Beruflich Dokumente
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CENTRALAND LIMITED
*
(Incorporated in Bermuda on 28 September 2007)
(Company Registration No: 40770)
(ii)
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.
Issue Manager
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.
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
CENTRALAND LIMITED
*
(Incorporated in Bermuda on 28 September 2007)
(Company Registration No: 40770)
(ii)
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.
Issue Manager
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.
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
FINANCIAL HIGHLIGHTS
Revenue
(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
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
23.2
18.9
76%
Land for Future Development
1,406,880 sq m
-10.4
FY2004
-5.7
FY2005
J-Expo ()
FY2006
Six months
ended
30 June 2006
Six months
ended
30 June 2007
FINANCIAL HIGHLIGHTS
Revenue
(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
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
23.2
18.9
76%
Land for Future Development
1,406,880 sq m
-10.4
FY2004
-5.7
FY2005
J-Expo ()
FY2006
Six months
ended
30 June 2006
Six months
ended
30 June 2007
Guoling Shanshui () suburban area, away from the city centre and
surrounded by scenic views
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:
TABLE OF CONTENTS
PAGE
CORPORATE INFORMATION ......................................................................................................
DEFINITIONS ................................................................................................................................
11
12
16
17
18
21
22
23
25
27
28
RISK FACTORS
RISKS RELATING TO OUR BUSINESS ..................................................................................
29
38
39
41
43
45
47
50
56
62
64
68
68
69
PAGE
EXCHANGE CONTROL
FOREIGN EXCHANGE CONTROLS IN THE PRC ..................................................................
70
71
72
DILUTION ......................................................................................................................................
74
76
77
SHAREHOLDERS ........................................................................................................................
81
MORATORIUM ..............................................................................................................................
83
84
86
89
92
96
96
99
105
113
114
114
114
115
118
119
119
SEASONALITY ........................................................................................................................
119
COMPETITION ........................................................................................................................
119
120
121
122
INSURANCE ............................................................................................................................
124
124
PROSPECTS ............................................................................................................................
124
126
ii
PAGE
DIRECTORS, MANAGEMENT AND STAFF
MANAGEMENT REPORTING STRUCTURE ..........................................................................
128
DIRECTORS ............................................................................................................................
129
134
REMUNERATION ......................................................................................................................
136
EMPLOYEES ............................................................................................................................
137
137
139
141
142
143
144
146
147
TAKE-OVERS ................................................................................................................................
148
149
151
LITIGATION ................................................................................................................................
153
154
MISCELLANEOUS ....................................................................................................................
156
CONSENTS ..............................................................................................................................
156
157
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
REGISTERED OFFICE
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
ISSUE MANAGER
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.
KhattarWong
80 Raffles Place #25-01
UOB Plaza 1
Singapore 048624
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
RECEIVING BANK
PRINCIPAL BANKERS
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:
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
Henan Jinzhi
Piaget
Authority
CB Richard Ellis
CDP
CIM X
CIM X Limited
CPF
Easy Solution
Ember Vision
Issue Manager
Marble Focus
Overseas Market
PBOC
Queen Hope
SAFE
SCCS
SGX-ST
State Council
State Council
1H
2H
Application Forms
Application List
associates
(a)
General
(b)
(ii)
(ii)
(iii)
ATM
Audit Committee
Board
business trust
BVI
Bye-laws
Companies Act
Controlling Shareholder
(b)
Directors
Electronic Applications
entity
EPS
Executive Directors
Executive Officers
FY
GFA
GST
IB
Internet Banking
IFRS
Independent Directors
Invitation
Issue Price
LAT
Li Wei
Listing Manual
Liu Xuemei
Market Day
NAV
Guoling Shanshui
New Shares
Non-executive Directors
NTA
Offer
Offer Shares
Participating Banks
PER
Placement
Placement Agreement
Placement Shares
PRC or China
PRC GAAP
Pre-Invitation Investors
Prospectus
Restructuring Exercise
Securities Account
Shareholders
Shares
Substantial Shareholder
Valuers Report
Wang Jian
Wang Peng
Wang Zhimin
Yan Tao
HK$
$ or S$ and cents
US$
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
(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
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)
(b)
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
EVENT
31 January 2008
11 February 2008
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)
(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
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
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 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
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
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
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
(0.52)
0.95
2.84
(0.29)
1.11
(0.45)
0.82
2.46
(0.25)
0.97
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
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.
20
THE INVITATION
Issue Size
Issue Price
The Offer
The Placement
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
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
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)
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
(S$000)
As a percentage of
gross proceeds
from the issue of
the New Shares
(%)
38,296
31.26
70,600
57.63
5,000
4.08
113,896
92.97
142
0.12
Professional fees
3,792
3.10
3,675
3.00
995
0.81
8,604
7.03
Use of proceeds
Total
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
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)
(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)
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
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
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.
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.
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
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
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.
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.
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.
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.
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.
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
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.
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.
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.
42
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.
43
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.
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)
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
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%
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
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
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
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
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)
(9,783)
44,615
152,184
(3,276)
75,077
Finance costs
(584)
(604)
(488)
(1,373)
(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
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
(0.52)
0.95
2.84
(0.29)
1.11
(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
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)
(1,997)
9,062
30,321
Finance costs
(656)
14,861
(119)
(123)
(97)
(2,116)
8,939
(5,097)
30,224
(19,365)
(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
(0.11)
0.19
0.57
(0.06)
0.22
(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
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
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
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
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
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)
(3)
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
Audited
FY2005
(RMB000)
Audited
Unaudited
Audited
FY2006
Six months
Six months
(RMB000) ended 30 June ended 30 June
2006
2007
(RMB000)
(RMB000)
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
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
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
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:
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.
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.
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
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.
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.
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
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.
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
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.
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.
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
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
(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)
(b)
(c)
our projected levels of capital expenditure and other investment plans; and
(d)
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
70
71
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
619,010
1,020,600
1,606,025
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
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)
(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
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
5.14
12.92
37.08
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)
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)
(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)
75
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)
(3,642,577)
5,463,865
Less: Provision for deferred tax on revaluation surplus after LAT provision
(4)
(1,365,966)
4,097,899
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
2.83
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)
(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)
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$)
0.15
1,000
1,000
150 (nil-paid)
0.15
999,000
1,000,000
150,000
(nil-paid)
1.20
125,000
150,000
(nil-paid)
0.40
375,000
150,000
(nil-paid)
0.40
375,000
150,000
0.40
1,599,625,000
1,600,000,000
640,000,000
0.40
245,000,000
1,845,000,000
738,000,000
0.40
1,845,000,000
738,000,000
The authorised share capital and the shareholders equity of our Company as at the Date of
Organisation, after the Restructuring Exercise and after the issue of the New Shares pursuant to the
Invitation are set forth below. These statements should be read in conjunction with the Combined
Financial Information as set out in Appendix A of this Prospectus.
As at the
Date of
Organisation
(HK$)
Immediately after
the increase in
authorised share
capital and the
Restructuring
Immediately
Exercise
after the Invitation
(HK$)
(HK$)
100,000
2,000,000,000
2,000,000,000
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)
(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)
%
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
896,000
56.0
896,000
48.6
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)
(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.
3.
4.
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%
27,000,000
75
6.0%
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.
Name of allottee
Number of Shares
896,000,000
56.0%
384,000,000
24.0%
CIM X Limited
160,000,000
10.0%
96,000,000
6.0%
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%
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%
48.6%
Yan Tao
Public
CIM X Limited
100.0%
8.7%
Easy Solution
Limited
20.8%
5.2%
CentraLand Limited
100.0%
100.0%
100.0%
100.0%
87
Queen Hope
Holdings Limited
3.5%
13.3%
Name of Company
Date, Place of
Incorporation
and Operation
Period (if relevant)
Principal
Business / Principal
Place of Business
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.
Operation period
of 50 years ending
24 December 2045
Development of
properties / PRC
100.0%
Operation period of
20 years ending
8 July 2016
Development of
properties / PRC
100.0%
None of our subsidiaries are listed on any stock exchange. We do not have any associated companies.
88
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
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
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:
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
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
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
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
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
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
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.
surrounding environment and convenience of the site (such as natural parks and greenery,
schools, rivers and commercial facilities); and
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.
relevant city planning and building parameters imposed by the PRC government;
100
advice and recommendations of professional advisors including architects and planning experts;
and
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.
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)
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)
(c)
the development units shall have passed completion, inspection and acceptance; and
(d)
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.
(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
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
106
2.
Guoling Shanshui
107
Phase I: Yongfu
Total
/
Low-rise
apartments and
townhouses
/
Low-rise
apartments and
commercial retail units
Phase I: Mufu
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
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
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.
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.
109
(1)
1 November
2046
9,771
65,890(1)
65,890
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.
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
is expected to
Location/ Type of
development
Name of Property
development
Phase III
5 May 2047
Date of expiry
of Land Use
Rights
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.
Development Site
Type of development
Date of expiry of
Land Use Rights
Estimated
site area
(sq m)
Composite
15 December 2045
250,079
100.0
Residential
15 December 2065
48,143
100.0
Residential
15 December 2065
25,377
100.0
Residential
15 December 2065
13,032
100.0
Residential
15 December 2065
3,376
100.0
Composite
5 May 2047
45,131
100.0
Composite
5 May 2047
97,595
100.0
Residential
5 May 2067
395
100.0
Composite
5 May 2047
65,839
100.0
Residential
5 May 2067
12,000
100.0
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)
Residential
5 May 2067
79,001
100.0
Residential
5 May 2067
17,635
100.0
Residential
5 May 2067
3,245
100.0
Residential
14 December 2065
213,852
100.0
Residential
14 December 2065
92,260
100.0
Residential
14 December 2065
22,809
100.0
Residential
5 May 2067
362,802
100.0
(1)
Total
1,406,880
Notes:
(1)
(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
Guoling Shanshui
Site Area
(sq m)
GFA
(sq m)
Lessee
Use
Period of
Lease
Rent
(RMB000)
15,333
10,886
Hotel
350
per month
Golf
academy
4,240
per annum
(formerly known as
Henan Sinian Yingzhou
Resort Hotel
Management Co., Ltd
)
Guoling Shanshui
354,630
1,500
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
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)
(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
41.1
37.6
38.4
16.2
17.3
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
Authority/Accrediting Body
March 2005
June 2005
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
January 2007
121
Date
Authority/Accrediting Body
5 February 2007
27 March 2007
June 2007
11 July 2007
2007
2007
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)
(ii)
(iii)
(iv)
;
;
; 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)
(2)
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.
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
Board of Directors
Sales Director
Liu Xuemei
Chief Project
Planning and
Development
Officer
Cui Yudong
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
Non-Executive Chairman
Yan Tao
39
Wang Jian
46
Wang Zhimin
39
Finance Director
Liu Xuemei
35
Sales Director
53
Businessman
37
54
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
Other Companies
Other Companies
Yan Tao
Group Companies
Group Companies
Nil
Wang Jian
Other Companies
Other Companies
Group Companies
Group Companies
Nil
Other Companies
Other Companies
Nil
132
Name
Present directorships
Past directorships
Wang Zhimin
Group Companies
Group Companies
Nil
Other Companies
Other Companies
Nil
Nil
Group Companies
Group Companies
Nil
Other Companies
Other Companies
Nil
Nil
Group Companies
Group Companies
Nil
Nil
Other Companies
Other Companies
Group Companies
Group Companies
Nil
Nil
Other Companies
Other Companies
Liu Xuemei
Group Companies
Group Companies
Nil
Nil
Other Companies
Other Companies
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
District,
Li Xiao Wei
42
Ding Gang
40
Ho Hin Yip
34
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
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
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
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
Band A
Band A
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)
(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
16
16
15
17
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
(i)
(ii)
(iii)
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:
B:
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
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
20,000
20,000
40,000
45,000
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)
(d)
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)
(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)
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)
(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)
(g)
review interested person transactions, falling within the scope of Chapter 9 of the Listing Manual, if
any;
(h)
(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
146
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
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)
(iv)
(v)
(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)
(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)
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.
) 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.
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
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
1,599,625,000
151
Purpose
Amount
Resultant Issued
Share Capital
Number of
ordinary shares
Par
Value
Consideration
100
US$100.00
US$100
12 October 2006
600
US$600
US$700
20 October 2006
300
US$51,500,000
US$51,500,700
4 August 2007
250
US$90,000,000 US$141,500,700
Purpose
Amount
Resultant Issued
Share Capital
(HK$)
Number
of shares
Par Value
(HK$)
Consideration
(HK$)
1.00
2.00
2.00
9,998
1.00
9,998
10,000
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$49,999,980
paid up on
6 September
2007
in
152
Purpose
Amount (US$)
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.
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)
(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
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
Professional Body
Partner-in-charge/
Professional Qualification
Grant Thornton
Certified Public Accountants
13th Floor, Gloucester Tower
The Landmark
15 Queens Road Central
Hong Kong
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.
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)
(b)
(c)
157
(d)
(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)
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
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
Grant Thornton
Certified Public Accountants
Hong Kong
A-2
2004
RMB000
Revenue
Cost of sales
Gross profit
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)
8
9
(9,783)
(584)
44,615
(604)
152,184
(488)
(3,276)
75,077
(1,373)
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
11
A-3
At 31 December
2005
2006
RMB000
RMB000
At 30 June
2007
RMB000
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
(74,468)
10,228
322,151
337,738
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
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)
1,556
(8,294)
(8,294)
1,556
(2,073)
389
(10,367)
1,945
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
A-5
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
2005
RMB000
2006
RMB000
(10,367)
44,011
151,696
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
(103,820)
114
54,862
(7,011)
542
96,248
(21,518)
310
912
(7,431)
142
308,287
(9,543)
168
(103,706)
48,393
75,040
(6,377)
298,912
A-7
2005
RMB000
2006
RMB000
(12,540)
1,897
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)
40,000
162,600
(9,500)
(20,000)
(6,212)
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
A-8
1,085
118,100
102,000
(45,000)
(147,260)
(5,967)
(15,131)
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)
A-9
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)
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
(b)
(c)
A-11
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)
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)
A-12
Equity
interest
held
Notes
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)
(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
A-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
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)
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
(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
Operating leases
(i)
(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)).
A-17
(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
(g)
(h)
(i)
A-19
(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)
(l)
A-20
(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
(p)
(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
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
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)
(iii)
(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)
(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
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)
(iii)
(b)
A-25
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
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
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
Amount has been included in administrative expenses on the face of the combined income statements.
A-26
FINANCE COSTS
Year ended 31 December
2004
RMB000
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.
Current tax:
Enterprise income tax in the
PRC for the year/period
Land appreciation tax (LAT)
in the PRC
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
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)
A-28
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)
19,161
266
33
116,677
136,137
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)
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)
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)
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)
174,216
1,618
3,965
179,799
174,216
243
1,618
349
3,965
837
4,327
179,799
5,756
171,422
1,925
4,829
(5,271)
2,234
A-29
278
(320)
598
(571)
(2,234)
876
(6,162)
(2,093)
(2,093)
178,176
Motor
vehicles
RMB000
Construction
in progress
RMB000
Total
RMB000
184,469
(13,047)
2,750
(825)
6,030
(1,201)
193,249
(15,073)
171,422
1,925
4,829
178,176
171,422
175
(2,689)
220
1,925
94
(204)
4,829
(353)
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)
169,128
1,815
4,476
175,419
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
INVESTMENT PROPERTIES
Buildings
RMB000
At 1 January 2005
Cost
Accumulated depreciation
39,947
(666)
39,281
39,947
(666)
39,281
39,281
2,093
(1,332)
40,042
42,040
(1,998)
40,042
40,042
1,964
(700)
41,306
At 30 June 2007
Cost
Accumulated depreciation
44,004
(2,698)
41,306
The Groups investment properties are located in the PRC and are held under medium to long
term leases.
A-31
14.
At 30 June
2004
RMB000
2005
RMB000
2006
RMB000
2007
RMB000
Cost
Accumulated amortisation
647
647
(11)
647
(22)
647
(33)
647
636
625
614
647
(11)
636
(11)
625
(11)
614
(5)
636
625
614
609
Cost
Accumulated amortisation
647
(11)
647
(22)
647
(33)
647
(38)
636
625
614
609
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
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
38,703
38,703
38,703
38,703
38,703
38,703
38,703
38,703
38,703
38,703
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
DEPOSITS PAID
The amount represented the Groups deposits paid for the acquisition of land use rights for
properties development.
17.
18.
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.
20.
TRADE RECEIVABLES
At 31 December
Trade receivables
A-34
At 30 June
2004
RMB000
2005
RMB000
2006
RMB000
2007
RMB000
4,470
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
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.
(b)
24.
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
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
At 30 June
2004
RMB000
2005
RMB000
2006
RMB000
2007
RMB000
5,967
29.
2005
RMB000
At 30 June
2006
RMB000
2007
RMB000
4,056
18,430
4,056
14,374
6,805
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
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:
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
14,079
(52,782)
40,242
(12,540)
A-38
(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)
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)
A-39
(3,276)
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
(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
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.
(b)
(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
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)
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
Six months
ended 30 June
2004
RMB000
2005
RMB000
2006
RMB000
2006
RMB000
(Unaudited)
142
2007
RMB000
114
542
310
(584)
(604)
(488)
(1,373)
(470)
(62)
(178)
142
(1,205)
A-43
168
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)
(v)
(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)
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
CAPITAL MANAGEMENT
The Groups objectives when managing capital are:
(a)
(b)
(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
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
Grant Thornton
Certified Public Accountants
Hong Kong
B-2
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)
152,184
(488)
151,696
(97,193)
54,503
Attributable to:
Equity holders of the Company
Minority interests
45,431
9,072
(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
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)
75,077
(1,373)
73,704
(50,499)
23,205
Attributable to:
Equity holders of the Company
Minority interests
17,827
5,378
(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
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
322,151
310,763
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
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
337,738
321,313
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
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
30,811
730,338
30,649
30,649
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
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
298,912
(2,453)
(3,276)
(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
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)
(54,461)
649,174
238,722
942,297
61,460
61,460
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
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.
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
3.
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.
4.
5.
B-10
7.
B-11
APPENDIX C
19 December 2007
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.
No Commercial Value
Group I Sub-total:
No Commercial Value
Group II Property interests held by the Group for investment in the PRC
2.
No Commercial Value
Group II Sub-total:
No Commercial Value
Group III Property interests held by the Group for sale in the PRC
3.
12,000,000
100%
12,000,000
4.
9,500,000
100%
9,500,000
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.
18,000,000
100%
18,000,000
6.
62,000,000
100%
62,000,000
7.
84,000,000
100%
84,000,000
8.
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.
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)
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
Details of
occupancy
Capital value in
existing state as at
30 June 2007
(RMB)
1.
The property is
currently occupied by
the Group.
No Commercial Value
Approximate
GFA (sq.m)
Sports Center
Cinema
Total
2,400
1,800
4,200
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
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
Approximate
GFA (sq.m)
Commercial
Buildings
Hotel Villas
Office
Total
6,393.64
4,492
1500
12,385.64
No Commercial Value
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.
The Group has not obtained the ownership right of the property;
(b)
(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
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 is
currently vacant.
12,000,000
(100% interests
attributable to the Group:
RMB12,000,000)
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
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 is
currently vacant.
9,500,000
(100% interests
attributable to the Group:
RMB9,500,000)
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
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 is
currently vacant
18,000,000
(100% interests
attributable to the Group:
RMB18,000,000)
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.
C-16
Yes
Yes
Yes
Yes
Yes
Yes
N/A
VALUATION CERTIFICATE
Property
Details of
occupancy
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 is
currently vacant.
62,000,000
(100% interests
attributable to the Group:
RMB62,000,000)
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.
C-18
Yes
Yes
Yes
Yes
Yes
Yes
N/A
VALUATION CERTIFICATE
Property
Details of
occupancy
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 is
currently vacant.
84,000,000
(100% interests
attributable to the Group:
RMB84,000,000)
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.
C-20
Yes
Yes
Yes
Yes
Yes
Yes
N/A
VALUATION CERTIFICATE
Property
Details of
occupancy
Capital value in
existing state as at
30 June 2007
(RMB)
8.
The property is
currently vacant.
1,001,000,000
(100% interests
attributable to the Group:
RMB1,001,000,000)
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.
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
(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 is
currently vacant.
8,123,000,000
(100% interests
attributable to the Group:
RMB 8,123,000,000)
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
Property
Capital value in
existing state as at
30 June 2007
Details of
occupancy
(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
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.
C-26
N/A
N/A
N/A
N/A
N/A
N/A
N/A
APPENDIX D
2.
Directors
(a)
(b)
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)
(d)
(e)
3.
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.
D-2
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)
(c)
(d)
Redemption provisions
The shares do not have redemption rights.
(e)
Sinking fund
The Bye-laws do not contain sinking fund provisions.
(f)
(g)
4.
5.
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.
7.
8.
D-5
APPENDIX E
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)
(ii)
in writing off:
(iii)
(aa)
(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.
E-1
(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)
(d)
E-2
(e)
(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.
E-3
(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)
E-4
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)
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)
(ii)
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.
(ii)
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.
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.
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
B.
G-1
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)
(c)
(d)
(e)
(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.
(a)
(b)
G-3
(c)
D.
(a)
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)
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;
G-5
the Contract on Lease of the Right to Use State-Owned Land does not
stipulate or the Approval Letter on Land Used for Construction does not
prescribe the date of commencement of the development and construction, and
the development and construction of the land has not begun at the expiry of
one year from the day when the Contract on Lease of the Right to Use Stateowned Land became effective or when the administrative department of land
issued the Approval Letter on Land Used for Construction;
the development and construction of the land has begun, but the area of the
development and construction is less than one third of the total area to be
developed and constructed, or the invested amount is less than 25% of the total
amount of investment, and the development and construction has been
continuously suspended for one year or more without approval; or
G-6
(iii)
(iv)
E.
(a)
Transfer of property
According to the Urban Property Law and the Provisions on Administration of Transfer of
Urban Property
promulgated by the Ministry of Construction on
7 August 1995 and as amended on 15 August 2001, a property owner may sell, bequeath or
otherwise legally transfer property to another person or legal entity. When transferring a
building, the ownership of the building and the land-use rights to the site on which the
building is situated are transferred simultaneously. The parties to a transfer shall enter into a
property transfer contract in writing and register the transfer with the property administration
authority having jurisdiction over the location of the property within 90 days of the execution
of the transfer contract.
Where the land-use rights were originally obtained by assignment, the real property may
only be transferred on the conditions that: a) the assignment price has been paid in full for
the assignment of the land-use rights as provided by the assignment contract and a landuse rights certificate has been obtained; and b) development has been carried out according
to the assignment contract and in the case of a project in which buildings are being
developed, development representing more than 25% of the total investment has been
completed.
If the land-use rights were originally obtained by assignment, the term of the land-use rights
after transfer of the property shall be the remaining portion of the original term provided by
the land-use rights assignment contract after deducting the time that has been used by the
former land users. In the event that the transferee intends to change the use of the land
provided in the original assignment contract, consent shall first be obtained from the original
assignor and the planning administration authority under the local government of the
relevant city or county and an agreement to amend the land-use right assignment contract
or a new land-use rights assignment contract shall be signed in order to, inter alia, adjust
the land-use rights assignment price accordingly.
G-7
If the land right were originally obtained by allocation, transfer of the real property shall be
subject to the approval of the government vested with the necessary approval power as
required by the State Council. Upon such approval, the transferee shall complete the
formalities for transfer of the land-use rights, unless the relevant statutes require no transfer
formalities, and pay the transfer price according to the relevant statutes.
(b)
(ii)
(iii)
G-8
(iv)
A real name system is applied for each property purchase transaction and an
immediate archival filing network system is in place for pre-sale contracts of
commodity buildings.
On 6 July 2006, the Ministry of Construction, the NDRC, and the SAIC jointly
promulgated Notice on Reorganising and Regulating the Transaction Procedures of
Property
,
the details of which are as follows:
z
A developer should start to sell the commodity buildings within 10 days after
receiving the Permit for Pre-sale of commodity buildings. Without this permit,
the pre-sale of commodity buildings is prohibited, as well as subscription
(including reservation, registration and number-selecting) and acceptance of
any kind of pre-sale payments.
The property administration authority should carry out the regulations of the
pre-sale contractor registration strictly and record and apply the real name
system for house purchases.
G-9
(c)
Mortgages of Property
Under the Urban Property Law, the The Guarantee Security Law of the Peoples Republic
of China
promulgated by Standing Committee of the National
Peoples Congress on 30 June 1995 and implemented on 1 October 1995, and the
Measures on the Administration of Mortgages of Property in Urban Areas
promulgated by the Ministry of Construction in May 1997 and as
amended on 15 August 2001, when a mortgage is created on a building legally obtained, a
mortgage shall be simultaneously created on the land-use rights of the land on which the
building is situated. The land-use rights of State-owned lands acquired through means of
assignment, when being mortgaged, the buildings on the land shall also be mortgaged at
the same time. The land-use rights of the town and village enterprises cannot be
mortgaged. When buildings of the town and village enterprises are mortgaged, the land-use
rights occupied by the buildings shall also be mortgaged at the same time. The mortgager
and the mortgagee shall sign a mortgage contract in writing. Within 30 days after a property
mortgage contract is signed, the parties to the mortgage shall register the mortgage with the
property administration authority at the location where the property is situated. A property
mortgage contract shall become effective on the date of registration of the mortgage. If a
mortgage is created on the property in respect of which a house ownership certificate has
been obtained, the registration authority shall make an entry under the third party rights
item on the original house ownership certificate and then issue a Certificate of Third Party
Rights to the mortgagee. If a mortgage is created on the commodity building put to pre-sale
or under construction, the registration authority shall record the details on the mortgage
contract. If construction of a real property is completed during the term of a mortgage, the
parties involved shall re-register the mortgage of the real property after issuance of the
certificates evidencing the ownership of the property.
(d)
Leases of buildings
Under the Urban Property Law and the Measures for Administration of Leases of Property
in Urban Areas
promulgated by the Ministry of Construction on 9
May 1995 and enforced on 1 June 1995, the parties to a lease of a building shall enter into
a lease contract in writing. A system has been adopted to register the leases of buildings.
When a lease contract is signed, amended or terminated, the parties shall register the
details with the property administration authority under the local government of the city or
county in which the building is situated.
F.
Property Credit
According to the Notice of the Peoples Bank of China on Regulating Home Financing Business
promulgated by the Peoples Bank of China (the PBOC) on 19
June 2001, all banks must comply with the following requirements before granting residential
development loans, individual home mortgage loans and individual commercial flat loans:
(a)
Housing development loans from banks shall only be granted to property development
enterprises with approved development qualifications and high credit ratings. Such loans
shall be offered to residential projects with good market potential. While the borrowing
enterprise must have self-owned capital of no less than 30% of the total investment required
of a project, the project itself must have been issued with a Land-Use Rights Certificate,
Construction Land Planning Permit, Construction Works Planning Permit and Construction
Permit.
(b)
In respect of the grant of individual home mortgage loans, the ratio between the loan
amount and actual value of the security (the Mortgage Ratio) shall never exceed 80%.
Where an individual applies for a home purchase loan to buy a pre-sale property, the
property must have achieved the stage of topping-out of the main structure completed for
multi-story buildings or two-thirds of the total investment completed for high-rise buildings.
G-10
(c)
In respect of the grant of individual commercial flat loans, the Mortgage Ratio under the
application for commercial flat loans shall not exceed 60% with a maximum loan period of
10 years and the relevant commercial flat must have already been completed.
The PBOC issued the Circular on Further Strengthening the Management of Loans for
Property Business
on 5 June
2003 to specify the requirements for banks to provide loans for the purposes of residential
development, individual home mortgage and individual commodity buildings as follows:
(a)
The property loan by commercial banks to property enterprises shall be granted only by the
item of property development rather than cash flow loan item or other loan item. Any kind of
loan can not be granted for the projects which do not obtain Land-Use Rights Certificates,
Construction Land Planning Permits, Construction Planning Permits and Construction
Permits.
(b)
Commercial banks shall not grant loans to property developers to pay off land premium.
(c)
Commercial banks may only provide housing loans to individual buyers when the main
structural buildings have been topped out. When a borrower applies for individual home
loans for his first residential unit, the first installment remains at 20%. In respect of his loan
application for additional purchase of residential unit(s), the percentage of the first
installment shall be increased.
Pursuant to the Guidance on Risk Management of Property Loans of Commercial Banks
issued by China Banking Regulatory Commission on
2 September 2004, any property developer applying for property development loans shall
have at least 35% of capital required for the development.
According to the Notice of the Peoples Bank of China on the Adjustment of Commercial
Bank Housing Credit Policies and the interest Rate of Excess Reserve Deposit
, promulgated by PBOC on
16 March 2005, from 17 March 2005, in the cities and areas where the price of houses
grows too quickly, the first installment of individual home loans increases from 20% to 30%.
The commercial banks can independently determine the specific cities or areas under such
adjustment according to special situations in different cities or areas.
On 24 May 2006, the General Office of State Council issued the Opinions of the Ministry of
Construction and other Departments on Adjusting the Housing Supply Structure and
Stabilising the Housing Prices
. The regulations on the property credit are as follows:
(a)
(b)
From 1 June 2006, the proportion of initial payment of individual housing mortgage loans
shall not be lower than 30%. However, considering the demands for housing by the medium
and low-income population, the purchase of self-used housing with gross floor area no more
than 90 square meters is still subject to the provision of the initial payment of housing at
20%.
G-11
H.
(a)
Income tax
According to the Income Tax Law of The Peoples Republic of China for Foreign-invested
Enterprises and Foreign Enterprises
which was promulgated by National Peoples Congress on 9 April 1991 and implemented on
1 July 1991 and its detailed rules promulgated by State Council on 30 June 1991, the
income tax on enterprises with foreign investment shall be computed on the taxable income
at the rate of 30%, and local income tax shall be computed on the taxable income at the
rate of 3%.
Pursuant to the Provisional Regulations of the Peoples Republic of China on Enterprise
Income Tax
issued by the State Council on 13
December 1993 and enforced on 1 January 1994 and the Detailed Implementation Rules
on the Provisional Regulations of The Peoples Republic of China on Enterprise Income Tax
issued by the PRC Ministry of Finance
(MOF) on 4 February 1994, the income tax rate applicable to Chinese enterprises other
than foreign-invested enterprises and foreign enterprises is 33%.
According to the PRC Enterprise Tax Law
(New Tax Law)
enacted by the National Peoples Congress on 16 March 2007 and enforced from 1 January
2008 onwards and its implemental regulations promulgated by the State Council on 6
December 2007 and enforceable from 1 January 2008 onwards, a uniform income tax rate
of 25% will be applied towards foreign investment and foreign enterprises which have set up
institutions or facilities in the PRC as well as PRC enterprises.
According to the current applicable Income Tax Law of The Peoples Republic of China for
Foreign-invested Enterprises and Foreign Enterprises
, income such as rental, interest and royalty derived in the PRC by a
foreign enterprise which has no establishment in the PRC or which has establishment in the
PRC but which income has no relationship with such establishment is subject to a 10%
withholding tax, subject to reduction as provided by any applicable double taxation treaty,
unless the relevant income is specifically exempted from tax under the current applicable tax
law. The dividends derived by a foreign investor from a PRC enterprise with foreign
investment are exempted from PRC withholding tax according to the current applicable PRC
tax law. However, following the enforcement of the New Tax Law from 1 January 2008,
dividends derived by a foreign enterprise which has no establishment in the PRC or which
has establishment in the PRC but its dividends have no relationship with such
establishment, from a PRC enterprise with foreign investment shall pay income tax at the
rate of 20%, subject to possible preferential treatment provided by the State Council.
G-12
(b)
Business Tax
Pursuant to the Interim Regulations of the Peoples Republic of China on Business Tax
promulgated
by
the
State
Council
on
13 December 1993 and implemented on 1 January 1994 and the Detailed Implementation
Rules on the Provisional Regulations of The Peoples Republic of China on Business Tax
issued by the MOF on 25 December 1993, the
tax rate of the transfer of real properties, their superstructures and attachments is 5%.
(c)
costs and expenses of new buildings and ancillary facilities, or estimated prices of old
buildings and constructions;
According to the requirements of the Land Appreciation Tax Provisional Regulations, the
Land Appreciation Tax Detailed Implementation Rules and the Notice on the Levy and
Exemption of Land Appreciation Tax for Development and Transfer Contracts signed before
1 January 1994
issued by the MOF and the State Administration of Taxation on 27 January 1995,
LAT shall be exempted under any of the following circumstances:
z
taxpayers construct ordinary standard residences for sale (i.e. the residences built in
accordance with the local standard for general civilian used residential properties.
Deluxe apartments, villas, resorts etc. are not under the category of ordinary standard
residences) and the appreciation amount does not exceed 20% of the sum of
deductible items;
property is taken back and repossessed according to laws due to the construction
requirements of the State;
G-13
if the property development contracts were signed before 1 January 1994 or the
project proposal has been approved and that capital was injected for development in
accordance with the conditions agreed, LAT shall be exempted if the properties are
transferred within 5 years after 1 January 1994 for the first time. The date of signing
the contract shall be the date of signing the Sale and Purchase Agreement. Particular
properties projects which are approved by the government for the development of the
whole lot of land and long-term development, of which the properties are transferred
for the first time after the 5-year tax-free period, the tax-free period may be
appropriately prolonged subject to the approval of the MOF and the State
Administration of Taxation.
On 24 December 1999, the MOF and the State Administration of Taxation issued the Notice
in respect of the extension of the period for the Land Appreciation Tax Exemption Policy
that extended the period for the
LAT exemption policy as mentioned in paragraph (5) above to the end of 2000.
After the issuance of the Land Appreciation Tax Provisional Regulations
and the Land Appreciation Tax Detailed Implementation Rules
, due to the longer period required for
property development and transfer, many districts, whilst they implement the regulations and
rules, did not force the property development enterprises to declare and pay LAT. Therefore,
the MOF, State Administration of Taxation, Ministry of Construction and the Ministry of Land
and Resources had assignments are signed, the taxpayers should declare the tax to the
local tax authorities where the property is located, and pay LAT in accordance with the
amount as calculated by the tax authority and the time as required. For those who fail to
acquire proof of payment or exemption from LAT from the tax authorities, the property
administration authority shall not process the relevant title change procedures, and shall not
issue the property title certificate.
State Administration of Taxation also issued the Notice on Serious Handling of
Administration of the Collection of Land Appreciation Tax
on 10 July 2002 to request local tax authorities to (i)
modify the management system of LAT collection and operation details, (ii) to build up a
sound taxpaying declaration system for LAT and (iii) to modify the methods of pre-levying for
the pre-sale of properties. The Notice also pointed out that where the properties
development contract were signed before 1 January 1994 or where the project proposal has
been approved and capital was injected for development, the privilege policy for LAT
exemption for such properties that are transferred for the first time will expire, and such tax
shall be levied again. This requirement is restated in the Notice on Strengthening of
Administration of the Collection of Land Appreciation Tax
and the Notice of State on Further Strengthening of Administration Work
in relation to the Collection of Land Appreciation Tax and Land Use Tax in Cities and Towns
, issued
separately on 2 August 2004 and 5 August 2004 by the State Administration of Taxation.
These two Notices also required that the system of tax declaration and tax sources
registration in relation to LAT be further established and perfected.
G-14
On 2 March 2006, the MOF and State Administration of Taxation issued the Notice on
Several Points on Land Appreciation Tax
to clarify the
relevant issues regarding land appreciation tax as follows:
(a)
As to the tax collection and exemption in the sale of ordinary standard residential
housing as built by taxpayers as well as in the transfer of ordinary residential houses
by individual residents.
The notice sets out the standards for ordinary standard residential houses. Where any
developers build ordinary residential houses as well as other commercial houses, the
appreciation amount of land shall be verified respectively. Before the day when this
notice is publicised, as to any application for tax exemption for ordinary standard
residential houses that has been filed to the tax authority at the locality of the
property, especially any ordinary standard residential houses which have been given
the treatment of exemption from LAT upon examination according to the standards for
ordinary standard residential houses as determined by the peoples government of a
province, autonomous region or municipality directly under the Central Government,
no adjustment shall be retroactively made.
(b)
All regions shall decide the advance collection rate in a scientific and
reasonable manner, and adjust it at a proper time according to the value
addition level of the property as well as the market development level within the
region and on the basis of the specific housing categories, namely, ordinary
standard residential houses, non-ordinary standard residential houses and
commercial houses. After a project is completed, the relevant settlement shall
be handled in a timely manner, with any overpayment refunded or any
underpayment being made up.
Any tax that fails to be collected in advance within the advance collection term,
the overdue fines shall be collected as of the day following the expiration of the
prescribed advance collection term according to the relevant provisions of the
Tax Collection and Administration Law as well as its detailed rules for
implementation.
Any property project that has been completed and has gone through the
acceptance procedure, where the floor area of the property as transferred
makes up 85% or more of the saleable floor area, the tax authority may require
the relevant taxpayer to conduct the settlement of LAT on the transferred
property according to the matching principles regarding the proportion between
the income as generated from the transfer of property and the amount under
the item of deduction. The specific method of settlement shall be prescribed by
the local tax authority of a province, autonomous region or municipality directly
under the Central Government, or a city under separate state planning.
G-15
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.
Pursuant to the Notice, a property developer shall settle and clear the LAT payment of its
development projects that meet certain criteria with the tax authorities in accordance with
the applicable LAT tax rates. The LAT shall be settled for projects approved by the
competent authorities; and for projects developed in different stages, the LAT shall be settled
in stages. LAT must be settled if (1) the property development project has been completed
and fully sold; (2) the property developer transfers the whole incompleted development
project; or (3) the land-use rights with respect to the project is transferred. In addition, the
relevant tax authorities may require the developer to settle the LAT if one of the following
criteria is met: (1) for completed property development projects, the transferred GFA
represents more than 85% of total salable GFA, or the proportion represented is less than
85%, but the remaining salable GFA has been leased out or used by the developer; (2) the
project has not been sold out for more than three years after obtaining the sale or pre-sale
permit; (3) the developer applies for cancellation of the tax registration without having settled
the relevant LAT; or (4) other conditions stipulated by the tax authorities.
The Notice also indicated that if a property developer satisfies any of the following
circumstances, the tax authorities shall levy and collect LAT as per the levying rate which
shall be no lower than the pre-payment rate with reference to the bearing rate of LAT of local
enterprises with a similar development scale and income level: (i) failure to maintain account
book required by law or administrative regulation; (ii) destroying the account book without
authorisation or refusing to provide taxation information; (iii) the accounts are in a state of
mess or cost materials, income vouchers and cost vouchers are damaged and incomplete,
making it difficult to determine transferred income or amount of deductible items; (iv) failure
to go through LAT settlement within the prescribed period, and such failure is not cured
within the period required by the relevant tax authorities; or (v) the basis for tax calculation
as submitted is obviously low without justifiable cause. Local provincial tax authorities can
formulate their own implementation rules according to the notice and local situation.
(d)
Deed tax
Pursuant to the Interim Regulations of the Peoples Republic of China on Deed Tax
promulgated by the State Council on 7 July 1997 and
implemented on 1 October 1997, the transferee, whether an individual or otherwise, of the
title to a land site or building in the PRC shall be the obliged taxpayer for deed tax. The rate
of deed tax is 3% to 5%. The governments of provinces, autonomous regions and
municipalities directly under the central government may, within the aforesaid range,
determine and report their effective tax rates to the MOF and the State Administration of
Taxation for the record. According to The Implementation Measures for Deed Duty of Henan
Province
promulgated by Henan Province Peoples Government on
21 October 1999, the deed tax rate in Henan Province is 4%.
(e)
G-16
(f)
Buildings tax
Under the Interim Regulations of the Peoples Republic of China on Building Tax
promulgated by the State Council on 15 September 1986
and implemented on 1 October 1986, building tax shall be 1.2% if it is calculated on the
basis of the residual value of a building, and 12% if it is calculated on the basis of the rental.
(g)
Stamp duty
Under the Interim Regulations of the Peoples Republic of China on Stamp Duty
promulgated by the State Council on 6 August 1988 and
implemented on 1 October 1988, for property transfer instruments, including those in
respect of property ownership transfer, the stamp duty rate shall be 0.05% of the amount
stated therein; for permits and certificates relating to rights, including property title
certificates and land-use rights certificates, stamp duty shall be levied on an item basis of
RMB5 per item.
(h)
(i)
Education surcharge
Under the Interim Provisions on Imposition of Education Surcharge
promulgated by the State Council on 28 April 1986 and as amended on
7 June 1990 and 20 August 2005, a taxpayer, whether an individual or otherwise, of product
tax, value-added tax or business tax shall pay an education surcharge, unless such obliged
taxpayer is instead required to pay a rural area education surcharge as provided by the
Notice of the State Council on Raising Funds for Schools in Rural Areas
. Under the Supplementary Notice Concerning
Imposition of Education Surcharge
issued by
the State Council on 12 October 1994, the Circular Concerning Temporary Exemption from
Municipal Maintenance Tax and Education Surcharge for Foreign-invested Enterprises and
Foreign Enterprises
and the Reply on Exemption of Municipal Maintenance Tax and
Education Surcharge in Foreign-Invested Freightage Enterprises
issued by State
Administration of Taxation on 25 February 1994 and on 14 September 2005 respectively, the
education surcharge shall not be applicable to enterprises with foreign investment for the
time being, until further explicit stipulations are issued by the State Council.
G-17
I.
(a)
Intensifying the planning and control and improving the housing supply structure
Where the housing price is in excessive growth, the supply of ordinary commodity houses at
medium or low prices and economical houses are insufficient; the housing construction
should mainly involve projects of ordinary commodity houses with medium or low prices and
economical houses. The construction of low-density, high-quality houses shall be strictly
controlled. With respect to construction projects of medium-or-low-price ordinary commodity
houses, before any supply of land, the municipal planning authority shall, according to
controlling detailed planning, set forth such conditions for planning and designing as height
of buildings, plot ratio and green space. The property authority shall, in collaboration of other
relevant authorities, set forth such controlling requirements as sale price, type and area.
Such conditions and requirements will be set up as preconditions of land assignment to
ensure an effective supply of small or medium-sized houses at moderate and low prices.
The local government must intensify the supervision of planning permit for property
development projects. Housing projects that have not been commenced within two years
must be examined again, and those that turn out to be not in compliance with the planning
permits will be revoked.
(b)
Intensifying the control over the supply of land and rigorously enforcing the administration of
land
Where the price of land for residential use and residential house increases too fast, the
proportion of land for residential use to the total land supply should be appropriately raised,
and the land supply for the construction of ordinary commodity housing at medium or low
price range and economical housing should be emphatically increased. Land supply for villa
construction shall be continuously suspended, and land supply for high-end housing
property construction shall be restricted.
(c)
Adjusting the policies of business tax in the link of house transfer and strictly regulating the
collection and administration of tax
From 1 June 2005, business tax upon transferring a residential house by an individual within
two years from purchasing will be levied on the full amount of the sale proceeds. For an
individual having transferred an ordinary residence after two years from date of purchase,
business tax will be exempted. For an individual having transferred a property other than
ordinary residential house for two years or more from date of purchase, the business tax will
be levied on the basis of the balance between the income from selling the residence and the
purchase price.
(d)
Practically rectifying and regulating the market order and seriously investigating into and
punishing any irregular and rule-breaking sales
The buyer of a pre-sale commodity building is prohibited from conducting any transfer of
such building if it is still under construction. A real name system for house purchase should
be applied, and an immediate archival filing network system for pre-sale contracts of
commodity buildings should be carried out.
G-18
On 24 May 2006, the General Office of the State Council issued the Opinion of the Ministry
of Construction and other Departments on Adjusting Housing Supply Structure and
Stabilisation of Housing Prices
. As to the adjustment of housing supply and stabilisation of housing
prices, the opinion provides that:
(i)
(ii)
From 1 June 2006, for each and every commodity building newly examined and
approved for starting construction, the proportion of the area of housing
(including economically affordable housing) with a unit floor area less than 90
square meters must reach 70% of the total development and construction area.
In case of adjustment of the above-mentioned proportion, if required in special
cases, the municipalities directly under the central government, separately
planned cities and provincial capital cities must submit the special request for
adjusting proportion to the Ministry of Construction for approval. The projects
that have been examined and approved but without construction permits
obtained shall adjust the set style of housing according to the above-mentioned
requirements if they do not meet such requirements.
Further promoting the adjusting role of tax, credit and land policies
z
From 1 June 2006, the first installment of individual home loans should be no
less than 30%. When a borrower applies for individual home loans for his own
use and the floor area of the unit is less than 90 square meters, the first
installment remains to be 20%;
G-19
(iii)
At least 70% of the land supply for residential property development must be
used for developing low-to-medium-cost and small to medium-size units and
low-cost rental properties. On the basis of the restriction of price and housing
set style, the land supply shall adopt the method of competitive bidding of land
price and housing price to determine the property developer. Land supply for
villa construction shall be continuously suspended, and land supply for lowdensity and large-area housing property construction shall be strictly restricted;
When the construction has not yet started after one year since the duration of
construction agreed in the contract has lapsed, charge for idle land should be
collected at a higher level; when the construction has not yet started after two
years have elapsed, the right to use land can be taken back without
consideration. The land will be regarded as idle land if: the development and
construction of the land has started on time, but the developed area is less
than one third of the total area to be developed and constructed, or the
invested amount is less than 25% of the total amount of investment, and the
development and construction has been continuously suspended for no less
than one year without approval.
The project with the Planning Permit which has not started construction should
be re-censored. If the project is not in accordance with the controlling
requirements of the plan, especially the requirements of the set style structure,
the Planning Permit, the Permit for Construction and the Permit for Precompletion Sale of Commodity Buildings should not be issued. The housing of
the designing of which has been changed, the projects of which have been
altered or the construction of which has exceeded the provisions shall be
disposed of or confiscated according to law.
To carry out Opinions on Adjusting the Housing Supply Structure and Stabilising Housing
Prices
, the
Ministry of Construction promulgated Opinions on Carrying Out Structure Proportion of
Housing Newly Built
on 6 July 2006 and made
supplemental requirements on the proportion of newly built housing structure as follows:
(i)
From 1 June 2006, in any city (including county), the floor area of the housing which
is less than 90 square meters should cover 70% of the total floor area of commercial
commodities newly approved or constructed in a year.
G-20
(ii)
(iii)
To projects which are approved before 1 June 2006 but have not obtained the
Construction Permit, the governments of cities should ascertain the specific project
which needs to adjust the set structure according to the proportion requirement of the
newly-built commodity buildings in that year.
G-21
APPENDIX H
YOUR APPLICATION MUST BE MADE IN LOTS OF 1,000 NEW SHARES AND INTEGRAL
MULTIPLES THEREOF. YOUR APPLICATION FOR ANY OTHER NUMBER OF NEW SHARES
WILL BE REJECTED.
2.
Your application for Offer Shares may be made by way of printed Offer Shares Application Forms
or by way of Electronic Applications through ATMs of the Participating Banks (ATM Electronic
Applications) or through Internet Banking (IB) websites of the relevant Participating Banks
(Internet Electronic Applications which, together with ATM Electronic Applications, shall be
referred to as Electronic Applications). Your application for Placement Shares may only be made
by way of Placement Shares Application Forms. YOU MAY NOT USE CPF FUNDS TO APPLY
FOR THE NEW SHARES.
3.
You are allowed to submit only one application in your own name for Offer Shares. If you
submit an application for Offer Shares by way of an Offer Shares Application Form, you
MAY NOT submit another application for Offer Shares by way of an Electronic Application
and vice versa. Such separate applications shall be deemed to be multiple applications and
may be rejected at the discretion of our Company.
If you submit an application for Offer Shares by way of Internet Electronic Application, you
MAY NOT submit another application for Offer Shares by way of ATM Electronic Application
and vice versa. Such separate applications shall be deemed to be multiple applications and
may be rejected at the discretion of our Company.
If you (being other than an approved nominee company) have submitted an application for Offer
Shares in your own name, you should not submit any other application for Offer Shares, whether
by way of an Offer Shares Application Form or by way of an Electronic Application, for any other
person. Such separate applications shall be deemed to be multiple applications and may be
rejected at the discretion of our Company.
You are allowed to submit only one application in your own name for Placement Shares.
Any separate application by you for Placement Shares shall be deemed to be multiple
applications and we have the discretion whether to accept or reject such multiple
applications.
If you, being other than an approved nominee company, have submitted an application for
Placement Shares in your own name, you should not submit any other application for
Placement Shares for any other person. Such separate applications shall be deemed to be
multiple applications and will be liable to be rejected at our discretion.
If you have made an application for Placement Shares, and you have also made a separate
application for Offer Shares either by way of an Application Form or through an Electronic
Application, we shall have the discretion to either (i) reject both of such separate
applications or (ii) accept any one (but not the other) out of such separate applications.
Conversely, if you have made an application for Offer Shares either by way of an
Application Form or through an Electronic Application and you have also made a separate
application for Placement Shares, we shall have the discretion to either (i) reject both of
such separate applications or (ii) accept any one (but not the other) out of such separate
applications.
H-1
Joint applications shall be rejected. Multiple applications for New Shares shall be liable to
be rejected at the discretion of our Company. If you submit or procure submissions of
multiple share applications for Offer Shares, Placement Shares or both Offer Shares and
Placement Shares, you may be deemed to have committed an offence under the Penal Code
(Chapter 224 of Singapore) and the Securities and Futures Act (Chapter 289 of Singapore)
and your applications may be referred to the relevant authorities for investigation. Multiple
applications or those appearing to be or suspected of being multiple applications may be
rejected at the discretion of our Company.
4.
We will not accept applications from any person under the age of 21 years, undischarged
bankrupt, sole-proprietorship, partnership, chop or non-corporate body, joint Securities Account
holders of CDP and applicant whose address (furnished in their Application Forms or, in the case
of Electronic Applications, contained in the records of the relevant Participating Banks) bear post
office box numbers.
5.
We will not recognise the existence of a trust. Any application by a trustee or trustees must be
made in his/their own name(s) and without qualification or, where the application is made by way
of an Application Form, in the name(s) of an approved nominee company or approved nominee
companies after complying with paragraphs 6 and 7 below.
6.
7.
IF YOU ARE NOT A NOMINEE COMPANY, YOU MUST MAINTAIN A SECURITIES ACCOUNT
WITH CDP IN YOUR OWN NAME AT THE TIME OF YOUR APPLICATION. If you do not have an
existing Securities Account with CDP in your own name at the time of your application, your
application will be rejected (if you apply by way of an Application Form), or you will not be able to
complete your Electronic Application (if you apply by way of an Electronic Application). If you have
an existing Securities Account but fail to provide your Securities Account number or provide an
incorrect Securities Account number in Section B of the Application Form or in your Electronic
Application, as the case may be, your application is liable to be rejected. Subject to paragraph 8
below, your application shall be rejected if your particulars, such as name, NRIC/passport number,
nationality and permanent residence status provided in your Application Form or in the records of
the relevant Participating Bank at the time of your Electronic Application, as the case may be, differ
from those particulars in your Securities Account as maintained with CDP. If you possess more
than one individual direct Securities Account with CDP, your application shall be rejected.
8.
If your address as stated in the Application Form or, in the case of an Electronic
Application, in the records of the relevant Participating Bank, as the case may be, is
different from the address registered with CDP, you must inform CDP of your updated
address promptly, failing which the notification letter on successful allotment will be sent to
your address last registered with CDP.
9.
Our Company reserves the right to reject any application which does not conform strictly to
the instructions set out in the Application Form and in this Prospectus or which does not
comply with the instructions for Electronic Applications or with the terms and conditions of
this Prospectus or, in the case of an application by way of an Application Form, which is
illegible, incomplete, incorrectly completed or which is accompanied by an improperly
drawn remittance or improper form of remittance. Our Company further reserves the right
to treat as valid any application not completed or submitted or effected in all respects in
accordance with the instructions set out in the Application Forms or the instructions for
Electronic Application or the terms and conditions of this Prospectus and also to present
for payment or other processes all remittances at any time after receipt and to have full
access to all information relating to, or deriving from, such remittances or the processing
thereof.
H-2
10.
Our Company reserves the right to reject or to accept, in whole or in part, or to scale down or to
ballot any application, without assigning any reason therefor, and no enquiry and/or
correspondence on the decision of our Company will be entertained. This right applies to
applications made by way of Application Forms and by way of Electronic Applications. In deciding
the basis of allotment, which will be at the discretion of our Company, our Company will give due
consideration to the desirability of allotting the New Shares to a reasonable number of applicants
with a view to establishing an adequate market for the Shares.
11.
Share certificates will be registered in the name of CDP and will be forwarded only to CDP. It is
expected that CDP will send to you, at your own risk, within 15 Market Days after the close of the
Application List, a statement of account stating that your Securities Account has been credited with
the number of New Shares allotted to you. This will be the only acknowledgement of application
moneys received and is not an acknowledgement by our Company. You irrevocably authorise CDP
to complete and sign on your behalf as transferee or renouncee any instrument of transfer and/or
other documents required for the issue or transfer of the New Shares allotted to you. This
authorisation applies to applications made by way of Application Forms and by way of Electronic
Applications.
12.
In the event of an under-subscription for Offer Shares as at the close of the Application List, that
number of Offer Shares not subscribed shall be made available to satisfy applications for
Placement Shares to the extent that there is an over-subscription for Placement Shares as at the
close of the Application List.
In the event of an under-subscription for Placement Shares as at the close of the Application List,
that number of Placement Shares not subscribed for shall be made available to satisfy applications
for Offer Shares to the extent that there is an over-subscription for Offer Shares as at the close of
the Application List.
In the event of an over-subscription for Offer Shares as at the close of the Application List and/or
Placement Shares are fully subscribed for or over-subscribed as at the close of the Application
List, the successful applications for Offer Shares will be determined by ballot or otherwise as
determined by our Directors and approved by the SGX-ST.
In all the above instances, the basis of allotment of the New Shares as may be decided by our
Directors in ensuring a reasonable spread of shareholders of our Company, shall be made public,
as soon as practicable, via an announcement through SGX-ST and by advertisement in a
generally circulating daily press.
13.
In the event that our Company lodges a supplementary or replacement prospectus (Relevant
Document) pursuant to the Securities and Futures Act (Chapter 289 of Singapore) or any
applicable legislation in force from time to time prior to the close of the Invitation, and the New
Shares have not been issued to you, we will:
(a)
within two days (excluding Saturday, Sunday or public holiday) from the lodgment of the
Relevant Document, give you written notice on how to obtain, or arrange to receive, a copy
of the Relevant Document and provide you with an option to withdraw your application and
take reasonable steps to make available within a reasonable period, the Relevant
Document, if you have indicated your wish to obtain, or have arranged to receive, a copy of
the Relevant Document;
(b)
within seven days from the lodgment of the Relevant Document give you a copy of the
Relevant Document and provide you with an option to withdraw your application; or
(c)
treat your application as withdrawn and cancelled, in which case your application shall be
deemed to have been withdrawn and cancelled and pay you all your application moneys
(without interest or any share of revenue or other benefit arising therefrom) to you within
seven days from lodgment of the Relevant Document.
H-3
Where you have notified us within 14 days from the date of lodgment of the Relevant Document of
your wish to exercise your option under paragraph 13(a) above to withdraw your application, we
shall pay to you all moneys paid by you on account of your application for the New Shares without
interest or any share of revenue or other benefit arising therefrom and at your own risk, within
seven days from the receipt of such notification.
In the event that at the time of the lodgment of the Relevant Document, the New Shares have
already been issued but trading has not commenced, we will either:
(I)
within seven days of the lodgment of the Relevant Document give you the Relevant
Document and provide you with an option to return the New Shares; or
(II)
subject to compliance with the Bermuda Companies Act and our Bye-laws, treat the issue
and/or sale of the New Shares as void, in which case the issue shall be deemed to be void
and we shall refund your application moneys (without interest or any share of revenue or
other benefit arising therefrom) to you within seven days from the lodgment of the Relevant
Document.
Where you have notified us within 14 days from the date of lodgment of the Relevant Document of
your wish to exercise your option under paragraph 13(I) above to return the New Shares issued to
you, you shall return all documents, if any, purporting to be evidence of title to those New Shares
whereupon we shall, subject to compliance with the Bermuda Companies Act and our Bye-laws,
pay to you all moneys paid by you on account of your application for the New Shares without
interest or any share of revenue or other benefit arising therefrom and at your own risk, within
seven days from the receipt of such notification and documents, if any.
Additional terms and instructions applicable upon the lodgment of the Relevant Document,
including instructions on how you can exercise the option to withdraw your application or return the
New Shares issued to you, may be found in such Relevant Document.
14.
You irrevocably authorise CDP to disclose the outcome of your application, including the number of
New Shares allotted to you pursuant to your application, to authorised operators.
15.
Any reference to the expression you in this section shall include an individual, a corporation, an
approved nominee or trustee applying for Offer Shares by way of an Application Form or by way of
an Electronic Application and a person applying for the Placement Shares through the Placement
Agent.
16.
irrevocably offer to subscribe for the number of New Shares specified in your application (or
such smaller number for which the application is accepted) at the Issue Price and agree that
you will accept such New Shares as may be allotted to you, in each case on the terms and
subject to the conditions set out in, this Prospectus and the Memorandum of Association
and Bye-laws of our Company;
(b)
agree that in the event of any inconsistency between the terms and conditions for
application set out in this Prospectus and those set out in the ATMs of the Participating
Banks, or the IB websites of the relevant Participating Banks, the terms and conditions set
out in this Prospectus shall prevail;
(c)
agree that the aggregate Issue Price for the New Shares applied for is due and payable to
our Company forthwith;
H-4
17.
18.
(d)
warrant the truth and accuracy of the information contained, and representations and
declarations made, in your application, and acknowledge and agree that such information,
representations and declarations will be relied on by our Company in determining whether to
accept your application and/or whether to allot any New Shares to you; and
(e)
agree and warrant that, if the laws of any jurisdictions outside Singapore are applicable to
your application, you have complied with all such laws and none of our Company, the Issue
Manager, the Underwriter and the Placement Agent will infringe any such laws as a result of
the acceptance of your application.
Our acceptance of applications will be conditional upon, inter alia, our Company being satisfied
that:
(a)
permission has been granted by the SGX-ST to deal in and for quotation for all our existing
Shares and the New Shares on the Official List of the SGX-ST;
(b)
no Stop Order which directs that no or no further shares to which this Prospectus relate be
allotted, has been issued by the Authority under the Securities and Futures Act (Chapter
289 of Singapore); and
(c)
the Management and Underwriting Agreement and the Placement Agreement referred to in
this Prospectus have become unconditional and have not been terminated or cancelled prior
to such date as our Company may determine.
In the event that a Stop Order in respect of the New Shares is served by the Authority or other
competent authority; and:
(a)
the New Shares have not been issued, all applications shall be deemed to have been
withdrawn and cancelled and our Company shall refund the application moneys (without
interest or any share of revenue or other benefit arising therefrom) to you within 14 days of
the date of the Stop Order; or
(b)
if the New Shares have already been issued but trading has not commenced, the issue will
be deem void, and
(i)
if documents purporting to evidence title had been issued to you, our Company shall
inform you to return such documents to our Company within 14 days from the date of
the Stop Order; and
(ii)
we will, subject to compliance with the Bermuda Companies Act and our Bye-laws,
refund the application moneys (without interest or any share of revenue or other
benefit arising therefrom) to you within seven days from the date of receipt of those
documents (if applicable) or the date of the stop order, whichever is later.
This shall not apply where only an interim stop order has been served.
In the event that an interim Stop Order in respect of the New Shares is served by the Authority or
other competent authority, no New Shares shall be issued to you until the Authority revokes the
interim stop order.
19.
The Authority is not able to serve a stop order in respect of the New Shares if the New Shares
have been issued and listed on a securities exchange and trading in them has commenced.
20.
21.
We will not allot Shares on the basis of this Prospectus later than six months after the date of
registration of this Prospectus.
22.
H-5
23.
The Issue Price for each Offer Share is S$0.50. All payments in respect of any application for
Offer Shares, and all refunds in respect of any unsuccessful applications thereto, shall be made in
Singapore currency.
24.
Additional terms and conditions for applications by way of Application Forms are set out on pages
H-6 to H-9 of this Prospectus.
25.
Additional terms and conditions for applications by way of Electronic Applications are set out on
pages H-9 to H-16 of this Prospectus.
26.
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 through a SGXNET announcement to be
posted on the Internet at the SGX-ST website www.sgx.com and through a paid advertisement in
a local newspaper.
Your application must be made using the WHITE Application Forms for Offer Shares and WHITE
official envelope A and B for the Offer Shares and the BLUE Application Forms for Placement
Shares, accompanying and forming part of this Prospectus. We draw your attention to the detailed
instructions contained in the respective Application Forms and this Prospectus for the completion
of the Application Forms which must be carefully followed. Our Company reserves the right to
reject applications which do not conform strictly to the instructions set out in the
Application Forms and this Prospectus or to the terms and conditions of this Prospectus or
which are illegible, incomplete, incorrectly completed or which are accompanied by
improperly drawn remittance or improper form of remittance.
2.
Your Application Forms must be completed in English. Please type or write clearly in ink using
BLOCK LETTERS.
3.
All spaces in the Application Forms except those under the heading FOR OFFICIAL USE ONLY
must be completed and the words NOT APPLICABLE or N.A. should be written in any space
that is not applicable.
4.
Individuals, corporations, approved nominee companies and trustees must give their names in full.
You must make your application, in the case of individuals, in your full names appearing in your
identity cards (if applicants have such identification documents) or in your passports and, in the
case of corporations, in your full names as registered with a competent authority. If you are a nonindividual completing the Application Form under the hand of an official, you must state the name
and capacity in which that official signs. If you are a corporation completing the Application Form,
you are required to affix your Common Seal (if any) in accordance with your Memorandum and
Articles of Association or equivalent constitutive documents. If you are a corporate applicant and
your application is successful, a copy of your Memorandum and Articles of Association or
equivalent constitutive documents must be lodged with our Share Registrar and Share Transfer
Agent. Our Company reserves the right to require you to produce documentary proof of
identification for verification purposes.
5.
(a)
You must complete Sections A and B and sign page 1 of the Application Forms.
(b)
You are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application Forms.
Where paragraph 7(a) is deleted, you must also complete Section C of the Application
Forms with particulars of the beneficial owner(s).
H-6
(c)
If you fail to make the required declaration in paragraph 7(a) or 7(b), as the case may be, on
page 1 of the Application Forms, your application is liable to be rejected.
6.
You (whether you are an individual or corporate applicant, whether incorporated or unincorporated
and wherever incorporated or constituted), will be required to declare whether you are a citizen or
permanent resident of Singapore or a corporation in which citizens or permanent residents of
Singapore or any body corporate constituted under any statute of Singapore have an interest in
the aggregate of more than 50 per cent. (50%) of the issued share capital of or interests in such
corporation. If you are an approved nominee company, you are required to declare whether the
beneficial owner of the New Shares is a citizen or permanent resident of Singapore or a
corporation, whether incorporated or unincorporated and wherever incorporated or constituted, in
which citizens or permanent residents of Singapore or any body corporate whether incorporated or
unincorporated and wherever incorporated or constituted under any statute of Singapore have an
interest in the aggregate of more than 50 per cent. (50%) of the issued share capital of or interests
in such corporation.
7.
You may apply for the New Shares using cash only. Each application must be accompanied by a
remittance in Singapore currency for the full amount payable, in respect of the number of New
Shares applied for, in the form of a BANKERS DRAFT and CASHIERS ORDER drawn on a
bank in Singapore, made out in favour of CENTRALAND SHARE ISSUE ACCOUNT crossed
A/C PAYEE ONLY, and with the name and address of the applicant written clearly on the
reverse side. Applications not accompanied by any payment or accompanied by ANY OTHER
FORM OF PAYMENT WILL NOT BE ACCEPTED.
Remittances bearing the NOT
TRANSFERABLE or NON TRANSFERABLE crossings will be rejected. No acknowledgement
of receipt will be issued by our Company, the Issue Manager for applications and application
moneys received.
8.
Moneys paid in respect of unsuccessful applications are expected to be returned (without interest
or any share of revenue or other benefit arising therefrom) to you by ordinary post within three
Market Days after the close of the Application List at your own risk. Where your application is
rejected or accepted in part only, the full amount or the balance of the application moneys, as the
case may be, will be refunded (without interest or any share of revenue or other benefit arising
therefrom) to you by ordinary post at your own risk within 14 days after the close of the Application
List. In the event that the Invitation is cancelled by us following the termination of the Management
and Underwriting Agreement and/or the Placement Agreement, the application moneys received
will be refunded (without interest or any share of revenue or other benefit arising therefrom) to you
by ordinary post or telegraphic transfer at your own risk within five days of the termination of the
Invitation. In the event that the Invitation is cancelled by us following the issuance of a Stop Order
by the Authority, the application moneys received will be refunded (without interest or any share of
revenue or other benefit arising therefrom) to you by ordinary post or telegraphic transfer at your
own risk within 14 days from the date of the Stop Order.
9.
Capitalised terms used in the Application Forms and defined in this Prospectus shall bear the
meanings assigned to them in this Prospectus.
10.
in consideration of our Company having distributed the Application Form to you and
agreeing to close the Application List at 12.00 noon on 30 January 2008 or such other time
or date as our Company may, in consultation with the Issue Manager, the Underwriter and
the Placement Agent, decide and by completing and delivering the Application Form:
(i)
(ii)
your remittance will be honoured on first presentation and that any moneys returnable
may be held pending clearance of your payment without interest or any share of
revenue or other benefit arising therefrom;
H-7
(b)
all applications, acceptances and contracts resulting therefrom under the Invitation shall be
governed by and construed in accordance with the laws of Singapore and that you
irrevocably submit to the non-exclusive jurisdiction of the Singapore courts;
(c)
in respect of the New Shares for which your application has been received and not rejected,
acceptance of your application shall be constituted by written notification and not otherwise,
notwithstanding any remittance being presented for payment by or on behalf of our
Company;
(d)
you will not be entitled to exercise any remedy of rescission for misrepresentation at any
time after acceptance of your application;
(e)
in making your application, reliance is placed solely on the information contained in this
Prospectus and none of the Company, the Issue Manager, the Underwriter and the
Placement Agent or any other person involved in the Invitation, shall have any liability for
any information not so contained;
(f)
you consent to the disclosure of your name, NRIC/passport number, address, nationality,
permanent resident status, CDP Securities Account number, the share application amount
to our Share Registrar, CDP, SCCS, SGX-ST, our Company, the Issue Manager or other
authorised operators; and
(g)
you irrevocably agree to subscribe for the number of New Shares applied for as stated in the
Application Form or any smaller number of such New Shares that may be allotted to you in
respect of your application. In the event that our Company decide to allot a smaller number
of New Shares or not to allot any New Shares to you, you agree to accept such decision as
final.
Your applications for Offer Shares MUST be made using the WHITE Offer Shares Application
Forms and WHITE official envelopes A and B. ONLY ONE APPLICATION should be enclosed
in each envelope.
2.
You must:
(a)
enclose the WHITE Offer Shares Application Form, duly completed and signed, together
with your remittance in accordance with the terms and conditions of this Prospectus in the
WHITE envelope A provided;
(b)
(ii)
(iii)
(iv)
(c)
(d)
write, in the special box provided on the larger WHITE envelope B addressed to
Boardroom Corporate & Advisory Services Pte. Ltd., 3 Church Street, #08-01,
Samsung Hub, Singapore 049483 the number of Offer Shares you have applied for; and
insert WHITE envelope A into WHITE envelope B, seal WHITE envelope B and
thereafter DESPATCH BY ORDINARY POST OR DELIVER BY HAND at your own risk to
Boardroom Corporate & Advisory Services Pte. Ltd., 3 Church Street, #08-01,
Samsung Hub, Singapore 049483, to arrive by 12.00 noon on 30 January 2008 or such
H-8
other time as our Company may, in consultation with the Issue Manager, the
Underwriter and the Placement Agent, decide. Local Urgent Mail or Registered Post
must NOT be used. No acknowledgement of receipt will be issued for any application or
remittance received.
3.
4.
Your application for Placement Shares MUST be made using the BLUE Placement Shares
Application Forms. ONLY ONE APPLICATION should be enclosed in each envelope.
2.
The completed BLUE Placement Shares Application Form and your correct remittance (in
accordance with the terms and conditions of this Prospectus) with your name and address written
clearly on the reverse side, must be enclosed and sealed in an envelope to be provided by you.
The sealed envelope must be DESPATCHED BY ORDINARY POST OR DELIVERED BY HAND
at your own risk to Boardroom Corporate & Advisory Services Pte. Ltd., 3 Church Street, #0801, Samsung Hub, Singapore 049483, to arrive by 12.00 noon on 30 January 2008 or such
other time as our Company may, in consultation with the Issue Manager, the Underwriter
and the Placement Agent, decide. Local Urgent Mail or Registered Post must NOT be used.
No acknowledgement of receipt will be issued for any application or remittance received.
3.
4.
H-9
Application. Upon completion of your Internet Electronic Application, there will be an on-screen
confirmation (Confirmation Screen) of the application which you can print out for your record. The
Transaction Record or your printed record of the Confirmation Screen is for your retention and should not
be submitted with any Application Form.
You must ensure that you enter your own Securities Account number when using the ATM card issued to
you in your own name. If you fail to use your own ATM card or if you do not key in your own Securities
Account number, your application will be rejected. If you operate a joint bank account with any of the
Participating Banks, you must ensure that you enter your own Securities Account number when using the
ATM card issued to you in your own name. Using your own Securities Account number with an ATM card
which is not issued to you in your own name will render your Electronic Application liable to be rejected.
You must ensure, when making an Internet Electronic Application, that your mailing address is in
Singapore and the application is being made in Singapore and you will be asked to declare accordingly.
Otherwise, your application is liable to be rejected. You shall make an Electronic Application on the
terms and subject to the conditions of this Prospectus including but not limited to the terms and
conditions appearing below and those set out under the section on TERMS, CONDITIONS AND
PROCEDURES FOR APPLICATION AND ACCEPTANCE on pages H-1 to H-16 of this Prospectus as
well as the Memorandum of Association and Bye-laws of our Company.
1.
In connection with your Electronic Application for Offer Shares, you are required to confirm
statements to the following effect in the course of activating the ATM for your Electronic
Application:
(a)
that you have received a copy of this Prospectus (in the case of an ATM Electronic
Application only) and have read, understood and agreed to all the terms and
conditions of application for Offer Shares and this Prospectus prior to effecting the
Electronic Application and agree to be bound by the same;
(b)
that you consent to the disclosure of your name, NRIC/passport number, address,
nationality, permanent resident status, CDP Securities Account number, and share
application amount (the Relevant Particulars) from your account with that
Participating Bank to the Share Registrar, CDP, SCCS, our Company, the Issue
Manager (the Relevant Parties); and
(c)
that this is your only application and it is made in your own name and at your own
risk.
2.
Your application will not be successfully completed and cannot be recorded as a completed
transaction in the ATM unless you press the Enter or OK or Confirm or Yes key. By doing so,
you shall be treated as signifying your confirmation of each of the above three statements. In
respect of statement 1(b) above, your confirmation, by pressing the Enter or OK or Confirm or
Yes key, shall signify and shall be treated as your written permission, given in accordance with
the relevant laws of Singapore including Section 47(2) of the Banking Act (Chapter 19 of
Singapore) to the disclosure by that Participating Bank of the Relevant Particulars to the Relevant
Parties.
3.
BY MAKING AN ELECTRONIC APPLICATION, YOU CONFIRM THAT YOU ARE NOT APPLYING
FOR OFFER SHARES AS NOMINEE OF ANY OTHER PERSON AND THAT ANY ELECTRONIC
APPLICATION THAT YOU MAKE IS THE ONLY APPLICATION MADE BY YOU AS BENEFICIAL
OWNER.
YOU SHOULD MAKE ONLY ONE ELECTRONIC APPLICATION FOR OFFER SHARES AND
SHOULD NOT MAKE ANY OTHER APPLICATION FOR OFFER SHARES, WHETHER AT THE
ATM OR THE IB WEBSITES OF ANY PARTICIPATING BANK OR ON THE APPLICATION
FORMS. IF YOU HAVE MADE AN APPLICATION FOR OFFER SHARES ON AN APPLICATION
FORM, YOU SHALL NOT MAKE AN ELECTRONIC APPLICATION FOR OFFER SHARES AND
VICE VERSA.
H-10
4.
You must have sufficient funds in your bank account with your Participating Bank at the time you
make your Electronic Application, failing which your Electronic Application will not be completed.
Any Electronic Application which does not conform strictly to the instructions set out on
the screens of the ATM or IB website through which your Electronic Application is being
made shall be rejected.
5.
You may make an ATM Electronic Application at the ATM of any Participating Bank or an Internet
Electronic Application at the IB website of the relevant Participating Bank for the Offer Shares
using only cash by authorising such Participating Bank to deduct the full amount payable from your
account with such Participating Bank.
6.
You irrevocably agree and undertake to subscribe for and to accept the number of Offer Shares
applied for as stated on the Transaction Record or the Confirmation Screen or any lesser number
of Offer Shares that may be allotted to you in respect of your Electronic Application. In the event
that our Company decides to allot any lesser number of such Offer Shares or not to allot any Offer
Share to you, you agree to accept such decision as final. If your Electronic Application is
successful, your confirmation (by your action of pressing the Enter or OK or Confirm or Yes
or any other relevant key on the ATM or clicking Confirm or OK or Submit or Continue or
Yes or any other relevant button on the IB website screen) of the number of Offer Shares applied
for shall signify and shall be treated as your acceptance of the number of Offer Shares that may be
allotted to you and your agreement to be bound by the Memorandum of Association and Bye-laws
of our Company.
7.
We will not keep any application in reserve. Where your Electronic Application is unsuccessful,
the full amount of the application moneys will be refunded in Singapore dollars (without interest or
any share of revenue or other benefit arising therefrom) to you by being automatically credited to
your account with your Participating Bank within 24 hours of balloting of applications. Trading is
expected to commence after such refund has been made.
Where your Electronic Application is rejected or accepted in part only, the full amount or the
balance of the application moneys, as the case may be, will be refunded in Singapore dollars
(without interest or any share of revenue or other benefit arising therefrom) to you by being
automatically credited to your account with your Participating Bank within 14 days after the close
of the Application List.
Responsibility for timely refund of application moneys arising from unsuccessful or
partially successful Electronic Applications lies solely with the respective Participating
Banks. Therefore, you are strongly advised to consult your Participating Bank as to the
status of your Electronic Application and/or the refund of any moneys to you from
unsuccessful or partially successful Electronic Application, to determine the exact number
of Offer Shares allotted to you (if any) before trading the Offer Shares on the SGX-ST. You
may also call CDP Phone at 6535 7511 to check the provisional results of your application
by using your T-pin (issued by CDP upon application for the service) and keying in the
stock code (that will be made available together with the results of the allotment and/or
allocation via an announcement through the SGX-ST and by advertisement in a generally
circulating daily press). To sign up for this service, you may contact CDP customer service
officers. Neither SGX-ST, CDP, SCCS, the Participating Banks, our Company or the Issue
Manager assume any responsibility for any loss that may be incurred as a result of you
having to cover any net sell positions or from buy-in procedures activated by SGX-ST.
H-11
8.
Bank
Telephone
Available at
Service
Operating Hours expected from
DBS Bank
Internet Banking
24 hours a day
Evening of the
balloting day
http://www.dbs.com
OCBC Bank
ATM/Phone Banking/
Internet Banking
http://www.ocbc.com(1)
24 hours a day
Evening of the
balloting day
UOB Group
ATM/
Phone Banking
24 hours
Evening of the
balloting day
Internet
Banking
24 hours a day
Evening of the
balloting day
(1)
If you have made your Electronic Application through the ATMs of OCBC Bank, you may check the result of your
application through the same channels listed in the table above.
(2)
If you make your Internet Electronic Applications through the IB website of UOB Group, you may check the result of
your application through the same channels listed in the table above in relation to ATM Electronic Applications made
at ATMs of UOB Group.
(3)
If you make your Electronic Application through the ATMs or IB website of UOB Group, you may check the result of
your application through UOB Personal Internet Banking, UOB Group ATMs or UOB PhoneBanking Services.
9.
Electronic Applications shall close at 12.00 noon on 30 January 2008 or such other time as
our Company may, in consultation with the Issue Manager, the Underwriter and the
Placement Agent, decide. An Internet Electronic Application is deemed to be received only upon
its completion, that is, when there is an on-screen confirmation of the application.
10.
You are deemed to have irrevocably requested and authorised our Company to:
(a)
register the Offer Shares allotted to you in the name of CDP for deposit into your Securities
Account;
(b)
(c)
return or refund (without interest or any share of revenue earned or other benefit arising
therefrom) the application moneys, should your Electronic Application be unsuccessful, by
automatically crediting your bank account with your Participating Bank with the relevant
amount within 24 hours of balloting of applications; and
(d)
return or refund (without interest or any share of revenue or other benefit arising therefrom)
the balance of the application moneys, should your Electronic Application be accepted in
part only, by automatically crediting your bank account with your Participating Bank with the
relevant amount within 14 days after the close of the Application List.
H-12
11.
You irrevocably agree and acknowledge that your Electronic Application is subject to risks of
electrical, electronic, technical and computer-related faults and breakdowns, fires, acts of God and
other events beyond the control of the Participating Banks, our Company, the Issue Manager and
if, in any such event, our Company, the Issue Manager and/or the relevant Participating Bank do
not receive your Electronic Application or tape or any other devices containing such data, or data
relating to your Electronic Application is lost, corrupted or not otherwise accessible, whether wholly
or partially for whatever reason, you shall be deemed not to have made an Electronic Application
and you shall have no claim whatsoever against our Company, the Issue Manager and/or the
relevant Participating Bank for Offer Shares applied for or for any compensation, loss or damage.
12.
We do not recognise the existence of a trust. Any Electronic Application by a trustee must be
made in your own name and without qualification. Our Company will reject any application by any
person acting as nominee except those made by approved nominee companies only.
13.
All your particulars in the records of your Participating Bank at the time you make your Electronic
Application shall be deemed to be true and correct and your Participating Bank and the Relevant
Parties shall be entitled to rely on the accuracy thereof. If there has been any change in your
particulars after making your Electronic Application, you shall promptly notify your Participating
Bank.
14.
You should ensure that your personal particulars as recorded by both CDP and the relevant
Participating Bank are correct and identical, otherwise, your Electronic Application is liable
to be rejected. You should promptly inform CDP of any change in address, failing which the
notification letter on successful allotment and/or allocation will be sent to your address last
registered with CDP.
15.
By making and completing an Electronic Application, you are deemed to have agreed that:
(a)
in consideration of our Company making available the Electronic Application facility, through
the Participating Banks acting as the agents of our Company, at the ATMs and the IB
websites (if any):
(i)
(ii)
your Electronic Application, our acceptance and the contract resulting therefrom under
the Invitation shall be governed by and construed in accordance with the laws of
Singapore and you irrevocably submit to the non-exclusive jurisdiction of the
Singapore courts;
(b)
none of our Company, the Issue Manager or the Participating Banks shall be liable for any
delays, failures or inaccuracies in the recording, storage or in the transmission or delivery of
data relating to your Electronic Application to our Company or CDP due to breakdowns or
failure of transmission, delivery or communication facilities or any risks referred to in
paragraph 11 above or to any cause beyond their respective controls;
(c)
in respect of Offer Shares for which your Electronic Application has been successfully
completed and not rejected, acceptance of your Electronic Application shall be constituted
by written notification by or on behalf of our Company and not otherwise, notwithstanding
any payment received by or on behalf of our Company;
(d)
you will not be entitled to exercise any remedy of rescission for misrepresentation at any
time after acceptance of your application; and
(e)
reliance is placed solely on information contained in this Prospectus and that none of our
Company, the Issue Manager, the Underwriter and the Placement Agent nor any other
person involved in the Invitation shall have any liability for any information not so contained.
H-13
Steps For Electronic Applications for Offer Shares through ATMs of DBS Bank
Instructions for ATM Electronic Applications will appear on the ATM screens of the Participating Bank. For
illustration purposes, the steps for making an ATM Electronic Application through a DBS or POSB ATM
are shown below. Certain words appearing on the screen are in abbreviated form (A/c, amt, appln,
&, I/C, SGX and No. refer to Account, amount, application, and, NRIC, SGX-ST and
Number respectively). Instructions for ATM Electronic Applications on the ATM screens of Participating
Banks (other than DBS (including POSB ATMs)), may differ slightly from those represented below,
Step
Select
ELECTRONIC
NOTES/SECURITIES)
Read and understand the following statements which will appear on the screen:
SECURITY
APPLICATION
(IPOS/BONDS/ST-
Press the ENTER key to confirm that you have read and understood.
H-14
FOR THE FIXED AND MAX PRICE SECURITY APPLICATION, THIS IS YOUR
ONLY APPLICATION AND IT IS MADE IN YOUR OWN NAME AND AT YOUR
OWN RISK.
10 :
11 :
12 :
Enter the number of securities you wish to apply for using cash
13 :
Enter or confirm (if your CDP Securities Account number has already been stored in
DBS Banks records) your own 12-digit CDP Securities Account number. (Note: This
step will be omitted automatically if your CDP Securities Account number has already
been stored in the Banks records)
14 :
Check the details of your share application, your NRIC or Passport Number and CDP
Securities Account number and number of securities on the screen and press the
ENTER key to confirm application
15 :
Remove the Transaction Record for your reference and retention only
Steps For An Internet Electronic Application For Offer Shares Through The IB Website Of DBS
Bank
For illustration purposes, the steps for making an Internet Electronic Application through the DBS IB
website is shown below. Certain words appearing on the screen are in abbreviated form (A/c, amt,
appln, &, I/C, SGX and No. refer to Account, amount, application, and, NRIC, SGX-ST
and Number respectively).
Step
H-15
Click Yes to proceed and to warrant, inter alia, that you are currently in Singapore, you
have observed and complied with all applicable laws and regulations and that your
mailing address for DBS Internet Banking is in Singapore and that you are not a US
person (as such term is defined in Regulation S under the US Securities Act of 1993,
as amended)
(a)
You have read, understood and agreed to all terms of application and the
Prospectus/Document or Profile Statement and if applicable, the Supplementary or
Replacement Prospectus/Document or Profile Statement;
(b)
(c)
You are not a US person (as such term defined in Regulation S under the US
Securities Act of 1933, as amended);
(d)
You understand that the securities mentioned herein have not been and will not be
registered under the United States Securities Act of 1993 as amended (the US
Securities Act) or the securities laws of any state of the United States and may
not be offered or sold in the United States or to, or for the account or benefit of any
US person (as defined in the Regulation S under the US Securities Act) except
pursuant to an exemption from or in a transaction subject to, the registration
requirements of the US Securities Act and applicable state securities laws. These
will be no public offer of the securities mentioned herein in the United States. Any
failure to comply with this restriction may constitute a violation of the United States
securities laws;
(e)
This application is made in your name and at your own risk; and
(f)
For FIXED/MAX price share application, this is your only application. For TENDER
price securities application, this is your only application at the selected tender
price.
10 :
Check details of your share application, your I/C/passport No. and click OK to confirm
your application
11 :
Print Confirmation Screen (optional) for your reference & retention only
H-16
CENTRALAND LIMITED
CENTRALAND LIMITED
*
(Incorporated in Bermuda on 28 September 2007)
(Company Registration No: 40770)
(ii)
Issue Manager
Guoling Shanshui ()
CentraLand Limited
No. 86 South Bank of Yellow River
Huiji District
Zhengzhou city
Henan Province
The Peoples Republic of China 450042
OUR BUSINESS
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.
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