CONNECTED TRANSACTIONS

CONNECTED TRANSACTIONS

We have entered into a number of continuing agreements with certain directors of the Group and their associates, which constitute connected persons of the Company under the Listing Rules, in our ordinary course of business. Upon the listing of the Shares on the Stock Exchange, the following transactions will constitute continuing connected transactions of the Company under the Listing Rules.

(A) Continuing connected transactions which are exempt from the reporting, announcement and independent shareholders’ approval requirements

(1) Grant of Trademark Licenses

Shunde Country Garden Co. is the registered owner of the trademarks and service marks of ‘‘ ’’ in the form of Chinese characters as well as in the form of the logos of and (the ‘‘Trademarks’’) in China. (For a complete list of all our registered trademarks please see ‘‘Appendix VII Statutory and General Information — Intellectual Property Rights’’.) On March 27, 2007, Shunde Country Garden Co. entered into a trademark license agreement with each of the following parties (the ‘‘Licensees’’) to grant a non-exclusive right to use the Trademarks in respect of the operations listed below:

Licensee Licensed use

Qingyuan Country Garden Co...... inthedevelopmentofpropertiesinShijiao Town, Qingcheng District, Qingyuan

Jun’anGolfClubCo...... intheoperationsofagolfclublocatedat Jun’an Town, Shunde District, Foshan City

theExistingShareholders...... intheoperationsofGuangdong Country Garden School, Zengcheng Phoenix City Anglo-Chinese Kindergarten, Zengcheng Phoenix City Anglo-Chinese School, Zengcheng Licheng Anglo-Chinese Kindergarten, Guangzhou Panyu District Huanan Country Garden School and Guangzhou Panyu District Huanan Country Garden Kindergarten

Note: For the trademark license agreement with the Existing Shareholders, the Trademarks being licensed also include two other logos registered in the name of Shunde Country Garden Co. in China for schools and kindergarten services.

The Licensees are permitted under the trademark license agreements to make use of the Trademarks in the business or operations which, apart from those of Qingyuan Country Garden Co., are services ancillary to the housing properties constructed by the Group and such business or operations do not compete with the businesses of the Group. Each of the trademark license agreement is for a term from January 1, 2007 until the relevant Licensee ceases the operation in which the Trademarks are used. Prior to the entering into the trademark license agreements between Shunde Country Garden Co. and the Licensees, the license fee charged for the use of the Trademarks by the Licensees was nil.

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Since the substantial income derived from the business or operation of Qingyuan Country Garden Co. are for charitable purposes, we believe the grant of non-exclusive right to use the Trademarks to Qingyuan Country Garden Co. will have a positive effect on the Group’s public image and benefit the Group from a social perspective. Our Directors also consider that the grant of non-exclusive right to use the Trademarks to Jun’an Golf Club Co. and the Existing Shareholders in the operations of schools and kindergartens benefit us, as these are ancillary facilities of our property development projects which add value to the relevant projects and benefit our business.

Under the trademark license agreement between Shunde Country Garden Co. and Qingyuan Country Garden Co., Qingyuan Country Garden Co. shall pay annual license fee of approximately RMB1.2 million, RMB0.9 million and RMB0.9 million respectively for the use of the Trademarks for each of the three years ending December 31, 2009. Such annual license fee is based on the average estimated expenses to be spent on brand promotion of the Trademarks in relation to property development business among our 21 property development projects and the property development project of Qingyuan Country Garden Co. (We intend to separately allocate promotion expenditures specifically for our six new projects of Zhaoqing Country Garden, Huiyang Country Garden, Manzhouli Country Garden, Taizhou Country Garden, Shenyang Country Garden — Daoyi and Shenyang Country Garden — Huashan.) We intend to spend approximately RMB27 million, RMB20 million and RMB20 million on brand promotion of the Trademarks in relation to property development business for each of the three years ending December 31, 2007, 2008 and 2009 respectively. The budget for 2007 is slightly more than the subsequent two years because the Group intends to arrange a series of promotional activities for the Trademarks corresponding to the proposed listing of our Shares in the Stock Exchange and to expand the scope of promotional activities, and will thus incur more promotional expenses in 2007. Since there will be 22 property development projects that will use or continue to use the Trademarks (on which these brand promotion expenditures will be incurred) in their property development business in those three years, we divide the total brand promotion expenses among them to reach the annual license fee to be charged on Qingyuan Country Garden Co. After December 31, 2009, Qingyuan Country Garden Co. will be charged an annual license fee calculated on the same basis.

For the other Licensees which have been granted the license to use the Trademarks in their respective businesses and operations, Shunde Country Garden Co. charges a nominal license fee of RMB10,000 per year from each of them for the use of the Trademarks. Such nominal license fee is based on the considerations that we have not and will not incur any expenses in promoting the Trademarks in the businesses and operations of these Licensees, and that their businesses and operations are ancillary facilities and services which bring value to our property development projects and are advantageous to our business. Our Directors take the view that had Shunde Country Garden Co. licensed the use of the Trademarks to independent third parties for the same businesses and operations, Shunde Country Garden Co. would have also charged a nominal license fee for the same reasons as stated above. Our Directors also believe that the nominal license fee charged to these Licensees will not unduly burden such facilities, most of which are loss-making or have low profit margins.

Holiday Islands Hotel Co., a wholly-owned subsidiary of the Group, makes use of the trademark and service mark of ‘‘ Holiday Islands’’ in the form of a logo. Qingyuan Country Garden Co. has applied to the trademarks registration authority in the PRC for trademark registration of such trademark and service mark. Qingyuan Country Garden Co. entered into a trademark license agreement with Holiday Islands Hotel Co. dated March 27, 2007 to grant Holiday Islands Hotel Co. a non-exclusive right to use such logo in its business

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operations on a free-of-charge basis for a term of ten years from January 1, 2007 with an option for Holiday Islands Hotel Co. to renew the agreement at the same terms for a further ten years.

Qingyuan Country Garden Co. is owned by Yang Huiyan as to 52%, by Yang Erzhu as to 12%, by Su Rubo as to 12%, by Ou Xueming as to 12% and Zhang Yaoyuan as to 12% of its total equity interest. All of them are Existing Shareholders and each of the Existing Shareholders is a Director and a connected person of the Company. Since over 30% of the equity interest in Qingyuan Country Garden Co. is owned by a Director, it is an associate of a connected person of the Company.

Jun’an Golf Club Co. is owned by Lida Investment as to 54%, by Shunde International (Hong Kong) Golf & Country Club Company Limited ( ) as to 30.92% and by Jun’an Tourism Development Co. Ltd. ( ) as to 15.08% . Lida Investment in turn is owned by Yang Meirong ( ) (a sister of Yeung Kwok Keung) as to 52%, by Yang Minsheng ( ) (a son of Yang Erzhu) as to 12%, by Su Zhiyan ( ) (a son of Su Rubo) as to 12%, by Zhang Chibiao ( ) (a son of Zhang Yaoyuan) as to 12% and by Ou Jieping ( ) (a daughter of Ou Xueming) as to 12%. Shunde International (Hong Kong) Golf & Country Club Company Limited is owned as to 85% by a company owned and controlled by Yang Lifen (a daughter of Yang Erzhu) and is thus an associate of Yang Erzhu, by Ou Caiying ( ) as to 10% and by Luo Wan Fei ( )asto5%.BothOuCaiyingandLuoWanFei are independent third parties except that Ou Caiying holds a 10% interest in Jun’an Country Garden Co., one of our subsidiaries, while Jun’an Tourism Development Co. Ltd. is an independent third party. Jun’an Golf Club Co. and Lida Investment are associates of Mr. Yeung Kwok Keung, a Director and a connected person of the Company.

Since each of the percentage ratios (other than the profits ratio) for the trademark license agreements above in aggregate is less than 0.1%, the transactions under these trademark license agreements constitute continuing connected transactions for the Company which are exempted from the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules pursuant to Rule 14A.33 of the Listing Rules.

(2) Purchase of fiber reinforced plastic products from Landcoin Fiber Reinforced Plastic Co.

We have been purchasing fiber reinforced plastic products from Landcoin Fiber Reinforced Plastic Co. for setting up recreational structures and facilities such as parks and playgrounds in our property development projects. For each of the three years ended December 31, 2004, 2005 and 2006, purchases of fiber reinforced plastic products by the Group from Landcoin Fiber Reinforced Plastic Co. amounted to approximately RMB0.8 million, RMB0.3 million and RMB1.1 million respectively which represented substantially all fiber reinforced plastic products purchased by the Group. Such products are not supplied by Landcoin Fiber Reinforced Plastic Co. exclusively to the Group. The Directors expect that the proportion of our fiber reinforced plastic products to be purchased from Landcoin Fiber Reinforced Plastic Co. in each of the three years ending December 31, 2007, 2008 and 2009 will be reduced to between approximately 65% to 75%, as we will source such products for our projects outside the Guangdong Province from independent suppliers nearby. The amount of fiber reinforced plastic products purchased by the Group depended on the amount of recreational structures and facilities required to be built, which in turn depended on the relevant greenery design that varied from one property development project to another.

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Landcoin Fiber Reinforced Plastic Co. is owned by Yeung Kwok Keung as to 46.8%, by Yang Erzhu as to 10.8%, by Su Rubo as to 10.8%, by Ou Xueming as to 10.8%, by Zhang Yaoyuan as to 10.8% and by Zhong Yaozan (who is the husband of a niece of Yeung Kwok Keung and the husband of a cousin of Yang Huiyan) as to 10%. As over 30% of the equity interest in Landcoin Fiber Reinforced Plastic Co. is owned by Yeung Kwok Keung, a Director and a connected person of the Company, it is an associate of a connected person of the Company.

Our Directors expect that our need for fiber reinforced plastic products from Landcoin Fiber Reinforced Plastic Co. will not increase very much in each of the three years ending December 31, 2007, 2008 and 2009 compared to the annual purchase amounts from Landcoin Fiber Reinforced Plastic Co. in the last three years, and estimate that the maximum amount of annual purchases of fiber reinforced plastic products by the Group from Landcoin Fiber Reinforced Plastic Co. will not exceed RMB1.5 million for each of the three years ending December 31, 2007, 2008 and 2009 respectively. Such estimate is based on the historic amount of fiber reinforced plastic products required for the recreational structures and facilities in our property development projects which were supplied by Landcoin Fiber Reinforced Plastic Co.. We believe that Landcoin Fiber Reinforced Plastic Co. is able to provide fiber reinforced plastic products to us efficiently and can ensure the quality of its fiber reinforced plastic products can satisfy our requirements, hence the transaction with them benefits us and we prefer to source fiber reinforced plastic products from them to other suppliers in the Guangdong Province.

Since each of the percentage ratios (other than the profits ratio) for our annual amount of purchases of fiber reinforced plastic products from Landcoin Fiber Reinforced Plastic Co. will be less than 0.1% for each of the three years ending December 31, 2007, 2008 and 2009, such transactions with Landcoin Fiber Reinforced Plastic Co. constitute continuing connected transactions for the Company which are exempted from the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules pursuant to Rule 14A.33 of the Listing Rules.

(3) The lease agreement between Shunde Country Garden Co. as landlord and Elite Architectural Co.

On March 27, 2007, Shunde Country Garden Co. and Elite Architectural Co. entered into a lease agreement (‘‘Elite Architectural Lease Agreement’’) pursuant to which Shunde Country Garden Co. agreed to lease to Elite Architectural Co. a property located at 3/F Shopping Center B, Shunde Country Garden, Beijiao Town, Shunde District, Foshan with an aggregate building area of approximately 2,541 sq.m. used as the office premises for Elite Architectural Co.. The lease agreement has a term of three years from January 1, 2007 with an annual rental of RMB899,514. CB Richard Ellis Limited, our property valuer has confirmed that the rental payable under the Elite Architectural Lease Agreement is comparable to the prevailing market rent. Elite Architectural Co. leasing its office at the same location as the Group’s headquarters enables the Group to obtain design service from Elite Architectural Co. more efficiently.

Elite Architectural Co. is owned by Yang Huiyan as to 52%, by Yang Erzhu as to 12%, by Su Rubo as to 12%, by Ou Xueming as to 12% and by Zhang Yaoyuan as to 12%. Since over 30% of the equity interest in Elite Architectural Co. is owned by Yang Huiyan, a Director and a connected person of the Company, Elite Architectural Co. is an associate of a connected person of the Company.

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Since each of the percentage ratios (other than the profits ratio) for the annual rental under the Elite Architectural Lease Agreement is less than 0.1%, the transactions under the Elite Architectural Lease Agreement constitute continuing connected transactions for the Company which are exempt from the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules pursuant to Rule 14A.33 of the Listing Rules.

(4) The lease agreement between Shunde Country Garden Co., Zengcheng Country Garden Co., Guangzhou Country Garden Co., as landlords and the Existing Shareholders as tenant in respect of the premises for schools and kindergartens

On March 27, 2007, Shunde Country Garden Co., Zengcheng Country Garden Co., Guangzhou Country Garden Co. as the landlords and the Existing Shareholders as the tenants entered into a lease agreement (the ‘‘Schools Lease Agreement’’) pursuant to which the following properties (together with the respective land use rights) are leased to the Existing Shareholders as premises for and teaching staff quarters of schools and kindergartens in some of our property development projects:

Landlord Location of property Area of property Use of property

Shunde Country Country Garden, GFA of 30,850.10 as the teaching staff GardenCo...... Beijiao Town, sq.m. quarters of Shunde District Guangdong Country Guangdong Garden School

Zengcheng Country Country Garden GFA of 32,384.86 as the premises for GardenCo...... Phoenix City on sq.m. and site area Zengcheng Phoenix Guangyuan Dong of 53,285.43 sq.m. City Anglo-Chinese Road, Xintang School and Town, Zengcheng Zengcheng Phoenix District City Anglo-Chinese Kindergarten

Zengcheng Country the community area GFA of 4,894.00 as the premises for GardenCo...... of Licheng Country sq.m. and site area Zengcheng Licheng Garden on Licheng of 3,181.66 sq.m. Anglo-Chinese Street, Zengcheng Kindergarten District

Guangzhou Country the residential area GFA of 13,637.40 as the premises for GardenCo...... of Huanan Country sq.m. and site area Guangzhou Panyu Garden, Nancun of 5,613.60 sq.m. District Huanan Town, Panyu Country Garden District of School Guangzhou

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Landlord Location of property Area of property Use of property

Guangzhou Country the community area GFA of 4,644.90 as the premises for GardenCo...... of Huanan Country sq.m. and site area Guangzhou Panyu Garden, Nancun of 1,800 sq.m. District Huanan Town, Panyu Country Garden District of Anglo-Chinese Guangzhou Kindergarten

The Schools Lease Agreement has a term of three years commencing on January 1, 2007. Under the Schools Lease Agreement, the Existing Shareholders shall pay an aggregate annual rent for the above premises equal to the lower of (a) 10% of the aggregate net profit of the schools and kindergartens which operate in these premises and (b) RMB7,565,880. The latter amount is equal to the aggregate annual fair rental value of all the premises under the School Lease Agreement, as assessed by CB Richard Ellis Limited using the contractor’s method, in which the depreciated replacement cost of the buildings had been considered. Further, the Existing Shareholders shall be responsible for the management fees and charges for water and electricity of the premises. The aggregate rent payable by the Existing Shareholders under the Schools Lease Agreement will not exceed RMB7,565,880 for each of the three years ending December 31, 2007, 2008 and 2009.

The above schools and kindergartens are ancillary facilities for our relevant property development projects, most of which are required pursuant to the planning design conditions set by the respective urban planning bureau for the acquisition of the subject pieces of land. These ancillary facilities were previously operated by subsidiaries of the Group. While our Directors believe that these ancillary facilities add value to our property development projects and benefit our business, the Group has ceased to operate such schools and kindergartens because: (i) subsidiaries of the Group, having become foreign investment enterprises pursuant to the Reorganization, are prohibited by the relevant PRC regulations from operating schools in the PRC; (ii) the above schools and kindergartens have been loss making or have low profit margins; (iii) the operations of such facilities are not within our scope of business and our Directors consider that it would not be advantageous to include the operations of such facilities in our business and; (iv) our Directors consider that it will be difficult to engage independent third parties willing to take up the operations of such facilities.

Accordingly, pursuant to the Reorganization, the operations of the schools and kindergartens have been transferred to the Existing Shareholders. The rental arrangement under the Lease Agreement is intended to facilitate the undertaking of such operations by the Existing Shareholders, in order to ensure that such facilities are maintained for compliance with relevant PRC regulations and to continue the advantages of having such facilities in our property development areas. Our Directors consider that having the Existing Shareholders rather than other third parties as operators of these schools and kindergartens is in the Company’s interest as this will help to ensure that the quality and standard of management of these schools and kindergartens are maintained.

The Existing Shareholders are Directors and are connected persons of the Company.

Since each of the percentage ratios (other than the profits ratio) for the Schools Lease Agreement (calculated using the annual fair rental value of the properties under the Schools Lease Agreement) is less than 0.1%, the transactions under the School Lease Agreement constitute

— 173 — CONNECTED TRANSACTIONS continuing connected transactions for the Company which are exempt from the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules pursuant to Rule 14A.33 of the Listing Rules.

(B) Continuing connected transactions which are exempt from the independent shareholders’ approval requirement but are subject to the reporting and announcement requirements

(5) Water supply agreements with Jiangkou Water Plant Co. and with Zengcheng Crystal Water Plant Co.

Pursuant to the water supply agreement dated March 27, 2007 between Shunde Country Garden Co. and Jiangkou Water Plant Co. (‘‘Jiangkou Water Supply Agreement’’) and the water supply agreement dated March 27, 2007 between Zengcheng Country Garden Co. and Crystal Water Plant Co. (‘‘Crystal Water Supply Agreement’’), Jiangkou Water Plant Co. and Crystal Water Plant Co. shall provide water supply for use in our operations in Panyu and Shunde Districts and in Zengcheng District respectively for three years from January 1, 2007. The water supply shall be at rates no less favourable than rates chargeable by other water plants operated by independent third parties in Panyu District, Shunde District and Zengcheng District respectively.

We believe the Jiangkou Water Supply Agreement and the Crystal Water Supply Agreement ensure a quality and stable water supply to the Group’s property development projects in Panyu, Shunde and Zengcheng Districts. Moreover, the charges for water supply for these two water plants are not higher than those charged by the government managed public water plant.

(a) Jiangkou Water Plant Co.

For each of the three years ended December 31, 2004, 2005 and 2006, the fees for water supplied by Jiangkou Water Plant Co. amounted to approximately RMB2.7 million, RMB3.4 million and RMB3.4 million respectively.

Jiangkou Water Plant Co. provided and will continue to provide water supply primarily to our property management, hotel and restaurant operations in Panyu and Shunde Districts. The fees for water supply for the three consecutive years ended December 31, 2006 increased due to the increase in the area of construction and areas which completed construction in the corresponding year.

As the property development of most of our projects in Panyu and Shunde Districts was completed by the end of 2006, it is expected that the water consumption in these districts will be fairly constant and similar to that for the year ended December 31, 2006. The Directors estimate that the maximum annual amount of fees for water supply to the Group pursuant to the Jiangkou Water Supply Agreement will not exceed RMB3.5 million for each of the three years ending December 31, 2007, 2008 and 2009 respectively. Such cap is estimated primarily based on the historical amounts of fees for water supplied by Jiangkou Water Plant Co. to the Group in the two years ended December 31, 2005 and 2006.

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(b) Crystal Water Plant Co.

Crystal Water Plant Co. first provided water supply to the Group in 2004. For each of the three years ended December 31, 2004, 2005 and 2006, the fees for water supplied by Crystal Water Plant Co. to the Group amounted to approximately RMB10.0 million, RMB16.4 million and RMB7.9 million respectively.

Crystal Water Plant Co. provided and will continue to provide water supply primarily to Zengcheng Country Garden Co., Guangdong Management Co., Zengcheng Phoenix Hotel Co. and Lychee Cultural Park Co., which carry on property construction, property management, hotel and cultural village operations in Pheonix City in Zengcheng District. The fees for water supply for each of the three years ended December 31, 2004, 2005 and 2006 varied due to changes in the area of construction and areas which completed construction in the corresponding year.

The Directors estimate that the water usage by Zengcheng Phoenix Hotel Co. and Lychee Cultural Park Co. will be more stable and fees for water should be comparable to that for the year ended December 31, 2006. On the other hand, we have continuing property development in our project in Country Garden Phoenix City. The water usage by Zengcheng Country Garden Co. for each of the three years ending 2007, 2008 and 2009 will correspond to the total anticipated area of this project that commences construction and completes construction for that particular year. The water usage by Guangdong Management Co. will increase broadly in line with the increase in the total area of our Country Garden Phoenix City project which has completed construction. Taking the above factors into account, our Directors estimate that the maximum annual amount of fees for water supply to the Group pursuant to the Crystal Water Supply Agreement will not exceed RMB17 million for each of the three years ending December 31, 2007, 2008 and 2009 respectively. Such cap is estimated primarily based on the historical amounts of fees for water supplied by Crystal Water Plant Co. to the Group for our property construction, property management, hotel and cultural village operations in Country Garden Phoenix City for the year ended December 31, 2006, and our anticipated area of that project that commences construction and completes construction for each of the three years ending December 31, 2007, 2008 and 2009.

For each of the three years ended December 31, 2004, 2005 and 2006 the aggregate water supply from Jiangkou Water Plant Co. and Zengcheng Crystal Water Plant Co. represented approximately 64.5%, 53.9% and 28.9% of the total water purchase by the Group respectively. The Directors expect that the percentages of our water supplied by Jiangkou Water Plant Co. and Zengcheng Crystal Water Plant Co. for each of the three years ending December 31, 2007, 2008 and 2009 will be gradually reduced, because the Group will have more property development projects which will obtain water supply from water plants other than Jiangkou Water Plant Co. and Zengcheng Crystal Water Plant Co.. These two water plant companies do not supply water exclusively to us.

Each of Jiangkou Water Plant Co. and Crystal Water Plant Co. is owned by Yang Huiyan as to 52%, by Yang Erzhu as to 12%, by Su Rubo as to 12%, by Ou Xueming as to 12% and by Zhang Yaoyuan as to 12%. Since over 30% of the equity interests in both Jiangkou Water Plant and Crystal Water Plant are owned by Yang Huiyan, a Director and a connected person of the Company, these two companies are associates of a connected person of the Company.

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(6) Interior decoration services agreement with Qingyuan Country Garden Co.

Pursuant to two interior decoration services agreements entered into between Finest Decoration Co. and Qingyuan Country Garden Co. on November 9 and November 15, 2006 respectively (as amended by a supplemental agreement dated March 27, 2007), Finest Decoration Co. agreed to provide interior decoration services for properties constructed under the project of Qingyuan Country Garden Co. for an aggregate sum of approximately RMB40.7 million (the ‘‘Decoration Services Agreements’’). Such interior decoration services are charged by Finest Decoration Co. with reference to market prices and on terms no more favorable than those offered by independent third parties for comparable services to Qingyuan Country Garden Co. The charge for the interior decoration services was determined with reference to the estimated costs plus profits for provision of such services.

Finest Decoration Co. provides interior decoration services principally to the Group. Apart from Qingyuan Country Garden Co. to which it has been providing interior decoration services since 2005, it has not provided such services to any party outside the Group. For the two years ended December 31, 2005 and 2006, the aggregate charge for the interior decoration services provided by Finest Decoration Co. to Qingyuan Country Garden Co. amounted to approximately RMB8.3 million and RMB33.7 million, respectively.

The interior decoration services charges varied according to the areas which had completed construction and required decoration services in the corresponding years. As the development of Qingyuan Country Garden only commenced in 2004, its first area completed construction and was ready for interior decoration in 2005, so interior decoration services were required from 2005 onwards. As substantial areas had completed in 2006, the interior decoration services charges significantly increased during that year. Moreover, the increase in interior decoration services charges in 2006 included the after-sale services provided by Finest Decoration Co. to the buyers of the properties developed by Qingyuan Country Garden Co.

The Decoration Services Agreements are the only outstanding interior decoration services agreements entered into by the Group with Qingyuan Country Garden Co.. The Group does not intend to provide any further interior decoration services to Qingyuan Country Garden Co. after the expiry of the Decoration Services Agreements by October 31, 2007. The Directors understand that Qingyuan Country Garden Co. will thereafter obtain interior decoration services from independent third party providers. The Directors estimate that the maximum charge of interior decoration services to be provided by Finest Decoration Co. to Qingyuan Country Garden Co. will not exceed RMB34.0 million for the year ending December 31, 2007 (being the approximate total amount of charges for interior decoration services to be provided by Finest Decoration Co. under the Decoration Services Agreement during that year).

The Decoration Services Agreements were entered into prior to the listing of our Shares on the Stock Exchange and such transactions for our provision of decoration services to Qingyuan Country Garden Co. are not intended to continue after expiry of the Decoration Services Agreements. In any event, we believe that the Decoration Services Agreements benefit us by bringing profits to us.

(7) Design services agreement with Elite Architectural Co.

Pursuant to the design services agreement dated March 27, 2007 entered into between Shunde Country Garden Co. and Elite Architectural Co. (the ‘‘Design Services Agreement’’), Elite Architectural Co. agreed to provide property design and interior design services to us on

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terms (including but not limited to pricing) no less favourable than those offered by independent third parties to the Group for comparable services for three years from January 1, 2007.

Elite Architectural Co. has been providing property design and interior design services in respect of our property development projects principally to us. For each of the three years ended December 31, 2004, 2005 and 2006, fees for property design and interior design services provided by Elite Architectural Co. to the Group amounted to approximately RMB53.5 million, RMB51.1 million and RMB70.9 million respectively which accounted for all such services required by us. The Directors expect that we will not source all property design and interior design services from Elite Architectural Co in each of the three years ending December 31, 2007, 2008 and 2009. We intend to develop new property projects in the northern part of the PRC, and will engage design companies in the northern part of the PRC for the new projects in those areas. Elite Architectural Co. may remain as our largest property design services provider for a considerable period of time. Elite Architectural Co. does not provide design services exclusively to us. The design services provided by Elite Architectural Co. to the Group were charged at fees that were lower than other design service providers in Shunde District of Guangdong Province, PRC. The fees for property design and interior design services for the three years ended December 31, 2006 varied due to changes in the area of construction in the corresponding periods.

Our Directors estimate that the maximum amount of fees for property design and interior design services provided by Elite Architectural Co. to the Group pursuant to the Design Services Agreement will not exceed RMB75.0 million for each of the three years ending December 31, 2007, 2008 and 2009 respectively. With the anticipated increase in our land development due to additional capital from the proceeds from the listing of our Shares, the land area of our property development which requires property design and interior design services for each of the three years ending December 31, 2007, 2008 and 2009 is expected to be more than that for the previous years and will exceed the service capacity of Elite Architectural Co.. The annual cap for property design and interior design services to be provided by Elite Architectural Co. was estimated by the Company based on the maximum annual service capacity of Elite Architectural Co. in each of the three years ending December 31, 2007, 2008 and 2009 and the per square meter design service fee charged by Elite Architectural Co. under the Design Services Agreement. We will engage independent third party design service providers to provide the extra property design and interior design services required for our projects.

Elite Architectural Co. holds a first-grade design quality certificate issued by the Ministry of Construction of the PRC and is constantly able to deliver quality design service to our Group on time and at competitive prices. Elite Architectural Co. has provided design services to us for a long time and is familiar with our design requirements. We believe that having design services delivered by Elite Architectural Co. is one of the strengths which enables our Group to have rapid development, and hence we prefer to obtain design services from it to other design service companies. We believe that obtaining property design and interior design services from Elite Architectural Co. pursuant to the Design Services Agreement benefits our Group.

Since each of the percentage ratios (other than the profits ratio) for the Jiangkou Water Supply Agreement and the Crystal Water Supply Agreement (in aggregate), the Decoration Services Agreements and the Design Services Agreement is more than 0.1% and less than 2.5%, the transactions under the Water Supply Agreements, the Decoration Services Agreements and the

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Design Services Agreement constitute continuing connected transactions for the Company which are exempted from independent shareholders’ approval requirements but are subject to the reporting and announcement requirements under Chapter 14A of the Listing Rules pursuant to Rule 14A.34 of the Listing Rules.

(C) Continuing connected transactions which are subject to the reporting, announcement and independent shareholders’ approval requirements

(8) Cement product sales agreement with Grand Cement Co.

Pursuant to the cement products sales agreement dated March 27, 2007 entered into between Giant Leap Construction Co. and Grand Cement Co. (‘‘Cement Products Sales Agreement’’), Grand Cement Co. agreed to supply cement products to Giant Leap Construction Co. on terms (including but not limited to pricing) no less favourable than those offered by Grand Cement Co. to independent third parties for three years from January 1, 2007.

We have been purchasing cement products from Grand Cement Co. for the construction of most of our property development projects in Guangdong Province. For each of the three years ended December 31, 2004, 2005 and 2006, purchases of cement products by the Group from Grand Cement Co. amounted to approximately RMB44.0 million, RMB120.8 million and RMB104.2 million respectively which represented approximately 89.4%, 93.9% and 88.2% of the total cement products purchased by us. The Directors expect that the percentage of our purchase of cement products from Grand Cement Co. will be reduced in each of the three years ending December 31, 2009 because we will have more property development projects which are beyond the areas which can make use of cement products supplied by Grand Cement Co. We will purchase cement products from other suppliers for those new projects, and the percentage of our purchase of cement products from Grand Cement Co. will be reduced accordingly. Grand Cement Co. does not supply cement products exclusively to us. The purchase of cement products for the three years ended December 31, 2006 varied due to changes in the area of construction in the corresponding year. The Group spent more on the purchase of cement products in the year ended December 31, 2005 because more cement products were required for the foundation of the land under development in that particular year.

The Directors estimate that the maximum amount of annual purchases of cement products by the Group from Grand Cement Co. pursuant to the Cement Products Sales Agreement will not exceed RMB240 million for each of the three years ending December 31, 2007, 2008 and 2009 respectively. Such cap amount was estimated by the Company based on the amount of cement products which we purchased from Grand Cement Co. and the construction area of our property development projects in Guangdong Province for the year ended December 31, 2006. Our anticipated amount of purchase of cement products from Grand Cement Co. is pro-rata to our construction area in those property development projects for each of the three years ending December 31, 2007, 2008 and 2009 (which is expected to be roughly the same for each of those three years).

Grand Cement Co. has been able to deliver cement products to the Group at competitive prices and on time. We believe that this enables us to maintain a competitive edge in the property development industry and hence we prefer to source cement products from Grant Cement Co. to other suppliers.

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Grand Cement Co. was formerly owned by our subsidiary, Giant Leap Construction Co., as to 73.6% and by Hong Kong Wei Ye Construction Material Co., Ltd (an independent third party) as to 26.4%. Giant Leap Construction Co. transferred its equity interest in Grand Cement Co. to Lida Investment in 2006. Lida Investment is owned by Yang Meirong (a sister of Yeung Kwok Keung) as to 52%, by Yang Minsheng (a son of Yang Erzhu) as to 12%, by Su Zhiyan (a son of Su Rubo) as to 12%, by Zhang Chibiao (a son of Zhang Yaoyuan) as to 12% and by Ou Jieping (a daughter of Ou Xueming) as to 12%. As Grand Cement Co. is owned by Lida Investment, an associate of Mr. Yeung Kwok Keung, as to 73.6% of its total equity interest, Grand Cement Co. is thus an associate of a connected person of the Company.

(9) Construction services agreements with Qingyuan Country Garden Co.

Pursuant to the various construction services agreements entered into by Giant Leap Construction Co. with Qingyuan Country Garden Co. between August 10, 2005 to April 10, 2006 (as amended by a supplemental agreement dated March 27, 2007) (‘‘Construction Services Agreements’’), Giant Leap Construction Co. agreed to provide construction services to Qingyuan Country Garden Co. in respect of the development of properties at the site located in Shijiao Town, Qingcheng City, Qingyuan for an aggregate amount of approximately RMB1,723.0 million. Such construction services are charged by Giant Leap Construction Co. with reference to market rates and on terms no more favourable than those offered by independent third parties to Qingyuan Country Garden Co.. The charge for the construction services was determined with reference to the estimated costs plus profits for our provision of such services.

Giant Leap Construction Co. provides construction services principally to the Group. From time to time it also provides construction support to related parties and other third parties. For each of the three years ended December 31, 2004, 2005 and 2006, the aggregate value of construction services provided by Giant Leap Construction Co. to Qingyuan Country Garden Co. amounted to approximately RMB195.3 million, RMB306.0 million and RMB347.1 million respectively. The construction charges varied according to the area under construction in the corresponding year.

The Construction Services Agreements are the only outstanding construction services agreements entered into by us with Qingyuan Country Garden Co. which are for various terms of construction period with different expiry dates, all of which do not exceed three years. The latest terms of construction period under the Construction Services Agreements will expire by April 9, 2009, and we do not intend to provide any further construction services to Qingyuan Country Garden Co. after expiry of the Construction Services Agreements. Our Directors estimate that the maximum amount of construction services to be provided by the Giant Leap Construction Co. to Qingyuan Country Garden Co. pursuant to the Construction Services Agreements will not exceed RMB590 million for each of the three years ending December 31, 2007, 2008 and 2009 respectively, which is the approximate annual average of the total amount of construction services to be provided by Giant Leap Construction Co. under the Construction Services Agreements over those three years.

The Construction Services Agreements were entered into prior to the listing of our Shares on the Stock Exchange and such provision of construction services to Qingyuan Country Garden Co. is not intended to continue after expiry of the Construction Services Agreements. In any event, we believe that the Construction Services Agreements benefit us by bringing profits to the Group.

— 179 — CONNECTED TRANSACTIONS

Since each of the percentage ratios (other than the profits ratio) for the Cement Products Sales Agreement and for the Construction Services Agreements is more than 2.5%, the transactions under the Cement Products Sales Agreement and the Construction Services Agreements constitute continuing connected transactions for the Company which are subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules pursuant to Rule 14A.35 of the Listing Rules.

To ensure that the above continuing connected transactions are fairly conducted, in respect of purchases of fiber reinforced plastic products and cement products and obtaining water supply from connected persons, the Company will obtain price quotes from one or more suppliers other than the relevant connected person. Assuming the other suppliers can supply products of the same quality as the connected persons, we will select the supplier mainly based on the price. We will also consider other factors such as after sales services and punctual delivery in choosing a supplier for certain products. For our provision of interior decoration services and construction services to Qingyuan Country Garden Co., under the Decoration Services Agreements and the Construction Services Agreements, the transaction amount has been determined with reference to costs plus profits for our provision of such services. For our leases of properties to the Existing Shareholders and to Elite Architectural Co., the rental was determined based on the fair market rent or the prevailing market rent as determined by CB Richard Ellis Limited, our property valuer.

In addition, as required by the Listing Rules, the independent non-executive Directors of the Company shall review the continuing connected transactions annually and confirm in the annual report and accounts of the Company that such transactions have been entered into in the Company’s ordinary and usual course of business, are either on normal commercial terms or on terms no less favorable to the Group than those available to or from independent third parties and on terms that are fair and reasonable and in the interests of shareholders of the Company as a whole.

Waivers

The transactions described in paragraphs (5) to (7) above constitute our continuing connected transactions under Rule 14A.34 of the Listing Rules. The applicable percentage ratios as defined in Rule 14A.10 of the Listing Rules and calculated with reference to the proposed annual caps each year shown above are more than 0.1% but less than 2.5%. As such, the non-exempt continuing connected transactions in paragraphs (5) to (7) above would normally require full reporting and announcement but be exempt from the independent shareholders’ approval. The transactions described in paragraphs (8) and (9) above constitute our non-exempt continuing connected transactions under Rule 14A.35 of the Listing Rules. The applicable percentage ratios as defined in Rule 14A.10 of the Listing Rules and calculated with reference to the proposed annual caps each year shown above are more than 2.5%. As such, the non-exempt continuing connected transactions in paragraphs (8) and (9) above would normally require full reporting, announcement and independent shareholders’ approval.

Our Directors, including the independent non-executive Directors, consider that disclosure and approval of these transactions in full compliance with the Listing Rules would be impracticable and, in particular, add unnecessary administrative costs to us. In addition, our Directors believe that it is in our interests to continue with these transactions after the listing of our Shares on the Stock Exchange. They also consider that all the continuing connected transactions in paragraphs (1) to (9) are conducted upon normal commercial terms and are fair and reasonable and in the interests of our shareholders as a whole and, apart from the granting of trademark licenses under paragraph (1) which are outside our scope of business, are in the ordinary and usual course of our business. Our Directors (including independent non-executive Directors) are also of the view that the annual caps

— 180 — CONNECTED TRANSACTIONS of all of the non-exempt continuing connected transactions in paragraphs (5) to (9) above are fair and reasonable. We have applied for and the Stock Exchange has granted us waivers from strict compliance with the announcement and (where applicable) independent shareholders’ approval requirements of the Listing Rules in respect of each of these transactions subject to the aggregate value of each of these non-exempt continuing connected transactions for each financial year not exceeding the relevant annual cap amount set forth in the respective caps stated above.

Confirmation from the Joint Sponsors

The Joint Sponsors are of the view that (i) the non-exempt continuing connected transactions described in paragraphs (5) to (9) above for which waiver is sought are on normal commercial terms and have been entered into in the ordinary and usual course of business of the Company and (ii) the proposed annual caps of these non-exempt continuing transactions are fair and reasonable and in the interest of the shareholders of the Company as a whole.

Previous transactions with related parties

We entered into various related party transactions during the Track Record Period which are contained in the section headed ‘‘Related Party Transactions’’ in Appendix I to this prospectus. The Directors are of the opinion that these transactions were conducted in the ordinary and usual course of our business and, save for sales of properties to certain related parties, were on normal commercial terms. These transactions will be discontinued after listing of the Shares on the Stock Exchange, except for the continuing transactions set out in this section and except for our sale of properties developed by the Group to related parties which may occur from time to time. Any connected transactions shall be conducted in compliance with the applicable provisions of the Listing Rules.

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