59 sq.m..
The Site is held under a Land
Use Rights Certificate for a
term expiring on 05 May 2067.

Notes:
a)

Pursuant to the Land Use Rights Grant Contract, the land use rights, with a total site area of
approximately 990.847.3 sq.m where the Site is located therein, has been granted to Zhengzhou
YellowRiver Tourism Development Co., Ltd.,.
Land Use Rights Grant
Contract Number

Site Area

Date of Contract

(sq.m)
N/A
b)

990,847.3

15 December 1995

Pursuant to the following Land Use Rights Certificates, the property is held in the name of the Group.
Land Use Rights
Certificate Number.

Date of
Issuance

Site Area

Date of Expiry

(sq.m.)
Zheng Guo Yong
(2005) No. 0185
Zheng Guo Yong
(2005) No. 0189
Zheng Guo Yong
(2005) No. 0191

28 March 2005

446,136.3

5 May 2067

28 March 2005

54,912.0

5 May 2067

28 March 2005

55,635.6

5 May 2067

Total:

556,683.9

C-19

c)

41 low-rise apartment units with a saleable gross floor area of approximately 4,279.49 sq.m. of the
property are subject to various agreements for sale and purchase in a total consideration of
RMB16,808,159. Capital Value in respect of this portion of the property is stated at total consideration
aforesaid, and has been considered in our valuation shown above.

d)

As advised by the Group, the outstanding construction cost as of 30 June 2007 is about RMB294,000.

e)

We have been provided with a legal opinion on the property prepared by the Groups legal advisor, which
contains, inter alia, the following information:

f)

i.

The Group has paid the land premium in respect of the Site in full and pursuant to various 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).

ii.

The Group has obtained from the PRC Government all requisite approvals in respect of the
construction of the property.

iii.

Portions of the property comprising 41 units with a saleable gross floor area of approximately
4,279.49 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.

Zhengzhou Great View, the owner of the property, is a wholly-foreign-owned enterprise established
in accordance with the laws of the PRC, in which the Group has a 100% equity interests.

A summary of major certificates/approvals is shown as follows:


i.
ii.
iii.
iv.
v.
vi.
vii.

Land Use Rights Transfer Contract


Land Use Rights Certificate
Construction Land Use Planning Permit
Construction Works Planning Permit
Construction Works Commencement Permit
Pre-sale Permit
Construction Works Completion Certified Report

C-20

Yes
Yes
Yes
Yes
Yes
Yes
N/A

VALUATION CERTIFICATE

Property

Description and tenure

Details of
occupancy

Capital value in
existing state as at
30 June 2007
(RMB)

8.

Various retail units


and office units in JExpo, No.8 Xinglong
Street (East of Fu
Shou Street, North of
Yuan Ling Street),
Zhengzhou City,
Henan Province, the
Peoples Republic of
China

The property comprises 2,560


retail units and 192 office units
with total saleable gross floor
area of approximately
54,579.15 sq.m. and
11,310.65 sq.m. respectively.
Its total expected ground
gross floor area of the
buildings and structures to be
constructed on the property is
approximately 65,889.90
sq.m., including the
underground gross floor area
with the gross floor area of
approximately 10,212.03
sq.m..

The property is
currently vacant.

1,001,000,000
(100% interests
attributable to the Group:
RMB1,001,000,000)

J-Expo (the Development) is


a commercial real estate
development occupying a site
with an area of approximately
9,771 sq.m. (the Site). The
Development will comprise a
commercial building with retail
units from Basement 1 to
Level 5 and office units from
Level 6 to Level12 with
saleable gross floor area of
approximately 65,889.9 sq.m..
Its expected under ground
gross floor area is
approximately 10,212.03
sq.m..
The Site is held under a Land
Use Rights Certificates for a
land use term expiring on 1
November 2046.
Notes:
a)

Pursuant to the Land Use Rights Certificate Zheng Guo Yong (2006) No. 1063 dated 4 December 2006
issued by the Peoples Government of Zhengzhou, the land use rights of the Site with a site area of
approximately 9,770.9 sq.m. for a term of 40 years for commercial use has been granted to the Group
and will be expiring on 1 November 2046.

b)

968 retail units with a saleable gross floor area of approximately 19,298 sq.m. and 23 office units with a
saleable gross floor area of approximately 1,235 sq.m. of the property are subject to various agreements
for sale and purchase in a total consideration of RMB332,868,829 and RMB5,637,781 respectively.
Capital Value in respect of this portion of the property is stated at total consideration aforesaid, and is
included in our valuation shown above.

c)

As advised by the Group, the outstanding construction cost as of 30 June 2007 is about
RMB151,405,300.

C-21

d)

e)

We have been provided with a legal opinion on the property prepared by the Groups legal advisor, which
contains, inter alia, the following information:
i.

The Group has paid the land premium in respect of the Site in full and pursuant to various 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).

ii.

The Group has obtained from the PRC Government all requisite approvals in respect of the
construction of the property.

iii.

Portions of the property comprising 991 units with a saleable gross floor area of approximately
20,533 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.

Zhengzhou Great View, the owner of the property, is a wholly-foreign-owned enterprise established
in accordance with the laws of the PRC, in which the Group has a 100% equity interests.

A summary of major certificates/approvals is shown as follows:


i.
ii.
iii.
iv.
v.
vi.
vii.

Land Use Rights Transfer Contract


Land Use Rights Certificate
Construction Land Use Planning Permit
Construction Works Planning Permit
Construction Works Commencement Permit
Pre-sale Permit
Construction Works Completion Certified Report

C-22

Yes
Yes
Yes
Yes
Yes
Yes
N/A

Group V Property interests held by the Group for future development in the PRC
VALUATION CERTIFICATE

Property

Capital value in
existing state as at
30 June 2007

Details of
occupancy

Description and tenure

(RMB)
9.

Reserved land
located in
No.86, South Bank of
Yellow River,
Huiji District,
Zhengzhou City,
Henan Province,
the Peoples Republic
of China

The property comprises a site


with an area (the Site) of
approximately 1,581,291.84
sq.m..

The property is
currently vacant.

8,123,000,000
(100% interests
attributable to the Group:
RMB 8,123,000,000)

As advised by the Group, its


total expected above ground
gross floor area of the
buildings and structures to be
constructed on the property is
approximately 3,181,544
sq.m., while underground
gross floor area comprises
approximately 5,190 car
parking spaces..
Guoling Shanshui (the
Development) is a large real
estate development. As
advised by the Group, the
Development will comprise
various apartment units,
townhouse units, retail units
and hotels with saleable gross
floor area of approximately
2,994,270.8 sq.m. and the
non-saleable gross floor area
is approximately 187,273.2
sq.m.. Its expected that under
ground gross floor area
comprises 5,190 car park
spaces.
The Site is held under a Land
Use Rights Certificate for the
latest term expiring on 15
December 2045 for composite
use and 14 December 2065
for residential use.

Notes:
a)

Pursuant to the following Land Use Rights Grant Contracts, the land use rights of a site, in which the
property is located therein, with a total site area of approximately 2,545,346.71 sq.m. have been granted
to the Group, at a total consideration of RMB26,608,605.
Land Use Rights Grant
Contract Number

Site Area

Date of Contract

(sq.m)
N/A
N/A
N/A
N/A
Total:

454,139.3
990,847.3
33,907.02
295,013.3
1,773,906.92

C-23

15
15
19
15

December 1995
December 1995
August 2004
December 1995

b)

Pursuant to the following Land Use Rights Certificates obtained by the Group after the date of valuation,
the following sites, where the property is located therein, is held by the Group.
Land Use Rights
Certificate Number.

Date of
Issuance

Site Area

Date of Expiry

(sq.m.)
Zheng Guo Yong
(2001) Zi No.0686
Xing Guo Yong
(2004) Zi No.0049
Xing Guo Yong
(2004) Zi No.0050
Zheng Guo Yong
(2005) Zi No.0185
Zheng Guo Yong
(2005) Zi No.0189
Zheng Guo Yong
(2005) Zi No.0191
Zheng Guo Yong
(2005) Zi No.0186
Zheng Guo Yong
(2005) Zi No.0187
Zheng Guo Yong
(2005) Zi No.0188
Zheng Guo Yong
(2005) Zi No.0190
Zheng Guo Yong
(2005) Zi No.0192
Zheng Guo Yong
(2005) Zi No.0202
Zheng Guo Yong
(2005) Zi No.0194
Zheng Guo Yong
(2004) Zi No.0614
Xing Guo Yong
(2004) Zi No.0051
Zheng Guo Yong
(2004) Zi No.1456
Zheng Guo Yong
(2004) Zi No.1457
Zheng Guo Yong
(2004) Zi No.1459
Zheng Guo Yong
(2004) Zi No.1468
*Zheng Guo Yong
(2007) Zi No.0614

3 December 2001

23,676.17

5 May 2047

31 August 2004

213,851.91

14 December 2065

31 August 2004

92,259.76

14 December 2065

28 March 2005

446,136.3*Note i

5 May 2067

28 March 2005

54,912.0*Note ii

5 May 2067

28 March 2005

55,635.6*Note iii

5 May 2067

28 March 2005

74,788.5

5 May 2047

28 March 2005

110,261.4*Note iv

5 May 2047

28 March 2005

394.7

5 May 2067

28 March 2005

65,838.8

5 May 2047

28 March 2005

12,000.1

5 May 2067

7 April 2005

79,001.1

5 May 2067

7 April 2005

54,309.4

5 May 2047

25 May 2004

250,079

5 December 2045

31 August 2004

22,808.69

14 December 2065

28 December 2004

48,143.1

15 December 2065

28 December 2004

25,376.8

15 December 2065

28 December 2004

13,032.1

N/A

28 December 2004

3,375.8

18 July 2007

121,078.2

Total:

15 December 2065
15 July 2077

1,766,959.43

* Note i

A portion of the site area stated in the Land Use Rights Certificate No. Zheng Guo Yong (2005) Zi
No.0185 of approximately 83,333.75sq.m. had been apportioned to the Property 1, Property 2, Property 6
& Property 7 in this valuation report.

* Note ii

A portion of the site area stated in the Land Use Rights Certificate No. Zheng Guo Yong (2005) Zi
No.0189 of approximately 51,666.93sq.m. had been apportioned to the Property 6 & Property 7 in this
valuation report.

* Note iii

A portion of the site area stated in the Land Use Rights Certificate No. Zheng Guo Yong (2005) Zi
No.0191 of approximately 38,000.19sq.m. had been apportioned to the Property 6 & Property 7 in this
valuation report.

* Note iv

A portion of the site area stated in the Land Use Rights Certificate No. Zheng Guo Yong (2005) Zi
No.0187 of approximately 12,666.73sq.m. had been apportioned to the Property 1 & Property 2 in this
valuation report.

C-24

c)

We have been provided with a legal opinion on the property prepared by the Groups legal advisor, which
contains, inter alia, the following information:
i.

The Group has paid the land premium in respect of the Site in full and pursuant to various 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).

ii.

The Group has the land use rights to the property and is entitled to receive the sale proceeds of the
property and occupy, use transfer, lease and mortgage the property.

iii.

Zhengzhou Great View, the owner of the property, is a wholly-foreign-owned enterprise established
in accordance with the laws of the PRC, in which the Group has a 100% equity interests.

C-25

Group VI Other Property interests held by the Group in the PRC


VALUATION CERTIFICATE

Property

Capital value in
existing state as at
30 June 2007

Details of
occupancy

Description and tenure

(RMB)
10.

A parcel of land
(West of Jing Guang
Railway, North of Xi
Shan Road),
Zhengzhou City,
Henan Province,
the Peoples Republic
of China

The property occupies a site


with an area (The Site) of
approximately 557,118.9
sq.m..

The Site is currently


vacant.

No Commercial Value

Notes:
a)

According to the confirmation made by the Zhengzhou City Land Resources Bureau on 21 April 2006,
the application for the issuance of the Land Use Rights Certificate had been received and confirmed,
there will be no legal impediment for Zhengzhou Great View to obtain the Land Use Rights Certificate.

b)

We have been provided with a legal opinion on the property prepared by the Groups legal advisor, which
contains, inter alia, the following information:

c)

i.

According to the confirmation, there will be no legal impediment for Zhengzhou Great View to obtain
the Land Use Rights Certificate subject to payment of the necessary land premium and other
applicable taxes and fees and the compliance in the applicable procedures required under the PRC
laws.

ii.

The approved use of the land is agriculture use and unless otherwise approved by relevant
government authorities, Zhengzhou Great View should not develop real estate projects on the land.

A summary of major certificates/approvals is shown as follows:


i.
ii.
iii.
iv.
v.
vi.
vii.

Land Use Rights Transfer Contract


Land Use Rights Certificate
Construction Land Use Planning Permit
Construction Works Planning Permit
Construction Works Commencement Permit
Pre-sale Permit
Construction Works Completion Certified Report

C-26

N/A
N/A
N/A
N/A
N/A
N/A
N/A

APPENDIX D

SUMMARY OF MEMORANDUM OF ASSOCIATON AND


SELECTED BYE-LAWS OF THE COMPANY
This appendix provides information about certain provisions of our Memorandum of Association and Byelaws and Bermuda company law. The description below is only a summary and is qualified in its entirety
by reference to our Memorandum of Association and Bye-laws and the Bermuda Companies Act.
1.

Registration number and Memorandum of Association


The registration number with which our Company was incorporated is 40770.
Our Memorandum of Association states, inter alia, that the liability of members of our Company is
limited to the amount, if any, for the time being unpaid on the shares respectively held by them and
that our Company is an exempted company as defined in the Bermuda Companies Act.
Paragraph 6 of the Memorandum of Association states that the objects for which our Company
was formed are unrestricted. Paragraph 7 of the Memorandum of Association provides that the
Company may do all such things as are incidental or conducive to the attainment of its objects and
shall have the capacity, rights, powers and privileges of natural person.
In accordance with and subject to section 42A of the Bermuda Companies Act, the Memorandum
of Association of our Company empowers it to purchase its own shares and this power is
exercisable by the Board of Directors upon such terms and subject to such conditions as it thinks
fit in accordance with the Bye-laws.

2.

Directors
(a)

Ability of interested directors to vote (Bye-laws 101 and 102)


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 considered, 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.
A Director shall not vote on any resolution of the Board in respect of any contract or
arrangement or proposed contract or arrangement in which he has directly or indirectly a
personal material interest. However, the interested Director need not be excluded from
being counted in the quorum for the meeting at which such contract or arrangement or
proposed contract or arrangement is considered. Certain matters in which a Director will not
be considered to have a personal material interest are set out in the Bye-laws.
A Director, whose remuneration (including pension or other benefits) for himself is the
subject of a resolution tabled at a meeting of the Board, shall not be entitled to vote on the
resolution as he shall be taken to have a personal material interest in the matter. Other
Directors of the Company will not be prohibited by the Bye-laws from voting on that
resolution so long as they do not have any direct or indirect personal material interest in the
subject matter of the said resolution.

(b)

Remuneration (Bye-laws 90, 95, 97(1) and 98)


The ordinary remuneration of the Directors shall from time to time be determined by the
Company in general meeting, shall not be increased except pursuant to an ordinary
resolution passed at a general meeting where notice of the proposed increase shall have
been given in the notice convening the general meeting, and shall (unless otherwise
directed by the resolution by which it is voted) be divided amongst the Board in such

D-1

proportions and in such manner as the Board may agree or, failing agreement, equally,
except that any Director who shall hold office for part only of the period in respect of which
such remuneration is payable shall be entitled only to rank in such division for a proportion
of remuneration related to the period during which he has held office.
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 provided
for by or pursuant to any other Bye-law. A 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, 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 determine, and either in addition to or in lieu of his remuneration as a Director, but he
shall not in any circumstances be remunerated by a commission on or a percentage of
turnover.
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.
(c)

Borrowing powers (Bye-law 109)


The Board may exercise all the powers of the Company to raise or borrow money and 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 Bermuda Companies Act, to
issue debentures, bonds and other securities, whether outright or as collateral security for
any debt, liability or obligation of the Company or of any third party.
These powers conferred on the Board may be varied by amending the relevant Bye-laws of
the Company.

(d)

Retirement age limit


There are no provisions relating to retirement of Directors upon reaching any age limit.

(e)

Shareholding qualification (Bye-law 85(3))


Neither a Director nor an alternate Director is required to hold any shares of the Company
by way of qualification.

3.

Share rights and restrictions


The Company currently has only one class of shares, namely ordinary shares.
(a)

Dividends and distribution (Bye-laws 136, 137, 138, 139, 140 and 143)
Holders of shares shall be entitled to share in the Companys profits by way of dividends
declared or distribution approved by the Board or the Company in general meeting in
accordance with the Bye-laws and the Bermuda Companies Act.
Subject to the Bermuda Companies Act, the Board may from time to time declare a dividend
or other distribution in any currency to be paid to the members and such dividend or
distribution may be in cash or wholly or partly in specie. Subject to the Bermuda Companies
Act, the Company in general meeting may also from time to time declare dividend or other
distribution to be paid to the members but no dividend or distribution shall be declared in
excess of the amount recommended by the Board.

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If at any time the share capital of the Company is divided into different classes, the Board
may pay such dividends in respect of those shares in the capital of the Company which
confer on the holders thereof deferred or non-preferential rights as well as in respect of
those shares which confer on the holders thereof preferential rights with regard to dividends.
No dividend shall be paid or distribution made if to do so would render the Company unable
to pay its liabilities as they become due or the realisable value of its assets would thereby
become less than the aggregate of its liabilities and its issued share capital and share
premium accounts.
Except in so far as the rights attaching to, or the terms of issue of, any share otherwise
provide (i) all dividends shall be declared and paid according to the amounts paid up on the
shares in respect of which the dividend is paid, but no amount paid up on a share in
advance of calls shall be treated as paid up on the share; and (ii) all dividends shall be
apportioned and paid pro rata according to the amounts paid up on the shares during any
portion or portions of the period in respect of which the dividend is paid. The Board may
deduct from any dividend or other moneys payable to a member by the Company on 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.
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. Any dividend or bonuses unclaimed after a period of six years from the date of
declaration shall be forfeited and shall revert to the Company.
(b)

Voting rights (Bye-laws 65 and 77(1))


Subject to any special rights or restrictions as to voting for the time being attached to any
shares by or in accordance with the Bye-laws, at any general meeting (i) on a show of
hands every member present in person (or being a corporation, is present by a
representative duly authorised under section 78 of the Bermuda Companies Act) or by proxy
shall have one vote and the chairman of the meeting shall determine which proxy shall be
entitled to vote where a member (other than CDP) is represented by two proxies, and (ii) on
a poll every member present in person or by proxy or, in the case of a member being a
corporation, by its duly authorised representative shall have one vote for every fully paid
share of which he is the holder or which he represents and in respect of which all calls due
to the Company have been paid, but so that no amount paid up or credited as paid up on a
share in advance of calls or instalments is treated for the foregoing purposes as paid up on
the share. If the member is CDP, CDP may appoint more than two proxies to attend and
vote at the same general meeting and each proxy shall be entitled to exercise the same
powers on behalf of CDP as CDP could exercise, including the right to vote individually on a
show of hands.
The Bye-laws do not provide for cumulative voting in relation to election or re-election of
Directors.

(c)

Share in surplus upon liquidation (Bye-law 163)


Shareholders are entitled to the surplus assets of the Company in the event that it is wound
up. 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 Bermuda Companies Act, divide among the members in specie or kind the whole or
any part of the assets of the Company and whether or not the assets shall consist of
properties of one kind or shall consist of properties to be divided as aforesaid of different
kinds, and may for such purpose set such value as he deems fair upon any one or more
class or classes of property 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 the
members as the liquidator with the like authority shall think fit, and the liquidation of the
Company may be closed and the Company dissolved, but so that no contributory shall be
compelled to accept any shares or other property in respect of which there is a liability.
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(d)

Redemption provisions
The shares do not have redemption rights.

(e)

Sinking fund
The Bye-laws do not contain sinking fund provisions.

(f)

Calls on shares (Bye-laws 25, 26, 28 and 33)


Subject to the Bye-laws and to the terms of allotment, the Board may from time to time
make calls upon the members in respect of any moneys unpaid on their shares (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 instalments. If a sum called in respect of a share is not
paid before or on the day appointed for payment thereof, the person from whom the sum is
due shall pay interest on the amount unpaid from the day appointed for payment thereof to
the time of actual payment at such rate (not exceeding twenty per cent. (20%) per annum)
as the Board may determine, but the Board may in its absolute discretion 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, and either in money or moneys worth, all or any part of the
moneys uncalled and unpaid or instalments payable upon any shares held by him and upon
all or any of the moneys so advanced (until the same would, but for such advance, become
presently payable) pay interest at such rate (if any) as the Board may decide.
The Memorandum of Association states 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.

(g)

Discriminatory provisions against substantial shareholder (Bye-law 167)


The Bye-laws do not contain any provisions discriminating against any existing or
prospective holder of shares as a result of such shareholder owning a substantial number of
shares save that for so long as the shares of the Company are listed on the Designated
Stock Exchange (which includes the SGX-ST), substantial shareholders (having the
meaning ascribed to it in the Companies Act) have to disclose particulars of their interest in
the Company and of any change in the percentage level of such interest. Such requirement
to disclose does not apply to CDP.

4.

Variation of rights of existing shares or classes of shares (Bye-law 10)


Subject to the Bermuda Companies Act, the special rights attached to any class of shares may be
varied or abrogated either with the consent in writing of the holders of three-quarters in nominal
value of the issued shares of the class or with the sanction of a special resolution passed at a
separate general meeting of the holders of the shares of the class (but not otherwise) and may be
so repaid, varied or abrogated either whilst the Company is a going concern or during or in
contemplation of a winding-up. To every such separate general meeting and all adjournments
thereof all the provisions of the Bye-laws relating to general meetings of the Company and to the
proceedings thereat shall mutatis mutandis apply, except that the necessary quorum (other than at
an adjourned meeting) shall be two persons at least holding or representing by proxy at least onethird in nominal value of the issued shares of the class and at any adjourned meeting of such
holders, two holders present in person or by proxy (whatever the number of shares held by them)
shall be a quorum and that any holder of shares of the class present in person or by proxy may
demand a poll and that every such holder shall on a poll have one vote for every share of the class
held by him.
The Memorandum of Association and Bye-laws do not impose more significant conditions than the
Bermuda Companies Act in this regard.

5.

General meetings (Bye-laws 55, 56, 57, 79 and 126)


Under Bermuda law, an annual general meeting of members must be convened every calendar
year. All general meetings other than the annual general meeting shall be called special general
meetings.
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Bye-law 55 provides that an annual general meeting of the Company shall be held in each year
(within a period of not more than fifteen (15) months after the holding of the last preceding annual
general meeting unless a longer period would not infringe the rules or regulations of the
Designated Stock Exchange, if any). In addition, for so long as the shares of the Company are
listed on the Designated Stock Exchange(which includes the SGX-ST), the interval between the
close of the Companys financial year and the date of the Companys annual general meeting shall
not exceed such period as may be prescribed or permitted by the Designated Stock Exchange.
The Directors may, whenever they think fit, convene a general meeting. In addition, subject to
section 74 of the Bermuda Companies Act, in certain circumstances, members of the Company
may requisition a special general meeting. Under that section, members holding at the date of
deposit of the requisition not less than one-tenth of the paid up capital of the Company carrying
the rights of voting at general meetings of the Company shall at all times have the right, by written
requisition to the Board or the secretary of the Company, to require a special general meeting to
be called by the Board for the transaction of any business specified in such requisition. If the
Directors do not within 21 days from the date of deposit of the requisition proceed duly to convene
the meeting, the requisitionists themselves may do so but any meeting so convened shall not be
held after the expiration of three months from the said date.
All registered shareholders of the Company are entitled to attend general meetings of the
Company. Further, Bye-law 126 (in accordance with the Bermuda Companies Act) provides that
the resident representative is also entitled to attend and be heard at all general meetings of the
Company. The Bermuda Companies Act does not contain provisions as to any documentary
evidence to be produced by proxies and corporate representatives. However, such provisions may
be contained in the Bye-laws. Where, for example, it is stated that the instrument of proxies must
be deposited a specified number of hours before the meeting (see Bye-law 79), proxies deposited
after that time cannot be admitted.
Corporate representatives are different from proxies and unless specifically required by the Byelaws, a letter of appointment does not need to be lodged before the meeting. There are currently
no such provisions in the Bye-laws.
6.

Limitations on non-Bermuda shareholders


There are no limitations, either under Bermuda law or the Bye-laws, on the rights of non-Bermuda
owners of the Companys shares to hold or vote their shares.

7.

Shareholding disclosure requirement (Bye-law 167)


The Bermuda Companies Act does not require disclosure of shareholder ownership beyond any
specified threshold. However, Bye-law 167 contains provisions to the effect that for so long as the
shares of the Company are listed on the Designated Stock Exchange (which includes the SGXST), Directors and members who are substantial shareholders (having the meaning ascribed to it
in the Companies Act) of the Company will have to disclose particulars of their interest in the
Company and any change in the percentage level of such interest. Bye-law 167 does not apply to
CDP.

8.

Changes in capital (Bye-laws 2, 4 and 6)


Under the Bermuda Companies Act, changes in the capital structure of the Company require
shareholder approval at general meetings.
The Bye-laws contain a distinction between a special resolution and an ordinary resolution, a
distinction which is not made in the Bermuda Companies Act. Under Bye-law 4, an ordinary
resolution is required for certain changes to the Companys share capital such as an increase,
consolidation or sub-division. An ordinary resolution is passed by a simple majority of votes cast
by members at general meetings.
With regard to a reduction of share capital or share premium account, Bye-law 6 requires a special
resolution. A special resolution is one which has been passed by a majority of not less than 75 per
cent. (75%) of votes cast by members present and voting at a general meeting.

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APPENDIX E

SUMMARY OF BERMUDA COMPANY LAW


Our Company is incorporated in Bermuda and, therefore, operates subject to Bermuda law. We have
been designated by the Bermuda Monetary Authority as non-resident for Bermuda exchange control
purposes. Set out below is a summary of certain provisions of Bermuda company law, although this does
not purport to contain all applicable qualifications and exceptions or to be a complete review of all
matters of Bermuda company law and taxation, which may differ from equivalent provisions in
jurisdictions with which interested parties may be more familiar:
(a)

Share capital
The Bermuda Companies Act provides that where a company issues shares at a premium,
whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on
those shares must be transferred to an account, to be called the share premium account, to
which the provisions of the Bermuda Companies Act relating to a reduction of share capital of a
company shall apply as if the share premium account were paid up share capital of the company
except that the share premium account may be applied by the company:
(i)

in paying up unissued shares of the company to be issued to members of the company as


fully paid bonus shares;

(ii)

in writing off:

(iii)

(aa)

the preliminary expenses of the company; or

(bb)

the expenses of, or the commission paid or discount allowed on, any issue of shares
or debentures of the company; or

in providing for the premiums payable on redemption of any shares or of any debentures of
the company.

In the case of an exchange of shares the excess value of the shares acquired over the nominal
value of the shares being issued may be credited to a contributed surplus account of the issuing
company.
The Bermuda Companies Act permits a company to issue preference shares and subject to the
conditions stipulated therein to convert those preference shares into redeemable preference
shares.
The Bermuda Companies Act includes certain protections for holders of special classes of shares,
requiring their consent to be obtained before their rights may be varied. Where provision is made
by the memorandum of association or bye-laws of a company authorising the variation of rights
attached to any class of shares in the company, 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. The holders of not less in the aggregate than
ten per cent. (10%) of the issued shares of that class may apply to a Bermuda court to have the
variation cancelled and, where such application is made, the variation shall not have effect unless
and until it is confirmed by the court. Where no provision for varying such rights is made in the
memorandum of association or bye-laws and nothing therein precludes a variation of such rights,
the rights attached to any class of shares may, unless otherwise provided by the terms of issue of
that class, may be varied with the written consent of the holders of three-fourths of the issued
shares of that class or the sanction of a resolution passed as aforesaid.

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(b)

Membership
Under the Bermuda Companies Act, only those persons who agree to become members of a
Bermuda company and whose names are entered on the register of members of such a company
are considered members. A Bermuda company is also not bound to see to the execution of any
trust, whether express, implied or constructive, to which any of its shares are subject and whether
or not the company had notice of such trust. Accordingly, persons holding shares through a
trustee, nominee or depository will not be recognised as members of a Bermuda company under
Bermuda law and may only have the benefit of rights attaching to the shares or remedies
conferred by law on members through or with the assistance of the trustee, nominee or depository.

(c)

Financial assistance to purchase shares of a company or its holding company


A company is prohibited from providing financial assistance directly or indirectly for the purpose of
an acquisition of its own or its holding companys shares unless there are reasonable grounds for
believing that the company is, and would after the giving of such financial assistance be, able to
pay its liabilities as they become due. In certain circumstances, the prohibition against giving
financial assistance may be excluded such as where the assistance is only an incidental part of a
larger purpose of the company or the assistance is of an insignificant amount such as the payment
of minor costs. In addition, the Bermuda Companies Act expressly permits the grant of financial
assistance where (i) the financial assistance does not reduce the companys net assets or, to the
extent the net assets are reduced, such financial assistance is provided for out of funds of the
company which would otherwise be available for dividend or distribution; (ii) an affidavit of solvency
is sworn by the directors of the company; and (iii) the financial assistance is approved by resolution
of shareholders of the company.

(d)

Purchase of shares and warrants by a company and its subsidiaries


A company may, if authorised by its memorandum of association or bye-laws, purchase its own
shares and purchased shares may be cancelled or held as treasury shares. Such purchases may
only be effected out of the capital paid up on the purchased shares or out of the funds of the
company otherwise available for dividend or distribution or out of the proceeds of a fresh issue of
shares made for the purpose. Any premium payable on a purchase over the par value of the
shares to be purchased must be provided for out of funds of the company otherwise available for
dividend or distribution or out of the companys share premium account. Any amount due to a
shareholder on a purchase by a company of its own shares may (i) be paid in cash; (ii) be satisfied
by the transfer of any part of the undertaking or property of the company having the same value;
or (iii) be satisfied partly under (i) and partly under (ii). Any purchase by a company of its own
shares may be authorised by its board of directors or otherwise by or in accordance with the
provisions of its bye-laws. Such purchase may not be made if, on the date on which the purchase
is to be effected, there are reasonable grounds for believing that the company is, or after the
purchase would be, unable to pay its liabilities as they become due. The shares so purchased may
either be cancelled (in which event, the companys issued, but not its authorised, capital will be
diminished accordingly) or may be held as treasury shares. Under the laws of Bermuda, if a
company holds shares as treasury shares, the company shall be entered in the register of
members as the member holding the shares but the company is not permitted to exercise any
rights in respect of those shares and no dividend or other distribution (whether in cash or
otherwise) shall be paid or made to the Company in respect of such shares.
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 Bermuda law that a companys memorandum of association or its bye-laws
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 Bermuda law, a subsidiary may hold shares in its holding company and in certain
circumstances, may acquire such shares. The holding company is, however, prohibited from giving
financial assistance for the purpose of the acquisition, subject to certain circumstances provided
by the Bermuda Companies Act. A company, whether a subsidiary or a holding company, may only
purchase its own shares for cancellation if it is authorised to do so in its memorandum of
association or byelaws pursuant to section 42A of the Bermuda Companies Act.

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(e)

Dividends and distributions


A company may not declare or pay a dividend, or make a distribution out of contributed surplus, if
there are reasonable grounds for believing that (i) the company is, or would after the payment be,
unable to pay its liabilities as they become due; or (ii) the realisable value of the companys assets
would thereby be less than the aggregate of its liabilities and its issued share capital and share
premium accounts. Contributed surplus is defined for purposes of section 54 of the Bermuda
Companies Act to include the proceeds arising from donated shares, credits resulting from the
redemption or conversion of shares at less than the amount set up as nominal capital and
donations of cash and other assets to the company.

(f)

Protection of minorities
Class actions and derivative actions are generally not available to shareholders under the laws of
Bermuda. The Bermuda courts, however, would ordinarily be expected to permit a shareholder to
commence an action in the name of a company to remedy a wrong done to the company where
the act complained of is alleged to be beyond the corporate power of the company or is illegal or
would result in the violation of the companys memorandum of association and bye-laws.
Furthermore, consideration would be given by the Bermuda court to acts that are alleged to
constitute a fraud against the minority shareholders or, for instance, where an act requires the
approval of a greater percentage of the companys shareholders than actually approved it.
Any member of a company who complains that the affairs of the company are being conducted or
have been conducted in a manner oppressive or prejudicial to the interests of some part of the
members, including himself, may petition the Bermuda court which may, if it is of the opinion that
to wind up the company would unfairly prejudice that part of the members but that otherwise the
facts would justify the making of a winding up order on just and equitable grounds, make such
order as it thinks fit, whether for regulating the conduct of the companys affairs in future or for the
purchase of shares of any members of the company by other members of the company or by the
company itself and in the case of a purchase by the company itself, for the reduction accordingly
of the companys capital, or otherwise. Bermuda law also provides that the company may be
wound up by the Bermuda court, if the court is of the opinion that it is just and equitable to do so.
Both these provisions are available to minority shareholders seeking relief from the oppressive
conduct of the majority, and the Bermuda court has wide discretion to make such orders as it
thinks fit.
Except as mentioned above, claims against a company by its shareholders must be based on the
general laws of contract or tort applicable in Bermuda.
A statutory right of action is conferred on subscribers of shares in a company against persons,
including directors and officers, responsible for the issue of a prospectus in respect of loss or
damage suffered by reason of an untrue statement therein, but this confers no right of action
against the company itself. In addition, such company, as opposed to its shareholders, may take
action against its officers including directors, for breach of their statutory and fiduciary duty to act
honestly and in good faith with a view to the best interests of the company.
The Bermuda Companies Act also provides that the Minister of Finance of Bermuda may at any
time appoint one or more inspectors to investigate the affairs of an exempted company and to
report on them in such manner as the Minister may direct. The inspector shall, on the completion
of his investigation, report to the Minister and shall send copies of such reports to the company.
However, no other person shall be informed of the nature or contents of the report save at the
request of the company or on the direction of the Minister. Upon receiving the inspectors report,
the Minister may require the company to take such measures as he may consider necessary in
relation to its affairs or direct the Registrar of Companies in Bermuda to petition the Bermuda court
for the winding up of the company.

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(g)

Management
The Bermuda Companies Act contains no specific restriction on the power of directors to dispose
of assets of a company, although it specifically requires that every officer of a company, which
includes a director, managing director and secretary, in exercising his powers and discharging his
duties must act 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. Furthermore, the Bermuda Companies Act requires that every officer
should comply with the Bermuda Companies Act, regulations passed pursuant to the Bermuda
Companies Act and the byelaws of the company.
The Bermuda Companies Act contains no specific provision in respect of the establishment or
composition of audit committees or similar committees of the board of directors of a company.

(h)

Accounting and auditing requirements


The Bermuda Companies Act requires a company to cause proper records 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.
Furthermore, it requires that a company keeps its records of account at the registered office of the
company or at such other place as the directors think fit and that such records must at all times be
open to inspection by the directors or the resident representative of the company. If the records of
account are kept at some place outside Bermuda, there must be kept at the office of the company
in Bermuda such records as will enable the directors or the resident representative of the company
to ascertain with reasonable accuracy the financial position of the company at the end of each
three month period, except that where the company is listed on an appointed stock exchange (as
defined in the Bermuda Companies Act), there must be kept such records as will enable the
directors or the resident representative of the company to ascertain with reasonable accuracy the
financial position of the company at the end of each six month period.
The Bermuda Companies Act requires that the directors of the company must, at least once a
year, lay before the company in general meeting financial statements for the relevant accounting
period signed on the balance sheet page by two directors of the company; however, this
requirement may be waived if all of the members and all of the directors, either in writing or at a
general meeting, agree that in respect of a particular interval no financial statements or auditors
report thereon need be laid before a general meeting. Further, the companys auditor must audit
the financial statements so as to enable him to report to the members. Based on the results of his
audit, which must be made in accordance with generally accepted auditing standards, the auditor
must then make a report to the members. The generally accepted auditing standards may be those
of a country or jurisdiction other than Bermuda or such other generally accepted auditing
standards as may be appointed by the Minister of Finance of Bermuda under the Bermuda
Companies Act; and where the generally accepted auditing standards used are other than those of
Bermuda, the report of the auditor must identify the generally accepted auditing standards used.
Subject to certain exceptions provided in the Bermuda Companies Act, the company must send to
every member a copy of financial statements, prepared in accordance with generally accepted
accounting principles and containing all such information and documents as required by the
Bermuda Companies Act (Financial Statements), at least five days before the general meeting of
the company at which the Financial Statements are to be tabled.
A company listed on an appointed stock exchange may send to its members summarised financial
statements derived from the Financial Statements for the relevant period instead of the Financial
Statements. The summarised financial statements must include a summarised report of the
Financial Statements and be accompanied by the auditors report. The summarised financial
statements must be sent to members not less than 21 days before the general meeting at which
the Financial Statements are to be tabled, and a copy of the summarised financial statements
must be made available for inspection by the public at the Companys registered office in Bermuda.

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The company must also make a copy of the full Financial Statements available for inspection by
the public at the companys registered office. Summarised financial statements must be
accompanied by a notice informing members how they may elect to receive the companys
Financial Statements.
(i)

Auditors
At each annual general meeting, a company must appoint an auditor to hold office until the close
of the next annual general meeting; however, this requirement may be waived if all of the members
and all of the directors, either in writing or at the general meeting, agree that no auditor shall be
appointed to the close of the next annual general meeting.
A person, other than an incumbent auditor, is not capable of being appointed auditor at an annual
general meeting unless notice in writing of an intention to nominate that person to the office of
auditor has been given not less than 21 days before the annual general meeting. The company
must send a copy of such notice to the incumbent auditor and give notice thereof to the members
not less than seven days before the annual general meeting. An incumbent auditor may, however,
by notice in writing to the secretary of the company waive the foregoing requirements.
An auditor appointed to replace another auditor must, before accepting the appointment or
consenting to be appointed, seek from the former auditor a written statement as to the
circumstances of the latters replacement. If the former auditor does not respond within 15 days,
the new auditor may act in any event. An appointment as auditor of a person who has not
requested a written statement from the former auditor is voidable by a resolution of the
shareholders at a general meeting. An auditor who has resigned or been removed, or whose term
of office has expired or is about to expire, or who has vacated office, is entitled to attend the
general meeting of the company at which he is to be removed or his successor is to be appointed;
to receive all notices of, and other communications relating to, that meeting which a member is
entitled to receive; and to be heard at that meeting on any part of the business of the meeting that
relates to his duties as auditor or former auditor.

(j)

Exchange control
Exchange control is operated under the Exchange Control Act 1972 of Bermuda (and the
regulations made thereunder) and is administered by the Bermuda Monetary Authority. Generally,
any payment by a person resident in Bermuda to or for the credit of a person resident outside
Bermuda will require prior approval from the Bermuda Monetary Authority.
Exempted companies are normally designated non-resident for exchange control purposes and
are able to conduct their day-to-day operations free of exchange control formalities. Such
companies are able to pay dividends, distribute capital, open and maintain bank accounts in any
foreign currency and to acquire assets and meet all liabilities without reference to the Bermuda
Monetary Authority.
Issues and transfers of securities in exempted companies involving non-residents for exchange
control purposes must receive prior approval from the Bermuda Monetary Authority. However, the
Bermuda Monetary Authority has granted to all Bermuda companies with voting shares listed on
an appointed stock exchange a general permission for the issue and subsequent transfer of any
securities of such companies from and/or to a non-resident of Bermuda for so long as any voting
shares of such companies remain so listed.

(k)

Taxation
Under present Bermuda law, no Bermuda withholding tax on dividends or other distributions, or
any Bermuda tax computed on profits or income or on any capital asset, gain or appreciation will
be payable by an exempted company or its operations, and there is no Bermuda tax in the nature
of estate duty or inheritance tax applicable to shares, debentures or other obligations of the
company held by non-residents of Bermuda. Furthermore, a company may apply to the Minister of
Finance of Bermuda for an assurance, under the Exempted Undertakings Tax Protection Act 1966

E-5

of Bermuda, that no such taxes shall be so applicable to it or any of its operations until 28 March
2016, although this assurance will not prevent the imposition of any Bermuda tax payable in
relation to any land in Bermuda leased or let to the company or to persons ordinarily resident in
Bermuda.
(l)

Stamp duty
An exempted company is exempt from all stamp duties except on transactions involving Bermuda
property. This term relates, essentially, to real and personal property physically situated in
Bermuda, including shares in local companies (as opposed to exempted companies). Transfers of
shares and warrants in all exempted companies are exempt from Bermuda stamp duty.

(m)

Loans to directors
Bermuda law prohibits a company from (i) making loans to any of its directors (or any directors of
its holding company) or to their spouse or children or to companies (other than a company which
is a holding company or a subsidiary of the company making the loan) in which they own or
control directly or indirectly more than a twenty per cent. (20%) interest, or (ii) entering into any
guarantee or providing any security in connection with a loan made to such persons as aforesaid
by any other person, without the consent of any member or members holding in aggregate not less
than nine-tenths of the total voting rights of all members having the right to vote at any meeting of
the members of the company. These prohibitions do not apply to anything done to provide a
director with funds to meet the expenditure incurred or to be incurred by him for the purposes of
the company, provided that the company gives its prior approval at a general meeting or, if not, the
loan, guarantee or security is made or given on condition that it will be repaid or discharged, as
the case may be, within six months from the conclusion of the next following annual general
meeting if the loan, guarantee or security is not approved at or before such meeting. If the
approval of the company is not given for the loan, guarantee or security as aforesaid, the directors
who authorised it will be jointly and severally liable to indemnify the company for any loss arising
therefrom.

(n)

Inspection of corporate records


Members of the general public have the right to inspect the public documents of a company
available at the office of the Registrar of Companies in Bermuda which will include the companys
certificate of incorporation, its memorandum of association (including its objects and powers) and
any alteration to the companys memorandum of association. The members of the company have
the additional right to inspect the bye-laws of a company, minutes of general meetings and the
companys audited financial statements, which must be presented to the annual general meeting.
Minutes of general meetings of a company are also open for inspection by directors of the
company without charge for not less than two hours during business hours each day.
Except when the register of members is closed under the provisions of the Bermuda Companies
Act, the register of members of a company shall during business hours (subject to such
reasonable restrictions as the company may impose so that not less than two hours in each day
be allowed for inspection) be open for inspection by members of the general public without charge.
A company may on giving notice by advertisement in an appointed newspaper close the register of
members for any time or times not exceeding in the whole thirty days in a year. A company is
required to maintain its register of members in Bermuda but may, subject to the provisions of the
Bermuda Companies Act, establish a branch register outside Bermuda. Any branch register of
members established by the company is subject to the same rights of inspection as the principal
register of members of the company in Bermuda. Any member of the public may require a copy of
the register of members or any part thereof which must be provided within 14 days of a request on
payment of the appropriate fee prescribed in the Bermuda Companies Act. Bermuda law does not,
however, provide a general right for members to inspect or obtain copies of any other corporate
records.

E-6

A company is required to maintain a register of directors and officers at its registered office in
Bermuda and such register must during business hours (subject to such reasonable restrictions as
the company may impose, so that not less than two hours in each day be allowed for inspection)
be open for inspection by members of the public without charge. Any member of the public may
require a copy of the register of directors and officers, or any part of it, on payment of the
appropriate fee prescribed in the Bermuda Companies Act.
Where a company, the shares of which are listed on a appointed stock exchange, sends its
summarised financial statements its members pursuant to section 87A of the Bermuda Companies
Act, a copy of the full financial statements (as well as the summarised financial statements) must
be made available for inspection by the public at the companys registered office in Bermuda.
(o)

Winding up
A company may be wound up by the Bermuda court on application presented by the company
itself, its creditors or its contributories. The Bermuda court has authority to order winding up in a
number of specified circumstances including where it is, in the opinion of the Bermuda court, just
and equitable to do so.
A company may be wound up voluntarily when the members so resolve in general meeting, 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. Upon the appointment of a liquidator, the responsibility for the companys affairs rests
entirely in his hands and no future executive action may be carried out without his approval.
Where, on a voluntary winding up, a majority of directors make a statutory declaration of solvency,
the winding up will be a members voluntary winding up. In any case where such declaration has
not been made, the winding up will be a creditors voluntary winding up.
In the case of a members voluntary winding up of a company, the company in general meeting
must appoint one or more liquidators within the period prescribed by the Bermuda Companies Act
for the purpose of winding up the affairs of the company and distributing its assets. If the liquidator
at any time forms the opinion that such company will not be able to pay its debts in full in the
period stated in the directors declaration of solvency, he is obliged to summon a meeting of
creditors and lay before the meeting a statement of the assets and liabilities of the company.
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 requires at least one months notice published in an appointed newspaper in Bermuda.
In the case of a creditors voluntary winding up of a company, the company must call a meeting of
creditors of the company to be summoned for the day, or the next day following the day on which
the meeting of the members at which the resolution for voluntary winding up is to be proposed is
held. Notice of such meeting of creditors must be sent at the same time as notice is sent to
members. In addition, such company must cause a notice to appear in an appointed newspaper on
at least two occasions.
The creditors and the members at their respective meetings may nominate a person to be
liquidator for the purposes of winding up the affairs of the company provided that if the creditors
and the members nominate different persons, the person nominated by the creditors shall be the
liquidator. If no person is nominated by the creditors, the person (if any) nominated by the
company shall be liquidator. The creditors at the creditors meeting may also appoint a committee
of inspection consisting of not more than five persons.

E-7

If a creditors winding up continues for more than one year, the liquidator is required to summon a
general meeting of the company and a meeting of the creditors at the end of each year and must
lay before such meetings an account of his acts and dealings and of the conduct of the winding up
during the preceding year. As soon as the affairs of the company are fully wound up, the liquidator
must make 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 shall call a general meeting of
the company and a meeting of the creditors for the purpose of laying the account before such
meetings and giving an explanation thereof. This meeting requires at least one months notice
published in an appointed newspaper in Bermuda.
Within one week after the date of the meetings, or if the meetings are not held on the same date,
after the date of the later meeting, the liquidator is required to send to the Registrar of Companies
in Bermuda a copy of the account and make a return in accordance with the Bermuda Companies
Act. The company will be deemed to be dissolved on the expiration of three months from the
registration by the Registrar of Companies in Bermuda of the account and the return. However, a
Bermuda court may, on the application of the liquidator or of some other person who appears to
the court to be interested, make an order deferring the date at which the dissolution of the
company is to take effect for such time as the court thinks fit.

E-8

APPENDIX F

TAXATION

SINGAPORE
The following is a discussion of certain tax matters arising under the current tax laws in Singapore and is
not intended to be and does not constitute legal or tax advice. The discussion is based on laws,
regulations and interpretations now in effect and available as of the date of this Prospectus. These laws
and regulations are subject to changes, which may be retrospective to the date of issuance of our
Shares. These laws and regulations are also subject to various interpretations and the relevant tax
authorities or the courts of Singapore could later disagree with the explanations or conclusions set out
below.
The discussion is limited to a general description of certain tax consequences in Singapore with respect
to purchase, ownership and disposal of our Shares, and does not purport to be a comprehensive nor
exhaustive description of all tax considerations that may be relevant to a decision to purchase, hold or
dispose of our Shares. Prospective investors should consult their own tax advisors concerning the tax
consequences of owning and disposing our Shares. Neither the Company, the Directors nor any other
persons involved in the Invitation accepts responsibility for any tax effects or liabilities resulting from the
subscription for, purchase, holding or disposal of our Shares.
1.

INCOME TAX

1.1

General
Singapore resident and non-resident corporate taxpayers are subject to Singapore income tax on:
(i)

income accruing in or derived from Singapore; and

(ii)

foreign income received or deemed received in Singapore.

However, foreign income in the form of branch profits, dividends and service income received or
deemed received in Singapore by a resident corporate taxpayer shall be tax exempt provided the
following conditions are met:
(i)

such income is subject to tax of a similar character to income tax under the law of the
jurisdiction from which such income is received;

(ii)

at the time the income is received in Singapore, the highest rate of tax of a similar character
to income tax in the jurisdiction from which the income is received is at least 15%; and

(iii)

the Comptroller of Income Tax is satisfied that the tax exemption would be beneficial to the
recipient of the foreign income.

Foreign-sourced personal income received or deemed received in Singapore by a Singapore tax


resident individual (except where such income is received through a partnership) on or after 1
January 2004 will be exempt from tax in Singapore. Certain investment income derived from
Singapore sources by individuals will also be exempt from tax.
Non-Singapore resident corporate taxpayers, subject to certain exceptions, are subject to
Singapore income tax on:
(i)

income that is accrued in or derived from Singapore; and

(ii)

foreign income received or deemed received in Singapore.

Non-Singapore resident individuals, subject to certain exceptions, are subject to Singapore income
tax only on income accruing in or derived from Singapore.

F-1

A company is regarded as a tax resident in Singapore if the control and management of its
business is exercised in Singapore. An individual is a tax resident in Singapore if, in the calendar
year preceding the year of assessment, he was physically present in Singapore or exercised
employment in Singapore (other than as a director of a company) for 183 days or more in a
calendar year, or if he ordinarily resides in Singapore.
The corporate tax rate in Singapore is 20% from the Year of Assessment 2005 (i.e. financial year
ended 2004) and 18% for the Year of Assessment 2008 (i.e. financial year ended 2007). In
addition, three-quarters of up to the first $10,000 of a companys normal chargeable income, and
one-half of up to the next $90,000 of the companys normal chargeable income are exempt from
tax. 75% of up to the first $10,000 of a companys normal chargeable income and 50% of the next
$290,000 of the companys normal chargeable income are exempt from corporate tax as from Year
of Assessment 2008. The remaining chargeable income (after the partial tax exemption) will be
taxed at the applicable corporate tax rate. The partial tax exemption does not apply to Singapore
dividends received by companies.
A tax exemption scheme for qualifying newly incorporated Singapore companies is applicable for
Years of Assessment 2005 2009. Under this exemption scheme, the first $100,000 of their
normal chargeable income (excluding Singapore dividends) for each of their first three consecutive
years of assessment that falls within Years of Assessment 2005 to 2009 would be exempt from tax.
Singapore tax resident individuals are subject to tax based on a progressive scale. The top
marginal rate is 21% for the Year of Assessment 2006 (i.e. calendar year 2005). The top individual
marginal tax rate will be reduced to 20% with effect from Year of Assessment 2007 (i.e. calendar
year 2006).
Non-Singapore resident individuals are generally subject to tax at a rate equivalent to the
prevailing corporate tax rate.
1.2

Dividend Distributions
One-tier system takes effect from 1 January 2003 in which the tax collected on corporate profits is
final and Singapore dividends are tax exempt in the hands of all shareholders. There will be no tax
credits attached to such dividends.
As our Company is a company incorported in Bermuda and non-resident in Singapore, dividends
paid by our Company would be exempt from tax in the hands of individual shareholders regardless
of whether these individual shareholders are Singapore tax resident, the exemption will not apply
to a partnership in Singapore. However, corporate shareholders resident in Singapore or having a
permanent establishment in Singapore or carrying on business in Singapore will be subject to tax
on the receipt of these dividiends.
No withholding tax is imposed on dividend payments made to non-Singapore tax resident
shareholders.

2.

GAINS ON DISPOSAL OF THE SHARES


Singapore does not impose tax on capital gains. However, gains arising from the disposal of our
Shares may be construed to be of an income nature and subject to tax if they arise from activities
which the Inland Revenue Authority of Singapore regards as the carrying on of a trade or business
in Singapore.
Any profits from the disposal of our Shares are not taxable in Singapore unless the seller is
regarded as carrying on a trade or business of dealing in shares in Singapore. In which case, such
gains would be taxable as trading profits.

3.

STAMP DUTY
No stamp duty is payable on the allotment or holding of our Shares.

F-2

Stamp duty is payable on an instrument of transfer of our Shares at the rate of $0.20 for every
$100 or any part thereof of the consideration for our Shares. The purchaser is liable for stamp duty,
unless otherwise agreed. However, no stamp duty is payable if no instrument of transfer is
executed (such as in the case of scripless shares, the transfer of which does not require
instruments of transfer to be executed) or if the instrument of transfer is executed outside
Singapore. However, stamp duty may be payable if the instrument of transfer which is executed
outside Singapore is subsequently received in Singapore.
4.

ESTATE DUTY
Singapore estate duty is imposed on the value of immovable property situated in Singapore and
on movable property, wherever it may be, owned by individuals who are domiciled in Singapore,
subject to specific exemption limits.
Our Shares are considered movable property situated outside Singapore as our Company is
incorporated in Bermuda and the register of the shares is kept in Bermuda. Accordingly, our
Shares held by an individual are subject to Singapore estate duty upon the individuals death, if the
individual is domiciled in Singapore. Singapore estate duty is payable to the extent that the value
of the shares aggregated with any other assets subject to Singapore estate duty exceeds
$600,000. Any excess beyond $600,000 will be taxed at 5% on the first $12,000,000 of the
individuals Singapore dutiable assets and any excess over $12,000,000 will be taxed at 10%. It
should be noted that certain assets, although dutiable, are not included in this aggregation. For
example, dwelling houses are assessed separately and subject to a different exemption limit.
Individuals, whether or not domicile in Singapore, should consult their own tax advisors regarding
the Singapore estate duty consequences of their ownership of our Shares.

5.

GOODS AND SERVICES TAX (GST)


The sale of the Shares by an investor belonging in Singapore through a SGX-ST member or to
another person belonging in Singapore is an exempt supply not subject to GST. Where the Shares
are sold by the investor to a person belonging outside Singapore, the sale is generally a taxable
supply subject to GST at zero-rate. Any GST incurred by a GST-registered investor in the making
of this supply in the course of furtherance of a business may be recovered from the Comptroller of
GST. Services such as brokerage, handling and clearing services rendered by a GST-registered
person to an investor belonging in Singapore in connection with the investors purchase, sale or
holding of the Shares will be subject to GST at the current rate of seven percent. Similar services
rendered to an investor belonging outside Singapore would generally be zero-rated i.e. subject to
GST at zero percent.

BERMUDA
1.

TAXATION
Under present Bermuda law, no Bermuda withholding tax on dividends or other distributions, or
any Bermuda tax computed on profits or income or on any capital asset, gain or appreciation will
be payable by an exempted company or its operations, and there is no Bermuda tax in the nature
of estate duty or inheritance tax applicable to shares, debentures or other obligations of the
company held by non-residents of Bermuda. Furthermore, a company may apply to the Minister of
Finance of Bermuda for an assurance, under the Exempted Undertakings Tax Protection Act 1966
of Bermuda, that no such taxes shall be so applicable to it or any of its operations until 28 March
2016, although this assurance will not prevent the imposition of any Bermuda tax payable in
relation to any land in Bermuda leased or let to the company or to persons ordinarily resident in
Bermuda.

2.

STAMP DUTY
An exempted company is exempt from all stamp duties except on transactions involving Bermuda
property. This term relates, essentially, to real and personal property physically situated in
Bermuda, including shares in local companies (as opposed to exempted companies). Transfers of
shares and warrants in all exempted companies are exempt from Bermuda stamp duty.

F-3

APPENDIX G

SUMMARY OF RELEVANT PRC LAWS AND REGULATIONS

LEGAL SUPERVISION RELATING TO PROPERTY SECTOR IN THE PRC


A.

Establishment of a Property Development Enterprise


According to the Law of the Peoples Republic of China on Administration of Urban Property (the
Urban Property Law)
promulgated by the Standing
Committee of the National Peoples Congress on 5 July 1994, effective from January 1995, and
revised on 30 August 2007, a property developer is defined as an enterprise engaging in the
development and sale of property for the purpose of making profits. Under the Regulations on
Administration of Development of Urban Property
(the
Development Regulations) promulgated and implemented by the State Council on 20 July 1998,
an enterprise which is to engage in development of property shall have to satisfy the following
requirements: 1) its registered capital shall be RMB1 million or more; and 2) have four or more fulltime professional property/construction technicians and two or more full-time accounting officers,
each of whom shall hold the relevant qualification certificate. The Development Regulations also
stipulate that 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 property developer. According to the
Regulations on Administration of Development of Urban Property of Henan Province
promulgated and implemented by the Standing Committee
of the Peoples Congress of Henan Province dated 31 May 2002 and amended on 14 January
2005, the registered capital of rela estate development enterprise in Henan shall be RMB2 million
or more and should have 5 or more full-time professional property/construction technicians.
Pursuant to the Development Regulations, a developer who aims to establish a property
development enterprise should apply to be registered with the administration for industry and
commerce. The property developer must also report its establishment to the property development
authority, within 30 days of the receipt of its Business License.
Under the Notice on Adjusting the Portion of Capital Fund for Fixed Assets Investment of Certain
Industries
issued by the State
Council on 26 April 2004, the portion of capital funding for property projects (excluding economical
housing projects) has been increased from 20% or above to 35% or above.

B.

Foreign-invested Property Enterprises


According to the Foreign Investment Industrial Guidance Catalogue
promulgated by the Ministry of Commerce (the MOFCOM) and the National Development and
Reform Commission (the NDRC) on 31 October 2007, effective on 1 December 2007 (the
Catalogue), 1) the development of a whole land lot (limited to equity joint ventures and
cooperative joint ventures) as well as the construction and operation of high-class hotels, villas,
premium office buildings, international conference centres and real estate secondary market and
intermediary or broker companies fall within the category of industries in which foreign investment
is subject to restrictions, and 2) other property development falls within the category of industry in
which foreign investment is permitted. Foreign-invested property enterprises can be established in
the form of Sino-foreign equity joint venture, Sino-foreign cooperative joint venture or wholly owned
enterprise by foreign investors. Prior to its registration, the enterprise must be approved by the
commerce authorities, upon which an Approval Certificate for a Foreign-Invested Enterprise will be
issued.
On 11 July 2006, the Ministry of Construction, the MOFCOM, the NDRC, the Peoples Bank of
China, the State Administration for Industry and Commerce (the SAIC) and the State
Administration for Foreign Exchange (the SAFE) jointly promulgated the Circular on
Standardizing the Admittance and Administration of Foreign Capital in the Property Market

G-1

. On 23 May 2007, the MOFCOM and SAFE jointly


promulgated the Notice in Relation to Further Strengthen and Regulate the Approval and
Supervision of Foreign Dircet Investment in Real Estate Industry
to strengthen the regulation of foreign investment in the real
estate industry. According to this Circular, the admittance and administration of foreign capital in
the property market must comply with the following requirements:
(a)

Foreign institutions or individuals should only buy property not for their own use through
FIEs they registered in PRC. Foreign institutions or individuals who buy property not for their
own use in China should apply for the establishment of foreign-invested enterprises
pursuant to the regulations of foreign investment in property. After obtaining the approvals
from relevant authorities and upon completion of the relevant registrations, foreign
institutions and individuals can then carry on their business pursuant to their approved
business scope.

(b)

Where the total investment amount of a foreign-invested property enterprise is US$10


million or more, its registered capital shall not be less than 50 per cent. of the total
investment amount; where the total investment amount is less than US$10 million, its
registered capital shall follow the requirements of the existing regulations.

(c)

For the establishment of a foreign-invested property enterprise, the commerce authorities


and the administration for industry and commerce take charge of the approval and
registration of the foreign-invested property enterprise and the issuance of the Approval
Certificate for a Foreign-Invested Enterprise
(which is only effective
for one year) and the business license. Upon full payment of the assignment price for the
land-use rights, the foreign-invested property enterprise should apply for the Certificate of
Land-Use Rights
. With such Certificate of Land-Use Rights, it can then
obtain a formal Approval Certificate for a Foreign-Invested Enterprise from the commerce
authorities and an updated business license from the administration of industry and
commerce which will have the same approved business period as the formal Approval
Certificate for Foreign-Invested Enterprise.

(d)

Transfers of projects or shares in foreign-invested property enterprises or acquisitions of


domestic property enterprises by foreign investors should follow the relevant PRC laws,
regulations and policies strictly as well as obtain the relevant approvals. The investor should
submit: a) a written undertaking of fulfilment of the contract for State-owned land-use rights
assignment, the Construction Land Planning Permit
and the
Construction Works Planning Permit
; b) the Certificate of Land-Use
Rights
; c) documents evidencing the filing for modification with the
construction authorities; and d) documents evidencing the payment of tax from the relevant
tax authorities.

(e)

When acquiring domestic property enterprises by way of shares transfer or otherwise, or


purchasing shares from PRC parties in Sino-foreign equity joint ventures, foreign investors
should make proper arrangements for the employees of the domestic property enterprises,
handle the debts owing to the banks and pay the consideration in a single payment with its
own capital. Foreign investors with records showing that they have not complied with
relevant employment laws, with unsound financial track records, or who have not fully
satisfied any previous acquisition consideration shall not be allowed to undertake the
aforementioned activities.

(f)

Foreign invested real estate enterprises which obtained Approval Certificate for a foreignInvested real estate enterprise after 1 June 2007, should file with the MOFCOM and with the
filing with MOFCOM, SAFE will not approve relevant FIE to purchase or sale foreign
exchange and will not issue foreign exchange registration certificate
to this
FIE.

G-2

C.

Qualifications of a Property Developer

(a)

Classifications of a property enterprises qualification


Under the Development Regulations, a property developer must record its establishment to
the governing property development authorities in the location of the registration authority
within 30 days after receiving its Business License. The property development authorities
shall examine applications for classification of a property developers qualification by
considering its assets, professional personnel and industrial achievements. A property
enterprise shall only engage in property development projects in accordance with its
approved qualification.
Under the Provisions on Administration of Qualifications of Property Developers
(the Provisions on Administration of Qualifications)
promulgated by the Ministry of Construction and implemented on 29 March 2000, a property
developer shall apply for registration of its qualifications according to such Provisions on
Administration of Qualifications. An enterprise may not engage in the development and sale
of property without a qualification classification certificate for property development.
In accordance with the Provisions on Administration of Qualifications, qualifications of a
property enterprise are classified into four classes: class 1, class 2, class 3 and class 4.
Different classes of qualification should be examined and approved by the relevant
authorities. The class 1 qualifications shall be subject to preliminary examination by the
construction authority under the 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 peoples
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. For a
newly established property developer, after it reports its establishment to the property
development authority, the latter shall issue a Provisional Qualification Certificate to the
eligible developer within 30 days. The Provisional Qualification Certificate shall be effective
for one year from its issuance while the property development authority may extend the
validity to a period of no longer than 2 years depending on the actual business situation of
the enterprise. The property developer shall apply for qualification classification by the
property development authority within one month before expiry of the Provisional
Qualification Certificate. According to the Regulations on Administration of Development of
Urban Property of Henan Province, the Provisional Qualification Certificate shall be effective
for 2 years and for developers with projects still under construction, the validity of the
Provisional Qualification Certificate may be extended for not more than 1 year.

(b)

The business scope of a property developer


Under the Provisions on Administration of Qualifications, a developer of any qualification
classification may only engage in the development and sale of the property within its
approved scope of business and may not engage in business which falls outside the
approved scope of its qualification classification. A class 1 property developer may
undertake a property development project anywhere in the country without any limit on the
scale of property project. A property developer of class 2 or lower may undertake a project
with a gross floor area of less than 250,000 square meters and the specific scopes of
business shall be as formulated by the construction authority under the peoples government
of the relevant province, autonomous region or municipality.

G-3

(c)

The annual inspection of a property developers qualjfication


Pursuant to the Provisions on Administration of Qualifications, the qualification of a property
developer shall be inspected annually. The construction authority under the State Council or
its authorised institution is responsible for the annual inspection of a class 1 property
developers qualification. Procedures for annual qualification inspection with developers of
class 2 or lower qualifications shall be formulated by the construction authority under the
peoples government of the relevant province, autonomous region or municipality.

D.

Development of a Property Project

(a)

Land for property development


Under the Provisional Regulations of the Peoples Republic of China on Assignment and
Transfer of the Land-Use Rights of State-owned Urban Land
(the Provisional Regulations on Assignment and Transfer)
promulgated and implemented by the State Council on 19 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 rights within the term of use. Under the
Provisional Regulations on Assignment and Transfer and the Urban Property 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
rights. The land user shall pay the assignment price as provided by the assignment contract.
After full payment of the assignment price, the land user shall register with the land
administration authority and obtain a Land-Use Rights Certificate which evidences the
acquisition of land-use rights. The Development Regulations provide that the land-use right
for a land parcel intended for property development shall be obtained through assignment
except for land-use rights which may be obtained through allocation pursuant to PRC laws
or the stipulations of the State Council.
Under the Regulations on the Assignment of State-owned Land-Use Rights Through
Competitive Bidding, Auction and Listing-for-Sale
promulgated by the Ministry of Land and Resources on 9 May 2002 and implemented on
1 July 2002, and the Regulations on the Assignment of Land-Use Right of State-owned
Construction Land Through Competitive Bidding, Auction and Listing-for-Sale
promulgated by the Ministry of Land and
Resources on 28 September 2007 and implemented on 1 November 2007, land for
industrial use, commercial use, tourism, entertainment and commodity housing development
shall be assigned by means of competitive bidding, public auction or listing-for-sale.
Competitive bidding of land-use rights means where the relevant land administration
authority (the grantor) issues a bidding announcement, inviting individuals, legal persons or
other organisations (whether specified or otherwise) to participate in tender for the land-use
rights of a particular parcel of land, the land user will be determined according to the results
of the biddings. Auction for land-use rights is where the grantor issues an auction
announcement, and the bidders can at specified time and location openly bid for a parcel of
land. Listing-for-sale is where the grantor issues a listing-for-sale announcement, and in
accordance with the announcement, the land grant conditions will be listed in a specified
land grant exchange within a specified period, bidders payment applications will be listed
and the land user will be granted according to the bidders payment applications at the end
of such listing period. The procedures are as follows:
(i)

The land authority under the government of the city and county (the assignor) shall
announce at least 20 days prior to the day of competitive bidding, public auction or
listing-for-sale. The announcement should include basic particulars of the land parcel,
qualification requirement of the bidder and auction applicants, the methods and
criterion to confirm the winning tender or winning bidder and conditions such as the
deposit of the bid.

G-4

(ii)

The assignor shall conduct a qualification verification of the bidding applicants and
auction applicants and inform the applicants who satisfy the requirements of the
announcement to attend the competitive bidding, public auction or listing-for-sale.

(iii)

After determining the winning tender or the winning bidder by holding a competitive
bidding, public auction or listing-for-sale, the assignor and the winning tender or
winning bidder shall then enter into a confirmation. The assignor should refund the
other applicants their deposits.

(iv)

The assignor and the winning tender or winning bidder shall enter into a contract for
State-owned land-use rights assignment at the time and venue set in the
confirmation. The deposit of the bid paid by the winning tender or winning bidder will
be deemed as part of the assignment price of the state-owned land-use rights.

(v)

The winning tender or winning bidder should apply for the land registration after
paying off the assignment price. The government authority at the municipality and
county level or above shall issue the Land-Use Rights Certificate.

According to the Notice of the Ministry of Land and Resources on Relevant Issues
Concerning the Strengthening of Examination and Approval of Land Use in Urban
Construction
promulgated by the
Ministry of Land and Resources on 4 September 2003, from the day of issuance of the
Notice, the grant of land-use rights for luxurious commodity houses shall be stringently
controlled, and applications of land-use rights for villas are to be stopped. On 30 May 2006,
the Ministry of Land and Resources issued the Urgent Notice on Ulteriorly Strengthening
the Administration of Land
. The Notice states
that land for property development must be assigned by competitive bidding, public auction
or listing-for-sale; the rules prohibiting development projects for villas should be strictly
enforced; and land supply and relevant procedures of land use for villas ceased to have
effect from the date of the Notice.
Under the Urgent Notice of Ulteriorly Strengthening the Administration of the Land
, the land authority should rigidly execute the
Model Text of the State-owned Land-Use Rights Assignment Contract
and Model Text of the State-owned Land-Use Rights Assignment
Supplementary Agreement (for Trial Implementation)
jointly promulgated by the
Ministry of Land and Resources and the SAIC. The documents of the land assignment
should ascertain the requirements of planning, construction and land use such as the
restriction of the dwelling size, plot ratio, and the time limit for the commencement and
completion of construction. All these should be set forth in the Land-Use Rights Assignment
Contract.

(b)

Development of a property project


(i)

Commencement of development with respect to a property project and the idle land
Under the Urban Property Law, those who have obtained the land-use rights by
assignment must develop the land in accordance with the use and period of
commencement as prescribed by the contract for the land-use right assignment.
According to the Measures on Disposing Idle Land
promulgated
and implemented by the Ministry of Land and Resources on 28 April 1999, a parcel of
land can be defined as idle land under any of the following circumstances:
z

after obtaining the land-use rights, the development and construction of the
land has not begun within the time limit for commencement of the development
as stipulated without the consent of the peoples government that originally
approved the use of the land;

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