14 Guangzhou R&F Properties Co., Ltd

14 GUANGZHOU R&F PROPERTIES CO., LTD. Annual Report 2005 precise Market Positioning, satisfying customers’ needs

GUANGZHOU R&F PROPERTIES CO., LTD. Annual Report 2005 15 R&F Property廣州物業一覽 in China

Heilongjiang

Jilin

Beijing Liaoning Xinjiang Neimenggu

Hebai Tianjin Ningxia Shanxi Shandong Qinghai Gansu Xian Jiangsu Henan Shaanxi

Tibet Anhui Hubei Sichuan Chongqing Zhejiang Shanghai

Hunan Jiangxi

Guizhou Fujian Guangzhou Yunnan Taiwan Guangxi

Guangdong Hong Kong Macau

Hainan

No. of Project Land Bank Location under development Total GFA as at 14 March 2006 (sq. m.) (sq. m.)

Guangzhou 11 1,143,000 4,128,000

Beijing 4 870,000 3,080,000

Tianjin 1 318,000 926,000

Xian 1 140,000 980,000

Chongqing 0 0 230,000

16 GUANGZHOU R&F PROPERTIES CO., LTD. Annual Report 2005 Business Review

Overview of the PRC Property Market In 2005, China’s economy continued its rapid growth. The gross domestic product (“GDP”) in the People’s Republic of China (the “PRC”or “China”) reached RMB18,232.1 billion, which was a 9.9% surge over the previous year, while per capita disposable income of urban residents in cities and towns recorded a growth of 9.6%. The continuing growth in China’s economy and the rise in the disposable income of its citizens will inevitably lead to a higher demand for quality housing. During the year under review, the Chinese Govern- ment implemented a series of macro economic measures to counter act the overheated property market. These macro economic measures have helped stabi- lized market conditions and in the long run are ex- pected to create a more balanced supply and demand situation and a healthier development of the property market. Core Competitiveness Since its establishment, the Group has implemented a highly efficient and competitive management and operation system. The hallmarks of this system are its speedy operational procedures, precise market positioning of its products and effective deployment of financial resources, all built on well-coordinated teamwork. Each specific project development is made up of a Co-chairman & Chief Executive Offier Zhang Li series of operations that include site selection, land acquisition, conceptual planning, design, construction, sale and after-sales services. The Group has functional departments covering all these areas, so the whole The hallmarks of our core competitive- development process can be undertaken internally. ness are the Group’s speedy operation procedures, precise market positioning of its products, and effective deployment of financial resources, all built on well-co-ordinated teamwork. Our products are mainly middle to higher class residential properties, and our designs and layouts are aiming at to satisfy the varying requirements of a range of different customers.

GUANGZHOU R&F PROPERTIES CO., LTD. Annual Report 2005 17 19 Guangzhou Properties

Under development 1 R&F Square (South Court) 2 Guangzhou R&F City 3 R&F Peach Garden 4 R&F Tianhe Prosperous Place 5 R&F West Garden

6 R&F Cairnhill Garden (Formerly: Airport Expressway R&F Wealth Court)

7 R&F Oasis Court (Formerly: R&F 2 Aristocratic House Phase III) 8 R&F Peninsula Garden 9 R&F Yinglong Plaza

y d a a o

10 R&F Yingli Building w R

s g

e n

11 R&F Edingburg International r o p

c x

Apartment g E

n t

a r

12 R&F Center o

p G

r i

13 Grand Hyatt Guangzhou A e 14 The Ritz-Carlton, Guangzhou N 3 15 R&F Science Center 20 5 21 d 8 R o a Not yet developed N e i h u a n Do Guangzhou ngfe 16 R&F International Commercial ng R Municipal oad Government Centre (J2-5 Project) Liwan District 17 R&F Jubilee Garden Zhongshan Road

1 n

18 R&F No. 2 Baogang Road Project i Yuexiu

n o

19 R&F Jingu City of Industry Project e District

R R 20. R&F Huaguo Shan Project 18 6

21 R&F Liuhua Road Project

v d

A a

o e

y R

n n

o u

Huadi Avenue h

d n a a o

R F e h e H

18 GUANGZHOU R&F PROPERTIES CO., LTD. Annual Report 2005 19 Airport

Pearl River New Town - Guangzhou CBD

Huangpu Avenue 10 e 9 黃

u 15

d e

a o

o Jinsui Road R

13 c

zh u i

H X M

n Huacheng Road

u 16

G 12 11 14

enue Huanan Expressw ng Av Linjia Pearl River Baiyun District

o R n g o c

n 4

a u

R o a d G Tianhe Zhongshan A venue District T i a n h e R o a d

Huangpu Avenue Pearl River iu New Town

y ct a

17 p

x 7 n g R o a d E g a n i n a

X n

Haizhu e

n District e v Subway Station A

u o Nanzhou h z 1 Under development Road g n a u 16 Not yet developed G

GUANGZHOU R&F PROPERTIES CO., LTD. Annual Report 2005 19 Business Review (continued)

During the development stage, different departments Property Developments and Sales generally work in parallel in order to shorten the re- The Group began in Guangzhou, and has more than quired development time schedule and speed up ten years of development history in the city. We have completion. Based on our past experience, the aver- also entered Beijing, Tianjin, Xian and Chongqing. As age time between commencement of construction at 31 December 2005, the group had 39 development and presale is approximately 10 months, and to projects completed and under development with to- completion and project delivery approximately 18 tal gross floor area (“GFA”) of 10,696,000 sq. m. of months. which 90% are residentral development. The Group also benefits from its team spirit when it As at the end of 31 December 2005, the Group was comes to business development and market developing 17 projects (excluding investment projects) expansion. When a new project is being developed, across China, with eleven projects in Guangzhou, four each department is responsible for its own duties but in Beijng, one in Tianjin and one in Xian. The total GFA also actively and closely co-ordinate with other under development (excluding investment projects), departments. When developing a new market, the was approximately 2,471,000 sq. m., representing Group seconds a team of highly experienced man- an increase of 20.8% compared with GFA under de- agement staff to head the operation. Their experience velopment in 2004. and style of co-operation at home is transferred to the new markets, making for rapid development and In 2005, the Group experience another recorded year an increasing market share. in sales. Total GFA sold and delivered was approximately 864,759 sq. m. and sales turnover amounted The Group’s products are mainly quality residential to approximately RMB6.782 billion, an increase of developments targeting customers in the middle to 26.2% and 51.2% respectively compared to 2004. higher-middle income groups. The design styles and Of the total GFA sold, Guangzhou accounted for layouts of its products are aiming at to satisfying the 533,677 sq. m. or turnover of RMB3,661 million varying requirements of a range of different and Beijing accounted for 331,082 sq. m or turn- customers. The Group’s products have always been over of RMB3,122 million. The Group’s flagship well positioned, and positively received in the market, projects are selling particularly well in Guangzhou & a fact reflected by the Group’s high pre-sale rate. Beijing, and together they accounted for around According to the past records, the Group has on av- 55.1% and 58.5% of the total GFA sold and total erage been able to pre-sell by more than 90% of its turnover respectively. products in the three months after the presale begins. The Group develops its property projects in these The Group’s excellent reputation, is an aid to buyers cities in accordance with its overall plans and needing to arrange mortgage finance and title strategies. It concentrates on choosing sites located registration. As a result, the Group typically receives within the urban area and with good development 90% of the sale proceeds within the year of sale, potential. The Group also selects major anchorage funds which can be immediately re-deployed on other sites as flagship projects within these cities. Each projects. This maximization of the use of working capi- flagship project has a total GFA in excess of tal employment has lowered the Group’s debt to eq- 500,000 sq. m. Examples of these flagship projects uity ratio and reduced its financial costs. are the R&F Peach Garden and the R&F City in Guangzhou; the Beijing R&F City and the R&F Festi- Average of more than 90% val City in Beijing; the Tianjin R&F City in Tianjin and 10 months sold in the three the Xian R&F City in Xian. months after the presale begin

Start of Start of Construction Construction Pre-Sale to Top Fill

Typically 16-18 months

20 GUANGZHOU R&F PROPERTIES CO., LTD. Annual Report 2005 Projects under Development Total GFA of under development project as at 31/12/2005 Guangzhou sq. m. (’000) Guangzhou is a major economic centre in southern 1,200 1,143 China and it is the most important city in the Pearl 1,000 870 River Delta region. The total GDP of Guangzhou in 800 2005 was approximately RMB511.6 billion, an increase of approximately 13% as compared to last 600 Beijing 400 year. It is the third largest city in terms of GDP of all 318 Tianjin China’s major cities. 200 140 Xian The Group is very optimistic about the property de- 0 Guangzhou velopment in Guangzhou, a city which will continue to be a major focal point of its business plans. With its adequate land reserves, superb quality products 2005 Sales Trend and services, strong market position, and excellent reputation, the Group expects to continuously in- RMB／Million 6,000 crease its share in Guangzhou’s property market. 5,000 As at 31 December 2005, the Group had eleven 4,000 3,660.55 projects (excluding investment projects), currently 3,121.77 under development in Guangzhou with a total GFA of 3,000 approximately 1,143,000 sq. m. 2,000 1,000 Beijing 0 Guangzhou Projects Under Development (PUD) 11 2005 Sales Trend of Flagship Project PUD Total GFA 1,143,000 sq. m.

Land Bank Total GFA 4,128,000 sq. m. 41.5%

58.5%

Other 2,814.81 million Flagship project 3,967.51 million

GUANGZHOU R&F PROPERTIES CO., LTD. Annual Report 2005 21 Beijing Properties

Under development 1 R&F Edingburg Apartment / Plaza 2 Beijing R&F City Haidian 3 R&F Xinran Court / Plaza District 4 R&F Festival City Not yet developed 5 R&F Xisanqi Construction Material City 6 R&F Shunyi Mapo Project 7 R&F Jingnan Green Life Community Project

West Changan Avenue

Fengtai District

22 GUANGZHOU R&F PROPERTIES CO., LTD. Annual Report 2005 y

w 6

x E Airport Shunyi g n District e

n i

5 ay sw es th pr 5 Ring Road Ex rt po ir

A aaigExpressway Badaling

4th Ring Road Chaoyang District

3rd Ring Road

2 nd Ring Road Xicheng Dongcheng District District Tianan Men 1 Square Jingtong Expres East Changan Avenue sway 2 4 Xuanwu Chongwen District District 3 Jingshen Expressway

Jingjintang Expressway

1 Under development

7 5 Not yet developed

GUANGZHOU R&F PROPERTIES CO., LTD. Annual Report 2005 23