Merchants Property Development Co., Ltd. Summary of Semi-Annual Report 2006

Stock Code: 000024,200024 Stock ID: G China Merchants, China Merchants B Announcement No. [CMPD]2006-023

China Merchants Property Development Co., Ltd.

Summary of Semi-Annual Report 2006

§1 Important Declaration

1.1 The Board of Directors and the directors of the Company guarantee that there are no significant omissions, fictitious or misleading statements carried in the Report and we will accept individual and joint responsibilities for the truthfulness, accuracy and completeness of the Report. This summary is abstracted from the completed text of the Interim Report, which can be found at www.cninfo.com.cn , for details of the report please go to the complete text.

1.2 None of the directors, supervisors, or senior managements is not able to guarantee or disagree with the accuracy, authentic and completeness.

1.3 All directors presented the board meeting.

1.4 The financial statements carried in this report are not audited.

1.5 Mr. Sun Chengming - the legal representative, Mr. Huang Peikun – the chief financial officer, and Ms. Xu Yixia – the manager of accounting department declare: the financial reports carried in this report is secured for its truthfulness and completeness.

1 China Merchants Property Development Co., Ltd. Summary of Semi-Annual Report 2006

§2 Company Profile

2.1 Company Profile Stock ID G China Merchants, China Merchants B Stock Code 000024、 200024 Stock Exchange Stock Exchange, Singapore Stock Exchange Secretary of the Board Representative of Stock Affairs Name Chen Yu Liu Ning 9/F, New Times Plaza, Shekou Industrial Zone, 9/F, New Times Plaza, Shekou Industrial Zone, Address Nanshan District, Shenzhen Nanshan District, Shenzhen Tel. 518067 518067 Fax. （0755）26819600 （0755）26819680 Email. [email protected] [email protected] 2.2 Financial Highlights

2.2.1 Financial Hightlights In RMB Yuan Increase/decrease Ended this report term Ended previous year (%) Current Assets 7,537,558,887.00 6,082,116,577.00 23.93% Current Liabilities 5.027,081,661.00 3,438,736,927.00 46.19% Gross Assets 10,915,518,670.00 8,936,565,336.00 22.14% Shareholders’ Equity (Exclude Minority Shareholders’ 3,908,030,843.00 3,775,757,154.00 3.50% Equity) Net asset per share 6.315 6.102 3.49% Net asset per share, adjusted 6.305 6.093 3.48% Same period last Increase/decrease Report term (Jan-Jun) year (%) Net profit 138,865,458.00 231,286,386.00 -39.96% Net profit deducted non-recurring gain/loss 136,280,825.00 229,744,227.00 -40.68% Earnings per share 0.224 0.374 -40.11% Net return on equity (Weighted) 3.61% 6.54% 2.93% less Cash flow generated by business operation, net -393,369,698.00 114.80% 58,220,893.00 2.2.2. Non-recurring gain and loss items

√ applicable □ not applicable

In RMB Yuan Non-recurring gain and loss items Amount Non-business gain/loss, net 2,106,336.00 Written back of asset impairment provision 744,582.00 Impact of income tax and minor shareholders’ gains/losses -266,285.00 Total 2,584,633 2.2.3 Diversity between the Domestic and the International Accounting Standards

√ applicable □ not applicable

In RMB Yuan Domestic Accounting Standard International Accounting Standard Net profit 138,865,458.00 162,549,747.00 Statement about the Mainly caused by deferent accounting polices on recognition of future foreign currency earnings, subsidy diversity income and difference of equity investment.

2 China Merchants Property Development Co., Ltd. Summary of Semi-Annual Report 2006

§3 Changes in Share Capital & Particulars about Shareholders

3.1. Statement of Changes in Shares

√ applicable □ not applicable

In shares

Before the change Changed Currently (+,-) After the change Bonus Amount Proportion Others Sub-total Amount Proportion shares I. Shares with conditional 251,086,400 40.57% -40,854,022 +253,822 -40,600,200 210,486,200 34.01% subscription 1. State-owned shares ------2. State-owned legal person shares 188,288,100 30.43% -40,861,142 - -40,861,142 147,426,958 23.82% 3. Other domestic shares 35,600 - +7,120 +102,422 +109,542 145,142 0.02% Including:

Domestic legal person shares ------Domestic natural person shares 35,600 - +7,120 +102,422 +109,542 145,142 0.02% (Management shares) 4. Foreign shareholding 62,762,700 10.14% - +151,400 +151,400 62,914,100 10.16% Including:

Foreign legal person shares 62,762,700 10.14% - - - 62,762,700 10.14% Foreign natural person shares - - - +151,400 +151,400 151,400 0.02% (Management shares) II. Shares with unconditional 367,736,272 59.43% +40,854,022 -253,822 +40,600,200 408,336,472 65.99% subscription 1. Common shares in RMB 204,270,112 33.01% +40,854,022 -102,422 +40,751,600 245,021,712 39.60% 2. Foreign shares in domestic 163,466,160 26.42% - -151,400 -151,400 163,314,760 26.39% market 3. Foreign shares in overseas ------market 4. Others ------

III. Total of capital shares 618,822,672 100% - - - 618,822,672 100%

3 China Merchants Property Development Co., Ltd. Summary of Semi-Annual Report 2006

Top 10 holders of shares with limiting conditions In shares Shares with Date of Newly added Name of the No. conditioned trading tradable Conditions holder subscription allowed shares Feb. 9th (1) The original non-negotiable shares shall not be placed in the market 30,941,133 2008 or sold within 24 months since the placing right been granted. (2) Shares placed in Shenzhen Stock Exchange in 12 months upon the above 24 months shall not exceed 5% of the total shares of the 1 CMSIZ 147,426,958 Company. The price of A-shares of the Company shall not be lower Feb. 9th 116,485,825than 120% of the arithmetical average in 30 days prior to the 2009 publishing of share reallocation announcement, namely RMB11.51 (In April 2006, the Company has implemented dividend distribution for year 2005, therefore the price was adjusted to RMB11.49.) Hong Kong The original foreign shareholder shares shall not be placed in the Panorama Nov. 1 2 62,762,700 62,762,700market or sold within 12 months since the application of converting Investment 2006 into current B shares was approved. Ltd. 3.2 Top 10 shareholders and top 10 holders of unconditional shares

In shares Total of shareholders 39,789 Top 10 Shareholders Properties of Share Pledged or Name of the shareholder Total shares Conditional shares shareholder proportion % frozen China Merchants Shekou Industrial Zone State-owned 23.82% 147,426,958 147,426,958 0 Co., Ltd. Hong Kong Panorama Investment Ltd. Foreign shares 10.14% 62,762,700 62,762,700 0 China Merchants Securities Hong Kong Foreign shares 3.01% 18,636,056 0 0 Ltd. FOXTROT INTERNATIONAL Foreign shares 2.99% 18,480,000 0 0 LIMITED ORIENTURE INVESTMENT LTD Foreign shares 2.87% 17,735,430 0 0 Boshi Value Growth Securities Others 2.14% 13,260,548 0 0 Investment Foundation National Social Insurance Foundation 108 Others 1.86% 11,507,501 0 0 Portfolio National Social Insurance Foundation 102 Others 1.62% 10,014,101 0 0 Portfolio Yang Bang International Ltd. Foreign shares 1.21% 7,507,402 0 0 Yu Yang Securities Investment Foreign shares 1.13% 7,016,940 0 0 Foundation Top 10 holders of unconditional shares Name of the shareholder Unconditional shares Category of shares China Merchants Securities Hong Kong Ltd. 18,636,056Foreign shares placed in domestic exchange FOXTROT INTERNATIONAL LIMITED 18,480,000Foreign shares placed in domestic exchange ORIENTURE INVESTMENT LTD 17,735,430Foreign shares placed in domestic exchange Boshi Value Growth Securities Investment Foundation 13,260,548RMB common shares National Social Insurance Foundation 108 Portfolio 11,507,501RMB common shares National Social Insurance Foundation 102 Portfolio 10,014,101RMB common shares Yang Bang International Ltd. 7,507,402Foreign shares placed in domestic exchange Yu Yang Securities Investment Foundation 7,016,940RMB common shares National Social Insurance Foundation Portfolio 103 6,056,434RMB common shares Jing Fu Securities Investment Foundation 5,809,617RMB common shares (1) Among the shares held by China Merchants Securities (HK) Co., Ltd., there are 18,517,556 shares that were bought on behalf of Dafeng International Co., Ltd. During the period of increasing shareholding, Dafeng International Co., Ltd. committed not to reduce the shareholding amount during the period of increasing Notes to relationship or “action in concert” among the top and in 24 months after completion of share increasing. ten shareholders. (2) Dafeng International Co., Ltd., Hong Kong Panorama Investment Ltd., Foxtrot International Ltd., and Orienture Investment Ltd. are the wholly-owned subsidiaries of CMSIZ; Yangbang International Co., Ltd. is a wholly-owned subsidiary of China Merchants Holdings (International) CO., Ltd. CMSIZ is a wholly-owned subsidiary of China Merchants Group Co., Ltd.; China Merchants

4 China Merchants Property Development Co., Ltd. Summary of Semi-Annual Report 2006

Holdings (International) Co., Ltd. is a holding subsidiary of China Merchants Group Co., Ltd. (3) Boshi Value Growth Securities Investment Foundation, National Social Insurance Foundation 108 Portfolio, National Social Insurance Foundation 102 Portfolio, and Yu Yang Securities Investment Foundation were under the management of Boshi Foundation Management Co., Ltd. (4) On February 9th 2006, the share relocating reforming was launched successfully and the non-negotiable shares held by the principal shareholder – Shekou Industrial Zone had been converted into conditional current A-shares. (3) In November 2005, as approved by Document Zheng-Jian-Gong-Si-Zi [2005]108 of China Securities Regulatory Commission, titled “The approval notice to CHINA MERCHANTS PROPERTY DEVELOPMENT CO., LTD. for the placing of its non-negotiable foreign shares in the market”, the totally 62,762,700 of non-negotiable foreign legal person shares were put into trading in the market as current B-shares. These shares will be negotiable in Shenzhen Stock Exchange since November 1st 2006. (6) None of the shares held by shareholders holding 5% or above of the shares has been pledged or frozen.

3.3 Change in Controlling Shareholder and the Actual Controller

□applicable √ not applicable

§4 Directors, Supervisors and Senior Executives

4.1 Changes in Shares Held by Directors, Supervisors and Senior Executives

√ applicable □ not applicable

Shares holding at the Shares held at the end of Cause of change Name Position beginning of year (shares) term (shares) A shares B shares A shares B shares A shares B shares Bonus Lin Shaobin Director, GM 15,600 0 18,720 40,000 Purchased shares Director, Vice Yang Baiqian 0 0 30,400 0 Purchased GM Yang Vice General 0 0 19,900 22,000 Purchased Purchased Zhiguang Manager Bonus Vice General He Jianya 20,000 0 38,522 20,000 shares and Purchased Manager purchased Vice General Meng Cai 0 0 20,000 0 Purchased Manager Vice General Hu Jianxin 0 0 0 26,500 Purchased Manager Huang Peikun CFO 0 0 0 53,600 Purchased Secretary of the Chen Yu 0 0 9,000 0 Purchased Board Xiong Yan Supervisor 0 0 4,200 Purchased Zhang Linmei Supervisor 0 0 8,600 5,100 Purchased Purchased Total of 35,600 0 145,142 151,400 shares held

5 China Merchants Property Development Co., Ltd. Summary of Semi-Annual Report 2006

§5 Discussion and Analysis of the Management

In the report term, the Company keeps following with an aggressive and healthy development strategy, extended its property development business over to 9 cities in the country. The number of project-in-progress has reached the highest ever in the Company’s history. Meanwhile, following with the operating of Garden City Center, the Company’s property leasing business was further empowered. The power and water supply businesses were in good situation too.

2006 is the Company’s “year of business performance”. Facing with the national deflating policies, the Company adopted flexible business operation and further improved its project process management. Great effort has been made to upgrade product quality and sales force. Along with the rapid developing of the Company’s business scale, the Company is doing its best to increase the profitability.

5.1 Principal businesses classified based on industries/products

In RMB 10 thousand Yuan Distribution on industries Change of major Increase/decrease of Increase/decrease of business profit Major business Major business Major business On Industries major business major business cost over the same income cost profit ratio (%) turnover (%) (%) period of last year (%) Developing of merchandise 20,347.73 12,576.61 32.64% -62.55% -61.59% - 2.04% properties Rental 14,048.89 7,049.42 44.62% 25.39% 34.88% -3.68% Water and power 32,261.58 25,692.57 20.17% -1.49% -3.53% + 1.58% supply Property 12,910.88 10,128.89 16.80% management (1) Property development and sales

In the report term, the Company was promoting the national developing strategy steadily. Property development business has been extended to Shenzhen, , , , , , , and Zhangzhou. Projects in Suzhou and Shanghai were put into the market one after another. Projects in cities other than Shenzhen were becoming the new growth points of the Company’s property development business.

Under the ongoing national deflating policies, the Company adopted a number of counter measure to keep the business in steady growth. In the report term. As for property development business, Yishanjun 3rd phase and Haiyue 4th phase, the two projects not launched yet were influenced by the national policies. They need to be redesigned and apply for governmental approval. The other projects were under normal process. The Company will do it best to restore the projects into original schedule. The 2# land of Garden City 3rd phase and Yishanjun 1st phase were in great sales. Shenzhen Xicheng project was in normal progress, the main body has been completed, and has been sold out since the promotion started in April. Moving of Shanghai Yiyunjun project has been completed and the demo area of the 1st phase has been finished and open to public. The other parts were in normal progress and will be on sale in the 2nd half of the year. Suzhou Yiyunshui’an was sold all out immediately as offered to the market. The 2nd phase of the project has obtained the construction license, and cut the influence of national deflating policy to the lowest level. The designing works have been carried forward smoothly and will be started in October.

(2) Property leasing

In the report term, along with the development of Shenzhen property market, the leasing business was in a steady growth for recent years. Taige Apartment was put on leasing in the report term. Up to the end of report term, 70% of the apartment had been rent out. It is a high-class hotel-style apartment served by Fraser Management Co., Ltd.

Meanwhile, Garden City Center project was completed and opened at the end of April. Marine Center, the leasing property on construction, was in schedule. In the report term, the property leasing business was in steady growth. The on leasing properties were totaled to 2.05 million square meters, which was a 10.81% of growth over the same period of last year.

(3) Power and water supply

In the report term, the 3rd cross-harbor power cable was working normally, which fully supporting the power supply of Shekou area. For industrial enterprises in Shekou were gradually moving out of the area, the sales of water supply was decreasing. The

6 China Merchants Property Development Co., Ltd. Summary of Semi-Annual Report 2006

Company has realized power sales of 392.81 million Kwh, which decreased by 1.54% from the same period of last year. While the water sales were totaled to 15.03 million ton, which was a 5.69% of decreasing from the same period of last year.

(4) Property management

Upon takeover of China Merchants Property Management Co., Ltd., the Company performed full restructure on the management and business layout to enforce the cooperation between the Company and CMPM. Up to the end of the report term, the Company was managing 20 million square meters of properties.

5.2 Major businesses distribution on regions

In RMB 10 thousand Yuan Regions Major business income Increase/decrease of major business turnover (%) Shenzhen 83,465.01 -17.18% 5.3 Other businesses with significant influence upon the net profit

□applicable √ not applicable

5.4 Operation of shareholding subsidiaries

□applicable √ not applicable

5.5 Major Change in the Principal Business or its Structure

√ applicable □ not applicable In January 2006, the Company took over the 100% equity of China Merchants Property Management Co., Ltd. Therefore it is included in the business of Jan-Jun 2006, but not in the corresponding period of last year. 5.6 Major Change in the Profitability (Gross Profit Rate) of the Major Business over the Previous Year

□applicable √ not applicable

5.7 Cause of Major Change in the Profit Composition over the Previous Year

□applicable √ not applicable

5.8 Utilization of fund raised from financing actions

5.8.1 Application of Proceeds Raised through Share Offering

□applicable √ not applicable

5.8.2 Change of Projects

□applicable √ not applicable

5.9 Revising of business plan for the 2nd half of year by the Board of Directors

□applicable √ not applicable

5.10 Estimated accumulative profit from the year beginning to the end of the next report period may be of deficits; or in comparison with the same period of the previous year, give the warning of great change and the notice to the reasons.

□applicable √ not applicable

5.11 Statement of the Management on the Non-standard Opinion Presented by the Certified Public Accountants

□applicable √ not applicable

7 China Merchants Property Development Co., Ltd. Summary of Semi-Annual Report 2006

5.12 Statement of the Management on the Change and the Treatment Result of the Issues Involved in the Non-standard Opinion Presented by the Certified Public Accountants in the Previous Year.

□applicable √ not applicable

§6 Significant Events

6.1 Acquisition and disposal of assets, reorganization of assets

6.1.1 Assets Purchased or Transferred in

□applicable √ not applicable

6.1.2 Assets Sold or Transferred out

□applicable √ not applicable

6.1.3 Since the Report on Assets Reorganization or Public Notice on Acquisition/Sales of Assets has been published, the progress of the event and the influence upon the operation result and financial position in the report period.

□applicable √ not applicable

6.2 Significant guarantee

□applicable √ not applicable

6.3 Credits/Debts with Related Parties

√ applicable □ not applicable

In RMB 10 thousand Yuan Fund provided by the Company to Accept money from the Relationship with the the related parties related parties Name of the parties Company Amount Amount occurred Balance Balance occurred China Merchants Shekou Industrial Controlling shareholder 0.00 0.00 909.67 1,441.65 Zone Co., Ltd. Shenzhen China Merchants Affiliate company 0.00 0.00 -233.08 8,872.75 Guangming Technologies Zone Ltd. Shenzhen China Merchants Landmark Subsidiary of the 0.00 0.00 653.54 653.54 Co., Ltd. controlling shareholder Hong Kong Chinese Businessman Subsidiary of the 0.00 0.00 162.44 162.44 Property Co., Ltd. controlling shareholder China Merchants Development Co., Subsidiary of the 0.00 0.00 23.21 23.21 Ltd. substantial holder Total 0.00 0.00 1,515.78 11,153.59 Including: RMB0.00 provided by the Company to the controlling shareholder or its subsidiaries, and the balance was RMB0.00.

6.4 Material Lawsuits/Arbitrations

□applicable √ not applicable

6.5 Notes to the other Significant Events and their Influences and Analysis on the Solutions

None-business capital adoption and progress of restoring.

8 China Merchants Property Development Co., Ltd. Summary of Semi-Annual Report 2006

□applicable √ not applicable

6.6 Special commitments made by former holder of none-negotiable shares in the share equity relocation process and their fulfilling

√ applicable □ not applicable

Name of the Fulfilling of Fulfilling of Special commitments shareholder agreement commitments During the period of being the controlling shareholder of the Company, CMSIZ will not, by any means (include but not limited to direct operation, indirect operation, or participate in investment), run the businesses or activities that are Under Fulfilled or possibly are competing with the new businesses, new products, or new processing strictly technologies. And also promise to ensure its full subsidiaries, subsidiaries with 50% or above shareholding, or subsidiaries under substantial control to abide this commitment. The original non-negotiable shares shall not be placed in the market or sold within 24 months since the placing right been granted. Shares placed in Shenzhen Stock Exchange in 12 months upon the above 24 months shall not exceed 5% of the total shares of the Company. The price of A-shares of the Condition of Company shall not be lower than 120% of the arithmetical average (saycommitment Fulfilled

CMSIZ RMB11.51, in April 2006, upon complition of dividend distributing, the pricenot satisfied strictly was adjusted to RMB11.49) in 30 days prior to the publishing of shareyet reallocation announcement. In case of the commitment was broken, the illegal income from selling of shares will be transferred to the Company’s bank account and under the possession of all shareholders. CMSIZ will propose a management shareholding motivation scheme. But the Fulfilled scheme can only be put into operation under the approval of the Board ofNote yet strictly Directors and the Shareholders’ General Meeting. Upon execution of the share relocation plan, according to the needs of business operation, CMSIZ will keep introduce high quality resources such as lands toUnder Fulfilled support the growth of the Company. processing strictly

6.7 Share restructuring schedule for the companies not implemented yet

□applicable √ not applicable

Statement on the bleaching breaching of share equity relocation schedule.

□applicable √ not applicable

§7 Financial Report

7.1 Auditor’s Opinion

Financial Report √Not audited □ Audited

7.2 Financial Statements

9 China Merchants Property Development Co., Ltd. Summary of Semi-Annual Report 2006

7.2.2 Income statements

Prepared by China Merchants Property Development Co., Ltd. Jan-Jun 2006 in RMB Current term Same period last year Items Consolidated Parent company Consolidated Parent company I. Major business turnover 834,650,144.00 5,304,939.001,007,797,618.00 5,304,939.00 Less: Major business cost 583,628,088.00 5,527,707.00 663,231,086.00 5,628,502.00 Major business tax and surtax 27,680,788.00 267,899.00 34,808,052.00 267,899.00 II. Major business profit (“-“ for loss) 223,341,268.00 -490,667.00 309,758,480.00 -591,462.00 Plus: Other business profit (“-“ for loss) 3,471,688.00 309,768.00 Less: Business expenses 18,067,847.00 18,518,456.00 Administrative expense 50,395,124.00 6,387,591.00 34,507,427.00 5,937,251.00 Financial expenses -13,848,399.00 -11,693,206.00 -29,952,126.00 -17,947,059.00 III. Operational profit (“-“ for loss) 172,198,384.00 4,814,948.00 286,994,491.00 11,418,346.00 Plus: Investment gains (“-“ for loss) -31,099,187.00 134,772,642.00 -14,738,568.00 221,580,792.00 Allowance income 31,540,126.00 19,901,616.00 Non-business income 2,666,729.00 8,307,363.00 Less: Non-business expenses 560,393.00 9,248,221.00 IV. Gross profit (“-“ for loss) 174,745,659.00 139,587,590.00 291,216,681.00 232,999,138.00 Less: Income tax 31,138,800.00 722,132.00 50,949,975.00 1,712,752.00 Minor shareholders’ equity 4,741,401.00 8,980,320.00 Plus: Investment loss occurred this term but not recognized V. Net profit (“-“ for loss) 138,865,458.00 138,865,458.00 231,286,386.00 231,286,386.00 Plus: Retained profit at the beginning of term 1,047,483,698.001,087,935,246.00 789,127,260.00 822,414,866.00 Other transferred in VI. Distributable profit 1,186,349,156.001,226,800,704.001,020,413,646.00 1,053,701,252.00 Less: Statutory surplus reserves 590,368.00 Drawing of statutory public welfare 7,163,942.00 Employee award and welfare fund Reserves Enterprise development fund Profit returned to investment VII. Distributable profit 1,185,758,788.001,226,800,704.001,013,249,704.00 1,053,701,252.00 Less: Preference share dividend payable Optional surplus reserves 6,816,780.00 Common share dividend payable 12,376,453.00 12,376,453.00 92,823,401.00 92,823,401.00 Common share dividend transferred to capital (or share capital) VIII. Undistributed profit 1,166,565,555.001,214,424,251.00 920,426,303.00 960,877,851.00 Income statement (Appendix) 1. Income from selling and disposal of department or invested entities 2. Loss from nature disasters 3. Increasing (or decreasing) of gross profit by changing of accounting policies 4. Increasing (or decreasing) of gross profit by changing of accounting estimation 5. Loss from debt reconstruction 6. Others 7.3 Notes to the financial statements

7.3.1 Changing of accounting policies, accounting estimations or correcting of accounting errors

□applicable √ not applicable

7.3.2 Major change in consolidation range of financial report

√ applicable □ not applicable

10 China Merchants Property Development Co., Ltd. Summary of Semi-Annual Report 2006

On January 12th 2006, the Company and Shenzhen China Merchants Property Co., Ltd. (the subsidiary of the Company) entered the Property Transaction Agreement respectively with China Merchants Sekou Industrial Zone Co., Ltd. and Shenzhen China Merchants Landmark Co., Ltd. It has been agreed that the Company and Shenzhen China Merchants Property Co., Ltd. are about to purchase the 90% and 10% of the share equity of China Merchants Property Management Co., Ltd. held by the two companies by RMB152.28 million and RMB16.92 million respectively. The payment has been made on January 12th 2006. As approved by the Board meeting held on December 8th 2005, pricing of the project was basing on the appraisal report (Zhong-tong-ping-bao-zi [2005] No. 67) issued by Zhongtongcheng Asset Appraisal Co., Ltd. on November 3rd 2005. Basing upon January 1st 2006, the total asset of the object was RMB198.3735 million, and the total liabilities was RMB144.8417 million, while the net asset was RMB40.5118 million.

In December 2005, Hong Kong Ruijia Investment & Industrial Co., Ltd. (the subsidiary of the Company) entered the Share Equity Trading Agreement respectively with Hong Kong Chinese Businessman Properties Co., Ltd. and China Merchants Development Co., Ltd. It has been agreed to purchase the shares of Fucheng (China) Co., Ltd. held by Hong Kong Chinese Businessman Properties Co., Ltd.(70%) and China Merchants Development Co., Ltd.(10%) with RMB98.210 million and RMB14.030 million respectively under the name of Ruijia Investment & Industrial Co., Ltd. The payment has been made on January 16th 2006. As approved by the Board meeting held on December 16th 2005, pricing of the project was basing on the appraisal report (Zhong-tong-ping-bao-zi [2005] No. 73) issued by Zhongtongcheng Asset Appraisal Co., Ltd. on December 11th 2005. Basing upon January 1st 2006, the total asset of the object was RMB442.8937 million, and the total liabilities was RMB378.5992 million, while the net asset was RMB64.2945 million.

7.3.3 If the certified public accounts has issued a non-standard qualified opinion auditor’s report, list the relevant notes to the issues involved in the report.

□applicable √ not applicable

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