Greentown China Holdings Limited (綠城中國控股有限公司)

OFFERING MEMORANDUM CONFIDENTIAL

GREENTOWN CHINA HOLDINGS LIMITED (綠城中國控股有限公司) (Incorporated in the Cayman Islands with limited liability) US$70,302,000 5.875% Notes due 2020 Issue Price: 100.0% with the benefit of a Keepwell Deed and a Deed of Equity Interest Purchase, Investment and Liquidity Support Undertaking provided by China Communications Construction Group (Limited) (中國交通建設集團有限公司) (incorporated in the People’s Republic of China)

Greentown China Holdings Limited (the “Company”), incorporated in the Cayman Islands with limited liability, is offering US$70,302,000 aggregate principal amount of 5.875% notes due 2020 (the “Notes”). The Notes will bear interest at the rate of 5.875% per year and will mature on August 11, 2020. The Company is concurrently conducting (1) an exchange offer for its outstanding 2018 USD Notes (as defined herein) (the “2018 USD Notes Exchange”); and (2) an exchange offer for its outstanding 2019 USD Notes (as defined herein) (the “2019 USD Notes Exchange,” and, together with the 2018 US$ Notes Exchange (as defined herein), the “Exchange Offer”); the Exchange Offer is for the new senior notes due 2020 to be issued by the Company through an Exchange Offer, on the same terms and conditions in all respects as and form a single series with, the Notes (the “New Notes”) and is being made pursuant to a separate exchange offer memorandum and available only to Eligible Holders (as defined therein) outside the United States. Pursuant to the Exchange Offer, the Company expects to issue the New Notes. This offering is conditional upon completion of the Exchange Offer. The Company’s obligation to consummate the Exchange Offer is subject to the satisfaction of certain conditions. The total principal amount of the New Notes and the Notes to be issued is US$500,000,000. The Company is also concurrently soliciting consents from holders of the outstanding 2016 RMB Notes (as defined herein), the outstanding 2018 USD Notes and the outstanding 2019 USD Notes to make certain amendments to the relevant Senior Notes Indenture (as defined herein), which is being made pursuant to the separate consent solicitations statement. The Notes are senior obligations of the Company, guaranteed by certain of our existing subsidiaries (the “Subsidiary Guarantors,” and such guarantees, the “Subsidiary Guarantees”), other than (1) those organized under the laws of the PRC and (2) certain other subsidiaries specified in “Description of the Notes.” We refer to the guarantees by the Subsidiary Guarantors as Subsidiary Guarantees. Under certain circumstances and subject to certain conditions, a Subsidiary Guarantee required to be provided by a subsidiary of the Company may be replaced by a limited-recourse guarantee (the “JV Subsidiary Guarantee”). We refer to the subsidiaries providing a JV Subsidiary Guarantee as JV Subsidiary Guarantors. In connection with the Notes, the Company and China Communications Construction Group (Limited) (“CCCG”) will enter into a keepwell deed on or about August 11, 2015 with DB Trustees (Hong Kong) Limited (the “Trustee”) as trustee of the Notes (the “Keepwell Deed”), as further described in “Description of the Keepwell Deed.” CCCG will enter into a deed of equity interest purchase, investment and liquidity support undertaking on or about August 11, 2015 with the Trustee (the “Deed of Undertaking”), as further described in “Description of the Deed of Equity Interest Purchase, Investment and Liquidity Support Undertaking.” Neither the Keepwell Deed nor the Deed of Undertaking constitutes a direct or indirect guarantee of the Notes by CCCG. At any time on or after August 11, 2018, we may redeem the Notes, in whole or in part, at the redemption prices specified under “Description of the Notes—Optional Redemption.” At any time prior to August 11, 2018, we may redeem up to 35% of the Notes, at a redemption price of 105.875% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date in each case, using the net cash proceeds from sales of certain equity offerings. In addition, we may redeem the Notes, in whole but not in part, at any time, at a price equal to 100.0% of the principal amount of such Notes plus (i) accrued and unpaid interest (if any) to the redemption date and (ii) a premium as set forth in this offering memorandum. Upon the occurrence of a Change of Control Triggering Event (as defined in the indenture governing the Notes (the “Indenture”)), we must make an offer to repurchase all Notes outstanding at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of repurchase. The Notes will be (1) at least pari passu in right of payment against the Company with the 2016 RMB Notes, the 2018 USD Notes and the 2019 USD Notes and all other unsecured, unsubordinated Indebtedness (as defined in the Indenture) of the Company (subject to any priority rights of such unsubordinated Indebtedness pursuant to applicable law), (2) senior in right of payment to any existing and future obligations of the Company expressly subordinated in right of payment to the Notes, (3) effectively subordinated to secured obligations of the Company, the Subsidiary Guarantors and the JV Subsidiary Guarantees (if any), to the extent of the value of the assets serving as security therefor, and (4) effectively subordinated to all existing and future obligations of the Non-Guarantor Subsidiaries (as defined below). In addition, applicable law may limit the enforceability of the Subsidiary Guarantees and the JV Subsidiary Guarantees (if any); see the section entitled “Risk Factors—Risks Relating to the Subsidiary Guarantees and the JV Subsidiary Guarantees.” For a more detailed description of the Notes, see the section entitled “Description of the Notes” beginning on page 193. Investing in the Notes involves risks. See the section entitled “Risk Factors” beginning on page 18. Application will be made to The Stock Exchange of Hong Kong Limited (the “SEHK”) for the listing of, and permission to deal in, the Notes by way of debt issues to “professional investors” only as described in this offering memorandum and such permission is expected to become effective on August 12, 2015. A confirmation of the eligibility of the listing of the Notes has been received from the SEHK. This offering memorandum includes particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) for the purpose of giving information with regard to the Company. The Company accepts full responsibility for the accuracy of the information contained in this offering memorandum and confirms, having made all reasonable enquiries, that to the best of its knowledge and belief there are no other facts the omission of which would make any statement herein misleading. Hong Kong Exchanges and Clearing Limited and the SEHK take no responsibility for the contents of this offering memorandum, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of this offering memorandum. The Notes are expected to be rated “BB-” by Standard & Poor’s Ratings Services and “Ba3” by Moody’s Investors Service, respectively. Such ratings are provisional and subject to each rating agency’s review of the final terms and conditions of the Notes. The ratings reflect the rating agencies’ assessment of the likelihood of timely payment of the principal of and interest on the Notes. The ratings do not constitute recommendations to purchase, hold or sell the Notes inasmuch as such ratings do not comment as to market price or suitability for a particular investor. We cannot assure you that the ratings will remain in effect for any given period or that the ratings will not be revised by such rating agencies in the future if in their judgment circumstances so warrant. The Notes, the Subsidiary Guarantees and the JV Subsidiary Guarantees (if any) have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act. The Notes are being offered and sold only outside the United States in compliance with Regulation S under the U.S. Securities Act “Regulation S.” For a description of certain restrictions on resale and transfer, see the section entitled “Transfer Restrictions.” It is expected that delivery of the Notes will be made on or about August 11, 2015 through the book-entry facilities of Euroclear Bank SA/NV (“Euroclear”) and Clearstream Banking, société anonyme, Luxembourg (“Clearstream”) against payment therefor. The Notes will be evidenced by a global certificate (the “Global Certificate”) in registered form, which will be registered in the name of a nominee of, and deposited with, a common depositary for Euroclear and Clearstream. Beneficial interests in the Global Certificate will be shown on, and transfers thereof will be effected only through, the records maintained by Euroclear and Clearstream and their respective accountholders. Except in the limited circumstances set out herein, individual certificates for the Notes will not be issued in exchange for beneficial interests in the Global Certificate. It is expected that delivery of the Global Certificate will be made on or about August 11, 2015 or such later date as may be agreed by the Company and the Joint Lead Managers (the “Closing Date”).

Joint Bookrunners and Joint Lead Managers

The date of this offering memorandum is July 31, 2015. TABLE OF CONTENTS

Page Summary ...... 1 The Offering ...... 8 Risk Factors ...... 18 Use of Proceeds ...... 63 Exchange Rate Information ...... 64 Capitalization and Indebtedness ...... 66 Selected Consolidated Financial and Other Data ...... 67 Recent Developments ...... 71 Management’s Discussion and Analysis of Financial Condition and Results of Operations ...... 74 Industry Overview ...... 97 Corporate Structure ...... 112 Business ...... 113 Management ...... 136 Description of CCCG ...... 144 Substantial Shareholders ...... 145 Regulations ...... 146 PRC Currency Controls ...... 178 Related Party Transactions ...... 180 Description of Material Indebtedness and Other Obligations ...... 187 Description of the Notes ...... 193 Description of the Keepwell Deed ...... 262 Description of the Deed of Equity Interest Purchase, Investment and Liquidity Support Undertaking ...... 263 Taxation ...... 266 Plan of Distribution ...... 270 Transfer Restrictions ...... 274 Ratings ...... 275 Legal Matters ...... 276 Independent Auditor ...... 276 General Information ...... 277 Index to Consolidated Financial Statements ...... F-1

i This offering memorandum does not constitute an offer to sell to, or a solicitation of an offer to buy from, any person in any jurisdiction to whom it is unlawful to make the offer or solicitation in such jurisdiction. Neither the delivery of this offering memorandum nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in our affairs since the date of this offering memorandum or that the information contained in this offering memorandum is correct as of any time after that date.

ANY OF THE JOINT LEAD MANAGERS (AS DEFINED BELOW) APPOINTED AND ACTING IN ITS CAPACITY AS A STABILIZING MANAGER, OR ANY PERSON ACTING FOR SUCH JOINT LEAD MANAGERS, MAY ENGAGE IN STABILIZING TRANSACTIONS, SYNDICATE COVERING TRANSACTIONS AND PENALTY BIDS TO THE EXTENT PERMITTED BY APPLICABLE LAWS AND REGULATIONS.

STABILIZING TRANSACTIONS PERMIT BIDS TO PURCHASE THE UNDERLYING SECURITY SO LONG AS THE STABILIZING BIDS DO NOT EXCEED A SPECIFIED MAXIMUM. COVERING TRANSACTIONS INVOLVE PURCHASE OF THE NOTES IN THE OPEN MARKET AFTER THE DISTRIBUTION HAS BEEN COMPLETED IN ORDER TO COVER SHORT POSITIONS. PENALTY BIDS PERMIT SUCH JOINT LEAD MANAGERS OR ANY PERSON ACTING FOR SUCH JOINT LEAD MANAGERS, TO RECLAIM A SELLING CONCESSION FROM A DEALER WHEN THE NOTES ORIGINALLY SOLD BY SUCH DEALER ARE PURCHASED IN A STABILIZING TRANSACTION OR A COVERING TRANSACTION TO COVER SHORT POSITIONS. NONE OF US, THE JOINT LEAD MANAGERS OR CCCG MAKES ANY REPRESENTATION OR PREDICTION AS TO THE DIRECTION OR MAGNITUDE OF ANY EFFECT THAT THE TRANSACTIONS DESCRIBED ABOVE MAY HAVE ON THE PRICE OF THE NOTES. IN ADDITION, NONE OF US, CCCG OR THE JOINT LEAD MANAGERS MAKES ANY REPRESENTATION THAT SUCH JOINT LEAD MANAGERS, OR ANY PERSON ACTING FOR SUCH JOINT LEAD MANAGERS WILL ENGAGE IN THESE TRANSACTIONS OR THAT THESE TRANSACTIONS, ONCE COMMENCED, WILL NOT BE DISCONTINUED WITHOUT NOTICE.

THIS OFFERING MEMORANDUM CONTAINS PARTICULARS GIVEN IN COMPLIANCE WITH THE RULES GOVERNING THE LISTING OF SECURITIES ON THE SEHK FOR THE PURPOSE OF GIVING INFORMATION WITH REGARD TO THE COMPANY.

This offering memorandum is highly confidential. We are providing it solely for the purpose of enabling you to consider a purchase of the Notes. You should read this offering memorandum before making a decision whether to purchase the Notes. You must not use this offering memorandum for any other purpose, or disclose any information in this offering memorandum to any other person.

Having made all reasonable enquiries, we confirm that (i) this offering memorandum contains all information with respect to us, the issue and offering of the Notes, the Keepwell Deed and the Deed of Undertaking, which is material in the context of the issue of the Notes; (ii) the statements contained in this offering memorandum relating to us are in every material respect true and accurate and not misleading; (iii) the opinions and intentions expressed in this offering memorandum with regard to us are honestly and reasonably held, have been reached after considering all relevant circumstances and are based on reasonable assumptions; (iv) there are no other facts in relation to us, the Notes, the Keepwell Deed or the Deed of Undertaking, the omission of which would, in the context of the issue and offering of the Notes, make any statement, opinion or intention expressed in this offering memorandum misleading in any material respect; and (v) we have made all reasonable enquiries to ascertain such facts and to verify the accuracy of all such information and statements. In addition, we accept full responsibility for the accuracy of the information contained in this offering memorandum.

We have prepared this offering memorandum, and we are solely responsible for its contents. You are responsible for making your own examination of us and your own assessment of the merits and risks of investing in the Notes. By purchasing the Notes, you will be deemed to have acknowledged that you

ii have made certain acknowledgements, representations and agreements as set forth under the section entitled “Transfer Restrictions” below.

No representation or warranty, express or implied, is made by any of Credit Suisse Securities (Europe) Limited, The Hongkong and Shanghai Banking Corporation, UBS AG, Hong Kong Branch and BOCI Asia Limited (the “Joint Lead Managers”), CCCG, the Trustee, Deutsche Bank AG, Hong Kong Branch (the “Principal Paying and Transfer Agent”) or Deutsche Bank Luxembourg S.A. (the “Registrar”), or any of their affiliates or advisers as to the accuracy or completeness of the information set forth herein, and nothing contained in this offering memorandum is, or should be relied upon as, a promise or representation, whether as to the past or the future. None of the Joint Lead Managers, CCCG, the Trustee, the Principal Paying and Transfer Agent and the Registrar has independently verified any of the information contained in this offering memorandum, and to the fullest extent permitted by law, assumes no responsibility for the contents, accuracy or completeness of any such information or for any other statement, made or purported to be made by any Joint Lead Manager or on its behalf in connection with the Company, the Subsidiary Guarantors, or the issue and offering of the Notes. The Joint Lead Managers, CCCG, the Trustee, the Principal Paying and Transfer Agent and the Registrar accordingly disclaim all and any liability whether arising in tort or contract or otherwise which they might otherwise have in respect of this offering memorandum or any such statement. This offering memorandum is not intended to provide the basis of any credit or other evaluation nor should it be considered as a recommendation by the Company, the Subsidiary Guarantors, CCCG, the Joint Lead Managers, the Trustee, the Principal Paying and Transfer Agent or the Registrar that any recipient of this offering memorandum should purchase the Notes.

Prospective investors in the Notes should rely only on the information contained in this offering memorandum. None of us, CCCG, the Trustee, the Principal Paying and Transfer Agent, the Registrar or the Joint Lead Managers has authorized the provision of information different from that contained in this offering memorandum, to give any information or to make any representation not contained in or not consistent with this offering memorandum or any other information supplied in connection with the offering of the Notes or to make any representation concerning us, CCCG, the Notes, the Keepwell Deed or the Deed of Undertaking other than as contained herein and, if given or made, such information or representation must not be relied upon as having been authorized by us, CCCG, the Trustee, the Principal Paying and Transfer Agent, the Registrar or any of the Joint Lead Managers. The information contained in this offering memorandum is accurate in all material respects only as of the date of this offering memorandum, regardless of the time of delivery of this offering memorandum or of any sale of the Notes. Neither the delivery of this offering memorandum nor any sale made hereunder shall under any circumstances imply that there has not been a change in our affairs and those of each of our respective subsidiaries or that the information set forth herein is correct in all material respects as of any date subsequent to the date hereof. Neither the Joint Lead Managers nor CCCG undertakes to review our financial condition or affairs during the life of the Notes or to advise any investor in the Notes of any information coming to their attention.

Each person receiving this offering memorandum acknowledges that: (i) such person has been afforded an opportunity to request from us and to review, and has received, all additional information considered by it to be necessary to verify the accuracy of, or to supplement, the information contained herein; (ii) such person has not relied on the Joint Lead Managers or any person affiliated with the Joint Lead Managers, CCCG, the Trustee, the Principal Paying and Transfer Agent or the Registrar, in connection with any investigation of the accuracy of such information or its investment decision; and (iii) no person has been authorized to give any information or to make any representation concerning us, our subsidiaries and affiliates, the Notes or the Subsidiary Guarantees (other than as contained herein and information given by our duly authorized officers and employees in connection with investors’ examination of our company and the terms of the offering of the Notes) and, if given or made, any such other information or representation should not be relied upon as having been authorized by us, CCCG, the Trustee, the Principal Paying and Transfer Agent, the Registrar or the Joint Lead Managers.

The Notes, the Subsidiary Guarantees and the JV Subsidiary Guarantees (if any) have not been approved or disapproved by the United States Securities and Exchange Commission (“SEC”), any state securities commission in the United States or any other United States regulatory

iii authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering or the accuracy or adequacy of this offering memorandum. Any representation to the contrary is a criminal offense in the United States.

We are not, CCCG is not, and the Joint Lead Managers are not making an offer to sell the Notes, including the Subsidiary Guarantees and the JV Subsidiary Guarantees (if any), in any jurisdiction except where an offer or sale is permitted. The distribution of this offering memorandum and the offering of the Notes, including the Subsidiary Guarantees and the JV Subsidiary Guarantees (if any), may in certain jurisdictions be restricted by law. Persons into whose possession this offering memorandum comes are required by us and the Joint Lead Managers to inform themselves about and to observe any such restrictions. The Notes are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the U.S. Securities Act and applicable state securities laws or exemption therefrom. You should be aware that you may be required to bear the financial risks of this investment for an indefinite period of time. For a description of the restrictions on offers, sales and resales of the Notes, including the Subsidiary Guarantees and the JV Subsidiary Guarantees (if any), and distribution of this offering memorandum, see the sections entitled “Transfer Restrictions” and “Plan of Distribution” below.

This offering memorandum summarizes certain material documents and other information, and we refer you to them for a more complete understanding of what we discuss in this offering memorandum. In making an investment decision, you must rely on your own examination of us and the terms of the offering, including the merits and risks involved. None of us or CCCG is making any representation to you regarding the legality of an investment in the Notes by you under any legal, investment, taxation or similar laws or regulations. You should not consider any information in this offering memorandum to be legal, business or tax advice. You should consult your own professional advisers for legal, business, tax and other advice regarding an investment in the Notes.

We reserve the right to withdraw the offering of the Notes at any time, and the Joint Lead Managers reserve the right to reject any commitment to subscribe for the Notes in whole or in part and to allot to any prospective purchaser less than the full amount of the Notes sought by such purchaser. The Joint Lead Managers and certain related entities may acquire for their own account a portion.

iv CERTAIN DEFINITIONS, CONVENTIONS AND CURRENCY PRESENTATION

We have prepared this offering memorandum using a number of conventions, which you should consider when reading the information contained herein. When we use the terms “we,” “us,” “our,” the “Company,” the “Group” and words of similar import, we are referring to Greentown China Holdings Limited itself, or to Greentown China Holdings Limited and its consolidated subsidiaries, as the context requires.

Market data, industry forecast and PRC and property industry statistics in this offering memorandum have been obtained from both public and private sources, including market research, publicly available information and industry publications. Although we believe this information to be reliable, it has not been independently verified by us, the Subsidiary Guarantors, CCCG, the Joint Bookrunners and Joint Lead Managers or their directors and advisers, nor the Trustee, or the Agents, and none of us, the Subsidiary Guarantors, CCCG, the Joint Bookrunners and the Joint Lead Managers, nor our or their respective directors and advisers nor the Trustee or the Agents, makes any representation or warranty, express or implied, nor assumes any responsibility as to the accuracy or completeness of that information. In addition, third-party information providers may have obtained information from market participants and such information may not have been independently verified.

The statistics set forth in this offering memorandum relating to the PRC and the property industry in the PRC were taken or derived from various government and private publications. None of us, CCCG or the Joint Lead Managers makes any representation as to the accuracy of such statistics, which may not be consistent with other information compiled within or outside the PRC. Due to possibly inconsistent collection methods and other problems, the statistics herein may be inaccurate. You should not unduly rely on such market data, industry forecast and PRC and property industry statistics.

In this offering memorandum, all references to “USD,” “US$” and “U.S. dollars” are to United States dollars, the official currency of the United States of America (the “United States”or“U.S.”); all references to “HKD,” “HK$” and “H.K. dollars” are to Hong Kong dollars, the official currency of the Hong Kong Special Administrative Region of the PRC (“Hong Kong”or“HK”); and all references to “RMB” or “Renminbi” are to Renminbi, the official currency of the People’s Republic of China (“China” or the “PRC”).

We record and publish our financial statements in Renminbi. Unless otherwise stated in this offering memorandum, all translations from Renminbi amounts to U.S. dollars were made at the rate of RMB6.2046 to US$1.00, the noon buying rate in New York City for cable transfers payable in Renminbi as certified for customs purposes by the Federal Reserve Bank of New York on December 31, 2014, and all translations from H.K. dollars into U.S. dollars were made at the rate of HK$7.7531 to US$1.00, the noon buying rate in New York City for cable transfers payable in H.K. dollars as certified for customs purposes by the Federal Reserve Bank of New York on December 31, 2014. All such translations in this offering memorandum are provided solely for your convenience and no representation is made that the Renminbi amounts referred to herein have been, could have been or could be converted into U.S. dollars or H.K. dollars, or vice versa, at any particular rate or at all. For further information relating to the exchange rates, see the section entitled “Exchange Rate Information.”

References to the “PRC” and “China,” for the statistical purposes of this offering memorandum, except where the context otherwise requires, do not include Hong Kong, Macau Special Administrative Region of the PRC, or Taiwan. “PRC government” or “State” means the central government of the PRC, including all political subdivisions (including provincial, municipal and other regional or local governments) and instrumentalities thereof, or, where the context requires, any of them.

In this offering memorandum, where information has been presented in thousands, millions or billions of units, amounts may have been rounded up or down. Accordingly, totals of columns or rows of numbers in tables may not be equal to the apparent total of the individual items and actual numbers may differ from those contained herein due to rounding.

The English names of PRC nationals, entities, departments, facilities, laws, regulations, certificates, titles and the like are translations of their Chinese names and are included for identification purpose only. In the event of any inconsistency, the Chinese name prevails.

v Our financial statements are prepared in accordance with the International Financial Reporting Standards (the “IFRS”) which differ in certain respects from generally accepted accounting principles in certain other countries.

Unless the context otherwise requires, references to “2012,” “2013” and “2014” in this offering memorandum are to our financial years ended December 31, 2012, 2013 and 2014, respectively.

References to “2012 Convertible Securities” are to the Hong Kong dollar denominated perpetual subordinated convertible callable securities issued by Active Way Development Limited (a wholly owned subsidiary of the Company) and guaranteed by Greentown China Holdings Limited in an aggregate principal amount of HK$2,550 million.

References to “2014 Perpetual Securities” are to the U.S. dollar denominated subordinated perpetual capital securities issued by Moon Wise Global Limited (an indirect wholly owned subsidiary of the Company) and guaranteed by Greentown China Holdings Limited in an aggregate principal amount of US$500,000,000.

References to the “November 2006 Notes” are to our 9.00% senior notes due 2013 in an aggregate principal amount of US$400 million.

References to the “2016 RMB Notes” are to our 5.625% senior notes due 2016 in an aggregate principal amount of RMB2,500,000,000.

References to the “2016 RMB Notes Indenture” are to the indenture dated May 13, 2013 governing the 2016 RMB Notes.

References to the “2018 USD Notes” are to our 8.50% senior notes due 2018 in an aggregate principal amount of US$700 million.

References to the “2018 USD Notes Indenture” are to the indenture dated February 4, 2013 governing the 2018 USD Notes.

References to the “2019 USD Notes” are to our 8.0% senior notes due 2019 in an aggregate principal amount of US$500 million.

References to the “2019 USD Notes Indenture” are to the indenture dated September 24, 2013 governing the 2019 USD Notes.

References to the “Senior USD Notes” are to the 2018 USD Notes and the 2019 USD Notes, collectively.

References to the “Senior Notes” are to the 2016 RMB Notes, the 2018 USD Notes and the 2019 USD Notes, collectively.

References to the “Senior USD Notes Indentures” are to the 2018 USD Notes Indenture and the 2019 USD Notes Indenture, collectively.

References to the “Senior Notes Indentures” are to the 2016 RMB Notes Indenture, the 2018 USD Notes Indenture and the 2019 USD Notes Indenture, collectively.

References to the “Consent Solicitations” are to the Company’s solicitation of consents from the holders of the relevant series of Senior Notes, through electronic means, to amend certain covenants and other provisions in the respective Senior Notes Indentures.

References to the “Exchange Offer” are to the offer made by the Company upon the terms and subject to the conditions set forth in a separate exchange offer memorandum to exchange (1) its outstanding 2018 USD Notes; and (2) its outstanding 2019 USD Notes, for New Notes, available only to eligible holders outside the United States.

vi References to “CCCC” are to China Communications Construction Company Limited, a joint stock limited company incorporated in the PRC with limited liability, whose H shares and A shares are listed on the SEHK and the Shanghai Stock Exchange, respectively.

References to “CCCI” are to CCCC International Holding Limited, a direct wholly owned subsidiary of CCCC incorporated under the laws of Hong Kong with limited liability.

References to “CCCG” are to China Communications Construction Group (Limited), a wholly state-owned company established on December 8, 2005 in the PRC.

References to “Wharf” are to The Wharf (Holdings) Limited, a non-controlling shareholder of the Company.

References to “share” are to, unless the context indicates otherwise, an ordinary share, with a nominal value of HK$0.10, in our share capital.

A property is considered sold after we have executed the purchase contract with a customer and have delivered the property to the customer. All site area and gross floor area (“GFA”) information presented in this offering memorandum represent the site area and GFA of the entire project, including those attributable to the minority shareholders of our non-wholly owned project companies. References to “sq.m.” are to the measurement unit of square meters.

In this offering memorandum, unless otherwise indicated, all references to our projects include the Group’s projects together with those of its joint ventures and associates.

In this offering memorandum, unless the context otherwise requires, all references to “affiliate” are to a person or entity directly or indirectly controlled by, or under the direct or indirect common control of, another person or entity; all references to “subsidiary” are used with the meaning ascribed to it in the Listing Rules, which includes: (i) a “subsidiary undertaking” as defined in the twenty-third schedule to the Companies Ordinance (Chapter 32 of the Laws of Hong Kong), (ii) any entity which is accounted for and consolidated in the audited consolidated accounts of another entity as a subsidiary pursuant to IFRS, as applicable, and (iii) any entity which will, as a result of acquisition of its equity interest by another entity, be accounted for and consolidated in the next audited consolidated accounts of such other entity as a subsidiary pursuant to IFRS; all references to “associate” are used with the meaning ascribed thereto under the Listing Rules, which includes: (i) in relation to an individual, his spouse and children under the age of 18, certain trustees, his or his family holding companies, as well as companies over which he, his family, trustee interests and holding companies exercise at least 30% voting power, (ii) in relation to a company, its subsidiaries, its holding companies, subsidiaries of such holding companies, certain trustees, as well as companies over which such company and its subsidiaries, trustee interests, holding companies and subsidiaries of such holding companies together exercise at least 30% voting power and (iii) in the context of connected transactions, certain connected persons and enlarged family members of a director, chief executive or substantial shareholder of a listed issuer; and all references to “controlling shareholder” are used with the meaning ascribed thereto under the Listing Rules, including any person or group of persons who are entitled to exercise 30% or more of the voting power at our general meetings or are in a position to control the composition of a majority of our board of directors (the “Board”), and “controlling interest” will be construed accordingly.

In this offering memorandum, a land grant contract refers to a state-owned land use rights grant contract (國有土地使用權出讓合同) between a developer and the relevant PRC governmental land administrative authorities, typically the local state-owned land bureaus.

In this offering memorandum, a land use rights certificate refers to a state-owned land use rights certificate (國有土地使用證) issued by a local real estate and land resources bureau with respect to the land use rights; a construction land planning permit refers to a construction land planning permit (建設用地規劃許可證) issued by local urban zoning and planning bureaus or equivalent authorities in China; a construction works planning permit refers to a construction works planning permit (建設工程規劃許可證) issued by local urban zoning and planning bureaus or equivalent authorities in China; a construction permit refers to a construction works commencement permit (建築工程施工許可證) issued by local

vii construction committees or equivalent authorities in China; a pre-sale permit refers to a commodity property pre-sale permit (商品房預售許可證) issued by local housing and building administrative bureaus or equivalent authorities with respect to the pre-sale of relevant properties; a certificate of completion refers to an inspection and acceptance form of construction completion (竣工驗收備案表); and a property ownership certificate refers to a property ownership certificate (房屋所有權證) (or in certain areas of the PRC, a property ownership and land use rights certificate (房地產權證)) issued by a local real estate bureau with respect to the ownership rights of the buildings on the relevant land.

viii FORWARD-LOOKING STATEMENTS

This offering memorandum includes “forward looking statements.” These forward looking statements relate to events that are subject to known and unknown risks, uncertainties and other factors, some of which are beyond our control, which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. These forward looking statements are based on numerous assumptions regarding our present and future business strategies and the environment in which we will operate in the future. Important factors that could cause our actual results, performance or achievements to differ materially from those in the forward looking statements include but are not limited to:

• our business, financing and operating strategies;

• our capital expenditure and property development plans;

• the amount and nature of, and potential for, future development of our business;

• our operations and business prospects;

• our financial condition and results of operations;

• various business opportunities that we may pursue;

• the interpretation and implementation of the existing rules and regulations relating to land appreciation tax (“LAT”) and its future changes in enactment, interpretation or enforcement;

• the prospective financial information regarding our businesses;

• availability and costs of bank loans and other forms of financing;

• our dividend policy;

• the industry outlook generally;

• projects under development or held for future development;

• the regulatory environment of our industry in general;

• our proposed completion and delivery dates for our projects;

• the performance and future developments of the property market in China or any region in China in which we may engage in property development;

• changes in political, economic, legal and social conditions in China, including the specific policies of the PRC central and local governments affecting the regions where we operate, which affect land supply, availability and cost of financing, pre-sale, pricing and volume of our property development projects;

• significant delay in obtaining the various permits, proper legal titles or approvals for our properties under development or held for future development;

• timely repayments by our purchasers of mortgage loans guaranteed by us;

• changes in competitive conditions and our ability to compete under these conditions;

ix • the performance of the obligations and undertakings of the third-party contractors under various construction, building, interior decoration, material and equipment supply and installation contracts;

• currency exchange restrictions;

• changes in currency exchange rates; and

• other factors beyond our control.

In some cases, you can identify forward-looking statements by such terminology as “may,” “will,” “should,” “could,” “would,” “expect,” “intend,” “plan,” “anticipate,” “going forward,” “ought to,” “seek,” “project,” “forecast,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other comparable terminology. Such statements reflect the views of our management only as at the date of this offering memorandum with respect to future events, operations, results, liquidity and capital resources and are not guarantee of future performance and some of which may not materialize or may change. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that those expectations will prove to be correct, and you are cautioned not to place undue reliance on such statements. In addition, unanticipated events may adversely affect the actual results we achieve. Important factors that could cause actual results to differ materially from our expectations are disclosed under the section entitled “Risk Factors.” Except as required by law, we undertake no obligation to update or otherwise revise any forward-looking statements contained in this offering memorandum, whether as a result of new information, future events or otherwise after the date of this offering memorandum. All forward-looking statements contained in this offering memorandum are qualified by reference to the cautionary statements set forth in this section.

x ENFORCEABILITY OF CIVIL LIABILITIES

We are an exempted company incorporated in the Cayman Islands with limited liability, and each Subsidiary Guarantor is also incorporated outside the United States. The Cayman Islands has a different body of securities laws from the United States and protections for investors may differ.

All of our assets and the assets of the Subsidiary Guarantors are located outside the United States. In addition, all of our directors and officers and the Subsidiary Guarantors’ directors and officers are nationals or residents of countries other than the United States (principally in the PRC), and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon us, any of the Subsidiary Guarantors or such persons or to enforce against us or any of the Subsidiary Guarantors or such persons judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.

We and each of the Subsidiary Guarantors expect to appoint CT Corporation System as our and their respective agent to receive service of process with respect to any action brought against us or the Subsidiary Guarantors in the United States federal courts located in the Borough of Manhattan, The City of New York under the federal securities laws of the United States or of any state of the United States or any action brought against us or the Subsidiary Guarantors in the courts of the State of New York in the Borough of Manhattan, The City of New York under the securities laws of the State of New York.

We have been advised by our Cayman Islands legal adviser, that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the securities laws of the United States or any of its states and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the securities laws of the United States or any of its states, on the grounds that such provisions are penal in nature. However, in the case of laws that are not penal in nature, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided that such judgment is final and conclusive, for a liquidated sum, not in respect of taxes or a fine or penalty, is not inconsistent with a Cayman Islands’ judgment in respect of the same matter, and was not obtained in a manner, and is not of a kind the enforcement of which is, contrary to the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands’ court may stay proceedings if concurrent proceedings are being brought elsewhere.

Our British Virgin Islands legal adviser has advised that it is doubtful whether the courts in the British Virgin Islands will enforce judgments obtained in the United States, against us or our directors or officers under the securities laws of the United States or entertain actions in the British Virgin Islands against us or our directors or officers under the securities laws of the United States.

We have been further advised by our British Virgin Islands legal adviser that the courts of the British Virgin Islands would recognize as a valid judgment, a final and conclusive judgment in personam obtained in the United States courts against us under which a sum of money is payable (other than a sum of money payable in respect of multiple damages, taxes or other charges of a like nature or in respect of a fine or other penalty) and would give a judgment based thereon provided that (a) such courts had proper jurisdiction over the parties subject to such judgment, (b) such courts did not contravene the rules of natural justice of the British Virgin Islands, (c) such judgment was not obtained by fraud, (d) the enforcement of the judgment would not be contrary to the public policy of the British Virgin Islands, (e) no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the British Virgin Islands and (f) there is due compliance with the correct procedures under the laws of the British Virgin Islands.

xi We have been advised by our Hong Kong legal adviser that Hong Kong has no arrangement for the reciprocal enforcement of judgments with the United States. However, under Hong Kong common law, a foreign judgment (including one from a court in the United States predicated upon U.S. federal or state securities laws) may be enforced in Hong Kong by bringing an action in a Hong Kong court, and then seeking summary or default judgment on the strength of the foreign judgment, provided that the foreign judgment is for a debt or definite sum of money and is final and conclusive on the merits. In addition, the Hong Kong courts may refuse to recognize or enforce a foreign judgment if such judgment:

(a) was obtained by fraud;

(b) was rendered by a foreign court that lacked the appropriate jurisdiction at the time;

(d) is for penal damages;

(e) is based on foreign penal, revenue or other public law; or

(f) enforcement proceedings are instituted within six years after the date of the original judgment.

Further, we have been advised by our PRC legal adviser that there is uncertainty as to whether the courts of the PRC, would (i) enforce judgments of the U.S. courts obtained against us or our directors and officers predicated upon the civil liability provisions of the federal securities laws of the United States or the securities laws of any state or territory within the United States or (ii) entertain original actions brought in the courts of the PRC, respectively, against us or our directors and officers predicated upon the federal securities laws of the United States or the securities laws of any state or territory within the United States.

xii SUMMARY

This summary highlights certain information contained in this offering memorandum. This summary does not contain all the information that may be important to you in deciding to invest in the Notes. You should read this entire offering memorandum, including the section entitled “Risk Factors” and the financial statements and related notes thereto, before making investment decisions.

Overview

We are one of the leading property developers in the PRC. We offer a wide range of high quality housing such as villas, flat mansions, low-rise apartment and high-rise apartments, urban complexes, integrated community, as well as hotels and commercial property. Since our establishment in 1995 as a private real-estate developer in Hangzhou, we have been based in Zhejiang Province, one of the most economically vibrant provinces in the PRC. With property projects covering most of the economically prosperous cities such as Hangzhou, Ningbo, Wenzhou, Taizhou, Shaoxing and other cities in Zhejiang Province which ranked on Zhongjun County Economic Research Institute’s 2011 list of the Top 100 national most competitive county-level cities, we have achieved significant scale and built a strong reputation. We have also successfully set foot in other major cities located in the Yangtze River Delta, including Shanghai, Nanjing, Suzhou, Wuxi and Nantong and major cities in the Bohai Rim Economic Belt, including Beijing, Tianjin, Qingdao, Jinan and Dalian and other provincial cities, such as Hefei in Anhui Province, Zhengzhou in Henan Province, Changsha in Hunan Province, and Urumqi in Xinjiang. For 10 consecutive years, from 2005 to 2014, we were ranked jointly by four authoritative institutions, namely Enterprise Research Institute of the Development Research Center of the State Council, China Real Estate Association, Tsinghua University Real Estate Research Center and China Index Institute, as one of the top 10 property enterprises in China. In addition, in the “China Urban Resident Satisfaction Survey” published by the China Index Academy and the China Real Estate Index System (the “Residents’ Satisfaction Survey”), we ranked first in the outstanding enterprises rankings in terms of resident satisfaction for four consecutive years from 2011 to 2014. We also ranked first in the “Brand Loyalty,” “Product Quality,” “Property Services” and “Sales Services” indices in 2011, and first in the “Property-Owner Loyalty,” “Corporate Image,” “Plan and Design,” “Project Quality,” “Property Services” and “Sales Services” indices in 2012. On July 19, 2013, the China Index Academy issued the “Report of Housing Satisfaction of Urban Residents in China 2013.” The satisfaction survey covered 16 major cities, 122 key housing enterprises and 349 urban communities across China. Among the cities included in the survey were Hangzhou, Beijing, Shanghai, Qingdao, Ningbo and Changsha. We received outstanding results and rankings, coming first in the “General Satisfaction of Urban Residents” category in six cities, first in “Customer Loyalty Rate” in five cities and second in “Customer Loyalty Rate” in one city. In addition, in March 2014, we were named the “2014 Top 10 China Real Estate Companies,” “2014 Top 10 China Real Estate Companies in Comprehensive Strength,” “2014 Top 10 China Real Estate Companies in Comprehensive Development” and “2014 Top 10 China Real Estate Companies in City Coverage.” We received these honors at the press conference of the Top 500 China Real Estate Companies Survey jointly organized by the China Real Estate Research Association, the China Real Estate Association and the China Real Estate Appraisal.

As at December 31, 2014, we had a total of 98 projects at various stages of development in various provinces, autonomous regions and municipalities, including the Yangtze River Delta Region (including Jiangsu and Shanghai District, Hangzhou District and Ningbo District) and the Bohai Rim Region and other regions of rapid economic growth. As at December 31, 2014, our 98 projects comprise a total GFA of 34.89 million sq.m., of which 19.06 million sq.m. was attributable to the Group. We reasonably believe that the current land bank can satisfy our developmental needs for the coming five years.

1 from RMB27,460 million during the year ended December 31, 2013. The increase was mainly due to the increase in areas sold. The sales area of properties delivered in 2014 was 1,936,916 sq.m., representing an increase of 17.1% from 1,653,830 sq.m. in 2013. The average selling price of properties delivered in 2014 was RMB15,546 per sq.m., representing a decrease of 6.4% from RMB16,604 per sq.m. in 2013.

Our net profit for the year ended December 31, 2014 equaled RMB3,210 million (US$517.35 million), representing a decrease of 46.4% from RMB5,990 million during the year ended December 31, 2013. After deduction of post-tax effect of net gains from acquisitions, impairment losses or reversal of impairment loss on some assets, and changes in fair value of financial derivatives and gain from changes in fair value of investment properties, the core net profit in 2014 was RMB3,379 million, representing a decrease of 36.0% compared with RMB5,279 million recorded in 2013. In addition to the decline of gross profit margin contributed by subsidiaries from the sales of properties, the decrease was also mainly due to the significant decrease of share of results of joint ventures and associates. Profit attributable to our owners amounted to RMB2,072 million during the year ended December 31, 2014, representing a decrease of 57.6% compared with RMB4,886 million during the year ended December 31, 2013. During the year ended December 31, 2014, we achieved basic earnings per share of RMB0.80, representing a 63.3% decrease over RMB2.18 recorded during the year ended December 31, 2013.

Please see the “Recent Developments” section, which includes our post December 31, 2014 developments.

Our Competitive Strengths

Leading high-end property developer in China with strong brand recognition

We are a leading property developer in China with a nationwide footprint and market leadership in Zhejiang province, one of the most prosperous and developed provinces in the PRC and Hangzhou. In addition to Zhejiang, we have developed high quality projects in major cities located in the Yangtze River Delta, including Shanghai, Nanjing, Suzhou, Wuxi and Nantong, key cities in the Bohai Rim Region, including Beijing, Tianjin, Qingdao, Jinan and Dalian, and provincial cities, such as Hefei, Zhengzhou, Changsha and Urumqi. From 2005 to 2014, we have been ranked as one of the Top 10 Property Enterprises in China for 10 consecutive years, jointly by the Enterprise Research Institute of the Development Research Center of the State Council, China Real Estate Association, Tsinghua University Real Estate Center and China Index Institute.

Our long-standing leading position has been maintained as a result of our strong brand recognition and successful track record of consistently providing customers with top quality products and services. We have received numerous awards from both institutions and customer surveys. In the Residents’ Satisfaction Survey, we ranked first in the outstanding enterprises rankings in terms of Resident Satisfaction for four consecutive years from 2011 to 2014. We also ranked first in all 6 indices of customer satisfaction, namely “Property-Owner Loyalty,” “Corporate Image,” “Plan and Design,” “Project Quality,” “Property Services” and “Sales Services.” In addition, on July 19, 2013, the China Index Academy issued the “Report of Housing Satisfaction of Urban Residents in China 2013.” The satisfaction survey covered 16 major cities, 122 key housing enterprises and 349 urban communities across China. Among the cities included in the survey were Hangzhou, Beijing, Shanghai, Qingdao, Ningbo and Changsha. We received outstanding results and rankings, coming first in the “General Satisfaction of Urban Residents” category in six cities, first in “Customer Loyalty Rate” in five cities and second in “Customer Loyalty Rate” in one city. In addition, in September 2013, Greentown was the only PRC real estate developer in the PRC to be named the “Top Brand in Customer Satisfaction.” Greentown received this honor at a press conference held by the “China Real Estate TOP 10 Research Team,” formed jointly by the Development Research Center of the State Council, the Institute of Real Estate Studies at Tsinghua University and the China Index Academy. The surveys conducted for this recognition covered 17 cities throughout China. Greentown came first on the basis of customer satisfaction in 15 major cities in which it operates. The Group (together with its joint ventures and associates) also ranked second in the “2014 China Real Estate Enterprises Top 10 Brand Value (Mixed Category)” with a brand valuation of RMB19.883 billion and was named for the 11 consecutive years as one of the “China Real Estate Enterprises Top 10 Brand Value” since 2004. We believe that our superior operational capabilities and long-term commitment to excellent quality and customer service will continue to reinforce our brand and market leadership.

2 Diversified product offering with a focus on residential properties

We have continually improved and enhanced our product mix to respond to the demands of customers and maintain our competitiveness in the market. We currently offer a diverse range of product types, including villas, flat mansions, low-rise and high-rise apartments, urban complexes and integrated community developments. We have devised a replication module, wherein we build a branded product series based on successful existing projects, and replicate new projects in other regions with additional features incorporating local elements. Many of our branded product series have received positive feedback from our customers and we believe our branded product series has strengthened our customer loyalty and solidified our brand name.

We are also actively entering into the “themed estate” market to further broaden our space for development, including urban complexes in second and third tier cities, housing estates for retired communities and tourist-oriented estates. As a result of detailed market analysis and research, we ensure that we develop projects which are suited to the demographics and market demand of each project location. Though our focus is on residential property development, we have diversified into mixed-use developments and commercial property, including Hangzhou Wanjiang Project, Deqing Yingxi Arcadia in Zhejiang, Greentown Bund No.8 in Shanghai, Beijing Xiaoyunlu Project, among others. We also generate additional recurring revenue from rental income from investment properties, property management and hotel operations.

Sizeable quality land bank ensuring sustainable future development and growth

Our breadth of experience and in-depth understanding of the market have enabled us to identify prime locations and land acquisition opportunities, allowing us to build a strong project development pipeline. We have successfully accumulated a sizeable quality land bank, which, as at December 31, 2014, consisted of 98 projects at various stages of development in various provinces, autonomous regions and municipalities, including the Yangtze River Delta Region (including Jiangsu and Shanghai District, Hangzhou District and Ningbo District) and the Bohai Rim Region and other regions of rapid economic growth as at December 31, 2014. As at December 31, 2014, we had a total land bank of approximately 34.89 million sq.m., of which 19.06 million sq.m. was attributable to the Group. As at December 31, 2014, total saleable area amounted to 25.55 million sq.m. of which 13.68 million sq.m. was attributable to the Group.

We believe that our existing land reserves are sufficient for the coming five years of development. In line with our asset-light strategy, we aim to collaborate with JV partners for future land acquisitions, particularly in new markets, thereby mitigating developmental risk and reducing cash flow requirements.

Prudent financial management reinforced by disciplined cost controls and acquisition strategy

We adopt a prudent financial management approach and implement disciplined cost controls with respect to project development in order to maximize profitability. We closely monitor our capital position and carefully manage our land acquisitions, construction costs and operating expenses. We believe that through centralizing the procurement of building materials and standardizing construction and decoration costs for projects in different price segments, we are able to effectively control our construction costs.

We have also formed an Investment Committee, comprised of three members (one of whom is appointed by Wharf) to assess the risk and returns of potential acquisitions targets. Acquisition of land or investment in property development will be submitted to the Investment Committee for review. We will be prudent in new land acquisitions and work with JV partners in order to lower capital requirements and development risk. Our acquisition strategy will ensure that we have sufficient cash flows to service our indebtedness, maintain a strong capital position and sustain leverage ratios which are in line with the industry norm.

3 Experienced management team backed by top quality partners

Our senior management team members have extensive experience in the PRC real estate industry and expertise in project development and business management. Certain of our core management members, including our co-chairman, Mr. Song Weiping, and executive director, Mr. Shou Bainian, have led the growth of our business since our inception in 1995. We believe that our highly experienced senior management members will enable us to maintain the growth of our business. We continually seek to attract and retain management talent in accordance with our aim to further expand our business operations.

Our strong brand name and consistent track record has enabled us to form partnerships with top quality corporations, including strategic partners such as CCCG and Wharf and other established JV partners. Our strategic partnerships will bring synergies to our operations by strengthening our financial position and providing joint development opportunities in the future. We will also continue to work closely with our JV partners to implement our “asset-light” strategy going forward. See “—Strategic Partnerships from 2012 to 2014.”

Our Business Strategies

“Excellent quality and sound operation” will henceforth become the guiding principle for the development of the Group. “Excellent quality” mainly refers to qualities such as attention to details, exquisiteness of products, and sincerity in service. This is the fundamental quality of the Group and we will continue to uphold and promote it. At the same time, we will adopt a prudent financial strategy, improve our financial risk management, pursue an “asset-light” model of development, refine our land bank structure and continuously improve customers’ satisfaction, focusing primarily on the export of our brand, products and management expertise, in order to ensure the sustainable development of the Company.

Continuously promote our brand image through improving the quality of products and services

Through meticulous project design and management and quality control, we will continue to improve the quality of the Company’s products. At the same time, we will continue to promote the “estate community life services system” by improving the range of our services and the living quality of the residents in order to maintain our brand image and market leading position in terms of residents’ satisfaction.

Customer and community support is a valuable asset and driver of the Company. Continuous improvement of service quality is one of our long-term development strategies. In relation to our service strategy, we plan to increase our investments in projects with a high level of return attributable to services, transform our service model from a traditional property management developer to a comprehensive and ideal living services provider, and explore and implement both a service model and a commerce model within the living services industry in China. We aim to integrate online service channels such as the internet, mobile messaging communication services, cloud computing and big data with the offline servicing mechanism to upgrade the Greentown Living Services System and provide soft services to cover a comprehensive range of areas including education, healthcare, culture, health maintenance and retirement needs. We believe such integrated services will value-add, improve the value for money of our products and increase customer recognition and satisfaction.

Product diversification to expand customer base

We will continue to invest a large portion of our time and efforts in research and development, including analyzing market demand and geographical characteristics, in order to further enrich our product lines to serve different segment of customers. Under the premise of maintaining excellent quality, we will further optimize our designs and diversify our product mix to cater to the high-end, mid to high-end and mainstream market, in order to enhance the competitiveness of our products. At the same time, we will actively enter into the ‘themed estate’ market, including the development of urban complexes in the second- and third-tier cities, housing estate for retired people and tourist-oriented estates, to further increase our development potential.

4 We plan to focus on investment opportunities in “Tier 1” and other key cities, expand our coverage in regions and further grow our production lines from high-end products to medium and high-end products, continuously enhance the cost effectiveness of our products, diversify our products, expand our customer base and intensify the development of products targeted at “white collar” customers in cities. We also plan to proactively restructure our assets to improve liquidity and increase the proportion of asset-light businesses such as project management services.

Cost controls, financial discipline and prudent land acquisition strategy to improve profitability

We plan to exert stringent controls over construction costs and land acquisition which will improve our profitability. Regarding acquisition of land, we will work together with external market consultants and seek guidance from the newly established Investment Committee to assess the risks and returns associated with new projects. In terms of construction costs, we have established an e-commerce procurement center to centralize the procurement of building materials, which will effectively lower the relevant costs. We will also standardize construction and decoration costs for products under different price ranges in the new ‘Greentown Product Catalogue,’ which will enable us to control costs more systematically. We also plan to refine our financial management and control and leverage CCCG’s financial discipline and internal control process to achieve a balance between quality and profit. We believe the optimization of cost control mechanisms, bidding and tender mechanisms and procedure supervision systems will help to improve our cost control for the whole production process and our profitability.

Optimization of the debt structure and decreasing inventory to reduce financial costs

In addition to the continuous effort to lower our gearing ratio, we are also focusing on optimizing our debt structure. We seek to reduce the level of short-term borrowings so as to balance the debt maturity profile. We will carefully explore available means of financing, and adjust the debt portfolio to lower the average cost of borrowing. We will also continue to explore opportunities to dispose projects or part of projects that have a relatively longer payback cycle in order to improve cash flow and optimize the structure of our land bank.

We also plan to focus on reducing the level of our inventory to improve cash flow by implementing specific and effective measures to address the characteristics of different regions and projects. Such measures include adopting flexible pricing strategies to increase turnover rate and improve cash flow with respect to regions with higher inventory and longer turnover time.

General Information

We were incorporated in the Cayman Islands on August 31, 2005 as an exempted company with limited liability, with registered number MC-154283. Our principal place of business in the PRC is at 10th Floor, Block A, Huanglong Century Plaza, No. 1 Hangda Road, Hangzhou 310007, Zhejiang Province, The People’s Republic of China. Our place of business in Hong Kong is at Room 1406–8, 14th Floor, New World Tower, Queen’s Road Central, Hong Kong. Our registered office is located at Maples Corporate Services Limited, PO Box 309, Ugland House, South Church Street, George Town, Grand Cayman, KY1-1104, Cayman Islands. Our shares have been listed on the Main Board of the SEHK with effect from July 13, 2006. Our websites are www.chinagreentown.com and www.chinagreentown.cn. Information contained on our website does not constitute part of this offering memorandum.

Description of CCCG

CCCG is a wholly state-owned company established on December 8, 2005 in the PRC and is one of the state-owned enterprises (the “SOEs”) under the direct supervision of central State-owned Assets Supervision and Administration Commission (the “SASAC”). It is also one of the 21 state-owned enterprises permitted by SASAC to engage in property development as its principal business. SASAC wholly-owns CCCG and closely manages its strategic development and appoints its senior management. In conducting its property development business, CCCG does not engage in any actual operations itself and essentially operates through CCCC, an entity under its control, as an integrated operational model.

5 CCCC was established in the PRC on 8 October 2006 and was initiated and founded by CCCG, which inherited the businesses and assets of China Harbour Engineering Company Group and China Road and Bridge Group, two of the then-most influential enterprises in the PRC infrastructure construction sector, following their consolidation. CCCC’s H shares are listed on the SEHK and CCCC’s A shares are listed on the Shanghai Stock Exchange. As of December 31, 2014, CCCG held approximately 63.8% of outstanding shares capital of CCCC. CCCC is one of the largest SOEs in infrastructure construction and design in the PRC by revenue according to Engineering News-Record and the largest dredging enterprise in the world by total hopper storage capacity of its hopper fleet and total engine power of its cutter fleet and revenue according to the IHS International Dredging Directory, with a market share of over 70%. The total revenue and total assets of CCCC accounted for approximately 99.0% and 95.2%, respectively, of the total revenue and total assets of CCCG for the year ended December 31, 2014.

CCCG, through CCCC and its subsidiaries (the “CCCG Group”), is an established PRC market leader in its four core business segments of infrastructure construction, infrastructure design, dredging and heavy machinery manufacturing with operations in over 120 countries and regions overseas. The CCCG Group has been leveraging its extensive experience in its core business segments to shift towards an investment operation strategy which utilizes an integrated, full value chain model both domestically and internationally, which enables it to provide extensive services and products to its customers, including research and development, planning, survey, design, construction, supervision, maintenance, operation, investment and financing. This has in turn increased the CCCG Group’s competitiveness in its traditional businesses, and as a result, it has developed from being an established PRC market leader to a global competitor in its core business segments.

6 CONCURRENT TRANSACTIONS

Concurrently with this offering of the Notes, the Company is conducting the Exchange Offer; the Exchange Offer is for the New Notes and is being made pursuant to a separate exchange offer memorandum dated July 20, 2015, and available only to eligible holders outside the United States. Pursuant to the Exchange Offer, the Company expects to issue the New Notes. The New Notes will have the same terms as, and form a single series with, the Notes. The New Notes are expected to be delivered on the same date as the Notes. This offering is conditional upon completion of the Exchange Offer. The Company’s obligation to consummate the Exchange Offer is subject to the satisfaction of certain conditions.

The Company is also concurrently soliciting consents from holders of the outstanding Senior Notes to make certain amendments to the relevant Senior Notes Indenture, which is being made pursuant to the separate consent solicitations statement dated July 20, 2015.

7 THE OFFERING

The following is a brief summary of the terms of this offering and is qualified in its entirety by the remainder of this offering memorandum. Terms used in this summary and not otherwise defined shall have the meanings given to them in “Description of the Notes.”

Issuer ...... Greentown China Holdings Limited.

Provider of Keepwell Deed and Deed of Undertaking ...... China Communications Construction Group (Limited).

Notes Offered ...... US$70,302,000 in aggregate principal amount of 5.875% senior notes due August 11, 2020.

Offering Price ...... 100.0%

Maturity Date ...... August 11, 2020.

Interest ...... The Notes will bear interest at a rate of 5.875% per annum, payable semi-annually in arrears on February 11 and August 11 of each year, commencing on or around February 11, 2016.

Ranking of the Notes ...... The Notes are:

• general obligations of the Company;

• senior in right of payment to any existing and future obligations of the Company expressly subordinated in right of payment to the Notes;

• at least pari passu in right of payment with all other unsecured, unsubordinated Indebtedness of the Company (subject to any priority rights of such unsubordinated Indebtedness pursuant to applicable law);

• guaranteed by the Subsidiary Guarantors and the JV Subsidiary Guarantors (if any) on a senior basis, subject to the limitations described below under “Description of the Notes—Subsidiary Guarantees and JV Subsidiary Guarantees” and “Risk Factors—Risks Relating to the Subsidiary Guarantees and the JV Subsidiary Guarantees;”

• effectively subordinated to secured obligations of the Company, the Subsidiary Guarantors and the JV Subsidiary Guarantors, to the extent of the value of the assets serving as security therefor; and

• effectively subordinated to all existing and future obligations of the Non-Guarantor Subsidiaries (as defined below).

8 Subsidiary Guarantees ...... Each of the Subsidiary Guarantors and the JV Subsidiary Guarantors (if any) will, jointly and severally, guarantee the due and punctual payment of the principal, premium, if any, interest, and all other amounts payable under, the Notes.

A Subsidiary Guarantee given by a Subsidiary Guarantor and a JV Subsidiary Guarantee given by a JV Subsidiary Guarantor may be released in certain circumstances. See “Description of the Notes—Subsidiary Guarantees and JV Subsidiary Guarantees—Release of Subsidiary Guarantees and JV Subsidiaries Guarantees.”

The Subsidiary Guarantors on the date the Notes are issued consist of all of the Offshore Restricted Subsidiaries, other than Active Way Development Limited, Hong Kong Greentown Trading and Development Co., Limited, Hong Kong Greentown Decoration Trading and Development Limited, Fortune Pointer Limited, Crown Gain Development Limited, Moon Wise Global Limited and Win Most Global Limited. The Subsidiary Guarantors are holding companies that do not have significant operations.

None of the existing Restricted Subsidiaries organized under the laws of the PRC provided a Subsidiary Guarantee or JV Subsidiary Guarantee on the Original Issue Date or will provide a Subsidiary Guarantor JV and Subsidiary Guarantee at any time in the future and no future Restricted Subsidiaries organized under the laws of the PRC will provide a Subsidiary Guarantee or JV Subsidiary Guarantee at any time in the future (together, the “PRC Restricted Subsidiaries”). See “Risk Factors—Risks relating to the Subsidiary Guarantees and the JV Subsidiary Guarantees—Guarantees may in some cases be replaced by limited-recourse guarantees.”

None of the existing Restricted Subsidiaries organized in any jurisdiction other than the PRC that is prohibited by applicable law or regulation to provide a Subsidiary Guarantee or JV Subsidiary Guarantee will provide a Subsidiary Guarantor JV and Subsidiary Guarantee at any time in the future (together, the “Exempted Subsidiaries”); provided that (x) we have failed, upon using commercially reasonable efforts, to obtain any required governmental or regulatory approval or registration with respect to such Subsidiary Guarantee or JV Subsidiary Guarantee, to the extent that such approval or registration is available under any applicable law or regulation and (y) such Restricted Subsidiary shall cease to be an Exempted Subsidiary immediately upon such prohibition ceasing to be in force or apply to such Restricted Subsidiary or upon our having obtained such applicable approval or registration.

9 In addition, the Company may designate any Offshore Restricted Subsidiary as an Offshore Non-Guarantor Subsidiary (each, an “Offshore Non-Guarantor Subsidiary,” subject to the limitations described below under “Description of the Notes—Subsidiary Guarantees and JV Subsidiary Guarantees—Offshore Non-Guarantor Subsidiaries.” The Offshore Non-Guarantor Subsidiaries, together with the PRC Restricted Subsidiaries, are referred to as the “Non-Guarantor Subsidiaries”).

Any future Restricted Subsidiary (other than any Non-Guarantor Subsidiary or any Exempted Subsidiary) will provide a guarantee of the Notes immediately upon becoming a Restricted Subsidiary.

Ranking of Subsidiary Guarantee ...... The Subsidiary Guarantee of each Subsidiary Guarantor:

• is a general obligation of such Subsidiary Guarantor;

• is effectively subordinated to secured obligations of such Subsidiary Guarantor to the extent of the value of the assets serving as security therefor;

• is senior in right of payment to all future obligations of such Subsidiary Guarantor expressly subordinated in right of payment to such Subsidiary Guarantee; and

• ranks at least pari passu with the subsidiary guarantees for all other unsecured, unsubordinated Indebtedness of the Company (subject to any priority rights of such unsubordinated Indebtedness pursuant to applicable law).

Ranking of JV Subsidiary Guarantees ...... If any is provided, the JV Subsidiary Guarantee of each JV Subsidiary Guarantor:

• will be a general obligation of such JV Subsidiary Guarantor;

• will be enforceable only up to the JV Entitlement Amount;

• will be effectively subordinated to secured obligations of such JV Subsidiary Guarantor, if any, to the extent of the value of the assets serving as security therefor;

• will be limited to the JV Entitlement Amount, and will be senior in right of payment to all future obligations of such JV Subsidiary Guarantor expressly subordinated in right of payment to such JV Subsidiary Guarantee; and

• will be limited to the JV Entitlement Amount, and will rank at least pari passu with all other unsecured, unsubordinated Indebtedness of such JV Subsidiary Guarantor (subject to any priority rights of such unsubordinated Indebtedness pursuant to applicable law).

10 Offshore Non-Guarantor Subsidiaries ...... An Offshore Restricted Subsidiary need not provide a Subsidiary Guarantee or JV Subsidiary Guarantee if it is designated by the Board of Directors as a Designated Offshore Non-Guarantor Subsidiary. The Board of Directors may designate any Offshore Restricted Subsidiary to be a Designated Offshore Non-Guarantor Subsidiary if:

(1) at any time of determination, the total Non-Guaranteed Portion would not exceed 25.0% of Total Assets; and

(2) such designation would not cause a Default.

Use of Proceeds ...... See “Use of Proceeds.”

Optional Redemption of the Notes ...... At any time and from time to time on or after August 11, 2018, the Company may at its option redeem the Notes, in whole or in part, at a redemption price equal to the percentage of the principal amount set forth below plus accrued and unpaid interest, if any, to (but not including) the redemption date if redeemed during the twelve-month period beginning on August 11 of each of the years indicated below. Period Redemption Price 2018 102.938% 2019 and thereafter 101.469%

At any time prior to August 11, 2018, the Company may at its option redeem the Notes, in whole but not in part, at a redemption price equal to 100.0% of the principal amount of the Notes plus the Applicable Premium as of, and accrued and unpaid interest, if any, to (but not including) the redemption date.

At any time and from time to time prior to August 11, 2018, the Company may redeem up to 35.0% of the aggregate principal amount of the Notes with the Net Cash Proceeds of one or more sales of Common Stock of the Company in an Equity Offering at a redemption price of 105.875% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to (but not including) the redemption date; provided that, at least 65.0% of the aggregate principal amount of the Notes issued on the Original Issue Date remains outstanding after each such redemption and any such redemption takes place within 60 days after the closing of the related Equity Offering.

The Company will give not less than 30 days’ nor more than 60 days’ notice of any redemption.

Repurchase of Notes Upon a Change of Control Triggering Event ...... Not later than 30 days following a Change of Control Triggering Event, the Company will make an Offer to purchase all outstanding Notes (a “Change of Control Offer”) at a purchase price equal to 101.0% of the principal amount thereof plus accrued and unpaid interest, if any, to (but not including) the Offer to Purchase Payment Date. See “Description of the Notes—Repurchase of Notes Upon a Change of Control Triggering Event.”

11 Redemption for Taxation Reasons ...... Subject to certain exceptions and as more fully described herein, the Notes may be redeemed, at the option of the Company or a Surviving Person with respect to the Company, as a whole but not in part, upon giving not less than 30 days’ nor more than 60 days’ notice to the Holders and the Trustee (which notice shall be irrevocable), at a redemption price equal to 100.0% of the principal amount thereof, together with accrued and unpaid interest (including any additional amounts), if any, to the date fixed by the Company or the Surviving Person, as the case may be, for redemption, if the Company, a Surviving Person, a Subsidiary Guarantor or a JV Subsidiary Guarantor (if any) would become obligated to pay certain additional amounts as a result of certain changes in or interpretations of specified tax laws (or the statement of an official position with respect thereto). See “Description of the Notes—Redemption for Taxation Reasons.”

Covenants ...... The Notes, the Indenture, the Subsidiary Guarantees and the JV Subsidiary Guarantees (if any) will limit the Company’s ability and the ability of its Restricted Subsidiaries to, among other things:

• incur or guarantee additional indebtedness and issue disqualified or preferred stock;

• declare dividends on its capital stock or purchase or redeem capital stock;

• make investments or other specified restricted payments;

• issue or sell capital stock of Restricted Subsidiaries;

• obtain guarantee from Restricted Subsidiaries;

• sell assets;

• create liens;

• enter into sale and leaseback transactions;

• engage in any business other than a permitted business;

• enter into agreements that restrict the Restricted Subsidiaries’ ability to pay dividends, transfer assets or make intercompany loans;

• enter into transactions with stakeholders or affiliates; and

• effect a consolidation or merger.

These covenants are subject to a number of important qualifications and exceptions described in “Description of the Notes—Certain Covenants.”

12 Form, Denomination and Registration ...... The Notes will be issued only in fully registered form, without coupons, in denominations of US$200,000 and integral multiples of US$1,000 in excess thereof and will be initially represented by one or more global notes deposited with a common depositary and registered in the name of the common depositary or its nominee. Beneficial interests in the Global Note will be shown on, and transfer thereof will be effected only through the records maintained by the Clearing Systems.

Book Entry Only ...... The Notes will be issued in book-entry form through the facilities of the Clearing Systems for the accounts of its participants. For a description of certain factors relating to clearance and settlement, see “Description of the Notes—Book-Entry; Delivery and Form.”

Delivery of the Notes ...... The Company expects to make delivery of the Notes, against payment in same day funds on or about August 11, 2015, which the Company expects will be the seventh business day following the date of this offering memorandum (referred to as “T+7”). You should note that initial trading of the Notes may be affected by the T+7 settlement. See “Plan of Distribution.”

Trustee ...... DB Trustees (Hong Kong) Limited.

Principal Paying Agent and Transfer Agent ...... Deutsche Bank AG, Hong Kong Branch.

Registrar ...... Deutsche Bank Luxembourg S.A.

Listings ...... Application will be made for listing of the Notes on the SEHK. A confirmation of the eligibility of the listing of the Notes has been received from the SEHK.

Governing Law ...... The Notes, the Subsidiary Guarantees, the JV Subsidiary Guarantees (if any) and the Indenture will be governed by and will be construed in accordance with the laws of the State of New York.

Risk Factors ...... For a discussion of certain factors that should be considered in evaluating an investment in the Notes, see “Risk Factors—Risks Relating to the Notes.” Security Codes for the Notes ISIN Common Code XS1272206209 127220620

Keepwell Deed ...... We, the Subsidiary Guarantors, CCCG and the Trustee will enter into a keepwell deed as further described in “Description of the Keepwell Deed.”

Deed of Undertaking ...... We, the Subsidiary Guarantors, CCCG and the Trustee will enter into a deed of equity interest purchase, investment and liquidity support undertaking as further described in “Description of the Deed of Equity Interest Purchase, Investment and Liquidity Support Undertaking.”

13 SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

The following table presents our selected consolidated financial and other data. The selected consolidated statements of comprehensive income data for 2012, 2013 and 2014 and the selected consolidated statements of financial position as at December 31, 2012, 2013 and 2014 set forth below (except for EBITDA) have been derived from our consolidated financial statements as at and for the years ended December 31, 2012, 2013 and 2014, as audited by Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong, included elsewhere in this offering memorandum. Our financial results for any past period are not, and should not be taken as, an indication of our performance, financial position or results of operations in future periods. Our financial statements have been prepared and presented in accordance with IFRS. The selected financial data below should be read in conjunction with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the notes to those statements included elsewhere in this offering memorandum.

The financial information furnished in this offering memorandum shall not be deemed to be incorporated by reference into this offering memorandum except as otherwise expressly stated herein.

Summary Consolidated Statements of Comprehensive Income and Other Financial Data

For the year ended December 31, 2012 2013 2014 2014 (RMB in thousands) (US$ in (audited) thousands) Revenue 35,392,506 28,990,570 32,048,979 5,165,358 Cost of Sales ...... (24,678,810) (20,215,201) (23,916,319) 3,854,611 Gross Profit 10,713,696 8,775,369 8,132,660 1,310,747 Other income ...... 1,000,594 728,329 964,263 155,411 Selling expenses ...... (665,170) (848,771) (991,966) (159,876) Administrative expenses ...... (1,403,873) (1,491,574) (1,835,533) (295,834) Finance costs ...... (564,115) (506,815) (679,688) (109,546) Fair value changes on cross currency swaps ...... — 49,849 (121,022) (19,505) Impairment losses on properties for development ...... — — — — Impairment losses on properties under development ...... — — — — Reversal of impairment losses on property, plant and equipment ..... — 60,685 16,799 2,707 Impairment losses on property, plant and equipment ...... (81,485) — — — Impairment loss on completed properties for sale ...... — — (70,604) (11,379) Impairment loss on amounts due from a joint venture ...... — — (122,198) (19,695) Gain from changes in fair value of investment properties ...... 600 100,900 60,000 9,670 Fair value changes on trust-related financial derivatives ...... 82,520 — — — Net gain on disposal of subsidiaries 549,697 — 8,670 1,397 Gain on re-measurement of associates to acquisition date fair value in business combination achieved in stages ...... 3,399 3,923 37,196 5,995 Net gain on disposal of associates ... 56,505 — 120,773 19,465

14 For the year ended December 31, 2012 2013 2014 2014 (RMB in thousands) (US$ in (audited) thousands) Gain on partial disposal of an associate ...... — — — — Gain on re-measurement of an associate to acquisition date fair value upon re-consolidation of a subsidiary ...... 49,980 — — — Gain relating to a newly acquired joint venture ...... — 704,131 — — Net gain on disposal of joint ventures ...... 1,377 — — — Gain on de-consolidation of a subsidiary ...... — — — — Gain on acquisition of a subsidiary.. — — 1,363 220 Share of results of associates ...... 209,356 1,092,037 339,873 54,778 Share of results of joint ventures .... 304,119 477,999 67,879 10,940 Profit before taxation ...... 10,257,200 9,146,062 5,928,465 955,495 Taxation ...... (4,204,149) (3,155,857) (2,718,644 (438,166) Profit for the year and total comprehensive income for the year.. 6,053,051 5,990,205 3,209,821 517,330 Profit attributable to: Owners of the Company ...... 4,851,123 4,885,514 2,071,722 333,901 Non-controlling interests ...... 1,201,928 1,104,691 1,128,099 181,816 Earnings per share Basic ...... RMB2.57 RMB2.18 RMB0.80 US$0.13 Diluted ...... RMB2.37 RMB1.94 RMB0.80 US$0.13

Other financial Data EBITDA(1) ...... 10,401,516 7,942,183 7,696,540 1,240,457 EBITDA margin(2) ...... 29.4% 27.4% 24.0% 24.0%

(1) EBITDA for any period consists of profit for the year before fair value change on the investment properties and financial derivatives, interest income, interest expenses (including capitalized interest under cost of sales), income tax expenses, depreciation and amortization expenses and other non-operating items. EBITDA is not a standard measure under IFRS. EBITDA is a widely used financial indicator of a company’s ability to service and incur debt. EBITDA should not be considered in isolation or construed as an alternative to cash flows, net income or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities. EBITDA does not account for taxes, interest expense or other non-operating cash expenses. In evaluating EBITDA, we believe that investors should consider, among other things, the components of EBITDA such as sales and operating expenses and the amount by which EBITDA exceeds capital expenditures and other charges. We have included EBITDA because we believe it is a useful supplement to cash flow data as a measure of our performance and our ability to generate cash flow from operations to cover debt service and taxes. EBITDA presented herein may not be comparable to similarly titled measures presented by other companies. Investors should not compare our EBITDA to EBITDA presented by other companies because not all companies use the same definition. See the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for a reconciliation of our profit for the year under IFRS to our definition of EBITDA. (2) EBITDA margin is calculated by dividing EBITDA by revenue.

15 Set forth below is a reconciliation of EBITDA to the most directly comparable IFRS measure, profit for the year:

For the year ended December 31, 2012 2013 2014 2014 (US$ in (RMB in thousands) thousands) (audited) Profit for the year/period ...... 6,053,051 5,990,205 3,209,821 517,329 Adjustments for: Finance costs (inc. interest income and capitalized interests under cost of sales) ...... 1,151,003 1,127,047 1,878,100 302,695 Reversal of impairment losses on property, plant and equipment .. — (60,685) (16,799) (2,707) Fair value changes on trust-related financial derivatives ...... (82,520) — — — Fair value changes on cross currency swaps ...... — (49,849) 121,022 19,505 Impairment losses on property, plant and equipment ...... 81,485 — — — Impairment loss on completed properties for sale ...... — — 70,604 11,379 Impairment loss on amounts due from a joint venture ...... — — 122,198 19,695 Gain from changes in fair value of investment properties ...... (600) (100,900) (60,000) (9,670) Net gain on disposal of subsidiaries/joint ventures/associates ...... (607,579) — (129,443) (20,862) Gain on re-measurement of associates to acquisition date fair value in business combination achieved in stages ...... (3,399) (3,923) (37,196) (5,995) Gain relating to a newly acquired joint venture ...... — (704,131) — — Gain on re-measurement of an associate to acquisition date fair value upon re-consolidation of a subsidiary ...... (49,980) — — — Gain on de-consolidation of a subsidiary ...... — — — — Gain on acquisition of a subsidiary.. — — (1,363) (220) Share of results of associates/joint ventures ...... (513,475) (1,570,036) (407,752) (65,718) Taxation ...... 4,204,149 3,155,857 2,718,644 438,166 Depreciation and amortization ...... 169,381 158,598 228,702 36,860 EBITDA ...... 10,401,516 7,942,183 7,696,540 1,240,457 Revenue ...... 35,392,506 28,990,570 32,048,979 5,165,358

16 Summary Consolidated Statements of Financial Position

As at December 31, 2012 2013 2014 2014 (US$ in (RMB in thousands) thousands) (audited) Assets Non-current assets ...... 14,373,365 20,713,682 20,815,722 3,354,885 Current assets ...... 93,333,931 101,622,020 106,328,156 17,136,988 Total assets ...... 107,707,296 122,335,702 127,143,878 20,491,873

Equity and Liabilities Non-current liabilities ...... 6,656,730 25,197,361 24,523,469 3,952,466 Current liabilities ...... 73,562,491 65,127,369 67,775,101 10,923,363 Total liabilities ...... 80,219,221 90,324,730 92,298,570 14,875,829 Total equity ...... 27,488,075 32,010,972 34,845,308 5,616,044 Total equity and liabilities ...... 107,707,296 122,335,702 127,143,878 20,491,873

17 RISK FACTORS

You should carefully consider the risks and uncertainties described below and the information contained elsewhere in this offering memorandum before making an investment decision. The risks described below are not the only ones that may affect you, us, the Subsidiary Guarantors or the Notes. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. If any of the risks described below occurs, our business, financial condition and results of operations could be materially and adversely affected.

Risks Relating to the Business

We may not always be able to obtain land reserves that are suitable for development

We derive our revenue principally from the sale of properties that we have developed. Therefore, we must maintain or increase our land reserves in strategic locations at an appropriate pace in order to ensure sustainable business growth. Based on our current rate of property development, we believe we have sufficient land reserves for approximately the next five years of development. Our ability to identify and acquire suitable development sites is subject to a number of factors, some of which are beyond our control. The supply of substantially all of the land in China is controlled by the PRC government. The land supply policies adopted by the PRC government directly impact our ability to acquire land use rights for development and our costs of such acquisitions. In recent years, the PRC central and local governments have implemented various measures to regulate the means by which property developers may obtain land. The PRC government also controls land supply through zoning, land usage regulations and other means. All these measures further intensify the competition for land in China among property developers. In 2002, the PRC government introduced a nationwide system of mandatory public tender, auction or listing-for-sale for the grant of land use rights for commercial use, tourism, entertainment and commodity property development. On September 28, 2007, the Ministry of Land and Resources of the PRC (the “Ministry of Land and Resources”) issued revised Rules on the Grant of State-owned Construction Land Use Rights through Public Tender, Auction and Listing-for-sale《招標拍賣掛牌出讓 ( 國有建設用地使用權規定》), which further stipulate legal and procedural requirements on public tender, auction or listing-for-sale, the only means by which state-owned land use rights can be granted by the PRC government for industrial purposes, commercial purposes, tourism, entertainment and commodity property development, and require that the land premium must be paid in full to local land administration bureau pursuant to the underlying land grant contract before the land use rights certificate can be issued to the land user. The PRC government’s policy to grant state-owned land use rights at competitive market prices has substantially increased and is likely to continue to increase the acquisition cost of land reserves generally in the PRC.

On September 21, 2010, the Ministry of Land and Resources and the Ministry of Housing and Urban Rural of the PRC (the “MOHURD”) jointly issued the Notice on Further Strengthening the Administration and Control of Real Estate Land and Construction《關於進一步加強房地產用地和建設 ( 管理調控的通知》), which stipulates, among other things, that the planning and construction conditions and land use standards should be specified when a parcel of land is to be granted, and the restrictions on the area of any parcel of land granted for commodity properties should be strictly implemented. The development and construction of large low-density residential properties should be strictly restricted, and the plot ratio for residential land is required to be more than 1:1. In addition, a property developer and its shareholders will be prohibited from participating in any bidding to acquire additional land until any illegal behavior in which it has engaged, such as leaving its land idle for more than one year, has been completely rectified.

18 On February 25, 2012, the Ministry of Land and Resources promulgated the Notice on the Key Tasks for Accomplishing Effective Real Estate Land Administration and Control in 2012《關於做好 ( 2012年房地產用地管理和調控重點工作的通知》) which stipulates the following:

• real estate control policy shall be strictly implemented and key tasks clarified;

• real estate land supply shall be properly managed to promote social welfare;

• land supply for social security housing projects shall be guaranteed;

• unlawful acts relating to land use shall be strictly punished;

• development and construction shall be vigorously encouraged; and

• supervisory analysis and media coverage shall be strengthened to provide positive guidance towards the market.

On May 1, 2012, the Ministry of Land and Resources promulgated the Notice on Further Strengthening and Improving the Pre-examination of Land for Construction Projects (關於進一步加強和改進建設項目用地預審工作的通知) which reinforces the importance of pre-examination administration of land for commercial and industrial purposes. Taking advantage of tender, auction and listing-for-sale to avoid the pre-examination of the utility of land is strictly prohibited, so is entering into a land use right grant contract in advance or issuing a land use right certificate in substitute for a pre-examination opinion. Without passing a pre-examination, no application may be raised in terms of a project permit or construction land permit. On-line filing for records and tracking supervision shall also be strengthened.

On June 1, 2012, the Ministry of Land and Resources promulgated the revised Measures on the Disposal of Idle Land《閒置土地處置辦法》 ( ), which became effective on July 1, 2012. Under these measures, if any land parcel constitutes “idle land” due to government-related action, the holder of the relevant land use rights is required to explain to the relevant municipality or county-level land administrative department(s) the reasons for the land becoming idle, consult the relevant governmental authorities and rectify the situation accordingly.

The means of rectification include but are not limited to the extension of the period permitted for commencing development, the adjustment of the land use and planning conditions or the substitution of the relevant idle land parcels with other land parcels.

On November 5, 2012, the Ministry of Land and Resources, the Ministry of Finance of the PRC (the “Ministry of Finance”), the People’s Bank of China (the “PBOC”) and the China Bank Regulatory Commission (the “CBRC”) jointly promulgated the Notice on Strengthening Land Reserves and Financing Administration (Guotuzi Fa [2012] No. 162)《關於加強土地儲備與融資管理的通知》 ( (國土資發[2012] 162號)) in order to strengthen land bank institutions administration, determine the reasonable scale and structure of land bank, strengthen the administration of land pre-development, reservation and protection, and regulate the financing to land reservation and the use of land reservation funds.

The implementation of these regulations may increase land transfer prices and require property developers to maintain a higher level of working capital. See “Regulations—Land for Property Development.”

If we fail to acquire sufficient land reserves in a timely manner and on acceptable terms, or at all, our business, prospects, results of operations and financial condition may be materially and adversely affected.

We may not have adequate financing to fund our land acquisitions and property projects

Property development is capital intensive. We finance our property projects primarily through a combination of internal funds, construction loans, proceeds from pre-sales and other methods of

19 financing. As at December 31, 2014, our total borrowings equaled RMB35,815.4 million (US$5,772.4 million). Our ability to procure adequate and suitable financing for acquisitions of land and/or companies and for property developments depends on a number of factors that are beyond our control, including general economic conditions, our financial strength and performance, credit availability from financial institutions, cost of borrowing and monetary policies in China.

Various PRC regulations restrict our ability to raise capital through external financing and other methods, including without limitation, the following:

• We cannot pre-sell uncompleted units in a project prior to achieving certain development milestones;

• PRC banks are prohibited from extending loans to real estate companies for the purpose of funding the purchase of land use rights;

• We cannot borrow from a PRC bank for a particular project unless we obtain the land use rights certificate, construction land planning permit, construction works planning permit and construction works commencement permit for that project;

• PRC banks are restricted from granting loans for the development of luxury residential properties;

• In principle, property developers are prohibited from using the proceeds from a loan obtained from a local PRC bank to fund property developments outside the region where that bank is located; and

• PRC banks are prohibited from accepting properties that have been vacant for more than three years as collateral for loans.

Specific measures implemented by the PRC government include the following examples:

• The PBOC has prohibited commercial banks from granting loans to property developers to pay land premiums since June 2003;

• MOHURD and other PRC governmental authorities jointly issued the Opinions on Adjusting the Housing Supply Structure and Stabilizing the Housing Prices《關於調整住房供應結構 ( 穩定住房價格的意見》) in May 2006, which, among other things,

• restrict the grant or extension of revolving credit facilities to property developers that hold a large amount of idle land and vacant commodity properties; and

• prohibit commercial banks from taking commodity properties that have been vacant for more than three years as security for their loans.

• The PBOC and CBRC jointly issued the Circular on Strengthening the Administration of Commercial Real Estate Credit Loans《關於加強商業性房地產信貸管理的通知》 ( )in September 2007, which, among other things,

• prohibits commercial banks from granting loans to property projects if the developer’s own capital is less than 35% of the total investment amount;

• prohibits commercial banks from granting loans to property projects that have not obtained land use rights certificates, construction land planning permits, construction works planning permits and construction works commencement permits;

• requires that commercial bank loans to property developers be classified as real estate development loans and not as general working capital loans; and

20 • requires that in principle real estate development loan proceeds may only be used for developments in the local city where the loan is originated.

• In November 2009, the PRC government raised the minimum down payment requirement for land purchases to 50% of the land premium and now requires the land premium to be fully paid within one year after the signing of a land grant contract, subject to limited exceptions; and

• In March 2010, the Ministry of Land and Resources stipulated that the minimum down payment of land premium of 50% should be paid within one month after the signing of a land grant contract and the rest of the land premium should be fully paid within one year after the signing of a land grant contract.

On January 3, 2008, the State Council of the PRC (the “State Council”) issued a Notice on Promoting the Economic Use of Land《關於促進節約集約用地的通知》 ( ) with respect to the collection of additional land premium establishment of a land utilization priority planning scheme and the formulation of a system for assessing the optimal use of land and other measures. The notice calls for the full and effective use of existing construction land and the preservation of farm land. The notice also emphasizes the enforcement of the current rules on assessing idle land fees at a rate equal to 20% of the land premium for any land left idle for over one year but less than two years. The notice also urges financial institutions to exercise caution when they review loan applications from property developers that have failed to complete development of at least one-third of the land area or to invest at least 25% of the total investment within one year of the construction date provided in the land grant contract. The notice states that a value-added land premium will be levied on the idle land, especially on those used for property development, and the relevant rules will be formulated jointly by the Ministry of Land and Resources and other authorities. The notice indicates that the relevant governmental authorities will formulate and issue additional rules and regulations on these matters.

In addition, the PBOC adjusted the reserve requirement ratio for commercial banks six times in 2010, seven times in 2011, twice in 2012 and twice in 2015. The latest reserve requirement ratio is 18.5%, with effect on April 20, 2015. The reserve requirement ratio for commercial banks ranged from 16% to 21% from 2010 to 2011, and from 21% to 18.5% from 2011 to 2015. Any increase in the reserve requirement may negatively impact the amount of funds available to lend to businesses, including us, by commercial banks in China. The PRC government could also introduce other initiatives that may further limit our access to capital, and/or consequently reduce our flexibility and ability to use bank loans or other forms of financing to finance our acquisitions and property developments. For example, on April 17, 2010 the State Council issued the Notice on Resolutely Curbing the Excessive Hike of Property Prices in Some Cities《國務院關於堅決遏制部分城市房價過快上漲的通知》 ( ), which mandates that developers who hold idle land or speculate in land will not be granted bank loans for the development of new property projects. In September 2010, the PBOC and CBRC jointly issued a notice to prohibit banks from lending to any property developer for its new projects or renewal of its existing loans if such developer has a track record of maintaining idle land, changing the use and nature of land without proper approval, delaying the construction, commencement or completion date, hoarding properties or other noncompliance. These governmental actions and policy initiatives limit our ability to use bank loans to finance our acquisitions and property development projects. Although the PBOC’s recent lowering of 7-day reverse bond repo to 2.50% on July 2, 2015, and the PBOC’s fourth Interest Rate cut in seven months, on June 28, 2015, reflect the relatively loose monetary conditions currently, the PRC government nevertheless could introduce other initiatives which may further limit our access to capital, and consequently limit our ability to obtain bank loans, the net proceeds from debt issuances or other forms of financing. If we fail to secure adequate financing or renew our existing credit facilities prior to their expiration, or if the PRC government adopts further restrictive credit policies in the future, our business, results of operations and financial condition may be materially and adversely affected.

21 Our LAT provisions and prepayments may not be sufficient to meet our LAT obligations

In accordance with the provisions of the Provisional Regulations of the People’s Republic of China on Land Appreciation Tax《中華人民共和國土地增值稅暫行條例》 ( ) and the related implementation rules, all entities and individuals that receive income from the sale or transfer of land use rights, buildings and ancillary facilities are subject to LAT at progressive rates ranging from 30% to 60% of the appreciated value of such properties. There is an exemption for the sale of ordinary residential properties if the appreciated value does not exceed 20% of the total deductible expense items allowed under the relevant LAT regulations. This exemption is not available for sales of luxury residential properties, villas and commercial properties. It is not clear whether the residential portion of our mixed residential and commercial developments will be eligible for the exemption available to ordinary residential properties. The State Taxation Bureau clarified LAT settlement to some extent in its Notice on the Administration of the Settlement of Land Appreciation Tax of Property Development Enterprises《關於房地產開發企業土 ( 地增值稅清算管理有關問題的通知》) effective February 1, 2007. The Notice clarifies that provincial and local tax bureaus may formulate their own implementing rules and determine how LAT will be settled in their jurisdictions.

We have been prepaying LAT with reference to our pre-sale proceeds since the PRC government imposed such prepayment obligation in 2004 in areas where we have operations. In addition, we also make provision for the estimated amount of LAT that may be payable in respect of our other sales. We made LAT provisions of RMB2,066.3 million, RMB1,253.2 million and RMB1,396.5 million (US$225.07 million) for each of the years ended December 31, 2012, 2013 and 2014, respectively. LAT provisions are recorded as a part of “income taxes payable” on our balance sheets. We cannot assure you that the relevant tax authorities will agree with our calculation of LAT liabilities nor can we assure you that the LAT provisions will be sufficient to cover our LAT obligations in respect of our past LAT liabilities. If the relevant tax authorities determine that our LAT liabilities exceed our LAT prepayments and provisions, and seek to collect that excess amount, our cash flow, results of operations and financial condition may be materially and adversely affected. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our Results of Operations—LAT.”

We experienced net cash outflows from operating activities in the past and maintain a significant amount of indebtedness, which may materially and adversely affect our liquidity and our ability to service our indebtedness

We have had net cash outflows from operating activities in the past. Our net cash from operating activities was RMB4,699.8.million in 2012, RMB1,273.8 million in 2013 and RMB96.5 million in 2014 (US$15.6 million). We maintain a significant amount of indebtedness to finance our operations. As at December 31, 2012, 2013 and 2014, our total borrowings were RMB21,373.4 million, RMB30,511.6 million and RMB35,815.4 million (US$5,772.4 million), respectively. Our gearing ratio (total borrowings less bank balances and cash and pledged bank deposits divided by total equity) was approximately 49.0%, 60.1% and 76.7%, respectively, as at December 31, 2012, 2013 and 2014. Of our total outstanding borrowings of RMB35,815.4 million (US$5,772.4 million) as at December 31, 2014, RMB12,167.2 million (US$1,961.0 million) was repayable within one year and RMB23,648.3 million (US$3,811.4 million) was repayable in more than one year.

Our cash flow and results of operations of our operating subsidiaries will affect our liquidity and our ability to service our indebtedness. We cannot assure you that we will be able to continue to generate and maintain sufficient cash flow to service our indebtedness. If we are unable to make scheduled payments in connection with our debts and other fixed payment obligations as they become due, we may need to refinance such obligations or obtain additional financing. Furthermore, the Notes, the 2014 Perpetual Securities and some of our domestic or offshore bank loans contain cross default provisions under which default in one such indebtedness could trigger a default under the other outstanding indebtedness and/or restrictions under the Notes as well. We cannot assure you that our refinancing efforts would be successful or timely or that we could secure additional financing on acceptable terms, or at all. If we fail to maintain sufficient cash flow to service our indebtedness or our refinancing efforts are unsuccessful, our liquidity, business, and financial condition will be materially and adversely affected.

22 In addition to bank borrowings, we rely on proceeds from the pre-sale of residential properties as a major source of funding for our property development activities. If our pre-sales are limited or reduced for any reason, including policy or regulatory changes, a reduction in demand for or in the prices of our properties, or an increase in the time required to complete sales, we could experience cash flow shortfalls and difficulties in funding our property development activities and servicing our indebtedness.

Our operations are restricted by the terms of our other debt arrangements and the Notes, which could limit our ability to plan for or to react to market conditions or meet our capital needs, which could increase your credit risk

Our debt documents and the Indenture include a number of significant restrictive covenants. These covenants restrict, among other things, our ability and the ability of our Restricted Subsidiaries to:

• incur or guarantee additional indebtedness and issue disqualified or preferred stock;

• declare dividends on capital stock or purchase or redeem capital stock;

• make investments or other specified restricted payments;

• issue or sell capital stock of certain of our subsidiaries or Restricted Subsidiaries;

• guarantee indebtedness of certain of our subsidiaries or Restricted Subsidiaries;

• sell assets;

• create liens;

• enter into sale and leaseback transactions;

• engage in any business other than permitted business;

• enter into agreements that restrict certain of our subsidiaries’ or Restricted Subsidiaries’ ability to pay dividends;

• transfer assets or make intercompany loans;

• enter into transactions with shareholders or affiliates; and

• effect a consolidation or merger.

These covenants could limit our ability to plan for or react to market conditions or to meet our capital needs. Our ability to comply with these covenants may be affected by events beyond our control, and we may have to curtail some of our operations and growth plans to maintain compliance.

We may be adversely affected by fluctuations in the global economy and financial markets

The global economic slowdown and fluctuations in the global financial markets that started in the second half of 2008 have had a negative impact on the world economy, which in turn has affected the PRC real estate industry and many other industries. More recently, global market and economic conditions have continued to be adversely affected by the credit crisis and sovereign debt concern in Greece and heightened market volatility in major stock markets, including the recent turmoil in the PRC stock market. For example:

• slow economic growth and tightened credit have resulted in lower demand for residential and commercial properties and declining property prices, which in turn have affected our turnover and profit margin;

• weak economic conditions have also affected the ability and speed of property developers in commencing new development projects or expanding existing projects; and

23 • the tightening of credit has negatively affected the ability of property developers and potential property purchasers to obtain financing.

These and other issues resulting from the global economic slowdown and financial market fluctuations have adversely affected, and may continue adversely affecting, homeowners and potential property purchasers, which may lead to a decline in the general demand for our products and erosion of their sale prices. In addition, any further tightening of liquidity in the global financial markets may negatively affect our liquidity. Therefore, if the global economic slowdown and fluctuations in the financial markets crisis continue, our business, financial condition and results of operations may be negatively affected.

We may be adversely affected by the performance of third-party contractors

We engage third-party contractors to provide various services, including design, pile setting, foundation digging, construction, equipment installation, interior decoration, electromechanical engineering, pipeline engineering and elevator installation. During the years ended December 31, 2012, 2013 and 2014, payments to third-party contractors accounted for all of our total construction costs. During the years ended December 31, 2012, 2013 and 2014, we have engaged various principal independent third-party contractors, who carried out property construction and subcontracted various works to independent third-party subcontractors. We endeavor to employ construction contractors with good reputations, strong track records, and adequate financial resources. We also adopt and follow our own quality control procedures and routinely monitor works performed by third-party contractors. However, we cannot assure you that any third-party contractor will provide services that satisfy our required standard of quality. If the performance of any third-party contractor is not satisfactory, we may need to replace that contractor or take other remedial actions, which could increase the cost and lengthen the time required to complete the work and the whole project. In addition, we are expanding our business into other regional markets in China, and there may be a shortage of contractors that meet our quality requirements in such markets. Moreover, contractors may undertake projects for other developers, engage in risky or unsound practices or encounter financial or other difficulties, which may affect their ability to complete their work for us on time or within budget. Any of the above factors could have a material adverse effect on our reputation, business, results of operations and financial condition.

We may not be able to effectively manage our expansion and growth

We have historically focused on developing properties in Zhejiang Province. We have expanded into other regions and plan to further explore other promising markets in China. Our expansion is based on our forward-looking assessment of market prospects. We cannot assure you that our assessments will turn out to be accurate. In addition, to succeed with our business expansion, we will need to recruit and train new managers and other employees and build our operations and reputation in our target regional markets within a relatively short period of time. We have limited knowledge of the conditions of these local property markets and little or no experience in property development in these regions. As we enter new markets, we may not have the same level of familiarity with contractors, business practices and customs and customer tastes, behavior and preferences as compared with the cities where we are an established property developer. In addition, when we enter new geographical areas, we may face intense competition from developers with an established presence and market share in those areas. Therefore, we cannot assure you that we can execute successfully our contemplated expansion plan or that we will succeed in effectively integrating our expanded operations, or that our expanded operations will generate adequate returns on our investments or positive operating cash flows. Furthermore, our business expansion may place a substantial strain on our managerial and financial resources and any failure in effectively managing our expanded operations may materially and adversely affect our business, prospects, results of operations and financial condition.

24 The fair value of our investment properties is likely to fluctuate from time to time and may decrease significantly in the future, which may materially and adversely impact our profitability

We are required to reassess the fair value of our investment properties as at the date of our balance sheet. In accordance with IFRS, gains or losses (as applicable) arising from changes in the fair value of our investment properties should be accounted for in our income statements in the period in which they arise. Our investment properties were revalued by an independent property valuer as at December 31, 2012, 2013 and 2014, respectively, on an open market for existing use basis which reflected market conditions at those dates. Based on such valuation, we recognized the aggregate fair market value of our investment properties on our consolidated balance sheets, and recognized changes in fair values of investment properties and the relevant deferred tax on our consolidated statements of comprehensive income. In 2014, the fair value gain from our investment properties was RMB60 million (US$9.7 million).

Fair value gains or losses do not, however, change our cash position as long as the relevant investment properties are held by us, and accordingly do not increase our liquidity in spite of the increased profit represented by any fair value gains. The amount of revaluation adjustments has been, and will continue to be, subject to market fluctuations. Macroeconomic factors, including economic growth rate, interest rate, inflation rate, urbanization rate and disposable income level, in addition to any governmental regulations, can substantially affect the fair value of our investment properties and affect the supply and demand in the PRC property market. All these factors are beyond our control. If the fair value of our investment properties continues declining, our profitability would be materially and adversely affected.

We guarantee mortgage loans of our customers and may be liable to the mortgagee banks if our customers default on their mortgage payments

We pre-sell properties before construction is completed. The purchasers of our properties may need mortgage loans to purchase our properties, and we typically arrange for various banks to provide these mortgage loans. In accordance with market practice, the mortgagee banks require us to guarantee our customers’ mortgage loans. Typically, our guarantee obligations for such customers’ mortgage loans are released upon the earlier of (i) the satisfaction of the mortgage loan by the purchaser of the property; and (ii) the issuance of the property ownership certificate for the mortgaged property and the completion of the registration of the mortgage. It generally takes three to six months after we deliver possession of the relevant property to the purchaser for our guarantee to be released. If a purchaser defaults on a mortgage loan guaranteed by us we may have to repay the mortgage loan. If we fail to do so, the mortgagee bank may foreclose the underlying property and recover any balance from us as the guarantor of the defaulted mortgage loan. In line with industry practice, we rely on the credit analysis performed by the mortgagee banks in respect of individual customers and we do not conduct any independent credit checks on them.

As at December 31, 2012, 2013 and 2014, our outstanding financial guarantees for the mortgage loans of our customers amounted to RMB17,144.3 million, RMB17,625.1 million and RMB17,826.2 million (US$2,873.1 million), respectively. In 2012, 2013 and 2014, we did not experience any instances where we had to honor our guarantee obligations as a result of a failure by our customers to repay their mortgage loans. However, if we are required to honor our guarantees, our results of operations and financial position may be materially and adversely affected.

We may suffer certain losses not covered by insurance

In line with industry practice, we do not carry comprehensive insurance against all potential losses or damages with respect to our properties before their delivery to customers nor do we maintain insurance coverage against liability from tortious acts, property damage or personal injury relating to the construction and maintenance of our properties. Although we expect our third-party construction companies to maintain appropriate insurance coverage, we cannot assure you that their insurance would cover or be sufficient to satisfy all claims, or that we would not be sued or held liable for damages notwithstanding their insurance coverage. Moreover, there are certain losses for which insurance is not

25 available on commercially practicable terms in China, such as losses suffered due to earthquake, typhoon, flooding, war and civil disorder. If we suffer from any losses, damages or liabilities in the course of our business, we may not have sufficient financial resources to cover such losses, damages or liabilities or to satisfy our related obligations. Any payment we make to cover any losses, damages or liabilities may have a material and adverse effect on our business, results of operations and financial condition.

Our results of operations may vary significantly from period to period

Our results of operations may vary significantly due to a number of factors, including the timetables of our property development projects, the timing of the sale of properties that we have developed, our revenue recognition policies and any volatility in expenses such as raw material costs. The overall schedules of our property development and the number of properties that we can develop or complete during any particular period are limited as a result of the substantial capital required for the acquisition of land, demolition and resettlement and construction. The sale of properties we develop is subject to general market or economic conditions in the areas where we conduct our business and the level of acceptance of our properties by prospective customers. According to our accounting policy, we recognize revenue upon delivery of the properties to purchasers, which may typically take six to 24 months after the commencement of the pre-sale. Therefore, in periods in which we pre-sell a large aggregate GFA, we may not generate a correspondingly high level of revenue if the properties pre-sold are not delivered within the same period. In addition, our business depends on obtaining adequate supplies of raw materials and is subject to fluctuation in the market prices of raw materials. The prices that we pay for raw materials may increase due to increased industry demand, inflation, higher fuel and transportation costs and other factors. We will continue to experience significant fluctuations in revenue and profit subsequent to the issuance of the Notes. We therefore believe that period-to-period comparisons of our results of operations may not be as meaningful as they would be for a company with recurring revenue.

We may not be able to complete our projects according to schedule or on budget

A property development project requires substantial capital expenditures prior to and during the construction period, and it may take over a year before a development generates positive cash flow through pre-sales or sales. The progress of, and costs for, a development project can be adversely affected by many factors, including:

• changes in market conditions, an economic downturn or a decline in consumer confidence;

• delays in obtaining necessary licenses, permits or approvals from governmental agencies or authorities;

• relocation of existing residents and demolition of existing structures;

• increases in the market prices of raw materials if we cannot pass on the increased costs to customers;

• shortages of materials, equipment, contractors and skilled labor;

• latent soil or subsurface conditions and latent environmental damage requiring remediation;

• unforeseen engineering, design, environmental or geographic problems;

• labor disputes;

• construction accidents;

• natural disasters;

• adverse weather conditions;

26 • changes in governmental practices and policies, including reclamation of land for public works or facilities; and

• other unforeseen problems or circumstances.

The rising cost of construction in the PRC may also have a material and adverse effect on our business, results of operation and financial condition.

Our property projects are at risk from earthquakes, floods and other natural disasters in the regions where we operate. Damage to any of our properties or impact on the markets, whether by natural disasters or otherwise, may either delay or preclude our ability to develop and sell our properties or adversely affect our budget for the projects. During the three years ended December 31, 2012, 2013 and 2014, we did not experience any significant delays in completion or delivery of our projects. See “—We may be adversely affected by fluctuations in the global economy and financial markets” and “—The national and regional economies in China and our prospects may be adversely affected by natural disasters, acts of God, or occurrence of epidemics.” We may also experience additional or significant delays in completion or delivery of our projects or we may be subject to liability for any such delays. Construction delays or failure to complete construction of a project according to its planned specifications, schedule or budget may materially and adversely affect our reputation, business, results of operations and financial condition.

Our profitability and results of operations are affected by changes in interest rates

Changes in interest rates have affected and will continue to affect our financing costs and, ultimately, our results of operations. In April 2006, the PBOC raised the benchmark one-year lending rate from 5.58% to 5.85% and in August 2006 further increased such rate to 6.12%. The PBOC again increased the one-year lending rate six times in 2007 from 6.12% to 7.47% in December 2007. Beginning in 2008, the PBOC decreased the benchmark one-year lending rate five times, from 7.47% to 5.31% in December 2008, which remained unchanged until September 2010. The one-year lending rate increased to 5.81% as at December 31, 2010, increased to 6.06% effective from February 9, 2011, increased to 6.31% effective from April 6, 2011 and increased to 6.56% effective from July 7, 2011. The one-year lending rate decreased to 6.31% effective from June 8, 2012 and further decreased to 6.00% effective from July 6, 2012. On July 20, 2013, the PBOC ceased regulating the benchmark lending rate, allowing commercial banks to adopt differentiated lending rates. The one-year lending rate decreased to 5.60% effective from November 22, 2014. Any increases in benchmark lending rates will increase the interest costs for our property developments. For the year ended December 31, 2014, our weighted average interest cost was 7.9%. There has been no significant change in our financing cost since December 31, 2014.

A substantial portion of the interest expense has been capitalized as properties under development, which will then be recognized in the consolidated statements of comprehensive income as cost of sales upon the sale of properties. As a result, such capitalized interest expense may adversely affect our gross profit margin upon the sales of properties in future.

In addition, increases in interest rates may affect our customers’ ability to secure mortgages on acceptable terms, which in turn may affect their ability to purchase our properties.

The national and regional economies in China and our prospects may be adversely affected by natural disasters, acts of God, or occurrence of epidemics

Our business is subject to general economic and social conditions in China. Natural disasters, epidemics and other acts of God which are beyond our control may adversely affect the economy, infrastructure and livelihood of the people in China. Some regions in China, including the cities where we operate, are under the threat of flood, earthquake, sandstorm, snowstorm, fire, drought, or epidemics such as Severe Acute Respiratory Syndrome, or SARS, H5N1 avian flu or the human swine flu, also known as Influenza A (H1N1). In 2014, the Ebola virus broke out in West Africa, with a number of people having

27 died of the virus in Guinea, Sierra Leone and Liberia. There are also cases of patients diagnosed with Ebola in the United States and Europe. China has also experienced natural disasters like earthquakes, floods and droughts in the past few years. For example, in May 2008 and April 2010, China experienced earthquakes in Sichuan Province and Qinghai Province, respectively, resulting in the death of tens of thousands of people and destruction of assets in the region. Since the beginning of 2010, there have occurred severe droughts in southwestern China, resulting in significant economic losses in these areas. In addition, past occurrences of epidemics, depending on their scale, have caused different degrees of damage to the national and local economies in China. A recurrence of SARS or an outbreak of any other epidemics in China, such as the H5N1 avian flu, Ebola or the human swine flu, especially in the cities where we have operations, may result in material disruptions to our property development and our sales and marketing, which in turn may adversely affect our financial condition and results of operations.

We may have to compensate our customers if we fail to meet all requirements for the delivery of completed properties and the issuance of property ownership certificates

According to the relevant PRC law, property developers must meet various requirements within 90 days after the delivery of property or such other time period that may be provided in the relevant sales and purchase agreement to assist a purchaser in obtaining the individual property ownership certificate. We generally elect to specify the deadline to apply for an individual property ownership certificate in the sales and purchase agreement to allow sufficient time for the application and approval process. Within three months of the date of the completion certificate for a development, we must apply for a general property ownership certificate for the entire development. This involves, among other things, the submission of a number of documents, including land use rights documents, planning approvals and construction permits. Following the effective date of a sales and purchase agreement for one or more units in a development, we then assist the purchaser to apply for an individual property ownership certificate for each unit. This involves submission of other documents, including the sales and purchase agreement, identification documentation for the purchaser, evidence of payment of deed tax and a copy of the general property ownership certificate issued to us. Delay by a purchaser in providing the documents relating to the purchaser, or delay by the various administrative authorities in reviewing the relevant application document, as well as other factors beyond our control, may affect timely delivery of the relevant individual property ownership certificate. Under current PRC laws and regulations and under our sales and purchase agreements, we are required to compensate our customers for delays in delivery of individual property ownership certificates caused by us. During the three years ended December 31, 2012, 2013 and 2014, we did not pay any compensation for delays in delivery of individual property ownership certificates which could have a material adverse effect on our business operations. However, we cannot assure you that delays in delivery of the required property ownership certificates caused by us will not occur. Significant delays with respect to one or more of our developments may materially and adversely affect our reputation, business, results of operations and financial condition.

The PRC government may impose fines on us or take back our land if we fail to develop a property according to the terms of the land grant contract

Under PRC laws and regulations, if we fail to develop a property according to the terms of the land grant contract, including those relating to the payment of land premium, demolition and resettlement costs and other fees, the specified use of the land and the time for commencement and completion of the development, the PRC government may issue a warning, impose a penalty, and/or take back our land. Under current PRC laws and regulations, if we fail to pay any outstanding land grant premium on time, we may be subject to a late payment penalty of 0.1% of the outstanding balance for every day of delay in payment. In addition, the PRC government may impose an idle land fee equal to 20% of the land premium or allocation fees if (i) we do not commence construction for more than one year after the date specified in the relevant land grant contract, (ii) total constructed GFA is less than one-third of the total proposed GFA for the development, or (iii) the capital invested in the development is less than one-fourth of the total investment approved for the development and the development is suspended for more than one year without governmental approval. Furthermore, the PRC government has the authority to take back the land without compensation to us, if we do not commence construction for more than two years after the date specified in the land grant contract, unless the delay is caused by force majeure or governmental action.

We cannot assure you that there will be no significant delays in the commencement of construction or the development of our properties in the future, or that our developments will not be subject to idle

28 land penalties or be taken back by the government as a result of such delays. The imposition of substantial idle land penalties could have a material adverse effect on our business, results of operations and financial condition. If any of our land is taken back by the government, we would not only lose the opportunity to develop the property, but also lose our prior investments in the development, including land premiums paid and costs incurred in connection with such land.

Our acquisition of companies holding land use rights may be unsuccessful

We intend to continue to acquire controlling equity interests in companies holding land use rights as a means of expanding our business and land bank. However, we may face strong competition during the acquisition process and we may not be successful in selecting or valuing target companies or their land accurately. As a result, we may be unable to complete such acquisitions at reasonable costs, or at all. In addition, we may have to allocate additional capital and human resources to integrate the acquired business into our operations. We also cannot assure you that the integration of any acquired company will be successfully completed within a reasonable period of time, or at all, or that it will generate the economic benefit that we expected.

We may be required to relocate existing residents and pay demolition and resettlement costs associated with our future property developments and such costs may increase

We may be required to undertake and pay for demolition of existing buildings and resettlement of existing residents with respect to some of our property developments in accordance with the relevant PRC laws and regulations. We have also entered into certain contractual arrangements involving demolition and resettlement works. In particular, we have entered into certain contractual arrangements relating to redevelopment and primary land development with a view to facilitating potential acquisitions of land use rights or enhancing our future expansion into the relevant markets. See the section entitled “Business—Description of Our Property Developments—Contractual Arrangements.” The compensation we pay for resettlement is calculated in accordance with certain formulas published by the relevant local authorities. These formulas take into account the location, GFA and the type of building to be demolished, local income levels and many other factors. There can be no assurance that local authorities will not change or adjust their formulas without prior notice. Existing owners or residents may disagree with the compensation arrangements or refuse to relocate. The administrative process to settle the amount of compensation, together with any appeals, or a refusal to relocate may significantly delay the timetable for the affected development. Although we take into consideration the difficulties in resettlement compensation negotiations before we enter into such contractual arrangements, the protracted resettlement process may cause delays in the redevelopment projects, and adversely affect our plans to obtain the relevant land use rights or enter into the new markets. In addition, there is no assurance that we will be able to reach agreements for compensation and resettlement for such redevelopment projects on terms satisfactory to us or at all. Moreover, an unfavorable final determination or settlement regarding the amount of compensation payable by us may increase the cost of the development and materially and adversely affect our cash flow, business, results of operations and financial condition.

A third party’s inappropriate use of the trademarks and service marks “綠城” (Greentown) and “綠城房產” (Greentown Real Estate) may damage our reputation and negatively affect our results of operations and financial condition

We use the trademarks and service marks “綠城” (Greentown) and “綠城房產” (Greentown Real Estate) under licenses from Greentown Holdings Group Limited (綠城控股集團有限公司)(“Greentown Holdings Group”). Greentown Holdings Group is engaged in various businesses in addition to property development, such as hotel management and sports. Accordingly, the Greentown trademarks have been registered under Greentown Holdings Group’s name for various classes and categories of services and products in accordance with PRC law. Pursuant to a trademark licensing agreement entered into between Greentown Holdings Group and us dated June 22, 2006, we have been licensed to use the trademarks on an exclusive and royalty-free basis within the valid registration period of such trademarks. The term of the trademark licensing agreement is ten years subject to an automatic extension for a further ten years if so requested by us one month before the expiry date. Although we do not anticipate any issues relating to the automatic extension of the trademark licensing agreement, if for any reason it is not extended or

29 renewed at the end of its current ten year term in 2016, our business, results of operations and financial condition may be materially and adversely affected. Although we are licensed to use the trademarks in our property development business on an exclusive and royalty-free basis, Greentown Holdings Group continues to use such trademarks in its other categories of business. In addition, Greentown Holdings Group allows several connected parties to use the “Greentown” mark in their business operations. Such connected parties who are under the control of the Shareholders are engaged in interior decoration, media, hospital investment, and education businesses. If such entities use such trademarks and service marks in ways that negatively affect the “Greentown” and “Greentown Real Estate” brand names, our reputation and the reputation of our products could be damaged, which in turn may have an adverse effect on our financial condition and results of operations.

A deterioration in our brand image could adversely affect our business

We rely to a significant extent on our brand name and brand image, “Greentown.” Any negative incident or negative publicity concerning us or our property developments could adversely affect our reputation and business. One of our affiliates owns our brand and therefore has the right to use the brand for non-real estate related purposes. Brand value is based largely on subjective consumer perceptions and can be damaged by isolated incidents that reduce consumer trust. Consumer demand for our products and our brand value could diminish significantly if we fail to preserve the quality of our products, or fail to deliver a consistently positive consumer experience in each of our complexes, or if we are perceived to act in an unethical or socially irresponsible manner.

In addition, our efforts to protect our brand name may not be adequate, and we may be unable to identify any unauthorized use of our brand name or to take appropriate steps to enforce our rights on a timely basis. Our brand could be misappropriated or misused in the future. If the registration of our brand name “Greentown” and the relevant trademarks in the PRC cannot be completed, we will not be able to have adequate protection against unauthorized use or infringement of our brand name committed by any third parties. Any unauthorized use or infringement of our brand name may impair the value we have built in our brand name, damage our reputation and materially and adversely affect our business and results of operations.

Our success depends on the continued services of our senior management team and qualified employees

Our success and growth depend on Mr. Song Weiping, one of our founders and co-chairman and the continued services of our executive directors and other members of our senior management team such as Mr. Shou Bainian. They have extensive experience in the PRC real estate industry, and in-depth knowledge of various aspects of property development, strategic planning and business management. We cannot assure you that Mr. Song, any executive director or member of senior management is willing or able to continue in his or her present position or that we will be able to find and hire a suitable replacement if he or she is recruited by a competitor or departs to start a competing business. Any negative news regarding our senior management team may also adversely affect our reputation or business. Moreover, along with our steady growth and expansion into other regional markets in China, we will need to employ, train and retain additional suitable skilled and qualified management and employees from a wider geographical area. If we cannot attract and retain suitable personnel, our business and future growth may be materially and adversely affected.

We may be involved from time to time in disputes, administrative, legal and other proceedings arising out of our operations or subject to fines and sanctions in relation to our non-compliance with certain PRC laws and regulations, and may face significant liabilities or damage to our reputation as a result

We may be involved in disputes with various parties involved in the construction, development and the sale of our properties, including contractors, suppliers, construction workers, original owners and residents, partners and purchasers. These disputes may lead to protests, legal or other proceedings and may result in damage to our reputation, incurrence of substantial costs and the diversion of resources and management’s attention. As most of our projects are comprised of multiple phases, purchasers of our properties in earlier phases may file legal actions against us if our subsequent planning and development

30 of the relevant project is perceived to be inconsistent with our representations and warranties made to such earlier purchasers. These disputes and legal and other proceedings may materially and adversely affect our reputation, business, results of operations and financial condition. The judicial process of releasing the seizure of properties may decrease the time we devote to normal and customary operating functions. In addition, we may have compliance issues with regulatory bodies in the course of our operations, which may subject us to administrative proceedings and unfavorable decrees that result in liabilities, fines or sanctions and cause damage to our reputation and delays to our property developments. We may also be involved in disputes or legal proceedings in relation to delays in the completion and delivery of our projects. The occurrence of any of the above events, and failure to comply with any applicable PRC laws or regulations, may have a material adverse effect on our business, results of operations and financial condition. Finally, any failure or alleged failure by us or any of our directors, officers or other agents to fully adhere to the PRC or other applicable bribery or anti-corruption laws, or any investigation in relation to such failure or alleged failure by any regulatory body, could also materially and adversely affect our reputation and our business, results of operations and financial condition. For more information, see “Business—Legal Proceedings and Material Claims.”

In relation to a dispute with Sunac in respect of an alleged disposal of equity interests by Sunac Greentown in a wholly owned subsidiary and by Shanghai Sunac Greentown in certain PRC project companies, the Company had sought advice from its legal advisers. In connection with such dispute, on May 15, 2015, the Company and Sunac entered into a framework agreement and related agreements pursuant to which the Company conditionally agreed, subject to the relevant shareholders’ approval of the Company, to transact with Sunac and its subsidiaries to restructure certain joint ventures. See “Recent Developments—Sunac-Greentown Joint Venture Restructuring.” If such dispute were to result in an ongoing legal dispute, we cannot assure you that our results would not be materially and adversely affected.

Actions of our joint ventures or disputes with our project development partners may adversely affect our business

We carry out a substantial portion of our business through joint ventures with our project development partners and intend to increasingly use joint ventures to develop future projects. For example, in 2012, we formed joint ventures with our strategic partner, Wharf, our non-controlling shareholder, and Sunac China Holdings Limited (“Sunac”), respectively, for project development and business operations. Currently, Sunac is a substantial shareholder of one of our subsidiaries and Sunac and the Company are considered as the connected parties under the rules of the SEHK. Our associates and joint ventures, including those established pursuant to joint ventures with Sunac and Wharf, are and will not be our subsidiaries and will not be subject to any restrictive covenants in the Indenture. As a non-controlling shareholder in these entities, we do not consolidate the financial results and assets and liabilities of such entities in our consolidated financial statements (but instead incorporate them into our consolidated financial statements using the equity method of accounting), and will not control the actions of these entities including acquisitions and financings. Under the terms of the existing Indentures, in certain circumstances, we are permitted to invest in certain joint ventures including through contingent obligations such as direct and indirect capital contributions and also to pledge the shares we own in these joint ventures. We may not be able to recover the value of our investments in these joint ventures or may lose our shareholding in these joint ventures in certain circumstances including if these joint ventures become insolvent or fail to pay their debts. Such joint venture arrangements involve a number of risks, including but not limited to:

• disputes may arise with project development partners in connection with the performance of their obligations under the relevant project or joint venture agreements;

• disputes may also arise as to the scope of each party’s responsibilities under these arrangements;

• financial difficulties encountered by a project development partner may affect its ability to perform its obligations under the relevant project or joint venture agreements;

• dispute may arise over whether to develop, maintain, enter into or discontinue certain projects;

31 • the Company may not have the resources to invest in the joint venture at a time required under the joint venture agreements; and

• conflicts may exist between the policies or objectives adopted by the project development partners and those adopted by us.

Any of the above and other factors may adversely affect our ability to comply with our obligations under joint venture agreements or complete jointly developed projects on a timely basis or within budget, which would adversely affect our reputation, financial position and business operations.

We are subject to legal and business risks and our business may be adversely affected if we fail to obtain or maintain the required qualification certificates and other requisite governmental approvals

A PRC property developer must hold a valid qualification certificate to develop property. In addition, at various stages of project development, the PRC property developer must also obtain various licenses, certificates, permits, and approvals from the relevant PRC administrative authorities, including land use rights certificates, planning permits, construction permits, pre-sale permits and certificates or confirmation of completion.

According to the Provisions on Administration of Qualifications of Real Estate Developers《房地 ( 產開發企業資質管理規定》) issued by the Ministry of Construction of the PRC (the “Ministry of Construction”) (now MOHURD), a newly established property developer must first apply for a provisional qualification certificate with a one-year validity, which can be renewed annually for not more than two consecutive years. If, however, the newly established property developer fails to commence a property development project within the one-year period following the provisional qualification certificate, it will not be allowed to renew the term of its provisional qualification certificate. Developers with longer operating histories must submit their qualification certificates to relevant construction administration authorities for review annually. Governmental regulations require developers to fulfill all statutory requirements before they may obtain or renew their qualification certificates.

We conduct our property developments through project companies. These project companies must hold valid qualification certificates to be able to conduct their businesses. Some of our project companies are in the process of obtaining or renewing their qualification certificates. We cannot assure you that our project companies will be able to obtain or renew the necessary qualification certificates in a timely manner, or at all. If any of our project companies does not obtain or renew the necessary qualification certificate in a timely manner, or at all, our prospects, business, results of operations and financial condition may be materially and adversely affected.

Pursuant to the Measures for the Administration of Qualifications of Property Service Enterprises《物業服務企業資質管理辦法》 ( ), entities engaged in property management are required to obtain qualification certificates before they commence their business operations. Our wholly owned property management subsidiaries are primarily engaged to manage the residential and commercial properties we developed. If any property management companies are unable to meet the relevant requirements and therefore unable to obtain or maintain the qualification certificates, our business and financial condition could be materially and adversely affected.

In addition to the above, we cannot assure you that we will not encounter significant problems in satisfying the conditions to, or delays in, the issuance or renewal of other necessary licenses, certificates, permits or approvals. There may also be delays on the part of the administrative bodies in reviewing and processing our applications and granting licenses, certificates, permits or approvals. If we fail to obtain the necessary governmental licenses, certificates, permits or approvals for any of our major property projects, or a delay occurs in the government’s examination and review process, our development schedule and our sales could be substantially delayed, resulting in a material and adverse effect on our business, results of operations and financial condition.

32 We are subject to legal and business risks for the non-registration of our leases

The lease agreements for all the properties that we rented from third parties and all the properties that we leased to third parties have not been registered. Our PRC legal adviser has advised us that the requirement for the leases to be registered is an administrative measure, the non-compliance with which may result in an administrative penalty but does not affect the validity of the leases, however, we may face the risk of being determined by the relevant court of not being able to challenge any bona fide third party. We cannot assure you that the relevant administrative authorities will not impose a fine on us and bona fide third parties will not challenge our leases.

Our controlling shareholders and our strategic shareholders have the ability to exercise influence over our business and may take actions that are not in, or may conflict with, our or our creditors’, including the holders of the Notes, best interests

As at June 29, 2015, our controlling shareholders, Mr. Song Weiping and Mr. Shou Bainian together with their respective associates (our “Controlling Shareholders”), held in the aggregate 18.59% of our then outstanding shares. Our Controlling Shareholders have and will continue to have the ability to exercise a controlling influence over our business, and may cause us to take actions that are not in, or may conflict with, our or our creditors’, including the holders of the Notes, best interests, including matters relating to our management and policies and the election of our directors and senior management. Our Controlling Shareholders will be able to influence our major policy decisions, including our overall strategic and investment decisions, by influencing the election of our directors and, in turn, indirectly influencing the selection of our senior management, determining the timing and amount of any dividend payments, approving our annual budgets, deciding on increases or decreases in our share capital, determining our issuance of new securities, approving mergers, acquisitions and disposals of our assets or businesses, and amending our articles of association. For more information, see “Management,” “Substantial Shareholders” and “Related Party Transactions.”

Upon completion of the CCCG Share Sale on March 27, 2015, CCCG and Wharf (our “Strategic Shareholders”) held approximately 28.9% and 24.3%, respectively, of our outstanding shares. In connection with the CCCG Share Sale, we have made certain corporate governance changes, including appointing Mr. Zhu Bixin as co-chairman and executive director, Mr. Cao Zhounan as chief executive officer and Mr. Sun Guoqiang and Mr. Li Qingan as executive directors. CCCG and Wharf each also have a representative on our investment committee. Accordingly, our Strategic Shareholders have the ability to exercise influence over our business, including certain matters relating to our management and policies, our investment decisions, our annual budgets, mergers, acquisitions and disposals and amendments of our articles of association. For more information, see “Business—Strategic Partnerships from 2012 to 2014—Wharf” and “Recent Developments—Increase in CCCG’s Shareholding.”

We breached certain financial covenants under our indebtedness in the past and received waivers from noteholders for these breaches. Any additional breaches in the future under our indebtedness could materially affect our results of operations and financial condition

We breached certain financial covenants under certain of our indebtedness in the past, including the November 2006 Notes. We received waivers from holders of the November 2006 Notes and these holders, although they had the right to do so, did not accelerate the maturity of the November 2006 Notes. As of the date of this offering memorandum, the November 2006 Notes have been fully repaid. Any additional breaches of financial covenants under our indebtedness in the future could materially and adversely affect our results of operations and financial condition.

We have incurred significant indebtedness and may incur substantial additional indebtedness in the future, which could materially and adversely affect our financial condition and could further intensify the risks associated with our leverage

We have significant indebtedness outstanding. As at December 31, 2014, our consolidated capital commitments were approximately RMB13,786.1 million (US$2,221.91 million). See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Result of Operations—2014

33 compared with 2013—Capital commitments.” In addition, as of December 31, 2014, our consolidated current bank loans and other borrowings amounted to RMB12,167.2 million (US$1,961.0 million), and our consolidated noncurrent bank loans and other borrowings (including the 2018 USD Notes, the 2016 RMB Notes and the 2019 USD Notes) amounted to RMB23,648.3 million (US$3,811.4 million).

In addition, we and our subsidiaries may from time to time incur substantial additional indebtedness. See “Description of Material Indebtedness and Other Obligations.” Although the Indentures limit us and our subsidiaries from incurring additional debt, these limitations are subject to important exceptions and qualifications.

For example, under the Notes, we may incur additional indebtedness if we can, among other things, satisfy the Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio is derived by dividing Consolidated EBITDA by Consolidated Fixed Charges. Consolidated Fixed Charges comprises of Consolidated Interest Expense and dividends paid on any Disqualified Stock or Preferred Stock of the Company or any Restricted Subsidiary. Because our definition of Consolidated Interest Expense excludes the distributions under the Perpetual Bond Obligations, only includes interest that has become due and payable by the Company or any Restricted Subsidiary, and also subtracts the interest income from the gross interest expense, our Consolidated Fixed Charges would be substantially lower, and therefore our ability to incur additional debt under such covenant could be substantially larger, when compared to other similarly situated PRC high yield issuers whose covenant typically includes such interest regardless of whether it has become due and payable by the Company or any Restricted Subsidiary or not. If we or our subsidiaries incur additional debt, the risks that we face as a result of our already substantial indebtedness and leverage could intensify.

Moreover, the Perpetual Bond Obligations are not considered Indebtedness under the Notes. Therefore, we are able to incur the Perpetual Bond Obligations without any limitation under the Notes. In addition, neither the distributions under the Perpetual Bond Obligations are considered when calculating the Consolidated Interest Expense as abovementioned nor are the repayments and distributions under the Perpetual Bond Obligations considered Restricted Payments under our bank facilities and senior notes, including the Notes. We might therefore in certain circumstances be able to make repayments or distributions that we would not otherwise be entitled to under the covenants governing our bank facilities and senior notes, including the Notes, if the distributions were counted in calculating the Consolidated Interest Expense or treated as a Restricted Payment. Any of these factors could materially and adversely affect our ability to satisfy our obligations under the Notes and other indebtedness.

If we or our subsidiaries incur additional debt, the risks that we face as a result of such indebtedness and leverage could intensify. The amount of our indebtedness could have important consequences to the holders of the Notes. For example, it could:

• limit our ability to satisfy our obligations under the Notes and other debt;

• increase our vulnerability to adverse general economic and industry conditions;

• require us to dedicate a substantial portion of our cash flow from operations to servicing and repaying our indebtedness, thereby reducing the availability of cash flow to fund working capital, capital expenditures and other general corporate purposes;

• limit our flexibility in planning for or reacting to changes in the businesses and the industry in which we operate;

• place us at a competitive disadvantage compared with our competitors who have less debt;

• limit, along with the financial and other restrictive covenants of our indebtedness, our ability to borrow additional funds; and

• increase the cost of additional financing.

34 Our ability to generate sufficient cash to satisfy our outstanding and future debt obligations will depend upon our future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, many of which are beyond our control. If we are unable to service our indebtedness, we will be forced to adopt an alternative strategy that may include actions such as reducing or delaying capital expenditures, selling assets, restructuring or refinancing existing indebtedness or seeking equity capital. These strategies may not be instituted on satisfactory terms.

The terms of the Notes permit us to buy out minority interests in non-wholly owned Restricted Subsidiaries, and such purchases will not constitute Restricted Payments

The Indenture governing the Notes permits us to redeem, repurchase or otherwise acquire minority interests in our Restricted Subsidiaries held by Independent Third Parties, and such purchases will not constitute Restricted Payments. See “Description of the Notes—Certain Covenants—Limitation on Restricted Payments.” Even though such transactions would potentially increase our ownership interests in the relevant Restricted Subsidiary, we may pay substantial amounts of consideration in these transactions, whether in cash or other assets, which may adversely impact our business, results of operations and financial condition.

Certain of our offshore Restricted Subsidiaries will be permitted to not provide a Subsidiary Guarantee or a JV Subsidiary Guarantee, and their shares will not be required to be pledged for the benefit of the holders of the Notes

According to the terms of the Notes, certain offshore Restricted Subsidiaries will not be required to deliver a Subsidiary Guarantee or a JV Subsidiary Guarantee, and their shares will not be required to be pledged for the benefit of the holders of the Notes, including (i) any Restricted Subsidiary, the provision of a Subsidiary Guarantee or a JV Subsidiary Guarantee by which would be prohibited by any applicable laws or regulations or any applicable rules or policies of any applicable governmental or regulatory bodies or agencies; and (ii) offshore Restricted Subsidiaries whose consolidated assets in the aggregate do not exceed 25% of our Total Assets. See “Subsidiary Guarantees and the JV Subsidiary Guarantees” section and the definition of “Exempted Subsidiary” and “Total Assets” in the “Description of the Notes.” As a result of these exemptions, certain of our offshore Restricted Subsidiaries, which may constitute substantial revenue sources and/or hold substantial assets, will not be guaranteeing the Notes, and their shares are not required to be pledged for the benefit of the holders of the Notes.

If we are unable to comply with the restrictions and covenants in our debt agreements, or the Indentures, there could be a default under the terms of these agreements or the Indentures, which could cause repayment of our debt to be accelerated

If we are unable to comply with the restrictions and covenants in our debt agreements and our Indentures or our current or future debt obligations and other agreements, there could be a default under the terms of these agreements. In the event of a default under these agreements, the holders of the debt could terminate their commitments to lend to us, accelerate repayment of the debt and declare all outstanding amounts due and payable or terminate the agreements, as the case may be. Furthermore, some of our debt agreements, including the Indentures, contain cross-acceleration or cross-default provisions. As a result, our default under one debt agreement may cause the acceleration of repayment of not only such debt but also other debts, including the Notes, or result in a default under our other debt agreements, including the Indentures. If any of these events occur, we cannot assure you that our assets and cash flow would be sufficient to repay in full all of our indebtedness, or that we would be able to find alternative financing. Even if we could obtain alternative financing, we cannot assure you that it would be on terms that are favorable or acceptable to us.

35 Our past revenue may not be indicative of future revenue due to deconsolidation of subsidiaries or change in our equity interests in joint ventures

We are directly or through our subsidiaries a party to several joint ventures, some of which are a significant part of the Company’s current and prospective revenue source. We may from time to time, deconsolidate our subsidiaries or dispose of our equity interests in our joint ventures. Investors should be aware that there is no guarantee that our revenue for any financial period after a deconsolidation or disposal will not further decrease as a result of such deconsolidation or disposal. We may in the future enter into additional joint ventures as a means of conducting our business. New joint ventures may need time to generate profits and to the extent that we are unable to generate sufficient profits from our existing business to cover our operating costs, our business, results of operations and financial condition may be materially and adversely affected. We also may not fully control the operations or the assets of our joint ventures, nor can we unilaterally make major decisions with respect to such joint ventures. This constrains our ability to cause such joint ventures to take an action that would be in our best interests or refrain from taking an action that would be adverse to our interests. The loss of any joint venture or a change in the nature or terms of one or more of our joint ventures may have a material adverse impact on our business, results of operations and financial condition. For details regarding recent changes in our holdings, see “Recent Developments.”

There may be less publicly available information about us than is available in certain other jurisdictions

There may be less publicly available information about companies listed in Hong Kong than is regularly made available by public companies in certain other countries. In addition, the financial information in this offering memorandum has been prepared in accordance with IFRS, which differ in certain respects from U.S. GAAP and generally accepted accounting principles in other jurisdictions, which might be material to the financial information contained in this offering memorandum.

Risks Relating to the Real Estate Industry in China

The PRC government may adopt further measures to slow down growth in the property sector

Along with economic growth in China, investments in the property sectors have increased significantly in the past few years. In response to concerns over the increase in property investments, from 2004 to July 2012, the PRC government introduced various policies and measures to curtail property developments, including:

• requiring real estate developers to finance, with their internal resources, at least 35% of the total investment (excluding affordable housing projects);

• limiting the monthly mortgage payment to 50% of an individual borrower’s monthly income and limiting all monthly debt service payments of an individual borrower to 55% of his or her monthly income;

• suspending land supply for villa construction and restricting land supply for high-end residential property construction;

• requiring that at least 70% of the land supply approved by any local government for residential property development during any given year must be used for developing low- to medium-cost and small- to medium-size units for sale or as low-cost rental properties;

• requiring that at least 70% of the total development and construction area of residential projects approved or constructed on or after June 1, 2006 in any administrative jurisdiction must consist of units with a unit floor area of less than 90 sq.m. and that projects which have received project approvals prior to this date but have not obtained construction permits must adjust their planning in order to comply with this new requirement, with the exception that municipalities under direct administration of the PRC central government and provincial capitals and certain cities may deviate from such ratio under special circumstances upon approval from the MOHURD;

36 • requiring any first-time home owner using housing reserves (住房公積金) to pay the minimum amount of down-payment at 20% of the purchase price of the underlying property if the underlying property has a unit floor area of less than 90 sq.m. and the purchaser is buying the property as a primary residence, or 30% of the purchase price if the underlying property has a unit floor area of larger than 90 sq.m.;

• requiring any second-time home buyer to pay an increased minimum amount of down payment of 60% of the purchase price of the underlying property and an increased minimum mortgage loan interest rate of no less than 110% of the relevant PBOC benchmark interest rate;

• for a commercial property buyer, (i) requiring banks not to finance any purchase of pre-sold properties, (ii) increasing the minimum amount of down payment to 50% of the purchase price of the underlying property, (iii) increasing the minimum mortgage loan interest rate to 110% of the relevant PBOC benchmark interest rate, and (iv) limiting the terms of such bank borrowings to no more than 10 years, with commercial banks allowed flexibility based on their risk assessment;

• for a buyer of commercial/residential dual-purpose properties, increasing the minimum amount of down payment to 45% of the purchase price of the underlying property, with the other terms similar to those for commercial properties;

• limiting the grant or extension of revolving credit facilities to property developers that hold a large amount of idle land and vacant commodity properties;

• imposing more restrictions on the types of property developments that foreign investments may engage in;

• imposing or increasing taxes on short-term gains from second-hand property sales;

• restricting foreign investment in the property sector by, among other things, increasing registered capital and other requirements for establishing FIREEs, tightening foreign exchange control and imposing restrictions on purchases of properties in China by foreigners;

• requiring commercial banks to suspend mortgage loans to customers for purchase of a third or further residential property, or to non-residents who cannot provide proof of local tax or social security insurance payments for more than a one-year period;

• Raising the benchmark one-year lending rate published by the PBOC for the year ended December 31, 2010 to 5.81% and to 6% in July 6, 2012;

• adjusting the PBOC Renminbi deposit reserve requirement ratio for all PRC deposit-taking financial institutions eleven times in 2011, 2012 and in early 2014, with the current ratio ranging from 14.5% to 20%, effective as of April 25, 2014;

• further increasing down payment ratios and interest rates for loans to purchase second properties in accordance with the price control policies and targets of the corresponding local governments for those cities with excessive growth in housing prices; and

• imposing individual income tax payable on the sales of owner-occupied houses at 20% of the transfer income.

37 Beginning in the second half of 2008, in order to mitigate the impact of the global economic slowdown, the PRC government adopted measures to encourage domestic consumption in the residential property market and support property development. However, in December 2009 and January 2010 the PRC government adjusted some policies in order to enhance the regulation of the property market, restrain property purchases for investment or speculation purposes and keep property prices from rising too quickly in certain regions and cities. At the same time, the PRC government abolished certain preferential treatments relating to business taxes payable upon transfers of residential properties by property owners and imposed more stringent requirements on the payment of land premiums by property developers. In addition, in April 2010 the PRC government identified certain policy measures to increase down payment for properties purchased with mortgage loans. In January 2011, the PRC government adopted certain new policies to cool down the real estate property market, including increasing the minimum down-payment to at least 60% of the total purchase price for second-house purchases with a minimum mortgage lending interest rate at least 1.1 times the benchmark rate, in certain targeted cities restricting purchasers from acquiring second (or further) residential properties and restricting non-residents that cannot provide any proof of local tax or social security payments for more than a specified time period from purchasing any residential properties, imposing property tax in certain cities and levying business tax on the full amount of transfer price if an individual owner transfers a residential property within five years of purchase. In addition, certain cities, including Guangzhou, Tianjin, Beijing, Shanghai, Suzhou, Qingdao, Chengdu, Foshan and Jinan, promulgated measures further limiting the number of residential properties one family is allowed to purchase. On February 26, 2013, the PRC government further adopted more strict policies for properties purchase, including increasing down payment ratios and interest rates for loans to purchase second properties for those cities with excessive growth in housing prices and imposing individual income tax at a rate of 20% from the sale of a self-owned property. In the third quarter of 2013, the minimum down payment was raised to 70% in several cities.

We cannot assure you that the PRC government will not change or modify these temporary measures in the future. In addition, provincial, municipal and regional or local governments within the PRC may from time to time impose more stringent and/or permanent measures to slow growth in the property sector. For more information on the various restrictive measures taken by the PRC government, see the section entitled “Regulations.” These measures may limit our access to capital resources, reduce market demand for our products and increase our operating costs in complying with these measures. We cannot assure you that the PRC government will not adopt additional and more stringent measures, which could further slow down property development in China and adversely affect our business, results of operations and financial condition. The PRC government is expected to finalize regulations replacing the current business tax regime, which is levied on the total revenue of a company, with a value-added tax system, which assesses increments of new value created by a company, for the real estate sector in 2015 as part of China’s major overhaul of its tax structure. The change from the current business tax rate regime to a value-added tax system may result in a higher tax rate for the PRC real estate industry overall. In addition, the PRC government may impose a countywide real estate tax in the future. We are not sure when or whether such tax reforms will be imposed and neither can we assess the adverse impact of such new tax policies on our business operations and financial results. If we fail to adapt our operations to such new policies, regulations and measures that may come into effect from time to time with respect to the real property industry, or such policy changes disrupt our business or cause us to incur additional costs, our business, financial condition, results of operations and prospects may be materially and adversely affected.

38 The property industry in China is still at a relatively early stage of development, and there is a significant degree of uncertainty in the market as a whole

Private ownership of property in China is still at a relatively early stage of development. Demand for private residential property has been increasing rapidly in recent years. However, increased demand has often been coupled with volatile market conditions and fluctuations in prices. Numerous factors may affect the development of the market and accordingly, it is very difficult to predict when and how much demand will develop. Limited availability of accurate financial and market information and the general low level of transparency in China contribute to overall uncertainty. Investors may be discouraged from acquiring new properties due to the lack of a liquid secondary market for residential properties. In addition, the limited amounts and types of mortgage financing available to individuals, together with the lack of long-term security of legal title and enforceability of property rights, may also inhibit demand for residential property. Finally, the risk of over-supply is increasing in parts of China where property investment, trading and speculation have become more active. If as a result of any one or more of these or similar factors, demand for residential property or market prices decline significantly, our business, results of operations and financial condition may be materially and adversely affected.

Increasing competition in the PRC may adversely affect our business and financial condition

In recent years, a large number of property developers have undertaken property development and investment projects. The intensity of the competition among property developers for land, financing, raw materials and skilled management and labor resources may result in increased costs of land acquisition, construction or labor, a decrease in property prices and delays in the governmental approval process. An oversupply of properties available for sale could also depress the prices of the properties we sell and may adversely affect our business, financial condition and results of operations.

In addition, the property markets in the PRC are rapidly changing. Macro-economic measures have recently been adopted by the PRC government in an attempt to slow the rapid growth of the PRC’s economy and deter investment in fixed assets, including real estate assets. If we cannot respond to changes in market conditions or react to changes in customer preferences more swiftly or more effectively than our competitors, our business, results of operations and financial condition could be adversely affected.

We are exposed to contractual, legal and regulatory risks related to pre-sales

We depend on cash flows from pre-sales of properties as an important source of funding for our property developments. We face risks relating to the pre-sale of properties. For example, we may find ourselves liable to the purchasers for their losses if we pre-sell units in a property development and fail to complete that development. If we fail to complete a pre-sold property on time, our purchasers may claim compensation for late delivery pursuant to either their contracts with us or relevant PRC laws and regulations. If our delay extends beyond a specified period, our purchasers may terminate their pre-sale contracts and claim for compensation. A purchaser may also terminate his or her contract with us if the GFA of the relevant unit, as set out in the individual property ownership certificate, deviates by more than 3% from the GFA of that unit set out in his or her contract. We cannot assure you that we will not experience delays in the completion and delivery of our projects, nor that the GFA for a delivered unit will not deviate by more than 3% from the GFA set out in the relevant contract in every instance. Any termination of the purchase contract as a result of our late delivery of properties or deviation from the GFA set out in such contract will have a material adverse effect on our business, financial condition and results of operations.

Under current PRC laws and regulations, property developers must fulfill certain conditions before they can commence pre-sales of the relevant properties and pre-sales proceeds may only be used to finance the related development. Various PRC authorities and regulators have publicly called for the discontinuance or abolishment of pre-sales, or to impose tighter regulations on such practice. We cannot assure you that the PRC governmental authority will not ban the practice of pre-selling uncompleted properties or implement further restrictions on the pre-sale of properties, such as imposing additional conditions for a pre-sale permit or further restrictions on the use of pre-sale proceeds. Proceeds from the

39 pre-sale of our properties are an important source of financing for our property developments. Consequently, any restriction on our ability to pre-sell our properties, including any increase in the amount of up-front expenditure we must incur prior to obtaining the pre-sale permit, would extend the time period required for recovery of our capital outlay and would result in our needing to seek alternative means to finance the various stages of our property developments. This, in turn, could have an adverse effect on our business, cash flow, results of operations and financial condition.

The total GFA of some of our developments may exceed the original permitted GFA and the excess GFA is subject to governmental approval and payment of additional land premium

The permitted total GFA for a particular development is set out in various governmental documents issued at various stages. In many cases, the underlying land grant contract will specify permitted total GFA. Total GFA is also set out in the relevant urban planning approvals and various construction permits. If constructed total GFA exceeds the permitted total GFA, or if the completed development contains built-up areas that the authorities believe do not conform to the approved plans as set out in relevant construction works planning permit, we may not be able to obtain the acceptance and compliance form of construction completion (竣工驗收備案表) for the development, and as a consequence, we would not be in a position to deliver individual units to purchasers or to recognize the related pre-sale proceeds as revenue. Moreover, excess GFA requires governmental approval and the payment of additional land premium.

We cannot assure you that constructed total GFA for each of our existing projects under development or any future property developments will not exceed permitted total GFA for that development, or that the authorities will not determine that all built-up areas conform to the plans approved as set out in the construction permit. Moreover, we cannot assure you that we would have sufficient funding to pay any required additional land premium or to pay for any corrective action that may be required in a timely manner, or at all. Any of these circumstances may materially and adversely affect our reputation, business, results of operations and financial condition.

Potential liability for environmental damages could result in substantial cost increases

We are subject to a variety of laws and regulations concerning the protection of health and the environment. The particular environmental laws and regulations that apply to any given project development site vary according to the site’s location, the site’s environmental condition, the present and former uses of the site and the nature and former uses of adjoining properties. Compliance with environmental laws and regulations may result in delays in development, substantial costs and may prohibit or severely restrict project development activity in environmentally sensitive regions or areas. Under PRC laws and regulations, we are required to submit an environmental impact assessment report to the relevant governmental authorities for approval before commencing construction of any project. Although the environmental inspections conducted by the relevant PRC environmental protection agencies to date have not revealed any environmental violations that we believe would have a material adverse effect on our business, results of operations or financial condition, there may be potential material environmental liabilities of which we are unaware. In addition, our operations could result in environmental liabilities or our contractors could violate environmental laws and regulations in their operations that may be attributed to us. For more information, see the section entitled “Business—Environmental and Safety Matters.”

The construction business and the property development business are subject to claims under statutory quality warranties

Under Regulations on the Administration of Quality of Construction Works《建設工程質量管理 ( 條例》), all property development companies in the PRC must provide certain quality warranties for the properties they construct or sell. We are required to provide these warranties to our customers. Generally, we receive quality warranties from our third-party contractors with respect to our development projects. If a significant number of claims are brought against us under our warranties and if we are unable to obtain reimbursement for such claims from third-party contractors in a timely manner or at all, or if the money retained by us to cover our payment obligations under the quality warranties is not sufficient, we

40 could incur significant expenses to resolve such claims or face delays in correcting the related defects, which could in turn harm our reputation and have a material and adverse effect on our business, financial condition and results of operations.

Certain lenders under our PRC loan agreements are not licensed financial institutions

Certain of our PRC subsidiaries have entered into loan agreements with lenders that are not licensed financial institutions. It is unclear under the PRC laws whether the lack of qualification of the lenders will render the loan agreements void or unenforceable. If such loan agreements are challenged by third parties and as a result rendered void and unenforceable, we may be forced to repay the relevant loans immediately and our liquidity may be materially and adversely affected. Our business and operations may be negatively impacted if we cannot obtain alternative financings at suitable costs or at all. Our reputation may also be adversely affected.

Risks Relating to China

Our business is subject to extensive governmental regulation and, in particular, we are susceptible to policy changes in the PRC property sector

Our business is subject to extensive governmental regulation and the macroeconomic control measures implemented by the PRC government from time to time. As with other PRC property developers, we must comply with various requirements mandated by the PRC laws and regulations, including the policies and procedures established by local authorities designated to implement such laws and regulations. In particular, the PRC government exerts considerable direct and indirect influence on the development of the PRC property sector by imposing industry policies and other economic measures, such as control over the supply of land for property development, control of foreign exchange, property financing, taxation and foreign investment. Through these policies and measures, the PRC government may restrict or reduce land available for property development, raise benchmark interest rates of commercial banks, place additional limitations on the ability of commercial banks to make loans to property developers and property purchasers, impose additional taxes and levies on property sales and restrict foreign investment in the PRC property sector. In November 2010, the PRC Ministry of Commerce (“MOFCOM”) promulgated the Notice on Strengthening Administration of the Approval and Registration of Foreign Investment into Real Estate Industry《關於加強外商投資房地產業審批備案管 ( 理的通知》), which provides that, among other things, in the case that a real estate enterprise is established in China with overseas capital, it is prohibited to purchase and/or sell real estate properties completed or under construction for arbitrage purposes. The local MOFCOM authorities are not permitted to approve investment companies to engage in the real estate development and management. Restrictions imposed by the PRC government on foreign investment in the property sector may affect our ability to make further investments in our PRC subsidiaries and, as a result, may limit our business growth and have an adverse effect on our business, financial condition and results of operations.

The PRC government has announced a series of other measures designed to stabilize the growth of the PRC economy and to stabilize the growth of specific sectors in the past several years, including the property market, to a more sustainable level.

• On April 17, 2010, the State Council issued the Notice on Resolutely Curbing the Rapid Rising of the House Price in Certain Cities (Guofa (2010) No. 10)《國務院關於堅決遏制部 ( 分城市房價過快上漲的通知》), which stipulated that the down payment for the first property bought with mortgage loans that is larger than 90 sq.m. shall be not less than 30% of the purchase price, down payment for the second property bought with mortgage loans shall be not less than 50% of the purchase price and the loan interest rate shall be not lower than 110% of the benchmark lending rate published by the PBOC. In certain areas where commodity residential properties are in short supply and prices rise too quickly, the banks may suspend mortgage loans for the third or further properties bought by mortgage applicants or to non-residents who cannot provide any proof of tax or social insurance payment for more than one year.

• On April 30, 2010, the Beijing Municipal Government issued the Circular on Implementation of the Notice on Resolutely Curbing the Rapid Rising of Property Price in

41 Some Cities by the State Council《北京市人民政府貫徹落實國務院關於堅決遏制部分城 ( 市房價上漲文件的通知》), under which one household is allowed to purchase only one new residential unit in Beijing.

• On May 18, 2010, the Guangzhou Municipal Government issued the Opinion on the Implementation of the Notice on Resolutely Curbing the Rapid Rising of the House Price in Certain Cities by the State Council.《關於貫徹落實國務院關於堅決遏制部分城市房價過 ( 快上漲的通知精神努力實現住有所居的意見》), which reiterates and specifies the above regulations by the State Council.

• On May 19, 2010, the PRC State Administration of Taxation (“SAT”) issued the Circular on Settlement of Land Appreciation Tax《關於土地增值稅清算有關問題的通知》 ( ) to clarify and strengthen the settlement of LAT. Furthermore, on May 25, 2010, SAT issued the Notice on Strengthening the Collection of Land Appreciation Tax《關於加強土地增值稅徵管工作 ( 的通知》), which requires that the minimum prepayment rate shall be 2% for provinces in the eastern region, 1.5% for provinces in the central and northeastern regions, and 1% for provinces in the western region. If the LAT is calculated based on the authorized taxation method (核定徵收), the minimum taxation rate shall be 5% in principle. For more details, see “Regulations—Land Appreciation Tax.”

• On May 26, 2010, MOHURD, the PBOC, and CBRC jointly issued the Circular on Standardizing the Assessing Criteria of the Second Home for Personal Mortgage Loans《關於 ( 規範商業性個人住房貸款中第二套住房認定標準的通知》), under which a stricter standard will be adopted in assessing whether a house to be bought is a second home when granting mortgage loans. The new standard will be based on property ownership, not mortgage history, and the unit for the number of the houses will be determined in terms of family (including the borrower, his spouse and minor children), rather than individuals. Home buyers are required to provide a registration record from the local housing registration system when applying for mortgage loans. If it is impossible to check the purchasing record, loan applicants are required to submit a certification listing the number of homes owed by the applicant’s family. The banks will examine both the number of the homes owned by the applicant’s family and the applicant’s previous mortgage and purchasing record in order to counter speculative activities. The banks will define a loan applicant as a second-home buyer as long as the applicant has taken out a mortgage loan previously, or his family has a home ownership record in the housing registration system, or it is confirmed that his family has owned a property based on due diligence.

• On September 21, 2010, the Ministry of Land and Resources and MOHURD jointly promulgated the Notice on Further Strengthening the Administration and Control of the Lands for Real Estates and the Construction of Real Estates《關於進一步加強房地產用地 ( 和建設管理調控的通知》) to tighten the examination of qualifications of land bidders.

• On September 29, 2010, the PBOC and CBRC jointly issued the Circular on Issues Concerning Improving Differentiated Housing Loan Policies《關於完善差別化住房信貸 ( 政策有關問題的通知》), which raised the minimum down payment to 30% for all first home purchase with mortgage loans, and stipulates that for any family that uses loans to buy a second home, the down payment ratio shall not be lower than 50% and loan interest rate shall not be lower than 1.1 times the benchmark loan interest rate, and all commercial banks shall suspend issuing housing loans to home buyers whose family members already own two or more housing properties and to non-local residents who cannot provide evidence showing that they have paid taxes or social insurance contributions for more than one year.

• On November 2, 2010, the Ministry of Finance, MOHURD, CBRC and the PBOC jointly issued the Circular on Issues Concerning Policies on Regulation of Personal Housing Provident Fund Loan《關於規範住房公積金個人住房貸款政策有關問題的通知》 ( ), which provides that where personal housing provident fund loan is used to buy the first ordinary self-use house and the floor area of the house is no more than 90 sq.m., the down payment proportion shall not be lower than 20%; where the floor area of the house is more than 90,

42 the down payment proportion shall not be lower than 30%. Only the housing provident fund-paying families whose floor area per capita is less than local average shall have access to personal housing provident fund loan which is used to buy the second house, and the loan shall be used to buy ordinary self-use house so as to improve dwelling conditions. Where the personal housing provident fund loan is used to buy the second house, the down payment proportion shall not be lower than 50%, and the interest rate of such loan shall not be less than 1.1 times of the interest rate of the personal housing provident fund loan for the purchase of the first house. Personal housing provident fund loan for the purchase of a third or more houses by housing provident fund-paying families shall be suspended.

• On January 26, 2011, the General Office of the State Council issued the Notice concerning Further Strengthening the Macroeconomic Control of the Real Property Market《進一步做 ( 好房地產市場調控工作有關問題的通知》), which, among other things, raised the minimum down payment for second house purchases from 50% to 60%, with the minimum lending interest rate at 110% of the benchmark rate. Furthermore, many cities have promulgated measures to restrict the number of houses one family is allowed to newly purchase in order to implement the aforesaid notice, such as Guangzhou, Tianjin, Beijing, Shanghai, Suzhou, Qingdao, Jinan, Chengdu and Foshan. In order to implement the central government’s requirement, other cities in China where our property projects are located may also issue similar restrictive measures in the near future which may impose adverse effects on our business.

• The State Council also recently approved, on a trial basis, the launch of a new property tax scheme in selected cities. The detailed measures will be formulated by the governments of the pilot provinces, autonomous regions or municipalities directly under the central government. On January 27, 2011, the governments of Shanghai and Chongqing issued their respective measures for implementing pilot property tax schemes, which became effective on January 28, 2011. These two governments may issue additional measures to tighten the levy of property tax. It is also expected that more local governments will follow Shanghai and Chongqing in imposing property tax on commodity properties. The imposition of property tax on commodity properties will increase the purchasing cost of properties and is expected to have a negative impact on demand for properties in China, which in turn could have a material adverse effect on our business, financial condition and results of operations. We cannot assure you that property development and investment activities will continue at past levels or that there will not be an economic downturn in the property markets in the regions and cities where we operate.

• On March 8, 2011, the General Office of CBRC issued the Notice on Promoting Housing Financial Services and Strengthening Risk Management《中國銀監會辦公廳關於做好住 ( 房金融服務加強風險管理的通知》), which stipulates that in handling the individual housing loan business financial institutions must strictly implement the provision that, with respect to families that purchase second residential properties through a loan, the down payment may not be less than 60%, and the loan interest rate may not be less than 1.1 times the benchmark rate.

• On July 12, 2011, the State Council announced the PRC government’s intention to impose austerity measures on second and third-tier cities. The State Council ordered the Ministry of Construction to compile a list of the specific second and third-tier cities that will be affected by the austerity measures. If austerity measures on second and third-tier cities are implemented, particularly in second and third-tier cities where we have property projects or plan to have property projects, our business, financial condition and operating results may be materially and adversely affected.

• On July 19, 2012, the Ministry of Land and Resources and the MOHURD jointly issued the Urgent Notice to Further Tighten Real Property Land Administration and Consolidate the Regulation of the Real Property Market《關於進一步嚴格房地產用地管理鞏固房地產市 ( 場調控成果的緊急通知》) to strengthen the enforcement of macroeconomic policy in the

43 real property market. In accordance with the notice, local governments must strictly implement the macroeconomic control policies for the real property market and must secure the supply of residential land, especially land used for development of government-subsidized residential units. Residential construction projects must commence within one year of the delivery date of the land title, which is stipulated in the land allocation decision or land grant contract, and must be completed within three years of the date of commencement of the project.

• On September 6, 2012, the Ministry of Land and Resources promulgated the Notice on Strictly Implementing Land Use Standard and Vigorously Promoting Economical Intensive Land Use《關於嚴格執行土地使用標準大力促進節約集約用地的通知》 ( ), which stipulated that land use standards shall be strictly implemented and continuously improved in accordance with the principle of economical intensive land use.

• On February 26, 2013, the General Office of the State Council issued the Notice on Continuing to Effectively Regulate the Real Estate Market《繼續做好房地產市場調控工 ( 作的通知》), requiring certain related cities to fine-tune the existing house purchase restrictions on the basis of strict compliance with the Notice of the General Office of the State Council on Further Improving the Regulation of the Real Estate Market (Guo Ban Fa [2011] No. 1)《國務院辦公廳關於進一步做好房地產市場調控工作有關問題的通知》 ( 國辦發[2011] 1號), which includes, among others: (i) all administrative regions of a city subject to purchase restrictions shall be covered under such restrictions, while the types of houses subject to purchase restrictions shall include all newly-constructed commercial housing and second-hand housing. The house purchase eligibility shall be examined before the conclusion of a house purchase contract (or a letter of purchase intent). For the time being, houses within the administrative regions of a city shall not be sold to a family without local household register that already owns one or more houses, and a family without local household register that is unable to provide proofs for a certain number of consecutive years of local tax payment or social insurance contribution; (ii) with regard to cities with soaring housing prices, the local branches of the People’s Bank of China, may further raise the enforcing percentage of the minimum down payment (which shall not be lower than 60%) and loan interest rates which shall not be lower than 1.1 times of the benchmark interest rate for the second-home purchases, according to policy requirements and the price control targets determined by the local people’s governments for newly-constructed commercial housing; and (iii) tax authorities shall levy individual income tax payable on the sales of owner-occupied houses at 20% of the transfer income in strict compliance with the law if the original value of the houses sold can be verified through historical information such as tax collection and administration, house registration, etc.

• In addition, since late 2010 certain local governments, including those in Shenzhen, Foshan, Guangzhou, Hangzhou, Shanghai, Shenyang and Wuhan, have also implemented local regulatory and austerity measures affecting our industry. If local regulatory and austerity measures continue and/or are expanded in scope or to more localities where we have property projects or plan to have property projects, our business, financial condition and operating results may be materially and adversely affected.

Recently, the PRC government has gradually loosened control over the real property market in PRC by implementing various policies. Nevertheless, considering the massive inventorial housing properties in the current market resulted from the policy of real estate restrictions during the past years, this new easing policy still needs more time and space to demonstrate its substantive effects on the real estate market.

• On March 5, 2014, the annual report published by the PRC government’s State Council stated that ‘different cities should have different housing policies; the government will promote supply of small- and medium-size commercial residential buildings, control speculative demands, and promote healthy development of the real property market’ in PRC. After several years of referring to controlling policies and suppressing the rising housing prices, this was the first year that such language was not included in the report.

44 • On June 27, 2014, the purchasing limit policy for Hohhot was officially cancelled. On August 28, 2014, the purchasing limit policy for Hangzhou was also cancelled. Other cities in China gradually followed and cancelled such policies. As of January 25, 2015, purchasing limit policy is only applicable in Beijing, Shanghai, Guangzhou, Shenzhen and Sanya.

• On September 30, 2014, the PBOC and CBRC jointly issued the ‘Notice on Further Improving Housing Financial Services’《關於進一步做好住房金融服務工作的通知》 ( ). According to such Notice, if a household that owns an existing property for which the property purchase loan has been paid off applies for a new loan to purchase another ordinary commodity housing, policies applicable will be those which were applicable to the first owner-occupied property. In addition, if a household borrows a loan to purchase the first ordinary owner-occupied residential property, the minimum down payment ratio of the loan shall be 30% of the total price, and the interest rate of the loan shall be at least 0.7 times the benchmark lending rate.

• On October 9, 2014, the Ministry of Housing and Urban-Rural Development, the Ministry of Finance and the PBOC jointly issued the ‘Notice on Promoting the Personal Housing Accumulation Fund Loans’《關於發展住房公積金個人住房貸款業務的通知》 ( ). The Notice requires financial institutions to loosen the conditions for applying for personal housing accumulation fund loans and employees who have been paying such accumulation for a period of six consecutive months may apply for such loans. Also, accumulation payment in one location can be acknowledged in another location and employees may continue accumulation payment after moving to a new location. Furthermore, some banking fees are no longer applicable for such loans. The Notice also enhances support for households purchasing property for the first time.

• On March 25, 2015, the Ministry of Land and Resources and the Ministry of Housing and Urban-rural Development jointly issued the ‘Notice on Optimizing Housing and Land Supply Structure and Promoting the Steady and Healthy Development of Real Estate Market’(《關於優化2015年住房及用地供應結構促進房地產市場平穩健康發展的通知》), designed to ensure the balance between market supply and demand and to require that the size of housing land be determined according to the specific local conditions. For cities and counties that obviously have a much larger supply, housing land supply should be reduced and controlled to optimize its size and structure and accelerate de-stocking.

• On March 30, 2015, the Notice of the People’s Bank of China, the Ministry of Housing and Urban-rural Development and the China Banking Regulatory Commission on Matters concerning Individual Housing Loan Policies《中國人民銀行、住房城鄉建設部、中國銀 ( 行業監督管理委員會關於個人住房貸款政策有關問題的通知》) was promulgated, according to which, when a household, which has already owned a home and has not paid off the relevant housing loan, applies for another commercial personal housing loan to purchase another ordinary housing property for the purpose of improving living conditions, the minimum down payment is adjusted to 40%. For working households that have contributed to the HPT (Housing Provident Fund), when they use the HPT loans to purchase an ordinary residential house as their first home, the minimum down payment shall be 20% of the house price; for working households that have contributed to the HPT and that have already owned a home and have paid off the corresponding home loans, when they apply, for the second time, for the HPT loans for the purchase of an ordinary residential house as their second home in the interest of improving their housing conditions, the minimum down payment shall be 30% of the house price. After the promulgation, banks of various provinces have lowered the minimum down payment accordingly for households that apply for loans to purchase a second ordinary residential house as their second home.

• On March 30, 2015, the Notice of the Ministry of Finance and the State Administration of Taxation on Adjusting the Business Tax Policies Concerning Transfer of Individual Housing 《財政部、國家稅務總局關於調整個人住房轉讓營業稅政策的通知》( ) was promulgated,

45 to come into effect on March 31, 2015. According to this notice, the sale of an ordinary residential house by an individual who purchased the same house more than two years (inclusive) ago shall be exempted from business tax. The exemption period is shortened from 5 years to 2 years to further stimulate the circulation of second-hand housing and stimulate the market.

Many of the property industry policies carried out by the PRC government are unprecedented and are expected to be amended and revised over time. Other political, economic and social factors may also lead to further adjustments and changes of such policies. We cannot assure you that the PRC government will not adopt additional and more stringent industry policies, regulations and measures in the future, nor can we assure you when or whether the existing policies will be eased or reversed. If we fail to adapt our operations to new policies, regulations and measures that may come into effect from time to time with respect to the real property industry, or such policy changes disrupt our business, reduce our sales or average selling prices, or cause us to incur additional costs, our business prospects, results of operations and financial condition may be materially and adversely affected.

The PRC government may further introduce initiatives which may affect our access to capital and the means in which we may finance our property development. In particular, recent reports about a developer running into difficulties on repayment and operations could prompt the PRC government to further tighten restrictions on PRC property developers, which could have a material adverse impact on our business and operations. See “—Risks Relating to the Real Estate Industry in China—The PRC government may adopt further measures to slow down growth in the property sector” for more risks and uncertainties relating to the extensive PRC regulations.

Changes in PRC economic, political and social conditions, as well as governmental policies, could have a material adverse effect on our business, prospects, financial condition and results of operations

Substantially all of our business and operations are conducted in China. Accordingly, our business prospects, financial conditions and results of operation are, to a significant degree, subject to economic, political and social developments in China. The PRC economy differs from the economies of most of the developed countries in many aspects, including:

• the amount and degree of the PRC government involvement;

• growth rate and degree of development;

• uniformity in the implementation and enforcement of laws;

• content of and control over capital investment;

• control of foreign exchange; and

• allocation of resources.

The PRC economy has been transitioning from a centrally planned economy to a more market-oriented economy. For approximately three decades, the PRC government has implemented economic reform measures to utilize market forces in the development of the PRC economy. However, a substantial portion of productive assets in China is still owned by the PRC government. In addition, the PRC government continues to play a significant role in regulating industries and the economy by imposing industrial policies. We cannot predict whether changes in PRC economic, political or social conditions and in PRC laws, regulations and policies will have any adverse effect on our current or future business, financial condition or results of operations.

In addition, many of the economic reforms carried out by the PRC government are unprecedented or experimental and are expected to be refined and improved over time. Other political, economic and social factors may also lead to further adjustments of the reform measures. The PRC government exercises significant control over China’s economic growth through allocation of resources, controlling

46 payment or foreign currency denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Certain measures taken by the PRC government to guide the allocation of resources may benefit the overall economy of China but may, however, also have a negative effect on us. For example, our business, prospects, financial condition and results of operations may be adversely affected by government control over capital investments, changes in tax regulations that are applicable to us, change in interest rates and statutory reserve rates for banks or government control in bank lending activities. Also, the PRC government has in the past implemented a number of measures intended to slow down certain segments of the economy that the government believed to be overheating, including the real estate industry. These measures have included restricting foreign investment in certain sectors of the real estate industry, raising benchmark interest rates of commercial banks, reducing currency supply and placing additional limitations on the ability of commercial banks to make loans by raising bank reserves against deposits and raising the thresholds and minimum loan interest rates for residential mortgages. These actions, as well as future actions and policies of the PRC government, could cause a decrease in the overall level of economic activity, and in turn have a material and adverse impact on our business and financial condition.

Changes in governmental control of currency conversion and in PRC foreign exchange regulations may adversely affect our business operations

The PRC government imposes controls on the convertibility between Renminbi and foreign currencies and the remittance of foreign exchange out of China. A substantial portion of our revenue is denominated in Renminbi. Under our current corporate structure, our income is primarily derived from dividend payments from our PRC subsidiaries. Our PRC subsidiaries must convert their Renminbi earnings into foreign currency before they may pay cash dividends to us or service their foreign currency denominated obligations. Under existing PRC foreign exchange regulations, payments of current-account items may be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements.

However, approval from appropriate governmental authorities is required when Renminbi is converted into foreign currencies and remitted out of China for capital-account transactions, such as the repatriation of equity investment in China and the repayment of the principal of loans denominated in foreign currencies. Such restrictions on foreign exchange transactions under capital accounts also affect our ability to finance our PRC subsidiaries. Subsequent to the issuance of Notes, we have the choice, as permitted by the PRC foreign investment regulations, to invest our net proceeds (if any) from the issuance of Notes in the form of registered capital or a shareholder loan into our PRC subsidiaries to finance our operations in China. Our choice of investment is affected by the relevant PRC regulations with respect to capital-account and current-account foreign exchange transactions in China. Our investment decisions are additionally affected by various other measures taken by the PRC government relating to the PRC property market as we have disclosed in the section entitled “Industry Overview—China’s Property Market—Real Estate Reforms.” In addition, our transfer of funds to our subsidiaries in China is subject to approval by PRC governmental authorities in the case of an increase in registered capital, and subject to approval by and registration with PRC governmental authorities in case of shareholder loans to the extent that the existing foreign investment approvals received by our PRC subsidiaries permit any such shareholder loans at all. These limitations on the flow of funds between us and our PRC subsidiaries could restrict our ability to act in response to changing market conditions.

Our income tax obligations have increased, dividends from our PRC subsidiaries are currently subject to withholding tax under PRC tax laws and we may be subject to PRC tax under the Enterprise Income Tax Law

In March 2007, the National People’s Congress of the PRC and its Standing Committee (the “NPC”or the “National People’s Congress”) enacted the Enterprise Income Tax Law of the PRC《中華人民共和國 ( 企業所得稅法》) (the “Enterprise Tax Law”), which took effect on January 1, 2008. The Enterprise Tax Law imposes a unified income tax rate of 25% on all domestic and foreign-invested enterprises unless they qualify under certain limited exceptions. According to the Enterprise Tax Law, enterprises that were previously subject to an enterprise income tax (“EIT”) rate lower than 25% may continue to enjoy the lower rate and gradually transition to the new tax rate within five years after January 1, 2008. For example, companies

47 established in Shenzhen Special Economic Zone were subject to PRC enterprise income tax at a rate of 15% before January 1, 2008 and allowed an extension period of five years to phase into the new tax regime until the end of 2013, after which the unified 25% tax rate has been imposed. For the years ended December 31, 2012, 2013 and 2014, we made provisions for enterprise income tax of RMB2,137.9 million, RMB1,902.6 million and RMB1,322.2 (US$213.1 million), respectively.

We are a holding company that is financially dependent on distributions from our subsidiaries and our business operations are principally conducted through our PRC subsidiaries. Prior to December 31, 2007, dividend payments to foreign investors made by foreign-invested enterprises, such as dividends paid to us by our PRC subsidiaries, were exempt from PRC withholding tax. The Enterprise Tax Law and the Regulations for Implementation of Enterprise Income Tax Law of the PRC《中華人民共和國企業所 ( 得稅法實施條例》) (together with the Enterprise Tax Law, the “Enterprise Tax Laws”), effective January 1, 2008, provide that any dividend payment to foreign investors is subject to a withholding tax at a rate of 10%. Pursuant to the Arrangement between mainland China and Hong Kong for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income《內地和香港特別行 ( 政區關於對所得避免雙重徵稅和防止偷漏稅的安排》) signed on August 21, 2006, a company incorporated in Hong Kong may be subject to withholding income tax at a rate of 5% on dividends it receives from its PRC subsidiaries if it holds a 25% or more interest in that particular PRC subsidiary at the time of the distribution, or 10% if it holds less than a 25% interest in that subsidiary, although there is uncertainty under a SAT circular regarding whether intermediate Hong Kong holding companies will be eligible for benefits under this arrangement.

In addition, under the Enterprise Tax Laws, enterprises established under the laws of jurisdictions outside China with their “de facto management bodies” located within China may be considered PRC resident enterprises and therefore subject to the Enterprise Tax Law at the rate of 25% on their worldwide income. The Enterprise Tax Laws provide that the “de facto management body” of an enterprise is the organization that exercises substantial and overall management and control over the production, employees, books of accounts and properties of the enterprise. If a majority of the members of our management team continue to be located in China, we may be considered a PRC resident enterprise and therefore subject to the Enterprise Tax Law at the rate of 25% on our worldwide taxable income. It is not entirely clear whether the worldwide taxable income of a non-PRC enterprise that is treated as a resident enterprise will include dividends from PRC subsidiaries. If we or any of our non-PRC subsidiaries are or become a PRC resident enterprise under the Enterprise Tax Laws, our profitability and cash flow may be materially and adversely affected.

Interest and other amounts paid by us to our foreign investors may be subject to withholding taxes and gain on the sale or exchange of our Notes may be subject to tax under PRC tax laws

Under the Enterprise Tax Laws, if our Company is deemed a PRC resident enterprise, interest and other amounts paid on the Notes may be considered to be sourced within China. In that case, PRC income tax at the rate of 10% will be withheld from income paid by us to investors that are “non-resident enterprises” so long as such “non-resident enterprise” investors do not have an establishment or place of business in China or, if despite the existence of such establishment or place of business in China, the relevant income is not effectively connected with such establishment or place of business in China. Any gain realized on the transfer of the Notes by such investors may be subject to a 10% PRC income tax if we are treated as a PRC resident enterprise and such gain is regarded as income derived from sources within China. In the case of individual holders of Notes the taxes described above may be imposed at a rate of 20%. It is uncertain whether we will be considered a PRC “resident enterprise.” We currently do not believe we are a PRC resident enterprise. However, if we are required under the Enterprise Tax Laws to withhold PRC income tax on our interest or principal paid to our foreign holders of Notes, we will be required (subject to certain exceptions) to pay such additional amounts as will result in receipt by the holders of such amounts as would have been received by them had no such withholding been required. The requirement to pay additional amounts will increase the cost of servicing payments on the Notes, and could have a material adverse effect on our ability to pay interest on, and repay the principal amount of, the Notes, as well as our profitability and cash flow. In addition, if you are required to pay PRC income tax on the transfer of our Notes, the value of your investment may be materially and adversely affected. It is unclear whether, if we are considered a PRC “resident enterprise,” holders of our Notes might be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas.

48 PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may adversely affect our business operations

On June 4, 2014, the SAFE promulgated the Notice of the State Administration of Foreign Exchange on the Administration of Foreign Exchange Involved in Overseas Investment, Financing and Return on Investment Conducted by Residents in China via Special-Purpose Companies《國家外匯管 ( 理局關於境內居民通過特殊目的公司境外投融資及返程投資外匯管理有關問題的通知》), which stipulates that, among other measures: (i) prior to making a contribution to special purpose companies (“SPC,” referring to the overseas enterprises that are directly established or indirectly controlled for the purpose of investment and financing by PRC residents (including PRC institutions and resident individuals) with their legitimate holdings of the assets or interests in PRC enterprises, or their legitimate holdings of overseas assets or interests) with legitimate holdings of domestic or overseas assets or interests, a PRC resident shall apply to the relevant Foreign Exchange Bureau for foreign exchange registration of overseas investment; (ii) where a registered overseas SPC experiences changes of its PRC resident individual shareholder, its name, operating period or other basic information, or experiences changes of material matters, such as the increase or reduction of contribution by the PRC resident individual, the transfer or replacement of equity, or merger or division, the PRC resident shall promptly change the foreign exchange registration of overseas investment with the Foreign Exchange Bureau concerned. The PRC resident may proceed with subsequent business (including the repatriation of profits and bonuses) only after completing the change of the foreign exchange registration of overseas investment; (iii) after a SPC has completed overseas financing, if the funds raised are repatriated to the PRC for use, relevant Chinese provisions on foreign investment and external debt management shall be complied with. The Foreign-invested Enterprise established as a result of round-trip investment shall go through relevant foreign exchange registration pursuant to the prevailing provisions on the foreign exchange administration of foreign direct investment, and truthfully disclose the actual controllers of its shareholders and other relevant information; (iv) cross-border receipts and payments between a PRC resident and an overseas SPC shall be subject to the declaration of balance of payments statistics pursuant to prevailing provisions; (v) any acts in violation of the provisions hereof shall be subject to the punishment imposed by the SAFE according to relevant provisions of the Regulations of the People’s Republic of China on Foreign Exchange Control.

If the SAFE promulgates clarifications or regulations in the future requiring our beneficial owners who are Hong Kong permanent residents to comply with the registration procedures and update requirements described above and if our beneficial owners are unable or fail to comply with such procedures, our beneficial owners may be subject to fines and legal sanctions and our business operations may also be materially and adversely affected, particularly with respect to the ability of our Chinese subsidiaries to remit foreign currency payments out of China.

Our operations and financial performance could be adversely affected by labor shortages, increase in labor costs, changes to the PRC labor-related laws and regulations or labor disputes

The PRC Labor Contract Law, which became effective on January 1, 2008, imposes greater liabilities on employers and significantly affects the cost of an employer’s decision to reduce its workforce. Further, it requires certain terminations to be based upon seniority and not merit. In the event we decide to significantly change or decrease our workforce, the PRC Labor Contract Law could adversely affect our ability to effect such changes in the most cost effective or timely manner to our business, hence may adversely affect our financial condition and results of operations. In addition, the PRC government has continued to introduce various new labor-related regulations after the promulgation of the PRC Labor Contract Law. Among other things, the paid annual leave provisions require that paid annual leaves ranging from five to fifteen days be available to nearly all employees and further require that employers compensate an employee for any annual leave days the employee is unable to take in the amount of three times of such employee’s daily salary, subject to certain exceptions.

On October 28, 2010, the Standing Committee of the NPC promulgated the Social Insurance Law, which became effective on July 1, 2011, to clarify the contents of the social insurance system in China. According to the Social Insurance Law, employees will participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance and maternity insurance and the employers must, together with their employees or separately, pay for the social insurance premiums for such employees.

49 As a result of the implementation of these and any future rules and regulations designed to enhance the standard for labor protection, our labor costs may continue to increase. Furthermore, as the interpretation and implementation of these new laws and regulations are still evolving, we cannot assure you that our employment practice will at all times be deemed fully in compliance, which may cause us to face labor disputes or governmental investigations. If we are deemed in violation of such labor laws and regulations, we could be subject to penalties, compensations to the employees and loss of reputation, and as a result our business, financial condition and results of operations could be materially and adversely affected.

Further, labor disputes, work stoppages or slowdowns at our operating subsidiaries or project sites or affecting the operations of our business partners could disrupt our daily operation or our expansion plans, which could have a material adverse effect on our business and results of operations.

Interpretation of the PRC laws and regulations involves uncertainty and the current legal environment in China could limit the legal protections available to you

Our core business is conducted in China and is governed by PRC laws and regulations. Our principal operating subsidiaries are located in China and are subject to the PRC laws and regulations. The PRC legal system is a civil law system based on written statutes, and prior court decisions have limited precedential value and can only be used as a reference. Additionally, PRC written laws are often principle-oriented and require detailed interpretations by the enforcement bodies to further apply and enforce such laws. Since 1979, the PRC legislature has promulgated laws and regulations in relation to economic matters such as foreign investment, corporate organization and governance, commercial transactions, taxation and trade, with a view to developing a comprehensive system of commercial law, including laws relating to property ownership and development. However, because these laws and regulations have not been fully developed, and because of the limited volume of published cases and the non-binding nature of prior court decisions, interpretation of PRC laws and regulations involves a degree of uncertainty and the legal protection available to you may be limited. Depending on the governmental agency or the presentation of an application or case to such agency, we may receive less favorable interpretations of laws and regulations than our competitors. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention. All these uncertainties may cause difficulties in the enforcement of our land use rights, entitlements under our permits, and other statutory and contractual rights and interests.

It may be difficult to effect service of process upon us or our directors or senior officers who reside in China or to enforce against us or them in China any judgments obtained from non-PRC courts

A significant portion of our assets and our subsidiaries are located in the PRC. In addition, most of our directors and officers reside in the PRC, and the assets of our directors and officers may also be located in the PRC. As a result, it may be difficult or impossible to effect service of process outside the PRC upon us or our directors and officers, including with respect to matters arising under applicable securities laws. A judgment of a court of another jurisdiction may be reciprocally recognized or enforced in the PRC if that jurisdiction has a treaty with the PRC or if judgments of the PRC courts have been recognized before in that jurisdiction, subject to the satisfaction of some other requirements. Our PRC legal adviser has advised us that the PRC does not have treaties providing for the reciprocal acknowledgement and enforcement of judgments of courts with Japan, the United Kingdom, the United States or most other western countries. In addition, Hong Kong has no arrangement for the reciprocal enforcement of judgments with the United States. As a result, the prospects for the recognition and enforcement in the PRC or Hong Kong of judgments of a court in non-PRC jurisdictions are uncertain.

50 We cannot guarantee the accuracy of facts, forecasts and other statistics with respect to China, the PRC economy, the PRC real estate industry and the selected PRC regional data contained in this offering memorandum

Facts, forecasts and other statistics in this offering memorandum relating to China, the PRC economy, the PRC real estate industry and the selected PRC regional data have been derived from various official or other publications available in China and may not be consistent with other information compiled within or outside China. However, we cannot guarantee the quality or reliability of such source materials. They have not been prepared or independently verified by us or any of our affiliates or advisers (including legal advisers), or other participants in this offering and, therefore, we make no representation as to the accuracy of such facts, forecasts and statistics. We have, however, taken reasonable care in the reproduction and/or extraction of the official and other publications for the purpose of disclosure in this offering memorandum. Due to possibly flawed or ineffective collection methods or discrepancies between published information and market practice, these facts, forecasts and statistics in this offering memorandum may be inaccurate or may not be comparable to facts, forecasts and statistics produced with respect to other economies. Further, there can be no assurance that they are stated or compiled on the same basis or with the same degree of accuracy as in other jurisdictions. Therefore, you should not unduly rely upon the facts, forecasts and statistics with respect to China, the PRC economy, the PRC real estate industry and the selected PRC regional data contained in this offering memorandum.

Risks Relating to the Notes, the Keepwell Deed and the Deed of Undertaking

We are a holding company and payments with respect to the Notes are structurally subordinated to liabilities, contingent liabilities and obligations of our subsidiaries

We are a holding company with no material operations. We conduct our operations primarily through our PRC subsidiaries. The Notes will not be guaranteed by any current or future PRC subsidiaries or certain other Non-Guarantor Subsidiaries. Moreover, the Notes will not be guaranteed by the Initial Offshore Non-Guarantor Subsidiaries and under the terms of the Indenture, subject to certain conditions, the Company may designate any Offshore Restricted Subsidiary as a Designated Offshore Non-Guarantor Subsidiary which would allow such Offshore Restricted Subsidiary not to provide a Subsidiary Guarantee or JV Subsidiary Guarantee, subject to certain conditions. Our primary assets are ownership interests in our PRC subsidiaries, which are held through the Subsidiary Guarantors. The Subsidiary Guarantors do not, and the JV Subsidiary Guarantors (if any) may not, have material operations. Accordingly, our ability to pay principal and interest on the Notes and the ability of the Subsidiary Guarantors and the JV Subsidiary Guarantors (if any) to satisfy their obligations under the Subsidiary Guarantees or JV Subsidiary Guarantees (as the case may be) will depend upon our receipt of principal and interest payments on the intercompany loans and distributions of dividends from our subsidiaries.

Creditors, including trade creditors of the Non-Guarantor Subsidiaries and any holders of preferred shares in such entities, will have a claim on the Non-Guarantor Subsidiaries’ assets that would be prior to the claims of the holders of the Notes. As a result, our payment obligations under the Notes will be effectively subordinated to all existing and future obligations of our Non-Guarantor Subsidiaries, including their obligations under guarantees they have issued or will issue in connection with our business operations, and all claims of creditors of our Non-Guarantor Subsidiaries will have priority as to the assets of such entities over our claims and those of our creditors, including holders of the Notes. As at December 31, 2014, our Non-Guarantor Subsidiaries had bank and other borrowings in the aggregate principal amount of approximately RMB22,756 million (US$3,667.6 million), capital commitments in the amount of approximately RMB13,786 million (US$2,221.9 million) and contingent liabilities arising from guarantees in the amount of approximately RMB26,500 million (US$4,271.0 million). The Notes and the Indenture permit us, the Subsidiary Guarantors, the JV Subsidiary Guarantors (if any) and our Non-Guarantor Subsidiaries to incur additional indebtedness and issue additional guarantees, subject to certain limitations. In addition, holders of the Senior Notes and other secured creditors of us or those of any Subsidiary Guarantor or JV Subsidiary Guarantor (if any) would have priority as to our assets or the assets of such Subsidiary Guarantor or JV Subsidiary Guarantor (if any) securing the related obligations over claims of holders of the Notes.

51 Moreover, under the terms of the Notes, a Subsidiary Guarantee required to be provided by a subsidiary of the Company under the terms of the Notes may be replaced by a “JV Subsidiary Guarantee” following the sale or issuance to a third party of a 20.0% to 49.9% equity interest in such subsidiary or its direct or indirect majority shareholders or the purchase of no less than 50.1% and no more than 80.0% of the equity interest of an independent third party and designate such entity as a Restricted Subsidiary (subject to the satisfaction of certain conditions). Recovery under a JV Subsidiary Guarantee is limited to an amount equal to our proportional interest in the issued share capital of such Subsidiary Guarantor multiplied by the fair market value of the total assets in such JV Subsidiary Guarantor and its subsidiaries, on a consolidated basis, as at the date of the last fiscal year end of the Company. As a result, the amount that may be recovered by the Trustee pursuant to a JV Subsidiary Guarantee (compared with a Subsidiary Guarantee) is reduced, which in turn may affect your ability to recover any amounts due under the Notes.

The Notes, the Subsidiary Guarantees and the JV Subsidiary Guarantees (if any) are unsecured obligations

As the Notes, the Subsidiary Guarantees and the JV Subsidiary Guarantees (if any) are unsecured obligations, the ability of the Company, the Subsidiary Guarantors or JV Subsidiary Guarantors (if any) to fulfill its or their financial obligations may be compromised if:

• the Company, any Subsidiary Guarantor or JV Subsidiary Guarantors (if any) enter into bankruptcy, liquidation, reorganization or other winding-up proceeding;

• there is a default in payment under future secured indebtedness or other unsecured indebtedness of the Company, any Subsidiary Guarantor or JV Subsidiary Guarantors (if any); or

• there is an acceleration of any indebtedness of the Company, any Subsidiary Guarantor or JV Subsidiary Guarantors (if any).

If any of these events occur, the assets of the Company and the Subsidiary Guarantors may not be sufficient to pay amounts due on the Notes and the Subsidiary Guarantees.

Under PRC regulations, we may not be able to transfer to our PRC subsidiaries proceeds from the issuance of Notes in the form of a loan, which could impair our ability to make timely payments of interest, or even payments of principal, under the Notes

According to the existing PRC rules and regulations relating to supervision of foreign debt, loans by foreign companies to their subsidiaries in China, such as our PRC subsidiaries established as foreign-invested enterprises in China, are considered foreign debt, and such loans must be registered with the relevant local branches of SAFE. Such rules and regulations also provide that the total outstanding amount of such foreign debt borrowed by any foreign-invested enterprise may not exceed the difference between its total investment and its registered capital, each as approved by the relevant PRC authorities. In addition, in July 2007, SAFE issued a circular indicating that it would not process any foreign debt registration or conversion of foreign debt for foreign-invested enterprises in the real estate sector that was approved by the local office of MOFCOM and registered with MOFCOM after June 1, 2007. Foreign-invested enterprises include joint ventures and wholly foreign owned enterprises established in China, such as most of our PRC subsidiaries. Therefore, the proceeds of the issuance of Notes that may be used for land acquisitions and developments in China may only be transferred to our PRC subsidiaries as equity investments and not as loans. We would therefore have to rely on dividend payments from our PRC subsidiaries, and we cannot assure you that dividend payments will be available on each interest payment date to pay the interest due and payable under the Notes, or on the maturity date to pay the principal of the outstanding Notes.

52 Our subsidiaries are subject to restrictions on the payment of dividends and the repayment of intercompany loans or advances to us and our subsidiaries

As a holding company, we depend on the receipt of dividends and the interest and principal payments on intercompany loans or advances from our subsidiaries, including our PRC subsidiaries, to satisfy our obligations, including our obligations under the Notes. The ability of our subsidiaries to pay dividends and make payments on intercompany loans or advances to their shareholders is subject to, among other things, distributable earnings, cash flow conditions, restrictions contained in the articles of association of our subsidiaries, applicable laws and restrictions contained in the debt instruments or agreements of such subsidiaries. In addition, if any of our subsidiaries raises capital by issuing equity securities to third parties, dividends declared and paid with respect to such equity securities would not be available to us to make payments on the Notes. These restrictions could reduce the amounts that we receive from our subsidiaries, which would restrict our ability to meet our payment obligations under the Notes and the obligations of the Subsidiary Guarantors or JV Subsidiary Guarantors (if any) under the Subsidiary Guarantees or JV Subsidiary Guarantees (if any), as the case may be. PRC laws and regulations permit payment of dividends only out of accumulated profits as determined in accordance with PRC accounting standards and regulations and such profits differ from profits determined in accordance with IFRS in certain significant respects, including the use of different bases of recognition of revenue and expenses. Our PRC subsidiaries are also required to set aside a portion of their after-tax profits according to PRC accounting standards and regulations to fund certain reserves that are not distributable as cash dividends. In addition, dividends paid by our PRC subsidiaries to their non-PRC parent companies generally will be subject to a 10% withholding tax, unless any lower treaty rate is applicable according to an applicable tax treaty between the PRC and the jurisdiction in which the overseas parent company is incorporated. Pursuant to an avoidance of double taxation arrangement between Hong Kong and the PRC, if the non-PRC parent company is a Hong Kong resident and directly holds a 25% or more interest in the PRC enterprise, such restrictions tax rate may be lowered to 5%. However, according to a circular issued by the SAT in October 2009, tax treaty benefits will be denied to “conduit” or shell companies without business substance. As a result of such restrictions, there could be timing limitations on payments from our PRC subsidiaries to meet payments required by the Notes or satisfy the obligations of the Subsidiary Guarantors or JV Subsidiary Guarantors (if any) under the Subsidiary Guarantees or JV Subsidiary Guarantees (if any) as the case may be, and there could be restrictions on payments required to redeem the Notes at maturity or as required for any early redemption. As a result of the foregoing, we cannot assure you that we will have sufficient cash flow from dividends from our subsidiaries to satisfy our obligations under the Notes or the obligations of the Subsidiary Guarantors or JV Subsidiary Guarantors (if any) under the Subsidiary Guarantees or JV Subsidiary Guarantees (if any), as the case may be.

The terms of the Notes permit us to make investments in Unrestricted Subsidiaries, minority owned joint ventures and other third parties

In light of land prices, sizes of projects, the competitive landscape and other factors, we may from time to time consider developing projects jointly with other property developers or entering into other arrangements. As a result, we may need to make investments in joint ventures or other third parties (including joint ventures in which we may own less than a 50% equity interest) and such joint ventures or third parties may or may not be Restricted Subsidiaries under the Indenture. Although the Indenture restricts us and our Restricted Subsidiaries from making investments in Unrestricted Subsidiaries, minority joint ventures or third parties, these restrictions are subject to important exceptions and qualifications, including with respect to related parties. See the definition of “Permitted Investments” in the sections entitled “Description of the Notes.”

We may be able to redeem the Notes in whole at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest in the event we are required to pay additional amounts because we are treated as a PRC “resident enterprise”

In the event we are treated as a PRC “resident enterprise” under the Enterprise Tax Law, we may be required to withhold PRC income tax on interest paid to certain of our non-resident investors. See “Risks relating to China—Our income tax obligations have increased, dividends from our PRC subsidiaries are

53 currently subject to withholding tax under PRC tax laws and we may be subject to PRC tax under the Enterprise Income Tax Law” and “Interest paid by us to our foreign investors may be subject to withholding taxes and gain from the sale of our Notes may be subject to tax under PRC tax laws” above. In such case, we will, subject to certain exceptions, be required to pay such additional amounts as will result in receipt by a holder of a Note of such amounts as would have been received by the holder had no such withholding been required. As described under “Description of the Notes—Redemption for Taxation Reasons,” in the event we are required to pay additional amounts as a result of certain changes in or interpretations of tax law, or the stating of an official position with respect thereto that results in our being required to withhold tax on interest payments as a result of our being treated as a PRC “resident enterprise,” we may be able to redeem the Notes in whole at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest and any additional amounts.

The Notes may not be a suitable investment for all investors

Each potential investor in the Notes must determine the suitability of an investment in the Notes in light of its own circumstances. In particular, each potential investor should consider, either on its own or with the help of its financial and other professional advisers, whether it: (i) has sufficient knowledge and experience to make a meaningful evaluation of the Notes, the merits and risks of investing in the Notes and the information contained in this offering memorandum; (ii) has access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Notes and the impact such investment will have on its overall investment portfolio; (iii) has sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes, including where the currency for principal or interest payments is different from the currency in which the potential investor’s financial activities are principally denominated; (iv) understands thoroughly the terms of the Notes and is familiar with the behavior of any relevant indices and financial markets; and (v) is able to evaluate possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

We may not be able to repurchase the Notes upon a Change of Control Triggering Event

We must offer to purchase the Notes upon the occurrence of a Change of Control Triggering Event, at a purchase price equal to 101.0% of the principal amount plus accrued and unpaid interest. See “Description of the Notes.” The source of funds for any such purchase would be our available cash or third-party financing. However, we may not have sufficient available funds at the time of the occurrence of any Change of Control Triggering Event to make purchases of outstanding Notes. Our failure to make the offer to purchase or to purchase the outstanding Notes would constitute an Event of Default under the Notes. The Event of Default may, in turn, constitute an event of default under other indebtedness, including the Senior Notes, any of which could cause the related debt to be accelerated after any applicable notice or grace periods. If our other debt were to be accelerated, we may not have sufficient funds to purchase the Notes and repay the debt. In addition, the definition of Change of Control Triggering Event for purposes of the Indenture does not necessarily afford protection for the holders of the Notes in the event of some highly leveraged transactions, including certain acquisitions, mergers, refinancing, restructurings or other recapitalizations. These types of transactions could, however, increase our indebtedness or otherwise affect our capital structure or credit ratings. The definition of Change of Control Triggering Event for purposes of the Indenture also includes a phrase relating to the sale of “all or substantially all” of our assets. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition under applicable law. Accordingly, our obligation to make an offer to purchase the Notes and the ability of a holder of the Notes to require us to purchase its Notes pursuant to the offer as a result of a highly-leveraged transaction or a sale of less than all of our assets may be uncertain.

The insolvency laws of the Cayman Islands and other local insolvency laws may differ from U.S. bankruptcy law or those of another jurisdiction with which holders of the Notes are familiar

Because our Company is incorporated, and the JV Subsidiary Guarantors (if any) may be incorporated, under the laws of the Cayman Islands, an insolvency proceeding relating to us or any such JV Subsidiary Guarantor, even if brought in the United States, would likely involve Cayman Islands

54 insolvency laws, the procedural and substantive provisions of which may differ from comparable provisions of United States federal bankruptcy law. In addition, our Subsidiary Guarantors and other JV Subsidiary Guarantors (if any) are incorporated or may be incorporated in the British Virgin Islands or Hong Kong and the insolvency laws of the British Virgin Islands and Hong Kong may also differ from the laws of the United States or other jurisdictions with which the holders of the Notes are familiar. We conduct substantially all of our business operations through PRC-incorporated subsidiaries in China. The Subsidiary Guarantors, as equity holders in our PRC subsidiaries, are necessarily subject to the bankruptcy and insolvency laws of China in a bankruptcy or insolvency proceeding involving any of such PRC subsidiaries. Any JV Subsidiary Guarantors which become equity holders of our PRC subsidiaries would also be subject to such laws. The PRC laws and regulations relating to bankruptcy and insolvency and the legal proceedings in that regard may significantly differ from those of the United States and other jurisdictions with which the holders of the Notes are familiar. You should analyze the risks and uncertainties carefully before you invest in our Notes.

Fluctuation in the value of RMB may have a material adverse effect on our business and on your investment

Although substantially all of our turnover is generated by our PRC operating subsidiaries and is denominated in Renminbi, we are required to settle all amounts due under the Notes (including principal, premium, interest and redemption payments) in U.S. dollars. The value of RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions. The conversion of RMB into foreign currencies, including U.S. dollars, has been based on rates set by the PBOC. On July 21, 2005, the PRC government changed its policy of pegging the value of RMB to the U.S. dollar. Under the new policy, RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. This change in policy has resulted in appreciation of RMB against U.S. dollar. Any significant further appreciation of RMB may materially and adversely affect our cash flow, earnings and financial position, and the value of, and any dividends payable on, the shares in foreign currency terms. For example, an appreciation of RMB against the U.S. dollar would make any new RMB denominated investments or expenditures more costly to us, to the extent that we need to convert U.S. dollars into RMB for such purposes. There are limited hedging instruments available in China to reduce our exposure to exchange rate fluctuations between the Renminbi and other currencies. To date, we have not entered into any hedging transactions to reduce our exposure to such risks. Following the issuance of the Notes, we may enter into foreign exchange or interest rate hedging agreements with respect to our U.S. dollar-denominated liabilities under the Notes. These hedging agreements may require us to pledge or transfer cash and other collateral to secure our obligations under the agreements, and the amount of collateral required may increase as a result of mark-to-market adjustments. Each of the Joint Lead Managers and their affiliates may enter into such hedging agreements permitted under the indenture(s) governing the Notes, and these agreements may be secured by pledges of our cash and other assets as permitted under the indenture(s) governing the Notes. If we were unable to provide such collateral, it could constitute a default under such agreements.

A trading market for the Notes may not develop, and there are restrictions on resale of the Notes

The Notes are a new issue of securities for which there is currently no trading market. Although we have received approval in-principle for the listing and quotation of the Notes on the Official List of the SEHK, we cannot assure you that we will obtain or be able to maintain a listing on the SEHK, or that, if listed, a liquid trading market will develop. In addition, the Notes are being issued pursuant to exemptions from registration under the Securities Act and, as a result, you will only be able to resell your Notes in transactions that have been registered under the Securities Act or in transactions not subject to or exempt from registration under the Securities Act. We cannot predict whether an active trading market for the Notes will develop or be sustained.

55 The ratings assigned to the Notes and our corporate ratings may be lowered or withdrawn in the future

The Notes are expected to be rated “BB-” by Standard & Poor’s Ratings Services and “Ba3” by Moody’s Investors Service. Such ratings are provisional and subject to each rating agency’s review of the final terms and conditions of the Notes. The ratings address our ability to perform our obligations under the terms of the Notes and credit risks in determining the likelihood that payments will be made when due under the Notes. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time. As of July 20, 2015, Standard & Poor’s Ratings Services has upgraded the Company’s long-term corporate credit rating to BB with a stable outlook from BB- and long-term issue rating on the Company’s senior unsecured notes to BB- from B+. Moody’s Investors Service has also recently, on June 30, 2015, upgraded the Company’s corporate family rating to Ba3 with a positive outlook from B1 and senior unsecured bond rating to B1 from B2. See “Recent Developments — Ratings Upgrade” and “Ratings.” We cannot assure you that a rating will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by the relevant rating agency if in its judgment circumstances in the future so warrant. Each such rating should be evaluated independently of any other rating on the Notes, on other securities of ours, or on us. We have no obligation to inform holders of the Notes of any such revision, downgrade or withdrawal. A suspension, reduction or withdrawal at any time of the rating assigned to the Notes may materially and adversely affect the market price of the Notes.

Certain transactions that constitute “connected transactions” under the Listing Rules will not be subject to the “Limitation on Transactions with Shareholders and Affiliates” covenant

Our shares are listed on the SEHK and we are required to comply with its Listing Rules, which provide, among other things, that a “connected transaction” exceeding the applicable de minimis value thresholds will require prior approval of the independent shareholders of such listed company. However, the “Limitation on Transactions with Shareholders and Affiliates” covenant in the Notes does not capture transactions between the Company or any Restricted Subsidiary, on the one hand, and an Affiliate of any Restricted Subsidiary, on the other hand. As a result, we are not required by the terms of the Notes to ensure that any such transactions are on terms that are fair and reasonable, and we will not need to deliver officer’s certificates or procure the delivery of fairness opinions of accounting, appraisal or investment banking firms to the Trustee for any such transactions.

Our credit rating may decline

There is a risk that our credit rating may change as a result of changes in our operating performance or capital structure, or for some other reason. No assurance can be given that a credit rating will remain for any given period of time or that a credit rating will not be lowered or withdrawn by the relevant rating agency if, in its judgment, circumstances in the future so warrant or if a different methodology is applied to derive such credit ratings. Any lowering or withdrawal of our credit rating could, notwithstanding that it is not a rating of the Notes, adversely impact the market price and the liquidity of the Notes.

The liquidity and price of the Notes following their issuance may be volatile

The price and trading volume of the Notes may be highly volatile. Factors such as variations in our turnover, earnings and cash flows, proposals for new investments, strategic alliances and/or acquisitions, changes in interest rates, fluctuations in price for comparable companies, government regulations and changes thereof applicable to our industry and general economic conditions nationally or internationally could cause the price of the Notes to change. Any such developments may result in large and sudden changes in the trading volume and price of the Notes. We cannot assure you that these developments will not occur in the future.

The Notes will initially be held in book entry form, and therefore you must rely on the procedures of the relevant clearing systems to exercise any rights and remedies

The Notes will initially only be issued in global certificated form and held through the Clearing Systems. Interests in the global notes will trade in book-entry form only, and Notes in definitive registered form, or definitive registered notes, will be issued in exchange for book entry interests only in very limited circumstances. Owners of book-entry interests will not be considered owners or holders of

56 Notes. Payments of principal, interest and other amounts owing on or in respect of the global notes representing the Notes will be made to the paying agent which will make payments to the Clearing Systems. Thereafter, these payments will be credited to accounts of participants that hold book-entry interests in the global notes representing the Notes and credited by such participants to indirect participants. After payment to the common depositary for the Clearing Systems, we will have no responsibility or liability for the payment of interest, principal or other amounts to the owners of book-entry interests. Accordingly, if you own a book-entry interest, you must rely on the procedures of the Clearing Systems, and, if you are not a participant in the Clearing Systems, on the procedures of the participant through which you own your interest, to exercise any rights and obligations of a holder of Notes under the Indenture. Unlike the holders of the Notes themselves, owners of book-entry interests will not have the direct right to act upon our solicitations for consents, requests for waivers or other actions from holders of the notes. Instead, if you own a book-entry interest, you will be permitted to act only to the extent you have received appropriate proxies to do so from the Clearing Systems. The procedures implemented for the granting of such proxies may not be sufficient to enable you to vote on a timely basis. Similarly, upon the occurrence of an event of default under the Indenture, unless and until definitive registered notes are issued in respect of all book-entry interests, if you own a book entry interest, you will be restricted to acting through the Clearing Systems. The procedures to be implemented through the Clearing Systems may not be adequate to ensure the timely exercise of rights under the Notes.

EU Directive on the taxation of savings income

Under Council Directive 2003/48/EC on the taxation of savings income, (the “Savings Directive”), Member States are required to provide to the tax authorities of other Member States details of certain payments of interest or similar income paid or secured by a person established in a Member State to or for the benefit of an individual resident in another Member State or certain limited types of entities established in another Member State.

For a transitional period, Austria is required (unless during that period it elects otherwise) to operate a withholding system in relation to such payments. The end of the transitional period is dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries. A number of non-EU countries and territories including Switzerland have adopted similar measures (a withholding system in the case of Switzerland).

On March 24, 2014, the Council of the European Union adopted a Council Directive (the Amending Directive) amending and broadening the scope of the requirements described above. The Amending Directive requires Member States to apply these new requirements from 1 January 2017, and if they were to take effect the changes would expand the range of payments covered by the Savings Directive, in particular to include additional types of income payable on securities. They would also expand the circumstances in which payments that indirectly benefit an individual resident in a Member State must be reported or subject to withholding. This approach would apply to payments made to, or secured for, persons, entities or legal arrangements (including trusts) where certain conditions are satisfied, and may in some cases apply where the person, entity or arrangement is established or effectively managed outside of the European Union.

However, the European Commission has proposed the repeal of the Savings Directive from 1 January 2017 in the case of Austria and from 1 January 2016 in the case of all other Member States (subject to on-going requirements to fulfil administrative obligations such as the reporting and exchange of information relating to, and accounting for withholding taxes on, payments made before those dates). This is to prevent overlap between the Savings Directive and a new automatic exchange of information regime to be implemented under Council Directive 2011/16/EU on Administrative Cooperation in the field of Taxation (as amended by Council Directive 2014/107/EU). The proposal also provides that, if it proceeds, Member States will not be required to apply the new requirements of the Amending Directive.

If a payment were to be made or collected through a Member State which has opted for a withholding system and an amount of, or in respect of, tax were to be withheld from that payment pursuant to the Savings Directive (as amended from time to time) or any law implementing or complying with, or introduced in order to conform to, such Directive, neither the Company nor any Paying Agent nor any other person would be obliged to pay additional amounts with respect to amounts received by holders of the Notes as a result of the imposition of such withholding tax.

57 The Company may raise other capital which affects the price of the Notes

The Company may raise additional capital through the issue of other securities or other means. There is no restriction, contractual or otherwise, on the amount of securities or other liabilities which the Company may issue or incur or guarantee and which rank pari passu with, the Notes. The issue of any such securities or the incurrence of any such other liabilities may reduce the amount (if any) recoverable by holders of the Notes on an insolvency event of the Company. The issue of any such securities or the incurrence of any such other liabilities might also have an adverse impact on the trading price of the Notes and/or the ability of holders of the Notes to sell their Notes.

The Notes are subject to optional redemption by the Company

An optional redemption feature is likely to limit the market value of the Notes. During any period when the Company may elect to redeem Notes, the market value of the Notes generally will not rise substantially above the price at which they can be redeemed. This may also be true prior to any redemption period.

The Company may consider redeeming the Notes when its cost of borrowing is lower than the interest rate on the Notes. At such instance, an investor generally would not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the Notes being redeemed and may only be able to do so at a significantly lower rate.

CCCG holds only a limited portion of the total issued share capital of the Company and the Keepwell Deed does not include a negative pledge covenant

CCCG holds only approximately 28.9% of the total issued share capital of the Company and undertakes to hold only no less than 25% of the total issued share capital of the Company during the term of the Notes. See “Description of the Keepwell Deed” for more details. CCCG’s limited ownership of the Company imposes limitation on its ability to perform its obligations under the Keepwell Deed and the Deed of Undertaking, as well as its ability to procure the Company and the Subsidiary Guarantors to perform their respective obligations under the Notes, the Subsidiary Guarantees and the Indenture. Furthermore, the Keepwell Deed also does not include a covenant where the keepwell provider shall not incur encumbrances over the equity interests it holds directly or indirectly in the Company. As such, there can be no assurance that CCCG has not incurred, or will not incur, encumbrances over the equity interests it holds directly or indirectly in the Company. Also, there can be no assurance as to whether such encumbrances will be enforced which further decreases CCCG’s shareholding percentage in the Company’s issued share capital and in such circumstances, CCCG may not be able to perform certain of its obligations under the Keepwell Deed.

In addition, different from most of the keepwell deeds in the market, the Keepwell Deed does not include a covenant where the keepwell provider shall not incur certain types of indebtedness or provide security over such indebtedness without providing the same security over the Notes. See “Description of the Keepwell Deed” for more details. As such, there can be no assurance that CCCG has not incurred or will not incur secured indebtedness without providing the same security over the Notes, which would effectively subordinate the claims of holders of the Notes to the claims of the creditors under such indebtedness.

58 The Keepwell Deed is not a guarantee of the payment obligations under the Notes and the Subsidiary Guarantees and performance by CCCG of its obligations under the Keepwell Deed is subject to the approvals of the relevant authorities

CCCG will enter into a Keepwell Deed in relation to the Notes, as further discussed in “Description of the Keepwell Deed.” Pursuant to the terms of the Keepwell Deed, the Trustee may take action against CCCG to enforce the provisions of the Keepwell Deed. However, neither the Keepwell Deed nor any actions taken under the Keepwell Deed can be deemed as a guarantee by CCCG of the payment obligation of the Company under the Notes or the payment obligation of any of the Subsidiary Guarantors under the relevant Subsidiary Guarantees. Accordingly, CCCG will only be obliged to cause the Company or the Subsidiary Guarantors to obtain, before the due date of the relevant payment obligations, funds sufficient to enable the Company or the relevant Subsidiary Guarantors to pay such payment obligations in full as they fall due, rather than assume the payment obligation as would be the case under a guarantee. Furthermore, even if CCCG intends to perform its obligations under the Keepwell Deed, depending on the manner in which CCCG performs its obligations under the Keepwell Deed in causing a Subsidiary Guarantor to obtain, before the due date of the relevant payment obligations, funds sufficient to meet such subsidiary Guarantor’s obligations under the relevant Subsidiary Guarantees, such performance may be subject to obtaining prior consent, approvals, registration and/or filings from relevant governmental authorities, including MOF, CSRC, NDRC, MOFCOM, SAFE, SASAC and SEHK, as well as independent shareholders’ approval of the Company and other requirements, if any, under the Listing Rules. Although CCCG is required to use all reasonable efforts to obtain any required consents and approvals in order to fulfil its obligations under the Keepwell Deed, there is no assurance that such consents or approvals will be obtained in a timely manner or at all. Furthermore, depending on the manner of the performance of the Keepwell Deed and Deed of Undertaking, CCCG, the Subsidiary Guarantors and the PRC Subsidiaries may be subject to PRC tax, such as income tax, withholding tax, transfer tax, stamp tax or other taxes under applicable PRC Laws.

In addition, any claim by the Company, the Subsidiary Guarantors, the Trustee and/or holders of Notes against CCCG in relation to the Keepwell Deed will be effectively subordinated to all existing and future obligations of the CCCG’s subsidiaries (which do not guarantee the Notes), particularly the PRC operating subsidiaries of CCCG, and all claims by creditors of such subsidiaries (which do not guarantee the Notes) will have priority to the assets of such entities over the claims of the Company, the Subsidiary Guarantors, the Trustee and/or holders of Notes under the Keepwell Deed.

Parallel proceedings may be required in order to enforce your rights as the Notes, the Subsidiary Guarantees and the Indenture are governed by New York law, whereas the Keepwell Deed will be governed by Hong Kong law and provide for the exclusive jurisdiction of Hong Kong courts

The Notes, the Subsidiary Guarantees and the Indenture are each governed by the laws of the State of New York. Under the Notes, the Subsidiary Guarantees and the Indenture, the Company and the Subsidiary Guarantors will irrevocably submit to the non-exclusive jurisdiction of any state or United States federal court located in the Borough of Manhattan, the City of New York, New York in any suit, action or proceeding arising out of or relating to the Notes, the Subsidiary Guarantees and the Indenture. The Keepwell Deed will be governed by Hong Kong law. Under the Keepwell Deed, each of the Company, the Subsidiary Guarantors and CCCG has submitted to the exclusive jurisdiction of the courts of Hong Kong in respect of any dispute which may arise out of or in connection with the Keepwell Deed. Therefore, it may be necessary for the Trustee or holders of Notes to bring parallel proceedings in respect of claims arising under the Notes, the Subsidiary Guarantees or the Indenture (which may be brought in New York courts as described, or other jurisdictions where venue and jurisdiction may be properly established, if any) and claims arising under the Keepwell Deed (which can be brought only in courts in Hong Kong). Given that Hong Kong will be the exclusive jurisdiction in which claims relating to the Keepwell Deed may be brought, the Trustee and holders of the Notes will be restricted in their ability to bring an action relating to the Keepwell Deed in any other courts. This may make it more difficult as a practical matter for the Trustee and holders of Notes to enforce their rights as efficiently as if all claims relating to the Notes, the Subsidiary Guarantees, the Indenture and the Keepwell Deed could be heard in a single proceeding.

59 Performance by CCCG of its undertaking under the Deed of Undertaking is subject to approvals of the relevant governmental authorities

CCCG intends to assist the Company and the Subsidiary Guarantors to meet their respective obligations by entering into the Deed of Undertaking on the date of settlement of the Exchange Offer, which is anticipated to be on or around August 11, 2015. However, neither the Deed of Undertaking nor any actions taken by CCCG thereunder can be deemed as a guarantee by CCCG for the payment obligation of the Company under the Notes or the payment obligation of the Subsidiary Guarantors under the Subsidiary Guarantees. Under the Deed of Undertaking, upon the occurrence of an Event of Default (as defined in “Description of the Notes”), CCCG agrees to purchase from the Company or the Subsidiary Guarantors the equity interest in subsidiaries held by the Company or such Subsidiary Guarantors (the “Purchase”) at a purchase price not lower than the higher of the amount sufficient to enable the Company and the Subsidiary Guarantors to discharge their respective obligations under the Notes, the Subsidiary Guarantees and the Indenture and the fair market value of such equity interests. Upon the occurrence of an Event of Default, CCCG also agrees to make either (i) a loan to the Company or the Subsidiary Guarantors, as the case may be, or (ii) an investment in the Company or the Subsidiary Guarantors, as the case may be, in each case with a loan amount or an investment amount, as the case may be, equal to the amount sufficient to enable the Company or the Subsidiary Guarantors to discharge their respective obligations under the Notes, the Subsidiary Guarantees and the Indenture.

Performance by CCCG of the Deed of Undertaking is subject to the approval of MOF, CSRC, NDRC, MOFCOM, SAFE, SASAC and SEHK, and registration by the SAFE, the relevant Administration for Industry and Commerce and the relevant tax authority, as applicable

As the approval process is beyond the control of CCCG, there can be no assurance that CCCG will successfully obtain either of the requisite approvals in time, or at all. In the event that CCCG fails to obtain the requisite approvals, the Company and the Subsidiary Guarantors may still have insufficient funds to discharge their outstanding payment obligations under the Notes, the Subsidiary Guarantees or the Indenture.

Further, in the event of an insolvency of the Company or the Subsidiary Guarantors, any amount received by the Company or such Subsidiary Guarantors, as the case may be, may be subject to the insolvency claims of third parties. The Trustee’s claim against the sale proceeds will be an unsecured claim and may rank lower in priority to any claims by secured third party creditors of the Company or such Subsidiary Guarantors.

Performance by CCCG of its undertaking under the Deed of Undertaking may be subject to consent from third party creditors and shareholders, and may also be restricted if any of the equity interests are secured in favor of third party creditors

Under the Deed of Undertaking, CCCG agrees to purchase from the Company or the Subsidiary Guarantors the equity interest in subsidiaries held by the Company or such Subsidiary Guarantors. The ability of CCCG to perform this undertaking may be affected by its present or future financing agreements of the Company and the Subsidiary Guarantors:

• in the event that such financial agreements contain non-disposal or other restrictive covenants that would prevent the sale of an equity interest by the Company or such Subsidiary Guarantor, the Company or such Subsidiary Guarantor would need to obtain the consent from the third party creditor before it is able to proceed with the sale of such equity interest; and

• in the event that certain equity interests have been secured in favor of third party creditors, the Company or such Subsidiary Guarantor would need to arrange for these security interests to be released before it is able to proceed with the sale of such equity interests.

60 Under the Notes and the Keepwell Deed, the Company, the Subsidiary Guarantors or their respective subsidiaries are allowed to enter into financing agreements with such non-disposal or other restrictive covenants or secure the equity interests of any member of the Company, the Subsidiary Guarantors and their respective subsidiaries in favor of its creditors, subject to certain limitations.

In the event the obligation to purchase under the Deed of Undertaking becomes effective, there is no assurance that the Company or such Subsidiary Guarantor will be able to obtain any required consents from its creditors or that it will be able to arrange for any existing security arrangement to be released in order for the sale of the equity interest to proceed. If the Company or such Subsidiary Guarantor is not able to do so, it may need to repay the indebtedness owed to its third party creditors in order to be able to sell the relevant equity interests to CCCG.

In the event that the required consents or waivers from third party creditors are not able to be obtained and in the case of third party creditors, the relevant indebtedness cannot be repaid in the timely manner, the sale of the equity interest may not able to proceed and eventually the Company and the Subsidiary Guarantors may have insufficient funds to discharge their respective payment obligations to holders of the Notes.

In addition, the sale of the equity interests in certain non-wholly-owned companies may be subject to pre-emptive rights or other restrictions in such company’s articles of association, shareholders’ agreement or otherwise that would require the selling shareholder to obtain consent or waiver from other third party shareholders before any equity interest can be sold to CCCG. Any sale of the equity interests would also require independent shareholders’ approval and compliance with other requirements, if any, under the Listing Rules. In the event the obligation to purchase under the Deed of Undertaking becomes effective there is no assurance that any required consents or waivers can be obtained from third party shareholders in a timely manner or at all.

Risks Relating to the Subsidiary Guarantees and the JV Subsidiary Guarantees

Guarantees may in some cases be replaced by limited-recourse guarantees

We conduct substantially all of our business operations through our PRC subsidiaries, but none of our current PRC subsidiaries and their direct PRC or non-PRC subsidiaries will provide a Subsidiary Guarantee or a JV Subsidiary Guarantee either upon issuance of the Notes or at any time thereafter. No future subsidiaries that are organized under the laws of PRC or their future PRC or non-PRC subsidiaries will provide a Subsidiary Guarantee or a JV Subsidiary Guarantee at any time in the future. Moreover, under the terms of the Indenture, subject to certain conditions, the Company may designate any Offshore Restricted Subsidiary as a Designated Offshore Non-Guarantor Subsidiary which would allow such Offshore Restricted Subsidiary not to provide a Subsidiary Guarantee or JV Subsidiary Guarantee, subject to certain conditions. Our primary assets are ownership interests in our PRC subsidiaries, which are held through the Subsidiary Guarantors. As a result, the Notes will be effectively subordinated to all the debt and other obligations, including contingent obligations and trade payables, of the PRC subsidiaries.

The initial Subsidiary Guarantors that will guarantee the Notes do not have significant operations. We cannot assure you that the initial Subsidiary Guarantors or any subsidiaries that may become Subsidiary Guarantors or JV Subsidiary Guarantors in the future will have the funds necessary to satisfy our financial obligations under the Notes if we are unable to do so. See “—Risks Relating to the Notes—We are a holding company and payments with respect to the Notes are structurally subordinated to liabilities, contingent liabilities and obligations of our subsidiaries.” In addition, a Subsidiary Guarantee required to be provided by a subsidiary of the Company under the terms of the Notes may be replaced by a limited-recourse JV Subsidiary Guarantee following the sale or issuance to a third party of a 20.0% to 49.9% interest in such subsidiary or its direct or indirect majority shareholders or the purchase of a 50.1% to 80.0% interest in a third party. Recovery under a JV Subsidiary Guarantee is limited to an amount equal to our proportional interest in the issued share capital of such JV Subsidiary Guarantor multiplied by the fair market value of the total assets in such JV Subsidiary Guarantor and its subsidiaries, on a consolidated basis, as at the date of the last fiscal year-end of the Company.

61 The Subsidiary Guarantees or JV Subsidiary Guarantees may be challenged under applicable insolvency or fraudulent transfer laws, which could impair the enforceability of the Subsidiary Guarantees or JV Subsidiary Guarantees

Under bankruptcy laws, fraudulent transfer laws, insolvency or unfair preference or similar laws in the Cayman Islands, the British Virgin Islands, Hong Kong and other jurisdictions where future Subsidiary Guarantors or JV Subsidiary Guarantors (if any) may be established, a guarantee could be voided, or claims in respect of a guarantee could be subordinated to all other debts of that guarantor if, among other things, the guarantor, at the time it incurred the indebtedness evidenced by, or when it gives, its guarantee:

(1) incurred the debt with the intent to defraud creditors (whenever the transaction took place, and irrespective of insolvency);

(2) put the beneficiary of the guarantee in a position which, in the event of the guarantor’s insolvency, would be better than the position the beneficiary would have been in had the guarantee not been given; or

(3) received no consideration, or received consideration in money or money’s worth that is significantly less than the consideration supplied by the guarantor.

In the case of (2) and (3) above, a guarantee will only be voidable if it was entered into at a time when the guarantor was insolvent, or if it became insolvent as a consequence of doing so. Insolvency in this context under British Virgin Islands law means generally that the guarantor is unable to pay its debts as they fall due or that its liabilities exceed its assets. Additionally, a guarantee will only be voidable if it is given within the six-month period preceding the commencement of liquidation or within the two-year period, if the guarantor and the beneficiary are connected entities.

The measure of insolvency for purposes of the foregoing will vary depending on the laws of the applicable jurisdiction. Generally, however, a guarantor would be considered insolvent at a particular time if it were unable to pay its debts as they fell due or if the sum of its debts was then greater than all of its property at a fair valuation or if the present fair saleable value of its assets was then less than the amount that would be required to pay its probable liabilities in respect of its existing debt as they became absolute and matured. In addition, a guarantee may be subject to review under applicable insolvency or fraudulent transfer laws in certain jurisdictions or subject to a lawsuit by or on behalf of creditors of the guarantor. In such case, the analysis set forth above would generally apply, except that the guarantee could also be subject to the claim that, since the guarantee was not incurred for the benefit of the guarantor, the obligations of the guarantor thereunder were incurred for less than reasonably equivalent value or fair consideration.

In an attempt to limit the applicability of insolvency and fraudulent transfer laws in certain jurisdictions, the obligations of the Subsidiary Guarantors or JV Subsidiary Guarantors (if any) under the Subsidiary Guarantees or JV Subsidiary Guarantees (as the case may be) will be limited to the maximum amount that can be guaranteed by the applicable Subsidiary Guarantor or JV Subsidiary Guarantor without rendering the guarantee, as it relates to such Subsidiary Guarantor or JV Subsidiary Guarantor, voidable under such applicable insolvency or fraudulent transfer laws.

If a court voids a Subsidiary Guarantee or JV Subsidiary Guarantee (as the case may be), subordinates such guarantee to other indebtedness of the Subsidiary Guarantor or JV Subsidiary Guarantor, or holds the Subsidiary Guarantee or JV Subsidiary Guarantee (as the case may be) unenforceable for any other reason, holders of the Notes would cease to have a claim against that Subsidiary Guarantor or JV Subsidiary Guarantor based upon such guarantee, would be subject to the prior payment of all liabilities (including trade payables) of such Subsidiary Guarantor or JV Subsidiary Guarantor (as the case may be), and would solely be creditors of us and any Subsidiary Guarantors or JV Subsidiary Guarantors whose guarantees have not been voided or held unenforceable. We cannot assure you that, in such an event, after providing for all prior claims, there would be sufficient assets to satisfy the claims of the holders of the Notes.

62 USE OF PROCEEDS

We intend to apply the net cash proceeds from the issuance of the Notes, after deducting fees, commissions and expenses related to the issuance of the Notes, to refinance existing indebtedness.

63 EXCHANGE RATE INFORMATION

China

The PBOC sets and publishes daily a central parity exchange rate with reference primarily to the supply and demand of Renminbi against a basket of currencies in the market during the previous day. The PBOC also takes into account other factors, such as the general conditions existing in the international foreign exchange markets. Since 1994, the conversion of Renminbi into foreign currencies, including Hong Kong dollars and U.S. dollars, has been based on rates set by the PBOC, which are set daily based on the previous day’s interbank foreign exchange market rates and current exchange rates in the world financial markets. From 1994 to July 20, 2005, the official exchange rate for the conversion of Renminbi to U.S. dollars was generally stable. Although the PRC government introduced policies in 1996 to reduce restrictions on the convertibility of Renminbi into foreign currencies for current account items, conversion of Renminbi into foreign exchange for capital items, such as foreign direct investment, loan principals and securities trading, still requires the approval of SAFE and other relevant authorities. On July 21, 2005, the PRC government introduced a managed floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. The PBOC has enlarged the floating band several times since then to increase the Chinese currency’s exchange rate flexibility. The PRC government may, in the future, may make further adjustments to the exchange rate system. The PBOC authorized the China Foreign Exchange Trading Centre, effective since January 4, 2006, to announce the central parity exchange rate of certain foreign currencies against the Renminbi on each business day. This rate is set as the central parity for the trading against the Renminbi in the inter-bank foreign exchange spot market and the over-the-counter exchange rate for the following business day.

The following table sets forth the low, average, high and period-end noon buying rate in New York City for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York for the periods indicated:

Noon buying rate Period End Average(1) High Low (RMB per US$1.00) 2009 ...... 6.8259 6.8259 6.8470 6.8176 2010 ...... 6.6000 6.7603 6.8330 6.6000 2011 ...... 6.2939 6.4475 6.6364 6.2939 2012 ...... 6.2303 6.3085 6.3879 6.2221 2013 ...... 6.0537 6.1478 6.2438 6.0537 2014 ...... 6.2046 6.1704 6.2591 6.0402 2015: January ...... 6.2495 6.2181 6.2535 6.1870 February ...... 6.2695 6.2518 6.2695 6.2399 March ...... 6.1990 6.2386 6.2741 6.1955 April ...... 6.2018 6.2009 6.2185 6.1927 May ...... 6.1980 6.2034 6.2086 6.1980 June ...... 6.2000 6.2052 6.2086 6.1976 July (through July 10) ...... 6.2092 6.2072 6.2097 6.2008

Source: Federal Reserve H.10 Statistical Release (1) Determined by averaging the rates on the last business day of each month during the relevant year, except for monthly average rates, which are determined by averaging the daily rates during the respective months.

Hong Kong

The Hong Kong dollar is freely convertible into other currencies, including the U.S. dollar. Since October 17, 1983, the Hong Kong dollar has been linked to the U.S. dollar at the rate of HK$7.80 to US$1.00. The Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of

64 China (the “Basic Law”), which came into effect on July 1, 1997, provides that no foreign exchange control policies shall be applied in Hong Kong.

The market exchange rate of the Hong Kong dollar against the U.S. dollar continues to be determined by the forces of supply and demand in the foreign exchange market. However, against the background of the fixed rate system which applies to the issuance and withdrawal of Hong Kong currency in circulation, the market exchange rate has not deviated significantly from the level of HK$7.80 to US$1.00. In May 2005, the Hong Kong Monetary Authority broadened the 22-year-old trading band from the original rate of HK$7.80 per U.S. dollar to a rate range of HK$7.75 to HK$7.85 per U.S. dollar. The Hong Kong government has indicated its intention to maintain the link within that rate range. Under the Basic Law, the Hong Kong dollar will continue to circulate and remain freely convertible. The Hong Kong government has also stated that it has no intention of imposing exchange controls in Hong Kong and that the Hong Kong dollar will remain freely convertible into other currencies, including the U.S. dollar. However, no assurance can be given that the Hong Kong government will maintain the link at HK$7.75 to HK$7.80 to US$1.00 or at all.

The following table sets forth the noon buying rate for U.S. dollars in New York City for cable transfer in Hong Kong dollars as certified for customs purposes by the Federal Reserve Bank of New York for the periods indicated:

Noon buying rate Period End Average(1) High Low (HK$ per US$1.00) 2009 ...... 7.7536 7.7513 7.7618 7.7495 2010 ...... 7.7810 7.7692 7.8040 7.7501 2011 ...... 7.7663 7.7793 7.8087 7.7634 2012 ...... 7.7507 7.7569 7.7699 7.7439 2013 ...... 7.7539 7.7565 7.7654 7.7503 2014 ...... 7.7531 7.7554 7.7669 7.7495 2015: January ...... 7.7529 7.7531 7.7563 7.7508 February ...... 7.7559 7.7550 7.7584 7.7517 March ...... 7.7540 7.7584 7.7686 7.7534 April ...... 7.7513 7.7509 7.7525 7.7495 May ...... 7.7535 7.7527 7.7594 7.7505 June ...... 7.7513 7.7528 7.7567 7.7513 July (through July 10) ...... 7.7510 7.7522 7.7553 7.7510

Source: Federal Reserve H.10 Statistical Release

(1) Determined by averaging the rates on the last business day of each month during the relevant year, except for monthly average rates, which are determined by averaging the daily rates during the respective months.

65 CAPITALIZATION AND INDEBTEDNESS

The following table sets forth our bank balances and cash, borrowings, total equity and total capitalization as at December 31, 2014:

• on an actual basis;

• as adjusted to give effect to (i) the bank borrowings drawn down during the three months ended March 31, 2015 (net of repayment of bank and other borrowings for the same period) and (ii) the issuance of the additional US$200 million 2019 USD Notes on February 10, 2015; and

• as further adjusted to give effect to the issue of the Notes (but before deducting fees and other expenses payable in connection with the offering and Exchange Offer).

The as adjusted and as further adjusted information below is illustrative only and does not take into account any changes in our borrowings and capitalization after December 31, 2014 other than as noted above. For the avoidance of doubt, the “As adjusted” and “As further adjusted” data set forth below does not give effect to the issuance of any New Notes pursuant to the Exchange Offer.

You should read the following table together with “Selected Consolidated Financial and Other Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements, including the notes thereto, included elsewhere in this offering memorandum.

As at December 31, 2014 Actual As adjusted As further adjusted (RMB in (US$ in (RMB in (US$ in (RMB in (US$ in millions) millions) millions) millions) millions) millions) Bank balances and cash equivalents ...... 7,734 1,246 9,391 1,513 9,827 1,583 Borrowings(1) ...... 35,815 5,773 37,472 6,040 37,908 6,110 Bank and other borrowings ..... 27,223 4,388 27,639 4,455 27,639 4,455 Senior Notes ...... 8,592 1,385 9,833 1,585 9,833 1,585 Notes...... ––––43670 Total equity ...... 34,845 5,616 34,845 5,616 34,845 5,616 Total capitalization(2) ...... 70,660 11,389 72,317 11,656 72,753 11,726

Notes:

(1) Our borrowings do not include capital commitments or contingent liabilities. During the three months ended March 31, 2015, the Group repaid a total of RMB4,515 million of its bank and other borrowings and incurred a total of RMB4,931 million of additional bank and other borrowings. (2) Total capitalization equals total borrowings plus total equity.

Except as otherwise disclosed in this offering memorandum, there has been no material adverse change in our borrowings and capitalization since December 31, 2014. See “Description of Material Indebtedness and Other Obligations” for more information on our outstanding indebtedness.

66 SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The financial information furnished in this offering memorandum shall not be deemed to be incorporated by reference into this offering memorandum except as otherwise expressly stated herein.

Selected Consolidated Statements of Comprehensive Income and Other Financial Data

For the year ended December 31, 2012 2013 2014 2014 (US$ in (RMB in thousands) thousands) (audited) Revenue ...... 35,392,506 28,990,570 32,048,979 5,165,358 Cost of Sales ...... (24,678,810) (20,215,201) (23,916,319) 3,854,611 Gross Profit ...... 10,713,696 8,775,369 8,132,660 1,310,747 Other income ...... 1,000,594 728,329 964,263 155,411 Selling expenses ...... (665,170) (848,771) (991,966) (159,876) Administrative expenses ...... (1,403,873) (1,491,574) (1,835,533) (295,834) Finance costs ...... (564,115) (506,815) (679,688) (109,546) Fair value changes on cross currency swaps ...... — 49,849 (121,022) (19,505) Impairment losses on properties for development ...... — — — — Impairment losses on properties under development ...... — — — — Reversal of impairment losses on property, plant and equipment ..... — 60,685 16,799 2,707 Impairment losses on property, plant and equipment ...... (81,485) — — — Impairment loss on completed properties for sale ...... — — (70,604) (11,379) Impairment loss on amounts due from a joint venture ...... — — (122,198) (19,695) Gain from changes in fair value of investment properties ...... 600 100,900 60,000 9,670 Fair value changes on trust-related financial derivatives ...... 82,520 — — — Net gain on disposal of subsidiaries 549,697 — 8,670 1,397 Gain on re-measurement of associates to acquisition date fair value in business combination achieved in stages ...... 3,399 3,923 37,196 5,995 Net gain on disposal of associates ... 56,505 — 120,773 19,465

67 For the year ended December 31, 2012 2013 2014 2014 (US$ in (RMB in thousands) thousands) (audited) Gain on partial disposal of an associate ...... — — — — Gain on re-measurement of an associate to acquisition date fair value upon re-consolidation of a subsidiary ...... 49,980 — — — Gain relating to a newly acquired joint venture ...... — 704,131 — — Net gain on disposal of joint ventures ...... 1,377 — — — Gain on de-consolidation of a subsidiary ...... — — — — Gain on acquisition of a subsidiary . — — 1,363 220 Share of results of associates ...... 209,356 1,092,037 339,873 54,778 Share of results of joint ventures .... 304,119 477,999 67,879 10,940 Profit before taxation ...... 10,257,200 9,146,062 5,928,465 955,495 Taxation ...... (4,204,149) (3,155,857) (2,718,644 (438,166) Profit for the year and total comprehensive income for the year.. 6,053,051 5,990,205 3,209,821 517,330 Profit attributable to: Owners of the Company ...... 4,851,123 4,885,514 2,071,722 333,901 Non-controlling interests ...... 1,201,928 1,104,691 1,128,099 181,816 Earnings per share Basic ...... RMB2.57 RMB2.18 RMB0.80 US$0.13 Diluted ...... RMB2.37 RMB1.94 RMB0.80 US$0.13

Other financial Data EBITDA(1) ...... 10,401,516 7,942,183 7,696,540 1,240,457 EBITDA margin(2) ...... 29.4% 27.4% 24.0% 24.0%

68 Set forth below is a reconciliation of EBITDA to the most directly comparable IFRS measure, profit for the year:

69 Selected Consolidated Statements of Financial Position

70 RECENT DEVELOPMENTS

Sunac Share Sale

On May 22, 2014, our then chairman, Mr. Song Weiping and his spouse, Ms. Xia Yibo, and our then executive director, Mr. Shou Bainian, and their respective wholly owned investment holding companies, Delta House Limited (“Delta”), Wisearn Limited (“Wisearn”) and Profitwise Limited (“Profitwise” and, together with Delta and Wisearn, the “Vendors”) entered into a conditional sale and purchase agreement (the “Sunac Share Purchase Agreement”) with Sunac and Lead Sunny Investments Limited (“Lead Sunny”), a direct wholly owned subsidiary of Sunac, pursuant to which the Vendors agreed to sell 246,052,076, 68,859,000 and 209,940,717, respectively, ordinary shares of the Company (together, the “Target Shares”) to Lead Sunny at HK$12 per share (the “Sunac Share Sale”), for a total consideration of approximately HK$6.3 billion (the “Sunac Share Sale Consideration”).

The Vendors, Sunac and Lead Sunny terminated the Sunac Share Purchase Agreement and the Sunac Share Sale on or about December 31, 2014.

Following the termination of the Sunac Share Sale, the Company and Sunac entered into a framework agreement and related agreements pursuant to which the Company conditionally agreed, subject to the relevant shareholders’ approval of the Company, to transact with Sunac and its subsidiaries in relation to certain transactions. See “—Sunac-Greentown Joint Venture Restructuring,” “Business—Strategic Partnerships from 2012 to 2014—Sunac” and “Related Party Transactions—Framework Agreements—Sunac Framework Agreement.”

CCCG Share Sale

On December 23, 2014, the Vendors entered into a conditional sale and purchase agreement (the “CCCG Share Purchase Agreement”) with CCCG pursuant to which the Vendors agreed to sell the Target Shares to CCCG and/or its wholly owned subsidiary(ies) at HK$11.46 per share (the “CCCG Share Sale”), for a total consideration of approximately HK$6 billion (the “CCCG Share Sale Consideration”).

The CCCG Share Sale was completed on March 27, 2015 (the “Completion Date”) upon which CCCG (through CCCG Holding (HK) Limited) became interested in approximately 24.29% of the total issued share capital of the Company as at the Completion Date. In connection with the CCCG Share Sale, the following changes, among others, have been made to the composition, the nomination committee, remuneration committee and investment committee of the Board on the Completion Date:

• Mr. Zhu Bixin has been appointed as an executive director, co-chairman of the Board and a member of the nomination committee;

• Mr. Sun Guoqiang has been appointed as an executive director, a member of the investment committee in place of Mr. Shou and a member of the remuneration committee; and

• Mr. Song has been re-designated from chairman of the Board to a co-chairman of the Board.

See also “Management” for the appointments made pursuant to the CCCG Share Purchase Agreement, “Business—Strategic Partnerships from 2012 to 2014—CCCG” and “Business—Our Competitive Strengths—Experienced management team backed by top quality partners.”

Increase in CCCG’s Shareholding

On or around May 18, 2015, the Company was informed that CCCG, through its wholly owned subsidiary, CCCG Real Estate Limited (currently known as CCCG Real Estate Group Limited) has agreed to acquire 100,000,000 ordinary shares of the Company, representing approximately 4.63% of the total issued share capital of the Company, from Tandellen Group Limited (the “CCCG Additional Acquisition”). Tandellen is a company which is 50% owned by Mr. Luo Zhaoming (a former executive

71 director and vice chairman of the Board) and 50% owned by his spouse. The CCCG Additional Acquisition was completed on May 27, 2015, as a result of which CCCG became the single largest shareholder of the Company with an aggregate interest in approximately 28.91% of the total issued share capital of the Company.

We believe that CCCG, as the single largest shareholder of the Company, with its strength in global resources and state-owned background, will continue to provide strong support to the Company in various aspects including, among other things, obtaining land resources, broadening onshore and offshore financing channels, and lowering financing costs. Further to CCCG becoming our single largest shareholder, CCCG and we are discussing project level cooperation, which may include, among others, construction management, joint ventures, co-development, land acquisition and asset injection. See also “Business—Strategic Partnerships from 2012 to 2014—CCCG.”

Sunac-Greentown Joint Venture Restructuring

In connection with the termination of the Sunac Share Sale, Sunac alleged in its announcement dated December 31, 2014 (the “Sunac Announcement”) that, among other things, (i) Sunac Greentown has agreed to dispose of its entire shareholding in Elegant Trend Limited, a direct wholly owned subsidiary of Sunac Greentown, to Lead Sunny (the “Purported Offshore Disposal”), and (ii) Shanghai Sunac Greentown Investment Holdings Limited (上海融創綠城投資控股有限公司)(“Shanghai Sunac Greentown”), has agreed to dispose of its equity interests in certain PRC project companies to Tianjin Sunac Ao Cheng Investment Co., Ltd. (天津融創奧城投資有限公司), a wholly owned subsidiary of Sunac (the “Purported Onshore Disposal,” together with the Purported Offshore Disposal, the “Purported Disposals”). In the Sunac Announcement, Sunac alleged that the Purported Offshore Disposal had been approved by the Company and the Purported Onshore Disposal had been approved by Greentown Investment Management Co., Ltd (綠城投資管理有限公司) (a wholly owned subsidiary of the Company).

On January 5, 2015, the Company made an announcement to refute Sunac’s allegations in the Sunac Announcement with respect to the Purported Disposals. In particular, while the Board had considered the Purported Disposals, the Board had not approved the Purported Disposals and the unilateral actions by Sunac as alleged in the Sunac Announcement did not create a legally binding agreement with respect to the Purported Disposals.

In connection with the dispute between the Company and Sunac with respect to the Purported Disposals, on May 15, 2015, the Company and Sunac entered into a framework agreement and related agreements (the “Sunac Framework Agreement”), pursuant to which the Company conditionally agreed, subject to the relevant shareholders’ approval of the Company, to transact with Sunac and its subsidiaries in relation to the following transactions:

• acquisition by Greentown Real Estate Group Co., Ltd (綠城房地產集團有限公司) (“Greentown Real Estate”) from Shanghai Sunac Greentown of the return on investment in respect of Shanghai Sunac Greentown’s 51% equity interests in Shanghai Huazhe Bund Realty Co., Ltd. (上海華浙外灘置業有限公司)(“Shanghai Huazhe Bund”);

• acquisition by Greentown Real Estate from Beijing Sunac Construction Investment Real Estate Co., Ltd (北京融創建投房地產有限公司) of its 45% equity interests in, and shareholder’s loan to, Beijing Xingye Wanfa Real Estate Development Co., Ltd. (北京興業萬發房地產開發有限公司);

• acquisition by Greentown Real Estate from (i) Shanghai Greentown Forest Golf Villa Development Co., Ltd (上海綠城森林高爾夫別墅開發有限公司)(“Shanghai Forest Golf”) of its 50% equity interests in Zhejiang Jinying Real Estate Co., Ltd (浙江金盈置業有限公司)(“Zhejiang Jinying”) and (ii) Tianjin Sunac Zhidi Co., Ltd. (天津融創置地有限公司)(“Sunac Zhidi”) of its shareholder’s loan to Zhejiang Jinying;

• disposal by Greentown Real Estate to Sunac Zhidi of Greentown Real Estate’s 50% equity interests in Shanghai Forest Golf;

72 • disposal by On Century Investment Limited (安兆投資有限公司) to Zhuo Yue Property Investment Holdings Limited (卓越資產投資控股有限公司) of its 25% equity interests in Hangzhou Sunac Greentown Real Estate Development Co., Ltd. (杭州融創綠城房地產開發有限公司);

• disposal by Greentown Investment Management Co., Ltd. to Shanghai Sunac Real Estate Development Co., Ltd. (上海融創房地產開發有限公司) of its 50% equity interests in Shanghai Sunac Greentown;

• disposal by the Company to Sunac of its 50% of the issued share capital of Sunac Greentown; and

• development of Tianjin Greentown National Game Village Construction and Development Co., Ltd. (天津綠城全運村建設開發有限公司) on a 51:49 joint venture between the Company and Sunac.

The foregoing transactions were subject to approval of the Company’s shareholders which was obtained at an extraordinary general meeting of the Company held on July 15, 2015. For further details of the framework agreement, see “Related Party Transactions—Framework Agreements—Sunac Framework Agreement.”

Issue of Additional 2019 USD Notes

On February 10, 2015, the Company, along with certain of its offshore subsidiaries, as guarantors, entered into a purchase agreement with China Orient Asset Management (International) Holding Limited and Credit Suisse International, as purchasers, in relation to the issue of USD denominated 8.50% senior notes in an aggregate principal amount of USD200,000,000 that will mature on March 24, 2019. The listing of and permission to deal in these notes became effective on February 16, 2015 and such notes constituted a further issuance of, and were consolidated to form a single series with, the 2019 USD Notes issued by the Company on September 24, 2013.

Ratings Upgrade

As of July 20, 2015, Standard & Poor’s Ratings Services has upgraded the Company’s long-term corporate credit rating to BB with a stable outlook from BB- and long-term issue rating on the Company’s senior unsecured notes to BB- from B+. Moody’s Investors Service has also recently, on June 30, 2015, upgraded the Company’s corporate family rating to Ba3 with a positive outlook from B1 and senior unsecured bond rating to B1 from B2. In addition, Moody’s Investor Services assigned a provisional (P)Ba3 senior unsecured debt rating for the prospective New Notes and Standard & Poor’s Ratings Services assigned a BB- long-term issue rating to the prospective New Notes on July 21, 2015 and July 22, 2015, respectively, such ratings are provisional and subject to each rating agency’s review of the final terms and conditions of the New Notes. See “Ratings.”

73 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the section entitled “Selected Consolidated Financial and Other Data” and our consolidated financial statements, including the notes thereto, included elsewhere in this offering memorandum. All significant intra-group transactions, balances and unrealized gains on intra-group transactions have been eliminated.

Our consolidated financial statements were prepared in accordance with IFRS. In this section of the offering memorandum, unless otherwise specified, references to “2012,” “2013” and “2014” refer to our financial years ended December 31, 2012, 2013 and 2014, respectively.

Overview

We are a leading PRC property developer with a sizeable and diversified land bank comprising a total GFA of 34.89 million sq.m. (of which 19.06 million sq.m. was attributable to the Group) across various provinces, autonomous regions and municipalities as at December 31, 2014. For 10 consecutive years, from 2005 to 2014, we were ranked as one of the top 10 property enterprises in China by four authoritative institutions, namely the Enterprise Research Institute of the Development Research Center of the State Council, China Real Estate Association, Tsinghua University Real Estate Research Center and China Index Institute. In addition, in the Residents’ Satisfaction Survey, we ranked first in the outstanding enterprises rankings in terms of resident satisfaction for four consecutive years from 2011 to 2014. We also ranked first in the “Brand Loyalty,” “Product Quality,” “Property Services” and “Sales Services” indices in 2011, and first in the “Property-Owner Loyalty,” “Corporate Image,” “Plan and Design,” “Project Quality,” “Property Services” and “Sales Services” indices in 2012. On July 19, 2013, the China Index Academy issued the “Report of Housing Satisfaction of Urban Residents in China 2013.” The satisfaction survey covered 16 major cities, 122 key housing enterprises and 349 urban communities across China. Among the cities included in the survey were Hangzhou, Beijing, Shanghai, Qingdao, Ningbo and Changsha. We received outstanding results and rankings, coming first in the “General Satisfaction of Urban Residents” category in six cities, first in “Customer Loyalty Rate” in five cities and second in “Customer Loyalty Rate” in one city. In addition, in March 2014, we were named in the “2014 Top 10 China Real Estate Companies,” “2014 Top 10 China Real Estate Companies in Comprehensive Strength,” “2014 Top 10 China Real Estate Companies in Comprehensive Development” and “2014 Top 10 China Real Estate Companies in City Coverage.” We received these honors at the press conference of the Top 500 China Real Estate Companies Survey jointly organized by the China Real Estate Research Association, the China Real Estate Association and the China Real Estate Appraisal.

Since our establishment 19 years ago, we have been based in Zhejiang Province, one of the most economically vibrant and developed provinces in the PRC. With property projects covering most of the prosperous cities in Zhejiang province, such as Hangzhou, Ningbo, Wenzhou, Taizhou, Shaoxing and other cities in Zhejiang Province which ranked on Zhongjun County Economic Research Institute’s 2011 list of the top 100 most competitive Chinese counties or county-level cities, we have built a sizable operation in the province with exceptionally high brand awareness. Since the commencement of our national expansion strategy in 2000, we have successfully expanded our business to other important cities such as Shanghai, Nanjing, Suzhou, Wuxi and Nantong in the Yangtze River Delta, Beijing, Tianjin, Qingdao, Jinan and Dalian in the Bohai Rim Economic Belt, as well as other provincial cities such as Hefei in Anhui Province, Zhengzhou in Henan Province, Changsha in Hunan Province, and Urumqi in Xinjiang. This expansion has further boosted our business growth and reputation. We focus on developing high quality real estate and leverage ourselves on our quality human resources and effective corporate management structure. Having continuously improved and enriched our product mix, we now offer widely-received high quality housing types such as villas, flat mansions, low-rise apartments, high-rise apartments, urban complexes, integrated community and commercial property.

74 of 34.89 million sq.m., of which 19.06 million sq.m. was attributable to the Group. We reasonably believe that the current land bank can satisfy our developmental need for the coming five years.

Our revenue comes mainly from property sales, as well as from hotel operations, property rental, project management, sales of construction materials and design and decoration. In 2014, our revenue was RMB32,049 million (US$5,165.4 million), representing an increase of 10.5% from RMB28,991 million recorded in 2013. Our revenue from property sales in 2014 equaled RMB30,111 million (US$4,853.0 million), accounting for 94.0% of our total revenue and representing an increase of 9.7% from RMB27,460 million in 2013. This increase was mainly due to the increase in sales area; the sales area of properties delivered in 2014 was 1,936,916 sq.m., representing an increase of 17.1% from 1,653,830 sq.m. in 2013. In 2014, the average selling price of properties delivered equaled RMB15,546 per sq.m., representing a decrease of 6.4% from RMB16,604 per sq.m. in 2013.

Our net profit for 2014 equaled RMB3,210 million (US$517.4 million), representing a decrease of 46.4% from RMB5,990 million in 2013. Profit attributable to our owners amounted to RMB2,072 million (US$333.9 million) in 2014, representing a decrease of 57.6% compared with RMB4,886 million in 2013. In 2014, we achieved basic earnings per share of RMB0.80, representing a 63.3% decrease over RMB2.18 recorded in 2013. In addition to the decline of gross profit margin contributed by subsidiaries from the sales of properties, this decrease was mainly due to the significant decline of our share of results of joint ventures and associates. In 2014, the Group’s share of results of joint ventures and associates decreased 74.0% to RMB408 million (US$65.8 million) from RMB1,570 million in 2013. This decrease was mainly due to the impairment losses recognized by some joint ventures and associates and the generally low gross profit margin of the properties delivered in 2014.

Key Factors Affecting Our Results of Operations

Our business, results of operations and financial condition have been, and we expect will continue to be, affected by a number of key factors and material risks, many of which are beyond our control. Please refer to the section entitled “Risk Factors.” These factors and risks include the following:

Economic conditions in China, particularly in the Yangtze River Delta region and the regulatory environment of the real estate industry in China

Our business is heavily dependent on the performance of the real estate market in China, particularly in the Yangtze River Delta region. The performance of the PRC real estate industry is subject to continued growth in the economy, the rate of urbanization and the resultant demand for properties in China. The key factors that we consider to be important to our operations include (1) general economic development, (2) growth conditions in the private sector and (3) urban planning. Economic growth attributable to the private business sector has increased the general level of disposable income and the number of middle to upper-middle income households, which are our primary target customers. Developments in the economy and the rate of urbanization have in the past increased the supply of and demand for residential properties and affected pricing trends in the property sector in the cities and regions where we operate in China. We believe that these factors will continue to significantly affect our results of operations.

Our business and results of operations have been, and will continue to be, affected by the regulatory environment in China, PRC governmental policies and measures taken by the PRC government on property development and related industries. In recent years, the PRC government has implemented a series of measures with a view to control the growth of the economy, including the real estate markets. While the real estate industry is regarded as a pillar industry by the PRC government, the PRC government has taken various restrictive measures to discourage speculation in the real estate market and to increase the supply of affordable residential properties. From time to time, the PRC government adjusts or introduces macroeconomic control policies to encourage or restrict development in the private property sector through regulating, among others, land grants, pre-sales of properties, bank financing and taxation. Measures taken by the PRC government to control money supply, credit availability and fixed assets also have a direct impact on our business and results of operations. The PRC government may introduce initiatives which may affect our access to capital and the means in which we may finance our property development. See the section entitled “Regulations” for more details on the relevant PRC laws and regulations.

75 Changes in the economic conditions and the regulatory environment in the PRC in general or in cities and regions in which we operate, principally Hangzhou, Zhejiang, Jiangsu, Shanghai and Shandong, may affect the leasing or selling prices of our properties as well as the time it will take us to lease, pre-sell or sell the properties we have developed. Lower leasing or selling prices, without a corresponding decrease in costs, will adversely affect our gross profit and reduce cash flow generated from operations, which may increase our reliance on external financing and negatively impact our ability to finance the continuing growth of our business. A prolonged leasing or selling period will increase associated costs as well as reduce the cash flow generated from operations for a particular period. On the other hand, higher leasing or selling prices and a shorter leasing or selling period may increase our gross profit, reduce our costs and increase our cash flow for a particular period, which will enable us to better fund the growth of our business.

Ability to acquire suitable land at suitable prices and land costs

To have a steady stream of properties available for sale and to achieve continuous growth in the long term, we need to replenish and increase land reserves suitable for development. Based on our current development plans, we have sufficient land reserves for property developments for the next five years. We expect competition among property developers for land reserves that are suitable for property development to remain intense. In addition, PRC governmental policies and measures on land supply may further intensify competition for land in China among property developers. For example, although privately held land use rights are not prevented from being traded in the secondary market, the statutory means of public tender, auction and listing-for-sale practice in respect of the grant of state-owned land use rights is likely to increase competition for available land and to increase land acquisition costs. Furthermore, in November 2009, the PRC government raised the minimum down payment of land premium to 50% and required the land premium to be fully paid within one year after the signing of a land grant contract, subject to limited exceptions. In March 2010, the Ministry of Land and Resources promulgated a notice to strictly regulate the transfer of land for commercial buildings. According to the notice, the area of a parcel of land granted for commodity residential development should be strictly restricted in accordance with the catalog of restricted use of land and the minimum price of the land transfer should not be less than 70% of the benchmark price of the place where the land being transferred is located, and the real estate developer’s bid deposit should not be less than 20% of the minimum transfer price. See “Regulations.” These changes of policy may materially and adversely affect our cash flow and our ability to acquire suitable land for our operations. As a result of these regulations, the development of the PRC economy and increased competition, the land premiums continue to rise and our land acquisition costs have increased and are expected to continue to increase.

In 2012, 2013 and 2014, our land costs were RMB7,869.3 million, RMB6,009.6 million and RMB6,872.9 million (US$1,107.7 million), respectively, and our land costs as a percentage of our property sales revenue were approximately 23%, 22% and 23%, respectively.

Construction costs

Another key component of our cost of sales is construction costs, which are susceptible to the price volatility of construction materials such as steel and cement.

Pre-sale and progress of property development

Pre-sales constitute the most important source of our operating cash inflow during our project development. PRC law allows us to pre-sell properties before their completion upon obtaining the pre-sale permit from the relevant governmental authorities and requires us to use the pre-sale proceeds to develop the relevant pre-sale property projects. However, we do not recognize revenue from the pre-sale of a property until the property has been delivered to the purchaser. The progress of property development may affect our ability to deliver properties to our customers within the specified time limit and in turn affect the amount and timing of cash inflows from pre-sales. In addition, reduced cash inflow from pre-sales of our properties will increase our reliance on external financing and will impact our ability to finance our continuing property developments. For the year ended December 31, 2014, total contracted sales were approximately RMB79.4 billion (US$12.8 billion), of which approximately RMB39.9 billion

76 (US$6.4 billion) was attributable to the Group. As at December 31, 2014, in addition to contracted sales, subscription sales of RMB3.0 billion was recorded, of which approximately RMB1.5 billion was attributable to the Group. For the year ended 2014, the Group (together with its joint ventures and associates) exceed the annual sales target of RMB65.0 billion set at the beginning of 2014.

Access to and cost of financing

Borrowing is another important source of funding for our property developments. As at December 31, 2012, 2013 and 2014, our total outstanding borrowings amounted to RMB21,373.4 million, RMB30,512.0 million and RMB35,815.0 million (US$5,772.3 million), respectively. As commercial banks in China link the interest rates on their bank loans to benchmark lending rates published by the PBOC, any increase in such benchmark lending rates will increase the interest costs for our developments. Our access to capital and cost of financing are also affected by restrictions imposed from time to time by the PRC government on bank lending for property developments. We may also seek financing in the international capital markets, which may give us a longer maturity term but may bear higher interest rates than bank borrowings.

LAT

Our property developments are subject to LAT with respect to the appreciated value of the related land and improvements on such land. LAT applies to both domestic and foreign investors in real properties in China, irrespective of whether they are corporate entities or individuals. The PRC tax authorities in general have not strictly enforced the LAT regulations and the regulatory standards for the calculation of LAT are unclear in various aspects. We made LAT provisions of RMB2,066.3 million, RMB1,253.2 million and RMB1,396.5 million (US$225.1 million) for each of the years ended December 31, 2012, 2013 and 2014, respectively. We cannot assure you that such provisions will be sufficient to cover our LAT obligations in respect of our past LAT liabilities or that the relevant tax authorities will agree with the basis on which we have calculated our LAT liabilities for provision purposes. Our financial condition may be materially adversely affected if our LAT liabilities as calculated by the relevant tax authorities are substantially higher than our provisions. We have provided more details on the PRC regulations on LAT in “Regulations—PRC taxation.”

Development and delivery

We recognize revenue from property sales when properties are delivered to purchasers. The number of properties that we can develop or complete during any particular period is limited due to substantial capital requirements for land acquisition, demolition, resettlement and construction, as well as by limited land supplies and lengthy development periods before positive cash flows may be generated. In addition, in recent years we have begun to develop larger scale property developments and, as a result, we develop properties through different phases during the course of several years. Typically, selling prices of properties in such larger scale property developments tend to increase as the overall development becomes closer to completion, thus offering a more established residential community to the purchasers. Seasonal variations have in addition caused fluctuations in our interim revenues and profits, including quarterly and semiannual results. As a result, our results of operations have fluctuated in the past and are likely to continue to fluctuate in the future.

Critical Accounting Policies

The consolidated financial statements have been prepared on an historical cost basis except for certain financial instruments and investment properties, which are measured at fair values, as explained in the accounting policies set out below.

The consolidated financial statements have been prepared in accordance with IFRS. In addition, the consolidated financial statements include applicable disclosures required by the Listing Rules and by the Hong Kong Companies Ordinance.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts received or receivable for goods sold and services provided in the normal course of business, net

77 of discounts and sales-related taxes. Revenue from sales of properties in the ordinary course of business is recognized when the respective properties have been completed and delivered to the buyers. Deposits received from pre-sales of properties are carried as pre-sale deposits. Revenue from sales of other goods is recognized when the goods are delivered and title has passed. Service income is recognized when services are provided. Brand related income is recognized on sales or pre-sales of properties by brand users at agreed fee rates. Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition. Rental income, including rental invoiced in advance from properties let under operating leases, is recognized on a straight line basis over the period of the relevant leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized as an expense on a straight-line basis over the lease term.

Leasehold land and buildings

When a lease includes both land and building elements, the Group assesses the classification of each element as a finance lease or an operating lease separately based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the Group. Specifically, the minimum lease payments (including any lump sum upfront payments) are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of the lease.

To the extent the allocation of the lease payments can be made reliably, interest in leasehold land that is accounted for as an operating lease is presented as “prepaid lease payments” in the consolidated statement of financial position and is amortized over the lease term on a straight-line basis except for those that are classified and accounted for as investment properties under the fair value model. When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified as a finance lease and accounted for as property, plant and equipment, unless it is clear that both elements are operating leases, in which case the entire lease is classified as an operating lease.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated statement of comprehensive income because it excludes items of income and expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated 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 recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of the reporting period and reduced to the extent that it is no longer probable that sufficient

78 taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is recognized in profit or loss, except when it relates to items that are recognized in other comprehensive income or directly in equity, in which case the deferred tax is also recognized in other comprehensive income or directly in equity respectively.

Investments in associates and joint ventures

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

Joint venture arrangements that involve the establishment of a separate entity in which ventures have joint control over the economic activity of the entity are referred to as joint ventures. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

The results and assets and liabilities of associates and joint ventures are incorporated in these consolidated financial statements using the equity method of accounting. The financial statements of associates and joint ventures used for equity accounting purposes are prepared using uniform accounting policies as those of the Group for like transactions and events in similar circumstances. Under the equity method, an investment in an associate or a joint venture is initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate or joint venture. When the Group’s share of losses of an associate or joint venture exceeds the Group’s interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate or joint venture), the Group discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.

An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognized immediately in profit or loss in the period in which the investment is acquired.

The requirements of IAS 39 are applied to determine whether it is necessary to recognize any impairment loss with respect to the Group’s investment in an associate or a joint venture. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.

79 fair value of any retained interest and any proceeds from disposing of a part interest in the associate or joint venture is included in the determination of the gain or loss on disposal of the associate or joint venture. In addition, the Group accounts for all amounts previously recognized in other comprehensive income in relation to that associate or joint venture on the same basis as would be required if that associate or joint venture had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognized in other comprehensive income by that associate or joint venture would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity method is discontinued.

The Group continues to use the equity method when an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate. There is no remeasurement to fair value upon such changes in ownership interests.

When the Group reduces its ownership interest in an associate or a joint venture but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.

When a group entity transacts with an associate or a joint venture of the Group (such as a sale or contribution of assets), profits and losses resulting from the transactions with the associate or joint venture are recognized in the Group’s consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Group.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in profit or loss in the year in which they are incurred.

Investment properties

Investment properties are properties (including the leasehold interest under an operating lease for a property which would otherwise meet the definition of an investment property) held to earn rentals and/or for capital appreciation.

Investment properties are initially measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are measured at their fair values using the fair value model. Gains or losses arising from changes in the fair value of investment property are included in profit or loss for the period in which they arise.

Construction costs incurred for investment properties under construction are capitalized as part of the carrying amount of the investment properties under construction.

An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use or no future economic benefits are expected from its disposals. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year in which the item is derecognized.

Impairment of tangible assets

80 indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs of disposal 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 assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognized as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized as income immediately.

Properties for development

Properties for development, representing leasehold land located in the PRC for development for future sale in the ordinary course of business, are stated at the lower of cost and net realizable value. Cost comprises the costs of land use rights and other directly attributable costs. Net realizable value represents the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale. Properties for development are transferred to properties under development upon commencement of development.

Properties under development

Properties under development, representing leasehold land and buildings located in the PRC under development for future sale in the ordinary course of business, are stated at the lower of cost and net realizable value. Cost comprises the costs of land use rights, construction costs, borrowing costs capitalized and other direct development expenditure. Net realizable value represents the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale. Properties under development are transferred to completed properties for sale upon completion of development.

Completed properties for sale

Completed properties for sale are stated at the lower of cost and net realizable value. Cost comprises the costs of land use rights, construction costs, borrowing costs capitalized and other direct development expenditure. Net realizable value represents the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale. The Group transfers a property from completed properties for sale to investment property when there is a change of intention to hold the property to earn rentals or/and for capital appreciation rather than for sale in the ordinary course of business, which is evidenced by the commencement of an operating lease to another party. Any difference between the fair value of the property at the date of transfer and its previous carrying amount is recognized in profit or loss.

Change in Accounting Policy

In 2014, the Group applied, for the first time, certain new and revised IFRSs issued by the International Accounting Standards Board which became effective for the Group’s financial year beginning on January 1, 2014. The application of these new accounting standards has had no material

81 effect on the amounts reported in the condensed consolidated financial statements and disclosures set out in these condensed consolidated financial statements.

Certain Income Statement Items

Revenue

Revenue primarily comprises the fair value of the consideration received or receivable for the sales of properties, including completed properties held for sale and properties under development, and services in the ordinary course of business. The Group derives its revenue mainly from property sales, as well as from hotel operations, property rental, project management, sales of construction materials, and design and decoration. We recognize our revenue from sales of properties after the properties have been sold and delivered to the purchasers. We pre-sell our properties under development in accordance with PRC pre-sale regulations. We do not, however, recognize the proceeds from pre-sales until we have completed the construction of these properties and delivered the properties to the purchasers. Typically there is a time gap ranging from six to 18 months between the time we commence pre-sale of the properties under development and the delivery of the properties. We record the proceeds received from the pre-sold properties as advance proceeds received from customers, an item of current liabilities on our balance sheet, and as a part of cash inflows from operating activities on our cash flow statements. We generate a small portion of revenue from the rental income derived from our investment properties and property management services, although we expect the growth of project management and its contribution to the Group to increase in future periods.

Cost of sales

Cost of sales comprises primarily land acquisition costs, construction costs, capitalized borrowing costs, business taxes and direct cost related to property investment and property management.

Land costs. Land costs represent costs relating to the acquisition of the rights to occupy, use and develop land, including land premiums, deed taxes and governmental surcharges and demolition and resettlement cost. Land costs are recognized as part of cost of sales upon the completion and delivery of relevant properties to the purchasers. In 2012, 2013 and 2014, our GFA delivered was 1.9 million sq.m., 1.7 million sq.m. and 1.9 million sq.m., respectively. Our land cost decreased from RMB7,869.3 million in 2012 to RMB6,009.6 million in 2013, due to a decrease in total GFA delivered. Our land cost increased in 2014, to RMB6,872.9 million (US$1,107.7 million), as compared with RMB6,009.6 million in 2013; this increase was due to an increase in total GFA delivered.

Construction costs. Construction costs represent costs for the design and construction of a property project, consisting primarily of fees paid to our contractors, including contractors responsible for civil engineering construction, landscaping, equipment installation and interior decoration, as well as infrastructure construction costs, design costs and certain governmental surcharges. Construction costs are recognized as part of cost of sales upon the completion and delivery of relevant properties to the purchasers. Our construction costs are affected by a number of factors such as price movements for construction materials, location and types of properties, choices of materials and investments in ancillary facilities. In the years ended December 31, 2012, 2013 and 2014, our construction costs were RMB14,939.7 million, RMB12,289.1 million and RMB13,933.7 million (US$2,245.7 million), respectively.

Capitalized borrowing costs. Capitalized borrowing costs are derived from borrowings for our property development. We capitalize our borrowing costs as part of the cost of sales for a development project to the extent that such costs are directly attributable to the acquisition and construction of such project.

Selling expenses

Selling expenses include advertising expenses, sales and agency commissions, and other expenses relating to sales and promotion of our properties.

82 Administrative expenses

Administrative expenses comprise primarily staff costs, office expenses, directors’ emoluments, depreciation, legal and professional fees, travel expenses, and donations.

Other income

Other income mainly includes interest income, trust income, net foreign exchange gains, governmental grants and brand usage related income.

Pre-sale deposits

Pre-sale deposits represent the amounts received from the pre-sale of properties. The amounts will be recognized as sales revenue upon delivery of properties.

Finance costs

Finance costs comprise primarily interest expenses on bank borrowings, other borrowings and loans with detachable warrants, net of capitalized borrowing costs. Since the construction period for a project does not necessarily coincide with the interest payment period of the relevant loan, not all of the interest costs related to a project can be capitalized. As a result, our finance costs fluctuate from period to period.

Income tax expenses

Income tax expenses represent EIT payable, deferred tax and LAT by our subsidiaries. The following table sets forth our tax provision for the periods indicated:

For the year ended December 31, 2012 2013 2014 2014 (US$ in (RMB in thousands) thousands) (audited) Current tax – EIT ...... 2,192,930 1,997,345 1,271,129 204,869 – LAT ...... 2,066,294 1,253,216 1,396,485 225,072 Under (over) provision in prior years – EIT ...... (54,066) 10,013 448 72 Deferred tax ...... (1,069) (104,717) 50,582 8,152 Total income tax expenses ...... 4,204,149 3,155,857 2,718,644 438,166

For the years ended December 31, 2012, 2013 and 2014, we recognized enterprise income tax (including deferred income tax) of RMB2,137.8 million, RMB1,902.6 million and RMB1,322.2 million (US$213.1 million), respectively. The fluctuations in our EIT for the respective years were primarily attributable to changes in operating profit before tax.

No Hong Kong profits tax was provided for each of the years ended December 31, 2012, 2013 and 2014 as we had no assessable profits for those periods. The Company is incorporated in the Cayman

83 Islands as an exempted company with limited liability under the Companies Law (Revised) of the Cayman Islands and, accordingly, is exempted from payment of income tax as there are no laws enacted in the Cayman Islands which impose any tax to be levied on profits, income, gains or appreciations.

Under the PRC tax laws effective prior to January 1, 2008, dividends paid by our PRC subsidiaries to us were exempt from PRC income tax. However, pursuant to the Enterprise Tax Law and its implementation rules that became effective on January 1, 2008, dividends payable by foreign-invested enterprises, such as subsidiaries and joint ventures in China, to their foreign investors are subject to a withholding tax at a rate of 10%, unless such foreign investors’ jurisdiction of incorporation has a tax treaty with the PRC that provides for a different withholding tax arrangement. See the section entitled “Risk Factors—Risks Relating to China—Our income tax obligations may increase, dividends from our PRC subsidiaries are currently subject to withholding tax under PRC tax laws and we may be subject to PRC tax under the Enterprise Tax Law.”

Results of Operations

The following table sets forth our results of operations for the periods indicated which are derived from the consolidated statements of comprehensive income included in this offering memorandum. Our historical results presented below are not necessarily indicative of future results.

For the year ended December 31, 2012 2013 2014 2014 (US$ in (RMB in thousands) thousands) (audited) Revenue ...... 35,392,506 28,990,570 32,048,979 5,165,358 Cost of Sales ...... (24,678,810) (20,215,201) (23,916,319) (3,854,611) Gross Profit ...... 10,713,696 8,775,369 8,132,660 1,310,747 Other income ...... 1,000,594 728,329 964,263 155,411 Selling expenses ...... (665,170) (848,771) (991,966) (159,876) Administrative expenses ...... (1,403,873) (1,491,574) (1,835,533) (295.834) Finance costs ...... (564,115) (506,815) (679,688) (109,546) Fair value changes on cross currency swaps ...... — 49,849 (121,022) (19,505) Impairment losses on properties for development ...... — — — — Impairment losses on properties under development ...... — — — — Reversal of impairment losses on property, plant and equipment ..... — 60,685 16,799 2,707 Impairment losses on property, plant and equipment ...... (81,485) — — — Impairment loss on completed properties for sale ...... — — (70,604) (11,379) Impairment loss on amounts due from a joint venture ...... — — (122,198) (19,695) Gain from changes in fair value of investment properties ...... 600 100,900 60,000 9,670 Fair value changes on trust-related financial derivatives ...... 82,520 — — — Net gain on disposal of subsidiaries 549,697 — 8,670 1,397.35 Gain on re-measurement of associates to acquisition date fair value in business combination achieved in stages ...... 3,399 3,923 37,196 5,995 Net gain on disposal of associates ... 56,505 — 120,773 19,465

84 For the year ended December 31, 2012 2013 2014 2014 (US$ in (RMB in thousands) thousands) (audited) Gain on partial disposal of an associate ...... — — — — Gain on re-measurement of an associate to acquisition date fair value upon re-consolidation of a subsidiary ...... 49,980 — — — Gain relating to a newly acquired joint venture ...... — 704,131 — — Net gain on disposal of joint ventures ...... 1,377 — — — Gain on de-consolidation of a subsidiary ...... — — — — Gain on acquisition of a subsidiary . — — 1,363 220 Share of results of associates ...... 209,356 1,092,037 339,873 54,777 Share of results of joint ventures .... 304,119 477,999 67,879 10940) Profit before taxation ...... 10,257,200 9,146,062 5,928,465 955,495 Taxation ...... (4,204,149) (3,155,857) (2,718,644 438,166)

Profit for the year and total comprehensive income for the year.. 6,053,051 5,990,205 3,209,821 517,329

Profit attributable to: Owners of the Company ...... 4,851,123 4,885,514 2,071,722 333,901 Non-controlling interests ...... 1,201,928 1,104,691 1,128,099 181,816 Earnings per share Basic ...... RMB2.57 RMB2.18 RMB0.80 US$0.13 Diluted ...... RMB2.37 RMB1.94 RMB0.80 US$0.13

2014 compared with 2013

Revenue. In 2014, the Group recognized revenue of RMB32,049 million (US$5,165.4 million), representing an increase of 10.5% from RMB28,991 million in 2013.

Revenue recognized from property sales in 2014 was RMB30,111 million (US$4,853.1 million), which accounted for 94.0% of the total revenue and represented an increase of RMB2,651 million or 9.7% from RMB27,460 million in 2013. Such increase was mainly due to the increase in sales area. The sales area of properties delivered in 2014 was 1,936,916 sq.m., representing an increase of 17.1% from 1,653,830 sq.m. in 2013. The average selling price of properties delivered in 2014 was RMB15,546 per sq.m., representing a decrease of 6.4% from RMB16,604 per sq.m. in 2013.

Projects in Zhejiang area (excluding Hangzhou) achieved sales revenue in 2014 of RMB9,446 million (US$1,522.4 million), accounting for 31.4% of the property sales, ranking first in 2014 among all regions compared with RMB7,143 million, accounting for 26.0% of the property sales, in 2013. Projects in Hangzhou area achieved sales revenue in 2014 of RMB8,587 million (US$1,384.0 million), accounting for 28.5% of the property sales, ranking second in 2014 compared with RMB11,350 million, accounting for 41.3% of the property sales, in 2013. Projects in Shandong area achieved sales revenue in 2014 of RMB2,858 million (US$459.7 million), accounting for 9.5% of the property sales, ranking third in 2014 compared with RMB2,214 million, accounting for 8.1% of the property sales, in 2013.

Sales revenue of high-rise apartments, low-rise apartments and serviced apartments reached RMB21,697 million (US$3,496.9 million), accounting for 72.1% of the property sales, in 2014 compared

85 with RMB22,493 million, accounting for 82.0% of the property sales, in 2013; sales revenue of villas reached RMB8,066 million (US$1,300.0 million), accounting for 26.8% of property sales, in 2014 compared with RMB4,543 million, accounting for 16.5% of the property sales, in 2013; sales revenue of offices reached RMB348 million (US$56.1 million), accounting for 1.1% of property sales, in 2014 compared with RMB424 million, accounting for 1.5% of the property sales, in 2013.

The Group achieved design and decoration revenue of RMB749 million (US$120.7 million) in 2014, representing an increase of RMB582 million or an increase of 28.7% from RMB582 million achieved in 2013, mainly due to the gradual expansion of the design and decoration business scale year by year.

The Group’s revenue from project management in 2014 amounted to RMB461 million (US$74.3 million), representing an increase of 31.7% from RMB350 million in 2013, mainly consisting of project management revenue of Bluetown Property Construction Management Group Co., Ltd. (藍城房產建設管理集團有限公司) (formerly Greentown Property Construction Management Group Co., Ltd (綠城房產建設管理集團有限公司)) (“Bluetown Construction Management”), a subsidiary of the Company.

In 2014, the Group’s revenue from hotel operations was RMB440 million (US$70.9 million), representing an increase of 44.3% from RMB305 million in 2013. The increase was mainly due to the additional revenue contributed by Hainan Greentown Blue Bay Resort, Hainan Westin Blue Bay Resort and Sheraton Qingdao Licang Hotel and other hotels and resorts which commenced operations in 2014. Furthermore, Greentown Qiandao Lake Resort, Sheraton Zhoushan Hotel and Sheraton Qingdao Jiaozhou Hotel, which commenced operations in previous years, also recorded an increase in operational revenue as a result of their stable customer base.

In 2014, the Group’s rental income from investment properties was RMB122 million (US$19.7 million), representing a slight increase from RMB114 million in 2013, and was mainly attributable to the rental income generated by Oakwood Residence Beijing.

Gross profit margin from property sales. In 2014, the Group’s gross profit from property sales was RMB7,074 million (US$1,140.1 million) and the gross profit margin from property sales was 23.5%, lower than 28.4% in 2013. The two main reasons for the decrease were the relatively high land costs (as the majority of land of the projects with the revenue recognized in 2014 was acquired in 2009) and the relatively low selling price of the projects as a result of the control measures imposed by the Central Government on the real estate industry over recent years.

Other income. In 2014, the Group realized other income of RMB964 million (US$155.4 million), representing an increase of RMB236 million from RMB728 million in 2013, mainly due to an increase in interest income and the recognition of RMB76 million in dividend income from available-for-sale investments.

In 2014, the Group’s interest income amounted to RMB665 million (US$107.2 million), representing an increase of RMB171 million from interest income of RMB494 million in 2013, mainly due to the increase in interest income on amounts due from related parties.

Selling and administrative expenses. In 2014, the Group’s selling and administrative expenses amounted to RMB2,827 million (US$455.6 million), representing an increase of 20.8% as compared with RMB2,340 million in 2013.

Human resources cost, which is the largest single expense item within selling and administrative expenses, amounted to RMB950 million (US$153.1 million) in 2014, representing an increase of 31.4% from RMB723 million in 2013, mainly due to an increase in the number of staff for an increased business scale and the optimization of the remuneration system in 2014. In 2014, expenses in marketing and related fees amounted to RMB556 million (US$89.61 million), in line with RMB561 million in 2013.

In 2014, the Group’s daily operating expenses amounted to RMB864 million (US$139.3 million), representing an increase of 30.1% as compared with RMB664 million in 2013. Save for the slight

86 increase in the Group’s basic expenses such as office expenses, travel expenses, rental fees and entertainment expenses as a result of the price growth in 2014, the increase in the daily operating expenses was mainly due to the increased preliminary operating expenses incurred and depreciation in connection with the commencement of operations of Sheraton Qingdao Licang Hotel, Hainan Greentown Blue Bay Resort, Hainan Westin Blue Bay Resort and other hotels and resorts which commenced operations in 2014.

In addition, in 2014, administrative expenses included a net foreign exchange loss of RMB22 million (US$3.5 million) compared with a net foreign exchange gain of RMB90 million in other income in 2013, mainly due to a large number of borrowings of the Group being denominated in foreign currency and the depreciation of the Renminbi in 2014.

Financing costs. In 2014, interest expenses (which comprise finance costs charged in our statement of comprehensive income) amounted to RMB680 million (US$109.6 million), as compared with RMB507 million in 2013. The total interest expenses (which comprises interest expenses and capitalized finance costs relating to properties under development or properties for development) in 2014 amounted to RMB3,125 million (US$503.7 million), representing an increase of 28.5% from RMB2,431 million in 2013, mainly due to the significant increase in the weighted average of loan balance outstanding during the year. In 2014, the weighted average interest cost was 7.9% per annum, lower than 8.7% per annum in 2013. In 2014, capitalized interest was RMB2,445 million (US$394.1 million), at a capitalization rate of 78.2%, which was consistent with 79.1% in 2013.

Share of results of joint ventures and associates. In 2014, the Group’s share of results of joint ventures and associates was RMB408 million (US$65.8 million), representing a decrease of RMB1,162 million from RMB1,570 million in 2013, mainly due to the impairment losses recognized by certain joint ventures and associates and the relatively low gross profit margin of the properties delivered in 2014. In 2014, sales revenue from properties recognized by joint ventures and associates was RMB39,416 million (US$6,352.7 million), representing an increase of 19.7% from RMB32,921 million in 2013, mainly because sold areas increased by 39.5% from 1,503,542 sq.m. in 2013 to 2,097,973 sq.m. and the average selling price decreased by 14.2% from RMB21,896 per sq.m. in 2013 to RMB18,788 per sq.m. in 2014. In 2014, the gross profit margin of property sales generated by joint ventures and associates was 14.4%, mainly due to mark-to-market value appreciation recognized upon the acquisitions or high land price of projects such as Shanghai Central Garden, Wenzhou Begonia Bay, Suzhou Majestic Mansion, Jinan Lily Garden and Hangzhou Zhijiang No. 1, resulting in relatively high unit costs and low gross profit margins. As a result, the gross profit margin of property sales in 2014 was affected.

Taxation expenses. In 2014, tax expenses included LAT of RMB1,396 million (US$225.0 million), as compared with RMB1,253 million in 2013, and enterprise income tax of RMB1,323 million (US$213.2 million), as compared with RMB1,903 million in 2013. In 2014, the effective enterprise income tax rate was 32.1% (excluding share of results of joint ventures and associates), higher than the statutory tax rate of 25.0%, which was mainly attributable to withholding tax on dividend, the unrecognized deferred tax assets of the losses of certain overseas subsidiaries and fair value changes on cross currency swaps, and the tax effect of non-deductible expenses.

Gain from changes in fair value of investment properties. Investment property is a property held to generate rental income and measured at fair value. The Group commissioned a property appraiser to provide assessments on investment properties of the Group. According to the results of the assessment, the gain from changes in fair value of investment properties amounted to RMB60 million (US$9.7 million) in 2014, compared with RMB101 million in 2013.

Fair value changes on cross currency swaps. In May 2013, the Company entered into cross currency swap contracts in conjunction with the issuance of senior notes in the aggregate amount of RMB2,500 million. The fair value changes on such cross currency swaps realized a loss of RMB121 million (US$19.5 million) in 2014, compared with a gain of RMB50 million in 2013.

Provision and reversal of provision for impairment losses. The restriction on property purchases and credit tightening policies imposed by the PRC government increased the level of risk and

87 uncertainties of China’s real estate market. In light of this, the Group commissioned an independent third party property appraiser to provide assessments on properties held by the Group. According to the results of the assessment, Zhoushan Putuo Greentown Industry Investment Co., Ltd., a subsidiary of the Company, recognized a reversal of impairment loss of RMB17 million (US$2.7 million) for hotel property (namely, Zhoushan Westin Zhujiajian Resort) in 2014, compared with a reversal of impairment loss of RMB61 million (US$9.8 million) in 2013.

The Company’s subsidiary Zhuji Yuedu Real Estate Co., Ltd. recognized an impairment loss of RMB71 million (US$11.4 million) in 2014 for its completed properties for sale (Zhuji Greentown Plaza). In addition, an impairment loss of RMB122 million (US$19.66 million) was recognized in 2014 on the amount due from Shaoxing Greentown Baoye Real Estate Development Co., Ltd. (Shaoxing Jade Garden), a joint venture of the Group.

The Group’s joint ventures and associates recognized a total impairment loss of RMB620 million (US$99.9 million), mainly from China Investment Development Co., Ltd., Hangzhou Haihang Greentown Real Estate Co., Ltd. (Hangzhou Sincere Garden Zhichengyuan), Suzhou Greentown Yuyuan Real Estate Development Co., Ltd. (Suzhou Majestic Mansion) and Wuxi Sunac Greentown Hubin Real Estate Co., Ltd. (Wuxi Lihu Camphora Garden), which recognized impairment losses of RMB250 million (US$40.3 million), RMB213 million (US$34.3 million), RMB89 million (US$14.3 million) and RMB54 million (US$8.7 million) for their properties, respectively. Such impairment losses reduced the Group’s share of results of joint ventures and associates by RMB217 million (US$35.0 million) in 2014.

Pre-sale deposits. Pre-sale deposits represent the amounts received from the pre-sale of properties. The amounts will be recognized as sales revenue upon delivery of properties. As at December 31, 2014, the balance of pre-sale deposits of the Group was RMB20,116 million (US$3,242.1 million), representing a decrease of RMB3,312 million or 14.1% from RMB23,428 million as at December 31, 2013. As at December 31, 2014, the pre-sale deposits of joint ventures and associates amounted to RMB42,098 million (US$6,785.0 million), representing a decrease of RMB628 million or 1.5% from RMB42,726 million as at December 31, 2013.

Financial resources and liquidity. As at December 31, 2014, the Group had bank balances and cash (including pledged bank deposits) of RMB9,084 million (US$1,464.1 million), as compared with RMB11,281 million as at December 31, 2013, and total borrowings amounted to RMB35,815 million (US$5,772.3 million) as at December 31, 2014, as compared with RMB30,512 million as at December 31, 2013. Net gearing ratio (measured by net borrowings over net assets) as at December 31, 2014 was 76.7%, representing an increase from 60.1% as at December 31, 2013, mainly due to several bank and other borrowings obtained for payment of land cost and construction fees.

The Group, together with its joint ventures and associates has obtained facilities of approximately RMB49.4 billion (US$8.0 billion) from commercial banks, of which approximately RMB18.3 billion (US$3.0 million) was effectively drawn as at December 31, 2014.

Project transfer. On October 13, 2014, the Group entered into a transfer agreement of shares and shareholder’s loan with Sino-Ocean Land (Hong Kong) Limited (“Sino-Ocean”), pursuant to which, the Company had transferred 24.5% shares and shareholder’s loan held in Poly Link Management Limited (“Poly Link”) to Sino-Ocean for a total consideration of RMB1,090 million (US$175.7 million). Poly Link was formerly an associate of the Group, which indirectly held and developed the project of Hangzhou Ocean Mansion. As at December 31, 2014, the Group had received RMB1,060 million (US$170.8 million) for the consideration amount of the transfer. The transfer increased the profit attributable to owners of the Company by RMB121 million (US$19.5 million) in 2014.

Risks of foreign exchange fluctuation. The principal place of operation of the Group is the PRC, and the majority of our income and expenditure was denominated in Renminbi. As the Group had deposits, bank and other borrowings, amounts due from and amounts due to related parties denominated in foreign currencies, and amounts due from and amounts due to third parties denominated in foreign currencies, and the 2018 USD Notes and the 2019 USD Notes were denominated in US dollars, the Group was exposed to exchange rate risk. In addition, the Company issued senior notes in the aggregate

88 principal amount of RMB2,500 million in May 2013, and entered into cross currency swap contracts with certain banks. However, the Group’s operating cash flow and liquidity is not subject to significant influence from fluctuations in exchange rates. The Group did not enter into any foreign currency hedging arrangements as at December 31, 2014.

Financial guarantees. The Group provided financial guarantees to banks for mortgage facilities granted to buyers of the Group’s properties. As at December 31, 2014, such financial guarantees amounted to RMB17,826 million (US$2,873.0 million), as compared with RMB17,625 million as at December 31, 2013.

Pledge of assets. As at December 31, 2014, the Group pledged buildings, hotels, construction in progress, prepaid lease payment, investment properties, properties for development, properties under development, completed properties for sale, pledged bank deposits interests in joint ventures and interests in associates, with an aggregate carrying value of RMB26,217 million (US$4,225.4 million), as compared with RMB22,725 million as at December 31, 2013, to secure general credit facilities granted by banks and other financial institutions to the Group.

Capital commitments. As at December 31, 2014, the Group had contracted, but not provided for, capital expenditure commitments of RMB13,786 million (US$2,221.9 million), as compared with RMB14,065 million as at December 31, 2013, in respect of properties for development, properties under development and construction in progress.

2013 compared with 2012

Revenue. In 2013, the Group recognized revenue of RMB28,991 million, representing a decrease of 18.1% from RMB35,393 million in 2012.

Revenue recognized from property sales in 2013 was RMB27,460 million, which accounted for 94.7% of the total revenue and represented a decrease of RMB6,754 million or 19.7% from RMB34,214 million in 2012. Such decrease was mainly due to the decrease in area sold and average selling price of properties. In 2013, the total area of properties sold recognized decreased by 13.5% to 1,653,830 sq.m. from 1,912,061 sq.m. in 2012. The average selling price of properties delivered in 2013 was RMB16,604 per sq.m., representing a decrease of 7.2% from RMB17,894 per sq.m. in 2012.

The Group achieved design and decoration revenue in 2013 of RMB582 million, representing an increase of RMB257 million or an increase of 79.1% from RMB325 million achieved in 2012, mainly due to the continuous expansion of the design and decoration business.

The Group’s revenue from project management in 2013 amounted to RMB350 million, representing an increase of 37.3% from RMB255 million in 2012, mainly due to the construction income earned by Greentown Property Construction Management Co., Ltd., a subsidiary of the Company.

In 2013, the Group’s revenue from hotel operations was RMB305 million, representing a slight increase of 2.3% from RMB298 million in 2012.

In 2013, the Group’s rental income from investment properties was RMB114 million, which remained relatively stable as compared with RMB111 million in 2012, and was mainly attributable to the rental income generated by Oakwood Residence Beijing.

Gross profit margin from property sales. In 2013, the Group’s gross profit from property sales was RMB7,786 million and the gross profit margin from property sales was 28.4%, slightly lower than 29.2% in 2012. Among the properties delivered in 2013, the project of Hefei Jade Lake Rose Garden, which accounted for 3.8% of the total delivered properties, recorded a low gross profit margin due to its relatively low unit price when put on sale in the prior year. Among the properties delivered in 2013, the Hangzhou Sapphire Mansion project, which is a high-end and refined high-rise apartment and which accounted for 10.6% of the total delivered properties. Meanwhile, the gross profit margin from property sales in 2013 was adversely affected to a certain extent by the Qingdao Ideal City project, which

89 accounted for 5.4% of the total delivered properties. This project comprises mainly affordable housing and high-rise apartments. Due to the restrictions imposed by the local government on the selling price of affordable housing units, as well as the local macro control measures on the real estate industry, the selling price of this project was relative low while the cost was high due to the high-end and refined high-rise apartments. As a result, this project only achieved a gross profit margin of approximately 10%.

Other income. In 2013, the Group realized other income of RMB728 million, which was RMB273 million lower than RMB1,001 million in 2012, mainly due to the decrease in interest income, offset by a net foreign exchange gain of RMB90 million in 2013, significantly more than that of RMB26 million in 2012, mainly due to further appreciation of the Renminbi and the increase in foreign currency borrowings and issuance of several series of senior notes denominated in US dollars.

In 2013, the Group’s interest income amounted to RMB494 million, representing a decrease of RMB206 million from interest income of RMB700 million in 2012, mainly due to the decrease in interest due from related parties.

Selling and administrative expenses. In 2013, the Group’s selling and administrative expenses amounted to RMB2,340 million, representing an increase of 13.1% as compared with RMB2,069 million in 2012.

Human resource cost, which is the largest expense item within selling and administrative expenses, amounted to RMB723 million in 2013, representing an increase of 8.2% from RMB668 million in 2012, mainly due to an increase in the number of management staff in line with an increase in the scale of the Group’s business in 2013. In 2013, expenses in advertising, sales and marketing amounted to RMB561 million, as compared with RMB407 million in 2012, representing an increase of 37.8% or RMB154 million. The increased expenses can be attributed to the development and training exercises for project agents and increased spending on marketing and promotion, ensuring that internal staff and third-party intermediaries would be able to fully mobilize and maximize sales performance.

In 2013, the Group’s daily operating expenses amounted to RMB664 million, as compared with RMB611 million in 2012, representing a growth of 8.7%, mainly due to a slight increase in basic expenses including office expenses, travel expenses, utilities fees, property management fees, rental fees and entertainment expenses.

Finance costs. In 2013, interest expenses (which comprises finance costs charged in our statement of comprehensive income) amounted to RMB507 million, as compared with RMB564 million in 2012. The total interest expenses (which comprises interest expenses and capitalized finance costs relating to properties under development or properties for development) in 2013 amounted to RMB2,431 million, representing a decrease of 30.2% from RMB3,481 million in 2012, mainly due to the significant decrease in the weighted average of loan balance outstanding during the year and the decrease in the weighted average interest cost from 8.80% per annum in 2012 to 8.66% per annum in 2013. In 2013, capitalized interest was RMB1,924 million, at a capitalization rate of 79.1%, lower than the capitalization rate of 83.8% in 2012.

Share of results of joint ventures and associates. In 2013, the Group’s share of results of joint ventures and associates was RMB1,570 million, representing an increase of RMB1,057 million or 2.1 times from RMB513 million in 2012, mainly due to more properties delivered in 2013. In 2013, sales revenue from properties recognized by joint ventures and associates was RMB32,921 million, representing an increase of 2.3 times from RMB9,849 million in 2012, mainly because sold areas increased by 120.9% from 680,676 sq.m. in 2012 to 1,503,542 sq.m. and the average selling price increased by 51.3% from RMB14,469 per sq.m. in 2012 to RMB21,896 per sq.m.

Tax expense. In 2013, tax expenses included LAT of RMB1,253 million, as compared with RMB2,066 million in 2012, and enterprise income tax of RMB1,903 million, as compared with RMB2,138 million in 2012. In 2013, the effective enterprise income tax rate was 30.1% (excluding share of results of joint ventures and associates), higher than the statutory tax rate of 25.0%, which was mainly attributable to withholding tax on dividend, the unrecognized deferred tax assets of the losses of certain subsidiaries which have not yet commenced pre-sale and certain overseas subsidiaries, and the tax effect of non-deductible expenses.

90 Gain from changes in fair value of investment properties. Investment property is a property held to generate rental income and measured at fair value. The Group commissioned a property appraiser to provide assessments on investment properties of the Group. According to the results of the assessment, the gain from changes in fair value of investment properties amounted to RMB101 million in 2013.

Fair value changes on cross currency swaps. As discussed above, in May 2013, the Company entered into cross currency swap contracts in conjunction with the issuance of senior notes in the aggregate amount of RMB2,500 million. The fair value changes on such cross currency swaps realized a gain of RMB50 million in 2013.

Provisions for impairment losses and reversal. The restriction on property purchases and credit tightening policies imposed by the PRC government increased the level of risk and uncertainties of China’s real estate market. In light of this, the Group commissioned DTZ Debenham Tie Leung Ltd. to provide assessments on properties held for development and properties under development of the Group. According to the results of the assessment, Zhoushan Putuo Greentown Industry Investment Co., Ltd., a subsidiary of the Company, recognized a reversal of impairment provision of RMB61 million in 2013. In 2012, the Group’s subsidiary Xinchang Greentown Real Estate Co., Ltd. had provision for impairment losses of RMB81 million for its hotel properties.

In addition, the Group’s associate Wenzhou Greentown Real Estate Development Co., Ltd. recognized impairment losses of RMB64 million in 2013 for the properties under development, compared with RMB233 million in 2012, while the Group’s joint venture Shenyang National Games Project Construction Co., Ltd. recognized impairment losses of RMB205 million in 2013 for the properties under development.

Gain relating to a newly acquired joint venture. In 2013, Shanghai Forest Golf, a subsidiary of the Company, entered into an equity transfer agreement with Jindu Real Estate Group Co., Ltd., pursuant to which Jindu Real Estate Group Co., Ltd. transfered its 50% equity in, and the entirety of the creditor’s right owed by, Zhejiang Jinying Realty Co., Ltd. to Shanghai Forest Golf at the consideration of RMB1,200 million. Zhejiang Jinying Realty Co., Ltd. owns and is the developer of the project of Hangzhou Zhijiang No. 1. The acquisition enabled Shanghai Forest Golf to generate a gain of RMB704 million, increasing the profit attributable to the owners of the Company by RMB268 million.

Pre-sale deposits. Pre-sale deposits represent the amounts received from the pre-sale of properties. The amounts will be recognized as sales revenue upon delivery of properties. As at December 31, 2013, the balance of presale deposits of the Group was RMB23,428 million, representing a decrease of RMB5,420 million or 18.8% from RMB28,848 million as at December 31, 2012. As at December 31, 2013, the pre-sale deposits of joint ventures and associates amounted to RMB42,726 million, representing an increase of RMB6,214 million or 17.0% from RMB36,512 million as at December 31, 2012.

Financial resources and liquidity. As at December 31, 2013, the Group had bank balances and cash (including pledged bank deposits) of RMB11,281 million, as compared with RMB7,898 million as at December 31, 2012, and total borrowings amounted to RMB30,512 million, as compared with RMB21,373 million in as at December 31, 2012. Net gearing ratio (measured by net borrowings over net assets) as at December 31, 2013 was 60.1%, representing an increase from 49.0% as at December 31, 2012.

Among the total borrowings of RMB30,512 million as at December 31, 2013, borrowings with maturity within one year amounted to RMB6,018 million and borrowings with maturity after one year amounted to RMB24,494 million, accounting for 19.7% and 80.3% respectively of total borrowings. Among the total borrowings of RMB21,373 million as at December 31, 2012, borrowings with maturity within one year amounted to 15,255 million and borrowings with maturity after one year amounted to RMB6,118 million, accounting for 71.4% and 28.6%, respectively. The debt structure has been improved while the bank balances and cash was sufficient to cover borrowings with maturity within one year.

Risks of foreign exchange fluctuation. The principal place of operation of the Group is the PRC, and the majority of our income and expenditure was denominated in Renminbi. As the Group has

91 deposits, borrowings and amounts due from third parties denominated in foreign currencies, and the 2018 USD Notes and the 2019 USD Notes were denominated in US dollars, the Group was exposed to exchange rate risk. However, the Group’s operating cash flow and liquidity is not subject to significant influence from fluctuations in exchange rates. The Group did not enter into any foreign currency hedging arrangements as at December 31, 2013.

Financial guarantees. The Group provided financial guarantees to banks for mortgage facilities granted to buyers of the Group’s properties. As at December 31, 2013, such financial guarantees amounted to RMB17,625 million, as compared with RMB17,144 million as at December 31, 2012.

Pledge of assets. As at December 31, 2013, the Group pledged buildings, hotels, construction in progress, prepaid lease payment, investment properties, properties for development, properties under development, completed properties for sale, pledged bank deposits interests in joint ventures and interests in associates, with an aggregate carrying value of RMB22,725 million, as compared with RMB24,848 million as at December 31, 2012, to secure general credit facilities granted by banks and other financial institutions to the Group.

Capital commitments. As at December 31, 2013, the Group had contracted, but not provided for, capital expenditure commitments of RMB14,065 million, as compared with RMB15,276 million as at December 31, 2012, in respect of properties for development, properties under development and construction in progress.

Liquidity and Capital Resources

The following tables present selected cash flow data from our consolidated cash flow statements for the periods indicated:

For the year ended December 31, 2012 2013 2014 2014 (US$ in (RMB in millions) millions) (audited) Net cash (used in)/generated from operating activities ...... 4,699.8 1,273.8 96.5 15.6 Net cash (used in)/generated from investing activities ...... 6,711.5 (4,984.4) (2,607.7) (420.3) Net cash generated from/(used in) financing activities ...... (8,862.8) 8,237.4 (441.6) (71.2) Bank balances and cash at the end of the year ...... 6,163.6 10,686 7,733.6 1,246.4

Indebtedness

As at December 31, 2012 2013 2014 2014 (US$ in (RMB in millions) millions) (audited) Bank borrowings ...... 16,037.1 16,156.5 22,120.9 3,565.2 Other borrowings ...... 5,095.0 5,796.8 5,102.0 822.3 Convertible bonds ...... — — — — November 2006 Notes ...... 241.3 — — — 2018 USD Notes ...... — 4,265.8 4,281.8 690.1 RMB Notes ...... — 2,481.0 2,489.0 401.2 2019 USD Notes ...... — 1,811.4 1,821.3 293.5 Total ...... 21,373.4 30,511.5 35,815.4 5,772.4

92 Bank and other Borrowings

Our bank borrowings are denominated in Renminbi, U.S. dollars and H.K. dollars and other borrowings are denominated in Renminbi. The following table sets forth our outstanding borrowings as at the dates indicated.

As at December 31, 2012 2013 2014 2014 (US$ in (RMB in thousands) thousands) (audited) Secured bank loans ...... 14,725,150 13,164,350 16,503,229 2,659,838 Unsecured bank loans ...... 1,311,938 2,992,189 5,617,662 905,403 16,037,088 16,156,539 22,120,891 3,565,241

Secured other loans ...... 3,990,915 5,796,819 4,971,908 801,326 Unsecured other loans ...... 1,104,100 — 130,495 21,032 5,095,015 5,796,819 5,102,403 822,358 Total bank and other loans ...... 21,132,103 21,953,358 27,223,294 4,387,599

Our bank and other borrowings are primarily used for our property developments. When applying the bank loans to finance a project, we refer to our property development schedule for the project to determine the maturity date of such loans. The table below sets forth the breakdown of our bank and other borrowings into amounts due within one year and after one year:

As at December 31, 2012 2013 2014 2014 (US$ in (RMB in thousands) thousands) (audited) Amounts due within one year ...... 15,014,288 6,017,895 12,167,171 1,960,992 Amounts due after one year ...... 6,117,815 15,935,463 15,056,123 2,426,607 Total ...... 21,132,103 21,953,358 27,223,294 4,387,599

See “Description of Material Indebtedness and Other Obligations” for more details regarding the Senior Notes, the 2014 Perpetual Securities and certain subsidiaries that have signed as borrower and/or guarantor.

Financial Guarantees

We typically arrange for various banks to provide mortgage loans to the purchasers of our properties who require mortgage loans. In line with market practice, we make arrangements with various domestic banks to provide mortgage facilities to purchasers of our properties. Furthermore, we are required to provide guarantees to these banks in respect of mortgages offered to our customers. Pursuant to the terms of the guarantees, upon default in mortgage payments by a purchaser, we would be responsible for repaying the outstanding mortgage principal together with accrued interest and penalties owed by the defaulting purchaser to the bank, and we would be entitled to assume legal title to and possession of the related property. These guarantees will be released upon the earlier of (i) the satisfaction of the mortgage loan by the purchaser of the property; and (ii) the issuance of the property ownership certificate for the mortgaged property and the completion of the registration of the mortgage, which is generally available within six months to one year after the purchaser takes possession of the relevant property. If a purchaser defaults on the mortgage payment, we may be required to repurchase the underlying property by paying off the mortgage loan. If we fail to do so, the mortgagee bank may auction the underlying property under the relevant PRC laws and regulations and recover the balance from us if the outstanding loan amount exceeds the net foreclosure sale proceeds. In line with industry practice, we do not conduct independent credit evaluations on our customers but rely on the credit checks conducted by the mortgagee banks.

93 As at December 31, 2012, 2013 and 2014, the outstanding guarantees for mortgage loans of the purchasers of our properties were equal to RMB17,144 million, RMB17,625 million and RMB17,826 million (US$2,873.0), respectively.

Off-Balance Sheet Commitments and Arrangements

Except for the financial guarantees set forth above and in the notes to our financial statements, we have not entered into any off-balance sheet guarantees or other commitments to guarantee the payment obligations of any third parties. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing or hedging or research and development services with us.

Market Risks

We are, in the normal course of business, exposed to market risks primarily relating to fluctuations in interest rates, commodity prices, foreign exchange rates and the inflation rate.

Interest rate risk

We are exposed to cash flow interest rate risk due to the fluctuation of the prevailing market interest rate on bank borrowings which carry prevailing market interest rates. Our income and operating cash flows are substantially independent of changes in market interest rates. Our interest rate risk primarily arises from interest bearing bank deposits, bank borrowings, the Senior Notes. Bank deposits and bank borrowings issued at variable rates expose us to cash flow interest-rate risk. Our Senior Notes issued at fixed rates expose us to fair value interest rate risk.

An increase in interest rates may also adversely affect prospective purchasers’ ability to obtain financing and depress overall housing demand. Higher interest rates may adversely affect our revenue and profits. The PBOC benchmark one-year lending rates in China (which directly affects the property mortgage rates offered by commercial banks in the PRC) as at December 31, 2012, 2013 and 2014 were 6.00%, 6.00% and 5.60%, respectively. We cannot assure you that the PBOC will not raise lending rates in the future or that our business, financial condition and results of operations will not be adversely affected as a result of these adjustments.

We are also exposed to fluctuations in HIBOR or LIBOR, to which the interest rate of certain of our borrowings under the Hong Kong dollar and US dollar are linked. See “Description of Material Indebtedness and Other Obligations.” Higher interest rates may increase our finance costs, and our business financial condition and results of operations could be adversely affected.

Commodities risk

We are exposed to fluctuations in the prices of raw materials for our property developments, primarily steel and cement. Accordingly, rising prices for construction materials will affect our construction costs in the forms of increased fees payable to our contractors. As a result, fluctuations in the prices of our construction materials have a significant impact on our results of operations.

Foreign exchange risk

The principal place of our operation is the PRC, and a majority of our income and expenditures are denominated in Renminbi. As our functional currency is Renminbi, bank balances and borrowings denominated in foreign currencies are subject to retranslation on each reporting date. Therefore we are subject to foreign exchange risk arising from future commercial transactions and recognized assets and liabilities such as bank balances and cash and loans which are denominated in a currency that is not Renminbi. As we have deposits, borrowings, amounts due from third parties and amounts due to third parties denominated in foreign currencies, such as the 2018 USD Notes and the 2019 USD Notes which are denominated in US dollars, we are exposed to exchange rate risk. However, as at December 31, 2014, our operating cash flow or liquidity has not been significantly affected by any fluctuations in exchange

94 rates and we did not enter into any foreign currency hedging arrangements. As at December 31, 2014, our major assets and liabilities that were not denominated in Renminbi were borrowings and bank deposits denominated in Hong Kong dollars and U.S. dollars.

Although we do not currently have a foreign currency hedging policy, we may choose to use hedging transactions to reduce our exposure to foreign exchange rate fluctuations in the future. For example, we may enter into non-speculative hedging or other derivative transactions, which may include transactions relating to our obligations under the Notes. Our obligations under these transactions may be secured by cash or other collateral. Because Renminbi is not freely convertible, our ability to reduce the foreign exchange risk is limited. You should refer to “Risk Factors—Risks Relating to China—Changes in governmental control of currency conversion and in PRC foreign exchange regulations may adversely affect our business operations” for additional risk disclosure.

Inflation

According to the National Bureau of Statistics of China, China’s overall national inflation rate, as represented by the general consumer price index, was approximately -2.6%, 2.6% and 2.0% in the years ended December 31, 2012, 2013 and 2014, respectively. Deflation could negatively affect our business as it would be a disincentive for prospective property buyers to make a purchase.

Non-GAAP Financial Measures

We use EBITDA to provide additional information about our operating performance. EBITDA refers to our earnings before the following items:

• fair value change on the investment properties and financial derivatives;

• interest income/expense (including capitalized interest under cost of sales);

• amortization of intangible assets;

• income tax expense;

• depreciation; and

• non-operating income/expense.

EBITDA is not a standard measure under IFRS. As the property development business is capital intensive, capital expenditure requirements and levels of debt and interest expenses may have a significant impact on the profit for the year of companies with similar operating results. Therefore, we believe the investor community commonly uses this type of financial measure to assess the operating performance of companies in our market sector.

As a measure of our operating performance, we believe that the most directly comparable IFRS measure to EBITDA is profit for the year. We operate in a capital intensive industry. We use EBITDA in addition to profit for the year because profit for the year includes many accounting items associated with capital expenditures, such as depreciation, as well as non-operating items, such as amortization of intangible assets and interest income and interest expense. These accounting items may vary between companies depending on the method of accounting adopted by a company. By minimizing differences in capital expenditures and the associated depreciation expenses as well as reported tax positions, intangible assets amortization and interest income and expense (including capitalized interest under cost of sales) and other non-operating items. EBITDA provides further information about our operating performance and an additional measure for comparing our operating performance with other companies’ results. Funds depicted by this measure may not be available for debt service due to covenant restrictions, capital expenditure requirements and other commitments.

95 For the year ended December 31, 2012 2013 2014 2014 (US$ in (RMB in thousands) thousands) (audited) Profit for the year/period ...... 6,053,051 5,990,205 3,209,821 517,329 Adjustments for: Finance costs (inc. interest income and capitalized interests under cost of sales) ...... 1,151,003 1,127,047 1,878,100 302,695 Reversal of impairment losses on property, plant and equipment .. — (60,685) (16,799) (2,708) Fair value changes on trust-related financial derivatives ...... (82,520) — — — Fair value changes on cross currency swaps ...... — (49,849) 121,022 19,505 Impairment losses on property, plant and equipment ...... 81,485 — — — Impairment loss on completed properties for sale ...... — — 70,604 11,379 Impairment loss on amounts due from a joint venture ...... — — 122,198 19,695 Gain from changes in fair value of investment properties ...... (600) (100,900) (60,000) (9,670) Net gain on disposal of subsidiaries/joint ventures/associates ...... (607,579) — (129,443) (20,862) Gain on re-measurement of associates to acquisition date fair value in business combination achieved in stages ...... (3,399) (3,923) (37,196) (5,995) Gain relating to a newly acquired joint venture ...... — (704,131) — — Gain on re-measurement of an associate to acquisition date fair value upon re-consolidation of a subsidiary ...... (49,980) — — — Gain on de-consolidation of a subsidiary ...... — — — — Gain on acquisition of a subsidiary . — — (1,363) (220) Share of results of associates/joint ventures ...... (513,475) (1,570,036) (407,752) (65,718) Taxation ...... 4,204,149 3,155,857 2,718,644 438,166 Depreciation and amortization ...... 169,381 158,598 228,702 36,860 EBITDA ...... 10,401,516 7,942,183 7,696,540 1,240,457 Revenue ...... 35,392,506 28,990,570 32,048,979 5,165,358

You should not consider our definition of EBITDA in isolation or construe it as an alternative to profit for the year/period or as an indicator of operating performance or any other standard measure under IFRS. Our definition of EBITDA does not account for taxes, interest expense (including capitalized interest under cost of sales) and other non-operating items. Our EBITDA measures may not be comparable to similarly titled measures used by other companies.

96 INDUSTRY OVERVIEW

The information in the section below has been derived, in part, from various government publications unless otherwise indicated. This information has not been independently verified by us or any of our affiliates or advisers. The information may not be consistent with other information compiled within or outside the PRC.

China’s Economy

The PRC economy has grown significantly since the PRC government introduced economic reforms in the late 1970’s. China’s accession to the World Trade Organization, or WTO, in 2001 has further accelerated the reform of the PRC economy.

According to the National Bureau of Statistics of China, China’s nominal gross domestic product (“GDP”) has increased from approximately RMB34,090.3 billion in 2009 to approximately RMB63,646.3 billion in 2014 at a CAGR of approximately 13.30%. This makes China one of the fastest growing economies in the world. In 2014, China’s nominal GDP was approximately RMB63,646 billion and grew at approximately 11.9% as compared with 2013.

The table below sets forth the GDP data for China for the years indicated:

Nominal GDP (in RMB billions) 09–14 2009 2010 2011 2012 2013 2014 CAGR PRC ...... 34,090.3 40,151.3 47,310.4 51,932.2 56,884.5 63,646.3 13.30%

Source: National Bureau of Statistics of China

China’s population has been increasing steadily over the past decade. However, due to the adoption of the one-child-per-family policy by the PRC government, population growth has remained at a relatively slow rate from year to year. In 2014, the annual growth rate was approximately 0.5% and total population in China was around 1.4 billion. The urbanization rate in China was 54.8% and the urban population was 749.2 million in 2014. In addition, the annual disposable income per capita of urban households in China was RMB28,844.0 million in 2014.

The table below sets forth selected figures showing China’s urban and total population as well as its urbanization rate and the increase in disposable income levels of the urban population in China for the years indicated:

09–14 2009 2010 2011 2012 2013 2014 CAGR Urban population (in millions) ...... 645.1 669.8 690.8 711.8 731.1 749.2 3.04% Total population (in millions) ...... 1,334.5 1,340.9 1,347.4 1,354.0 1,360.7 1,367.8 0.49% Urbanization rate (%) .. 48.3% 49.9% 51.3% 52.6% 53.7% 54.8% 2.56% Annual disposable income per capital of urban households (in RMB) ...... 17,174.7 19,109.4 21,809.8 24,564.7 26,462.4 28,844.0 10.93%

Sources: National Bureau of Statistics of China, Bureau of Statistics of respective cities

In line with nominal GDP growth, according to the National Bureau of Statistics of China, China’s nominal GDP per capita increased to RMB46,652 in 2014, representing a growth of approximately 7.7% as compared with 2013. The urban household consumption expenditure per capita in China reached RMB25,315 in 2014, representing an increase of approximately 7.2% as compared with 2013.

97 The table below sets forth urban household consumption expenditure per capita in China for the years indicated:

Urban household consumption expenditure per capita (in RMB) 09-14 2009 2010 2011 2012 2013 2014 CAGR PRC ...... 15,127 17,104 19,912 21,861 23,609 25,315 10.85

Source: National Bureau of Statistics of China

Investments in residential real estate in China were approximately RMB6,435 billion in 2014, representing an increase of approximately 9.2% as compared with 2013.

The table sets forth the property development investment for China for the years indicated. China’s property development investment has increased from approximately RMB3,624.2 billion in 2009 to approximately RMB9,503.6 billion in 2014 at a CAGR of approximately 21.26%.

Investment in properties (in RMB billions) 09–14 2009 2010 2011 2012 2013 2014 CAGR PRC ...... 3,624.2 4,825.9 6,179.7 7,180.4 8,601.3 9,503.6 21.26%

Source: National Bureau of Statistics of China

China’s Property Market

Real Estate Reforms

Reform of the PRC property market did not commence until the 1990s. Prior to such reform, the PRC real estate development industry was part of the nation’s centrally planned economy. In the 1990s, the PRC government initiated the housing reform and, as a result, China’s real estate and housing sector began its transition to a market-based system. A brief timeline of key housing reforms is set out below:

1988 ...... NPC amended the national constitution to permit the transfer of state-owned land use rights

1992 ...... Public housing sales in major cities commenced

1994 ...... The PRC government further implemented the reform and established an employer/employee-funded housing fund

1994 ...... The PRC government issued a regulation regarding pre-sale of commodity housing in cities

1995 ...... The PRC government issued regulations regarding the transfer of real estate, establishing a regulatory framework for real estate sales

1998 ...... The PRC government abolished the state-allocated housing policy

1999 ...... The PRC government extended the maximum mortgage term to 30 years

The PRC government increased maximum mortgage financing from 70% to 80%

The PRC government formalized procedures for the sale of real property in the secondary market

98 2000 ...... The PRC government issued regulations to standardize the quality of construction projects, establishing a framework for administering construction quality

2001 ...... The PRC government issued regulations relating to sale of commodity properties

2002 ...... The PRC government promulgated the Rules Regarding the Grant of State-owned Land Use Rights by Way of Tender, Auction and Listing-For-Sale

The PRC government eliminated the dual system for domestic and overseas home buyers in China

2003 ...... The PRC government promulgated rules for more stringent administration of real estate financing for the purpose of reducing the credit and systemic risks associated with such financing

The State Council of China (“State Council”) issued a notice for sustained and healthy development of the real estate market

2004 ...... The State Council issued a notice to require that real estate development projects (excluding affordable housing programs) be financed by developers themselves from their capital funds with respect to 35%, rather than 20%, of the total projected capital outlay for such projects

The Ministry of Construction amended Administrative Measures on the Presale of Commodity Housing in Cities

CBRC issued the Guideline for Commercial Banks on Risks of Real Estate Loans to further strengthen the risk control of commercial banks over their real estate financing

2005 ...... The PRC government instituted additional measures to discourage speculation in real properties such as increasing the minimum down payment to 30% of the total purchase price in some cities where the housing price increased too fast, eliminating the preferential mortgage interest rate for residential housing, imposing a business tax of 5% on the proceeds from sales that occur within two years of purchase, and prohibiting resale of unfinished properties

2006 ...... The PRC government implemented additional land supply, bank financing and other measures to curb fast increases in property prices, to encourage the development of middle- to low-end housing and to promote healthy development of the PRC property industry

2007 ...... The PRC government issued regulations to increase the annual land use tax, and also to impose such land use tax on foreign invested enterprises

The Ministry of Land and Resources issued regulations that land use rights certificates may not be issued unless and until all land premium has been paid with respect to the whole land lot under a land grant contract, which has effectively stopped the practice of issuing land use rights certificates in installments

99 2008 ...... The State Council issued the Notice on Promoting the Economic Use of Land (Guo Fa 2008 No. 3). The notice reinforced the existing policy in respect of idle land by stipulating, among other things, that the disposal policies for idle land shall be implemented strictly. The requirement that not less than 70% of the residential land must be used for developing low-cost rental units, small- to medium-sized units, low-to-medium-cost units and units with a GFA of less than 90 sq.m. is also reinforced in this notice. The notice establishes an additional land premium surcharges on idle land and authorizes the Ministry of Land and Resources to formulate regulations to implement such surcharges

The PBOC and the CBRC jointly issued the Notice on Promoting Economic Use of Land through Finance. The notice emphasizes that the financial institutions should tighten the management of loans for certain projects and the management of credit for commercial real estate such as prohibiting from granting loans to property projects for which the land that has been held idle for two years or more

2009 ...... The Ministry of Finance, the Ministry of Land and Resources, the PBOC, the PRC Ministry of Supervision and the PRC National Audit Office jointly promulgated the Notice on Further Enhancing the Revenue and Expenditure Control over Land Grant. The Notice raises the minimum down payment for land premiums to 50% and requires the land premium to be fully paid within one year after the signing of a land grant contract, subject to limited exceptions

2010 ...... The Ministry of Land and Resources promulgated the Notification on Issues Relating to Strengthening the Supply and Regulation of the Land for Real Estate Development on March 8, 2010, to introduce new measures on land supply, including:

• Implement the PRC government’s latest land supply plans and prioritize land supply;

• Local governments must allocate 70% of new land supply to the construction of “supportive housing and self-use small-to-medium size housing”; and

• Local governments must closely monitor developers’ implementation of the terms regarding the date for commencement of construction and completion of construction in land transaction contracts, and in the case of any violations, local governments must investigate and punish them

Additionally, the Ministry of Land and Resources announced that land sales in local cities should be halted with immediate effect until local governments submit the details of land supply plan for overall housing and social welfare housing. The local governments must submit the detailed plans before April 5 to the Ministry of Land and Resources, and the Ministry of Land and Resources will release the overall plan to the public and submit the overall plan to the State Council. If a local government cannot timely submit the plan or meet the requirements, the local government should be noticed or deduct the quota of land usage

100 On March 18, 2010, the SASAC held a public meeting and the directive from ASAC said only 16 state-owned companies (under State Council), whose primary business was real estate, will be allowed to participate in the sector. The SASAC requested the remaining 78 State-owned enterprises to submit their property business exit plans within a certain time frame

2011 ...... In January 2011, the State Council promulgated the Regulation on Expropriation of and Compensation for Buildings on State-Owned Land (Order of the State Council No. 590) which stipulates that compensation must be paid before the resettlement. Compensation offered by governments at municipal and county levels that makes housing expropriation decision to parties with housing being expropriated includes:

• compensation for the value of the housing being expropriated;

• compensation for relocation and temporary settlement caused by expropriation of housing; and

• compensation for the loss arising from the suspension of production and operation caused by expropriation of housing

On February 5, 2011, the Ministry of Land and Resources required local governments to follow the annual target of price control before supplying commodity residential housing to the market and to set a reasonable range of land premium for new land sales based on pricing levels in the same area

On March 16, 2011, the National Development and Reform Commission (“NDRC”) promulgated the Regulation on Price of Commodity Property, which became effective on May 1, 2011. According to the regulation, property developers are required to make public the sale price of each apartment of commodity properties for sale or pre-sale and the number of apartments available for sale or pre-sale within a certain time period. Property developers are also required to state factors that would affect housing prices and relevant charges before the property transaction, such as a commission fee and property management fee. No additional charge beyond what is stated in the price tag or made public by the property developers is permitted

On June 9, 2011, the NDRC promulgated the Relevant Issues on Utilizing Debt Financing to Support Construction of Affordable Housing, which stipulated that, in order to reach the goal of building 36 million units of affordable housing under the Twelfth Five-Year Plan, eligible local governments’ investing and financing platforms and other enterprises are encouraged to issue corporate bonds to finance construction of affordable housing projects. Local governments’ investing and financing platforms and other enterprises seeking funds to engage in the construction of public rental housing, low-rent housing, price-limited housing, shanty town transformations and other affordable housing projects which meet the requirements and related conditions specified by the NDRC can apply for financing through the issuance of corporate bonds. The NDRC requires that funds raised from corporate bonds issued by local governments’ investing and financing platforms be prioritized for use in the construction of local affordable housing

101 On December 24, 2011, MOFCOM and NDRC, jointly promulgated the Catalog of Guidance on Industries for Foreign Investment (Revised in 2011), which was effective on January 30, 2012, stipulating the following:

• the development of a whole parcel of land (limited to Sino-foreign joint equity and cooperative ventures) as well as the construction and operation of high-end hotels, villas, premium office buildings, international conference and exhibition centers fall within the category of industries in which foreign investment is restricted;

• the secondary market transactions in real estate sector and real estate intermediaries or brokerage companies agents fall within the category of industries in which foreign investment is restricted; and

• other real estate developments fall within the category of industries in which foreign investment is permitted. Subject to the approval by the relevant foreign investment regulatory authorities, a foreign investor intending to engage in the development and operation of real estate in China may establish a Sino-foreign equity joint venture, a Sino-foreign cooperative joint venture or a wholly foreign owned enterprise in accordance with the PRC laws and regulations governing foreign-invested enterprises.

2012 ...... On February 25, 2012, the Ministry of Land and Resources promulgated the Notice on Accomplishment of Real Estate Land Administration and Control in 2012 which aimed to insist on stabilizing the housing price and guaranteeing the sufficient supply of social security housing

On June 1, 2012, the Ministry of Land and Resources promulgated the revised Measures on the Disposal of Idle Land, which became effective on July 1, 2012. Under these measures, if any land parcel constitutes “idle land” due to government-related action, the holder of the relevant land use rights is required to explain to the relevant municipality or county-level land administrative department(s) the reasons for the land becoming idle, consult the relevant government authorities and rectify the situation accordingly. The means of rectification include but are not limited to the extension of the period permitted for commencing development, the adjustment of the land use and planning conditions or the substitution of the relevant idle land parcels with other land parcels

On July 19, 2012, the Ministry of Land and Resources and MOHURD jointly issued the Urgent Notice to Further Tighten Up Real Property Land Administration and Consolidate the Achievement of Macroeconomic Control of the Real Property Market to strengthen the enforcement of macroeconomic policy in the real property market, which requires that residential construction projects must commence within one year from the land title delivery date as stipulated in the land allocation decision or land grant contract and must be completed within three years from the date of commencement

102 On September 6, 2012, the Ministry of Land and Resources promulgated the Notice on Strictly Implementing Land Use Standard and Vigorously Promoting Economical Intensive Land Use, which stipulated that land use standards shall be strictly implemented and continuously improved in accordance with the principle of economical intensive land use

On November 5, 2012, the Ministry of Land and Resources, the Ministry of Finance, the PBOC and CBRC jointly promulgated the Notice on Strengthening Land Reserves and Financing Administration (Guotuzi Fa [2012] No. 162) in order to strengthen land bank institutions administration, determine the reasonable scale and structure of land bank, strengthen the administration of land pre-development, reservation and protection, and regulate the financing to land reservation and the use of land reservation funds

On December 26, 2012, the Ministry of Finance (MOF) issued a notice requiring local governments to strictly implement rules relating to the construction and management of low income housing projects. In addition, the MOF will provide various measures to support construction of affordable housing in the coming year, including measures (1) to ensure that all affordable housing construction financings are strictly confined to permitted financing channels only; and (2) to allow local governmental finance departments to raise funds from Housing Provident Fund, Land Premium, State-owned capital operational budgets, local government debts, and to use the funds on projects that need government funding, including public rental housing, low rental housing, and relocation housing projects

2013 ...... On February 20, 2013, the executive meeting of the State Council chaired by Premier Wen Jiabao issued a document emphasizing the strict implementation of tightening measures for the real estate market. The measures includes: (1) stabilizing property prices. Each major city in China is required to compile and announce its target for 2013 on how to control the prices of newly completed commodity properties; (2) strictly limiting speculative purchase of properties. Restrictions on purchasing commodity properties should be strictly implemented; expand the scope of experimental taxation against residential properties held by individuals; (3) increasing the supply of small to medium-sized commodity properties and lands; (4) accelerating the construction of housing for low-income individuals; and (5) strengthening the supervision of the property market

On February 26, 2013, the State Council issued the Notice on Continuing Adjustment and Control of Property Markets《關於繼續做 ( 好房地產市場調控工作的通知》) which requires, among other restrictive measures:

(i) improving the responsibility system for stabilizing housing prices. Municipalities directly under the central government, cities listed on state plans and provincial capitals (excluding Lhasa) must set an annual objective for controlling housing prices and publish annual new commodity housing price control target in the first quarter of the year;

103 (ii) firmly restraining purchases of residential housing for investment and speculation purposes. Municipalities directly under the central government, cities listed on state plans and provincial capitals (excluding Lhasa) which have implemented restrictions on the real estate market are required to cover all administrative areas of the cities as restricted areas, and restricted housing shall include new commodity housing and second-hand housing. Non-local residents who possess one or more residential properties and fail to provide one-year or longer tax payment certificates or social insurance payment certificates are to be barred from purchasing any residential properties located in the administrative area. For cities where housing prices are increasing at an excessively high rate, local branches of the PBOC may further raise the down payment rate and mortgage interest rate for the purchase of a second residential property. In addition, the state will strictly enforce a 20% tax on home sale profits; and

(iii) expanding ordinary commodity housing units and increasing the supply of land. The overall housing land supply in 2013 shall not be lower than the average actual land supply in the past five years. Financial institutions, subject to credit requirements, are to prioritize requests for loans for ordinary commodity housing construction projects in which medium and small housing units constitute 70% or more of the total units in such construction project

On April 3, 2013, MOHURD revealed that the target for new construction of low-income housing has been set at 6.3 million units for the year 2013, and the target for completed construction of 4.7 million units.

On July 19, 2013, the PBOC announced a few measures to further liberalize China’s lending interest rates effective from July 20, 2013. The most important measure is the removal of the lending rate floor, which was 30% below the benchmark rates. However, the floor on the benchmark mortgage rate will remain to curb speculative demand in the property market and maintain stable and healthy development of the market.

2014 ...... As of September 30, 2014, other than Beijing, Shanghai, Guangzhou, Shenzhen and Sanya, cities that had property-purchasing limitations have loosened or canceled such limitations.

On September 29, 2014, the PBOC and the CBRC jointly issued the Circular on Further Improving Financial Services for Housing Consumption (關於進一步做好住房金融服務工作的通知), which provides that the down payment for the first time home purchase with mortgage loans or the home upgrade purchase with mortgage loans after full repayment of the first home purchase shall be not less than is 30% of the purchase price, and the loan interest rate shall be not lower than 70% of the benchmark landing rate published by the PBOC. In cities where restriction on purchasing residential properties have not been applied or have been canceled, the banks may determine the down payment as a percentage of purchase price and the interest rate based on the solvency and credit status of mortgage loan applicants who own two or more residential properties with mortgage loans fully repaid and are applying for mortgage loans to buy another property.

104 On November 21, 2014, the PBOC reduced the benchmark one-year lending rate to 5.60% and lowered the one year deposit rate to 2.75%. On February 28, 2015, the PBOC reduced the benchmark interest rate to 5.35% and benchmark saving rate to 2.5%.

2015 ...... On June 27, 2015, the PBOC cut the one year benchmark lending rate to 4.85% and reduced the one year rate to 2% deposit.

Commodity Property Sales

Demand for real estate in China has seen a steady increase over the years. According to National Bureau of Statistics of China, during the period from 2009 to 2014, total GFA sold in China increased from approximately 947.6 million sq.m. in 2009 to approximately 1,206.5 million sq.m. in 2014. Of the total GFA sold in 2009, approximately 861.9 million sq.m. were residential properties. Of the total GFA sold in 2014, approximately 1,051.8 million sq.m. were residential properties. The total GFA sold in residential properties grew at a CAGR of 4.9% from 2009 to 2014.

The table below sets forth selected data relating to the PRC property market for the years indicated:

09-14 2009 2010 2011 2012 2013 2014 CAGR Total GFA completed (in million square meters) .... 788.8 834.3 991.4 1,069.3 1,067.6 1,075.0 6.4% Total GFA sold (in million square meters) ...... 947.6 1,043.5 1,093.7 1,113.0 1,305.5 1,206.5 4.9% GFA of residential properties sold (in million square meters) ...... 861.9 930.5 965.3 984.7 1,157.2 1,051.8 4.1% GFA of office buildings sold (in million square meters) 15.4 18.9 20.0 22.5 28.8 25.0 10.2% Average price of properties (in RMB per square meter) ...... 4,681.0 5,032.0 5,357.1 5,791.0 6,237.0 6,323.5 6.2% Average price of residential properties (in RMB per square meter) ...... 4,459.0 4,725.0 5,011.0 5,429.9 5,850.0 5,932.2 5.9% Average price of office buildings (in RMB per square meter) ...... 10,608.0 11,406.0 12,327.3 12,306.4 12,996.5 11,786.9 2.1%

Source: National Bureau of Statistics of China

Hangzhou

Hangzhou is the capital city of Zhejiang Province. According to National Bureau of Statistics of China, Hangzhou covers a total area of approximately 16,596 square kilometers as of the end of 2013 and had a population of approximately 8.9 million as of the end of 2014. A key city in the Yangtze River delta, Hangzhou is approximately 2 hours and 2.5 hours away from Ningbo and Shanghai, respectively, by car.

The growth in the economy and population of Hangzhou has generated an increase in housing demand in the city. The nominal GDP of Hangzhou was approximately RMB920.3 billion in 2014, while nominal GDP grew approximately 10.3% as compared with 2013. As of December 31, 2014, Hangzhou’s population reached approximately 8.9 million, representing a growth rate of 1.14% as compared with 2013.

105 The following table sets forth selected economic indicators relating to Hangzhou for the years indicated:

Hangzhou’s Economic indicators (2008-2014)

2009 2010 2011 2012 2013 2014 Population (million) ...... 6.8 8.7 8.7 8.8 8.8 8.9 GDP (RMB billion) ...... 508.8 594.9 701.9 780.4 834.4 920.3

Sources: Hangzhou Statistical Yearbook 2013; Hangzhou Municipal Statistics Bureau

Urban household consumer expenditure per capita in Hangzhou was RMB32,165 in 2014, representing an increase of approximately 29.5% as compared with 2013.

The table below sets forth urban household consumption expenditure per capita in Hangzhou for the years indicated:

Urban household consumption expenditure per capita (in RMB) 2009 2010 2011 2012 2013 2014 Hangzhou ...... 18,595 20,219 19,912 21,861 23,609 25,315

Source: Hangzhou Municipal Statistics Bureau

Residential real estate investments in Hangzhou have increased over the years. Total residential real estate investments in the city amounted to approximately RMB117.0 billion in 2013, representing an increase of approximately 16.8% as compared with 2012.

Residential Real Estate Investments in Hangzhou (2004–2013)

140 40.0%

120

30.0% 100 G ns ro

80 w t h billio (%) n 20.0% b i

m 60 R

40 10.0%

0 0.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Investment Real Estate Investments in Hangzhou (RMB in billions) Growth (%)

Source: National Bureau of Statistics of China

In 2014, total residential GFA sold in Hangzhou amounted to approximately 9.5 million sq.m., representing a decrease of approximately 1.9% as compared with 2013.

106 The table below sets forth the total GFA sold in Hangzhou for the years indicated:

2009 2010 2011 2012 2013 2014 Hangzhou (in millions sq. m.) ...... 13.0 8.0 6.0 9.2 9.7 9.5

Source: Hangzhou Municipal Statistics Bureau

Zhejiang

Zhejiang is located in the southern part of the Yangtze River Delta on the southeast coast of China. It faces the East China Sea on the east and neighbors Fujian on the south. With an extensive hinterland in the rear, it shares borders with Jiangxi and Anhui on the west and Shanghai and Jiangsu on the north. According to National Bureau of Statistics of China, Zhejiang covers a total area of approximately 101,800 square kilometers as of the end of 2013 and had a population of approximately 55.1 million as of the end of 2014.

The growth in the economy and population of Zhejiang has generated an increase in housing demand.

In 2014, the nominal GDP of Zhejiang was approximately RMB4,015.4 billion, while nominal GDP grew approximately 6.3% as compared with 2013.

The table below sets forth GDP data for Zhejiang for the years indicated:

GDP (in RMB billions) 2009 2010 2011 2012 2013 2014 Zhejiang ...... 2,299.0 2,772.2 3,231.9 3,466.5 3,775.7 4,015.4

Source: National Bureau of Statistics of China

As of December 31, 2014, Zhejiang’s population reached approximately 55.1 million, representing a growth rate of 0.2% as compared with 2013.

The table below sets forth Zhejiang’s population for the years indicated:

2009 2010 2011 2012 2013 2014 Zhejiang (in millions) ...... 52.8 54.5 54.6 54.8 55.0 55.1

Source: National Bureau of Statistics of China

Per capita consumption expenditure of urban households in Zhejiang was RMB30,502 in 2014, representing an increase of approximately 8.3% as compared with 2013.

The table below sets forth urban household consumption expenditure per capita in Zhejiang for the years indicated:

Urban household consumption expenditure per capita (in RMB) 2009 2010 2011 2012 2013 2014 Zhejiang ...... 28,838 23,209 25,102 26,253 28,155 30,502

Source: Statistical Bureau of Zhejiang Province

107 Residential real estate investments in Zhejiang have increased over the years. Total residential real estate investments in the city amounted to approximately RMB408.9 billion in 2013, representing an increase of approximately 19.0% as compared with 2012.

Residential Real Estate Investments in Zhejiang (2004–2013)

400 60.0%

350

300

ns 40.0% G

250 ro w t billio h n

200 (%) b i m

R 150 20.0% 100

0 0.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Investment Real Estate Investments in Zhejiang (RMB billions) Growth (%)

Source: National Bureau of Statistics of China

In 2013, total residential GFA sold in Zhejiang amounted to approximately 41.0 million sq.m., representing an increase of approximately 23.6% as compared with 2012.

The table below sets forth the total GFA sold in Zhejiang for the years indicated:

2009 2010 2011 2012 2013 Zhejiang (in millions sq.m.) ... 47.6 38.3 27.6 33.2 41.0

Source: National Bureau of Statistics of China

Shanghai

Shanghai is situated at the eastern part of the Yangtze River delta region, bordering Jiangsu and Zhejiang Provinces. According to National Bureau of Statistics of China, Shanghai occupies an area of approximately 6,341 square kilometers as of the end of 2013 and had a population of approximately 24.3 million as of the end of 2014. Shanghai is one of the four municipalities in China under the direct administration of the PRC central government.

Shanghai’s nominal GDP reached approximately RMB2,356.1 billion in 2014, while nominal GDP grew approximately 8.0% as compared with 2013.

The table below sets forth the total GDP data for Shanghai for the years indicated:

GDP (in RMB billions) 2009 2010 2011 2012 2013 2014 Shanghai ...... 1,504.6 1,716.6 1,919.6 2,018.2 2,181.8 2,356.1

Source: National Bureau of Statistics of China

108 As of December 31, 2014, Shanghai’s population reached approximately 24.3 million, representing a growth rate of 0.5% as compared with 2013.

The table below sets forth Shanghai’s population for the years indicated:

2009 2010 2011 2012 2013 2014 Shanghai (in millions) ...... 22.1 23.0 23.5 23.8 24.2 24.3

Source: National Bureau of Statistics of China

Per capita consumption expenditure of urban households in Shanghai reached RMB30,520 in 2014, representing an increase of approximately 8.4% as compared with 2013.

The table below sets forth urban household consumption expenditure per capita in Shanghai for the years indicated:

Urban household consumption expenditure per capita (in RMB) 2009 2010 2011 2012 2013 2014 Shanghai ...... 20,992 23,200 25,102 26,253 28,155 30,520

Source: Shanghai Municipal Statistics Bureau

Total residential real estate investments in Shanghai amounted to approximately RMB408.9 billion in 2013, representing an increase of approximately 19.0% as compared with 2012.

Residential Real Estate Investments in Shanghai (2004–2013)

450 60.0%

400

350 ns 300 40.0% G ro

250 w t billio h n (%)

b i 200 m R 150 20.0%

100

0 0.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Investment Real Estate Investments in Shanghai (RMB in billions) Growth (%)

Source: National Bureau of Statistics of China

In Shanghai, total residential GFA sold in 2014 decreased by approximately 11.7% to approximately 17.8 million sq.m. as compared with 2013.

The table below sets forth the total GFA sold in Shanghai for the years indicated:

2008 2009 2010 2011 2012 2013 2014 Shanghai (in millions sq. m.) ... 20.1 29.3 16.9 15.0 15.9 20.2 17.8

Source: National Bureau of Statistics of China

109 Shandong

Shandong is situated on the eastern edge of the North China Plain and in the lower reaches of the Yellow River, bordering Hebei, Henan, Jiangsu and Anhui Provinces. According to National Bureau of Statistics of China, Shandong occupies an area of approximately 157,126 square kilometers as of the end of 2013 and had a population of approximately 97.9 million as of the end of 2014.

In 2014, Shandong’s nominal GDP reached approximately RMB5,942.7 billion, while nominal GDP grew approximately 7.6% as compared with 2013.

The table below sets forth the GDP data for Shandong for the years indicated:

GDP (in RMB billions) 2009 2010 2011 2012 2013 2014 Shandong ...... 3,389.7 3,917.0 4,536.2 5,001.3 5,523.0 5,942.7

Source: National Bureau of Statistics of China

As of December 31, 2014, Shandong’s population reached approximately 97.9 million, representing a growth rate of 0.6% as compared with 2013.

The table below sets forth Shandong’s population for the years indicated:

2009 2010 2011 2012 2013 2014 Shandong (in millions) ...... 94.7 95.9 96.4 96.9 97.3 97.9

Source: National Bureau of Statistics of China

Per capita consumption expenditure of urban households in Shandong reached RMB18,323 in 2014, representing an increase of approximately 7.1% as compared with 2013.

The table below sets forth urban household consumption expenditure per capita in Shandong for the years indicated:

Urban household consumption expenditure per capita (in RMB) 2009 2010 2011 2012 2013 2014 Shandong ...... 12,013 13,118 14,561 15,778 17,112 18,323

Source: Shandong Statistical Information Net

Total residential real estate investments in Shandong amounted to approximately RMB418.4 billion in 2014, representing an increase of approximately 5.2% as compared with 2013.

110 Residential Real Estate Investments in Shandong (2004–2013)

450 60.0%

400

350 45.0% G

ns 300 ro w t

250 h billio (%) n 30.0% b i 200 m R 150 15.0% 100

0 0.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Residential Real Estate Investments in Shandong (RMB in billions) Growth (%)

Source: National Bureau of Statistics of China

In Shandong, total residential GFA sold in 2014 decreased by approximately 14.3% to approximately 79.7 million sq.m. as compared with 2013.

The table below sets forth the total GFA sold in Shandong for the years indicated:

2009 2010 2011 2012 2013 2014 Shandong (in millions sq. m.) 64.8 84.5 87.4 77.3 93.0 79.7

Source: National Bureau of Statistics of China

111 CORPORATE STRUCTURE Offshore Onshore 100% 100% 100% n Real Estate I) w V in Most (B Group Co., Ltd. Group Co., Global Limited W ) Greento n g w s g in （綠城房地產集團有限公司） ) I) Kon n Decoration g W elopment V g w n Materials v n Decoration (B w Limited w Greento Era Kon elopment Limited Holdin g g v and De Greento s Kon g (Hon g g g Greento I) Greento g and De g Lead V g y Equipment Ltd. Co., Hon Co., LTD (Hon Kon (B Tradin g Limited Holdin Eas Zhejian Tradin Zhejian Hon Engineering Ltd.Management Co., （浙江綠城材料設備有限公司）（浙江綠城裝飾工程管理有限公司） y I) V ealth estments (B W v Limited Eternit In 100% 100% s g I) V al Rich y (B Limited Holdin Lo I) V moon y (B Limited Sk International n g ) g ) u 建築設計 ral Desi zho Co., Ltd. Kon u g g g Litao estment v ltin Limited Cheerco u (Han （杭州） In 諮詢有限公司） (Hon Cos Architech （力濤 ) g Kon g Fordtex Limited (Hon ) g spaper 100% 100% 100% 100% 100% 100% 100% 100% 100% w n Real elopment w Kon v Ne g ll Top estment g u v Co., Ltd. Limited F In Greento (Hon 開發有限公司） Estate De Zhejian 66.7% 100% （浙江報業綠城房地產 ) g y r u Kon g estment v Limited In On Cent (Hon ) g Kon g estment astsome v Limited V In (Hon ) g Kon g elopment v Limited Grandlink (Hon De ) g Kon g Limited Speed Ford (Hon ) g Kon g (Hon Onnex Limited I) V ) g s Limited Kon g g Limited Central Ford (Hon 100% s Limited (B g ) g man Island) y Kon n Gain g n China Holdin (Ca w elopment v Limited w ise Holdin Cro (Hon De w Rich ) Greento ) g g 50% 100% 100% 100% 100% 100% 100% 100% 100% ne u Kon Kon g g ointer P Fort Limited LIMITED (Hon (Hon CHINESE BASE INTERNATIONAL I) V Smart y p ) u g ictor V Limited (B Kon ji Gro g g estment v Limited Financial In International (Hon n Zhon w I) V estment mph ment v Co., Ltd. u g g Greento ji In g ltin Tri g u y Mana Enterprise Sk ) Beijin Limited (B Zhon Cons g 管理咨詢有限公司） 30% 30% （北京綠城中稷投資 100% 99.9% 0.1% Kon g De He strial Limited I) u International (Hon V Ind Fame n y w ction alit u u Q Limited (B Greento u Co., Ltd. zho g 建設有限公司）（杭洲綠城東部 I) Eastern Constr Han V er w eakpo P Enterprises 95.5% Limited (B I) s V u Benfitpl Limited (B 40.7% Jinma u zho g Co., Ltd. Real Estate 有限公司） I) s Han V u （杭洲金馬房地產 eni g Add Enterprises Limited (B 10.3% I) V 60% 100% estments v Zest Rich In Limited (B I) V acific P strial u bo estments Hoson g v Co., Ltd. I) Ind y In V a Limited (B Nin （寧波太平洋實業有限公司） W e v elopment v Acti n De Limited (B w Real y elopment v Ba u Co., Ltd. dao Greento g I) V Jiaozho Estate De Qin （青島綠城膠州灣 100% 100% 100% 100% 100% 100% 100% 100% 100% 房地產開發有限公司） a Yick estment u v n H w In 96.7% Limited (B n n Greento g u w w elopment g v an Co., Ltd. ijia jin u gy De v 開發有限公司） enzho R Jiajin Real Estate L u Jin u W Greento Greento u u u elopment （溫州綠城家景房地產 v Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. I) Real Estate Real Estate Real Estate Real Estate Real Estate 有限公司）有限公司）有限公司）有限公司） enzho enzho De enzho V W y 開發有限公司） enzho enzho W （溫州綠城置業（溫州睿佳置業（溫州綠景置業（溫州景楊置業 W （溫州綠城房地產 100% W W 55% I) V estments (B v Limtied rime Cit P In Best Smart Enterprises Limited (B 55% 55% 55% 55% 100% u zho u Ji u l u u j l g Co., Ltd. u g g Real Estate 有限公司） n gy Ton zho w g Ton Kan ement （桐廬九州房地產 u u zhi g v estment L v zho zho Co., Ltd. Co., Ltd. Co., Ltd. g g Greento In Real Estate 有限公司）有限公司） Technolo I) Mana The Han 管理有限公司） V Han （杭州康居投資（杭州錄智科技 Han 51% 100% 100% （杭州桐廬綠城置業 Green Sea Interantional 90% Limited (B 100% 100%

112 BUSINESS

Overview

We are one of the leading property developers in the PRC. We offer a wide range of high quality housing such as villas, flat mansions, low-rise apartment and high-rise apartments, urban complexes, integrated community, as well as hotels and commercial property. Since our establishment in 1995 as a private real-estate developer in Hangzhou, we have been based in Zhejiang Province, one of the most economically vibrant provinces in the PRC. With property projects covering most of the economically prosperous cities such as Hangzhou, Ningbo, Wenzhou, Taizhou, Shaoxing and other cities in Zhejiang Province which ranked on Zhongjun County Economic Research Institute’s 2011 list of the Top 100 national most competitive county-level cities, we have achieved significant scale and built a strong reputation. We have also successfully set foot in other major cities located in the Yangtze River Delta, including Shanghai, Nanjing, Suzhou, Wuxi and Nantong and major cities in the Bohai Rim Economic Belt, including Beijing, Tianjin, Qingdao, Jinan and Dalian and other provincial cities, such as Hefei in Anhui Province, Zhengzhou in Henan Province, Changsha in Hunan Province, and Urumqi in Xinjiang. For 10 consecutive years, from 2005 to 2014, we were ranked jointly by four authoritative institutions, namely Enterprise Research Institute of the Development Research Center of the State Council, China Real Estate Association, Tsinghua University Real Estate Research Center and China Index Institute, as one of the top 10 property enterprises in China. In addition, in the Residents’ Satisfaction Survey, we ranked first in the outstanding enterprises rankings in terms of resident satisfaction for four consecutive years from 2011 to 2014. We also ranked first in the “Brand Loyalty,” “Product Quality,” “Property Services” and “Sales Services” indices in 2011, and first in the “Property-Owner Loyalty,” “Corporate Image,” “Plan and Design,” “Project Quality,” “Property Services” and “Sales Services” indices in 2012. On July 19, 2013, the China Index Academy issued the “Report of Housing Satisfaction of Urban Residents in China 2013.” The satisfaction survey covered 16 major cities, 122 key housing enterprises and 349 urban communities across China. Among the cities included in the survey were Hangzhou, Beijing, Shanghai, Qingdao, Ningbo and Changsha. We received outstanding results and rankings, coming first in the “General Satisfaction of Urban Residents” category in six cities, first in “Customer Loyalty Rate” in five cities and second in “Customer Loyalty Rate” in one city. In addition, in March 2014, we were named the “2014 Top 10 China Real Estate Companies,” “2014 Top 10 China Real Estate Companies in Comprehensive Strength,” “2014 Top 10 China Real Estate Companies in Comprehensive Development” and “2014 Top 10 China Real Estate Companies in City Coverage.” We received these honors at the press conference of the Top 500 China Real Estate Companies Survey jointly organized by the China Real Estate Research Association, the China Real Estate Association and the China Real Estate Appraisal.

Our revenue comes mainly from property sales, as well as from hotel operations, property rental, project management, sales of construction materials and design and decoration. During the year ended December 31, 2014, our revenue was RMB32,049 million (US$5,165.36 million), representing an increase of 10.5% from RMB28,991 million recorded during the year ended December 31, 2013. Our revenue from property sales during the year ended December 31, 2014 equaled RMB30,111 million (US$4,853.01 million), accounting for 94.0% of our total revenue and representing an increase of 9.7% from RMB27,460 million during the year ended December 31, 2013. The increase was mainly due to the increase in areas sold. The sales area of properties delivered in 2014 was 1,936,916 sq.m., representing an increase of 17.1% from 1,653,830 sq.m. in 2013. The average selling price of properties delivered in 2014 was RMB15,546 per sq.m., representing a decrease of 6.4% from RMB16,604 per sq.m. in 2013.

Our net profit for the year ended December 31, 2014 equaled RMB3,210 million (US$517.35 million), representing a decrease of 46.4% from RMB5,990 million during the year ended December 31,

113 2013. After deduction of post-tax effect of net gains from acquisitions, impairment losses or reversal of impairment loss on some assets, and changes in fair value of financial derivatives and gain from changes in fair value of investment properties, the core net profit in 2014 was RMB3,379 million, representing a decrease of 36.0% compared with RMB5,279 million recorded in 2013. In addition to the decline of gross profit margin contributed by subsidiaries from the sales of properties, the decrease was also mainly due to the significant decrease of share of results of joint ventures and associates. Profit attributable to our owners amounted to RMB2,072 million during the year ended December 31, 2014, representing a decrease of 57.6% compared with RMB4,886 million during the year ended December 31, 2013. During the year ended December 31, 2014, we achieved basic earnings per share of RMB0.80, representing a 63.3% decrease over RMB2.18 recorded during the year ended December 31, 2013.

Strategic Partnerships from 2012 to 2014

Wharf

On June 8, 2012, the Company entered into subscription and investment agreements with Wharf pursuant to which Wharf agreed to become our strategic partner through an aggregate HK$5.1 billion investment comprising a subscription of approximately 490 million shares of the Company and a HK$2,550.0 million subscription of perpetual subordinated convertible securities issued by Active Way Development Limited (a wholly owned subsidiary of the Company) which were guaranteed on a subordinated basis by the Company. As a result of these investments, Wharf held, and continues to hold, an interest in approximately 24.6% of the share capital of the Company. In connection with these investments, the Board appointed two non-executive directors nominated by Wharf in June 2012 and August 2012, and also established and maintained, and continues to maintain, an investment committee initially comprising three members, one of whom was appointed by Wharf, for the purpose of providing guidance and supervision to the Company with respect to investment matters.

Wharf, a property developer, is a Hong Kong blue-chip company with over one hundred years of history. The principal business activities of Wharf and its subsidiaries are ownership of properties for development and letting, investment holding, container terminals as well as communications, media and entertainment. It is experienced in dealing with industry risk and market changes and its influence in the overseas capital market has facilitated the broadening of our financing channels and improvement of our internal financial and risk management since it became one of our largest shareholders. See “—Our Competitive Strengths—Experienced management team backed by top quality partners.”

Sunac

On June 22, 2012, the Group entered into a cooperative framework agreement with Sunac Zhidi to form Shanghai Sunac Greentown, a 50:50 joint venture between the Group and Sunac Zhidi. In connection with the formation of the joint venture, the Group transferred its equity interests in, and shareholder loans to, the seven subsidiaries and one associate set out in the table below to Shanghai Sunac Greentown. We account for Shanghai Sunac Greentown as an associate of the Group because we do not have control over the board of directors of Shanghai Sunac Greentown.

Equity Interest Contribution to JV Platform Company Transferred Project Name Shanghai Huazhe Bund Realty Co., Ltd ...... 51.0% Shanghai Bund House(1) Shanghai Lvshun Real Estate Development Co., Ltd ...... 100.0% Shanghai Yulan Garden Suzhou Greentown Yuyuan Real Estate Development Co., Ltd ...... 90.5% Suzhou Majestic Mansion Suzhou Greentown Rose Garden Real Estate Development Co., Ltd ...... 66.67% Suzhou Rose Garden Wuxi Greentown Real Estate Development Co., Ltd ...... 85.0% Wuxi Yulan Garden Changzhou Greentown Real Estate Co., Ltd ...... 37.0% Changzhou Yulan Square Tianjin Yijun Investment Co., Ltd ...... 80.0% Tianjin Azure Coast Wuxi Taihu Greentown Real Estate Co., Ltd ..... 39.0% Wuxi Taihu Project

114 Note: (1) Project subject to the restructuring arrangements in the Sunac Framework Agreement. See “Recent Developments—Sunac-Greentown Joint Venture Restructuring” and “Related Party Transactions—Framework Agreements—Sunac Framework Agreement.”

At the same time, the Group transferred 50% of its equity interests in, and shareholder loans to, our wholly owned subsidiary, Shanghai Forest Golf, to Sunac Zhidi. We account for Shanghai Forest Golf as a subsidiary of the Group because we control its board of directors.

The transfer of the Group’s interest in the above nine subsidiaries contributed approximately RMB3,358.0 million cash inflow to the Group in 2012.

On March 16, 2013, the Company and Sunac as purchasers entered into a framework agreement with China Gold Associates Limited (“China Gold”) as vendor and the shareholder of China Gold (the “Framework Agreement”) pursuant to which the Company and Sunac agreed to acquire through their 50:50 joint venture company the entire share capital of Golden Regal Limited for the purpose of developing a project located in Huangpu District, Shanghai (“Shanghai Pudong Project”). On April 25, 2013, Sunac Greentown Investment Holdings Limited (“Sunac Greentown Investment”), a 50:50 joint venture between the Company and Sunac, was incorporated. On May 31, 2013, a cooperation and investment agreement was entered into among Sunac Greentown Investment as purchaser, the Company and Sunac as guarantors of Sunac Greentown Investment and Arch Capital Success Limited as vendor (“Arch Capital”) and a related party of Arch Capital as guarantor of Arch Capital to supplement the Framework Agreement for the purpose of better developing the Shanghai Pudong Project. We account for Sunac Greentown Investment as an associate of the Group because we do not control the board of directors of Sunac Greentown Investment.

For the latest development of our partnership and joint ventures with Sunac, including the project companies described above, see “Recent Developments—Sunac Share Sale,” “Recent Developments—Sunac-Greentown Joint Venture Restructuring” and “Related Party Transactions—Framework Agreements—Sunac Framework Agreement.”

CCCG

On December 23, 2014, CCCG entered into a sale and purchase agreement with, among others, Mr Song Weiping, Ms Xia Yibo (the spouse of Mr Song) and Mr Shou Bainian, pursuant to which CCCG agreed to acquire an aggregate of 524,851,793 shares of the Company, representing approximately 24.3% of the share capital of the Company, from the respective companies wholly owned by Mr Song, Ms Xia and Mr Shou at HK$11.46 per share and a total cash consideration of HK$6,014,801,547.78. The transaction was completed on March 27, 2015.

CCCG is a wholly state-owned company established in the PRC supervised by the SASAC. CCCG is the controlling shareholder of China Communications Construction Co. Ltd., a company established in the People’s Republic of China whose H shares are listed on SEHK. Based on publicly available information, CCCG is principally engaged in the design and construction of transportation infrastructure, dredging and heavy machinery manufacturing business and covers the following business aspects: port, terminal, road, bridge, railway, tunnel, civil work design and construction, capital dredging and reclamation dredging, container crane, heavy marine machinery, large steel structure and road machinery manufacturing, and international project contracting, import and export trading services. CCCG is one of the 21 SOEs permitted by the SASAC to engage in property development as its principal business. Its strengths complements our brand value, management experience and customer recognition and we believe we will be able to benefit from various aspects with the strategic support from CCCG, such as enhancing business expansion and growth and exploring new financial channels. As at December 31, 2014, we are the sole property platform of CCCG in the overseas listing arena and we believe we will benefit from the background of CCCG as a state-owned enterprise in terms of land acquisition, development and financing, while CCCG will be able to expand its overall real estate segment rapidly, given our market leading position and brand equity. See “—Our Competitive Strengths—Experienced management team backed by top quality partners.”

115 For the latest development of our partnership with CCCG, see “Recent Developments—CCCG Share Sale” and “Recent Developments—Increase in CCCG’s Shareholding.”

Our Competitive Strengths

Leading high-end property developer in China with strong brand recognition

Diversified product offering with a focus on residential properties

116 We are also actively entering into the “themed estate” market to further broaden our space for development, including urban complexes in second and third tier cities, housing estates for retired communities and tourist-oriented estates. As a result of detailed market analysis and research, we ensure that we develop projects which are suited to the demographics and market demand of each project location. Though our focus is on residential property development, we have diversified into mixed-use developments and commercial property, including Hangzhou Wanjiang Project, Deqing Yingxi Arcadia in Zhejiang, Greentown Bund No.8 in Shanghai, Beijing Xiaoyunlu Project, among others. We also generate additional recurring revenue from rental income from investment properties, property management and hotel operations.

Sizeable quality land bank ensuring sustainable future development and growth

Prudent financial management reinforced by disciplined cost controls and acquisition strategy

Experienced management team backed by top quality partners

117 Our Business Strategies

Continuously promote our brand image through improving the quality of products and services

Product diversification to expand customer base

We plan to focus on investment opportunities in “Tier 1” and key cities, expand our coverage in regions and further grow our production lines from high-end products to medium and high-end products, continuously enhance the cost effectiveness of our products, diversify our products, expand our customer base and intensify the development of products targeted at “white collar” customers in cities. We also plan to proactively restructure our assets to improve liquidity and increase the proportion of asset-light businesses such as project management services.

Cost controls, financial discipline and prudent land acquisition strategy to improve profitability

118 price ranges in the new ‘Greentown Product Catalogue,’ which will enable us to control costs more systematically. We also plan to refine our financial management and control and leverage CCCG’s financial discipline and internal control process to achieve a balance between quality and profit. We believe the optimization of cost control mechanisms, bidding and tender mechanisms and procedure supervision systems will help to improve our cost control for the whole production process and our profitability.

Optimization of the debt structure and decreasing inventory to reduce financial costs

We also plan to focus on decreasing the level of our inventory to improve cash flow by implementing specific and effective measures to address the characteristics of different regions and projects. Such measures include adopting flexible pricing strategies to increase turnover rate and improve cash flow with respect to regions with higher inventory and longer turnover time.

119 Description of Our Property Developments

The map below shows the geographical distribution of our property development projects as at December 31, 2014:

Greentown in CHINA

Urumqi

Shenyang

Beijing Tangshan Dalian

Tianjin

Qingdao Jinan

Zhengzhou

Wuxi

Nanjing Shanghai

Hefei Suzhou

Zhejiang Changsha

14% Hangzhou 28% Zhejiang (excluding Hangzhou) 15% The Yangtze River Delta Area 28% The Bohai Rim River Delta Area 15% Other Lingshui, Hainan Total GFA Exceeds 34.89 Million sqm

As at December 31, 2014, the total GFA of our land bank was approximately 34.89 million sq.m., located in various cities shown in the below table:

No. of Projects Site Area Total GFA % of Total (’000 sq.m.) (’000 sq.m.) Hangzhou ...... 19 2,001 4,787 13.8% Zhejiang (excluding Hangzhou) ...... 30 5,880 9,888 28.4% Jiangsu ...... 7 1,132 2,972 8.5% Shanghai...... 12 624 2,210 6.3% Shandong ...... 10 2,168 4,982 14.3% Hainan ...... 1 1,693 1,687 4.8% Beijing ...... 3 294 607 1.7% Other Cities ...... 16 3,866 7,758 22.2% Total ...... 98 17,659 34,890 100.0%

120 Completed Properties

The table below sets forth certain information of our completed property projects and project phases during the year ended December 31, 2014:

Properties with the revenue recognized by subsidiaries for the year ended December 31, 2014

Average Selling Projects Type of Properties Area sold Sales Revenue % of Total Price (sq.m.) (RMB million) (RMB/sq.m.) (Note) Hangzhou Orchid High-Rise Apartment, 93,149 3,744 12.4% 40,194 Residence ...... Service Apartment. Shaoxing Lily Garden ..... High-Rise Apartment, 259,299 3,683 12.2% 14,204 Villa, Office Shanghai Rose Garden(1) . Villa 51,374 2,522 8.4% 49,091 Taizhou Rose Garden ..... High-Rise Apartment, 105,231 1,515 5.0% 14,397 Villa Hainan Greentown Blue High-Rise Apartment, 78,010 1,436 4.8% 18,408 Town ...... Low-Rise Apartment, Villa Xinjiang Jade Garden ..... High-Rise Apartment 137,719 1,292 4.3% 9,381 Hangzhou Jade Garden ... High-Rise Apartment 66,586 1,254 4.2% 18,833 Qingdao Jiaozhou High-Rise Apartment, 154,662 1,191 4.0% 7,701 Lagerstroemia Square .. Low-Rise Apartment Qingdao Ideal City ...... High-Rise Apartment, 101,868 1,076 3.6% 10,563 Low-Rise Apartment Zhuji Greentown Plaza .... High-Rise Apartment, 69,621 1,054 3.5% 15,139 Villa Nantong Qidong Rose High-Rise Apartment, 96,599 928 3.1% 9,607 Garden ...... Low-Rise Apartment Others ...... 722,798 10,416 34.5% 14,411 Total ...... 1,936,916 30,111 100.0% 15,546

Note: Includes above ground and underground saleable area (1) Project subject to the restructuring arrangements in the Sunac Framework Agreement. See “Recent Developments— Sunac-Greentown Joint Venture Restructuring” and “Related Party Transactions—Framework Agreements—Sunac Framework Agreement.”

During the year ended December 31, 2014, projects in Zhejiang area (excluding Hangzhou) achieved sales revenue of RMB9,446 million, accounting for 31.4% of the property sales, ranking first among all regions. Projects in Hangzhou area achieved sales revenue of RMB8,587 million, accounting for 28.5% of the property sales, ranking second. Projects in Shandong area achieved sales revenue of RMB2,858 million, accounting for 9.5%, ranking third.

121 Properties with the revenue recognized by joint ventures and associates during the year ended December 31, 2014:

Average Selling Projects Category Type of Properties Area sold Sales Revenue % of Total Price (sq.m.) (RMB million) (RMB/sq.m.) (Note) Shanghai Central Joint venture High-Rise 162,793 5,473 13.9% 33,619 (1) Garden ...... Apartment Hangzhou Bright Joint venture High-Rise 120,820 3,211 8.1% 26,577 Moon in Jiangnan .. Apartment Jinan Lily Garden ..... Joint venture High-Rise 189,149 1,498 3.8% 7,920 Apartment Hangzhou Zhijiang Joint venture High-Rise 72,507 1,309 3.3% 18,053 No. 1(1) ...... Apartment Shanghai Yulan Associate Low-Rise 79,882 3,132 7.9% 39,208 Garden–Glorious Apartment, 1 Garden ...... High-Rise Apartment Shanghai Dynasty on Associate High-Rise 44,664 2,583 6.6% 57,832 1 Bund ...... Apartment Wenzhou Begonia Associate Low-Rise 105,138 2,304 5.8% 21,914 Bay ...... Apartment, High-Rise Apartment, Villa Ningbo Center ...... Associate High-Rise 94,580 2,086 5.3% 22,055 Apartment, Office Jinan National Games Associate Low-Rise 113,761 2,039 5.2% 17,924 Project ...... Apartment, High-Rise Apartment, Villa, Serviced Apartment, Office Lishui Beautiful Associate High-Rise 122,137 1,861 4.7% 15,237 Spring River ...... Apartment, Villa Wuxi Lihu Camphora Associate High-Rise 82,831 1,326 3.4% 16,008 Garden ...... Apartment, Villa Others ...... 909,711 12,594 32.0% 13,844 Total ...... 2,097,973 39,416 100.0% 18,788

Note: Area sold includes above ground and underground areas (1) Project subject to the restructuring arrangements in the Sunac Framework Agreement. See “Recent Developments—Sunac-Greentown Joint Venture Restructuring” and “Related Party Transactions—Framework Agreements—Sunac Framework Agreement.”

122 Property portfolio

The tables below show the information of our property portfolio by cities as at December 31, 2014:

Hangzhou

Projects Type of Properties Equity Interest Site Area GFA (sq.m.) (sq.m.) 1 Hangzhou Orchid High-Rise Apartment, 85% 14,636 63,472 Residence ...... Serviced Apartment 2 Hangzhou Idyllic Garden High-Rise Apartment, Villa 33% 116,208 294,667 Luyunyuan...... 3 Hangzhou Wulin No. 1 . . . High-Rise Apartment 50% 104,442 461,607 4 Hangzhou Blue Patio..... High-Rise Apartment, Villa 85% 104,653 208,704 5 Hangzhou Jade Garden . . . High-Rise Apartment 100% 5,629 77,748 6 Hangzhou Yunqi Rose Villa 51% 85,256 27,955 Garden ...... 7 Hangzhou Sincere Garden High-Rise Apartment 40% 50,013 161,030 Zhichengyuan...... 8 Hangzhou Yuanfu Lane . . . Commercial 56% 10,558 27,238 9 Hangzhou Wangjiang Office 56% 6,749 45,048 Office...... 10 Hangzhou Hope Town .... Integrated Community 45% 365,205 728,340 11 Hangzhou Taohuayuan.... Villa, Hotel 64% 148,293 75,075 12 Hangzhou Xizi Urban Complex 30% 27,908 276,339 International...... 13 Hangzhou Center ...... Urban Complex 45% 22,566 248,260 14 Hangzhou Qiantang High-Rise Apartment 50% 70,277 187,574 Mingyue ...... 15 Hangzhou Zhijiang Low-Rise Apartment, 25% 85,496 270,679 No. 1(1) ...... High-Rise Apartment 16 Hangzhou Xinhua Garden . High-Rise Apartment 30% 37,360 141,719 17 Hangzhou Qibao Project . . Urban Complex 51% 293,354 539,982 18 Hangzhou Arcadia Garden . Integrated Community 50% 431,582 898,281 19 Project in Chengbei High-Rise Apartment 50% 21,300 53,200 Village, Beigan Road, Xioshan District, Hangzhou ...... Total ...... 2,001,435 4,786,918

Note:

(1) Project subject to the restructuring arrangements in the Sunac Framework Agreement. See “Recent Developments—Sunac-Greentown Joint Venture Restructuring” and “Related Party Transactions—Framework Agreements—Sunac Framework Agreement.”

123 Zhejiang

Projects Type of Properties Equity Interest Site Area GFA (sq.m.) (sq.m.) 1 Lin’an Mantuo Garden . . . Villa 15% 88,726 62,130 2 Lin’an Qingshan Lake Villa 100% 102,657 46,533 Hongfengyuan ...... 3 Lin’an Qingshan Lake Rose Villa 50% 1,024,553 388,426 Garden ...... 4 Jiande Chunjiang Mingyue . High-Rise Apartment 100% 15,611 174,780 5 Jiande Complex Project . . . Urban Complex 100% 79,321 161,130 6 Fuyang Harmony Garden . . High-Rise Apartment, Villa 40% 25,001 88,017 7 Ningbo Center ...... Urban Complex 49.34% 58,016 669,880 8 Fenghua Rose Garden .... High-Rise Apartment, Villa 31% 199,791 288,889 9 Yuyao Greentown Low-Rise Apartment, 47% 186,471 372,932 Mingyuan ...... High-Rise Apartment 10 Zhuji Greentown Plaza . . . Urban Complex 90% 67,058 353,612 11 Xinchang Rose Garden . . . Villa 80% 66,806 20,764 12 Xinchang Orchid High-Rise Apartment 80% 69,618 174,045 Residence ...... 13 Haining Lily New Town. . . High-Rise Apartment 50% 52,347 202,440 14 Wuzhen Graceland ...... Low-RiseApartment, 50% 296,884 545,942 High-Rise Apartment, Villa 15 Zhoushan Changzhidao . . . Integrated Community 96.875% 695,966 1,337,990 16 Zhoushan Daishan Sky High-Rise Apartment, 60% 68,488 154,833 Blue Apartment...... Office 17 Zhoushan Zhujiajian Villa, Serviced Apartment 90% 66,974 93,380 Dongsha Resort South Area...... 18 Zhoushan West Rose Low-Rise Apartment, 51% 207,117 331,444 Garden ...... High-Rise Apartment, Villa 19 Huzhou Majestic Mansion . Villa 70% 47,038 54,938 20 Deqing Yingxi Arcadia . . . Low-Rise Apartment, 100% 179,902 279,671 High-Rise Apartment, Villa, Hotel 21 Deqing Moganshan Project. Low-Rise Apartment, Villa 50% 609,358 354,180 22 Anji Taohuayuan ...... Villa, Hotel 15% 280,297 154,626 23 Taizhou Rose Garden .... High-Rise Apartment, Villa 55.2% 91,377 152,549 24 Taizhou Yulan Plaza ..... Urban Complex 49% 81,574 319,085 25 Taizhou Ningjiang Integrated Community 51% 691,141 1,854,779 Mingyue ...... 26 Tiantaishan Lianhua Resort Villa, Hotel 100% 88,499 44,957 Project ...... 27 Linhai Rose Garden ..... Villa 51% 138,446 198,378 28 Lishui Beautiful Spring High-Rise Apartment, Villa 37.5% 86,961 213,586 River...... 29 Wenzhou Lucheng Plaza . . Office, 90% 14,596 199,126 Hotel Commercial 80% 59,682 172,589 30 Yiwu Rose Garden ...... High-Rise Apartment, Villa 35% 139,702 422,336 Total ...... 5,879,978 9,887,967

124 Shanghai

Projects Type of Properties Equity Interest Site Area GFA (sq.m.) (sq.m.) 1 Shanghai Changfeng Serviced Apartment, 37.5% 90,270 360,239 Project ...... Office, Commercial 2 Redevelopment Project of Office 20.4% 6,760 34,336 No. 48 Changning District, Shanghai ..... 3 Shanghai Bund House(1) . . High-Rise Apartment 25.5% 50,017 266,422 4 Shanghai Majestic Low-Rise Apartment, 24.5% 75,091 167,384 Mansion(1) ...... High-Rise Apartment 5 Shanghai Yulan Mansion(1) . Low-Rise Apartment, 25% 60,206 118,731 High-Rise Apartment 6 Shanghai Yulan Garden– Low-Rise Apartment, 24.5% 21,162 47,355 Glorious Garden(1)..... High-Rise Apartment 7 Shanghai Dynasty on Low-Rise Apartment, 50% 72,449 453,039 Bund(1) ...... High-Rise Apartment, Serviced Apartment, Office 8 Shanghai Hongkou Serviced Apartment, 25.5% 10,239 57,866 Project(1) ...... Commercial 9 Shanghai Central High-Rise Apartment, 50% 88,583 254,678 Garden(1) ...... Serviced Apartment, Office, Commercial 10 Shanghai Gucun Project(1) . High-Rise Apartment 25.5% 66,170 170,403 11 Shanghai Caobaolu High-Rise Apartment 25% 45,710 165,400 Project(1) ...... 12 Shanghai Fuyuan High-Rise Apartment, 11.515% 36,988 113,690 Binjiang(1) ...... Serviced Apartment, Commercial Total ...... 623,645 2,209,543

Note:

Jiangsu Province

Projects Type of Properties Equity Interest Site Area GFA (sq.m.) (sq.m.) 1 Suzhou Taohuayuan(1) .... Villa 28.335% 213,852 263,090 2 Wuxi Yulan Garden(1) .... High-Rise Apartment 42.5% 38,831 121,240 3 Wuxi Yulan West Garden(1). High-Rise Apartment 19.5% 161,754 518,157 4 Changzhou Yulan Square(1). High-Rise Apartment 48.5% 356,537 1,207,835 5 Wuxi Lihu Camphora High-Rise Apartment, Villa 49% 116,268 436,012 Garden ...... 6 Xuzhou Lagerstroemia Low-Rise Apartment, 60% 140,615 241,663 Mansion ...... High-Rise Apartment, Villa 7 Suzhou Shishan Project(1) . Low-Rise Apartment 50% 104,401 183,562 Total ...... 1,132,258 2,971,559

125 Note:

Bohai Rim Region

Projects Type of Properties Equity Interest Site Area GFA (sq.m.) (sq.m.) 1 Beijing Majestic Low-Rise Apartment 55% 241,247 229,445 Mansion(1) ...... 2 Beijing Jinghang Plaza . . . Urban Complex 49% 39,455 280,821 3 Beijing Xiaoyunlu Project . Office 100% 13,593 96,289 4 Qingdao Ideal City ...... Integrated Community 80% 829,527 1,555,321 5 Qingdao Jiaozhou Low-Rise Apartment, 100% 158,904 424,153 Lagerstroemia Square. . . High-Rise Apartment 6 Qingdao Deep Blue Square. Urban Complex 40% 34,924 357,110 7 Jinan National Games Integrated Community 45% 324,922 695,982 Project ...... 8 Jinan Lily Garden...... High-Rise Apartment 49% 121,803 393,820 9 Jinan Center ...... Serviced Apartment, Office 39% 16,830 150,770 10 Shandong Xueye Lake Integrated Community 49% 193,329 126,006 Taohuayuan ...... 11 Xintai Yulan Garden ..... Low-RiseApartment, 70% 125,872 307,875 High-Rise Apartment 12 Qufu Greentown Sincere Low-Rise Apartment, 100% 53,753 86,005 Garden ...... High-Rise Apartment 13 Zibo Lily Garden ...... Low-RiseApartment, 100% 308,116 885,420 High-Rise Apartment, Villa 14 Shenyang National Games Integrated Community 50% 867,481 1,958,057 Project ...... 15 Dalian Deep Blue Office 90% 7,250 63,665 International...... 16 Dalian Taoyuan Lane .... High-Rise Apartment 40% 85,700 321,760 17 Tianjin Azure Coast(1) .... Urban Complex 40% 9,238 106,487 18 Tianjin National Game Integrated Community 50% 321,418 707,119 Project(1) ...... 19 Tangshan South Lake High-Rise Apartment 40% 345,173 1,063,640 Project ...... Total ...... 4,098,535 9,809,745

Note:

126 Other Provincial Cities

Projects Type of Properties Equity Interest Site Area GFA (sq.m.) (sq.m.) 1 Hefei Jade Lake Rose High-Rise Apartment, Villa 100% 119,053 401,266 Garden ...... 2 Xinjiang Jade Garden .... High-Rise Apartment, 60% 53,188 129,265 Office 3 Xinjiang Lily Apartment . . Low-Rise Apartment, 50% 144,937 911,981 Office, Commercial 4 Changsha Bamboo Garden . Villa 49.47% 904,828 307,546 5 Zhengzhou Yanming Lake Villa, Hotel 100% 125,391 58,588 Rose Garden...... 6 Henan Xinyang Lily City . . Low-Rise Apartment, 20% 77,662 181,698 High-Rise Apartment 7 Hainan Greentown Blue Integrated Community 51% 1,692,886 1,686,672 Town...... 8 Hubei Huangshi Yulan High-Rise Apartment, Villa 30% 307,465 760,792 Garden ...... 9 Daqing Majestic Mansion. . Low-Rise Apartment, 51% 100,872 187,669 High-Rise Apartment, Villa 10 Ordos Sincere Garden .... High-Rise Apartment 10.5% 44,155 427,772 Total ...... 3,923,072 5,223,769

Contractual Arrangements

In China, land use rights can be obtained in the primary market or the secondary market. See “—Land Acquisition.” Land acquisitions in the secondary market are usually not subjected to the public tender, auction and listing-for-sale requirements and can be completed by agreements among the relevant parties through private negotiation. From time to time, we may enter into contractual arrangements to participate in land acquisitions or development in the secondary market. In most cases, we are required to prepay deposits, advances or other consideration under these contractual arrangements. These deposits, down payments or other consideration are unsecured obligations and have been accounted for as prepayment for proposed development projects in our consolidated financial statements.

Land Acquisition

Under current PRC laws and regulations, land use rights for the purpose of industrial use, commercial use, tourism, entertainment and commodity housing development must be granted by the government through public tender, auction or listing-for-sale. When deciding to whom to grant the land use rights, the relevant authorities will consider not only the tender price, but also the credit history and qualifications of the tenderer and its development proposal. When land use rights are granted by way of a tender, an evaluation committee consisting of no fewer than five members (including a representative of the grantor and other experts) evaluates and selects the tenders that have been submitted. If land use rights are granted by way of an auction, a public auction is held by the relevant local land bureau and the land use rights are granted to the highest bidder.

Under current PRC laws and regulations, original grantees of land use rights may sell, assign or transfer the land use rights granted to them in the secondary markets. The “primary market” commonly refers to the grant of state-owned land use rights by relevant governmental authorities, and the “secondary market” commonly refers to the acquisition of land use rights from entities or persons which hold granted land use rights. PRC laws allow grantees of land use rights to dispose of the land use rights granted to them through secondary market sales, subject to the terms and conditions of the land use rights grant contracts and relevant laws and regulations. Unless otherwise required by relevant PRC laws and regulations, land acquisition in the secondary market is not subject to mandatory public tender, auction or listing-for-sale and can be accomplished by agreement among the relevant parties.

127 During the years ended December 31, 2012, 2013 and 2014, we have successfully acquired land through the following means:

• public tender, auction and listing-for-sale organized by the relevant governmental authorities;

• acquisition of controlling equity interests in companies that possess the land use; and

• rights for targeted land.

We intend to continue to expand our land reserves for new property developments through the primary market as well as the secondary market.

Financing of Property Development

Historically our main sources of funding for our property developments are internal funds, proceeds from pre-sales and sales of properties and borrowings from banks and other financial institutions. During the years ended December 31, 2012, 2013 and 2014, all of our payments of land premiums have been funded by internal funds and proceeds from the pre-sales of properties and debt financing. We typically use internal funds, proceeds from pre-sales and loans from PRC commercial banks to finance the construction costs for our property developments. From time to time, we also seek to obtain further funding to finance our project developments by accessing the international capital markets. We plan to use bank borrowings, internal funds, proceeds from the pre-sales and sales of our properties, and other cash generated from our operation to finance our future payments of property developments. During the year ended December 31, 2014 our weighted average financing cost during this period was 7.9% per annum, lower than 8.7% per annum for the year ended December 31, 2013. There has been no significant change in our financing cost since December 31, 2014.

Our financing methods vary from project to project and are subject to limitations imposed by PRC regulations and monetary policies.

Project Planning and Design Work

We have an engineering and procurement division and a design management division which work with our project managers as well as external designers and architects in project planning and design phases. Our senior management is regularly involved in our land acquisition and development process, especially in the master planning and architectural design of our projects. We have established written procedures to manage our planning and design process. By implementing these procedures, we can unify planning and overall coordination. We also implement a series of review and design guidelines for our planned projects.

We engage external design firms to carry out design work for our projects according to our design standards and guidelines. We select the design firm based on an evaluation of their proposed concept designs, technical capacities and track record in developing similar projects. Our design management division coordinates and works with the selected design firms in major aspects of the design process, including product positioning, master planning, concept design, layout and architectural design, landscape design and interior design.

Our design contracts generally include a price list and basis for calculating the design fees such as price per sq.m. of GFA and dispute resolution provisions. We generally make payments in instalments according to the progress of a project and settle the balance of the contract amounts after the project has passed the requisite governmental inspections and acceptances. We adopt procedures for project monitoring and quality control during the construction process to ensure that the project construction complies with design drawings, regulations, technical standards and contract requirements.

128 Project Management

We maintain a systematic development approach even though each project is specifically designed to cater to the target market. We have established various centralized divisions to oversee and control the major steps of our developments. These centralized divisions include the investment and development division, the engineering and procurement division, the design management division, the cost management division, the finance division and the customer services and sales division. Our investment and project development division is responsible for performing market and site analysis on the feasibility of potential projects and preparing the preliminary budget for each new project. Our engineering and procurement management division manages our material procurement and project construction. Our design management division is responsible for ensuring that construction is conducted in accordance with our planning, project design and construction drawings. Our cost management division focuses on cost control in our project development process, particularly land acquisition, project planning and design, construction and finance. Our finance division is responsible for providing senior management with the relevant cost and other financial information in relation to our operations. Our customer service and sales division works with our other centralized divisions throughout the development process to ensure that our products meet market trends and regional preferences. The involvement of these centralized divisions in the process of a project development enables us to achieve consistency in project management and synergies across our various projects.

In order to effectively carry out daily development functions in projects in various cities and regions, we have established project companies in the respective cities or regions to implement the significant strategic decisions by our centralized divisions. Our engineering and procurement division is principally responsible for managing these project companies and coordinating among the centralized divisions and regional project companies at each stage of a development project.

Procurement

We directly purchase certain major building materials and equipment such as aluminum alloys and elevators from suppliers and engage them for the installation of such materials and equipment. The amount paid for materials directly procured by us constitutes only a small portion of our total costs of materials because most construction materials are procured through our construction contractors. We have established a screening and bidding process to select material suppliers. We make decisions in selecting suppliers based on a set of factors including product quality, production capacity, management and implementation capability, track record and after-sales services. Our construction contractors are responsible for procuring most construction materials. For procurement of key construction materials, we typically designate a few brands which our construction contractors are required to procure.

Project Construction

We have historically contracted all of our construction work to independent construction companies. These construction companies carry out various work including foundation leveling, civil engineering construction, equipment installation, internal decoration, landscaping and various engineering work. Under relevant PRC laws and regulations, a construction company is required to hold the relevant construction qualification certificate for the type of construction it undertakes. We have guidelines for selecting construction companies and typically invite at least three qualified construction companies to bid through a tender process. We limit our selection of construction contractors to those which have obtained the relevant construction certificates and necessary licenses, including construction enterprise qualification certificates, safety permits and permits for production of industrial products. When selecting construction contractors, we consider various factors including quality and safety, reputation, track record in similar-size projects, technical and construction capabilities and proposed construction schedule and price.

The construction contracts we enter into with construction companies typically provide for the completion date of the construction projects, quality and safety requirements mandated by relevant PRC laws and regulations and our quality standards and other specifications. Our construction contracts generally provide progressive payment arrangements according to construction phases for additional

129 quality assurance. We typically withhold 10.0% of the contract sum for one to two years after the completion of construction as the additional quality warranty retention. During the years ended December 31, 2012, 2013 and 2014, we did not experience any material problems with services provided by our third-party construction contractors.

Quality Control and Construction Supervision

We emphasize quality control and adopt our quality control procedures to ensure that our properties and services comply with relevant rules and regulations relating to quality, safety and total permitted GFA and meet market standards. We adopt written selection and specification requirements for procurement of each type of material and equipment, including brand requirements, quality, technical standards, sample inspection and random quality inspection. We impose ingredient specifications for certain important construction materials such as cement. In addition, construction materials must go through the procedures of submission, sampling and testing before they are used in our projects.

We have adopted a construction plan design manual, which sets out the general classifications and illustrative guidelines for the quality specifications and parameters of our construction projects. It contains various aspects of design requirements, including construction and decoration, structural design, power supply, drainage and air conditioning systems, as well as environmental protection matters. In addition, we have adopted a manual for the general design of residential projects, which sets out the guidelines and requirements for our residential developments by classes and standards in terms of applications, environmental and economic functions, safety, and durability.

We have formulated internal control standards and procedures to regulate all major processes and procedures in our construction works. We require external contractors to adhere to the guidelines in respect of our standards and procedures, comply with relevant PRC laws and regulations in carrying out their work, and report any deviations and instances of non-compliance. Our project engineers perform on-site supervision during our construction process and conduct progressive inspections at each construction phase. We assign evaluation teams to perform on-site evaluation reviews of our existing contractors periodically with respect to construction quality, safety control and their compliance with the relevant PRC regulations and standards relating to building materials and workmanship. We also prepare detailed quality evaluation reports for each unit of our projects after construction completion.

In addition, we engage independent third-party supervisory companies to monitor, control and manage the construction progress of our projects, including quality, cost control, safety, quality control of construction materials and equipment, and to conduct on-site inspection. Our contracts with supervisory companies generally set out payment terms, fee calculation methods and dispute resolution provisions. The supervisory fees are generally determined either at a negotiated percentage of the total construction cost of the construction project, or according to the number of supervisory personnel deployed. We generally make progressive payments to our supervisory companies according to construction phases until they complete the relevant services.

We are not responsible for any labor problems in respect of workers employed by our contractors or accidents and injuries that may be incurred by those workers on our construction sites if such accidents or injuries were not caused by us. These risks are borne by our contractors as provided for in our contracts with them. During the years ended December 31, 2012, 2013 and 2014, we were not aware of any non-compliance by the construction contractors with the PRC laws and regulations relating to environmental protection, health and safety or labor disputes raised by our contractors or subcontractors.

We provide our customers with a warranty for the quality of the structure of the construction pursuant to the Measures on the Sales of Commodity Housing (商品房銷售管理辦法) and Regulations for the Operations of Urban Property Development (城市房地產開發經營管理條例). In addition, we also provide a quality warranty on certain fittings and fixtures, if applicable, usually for a period of two years according to the published national standards.

130 Sale and Marketing

Our sales team in our sales and customer service division is responsible for executing our overall marketing strategy and sales and product promotion plans. We provide training programs and courses to our sales staff with different levels of experience. Our sales team conducts markets analysis, prepares promotional designs and project brochures, organizes on site promotions, arranges advertising campaigns, recommends pricing, sets sales related policies and manages our customer relationships.

Pre-Sale

In line with market practice, we pre-sell properties prior to the completion of their construction. Under applicable PRC laws and regulations, the following conditions must be met prior to commencing any pre-sale of any particular property development:

• the land premium has been fully paid and the relevant land use rights certificate has been duly issued;

• the construction land planning permit, construction works planning permit and the construction works commencement permit have been duly issued;

• the funds contributed to the property development may not be less than 25% of the total amount required to be invested in the project;

• the progress and the expected completion date and delivery date of the construction work have been ascertained; and

• a pre-sale permit has been duly issued by the relevant construction bureau or real estate administration authority.

In addition, our pre-sale activities are subject to the relevant regulations of the cities where our property projects are located. We complied with the relevant regulations in relation to the pre-sale of properties in the cities where we have undertaken pre-sale activities during the years ended December 31, 2012, 2013 and 2014. During the three years ended December 31, 2012, 2013 and 2014, we did not encounter any defaults committed by our customers in pre-sales or sales contracts that had a material adverse effect on our business operations or financial condition. See the section entitled “Risk Factors—Risks Relating to the Real Estate Industry in China—We are exposed to contractual, legal and regulatory risks related to pre-sales.”

Delivery and After-Sales Services

We endeavor to deliver our products to our customers in a timely manner. We closely monitor the progress of construction of our property projects and conduct pre-delivery property inspections to ensure the quality of our properties. The time frame for delivery is set out in the sale and purchase agreements entered into with our customers. Once a property project or project phase has passed the requisite inspections and is ready for delivery, our sales and customer service division will notify our customers, and together with representatives of the construction contractors and third-party supervisory companies, inspect the properties prior to delivery to ensure quality. Furthermore, our customer services and sales division generally assists the purchasers of our properties with mortgage financing applications, title registrations and obtaining their property ownership certificates.

Our after-sales services are customer-oriented. Our objective is to ensure continued customer satisfaction. Our sales and customer service division is responsible for our after-sale services for each of our various projects. We offer multiple communication channels for our customers to provide feedback and complaints about our products or services, including a customer service hotline. We also study customer satisfaction through third-party research. We also cooperate with our property management companies to handle customer complaints. We seek to make timely adjustments to products and services to meet our customers’ needs.

131 Payment Arrangements

Purchasers of our residential properties, including those purchasing pre-sale properties, may pay us using mortgage loans from banks. We typically require our purchasers to pay a nominal non-refundable deposit upon entering into provisional purchase contracts. If the purchasers later decide not to enter into formal sale and purchase agreements, they will forfeit such deposits. Upon executing the formal sale and purchase agreements, the purchasers are typically required to pay not less than 30% of the total purchase price of the property within five days, and the mortgagee banks will pay the remaining balance once the customers have completed the mortgage application procedures. If the purchasers choose to fund their purchases with mortgage loans provided by banks, it is their responsibility to apply for and obtain the mortgage approvals although we will assist them on an as needed basis. The payment terms of sales and pre-sales of properties are substantially identical.

Most of our customers purchase our properties with the assistance of mortgage financing. In accordance with industry practice in China, we provide guarantees to mortgagee banks in respect of the mortgage loans provided to the purchasers of our pre-sold properties. Under the guarantees, we are required to guarantee the timely repayment of the principal and interest amount of the loans by the purchasers. As a guarantor, we are jointly responsible for the payment of the mortgage loan. These guarantees are released upon the earlier of (i) the relevant property ownership certificates being delivered to the purchasers; and (ii) the settlement of mortgage loans between the mortgagee banks and the purchasers of our properties.

In line with industry practice, we do not conduct independent credit checks on our customers but rely on the credit checks conducted by the mortgagee banks. As at December 31, 2012, 2013 and 2014, our outstanding guarantees on mortgage loans of the purchasers of our properties amounted to RMB17,144 million, RMB17,625 million and RMB17,826, respectively. During the three years ended December 31, 2012, 2013 and 2014, we did not encounter any mortgage loan default with respect to which we were required by mortgagee banks to honor our obligations. See “Risk Factors—Risks Relating to Our Business—We guarantee mortgage loans of our customers and may be liable to the mortgagee banks if our customers default on their mortgage payments.”

Hotel Operations

Operations at Greentown Thousand-Island Lake Sheraton Resort Hotel, Hangzhou Rose Garden Resort and Sheraton Zhoushan Hotel have established a solid customer base and built up a well-developed market presence.

In 2014, the Group recorded revenue of RMB440 million (US$70.9 million) from hotel operations, an increase of 44.3% from RMB305 million in 2013. In 2013, the Group recorded revenue of RMB305 million from hotel operations, an increase of 2.3% from RMB298 million in 2012.

Investment Properties

In 2014, the Group recorded property rental income totaling RMB122 million (US$19.7 million) from investment properties, an increase of 6.8% from RMB114 million in 2013. In 2013, the Group recorded property rental income totaling RMB114 million from investment properties, an increase of 2.7% as compared with RMB111 million in 2012. The rental income derived from our investment properties represented 0.5%, 0.4% and 0.4%, respectively, of our total revenue in 2012, 2013 and 2014.

Properties Used by the Company

We used the office space, with a total GFA of 4,757.6 sq.m., at Huanglong Century Plaza in Hangzhou as our headquarters. We leased this office space from Greentown Holdings Group and its associate Zhejiang Century Square Investment Company Limited.

132 Competition

We believe that the property markets in Zhejiang Province and of other parts of China are highly fragmented. We compete with other real estate developers based on a number of factors including product quality, service quality, price, financial resources, brand recognition and ability to acquire proper land reserves. Our existing and potential competitors include private and public developers in the PRC and Hong Kong. Our competitors may have more experience and resources than we do. We believe we maintain a competitive position with our well-known “Greentown” brand in Zhejiang Province, with property projects in prosperous cities in the province such as Hangzhou, Ningbo, Wenzhou, Taizhou, Shaoxing and other cities in Zhejiang Province which ranked on Zhongjun County Economic Research Institute’s 2011 list of the Top 100 most competitive countries and country-level cities in China. Since the commencement of our national expansion strategy in 2000, we have extended our business to other important cities such as Shanghai, Nanjing, Suzhou, Wuxi and Nantong in the Yangtze River Delta, Beijing, Tianjin, Qingdao, Jinan and Dalian in the Bohai Rim Economic Belt, as well as other provincial cities such as Hefei in Anhui Province, Zhengzhou in Henan Province, Changsha in Hunan Province, and Urumqi in Xinjiang. We believe major barriers to enter into these markets include a potential new entrant’s limited knowledge of local property market conditions and limited brand recognition in these markets. See “Risk Factors—Risks Relating to the Real Estate Industry in China—Increasing competition in the PRC may adversely affect our business and financial condition.”

Intellectual Property Rights

Greentown Holdings Group has registered the trademarks and service marks of “綠城“ (Greentown) and “綠城房產” (Greentown Real Estate) with the PRC Trademark Office (中國人民共和國商標局) under various categories including property development, construction, property lease and real estate agency. Greentown Holdings Group has granted us a license to use the trademarks and service marks “綠城” (Greentown) and “綠城房產” (Greentown Real Estate) free of charge in a trademark licensing agreement entered into between Greentown Holdings Group and us dated June 22, 2006. The term of the trademark licensing agreement is ten years subject to an automatic extension for a further ten years if so requested by us one month before the expiry date. See “Related Party Transactions.”

Insurance

We maintain group accident insurance for our employees. The insurance primarily insures our employees for personal injuries in our workplace or on our construction sites. We do not, however, maintain property damage or third-party liability insurance for our workplace, construction sites or property developments. Under PRC law, these types of insurance are not mandatory and may be purchased on a voluntary basis. We and our construction contractors monitor the quality and safety measures adopted at our construction sites to lower the risks of damage to our property and liabilities that may be attributable to us. We re-evaluate the risk profile of the property development business and adjust our insurance practices from time to time. We believe we have sufficient insurance coverage in place and that our insurance practice is in line with the customary practice in the PRC real estate industry.

However, there are risks that are not covered, and we are self-insured for money losses, damages and liabilities that may arise in our business operations. See the section entitled “Risk Factors—Risks Relating to the Business—We may suffer certain losses not covered by insurance.”

Employees

As at December 31, 2014, the Group employed a total of 5,050 employees. Employees are remunerated on the basis of their performance, experience and prevailing industry practices. The Group’s remuneration policies and packages are reviewed by our remuneration committee and the Board on a regular basis. As an incentive for employees, bonuses, cash awards and share options may also be given to employees based on individual performance evaluation.

133 Environmental and Safety Matters

We are subject to PRC environmental laws and regulations as well as environmental regulations promulgated by local governments. We are required to engage qualified agencies to conduct an environmental assessment and submit an environmental impact assessment report to the relevant governmental authorities for approval before construction begins. Under relevant PRC laws and regulations, when there is a material change in respect of the construction site, or the scale or nature of a project, a property developer must submit a new environmental impact assessment report for approval. During the course of construction, the property developer and the construction companies must take measures to minimize air pollution, noise pollution and water and waste discharge. Upon completion of each property development, the relevant governmental authorities will inspect the site to ensure that applicable environmental standards have been met. The inspection report is then submitted together with other specified documents to the local construction administration authorities for the record. See “Risk Factors—Risks Relating to the Real Estate Industry in China—Potential liability for environmental damages could result in substantial cost increases.”

During the course of property development, our construction may result in the creation of dust, noise, waste water and solid construction waste. Our construction contractors, under the construction contracts, are responsible for performing all necessary measures to prevent pollution and enhance environmental control of the construction sites and to comply with relevant laws and regulations. We endeavor to comply with relevant PRC laws and regulations on environmental protection and safety by (i) engaging qualified construction contractors and requiring the construction contractors to take steps to minimize adverse environmental impact during construction and to be responsible for the final cleanup of the construction site, (ii) monitoring the project at every stage to ensure the construction process is in compliance with the environmental protection and safety laws and regulations, and (iii) requiring the construction contractors to immediately remedy any default or non-compliance.

Inspections of each of our completed property projects by the relevant PRC governmental authorities to date have not revealed any environmental liability which we believe would have a material adverse effect on our business operations or financial condition. During the years ended December 31, 2012, 2013 and 2014, we did not experience any material environmental pollution incidents and we incurred insignificant costs in connection with our compliance with environmental and safety laws and regulations. As at December 31, 2014, all of our completed property projects and properties under construction had received the requisite environmental approvals.

We monitor the safety measures adopted by our construction contractors and safety aspects of the construction process through engaging independent third-party supervisory companies to oversee compliance with environmental and health and safety laws and regulations. See “—Quality Control and Construction Supervision” for further details. In relation to workplace safety on our construction sites, our construction contractors are generally responsible for any accidents or injuries not caused by us. We also require our construction contractors to purchase accident insurance to cover their workers and to adopt appropriate safety measures, including providing workers with safety training.

We believe that our operations are in compliance with currently applicable national and local environmental and health and safety laws and regulations in all material respects. We intend to continue to comply with relevant PRC environmental and health and safety laws and regulations, to engage only qualified construction contractors with good environmental protection and safety track records and to require the construction contractors to strictly comply with relevant laws and regulations relating to environment and health and safety and to maintain appropriate insurance. We will also continue to educate our employees in relation to the importance of environmental and safety and health issues and to keep abreast of developments in PRC environmental laws and regulations.

134 Legal Proceedings and Material Claims

Pursuant to an agreement dated December 29, 2011 entered into between Zhejiang Jiahe Industrial Co., Ltd. (“Greentown Jiahe”), a wholly owned subsidiary of the Company, Shanghai Zendai Land Company Limited (“Shanghai Zendai Land”), a wholly owned subsidiary of Shanghai Zendai Property Limited, a company listed on the SEHK and an independent third party, and Shanghai Chang Ye Investment Management Consulting Co., Ltd. (“Shanghai Chang Ye”), a wholly owned subsidiary of SOHO China Limited, Shanghai Chang Ye acquired from (i) Greentown Jiahe 100% of its equity interest in Greentown Hesheng Investment Company (“Greentown Hesheng”) and its loan granted to Greentown Hesheng; and (ii) Shanghai Zendai Land 100% of its equity interest in Shanghai Zendai Wudaokou Property Company Limited (“Shanghai Zendai Wudaokou”) and its loan granted to Shanghai Zendai Wudaokou. Pursuant to a supplementary agreement dated January 9, 2012. The relevant parties agreed that Shanghai Chang Sheng Investment Management Consulting Co., Ltd. (“Shanghai Chang Sheng”) should assume all rights, obligations and liabilities of Shanghai Chang Ye under the equity transfers and loan assignments. Greentown Hesheng and Shanghai Zendai Wudaokou owned 10% and 40% equity interests respectively in Shanghai Haizhimen Property Management Co., Ltd. (“Shanghai Haizhimen”), while Zhejiang Fosun Commerce Development Limited (“Zhejiang Fosun”), a wholly owned subsidiary of Fosun International Limited, a company listed on the SEHK, owned the remaining 50% equity interest in Shanghai Haizhimen. Shanghai Haizhimen indirectly owns 100% interest in a land parcel in Shanghai. The disposal of the 100% equity interest in Greentown Hesheng resulted in a gain of RMB115,330,000 to the Group in 2012.

On May 30, 2012, Zhejiang Fosun filed a civil suit to Shanghai No. 1 Intermediate People’s Court (the “Court”) and received a notification of acceptance from the Court, pursuant to which Zhejiang Fosun had initiated a civil action against the relevant parties to protect its pre-emptive rights in the above-mentioned indirect transfers of equity interests in Shanghai Haizhimen by asking for the transactions to be invalidated.

On June 4, 2012, the Group was served with a document of summons issued by the Court in relation to the civil action, pursuant to which Greentown Jiahe, among others, is named as a defendant. On November 29, 2012, a preliminary trial was held at the Court. On April 23, 2013, the Court issued its judgment (the “Judgment”), granting orders for (among other things):

• the invalidation of the agreement to transfer 100% equity interests in Shanghai Zendai Wudaokou and Greentown Hesheng respectively from Shanghai Zendai Land and Greentown Jiahe to Shanghai Chang Ye as stipulated under the agreement dated December 29, 2011;

• the invalidation of the equity transfer agreement in relation to the transfer of 100% equity interests in Shanghai Zendai Wudaokou by Shanghai Zendai Land to Shanghai Chang Sheng (“Shanghai Zendai Wudaokou Transfer”) dated December 29, 2011;

• the invalidation of the equity transfer agreement in relation to the transfer of 100% equity interests in Greentown Hesheng by Greentown Jiahe to Shanghai Chang Sheng (“Greentown Hesheng Transfer”) dated January 12, 2012; and

• the restatement of the ownership of Shanghai Zendai Wudaokou and Greentown Hesheng back to the state before the Shanghai Zendai Wudaokou Transfer and Greentown Hesheng Transfer, respectively.

The Company has reviewed the Judgment and SOHO China Limited had made an appeal to the Higher People’s Court of Shanghai in relation to the Judgment. As of the date of the Company’s financial statements for the year ended December 31, 2014, the second trial is in process. Having consulted with its PRC legal advisers, the Company believes the Judgment cannot be enforced and will not become effective pending the results of the appeal. The Company considers that the Judgement does not have any material adverse effect on the operation of financial position of the Group.

135 MANAGEMENT

Directors

Our Board consists of thirteen directors, three of whom are non-executive directors and four of whom are independent non-executive directors. The Board has general powers and duties for the management and conduct of our business. We have entered into service contracts with each of our executive directors and independent non-executive directors.

The table below sets forth certain information regarding our directors as at July 1, 2015:

Name Age Position SONG Weiping ...... 57 Co-chairman and Executive Director ZHU Bixin ...... 49 Co-chairman and Executive Director CAO Zhounan ...... 46 Chief Executive Officer and Executive Director SHOU Bainian ...... 61 Executive Director SUN Guoqiang ...... 48 Executive Director LI Qingan ...... 49 Executive Director LIU Wensheng ...... 55 Non-Executive Director JIA Shenghua ...... 52 Independent Non-Executive Director KE Huanzhang ...... 76 Independent Non-Executive Director SZE Tsai Ping, Michael ...... 70 Independent Non-Executive Director HUI Wan Fai ...... 39 Independent Non-Executive Director

On December 23, 2014, our then chairman, Mr. Song Weiping and his spouse, Ms. Xia Yibo, and our then executive vice chairman and chief executive officer, Mr. Shou Bainian, and their respective wholly owned investment holding companies, Delta, Wisearn and Profitwise entered into the CCCG Share Purchase Agreement with CCCG, pursuant to which each of Delta, Profitwise and Wisearn agreed to sell 246,052,076, 209,940,717 and 68,859,000 shares in the Company, respectively, to CCCG and/or its wholly owned subsidiary(ies) at HK$11.46 per share, for a total consideration of approximately HK$6 billion. Upon completion of the transaction, on March 27, 2015, the transfer of shares represented 24.29% of the total share capital of the Company, comprising approximately 11.386%, 9.715% and 3.187% from Delta, Profitwise and Wisearn, respectively. Under the terms of the CCCG Share Purchase Agreement, the Company was required to make certain corporate governance changes, including:

• two persons nominated by CCCG being appointed executive directors of the Company;

• one of the executive directors of the Company appointed by CCCG being appointed co-chairman of the Company (with the former chairman, Mr. Song Weiping, becoming the other co-chairman); and

• one of the executive directors of the Company appointed by CCCG becoming a member of the Company’s investment committee.

See “Recent Developments—CCCG Share Sale” for more details.

In line with the above, a number of changes have taken place in the makeup of the Company’s Board, including the appointment of Mr. Zhu Bixin as co-chairman and executive director, Mr. Cao Zhounan taking over as chief executive officer from Mr. Shou Bainian, and the appointments of Mr. Sun Guoqiang and Mr. Li Qingan as executive directors. These appointments, along with information on other members of the Board and senior management, are described in further detail below.

136 Co-Chairmen

SONG Weiping (宋衛平), Mr. Song, aged 57, is our co-chairman and was appointed as an executive director on August 31, 2005. He founded our Company in January 1995, and is primarily responsible for formulating our development strategies, as well as supervising our project planning, design and marketing divisions. He is also a director of certain subsidiaries or associates of the Company. Mr. Song graduated from Hangzhou University (杭州大學) with a bachelor’s degree in history in 1982. In 2004 and 2005, Mr. Song was honored as one of the “Ten Leaders of the Residential Property Sector in Zhejiang” jointly by the Zhejiang Daily, the China Housing Industry Association and the Special Committee of the China Construction Industry Association. In 2004, Mr. Song received the China Construction Architecture Award (Individual Contribution Award). He is the vice-chairman of the sixth Council of China Real Estate Association and the vice-chairman of Zhejiang Provincial Real Estate Association. Mr. Song is a controlling shareholder of the Company and is interested or deemed to be interested in the shares of the Company for the purpose of Part XV of the SFO by, among other things, holding shares through his controlled corporations, namely Delta and Hong Kong Orange Osmanthus Foundation Limited (“HKOO”). He is also a director of Delta and HKOO. Mr. Song is the spouse of Ms. Xia Yibo (夏一波) who is interested in the shares of the Company through her controlled corporation, namely Wisearn.

ZHU Bixin (朱碧新), Mr. Zhu, aged 49, is co-chairman of the Company and was appointed an executive director on March 27, 2015. Mr. Zhu joined CCCG in April 1995 and served as a vice-president from December 2005 to August 2006. He has been a vice-president of CCCG and CCCC since September 2006, and also serves as chief legal counsel of CCCG. Mr. Zhu served as a Secretary of the discipline commission of the Chinese Communist Party committee of China Road and Bridge Corporation ((中國路橋工程有限責任公司), formerly China Road and Bridge (Group) Company (中國路橋（集團）總公司)) (“CRBC”) and Head of trade union of China Road and Bridge Corporation from March 2001 to December 2005 for CCCG. Mr. Zhu is a senior economist and graduated from Chongqing Jiaotong University (重慶交通大學) with a bachelor’s degree in transportation management; he also obtained a master’s degree in business administration from Peking University (北京大學) and a PhD. in management science and engineering from the University of Science and Technology of China (中國科學技術大學).

Executive Directors

CAO Zhounan (曹舟南), Mr. Cao, aged 46, was appointed as our chief executive officer on June 22, 2015. He also serves as director and executive general manager of Greentown Real Estate. Mr. Cao graduated from Zhejiang University of Finance & Economics (浙江財經學院) in 1991, majoring in financial accounting. He obtained a master’s degree from Université du Québec, Canada in 2009, majoring in Business Administration. From 1991 to 1995, he held office in Zhejiang Provincial Finance Bureau. From 1996 to 1998, he was assistant to the county mayor of Yunhe County of Zhejiang Province. From 1998 to 2001, he was deputy division chief of the Zhejiang Provincial Finance Bureau, and from 2005 to 2009, served as vice general manager of the Zhejiang Provincial Railway Investment Group Co., Ltd. (浙江省鐵路集團). He joined the Company in February 2009, serving as executive general manager of Greentown Real Estate, and from September 2010 also served as general manager and authorized representative of Bluetown Construction Management, having responsibility for the development, operations and management of the construction consultancy business. Mr. Cao was an executive director of the Company from July 1, 2011 to March 27, 2015. On March 24, 2015, Mr. Cao was appointed a director of Greentown Real Estate.

SHOU Bainian (壽柏年), Mr. Shou, aged 61, was appointed as an executive director on August 31, 2005, and served as our executive vice chairman until March 27, 2015 and chief executive officer until June 22, 2015, during which time he was primarily responsible for our overall business operations and financial management. He is also a director of certain subsidiaries and associates of the Company. Mr. Shou graduated from Hangzhou University (杭州大學) with a bachelor’s degree in history in 1982. Between 1982 and 1998, he worked at the government office of Yin County of Zhejiang Province, the general office of Ningbo Municipal Government and China Huaneng Group’s Zhejiang subsidiary. Mr. Shou joined us in April 1998. He is a vice-chairman of Hangzhou Real Estate Association. Mr. Shou is a controlling shareholder of the Company and is interested or deemed to be interested in the shares of the

137 Company for the purpose of Part XV of the SFO by, among other things, holding shares through his controlled corporation, Profitwise Limited (“Profitwise”). He is also a director of Profitwise.

SUN Guoqiang (孫國強), Mr. Sun, aged 48, is an executive director of the Company and was appointed on March 27, 2015. Mr. Sun joined the CCCG in 1991 and has over 20 years’ experience in management and administration. Mr. Sun currently also serves as chairman of the board and general manager of CCCC Real Estate Company Limited, a subsidiary of CCCG. He served as director and general manager of CCCC Fourth Harbor Engineering Co., Ltd. He graduated from Jiangxi Industrial University (now Nanchang University (南昌大學) with a bachelor’s degree in water engineering, later obtaining a master’s degree in water structural engineering from Tianjin University (天津大學) and a master’s degree in business administration from the Cheung Kong Graduate School of Business (長江商學院).

LI Qingan (李青岸), Mr. Li, aged 49, is director and executive general manager of Greentown Real Estate and was appointed our executive director on June 22, 2015; he is primarily responsible for corporate finance, funds and audit management. Mr. Li graduated from the Department of Management (Engineering and Finance Accounting Profession) of Changsha Communications University (長沙交通學院管理系) with a bachelor’s degree in Engineering and Finance Accounting, and is a senior accountant with over 25 years’ experience. Mr. Li began his career as a financial accountant at the Ministry of Transportation and Communications in July 1989; he joined CRBC in September 1998 and served as the general manager of the finance and accounting department of CRBC, the general manager of the finance and accounting department of CCCC, and the provisional party secretary and director of CCCC Finance Company (中交財務有限公司). Mr. Li joined the Company in March 2015.

Non-Executive Directors

LIU Wensheng (劉文生), Mr. Liu, aged 55, was appointed as our non-executive director on June 27, 2015. He is also currently secretary of the board of directors, company secretary and chief economist of CCCC. In addition, he serves as chairman of CCCC International Holding Limited (中交國際（香港）控股有限公司) and Friede Goldman United, Ltd., as well as director of CCCC Dredging (Group) Holdings Co., Ltd ( 中交疏浚（集團）股份有限公司). Mr. Liu graduated from Dalian Maritime University (大連海事大學) with a bachelor’s degree in Engineering, and is a senior engineer with over 30 years’ experience. He joined China Harbour Engineering Company Ltd. (中國港灣工程有限責任有限公司)in 1982 later served as deputy general manager of CCCC Tianjin Dredging Co., Ltd. (中交天津航道局有限公司), vice chief economist and general manager of corporate planning of China Harbour Engineering Company Ltd., as well as chief economist of CCCG.

Independent Non-Executive Directors

JIA Shenghua (賈生華), Mr. Jia, aged 52, was appointed as our independent non-executive director on June 22, 2006. He is a professor of Zhejiang University (浙江大學). Currently, Mr. Jia is an associate director of the Department of Social Sciences of Zhejiang University, as well as the director of Zhejiang University’s Property Research Center. Mr. Jia graduated from Northwest Agricultural University (西北農業大學) with a doctorate degree in agricultural economics and management. Since 1989, Mr. Jia has taught and conducted research in property economics, property development and enterprise management in China. He studied in Germany from 1993 to 1994. He is currently a member of Zhejiang Enterprises Management Research Society, Zhejiang Land Academy and Hangzhou Land Academy. Mr. Jia is also a council member of the Zhejiang Provincial Real Estate Association and a member of the expert committee of the China Real Estate Research Association. At present, Mr. Jia acts as an independent non-executive director of Zhejiang Zhongda Group Co., Ltd. (浙江中大集團股份有限公司) (stock code: 600704.SH), a company listed in Shanghai, and an independent non-executive director of Yinyi Real Estate Co., Ltd. (銀億房地產股份有限公司) (stock code: 000981.SZ), Rongan Property Co., Ltd. (榮安地產股份有限公司) (stock code: 000517.SZ), and Calxon Group Co., Ltd. (嘉凱城集團股份有限公司) (stock code: 000918.SZ), all listed in Shenzhen.

138 KE Huanzhang (柯煥章), Mr. Ke, aged 76, was appointed as our independent non-executive director on June 22, 2009. He is currently the chief planning consultant of Beijing Municipal Institute of City Planning and Design (北京市城市規劃設計研究院). Mr. Ke has over 40 years’ experience in the areas of housing, urban and rural development and town planning. Mr. Ke graduated from Southeast University (東南大學) (formerly Nanjing Industrial Institute (南京工業學院)) with a major in construction in 1962. From 1979 to 1986, Mr. Ke served as the deputy section chief and deputy director-general of Beijing Planning Bureau. From September 1986 to March 2001, Mr. Ke was the dean and senior town planning professor of Beijing Municipal Institute of City Planning and Design.

SZE Tsai Ping, Michael (史習平), Mr. Sze, aged 70, was appointed as our independent non-executive director on June 22, 2006. Mr. Sze graduated with a master of laws (LLM) degree from the University of Hong Kong. He has over 30 years’ experience in the areas of finance and securities. He ceased to be a member of the Securities and Futures Appeals Tribunal in Hong Kong in April 2011. Mr. Sze was a former council member of the SEHK and a former member of the Main Board Listing Committee of the SEHK, and is currently a member of the Cash Market Consultative Panel of the Hong Kong Exchanges and Clearing Limited. Mr. Sze is a fellow of the Institute of Chartered Accountants in England and Wales, the Hong Kong Institute of Certified Public Accountants, the Association of Chartered Certified Accountants and the Hong Kong Institute of Directors Limited. Mr. Sze is an independent non-executive director of several companies listed in Hong Kong, including GOME Electrical Appliances Holding Limited (stock code: 00493.HK), Harbour Centre Development Limited (stock code: 00051.HK) and Walker Group Holdings Limited (stock code: 01386.HK). Mr. Sze resigned as a non-executive director of Burwill Holdings Limited (stock code: 0024.HK), a company listed in Hong Kong, on October 1, 2011.

HUI Wan Fai (許雲輝), Mr. Hui, aged 39, was appointed as our independent non-executive director on April 1, 2012. He is the managing partner of PAG (formerly known as Pacific Alliance Group), one of the region’s largest Asia-focused alternative investment managers with funds under management across private equity, real estate and absolute return strategies. Mr. Hui previously served at The Blackstone Group, an asset management and financial services company listed on the New York Stock Exchange, as a managing director. From 2005 to 2006, Mr. Hui was a managing director of Mellon HBV Alternative Strategies LLC, a New York-based hedge fund under Mellon Bank, where he acted as head of distressed investment for China. Mr. Hui obtained a master’s degree in business administration from INSEAD in 2004 and a master’s degree in international and public affairs from the University of Hong Kong in 2002. Mr. Hui also obtained a bachelor’s degree in business administration from the University of Hong Kong in 1998. Mr. Hui holds the qualifications of Certified Public Accountant from the Association of Chartered Certified Accountants, United Kingdom, Chartered Financial Analyst from the CFA Institute, United States of America, and Associate of HKICS from the Hong Kong Institute of Chartered Secretaries.

Senior Management

The table below sets forth certain information regarding our senior management members as at July 1, 2015:

Name Age Position FU Linjiang ...... 56 Executive General Manager YING Guoyong ...... 53 Executive General Manager of Greentown Real Estate YANG Zuoyong ...... 52 Executive General Manager of Greentown Real Estate GUO Xiaoming ...... 43 Executive General Manager of Greentown Real Estate FUNG Ching, Simon ...... 46 Chief Financial Officer and Company Secretary LI Yongqian...... 41 Director and Executive General Manager of Greentown Real Estate

139 FU Linjiang (傅林江), Mr. Fu, aged 56, is our executive general manager and joined us in June 2010. He is primarily responsible for our overall operation and management. He graduated from Shanghai Institute of Electric Power (上海電力學院) with a major in thermal dynamic engineering. He obtained a master’s degree from Maastricht School of Management in 2002, majoring in international business administration. He is qualified as a National Senior Professional Manager, Senior Engineer and Senior Economist. From 1980 to 2010, he held office as general manager, chairman, party secretary and other positions in large state-owned enterprises. He has been a professor in Shanghai Institute of Electric Power since 2006. He was honored as a National Labor Model and a Zhejiang Labor Model.

YING Guoyong (應國永), Mr. Ying, aged 53, is a general manager of Greentown Real Estate and joined us in June 2001. He is primarily responsible for developing and managing projects in Binjiang district of Hangzhou, Lin’an, Deqing, Cixi, Lishui and Taizhou (Zhejiang province), Zhengzhou (Henan province), and Xintai (Shandong province). He graduated from Hangzhou University (杭州大學) with a bachelor’s degree in law in 1985. From 1985 to 2001, he worked in CPC Youth School of Zhejiang Province (浙江省團校), Zhejiang Province Committee of the CPC Youth (共青團浙江省委) and Zhejiang Youth Travel Service Co. Ltd (浙江省中青國際旅遊有限公司).

YANG Zuoyong (楊佐勇), Mr. Yang, aged 52, is an executive general manager of Greentown Real Estate and joined us in January 2007. He is primarily responsible for the preliminary works of the Group and project management in the Wenzhou region. He graduated from China Communist Party School (中央黨校) with major in finance and economic management in 1999. From 1984 to 2006, he held senior management positions in various governmental departments of Westlake District of Hangzhou.

GUO Xiaoming (郭曉明), Mr. Guo, aged 43, is an executive general manager of Greentown Real Estate and joined us in August 1996. He is primarily responsible for development and administration of projects in Hangzhou and Xiangshan (Zhejiang province), Daqing and Hainan province. He is experienced in construction operation. Between 1996 and 1999, he was the project officer of the Group’s Hangzhou Jiuxi Rose Garden Project (杭州九溪玫瑰園項目) and deputy manager of the engineering department. Between 1999 and 2007, he was the deputy manager of the engineering department, manager of the engineering department, assistant to the general manager, deputy general manager and general manager of Hangzhou Taohuayuan Real Estate Development Co., Ltd. (杭州桃花源房地產開發有限公司), a subsidiary of the Company.

FUNG Ching, Simon (馮征), Mr. Fung, aged 46, is the chief financial officer, company secretary and one of the authorized representatives of the Company. Prior to joining the Group in August 2010, Mr. Fung served as the chief financial officer and secretary to the board of directors of Baoye Group Company Limited (寶業集團股份有限公司), a company listed in Hong Kong (stock code: 02355.HK), between 2004 and 2010, and he worked in PricewaterhouseCoopers between 1994 and 2004. Mr. Fung has experience of over 7 years in managing finance and accounting functions, mergers and acquisitions, fund raising and investor relations for PRC corporations listed in Hong Kong, and has experience of 10 years in auditing, accounting and business advisory with a “Big-4” international accounting firm. Mr. Fung graduated from Queensland University of Technology in Australia with a bachelor’s degree, majoring in accountancy. He is a fellow of the Hong Kong Institute of Certified Public Accountants and the CPA Australia. Mr. Fung is currently an independent non-executive director of Hainan Meilan International Airport Company Limited (海南美蘭國際機場股份有限公司), a company listed in Hong Kong (stock code: 00357.HK), and has been a non-executive director of Baoye Group Company Limited since June 2011.

LI Yongqian (李永前), aged 41, is a director and executive general manager of Greentown Real Estate. He joined us in March 2015 and is primarily responsible for managing the Company’s operations and business investment activities. Mr. Li is a senior engineer and graduated from the Architecture Department of Zhengzhou University (鄭州大學) (formerly Zhengzhou University of Technology (鄭州工業大學)) with a bachelor’s degree in Engineering. He also holds a master’s degree in business administration from Beijing Institute of Technology (北京理工大學) and a doctorate in law from Minzu University of China (中央民族大學). Mr. Li joined CCCG in January 2014 and has significant management experience, having previously served as general manager of the coordination and management department of China State Construction Real Estate Co., Ltd. (中國中建地產有限公司),

140 deputy general manager of Sino Hydro Real Estate Co., Ltd. (中國水電建設集團房地產有限公司), deputy general manager of the real estate division of China Power Construction Corporation (中國電力建設集團) and vice general manager of the real estate division of CCCG (中交集團).

Company Secretary

FUNG Ching, Simon (馮征). See the paragraph entitled “Senior Management” above for the description of Mr. Fung’s experience.

Board Committees

Audit Committee

Our audit committee is responsible for reviewing and supervising the Group’s financial reporting procedures, the internal audit scheme formulated by the internal audit department of the Group and the reports submitted by the internal audit department. It is also responsible for reviewing affairs related to the appointment, resignation and replacement of independent auditors, assessing the independent auditors’ performance and their audit fees, and providing relevant recommendations to the Board. The audit committee reviews the accounting principles and practices adopted by the Group and discusses the audit objectives and the scope of the internal audit department of the Group. As of July 1, 2015, the audit committee comprises three members (all independent non-executive directors): Mr. Sze Tsai Ping, Michael as chairman, and Mr. Jia Shenghua and Mr. Hui Wan Fai as members.

Remuneration Committee

Our remuneration committee is responsible for making recommendations on directors’ remuneration and other benefits. The remuneration of all directors is subject to regular monitoring by the remuneration committee to ensure that the level of their remuneration and compensation is reasonable. As of July 1, 2015, the remuneration committee comprises six members (two executive directors and four independent non-executive directors): Mr. Jia Shenghua as chairman, and Mr. Shou Bainian, Mr. Sze Tsai Ping, Michael, Mr. Sun Guoqiang, Mr. Ke Huanzhang and Mr. Hui Wan Fai as members.

Nomination Committee

Our nomination committee is responsible for considering and recommending to the Board suitably qualified persons to become members of the Board and is also responsible for reviewing the structure, size and composition of the Board on a regular basis and as required. The nomination committee adopts certain criteria and procedures in the nomination of new directors. The major criteria include, among others, the candidates’ professional background and experience in the industry of the Group’s business and past employment track record. As of July 1, 2015, the nomination committee comprises Mr. Sze Tsai Ping, Michael as the chairman, and Mr. Shou Bainian, Mr. Zhu Bixin, Mr. Hui Wan Fai, Mr. Ke Huanzhang and Mr. Jia Shenghua as members.

Compensation of Directors

The remuneration paid by us to our directors and other members of key management during the years ended December 31, 2012, 2013 and 2014 amounted to approximately RMB24.8 million, RMB27.0 million (US$4.4 million) and RMB33.4 million (US$5.4 million), respectively, including approximately RMB9.0 million and RMB1.2 million as equity-settled share-based payments in respect of such individuals in the years ended December 31, 2012 and 2013. We did not make any equity-settled share-based payments in the year ended December 31, 2014. The emoluments paid by us to our directors during the years ended December 31, 2012, 2013 and 2014 were approximately RMB16.0 million, RMB15.1 million (US$2.4 million), and RMB24.4 million (US$3.9 million), respectively, including approximately RMB1.2 million as equity-settled share-based payments in respect of such individuals in the year ended December 31, 2012. Of the five individuals with the highest emoluments paid by us during the years ended December 31, 2013 and 2014, four and two, respectively, were our directors. The emoluments of the highest paid individuals (excluding the directors) during the years ended December

141 31, 2012, 2013 and 2014 were approximately RMB4.9 million, RMB8.0 million (US$1.3 million) and RMB2.5 million (US$0.4 million), respectively.

Share Option Scheme

The Company’s share option scheme (the “Scheme”) was adopted pursuant to the shareholders’ resolution passed on June 22, 2006 for the primary purpose of providing incentives and/or reward to directors and employees of the Group and will expire on June 21, 2016. Under the Scheme, the Board may grant options to eligible employees, including the directors of the Company and its subsidiaries, to subscribe for shares in the Company.

The total number of shares in respect of which options may be granted under the Scheme is not permitted to exceed 10.0% of the shares of the Company in issue at any point in time, without prior approval from the Company’s shareholders. The number of shares issued and to be issued in respect of which options may be granted to any individual in any one year is not permitted to exceed 1.0% of the shares of the Company in issue at any point in time, without prior approval from the Company’s shareholders. Options granted to independent non-executive directors and substantial shareholders of the Company in excess of 0.1% of the Company’s share capital or with a value in excess of HKD5.0 million must be approved in advance by the Company’s shareholders.

Options may be exercised at any time from the date of grant of the share option to the expiry of the Scheme, unless otherwise specified in the Scheme. The exercise price is determined by the directors of the Company, and will not be less than the higher of (i) the closing price of the Company’s shares on the date of grant, (ii) the average closing price of the share for the five (5) business dates immediately preceding the date of grant and (iii) the nominal value of the Company’s shares.

Directors’ Interests in Securities

As at June 29, 2015, the interests and short positions of our directors and their associates in the shares, underlying shares and debentures of the Company and its associated corporations within the meaning of Part XV of the SFO, as recorded in the register maintained by the Company pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the SEHK were as follows:

Long positions in shares and underlying shares of the Company

Personal interests in underlying Percentage of shares (share Interest of issued share options granted Controlled capital of the Name to the Directors) Family interests Corporation Total Company SONG Weiping ...... 1,089,0001 — 226,071,9242 227,160,924 10.51% SHOU Bainian ...... — — 174,549,7833 174,549,783 8.08% CHOW Andrew ...... 410,000 20,0004 — 430,000 0.02% CAO Zhounan ...... 3,359,0005 — — 3,359,000 0.16%

(1) Pursuant to the Scheme, these options were granted on January 22, 2009 and are exercisable at HK$2.89 per share from January 22, 2009 to January 21, 2019. (2) Mr. Song Weiping, being the sole shareholder of Delta, is deemed to be interested in 126,071,924 shares held by Delta pursuant to Part XV of the SFO. HKOO is a company limited by guarantee and established by Mr. Song as a charitable institution of a public character exempt from tax under Section 88 of the Inland Revenue Ordinance, Chapter 112 of the Laws of Hong Kong. As Mr. Song is the sole member of HKOO, pursuant to Part XV of the SFO, Mr. Song is deemed to be interested in 100,000,000 shares held by HKOO notwithstanding that Mr. Song is not beneficially interested in such shares. (3) Mr. Shou Bainian is deemed to be interested in such shares as the sole shareholder of Profitwise. (4) Mr. Chow is deemed to be interested in such shares held by his spouse, Ms. LO Ping Hin Brenda. Mr. Chow has tendered his resignation as an non-executive director of the Company with effect from July 1, 2015. (5) Pursuant to the Scheme, these options were granted on May 13, 2009 and are exercisable at HK$7.16 per share from May 13, 2009 to May 12, 2019.

142 Long positions in shares and underlying shares of associated corporations of the Company

Percentage of the Interest in total registered Name of Director Name of associated corporation registered capital capital SONG Weiping ...... Bluetown Construction RMB69,200,000 34.6% Management

Long Positions in debentures of the Company

Personal Interests in the Name of Director Underlying Debentures Family Interest Corporate Interest SZE Tsai Ping, Michael ...... — US$300,000(1) —

(1) These debentures are held by Ms. YU Ka Po Ruby, the spouse of Mr. SZE Tsai Ping, Michael. Accordingly, Mr. SZE Tsai Ping, Michael is deemed to be interested in these debentures.

143 DESCRIPTION OF CCCG

CCCG is a wholly state-owned company established on December 8, 2005 in the PRC and is one of the SOEs under the direct supervision of central SASAC. It is also one of the 21 SOEs permitted by SASAC to engage in property development as its principal business. SASAC wholly-owns CCCG and closely manages its strategic development and appoints its senior management. In conducting its property development business, CCCG does not engage in any actual operations itself and essentially operates through CCCC, an entity under its control, as an integrated operational model. CCCC was established in the PRC on 8 October 2006 and was initiated and founded by CCCG, which inherited the businesses and assets of China Harbour Engineering Company Group and China Road and Bridge Group, two of the then-most influential enterprises in the PRC infrastructure construction sector, following their consolidation. CCCC’s H shares are listed on the SEHK and CCCC’s A shares are listed on the Shanghai Stock Exchange. As of December 31, 2014, CCCG held approximately 63.8% of outstanding shares capital of CCCC. CCCC is one of the largest SOEs in infrastructure construction and design in the PRC by revenue according to Engineering News-Record and the largest dredging enterprise in the world by total hopper storage capacity of its hopper fleet and total engine power of its cutter fleet and revenue according to the IHS International Dredging Directory, with a market share of over 70%. The total revenue and total assets of CCCC accounted for approximately 99.0% and 95.2%, respectively, of the total revenue and total assets of CCCG for the year ended December 31, 2014.

The CCCG Group is an established PRC market leader in its four core business segments of infrastructure construction, infrastructure design, dredging and heavy machinery manufacturing with operations in over 120 countries and regions overseas. The CCCG Group has been leveraging its extensive experience in its core business segments to shift towards an investment operation strategy which utilizes an integrated, full value chain model both domestically and internationally, which enables it to provide extensive services and products to its customers, including research and development, planning, survey, design, construction, supervision, maintenance, operation, investment and financing. This has in turn increased the CCCG Group’s competitiveness in its traditional businesses, and as a result, it has developed from being an established PRC market leader to a global competitor in its core business segments.

The CCCG Group’s infrastructure construction business includes port construction, road and bridge construction, railway construction, municipal and other construction projects, overseas construction projects and investment projects. The CCCG Group has participated in the construction and design of almost all of the PRC’s existing major coastal ports, including the top 10 ports in the PRC in 2014 by throughput. The CCCG Group has also participated in the construction of many of the PRC’s largest road and bridge construction projects, including five of the world’s 10 longest cable-stayed bridges, four of the world’s 10 longest suspension bridges and five of the world’s 10 longest trans-oceanic bridges. The railway construction business of the CCCG Group currently encompasses multiple aspects such as infrastructure, bridge, tunnel, track laying and bridge erection, electrical service, surveillance and design, supervision and equipment manufacturing, with the CCCG Group having participated in the construction and design of over 70 national key railway projects to date.

According to Engineering News-Record, CCCG is the 11th largest global design firm and the largest Chinese design firm by 2013 total design revenue. It has designed most of the main coastal ports in the PRC and has been appointed by the Ministry of Transport of the PRC to prepare numerous national waterway and highway development plans and feasibility studies in recognition of its industry-leading position in the PRC.

The CCCG Group, has been earmarked by the PRC government as an integral part of its “Going Global” strategy, which calls for outward investment among PRC enterprises, and is one of the first SOEs in the PRC to expand its operations globally. As of December 31, 2014, the CCCG Group had been engaged to provide services in all provinces, autonomous regions and municipalities in the PRC and in over 120 countries and regions overseas, including Hong Kong and Macau in the overseas markets.

144 SUBSTANTIAL SHAREHOLDERS

The register of substantial shareholders maintained by the Company pursuant to Section 336 of the SFO shows that, as at June 29, 2015, the following shareholders, other than those disclosed in the section headed “Directors’ Interests in Securities,” had notified the Company of their relevant interests in the shares and underlying shares of the Company as follows. So far as is known to the Board, as at June 29, 2015, save as disclosed below, no persons (not being a director or chief executive of the Company) had an interest or short position in the shares or underlying shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:

Percentage of Interest or short issued share position in the shares Capacity in which capital of the Name of substantial shareholder or underlying shares1 interests are held Company held CCCG2 ...... 624,851,793(L) Interest of controlled 28.91% corporation CCCG Holding (HK) 524,851,793(L) Beneficial owner 24.28% Limited3 ...... HSBC Trustee (C.I) 524,851,793(L) Interest of controlled 24.28% 4 Limited ...... corporations Wheelock5 ...... 524,851,793(L) Interest of controlled 24.28% corporations Wharf6 ...... 524,851,793(L) Interest of controlled 24.28% corporations Ms. XIA Yibo7 ...... 227,160,924(L) Interest of spouse 10.51% Profitwise8 ...... 174,549,783(L) Beneficial owner 8.08% Delta9 ...... 126,071,924(L) Beneficial owner 5.83% HKOO Foundation9 ...... 100,000,000(L) Beneficial owner 4.63% Lehman Brothers Holdings 101,400,450(L) Interest of controlled 4.69% 10 Inc...... corporations 31,868,575(S) Interest of controlled 1.47% corporations

(1) The letter “L” denotes a long position and the letter “S” denotes a short position. (2) CCCG is deemed to be interested in 624,851,793 shares through its controlled corporations, CCCG Real Estate Group Limited (中交房地產集團有限公司) and CCCG Holding (HK) Limited. (3) A company controlled by CCCG by virtue of SFO. (4) HSBC Trustee (C.I.) Limited is deemed to be interested in 524,851,793 shares through its controlled corporations, namely Wheelock, Wheelock Investments Limited, WF Investment Partners Limited, Wharf, Wharf China Holdings Limited and Target Smart Investments Limited (“Target Smart”). (5) Wheelock is deemed to be interested in 524,851,793 shares through its controlled corporations, namely Wheelock Investments Limited, WF Investment Partners Limited, Wharf, Wharf China Holdings Limited and Target Smart. (6) Wharf is deemed to be interested in 524,851,793 shares through its controlled corporations, namely Wharf China Holdings Limited and Target Smart. (7) Ms. Xia Yibo is the spouse of Mr. Song Weiping. Accordingly, pursuant to Part XV of the SFO, Ms. Xia Yibo is deemed to be interested in the following: (i) 126,071,924 shares held by Delta, a company of which Mr. Song is the sole shareholder; (ii) 100,000,000 shares held by HKOO Foundation, a charitable institution established by Mr. Song of which Mr. Song is the sole member (notwithstanding that neither Mr. Song nor Ms. Xia is beneficially interested in those shares); and (iii) 1,089,000 share options of the Company held by Mr. Song. The aforesaid represents an aggregate of 227,160,924 shares. (8) A controlled corporation of Mr. Shou Bainian by virtue of SFO, details of which are disclosed in the section “Directors’ Interests in Securities” above. (9) A controlled corporation of Mr. Song Weiping by virtue of SFO, details of which are disclosed in the section “Directors’ Interests in Securities” above. (10) Lehman Brothers Holdings Inc., according to its disclosure of interest filing, held deemed interest in a total of 101,400,450 (L) shares and 31,868,575 (S) shares by virtue of its control over certain entities by virtue of SFO.

145 REGULATIONS

The following discussion summarizes the principal laws, regulations, policies and administrative directives to which we are subject.

The PRC Legal System

The PRC legal system is based on the PRC Constitution and is made up of written laws, regulations, directives and local laws, laws of Special Administrative Regions and laws resulting from international treaties entered into by the PRC government. Court verdicts do not constitute binding precedents. However, they are used for the purposes of judicial reference and guidance.

The NPC is empowered by the PRC Constitution to exercise the legislative power of the State. The NPC has the power to amend the PRC Constitution and enact and amend basic laws governing State agencies and civil and criminal matters. The Standing Committee of the NPC is empowered to enact and amend all laws except for the laws that are required to be enacted and amended by the NPC.

The State Council is the highest organ of the State administration and has the power to enact administrative rules and regulations. The ministries and commissions under the State Council are also vested with the power to issue orders, directives and regulations within the jurisdiction of their respective departments. All administrative rules, regulations, directives and orders promulgated by the State Council and its ministries and commissions must be consistent with the PRC Constitution and the national laws enacted by the NPC. In the event that a conflict arises, the Standing Committee of the NPC has the power to annul administrative rules, regulations, directives and orders.

At the regional level, the provincial and municipal congresses and their respective standing committees may enact local rules and regulations and the people’s governments may promulgate administrative rules and directives applicable to their own administrative areas. These local laws and regulations must be consistent with the PRC Constitution, the national laws and the administrative rules and regulations promulgated by the State Council.

The State Council, provincial and municipal governments may also enact or issue rules, regulations or directives in new areas of the law for experimental purposes. After gaining sufficient experience with experimental measures, the State Council may submit legislative proposals to be considered by the NPC or the Standing Committee of the NPC for enactment at the national level.

The PRC Constitution vests the power to interpret laws in the Standing Committee of the NPC. According to the Decision of the Standing Committee of the NPC Regarding the Strengthening of Interpretation of Laws passed in June 1981, the Supreme People’s Court. The State Council and its ministries and commissions are also vested with the power to interpret rules and regulations that they have promulgated. At the regional level, the power to interpret regional laws is vested in the regional legislative and administrative bodies which promulgate such laws.

The PRC Judicial System

Under the PRC Constitution and the Law of Organization of the People’s Courts, the judicial system is made up of the Supreme People’s Court, the local courts, military courts and other special courts. The local courts are comprised of the basic courts, the intermediate courts and the higher courts. The basic courts are organized into civil, criminal, economic and administrative divisions. The intermediate courts are organized into divisions similar to those of the basic courts, and are further organized into other special divisions, such as the intellectual property division. The higher level courts supervise the basic and intermediate courts. The people’s procuratorates also have the right to exercise legal supervision over the civil proceedings of courts of the same level and lower levels. The Supreme People’s Court is the highest judicial body in China. It supervises the administration of justice by all other courts.

146 The courts employ a two-tier appellate system. A party may appeal against a judgment or order of a local court to the court at the next higher level. First judgments or orders of the Supreme People’s Court are also final. If, however, the Supreme People’s Court or a court at a higher level finds an error in a judgment which has been given in any court at a lower level, or the presiding judge of a court finds an error in a judgment which has been given in the court over which he presides, the case may then be retried according to the judicial supervision procedures.

The Civil Procedure Law of the PRC adopted in April 1991, amended in October 2007 and in August 2012, sets forth the criteria for instituting a civil action, the jurisdiction of the courts, the procedures to be followed for conducting a civil action and the procedures for enforcement of a civil judgment or order. All parties to a civil action conducted within the PRC must comply with the Civil Procedure Law. Generally, a civil case is initially heard by a local court of the municipality or province in which the defendant resides. The parties to a contract may, by express agreement, select a jurisdiction where civil actions may be brought, provided that the jurisdiction is either the plaintiff’s or the defendant’s place of residence, the place of execution or implementation of the contract or the object of the action. However, such selection cannot violate the stipulations of grade jurisdiction and exclusive jurisdiction in any case.

A foreign individual or enterprise generally has the same litigation rights and obligations as a citizen or legal person of the PRC. If a foreign country’s judicial system limits the litigation rights of PRC citizens and enterprises, the PRC courts may apply the same limitations to the citizens and enterprises of that foreign country within the PRC. If any party to a civil action refuses to comply with a judgment or order made by a court or an award granted by an arbitration panel in the PRC, the aggrieved party may apply to the court to request for enforcement of the judgment, order or award. There are time limits imposed on the right to apply for such enforcement. If a party fails to satisfy a judgment made by the court within the stipulated time, the court will, upon application by either party, mandatorily enforce the judgment.

A party seeking to enforce a judgment or order of a court against a party who is not located within the PRC and does not own any property in the PRC may apply to a foreign court with proper jurisdiction for recognition and enforcement of the judgment or order. A foreign judgment or ruling may also be recognized and enforced by the court according to the PRC enforcement procedures if the PRC has entered into, or acceded to, an international treaty with the relevant foreign country, which provides for such recognition and enforcement, or if the judgment or ruling satisfies the court’s examination according to the principal of reciprocity, unless the court finds that the recognition or enforcement of such judgment or ruling will result in a violation of the basic legal principles of the PRC, its sovereignty or security, or for reasons of social and public interests.

Establishment of a Real Estate Development Enterprise

According to the PRC Law on Administration of Urban Real Estate《中華人民共和國城市房地產 ( 管理法》) promulgated by the NPC, effective in January 1995, amended in August 2007, a real estate developer is defined as an enterprise that engages in the development and operation of real estate for the purpose of making profits. Under the Regulations on Administration of Development of Urban Real Estate《城市房地產開發經營管理條例》 ( ) promulgated by the State Council in July 1998, and amended on January 8, 2011, an enterprise that is to engage in development of real estate must satisfy the following requirements:

• its registered capital must be RMB1 million or more; and

• it must have four or more full-time professional real estate/construction technicians and two or more full-time accounting officers, each of whom must hold the relevant qualification certificate.

The local government of a province, autonomous region or municipality directly under the PRC central government may, based on local circumstances, impose more stringent requirements on the registered capital and the professional personnel of a real estate developer.

147 To establish a real estate development enterprise, the developer must apply for registration with the administration for industry and commerce. The developer must also report its establishment to the real estate development authority in the location of its registration, within 30 days of the receipt of its business license. Where a foreign-invested enterprise is to be established to engage in the development and operation of real estate, it must also comply with the relevant requirements under the PRC laws and administrative regulations regarding foreign-invested enterprises and apply for approvals relating to foreign investments in China.

Under the Catalog of Guidance on Industries for Foreign Investment (Revised in 2015)《外商投資 ( 產業指導目錄》（2015年修訂）), promulgated by MOFCOM and NDRC on March 10, 2015, effective on April 10, 2015, real estate development falls within the category of industries in which foreign investment is permitted.

A foreign investor intending to engage in the development and sale of real estate in China may establish an equity joint venture, a cooperative joint venture or a wholly foreign owned enterprise by the foreign investor in accordance with the PRC laws and administrative regulations governing foreign-invested enterprises.

Under the Notice on Adjusting the Portion of Capital Fund for Fixed Assets Investment of Certain Industries《關於調整部分行業固定資產投資項目資本金比例的通知》 ( ) issued by the State Council in April 2004, the portion of capital-account funding for real estate projects (excluding affordable housing projects) has been increased from 20% or above to 35% or above. However, pursuant to the Notice on Adjusting the Percentage of Capital Fund for Investment Projects in Fixed Assets《關於調整固定資產投 ( 資項目資本金比例的通知》) issued by the State Council in May, 2009, the minimum portion of the capital funding for ordinary commodity housing projects and affordable housing projects has been reduced to 20%, while that for other real estate projects has been decreased to 30%.

In July 2006, the Ministry of Construction, MOFCOM, NDRC, the PBOC, SAIC and SAFE jointly issued an Opinion on Standardizing the Admittance and Administration of Foreign Capital in the Real Estate Market《關於規範房地產市場外資準入和管理的意見》 ( ), which provides, among other things, that an overseas entity or individual investing in real estate in China other than for self-use must apply for the establishment of a FIREE in accordance with applicable PRC laws and may only conduct operations within the authorized business scope. The joint opinion attempts to impose additional restrictions on the establishment and operation of FIREE by regulating the amount of registered capital as a percentage of total investment in certain circumstances, limiting the validity of approval certificates and business licenses to one year, restricting the ability to transfer equity interests of a FIREE or its projects and prohibiting the borrowing of money from domestic and foreign lenders where its registered capital is not paid up or the land use rights not obtained. In addition, the joint opinion also limits the ability of foreign individuals to purchase commodity residential properties in China.

In May 2007, MOFCOM and SAFE issued the Circular on Strengthening and Regulating the Examination and Approval and Supervision of Foreign Direct Investment in the Real Estate Sector《關於進 ( 一步加強、規範外商直接投資房地產業審批和監管的通知》)(“Circular 50”). Under Circular 50, prior to applying for establishment of real estate companies, foreign investors must first obtain land use rights and building ownership, or must have entered into pre-sale or pre-grant agreements with respect to the land use rights or building ownership. If foreign-invested enterprises in China engage in real estate development or operations or if FIREEs in China engage in new real estate project developments, they must first apply to the relevant PRC governmental authorities to expand their scope of business or scale of operations in accordance with the PRC laws and regulations related to foreign investments. In addition, the local PRC governmental authorities must file with MOFCOM for record their approvals of establishment of FIREEs, and must exercise due control over foreign investments in high-end properties. Foreign exchange authorities may not allow capital-account foreign exchange sales and settlements by FIREEs that have been established in contravention of these requirements.

In connection with the filing requirement, MOFCOM issued the Notice on the Proper Filings of Foreign Investment in the Real Estate Sector《關於做好外商投資房地產業備案工作的通知》 ( ) in June 2008 to authorize the competent MOFCOM at the provincial level to verify and check the filing documents.

148 Moreover, in November 2010, MOFCOM promulgated the Notice on Strengthening Administration of the Approval and Registration of Foreign Investment into Real Estate Industry《關於 ( 加強外商投資房地產業審批備案管理的通知》), which provides that, among other things, in the case that a real estate enterprise is established within the PRC with overseas capital, it is prohibited to purchase and/or sell real estate properties completed or under construction within the PRC for arbitrage purposes. The local MOFCOM authorities are not permitted to approve foreign-invested investment companies to engage in the real estate development and management.

According to the Notice of the State Council on Promulgating the “Catalog of Investments Projects Subject to Government Verification and Approval (2014 Version)”《國務院關於發佈政府核准的投資項 ( 目目錄（2014年本）的通知》), promulgated by the State Council on October 31, 2014, the following projects shall be verified and approved by relevant department of the State Counsel: (i) foreign investments in encouraged industries with a total investment of more than US$1.0 billion, which is required to be controlled by a PRC entity (including relative control) as governed by the Catalog of Guidance on Industries for Foreign Investment; and (ii) foreign investments in restricted industries with a total investment (including capital increase) of more than US$100.0 million (excluding real estate). For projects in (i) and (ii) above where the total investment (including capital increase) is more than US$2.0 billion, such projects must be registered with the State Council. Real estate projects in restricted industries and other restricted projects in the Catalog of Guidance on Industries for Foreign Investment with a total investment of less than US$100.0 million must be verified and approved by the respective provincial governments. Foreign investments in encouraged industries with a total investment of less than US$1.0 billion, which is required to be controlled by PRC entity (including relative control) by the Catalog of Guidance on Industries for Foreign Investment, should be verified and approved by the respective local government.

Qualifications of a Real Estate Developer

Under the Provisions on Administration of Qualifications, a real estate developer must apply for registration of its qualifications according to such Provisions on Administration of Qualifications. An enterprise may not engage in property development without a qualification classification certificate for real estate development. The Ministry of Construction oversees the qualifications of real estate developers with national operations, and local real estate development authorities at or above the county level oversee the qualifications of local real estate developers.

In accordance with the Provisions on Administration of Qualifications, real estate developers are classified into four classes.

• Class 1 qualifications are subject to preliminary examination by the construction authorities at the provincial level and final approval of the Ministry of Construction. A class 1 real estate developer is not restricted as to the scale of its real estate projects and may undertake a real estate development anywhere in the country.

• Class 2 or lower qualifications are regulated by the construction authorities at the provincial level subject to delegation to lower level governmental agencies. A real estate developer of class 2 or lower may undertake a project with a GFA of less than 250,000 sq.m. subject to confirmation by the construction authorities at the provincial level.

Under the relevant PRC laws and regulations, the real estate development authorities will examine applications for registration of qualifications submitted by real estate developers by considering the professional personnel in their employ, financial condition and operating results. A real estate developer that passes the qualification examination will be issued a qualification certificate of the relevant class by the qualification examination authority. A developer of any qualification classification may only engage in the development and sale of real estate within its approved scope of business and may not engage in business which is limited to another classification.

149 For a newly established real estate developer, the real estate development authority will issue a provisional qualification certificate, if it is an eligible developer, within 30 days of receipt by the authority of the application. The provisional qualification certificate will be effective for one year from its date of issue and may be extended for not more than two additional years with the approval of the real estate development authority. The real estate developer must apply for qualification classification to the real estate development authority within one month before expiration of the provisional qualification certificate.

Development of a Real Estate Project

Under the Catalog for Guidance on Industries for Foreign Investment promulgated by NDRC and MOFCOM in December 2011, foreign investments are restricted in the development of a whole land lot and the construction and operation of high-end hotels, premium office buildings and international conference centers in China, and prohibited in the construction and operation of villas and golf course.

Pursuant to the Administrative Measures for the Verification and Approval and the Record-filing of Foreign Investment Projects (外商投資項目核准和備案管理辦法) promulgated by NDRC on May 17, 2014 and amended on December 27, 2014, the verification and approval authorization and scope will follow the Verification and Approval Catalog. The following projects shall be verified and approved by the relevant department of the State Counsel: (i) foreign investments in encouraged industries with a total investment of more than US$1.0 billion, which is required to be controlled by PRC entity (including relative control) as governed by the Catalog of Guidance on Industries for Foreign Investment; and (ii) foreign investments in restricted industries with a total investment (including capital increase) of more than US$100 million (excluding real estate). For projects in (i) and (ii) above where the total investment (including capital increase) is more than US$2.0 billion, such projects should be registered with the State Council. Real estate projects in restricted industries and other restricted projects in the Catalog of Guidance on Industries for Foreign Investment with a total investment of less than US$100.0 million should be verified and approved by the respective provincial government. Foreign investments in encouraged industries with a total investment of less than US$1.0 billion, which is required to be controlled by PRC entity (including relative control) by the Catalog of Guidance on Industries for Foreign Investment, should be verified and approved by the respective local government.

Under the Interim Regulations of the People’s Republic of China on Grant and Assignment of the Use Right of State-owned Urban Land《中華人民共和國城鎮國有土地使用權出讓和轉讓暫行條例》 ( ) promulgated by the State Council in May 1990, China adopted a system to grant and assign the right to use state-owned land. A land user must pay a land premium to the state as consideration for the grant of the right to use a land site within a specified period of time, and the land user may assign, lease out, mortgage or otherwise commercially exploit the land use rights within the term of use. Under the relevant PRC laws and regulations, the land administration authority at the city or county level may enter into a land grant contract with the land user to provide for the grant of land use rights. The land user must pay the land premium as provided by the land use rights grant contract. After payment in full of the land premium, the land user may register with the land administration authority and obtain a land use rights certificate which evidences the acquisition of land use rights. The relevant PRC laws and regulations provide that land use rights for a site intended for real estate development must be obtained through grant except for land use rights which may be obtained through premium-free allocation by the PRC government pursuant to the PRC laws or the stipulations of the State Council. Government-allocated land is not allowed to be transferred unless the transfer is approved by the relevant PRC governmental authorities and the land premium as determined by the relevant PRC governmental authorities has been paid.

When carrying out the feasibility study for a construction project, the construction or the developer entity must make a preliminary application for construction on the relevant site to the relevant land administration authority in accordance with the Measures for Administration of Examination and Approval for Construction Sites《建設用地審查報批管理辦法》 ( ) promulgated by the Ministry of Land and Resources in March 1999 and amended on November 30, 2010, and the Measures for Administration of Preliminary Examination of Construction Project Sites《建設項目用地預審管理辦法》 ( ) promulgated by the Ministry of Land and Resources in July 2001, as amended in October 2004 and in November 2008

150 respectively. After receiving the preliminary application, the land administration authority will carry out preliminary examinations of various aspects of the construction project in compliance with the overall zoning plans and land supply policy of the government, and will issue a preliminary approval in respect of the project site if its examination proves satisfactory. The land administration authority at the relevant city or county will sign a land use rights grant contract with the land user and issue an approval for the construction site to the construction entity or the developer.

Under the Measures for Control and Administration of Grant and Assignment of Right to Use Urban State-owned Land《城市國有土地使用權出讓轉讓規劃管理辦法》 ( ) promulgated by the Ministry of Construction in December 1992, the grantee under a land grant contract, i.e. a real estate developer, must further apply for a permit for construction site planning from the relevant municipal planning authority. After obtaining such permit, a real estate developer will organize the necessary planning and design work. Planning and design proposals in respect of a real estate development project are again subject to relevant reporting and approval procedures required under the Law of the People’s Republic of China on Urban and Rural Planning《中華人民共和國城鄉規劃法》 ( ) promulgated by the National People’s Congress in October 2007 and local statutes on municipal planning. Upon approval by the authorities, a permit for construction works planning will be issued by the relevant municipal planning authority.

In accordance with the Regulations for the Expropriation of Compensation for Housing on State-owned Land《國有土地上房屋徵收與補償條例》 ( ) promulgated by the State Council and implemented in January 2011, with regard to the expropriation of the housing of entities and individuals on the State-owned land for the need of public interest, the owners of the housing being expropriated shall be offered a fair compensation.

Compensation offered by governments at municipal and county levels that make housing expropriation decisions regarding parties with housing being expropriated includes: (i) compensation for the value of the housing being expropriated; (ii) compensation for relocation and temporary settlement caused by expropriation of housing; and (iii) compensation for the loss arising from the suspension of production and operation caused by expropriation of housing.

The amount of compensation for the value of housing being expropriated may not be less than the market price of the real estate similar to it on the announcement date of the housing expropriation decision. The value of housing being expropriated must be appraised and determined by a real estate price appraisal institution with corresponding qualifications according to the housing expropriation appraisal measures. A party that objects to the appraised value of the housing being expropriated may apply to the real estate price appraisal institution for review of the appraisal. A party that objects to the review result may apply to the real estate price appraisal expert committee for authentication.

The parties whose housing is being expropriated may choose monetary compensation, or may choose to exchange the property rights of the housing. If the parties whose housing is being expropriated choose to exchange the property rights of the housing, governments at municipal and county levels must provide housing used for the exchange of property rights, and calculate and settle the difference between the value of housing being expropriated and the value of housing used for the exchange of property rights. If residential housing of an individual is expropriated due to renovation of an old urban district and the individual chooses to exchange for the property rights of the housing in the area being renovated, governments at municipal and county levels that make housing expropriation decisions must provide the housing in the area being renovated or the nearby area.

When the site has been properly prepared and is ready for the commencement of construction works, the developer must apply for a permit for commencement of works from the construction authorities at or above the county level according to the Measures for Administration of Granting Permission for Commencement of Construction Works《建築工程施工許可管理辦法》 ( ) promulgated by the Ministry of Construction in October 1999, as amended in July 2001 and replaced by the Measures for Administration of Granting Permission for Commencement of Construction Works《建築工程施工許可 ( 管理辦法》) promulgated by the Ministry of Housing and Urban-Rural Development in June 2014. According to the Notice Regarding Strengthening and Regulating the Administration of

151 Newly-commenced Projects《國務院辦公廳關於加強和規範新開工項目管理的通知》 ( ) issued by the General Office of the State Council on November 17, 2007, before commencement of construction, all kinds of projects shall fulfill certain conditions, including, among other things, compliance with national industrial policy, development plan, land supply policy and market access standard, completion of all approval and filing procedures, compliance with zoning plan in terms of site and planning, completion of proper land use procedures and obtaining proper environmental valuation approvals and construction permit or report.

The development of a real estate project must comply with various laws and legal requirements on construction quality, safety standards and technical guidance on architecture, design and construction work, as well as provisions of the relevant contracts. On January 30, 2000, the State Council promulgated and implemented the Regulation on the Quality Management of Construction Projects《建設工程質量管 ( 理條例》), which sets the respective quality responsibilities and liabilities for developers, construction companies, reconnaissance companies, design companies and construction supervision companies. In August 2008, the State Council issued the Regulations on Energy Efficiency for Civil Buildings《民用建 ( 築節能條例》), which reduces the energy consumption of civil buildings and improves the efficiency of the energy utilization. According to this regulation, the design and construction of new buildings must meet the mandatory criteria on energy efficiency for buildings, and failure to meet such criteria will result in no commencement of construction or acceptance upon completion.

Among other things, this regulation sets forth additional requirements for property developers in the sale of commodity buildings in this respect. After completion of construction works for a project, the real estate developer must organize an acceptance examination by relevant governmental authorities and experts according to the Provisions on Inspection Upon Completion of Buildings and Municipal Infrastructure promulgated by the MOHURD《房屋建築和市政基礎設施工程竣工驗收規定》 ( )in December 2013, and file with the construction authority at or above the county level where the project is located within 15 days after the construction is qualified for the acceptance examination according to the Measures for Reporting Details Regarding Acceptance Examination Upon Completion of Buildings and Municipal Infrastructure《房屋建築和市政基礎設施工程竣工驗收備案管理辦法》 ( ) promulgated by the MOHURD in October 2009. The developer must also report details of the acceptance examination according to the Measures for Reporting Details Regarding Acceptance Examination upon Completion of Buildings and Municipal Infrastructure《房屋建築和市政基礎設施工程竣工驗收備案管理辦法》 ( ) promulgated by the MOHURD in October 2009. A real estate development project may not be delivered until and unless it has satisfactorily passed the necessary acceptance examination. Where a property project is developed in phases, an acceptance examination may be carried out for each phase upon completion.

In China, there are two registers of property interests. Land registration is effected by the issue of land use right certificates by the relevant authorities to the land users. Land use rights may be assigned, mortgaged or leased. The building registration is effected by the issue of property ownership certificates to the property owners. Property or building ownership rights are only related to the building or improvements erected on the land. Under the PRC laws and regulations, all land use rights and property ownership rights that are duly registered are protected by law. Most cities in China maintain separate registries for the registration. However, Shenzhen, Shanghai, Guangzhou and some other major cities have a consolidated registry for both land use rights and the property ownership interests for the building erected on the relevant land.

Land for Property Development

In April 1988, the National People’s Congress amended the PRC Constitution to permit the transfer of land use rights in accordance with the laws and regulations. In December 1988, the National People’s Congress amended the Land Administration Law《中華人民共和國土地管理法》 ( ) to permit the transfer of land use rights in accordance with the laws and regulations.

Pursuant to the Measures on Disposal of Idle Land《閒置土地處置辦法》 ( ) promulgated by the Ministry of Land and Resources on June 1, 2012 and became effective on July 1, 2012, idle land fees may be imposed on land that has not been developed for one year from the contractual construction

152 commencement date. Land use rights may be forfeited to the government without compensation to the developer if the land has not been developed for two years as required by the laws and regulations, and allotted for other purposes. Under current PRC laws and regulations on land administration, land for property development may be obtained only by grant except for land use rights obtained through allocation. Under the Regulations on the Grant of State-owned Land Use Rights Through Public Tender, Auction and Listing-for-Sale promulgated by the Ministry of Land and Resources《招標拍賣掛牌出讓 ( 國有土地使用權規定》) in May 2002 and amended in September 2007, land for commercial use, tourism, entertainment and commodity housing development must be granted by public tender, auction or listing-for-sale. Under these regulations, the relevant land administration authority at city or county level, or the grantor, is responsible for preparing the public tender or auction documents and must make an announcement 20 days prior to the day of public tender or auction with respect to the particulars of the land parcel and the time and venue of the public tender or auction. The grantor must also verify the qualification of the bidding and auction applicants, accept an open public auction to determine the winning tender or hold an auction to ascertain a winning bidder. The grantor and the winning tender or bidder will then enter into a confirmation followed by the execution of a contract for assignment of state-owned land use rights. Over the years, the Ministry of Land and Resources has promulgated further rules and regulations to define the various circumstances under which the state-owned land use rights may be granted by means of public tender, auction and listing-for-sale or by agreement. Under the Regulation on Grant of State-owned Land Use Rights by Agreements《協議出讓國有土地使用權規 ( 定》) promulgated by the Ministry of Land and Resources on June 11, 2003, except for a project that must be granted through tender, auction and listing as required by the relevant laws and regulations, land use right may be granted through transfer by agreement and the land premium for the transfer by agreement of the state-owned land use right shall not be lower than the benchmark land price.

The Urgent Notice on Further Governing and Rectifying Land Market and Strengthening Administration of Land《關於深入開展土地市場治理整頓嚴格土地管理的緊急通知》 ( ) issued by the General Office of the State Council on April 29, 2004 restated the principle of strict administration of the approval process for the construction land and protection of the basic farmland.

The Notice on Issues Relating to Strengthening the Land Control《關於加強土地調控有關問題的 ( 通知》) promulgated by the State Council on August 31, 2006 sets forth the administration of the receipt and disbursement of the land premium, modifies the tax policies relating to the construction land, and builds up the system of publicity for the standards of the lowest price with respect to the granted state-owned land use right for industrial purposes.

In March 2007, the National People’s Congress adopted the PRC Property Rights Law《中華人民 ( 共和國物權法》), which became effective on October 1, 2007. According to the Property Rights Law, when the term of the right to use construction land for residential (but not other) purposes expires, it will be renewed automatically. Unless it is otherwise prescribed by any law, the owner of construction land use rights has the right to transfer, exchange, and use such land use rights as equity contributions or collateral for financing. If the state takes the premises owned by entities or individuals, it must compensate the property owners in accordance with law and protect the lawful rights and interests of the property owners.

In September 2007, the Ministry of Land and Resources further promulgated the Regulations on the Grant of State-owned Construction Land Use Rights Through Public Tender, Auction and Listing-for-Sale《招標拍賣掛牌出讓國有建設用地使用權規定》 ( ) to require that land for industrial use, except land for mining, must also be granted by public tender, auction and listing-for-sale. Only after the grantee has paid the land premium in full under the land grant contract, can the grantee apply for the land registration and obtain the land use right certificates. Furthermore, land use rights certificates may not be issued in proportion to the land premium paid under the land grant contract.

In October 2007, the Standing Committee of National People’s Congress promulgated the Law of the People’s Republic of China Urban and Planning《中華人民共和國城鄉規劃法》 ( ), pursuant to which, a construction planning permit must be obtained from the relevant urban and rural planning governmental authorities for building any structure, fixture, road, pipeline or other engineering project within an urban or rural planning area.

153 In November 2007, the Ministry of Land and Resources, the Ministry of Finance and the PBOC jointly promulgated the Administration Measures on Land Reserves《土地儲備管理辦法》 ( ), pursuant to which, local authorities should reasonably decide the scale of land reserves in accordance with the macro-control of the land market. Idle, unoccupied, and low-efficient state-owned construction land inventory shall be used as land reserves in priority.

In December 2007, the Ministry of Land and Resources promulgated the Rules on Land Registration《土地登記辦法》 ( ), which further stresses payment in full of the land premium prior to the application for the registration of state-owned construction land use rights.

In May 2012, the Ministry of Land and Resources issued a Circular on the Distribution of the Catalog for Restricted Land Use Projects (2012 Version) and the Catalog for Prohibited Land Use Projects (2012 Version)《國土資源部、國家發展和改革委員會關於發布實施〈限制用地項目目錄 ( （2012年本）〉和〈禁止用地項目目錄（2012年本）〉的通知》), as a supplement to its 2012 version. In this Circular, the Ministry of Land and Resources has set forth a ceiling for the land granted by local governments for development of commodity housing as follows: seven hectares for small cities and towns, 14 hectares for medium-sized cities; and 20 hectares for large cities.

In November 2009, the Ministry of Finance, the Ministry of Land and Resources, the PBOC, the PRC Ministry of Supervision and the PRC National Audit Office jointly promulgated the Notice on Further Enhancing the Revenue and Expenditure Control over Land Grant《關於進一步加強土地出讓收 ( 支管理的通知》). The Notice raises the minimum down payment for land premiums to 50% and requires the land premium to be fully paid within one year after the signing of a land grant contract, subject to limited exceptions. Any developer defaulting on any such payment may not participate in any new transactions of land grant.

In November 2009, the Ministry of Housing and Urban-Rural Development and the Office of the Leading Group for Addressing Problems Regarding Unauthorized Change of Planning and Adjustment of the Floor Ratio in Real Estate Development under the Ministry of Supervision jointly promulgated the Notification on Further Unfolding of the Special Project to Address Problems Regarding Unauthorized Change of Planning and Adjustment of the Floor Area Ratio《關於深入推進房地產開發領域違規變更 ( 規劃調整容積率問題專項治理的通知》) which re-emphasized the need to rectify, investigate and punish real estate developing companies committing any unauthorized adjustment of the floor area ratio.

In March 2010, the Ministry of Land and Resources promulgated the Notification on Issues Relating to Strengthening the Supply and Regulation of the Land for Real Estate Development《關於加 ( 強房地產用地供應和監管的有關問題的通知》) which adopted measures to improve the regulation of land for real estate development. These include, among others, measures to improve the preparation and implementation of the plan of land supply, guarantee the supply of land for supportive housing development, improve the regime of public tender, auction and list-for-sale of land use right, enhance the supervision on the use of land, disclose information on the supply and grant of land and the status of the construction project on the land to the public, and conduct special inspection on outstanding problems in the field of land use.

Pursuant to the notification, the administration of land and resources of cities and counties shall establish a regime for developers to report the commencement and completion of construction projects. Under such regime, the developer shall report in writing to the respective administration of land and resources at the commencement and completion of the construction project. The commencement and completion date of construction set forth in the agreements may be postponed by reporting the reasons of delay to the respective administration of land and resources no later than 15 days prior to the expiration. The developer who fails to report accordingly shall be announced to the public and prohibited from participating in any new transactions of land grant for at least one year. Additionally, the land used for developing supportive housing, small-to-medium-size self-used residential commodity housing and reconstructing shantytown shall not be less than 70% of the total land supply for residential property development. The lowest land premium for the grant of land use right shall not be lower than 70% of the benchmark price for the land grade the granted land locates, and the deposit for the participation of tender shall not be lower than 20% of the lowest land premium. The land grant agreement shall be executed in

154 writing within 10 days after the deal is reached, the down payment of the land grant price which shall not be less than 50% of the full land grant price shall be paid within one month after the land grant agreement is executed, and the land grant price shall be paid in full no later than one year after the land grant agreement is executed. A developer who defaults on the payment of the land premium, holds idle land, hoards or speculates in land, develops property on the land exceeding its actual development capacity or defaults on the performance of land grant agreement shall be banned from participating in any transactions of land grant for a certain period.

On September 21, 2010, the Ministry of Land and Resources and the Ministry of Housing and Urban Development jointly promulgated the Notice of Further Strengthening Control and Regulation of Land and Construction of Property Development《關於進一步加強房地產用地和建設管理調控的通 ( 知》), which stipulated, among other things, that: (i) at least 70% of land designated for construction of urban housing must be used for economically affordable housing, housing for resettlement of shanty towns and small to medium-sized ordinary commercial housing; in areas with high housing prices, the supply of land designated for small to medium-sized, price-capped housing must be increased; (ii) developers and their controlling shareholders (as defined under PRC laws) are prohibited from participating in land biddings before the rectification of certain misconduct, including (1) illegal transfer of land use rights; (2) failure to commence required construction within one year from the delivery of land under land grant contracts due to such developers’ own reasons; (3) noncompliance with the land development requirements specified in land grant contracts; and (4) crimes such as swindling land by forging official documents and illegal land speculation; (iii) developers are required to commence construction within one year from the date of delivery of land under the relevant land grant contract and complete construction within three years since commencement of the construction; (iv) development and construction of projects of low-density and large-sized housing must be strictly limited and the plot ratio of the planned GFA to the total site area of residential projects must be more than 1:1; and (v) the grant of two or more bundled parcels of lands and undeveloped land is prohibited.

In December 2010, the Ministry of Land and Resources promulgated the Notice on Strict Implementation of Policies Regarding Regulation and Control of Real Property Land and Promotion of the Healthy Development of Land Markets《關於嚴格落實房地產用地調控政策促進土地市場健康發 ( 展有關問題的通知》), which provides, among other things, that: (i) cities and counties that have less than 70% of their land supply designated for social security housing projects, housing for redevelopment of shanty towns or small/medium residential units must not provide land for large-sized and high-end housing before the end of 2010; (ii) land and resource authorities in local cities and counties will report to the Ministry of Land and Resources and provincial land and resource authorities, respectively regarding land with a premium rate of more than 50%; (iii) land designated for affordable housing which is used for commodity property development against relevant policies or involved illegal income will be confiscated and the relevant land use rights will be withdrawn. Moreover, changing the plot ratio without approval is strictly prohibited.

On February 15, 2012, the Ministry of Land and Resources promulgated the Notice on Accomplishment of Real Estate Land Administration and Control in 2012《國土資源部關於做好 ( 2012年房地產用地管理和調控重點工作的通知》). The notice provides that:

• The real estate control policy shall be firmly performed and the key tasks shall be clarified. The real estate land administration and control is confronting fundamental requirements and key tasks that the control policy by central government shall be strictly implemented, the supervision and control shall be strengthened, while the price of real estate and land shall be stable and reasonable.

• The real estate land supply shall be properly managed for the purpose of the welfare of the masses. Relevant authorities shall compile the annual supply plan of land for residential purposes of year 2012 from a scientific and reasonable perspective. The planned land supply quantity shall be no smaller than the average quantity of the recent five years, no less than 70% among which shall be designated for social security housing projects, housing for redevelopment of shanty towns and small/medium residential units. The supply of land for social security housing projects shall be guaranteed. The supply of high-end housing land shall be strictly controlled and no land shall be permitted for the development of villas.

155 • The land supply for social security housing projects shall be guaranteed. The construction land permission procedure for social security housing projects shall be accelerated.

• Unlawful acts shall be strictly punished and the development and construction shall be vigorously encouraged. Unlawful acts, including any of the following ones, shall be prohibited: a land use right is granted over a parcel of land where the land area exceeds the size approved by the relevant competent authorities; more than one parcel of land is granted to the same bidder at the same time; a land use right is granted over a parcel of land where the demolition of buildings erected on such land has not been carried out of the occupants of such land have not been compensated for the demolition and resettlement; a land use right is granted over a parcel of land with a plot ratio of less than one. A reporting system shall be implemented according to which, when concluding a land grant contract, a provision providing land users report to land and resources authorities in a written form before or at the commencement and completion of a project.

• Supervision analysis and media propaganda shall be strengthened to provide a positive guidance towards the market. Relevant local departments shall strengthen the supervision over land price. A record filing system of abnormal land purchases shall be implemented and improved.

On May 22, 2012, the Ministry of Land and Resources amended the Measures on Disposal of Idle Land《閒置土地處置辦法》 ( ), which were originally published in April 1999. This amendment includes the following significant changes or new provisions:

• Emphasizing the key purposes of regulating idle land. The current version of Measures on Disposal of Idle Land re-emphasize the importance of suppressing intentional reservations of land for the purpose of resale. For example, it provides that if the real estate developer intentionally delays the commencement of construction and development for the purpose of reserving the land for resale with bad faith, and before the condition of such land is reviewed and disposed of by the government, the government should neither accept new applications for land use by the same holder of land use rights, nor register the status of transfer, lease, mortgage or information change of the land considered to be idle.

• Readdressing the disposal method of idle land. Consistent with the April 1999 version, the amended Measures on Disposal of Idle Land once again addressed the method of disposal of idle land. If the real estate developer fails to commence the construction and development of the land for one year, the government should issue the Notice on Imposition of Land Idleness Penalty Fees to the holder of land use right. The penalty fees should be 20% of the price that the holder paid for obtaining the land use right. If the holder of land use rights failed to commence the construction and development of the land for two years, the government should issue the Notice on Decision of Withdrawal of Land Use Right to the holder, thereby withdrawing the holder’s right to use land for free. However, compared with the 1999 version, the amended Measures on Disposal of Idle Land specify the procedure for determining and disposing of idle land, including:

1. Once relevant governmental authority suspects that a tract of land has become idle, it should initiate investigation within 30 days therefrom and issue a “notice on investigation of idle land” to the holder of land use right. The holder of land use right should submit explanatory materials about the development condition and reason for land idleness to the government within 30 days upon the receipt of such notice.

2. After investigation, if the government decides that the investigated land has become idle, it should issue a “notice on confirmation of idle land” to the investigated holder of land use rights, which will specify the facts and grounds for determining that the

156 land concerned has become idle. Relevant information of the idle land will also be published on the governmental authority’s official website after issuance of such notice.

3. If the idleness of land was caused by the real estate developer rather than the government, the governmental authority is entitled to impose penalty fees for the idleness or even withdraw the decision for granting the land use right. However, before such penalty decisions are made, the government should notify the holder of the land use rights that the holder has the right to request a hearing.

4. Once the government decides to impose penalty fees for land idleness, it should issue a “notice on imposition of land idleness penalty fees” to the holder of the land use rights, and the owner should pay the penalty fees within 30 days upon the receipt of the notice. If the government decides to withdraw the decision for granting land use right, the government should issue a “notice on decision of withdrawal of land use rights” to the holder, and the holder should cancel the registration of its land use rights from government’s record within 30 days upon its receipt of such notice.

• Specifying the circumstances where the delay of commencement of construction and development was caused by the government. If the delay of commencement of construction and development was caused by the government, the real estate developer will not be directly subject to penalties for delays caused by the developer itself. The amended

Measures on Disposal of Idle Land specify the following circumstances where the delay of commencement of construction and development is considered to be caused by the government:

1. Where the land fails to be delivered to the holder of the land use rights in accordance with the time limit and conditions as prescribed in the land transfer contract or the land allocation decision, with the result that the conditions for commencing the construction and development of the project are not met;

2. Where relevant land-use planning is modified, with the result that the owner of the land use rights cannot commence construction and development;

3. Where the land-use planning and construction conditions need to be modified in light of new policies issued by the government;

4. Where the construction and development of the land cannot be commenced due to complaints lodged by the general public in connection with the land;

5. Where the construction and development of the land cannot be commenced due to military control or protection of historic and cultural relics; and

6. Where other acts of any government or governmental agency cause the delay.

On May 22, 2014, the Ministry of Land and Resources issued Rules on Economical and Intensive Utilisation of Land《節約集約利用土地規定》 ( ), which came into effect on September 1, 2014. The main content of the Rules includes: (i) restriction on expansion of megalopolis boundary; (ii) expand the scope of paid use for land, in order to reduce the allotted land; (iii) allowing new methods for transferring land, including “lease before transfer” transaction; (iv) prohibit any reduction in land-transferring fees in any form; and (v) increase the utilization efficiency of industrial land.

On September 12, 2014, the Ministry of Land and Resources issued Guiding Opinions on Promoting the Economical and Intensive Utilization of Land (Guo Tu Zi Fa (2014)119)《國土資源部關 ( 於推進土地節約集約利用的指導意見》) (the “Opinions”). The Opinions shall be in force for 8 years and consists of 8 sections, including general requirement, limitation on land utilization approval area, optimizing the overall arrangement of land utilization, establishing the standard for land utilization

157 control, introducing market mechanism in land utilization control, comprehensive treatment of land utilization, promotion of technology in land utilization, and enhancing the supervisory and promotion mechanism. The Opinions stipulate that the existing problem of extensive and over-reaching use of land shall be effectively addressed, the transformation of the economic development pattern shall be facilitated through the transformation of the land use pattern, ecologically sound construction and urbanization shall be promoted.

Sale of Commodity Houses

Under the Measures for Administration of Sale of Commodity Houses《商品房銷售管理辦法》 ( ) promulgated by the Ministry of Construction in April 2001, sale of commodity houses can include both sales before the completion of the properties, or pre-sale, and sales after the completion of the properties.

Any pre-sale of commodity buildings must be conducted in accordance with the Measures for Administration of Pre-sale of Commodity Buildings in Urban Area promulgated by the Ministry of Construction in November 1994《城市商品房預售管理辦法》 ( ), as amended in August 2001 and July 2004, and other related regulations. The pre-sale regulations provide that any pre-sale of commodity properties is subject to specified procedures. According to the current PRC laws and regulations, a pre-sale permit must be in place before a commodity building may be put to pre-sale. Specifically, a developer intending to sell a commodity building before its completion must apply to the real estate development authorities for a pre-sale permit. A commodity building may be sold before completion only if:

• the purchase price has been paid in full for the grant of the land use rights involved and a land use rights certificate has been properly obtained;

• a construction planning permit and a construction permit have been properly obtained;

• funds invested in the development of the commodity buildings for pre-sale represent 25% or more of the total investment in the project and the construction progress as well as the completion and delivery dates have been properly ascertained; and

• a pre-sale permit has been obtained.

The pre-sale proceeds of commodity buildings must be used to develop the relevant project so pre-sold.

Commodity buildings may be put to post-completion sale and delivery after they have passed the acceptance examination and otherwise satisfy the various preconditions for such sale. Before the post-completion sale of a commodity building, the developer must, among other things, submit a real estate development project manual and other documents relating to the project evidencing the satisfaction of the preconditions for post-completion sale to the real estate development authority for its record.

On April 13, 2010, MOHURD issued the Notice on Further Enhancing the Supervision of the Real Estate Market and Perfecting the Pre-sale System of Commodity Houses《關於進一步加強房地產市場 ( 監管完善商品住房預售制度有關問題的通知》). Pursuant to the notice, without the pre-sale approval, the commodity properties are not permitted to be pre-sold and the real estate developer are not allowed to charge the buyer any deposit or pre-payment or payment of the similar nature. In addition, the notice urges local governments to enact regulations on sale of completed commodity properties in light of the local conditions, and encourages property developers to sell completed commodity properties.

The Provisions on Sales of Commodity Properties at Clearly Marked Price《商品房銷售明碼標價 ( 規定》) was promulgated by the NDRC on March 16, 2011 and became effective on May 1, 2011. According to the provisions, any real estate developer or real estate agency (“real estate operators”) is required to mark the selling price explicitly and clearly for both newly-build and second-hand commodity properties. The provisions require real estate operators to clearly indicate the prices and relevant fees of commodity properties, as well as other factors affecting the prices of commodity properties to the public.

158 With respect to the real estate development projects that have received property pre-sale permit or have completed the filing procedures for the sales of constructed properties, real estate operators shall announce all the commodity properties available for sales on at once within the specified time limit. Furthermore, with regard to a property that has been sold out, real estate operators are obliged to disclose this information and to disclose the actual transaction price. Real estate operators cannot sell commodity properties beyond the explicit marked price or charge any other fees not explicitly marked. Moreover, real estate operators may neither mislead property purchasers with false or irregular price marking, nor engage in price fraud by using false or misleading price marking methods.

Transfer of Real Estate

According to the PRC laws and the Provisions on Administration of Transfer of Urban Real Estate 《城市房地產轉讓管理規定》( ) promulgated by the Ministry of Construction in August 1995, as amended in August 2001, a real estate owner may sell, gift or otherwise legally transfer the property to another natural 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 together. The parties to a transfer must enter into a written real estate transfer contract and register the transfer with the real estate administration authority having jurisdiction over the location of the real estate within 90 days of the execution of the transfer contract.

Where the land use rights are originally obtained by grant, the real property may only be transferred on the condition that:

• the land premium has been paid in full for the granted land use rights as required by the land grant contract and a land use rights certificate has been properly obtained; 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; or

• in case of a whole land lot development project, construction works have been carried out as planned, water supply, sewerage, electricity supply, heat supply, access roads, telecommunications and other infrastructure or utilities have been made available, and the site has been leveled and made ready for industrial or other construction purposes.

If the land use rights are originally obtained by grant, the term of the land use rights after transfer of the real estate will be the remaining portion of the original term in the land grant contract. In the event that the assignee intends to change the use of the land provided in the land grant contract, consent must first be obtained from the original land use rights grantor and the planning administration authority at the relevant city or county and an agreement to amend the land grant contract or a new land grant contract must be signed in order to, inter alia, change the use of the land and adjust the land premium accordingly.

If the land use rights are originally obtained by allocation, such allocated land use right may be changed to granted land use rights upon approval by the government vested with the necessary approval power as required by the State Council. After the governmental authorities vested with the necessary approval power approve such change, the grantee must complete the formalities for the grant of the land use rights and pay the land premium according to the relevant statutes. Assignment of Land for commercial use, tourism, entertainment and commodity housing development must be conducted through public tender, auction or listing-for-sale under the current PRC laws and regulations.

Registration of Real Property

On December 22, 2014, the State Council published the Interim Regulations on Real Estate Registration by State Council Decree No. 656, which will come into effect on March 1, 2015. Pursuant to the regulation, the following real estate rights shall be registered: (1) ownership of collectively-owned land; (2) ownership of houses and other buildings and structures; (3) ownership of forests and woods; (4) the rights for contracted business operations of arable land, woodland, grassland and other land parcels; (5) the rights to use construction land; (6) the rights to use rural homesteads; (7) the rights to use sea water; (8) easement; (9) mortgage rights; and (10) other real estate rights that shall be registered pursuant to the law.

159 Leases of Buildings

The Measures for Administration of Lease of Commodity Housing《商品房屋租賃管理辦法》 ( ) promulgated by the MOHURD on December 1, 2010 and implemented on February 1, 2011, requires parties to a leasehold arrangement of a property shall register the leasing agreement with property administrative authorities within 30 days after entering into such leasing agreement under local government at the municipal or county level where the property is situated. In addition, enterprise may be imposed a fine of RMB1,000 to RMB10,000 and individuals of RMB1,000 or less if they do not register leasing agreement within time limit required by competent authorities.

Mortgages of Real Estate

Under the PRC Urban Real Estate Administration Law《中華人民共和國城市房地產管理法》 ( ) promulgated by the NPC in July 1994, the PRC Security Law《中華人民共和國擔保法》 ( ) promulgated by the NPC in June 1995 and the Measures for Administration of Mortgages of Urban Real Estate《城市房地產 ( 抵押管理辦法》) promulgated by the Ministry of Construction in May 1997, as amended in August 2001, when mortgage is created on the ownership of a building legally obtained, such mortgage must be simultaneously created on the land use rights of the land on which the building is situated. The mortgagor and the mortgagee must sign a mortgage contract in writing. China has adopted a system to register mortgages of real estate. After a real estate mortgage contract has been signed, the parties to the mortgage must register the mortgage with the real estate administration authority at the location where the real estate is situated. A real estate mortgage contract will become effective on the date of registration of the mortgage. If a mortgage is created on the real estate in respect of which a property ownership certificate has been obtained legally, the registration authority will, when registering the mortgage, make an entry under “third party rights” on the original property 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 on works in progress, the registration authority will, when registering the mortgage, record the details on the mortgage contract. If construction of a real property is completed during the term of a mortgage, the parties involved will re-register the mortgage of the real property after issue of the certificates evidencing the rights and ownership to the real estate.

The PRC Property Rights Law promulgated in March 2007 that became effective in October 2007 further widens the scope of assets that can be mortgaged, allowing for any asset associated with property rights to be mortgaged as collateral unless a specific prohibition under another law or regulation applies.

The down payment requirement was subsequently increased to 30% of the property price for residential units with a unit floor area of 90 sq.m. or more in May 2006. You may refer to “—Measures on Stabilizing Housing Price” below. The initial capital outlay requirement was subsequently increased to 35% by the CBRC, in August 2004 pursuant to its Guidance on Risk Management of Property Loans Granted by Commercial Banks《商業銀行房地產貸款風險管理指引》 ( ).

In a Circular on Facilitating the Continuously Healthy Development of Property Market《關於促 ( 進房地產市場持續健康發展的通知》) issued by the State Council in August 2003, a series of measures were adopted by the government to control the property market. They included, among others, strengthening the construction and management of low-cost affordable houses, increasing the supply of ordinary commodity houses and controlling the construction of high-end commodity houses. Besides, the government also staged a series of measures on the lending for residential development, including, among others, improving the loan evaluation and lending process, improving the guarantee mechanism of individual home loans and strengthening the monitoring over property loans. It is expected that the circular will have a positive effect on the development of the PRC property market in the long run by facilitating a continuously healthy growth of the property market in China.

In September 2007, the PBOC and CBRC promulgated a Circular on Strengthening the Management of Commercial Real-estate Credit Loans《關於加強商業性房地產信貸管理的通知》 ( ), with a supplement issued in December 2007. The circular aims to tighten the control over real-estate loans from commercial banks to prevent granting excessive credit. The measures include:

• for a first-time home owner, increasing the minimum amount of down payment to 30% of the purchase price of the underlying property if the underlying property has a unit floor area of 90 sq.m. or more and the purchaser is buying the property as its own residence;

160 • for a second-time home buyer, increasing (i) the minimum amount of down payment to 40% of the purchase price of the underlying property and (ii) the minimum mortgage loan interest rate to 1.1 times that of the corresponding benchmark interest rate over the same corresponding period released by the PBOC. If a member of a family (including the buyer, his/her spouse and their children under 18) has financed the purchase of a residential unit, any member of the family that buys another residential unit with bank loans will be regarded as a second-time home buyer;

• for a commercial property buyer, (i) requiring banks not to finance any purchase of pre-sold properties, (ii) increasing the minimum amount of down payment to 50% of the purchase price of the underlying property, (iii) increasing the minimum mortgage loan interest rate to 1.1 times that of the corresponding benchmark interest rate over the same corresponding period released by the PBOC, (iv) limiting the terms of such bank loans to no more than 10 years, although the commercial banks are given certain flexibility based on its risk assessment;

• prohibiting commercial banks from providing loans to real-estate developers who have been found by relevant governmental authorities to be hoarding land and properties.

In addition, commercial banks are also banned from providing loans to the projects that have less than 35% of capital funds (proprietary interests), or fail to obtain land use right certificates, construction land planning permits, construction works planning permits or construction permits. Commercial banks are also prohibited from accepting commercial premises that have been vacant for more than three years as collateral for loans. In principle, real-estate development loans provided by commercial banks should only be used for the projects where the commercial banks are located. Commercial banks may not provide loans to property developers to finance the payment of land premium.

According to the Notice on Extending the Downward Range of the Interest Rate for Commercial Personal Home Loans and Supporting the Residents in First-time Purchase of Ordinary Residential Homes《關於擴大商業性個人住房貸款利率下浮幅度等有關問題的通知》 ( ) issued by the PBOC on October 22, 2008, the minimum amount of down payment has been adjusted to 20% since October 27, 2008.

Real Estate Management

Under the Measures for the Administration of Qualifications of Property Service Enterprises《物業 ( 管理企業資質管理辦法》) promulgated by the Ministry of Construction in March 2004, as amended in November 2007, a property service enterprise must apply for assessment of its qualification by the relevant qualification approval authority. An enterprise which passes such a qualification assessment will be issued a qualification certificate. No enterprise may engage in property management without undertaking a qualification assessment conducted by the relevant authority and obtaining a qualification certificate.

Insurance

There is no mandatory provision under the PRC laws, regulations and governmental rules which require a property developer to take out insurance policies for its real estate developments. According to the common practice of the property industry in China, construction companies are usually required to submit insurance proposals in the course of tendering and bidding for construction projects. Construction companies must pay for the insurance premium at their own costs and take out insurance to cover their liabilities, such as third party’s liability risk, employer’s liability risk, risk of non-performance of contract in the course of construction and other kinds of risks associated with the construction and

161 installation works throughout the construction period. The insurance coverage for all these risks will cease immediately after the completion and acceptance upon inspection of construction.

Measures on Stabilizing Housing Price

The General Office of the State Council promulgated a Circular on Stabilizing Housing Price《關於 ( 切實穩定住房價格的通知》) in March 2005, introducing measures to be taken to restrain the housing price from increasing too fast and to promote a stable development of the real estate market. In April 2005, the Ministry of Construction, NDRC, the Ministry of Finance, the Ministry of Land and Resources, the PBOC, SAT and CBRC jointly issued an Opinions on Stabilizing Housing Prices《關於做好穩定住房價格工作的 ( 意見》) containing the following guidance:

• Where the housing price is growing too fast, while the supply of ordinary commodity houses at medium or low prices and low-cost affordable houses is insufficient, the housing construction should mainly involve projects of ordinary commodity houses at medium or low prices and low-cost affordable houses. The construction of low-density, high-end houses should be strictly controlled. The relevant local governmental authorities are authorized to impose conditions on planning and design such as the building height, plot ratio and green space and to impose such requirements as the selling price, type and GFA as preconditions on land assignment. The local governments are also required to strengthen their supervision of real estate developments in their jurisdictions.

• Where the price of land for residential use and the price for residential housing are growing too fast, the proportion of land supply for residential use to the total land supply should be appropriately raised, and the land supply for the construction of ordinary commodity houses at medium or low prices and low-cost affordable houses should be especially increased. Land supply for villa construction should continue to be suspended, and land supply for high-end housing property construction should be strictly restricted.

• Idle land fee must be imposed on land that has not been developed for one year from the contractual construction commencement date. Land use rights of land that has not been developed for two years must be forfeited without compensation.

• Commencing from June 1, 2005, a business tax upon transfer of a residential house by an individual within two years from his/her purchase will be levied on the entire sales proceeds from such sale. For an individual to transfer an ordinary residential house after two years from his/her purchase, the business tax will be exempted. For an individual to transfer a property other than an ordinary residential house after two years from his/her purchase, the business tax will be levied on the difference between the price of such sale and the original purchase price.

• Ordinary residential houses with medium or small GFA and at medium or low prices may be granted preferential treatment such as planning permits, land supply, credit and taxation. Houses enjoying these preferential policies must satisfy the following conditions in principle: the plot ratio is above 1.0, the GFA of one single unit is less than 120 sq.m., and the actual transfer price is lower than 120% of the average transfer price of comparable houses at comparable locations. The local governments at the provincial level may, based on their actual local circumstances, formulate specific standards for ordinary residential houses that may enjoy the preferential policies.

• Transfer of unfinished commodity properties by any pre-sale purchaser is forbidden. In addition, purchasers are required to buy properties in their real names. Any commodity property pre-sale contract must also be filed with the relevant governmental agencies electronically immediately after its execution.

162 The Notice on Adjustment of the Housing Loan Policy and Deposit Rate of Excess Reserve for Commercial Banks《關於調整商業銀行住房信貸政策和超額準備金存款利率的通知》 ( ), promulgated by the PBOC in March 2005, has made adjustment to individual housing loan policies of commercial banks as well as individual housing fund loan rate. Pursuant to this notice, the preferential mortgage loan interest rate was replaced by the commercial loan interest rate subject to certain restrictions on the lower limit on such interest rates. In the urban areas or cities with rapidly increased real estate prices, minimum down payment ratio for individual housing loans was adjusted from 20% to 30%. In May 2006, the Ministry of Construction, NDRC, the PBOC and other relevant PRC governmental authorities jointly issued their Opinions on Housing Supply Structure and Stabilization of Property Prices《關於調整住房 ( 供應結構穩定住房價格意見的通知》). These opinions reiterated the existing measures and ushered additional measures that aim to further curb rapid increases in property prices in large cities and to promote healthy development of the PRC property market. These measures include:

• requiring that at least 70% of the land supply approved by a local government for residential property development for any given year must be used for developing low-to medium-cost and small-to medium-size units and low-cost rental properties;

• requiring that at least 70% of residential projects approved or constructed on or after June 1, 2006 must consist of units with a unit floor area of less than 90 sq.m. per unit and that projects which have received approvals prior to this date but have not obtained construction permits must adjust their planning in order to be in conformity with this new requirement, with the exception that municipalities under direct administration of the PRC central government, such as Beijing, Chongqing and Shanghai, provincial capitals and certain other cities may deviate from such ratio under special circumstances upon approval from the Ministry of Construction;

• increasing the minimum amount of down payment from 20% to 30% of the purchase price of the underlying property if the underlying property has a unit floor area of 90 sq.m. or more, effective from June 1, 2006;

• prohibiting commercial banks from lending to real estate developers with an internal capital ratio, calculated by dividing the internal funds by the total project capital required for the relevant projects, of less than 35%, restricting the grant or extension of revolving credit facilities to property developers holding a large amount of idle land and vacant commodity properties, and prohibiting commercial banks from accepting commodity properties which have been vacant for more than three years as security for their loans; and

• imposing a business tax levy on the entire sales proceeds from transfer of properties if the holding period is shorter than five years, effective from June 1, 2006, as opposed to two years when such levy was initially implemented in June 2005, and allowing such business price in the event that an individual transfers a property other than an ordinary residential property after five years from his/her date of purchase.

In July 2006, the Ministry of Construction, NDRC, MOFCOM, the PBOC, SAIC, and SAFE jointly issued an Opinion on Regulating the Access and Management of Foreign Capital in the Real Estate Market《關於規範房地產市場外資准入和管理的意見》 ( ) (the “171 Opinion”). The 171 Opinion aims to tighten access by foreign capital to the PRC real estate market and to restrict property purchases in China by foreign institutions or individuals. It provides, among others, that a foreign institution or individual must establish a foreign-invested enterprise in order to purchase real property in China if the property is not intended for self-use. The registered capital of such foreign-invested enterprise must amount to at least 50% of its total investments in PRC real properties if the amounts of such investments exceed US$10 million. Branches and representative offices of foreign institutions in China and foreign individuals who work or study in China for more than one year may purchase real property for their own use but not for any other purposes. In addition, foreign institutions which have no branches or representative offices in China or foreign individuals who work or study in China for less than a year are prohibited from purchasing any real property in China. In September 2006, SAFE and the Ministry of Construction jointly issued a Notice in Respect of Foreign Exchange Issues in the Real Estate Market《關於規範房地產市場 (

163 外匯管理有關問題的通知》) (the “47 Notice”) to implement the 171 Opinion. The 47 Notice provides specific procedures for purchasing real properties by foreign institutions and foreign individuals. The 47 Notice also forbids a FIREE to apply for overseas loans if it has failed to pay its registered capital in full or failed to obtain the land use rights certificates, or its own capital funds do not reach 35% of the total investment for the project.

In September 2007, the Ministry of Land and Resources issued the Notice on Implementation of the State Council’s Certain Opinions on Resolving Difficulties of Housing for Low-income Urban Families and Further Strengthening Macro-control of Land Supply《關於認真貫徹國務院〈關於解決 ( 城市低收入家庭住房困難的若干意見〉進一步加強土地供應調控的通知》) as amended on December 3, 2010, pursuant to which, at least 70% of the land supply arranged by the relevant land administration authority at city or county level for residential property development for any given year must be used for developing low-to-medium-cost and small- to medium-size units, low-cost rental properties and affordable housing.

In November 2007, the PRC government revised its Catalog of Guidance on Industries for Foreign Investment by, among other things, removing the development of ordinary residences from the foreign-investment-encouraged category and adding the secondary market residential property trading and brokering into the foreign-investment-restricted category. In July 2008, the PBOC and CBRC jointly issued the Notice on Financially Promoting the Saving and Intensification of Use of Land《關於金融促 ( 進節約集約用地的通知》), requiring that relevant financial institutions to strengthen the administration of construction land project loans, including the administration of commercial real estate credit loan.

In October 2008, the PBOC issued the Notice on Extending the Downward Range of the Interest Rate for Commercial Personal Home Loans and Supporting the Residents in First-time Purchase of Ordinary Residential Homes《關於擴大商業性個人住房貸款利率下浮幅度等有關問題的通知》 ( ), pursuant to which, since October 27, 2008, the bottom limit of the interest rate applicable to the commercial personal home loans has been extended, the minimum amount of down payment has been adjusted to 20% and the interest rate applicable to personal home loans financed by provident fund has been also reduced.

In October 2008, the Ministry of Finance and SAT issued the Notice on the Adjustments to Taxation on Real Property Transactions《關於調整房地產交易環節稅收政策的通知》 ( ) (as amended in September 2010), pursuant to which, since November 1, 2008, individuals who sell or purchase residential properties are temporarily exempted from stamp duty and who sell residential properties are temporarily exempted from land value-added tax.

In December 2008, the General Office of the State Council issued the Several Opinions on Facilitating the Healthy Development of the Real Estate Market《關於促進房地產市場健康發展的若干 ( 意見》), which aims to, among other things, encourage the consumption of the ordinary residence and support the real estate developer to handle the market change. Pursuant to this opinion, in order to encourage the consumption of the ordinary residence, from January 1, 2009 to December 31, 2009, business tax is imposed on the full amount of the sale income upon the transfer a non-ordinary residence by an individual within two years from the purchase date. For the transfer of non-ordinary residence which is more than two years from the purchase date and ordinary residence which is within two years from the purchase date, the business tax is to be levied on the difference between the sale income and the purchase price. In the case of an ordinary residence, the business tax is exempted if that transfer occurs after two years from the purchase date. Furthermore, individuals with an existing ordinary residence that is smaller than the average size for their locality may buy a second ordinary residence under favorable loan terms similar to first-time buyers. In addition, support for real estate developers to deal with the changing market is to be provided by increasing credit financing services to “low-to-medium-level price” or “small-to-medium-sized” ordinary commercial housing projects, particularly those under construction, and providing financial support and other related services to real estate developers with good credit standing for merger and acquisition activities.

164 In January 2010, the General Office of the State Council issued a Circular on Facilitating the Stable and Healthy Development of Property Market《關於促進房地產市場平穩健康發展的通知》 ( ), which adopted a series of measures to strengthen and improve the regulation of the property market, stabilize market expectation and facilitate the stable and healthy development of the property market. These include, among others, measures to increase the supply of affordable housing and ordinary commodity housing, provide guidance for the purchase of property, restrain speculation of properties, and strengthen risk prevention and market supervision. Additionally, it explicitly requires each family (including a borrower, his or her spouse and children under 18), that has already purchased a residence through mortgage financing and have applied to purchase a second or more residences through mortgage financing, to pay a minimum down payment of 40% of the purchase price on the second of more residences.

On April 17, 2010, the State Council announced a series of new measures in the Notice on Resolutely Curbing the Rapid Rising of the House Price in Certain Cities《國務院關於堅決遏制部分城 ( 市房價過快上漲的通知》) to keep housing prices from rising too quickly in certain cities in conjunction with and subsequent to a meeting held on April 14, 2010. The new measures include, among other things:

• Higher minimum down payment requirements

• first-time home house buyers must make a down payment of at least 30% of the purchase price of the underlying property if the underlying property has a unit floor area of 90 sq.m. or more;

• second-time home buyers must make a down payment of at least 50% of the purchase price of the underlying property subject to a minimum mortgage loan interest rate at 110% of the relevant PBOC benchmark interest rate; and

• commercial banks should significantly increase the ratio of minimum down payment to the purchase price and the minimum mortgage loan interest rate, respectively, for buyers who purchase a third or additional houses by mortgage financing.

• Commercial banks’ right to stop lending

• in regions where house prices have been increasing too quickly, commercial banks may stop granting mortgage loans to home buyers who purchase a third or any additional houses;

• commercial banks are required to stop granting mortgage loans to home buyers who are not local residents and cannot provide evidence of payment of tax or social insurance contribution in such local area for more than one year; and

• the local governments may adopt interim measures to impose limits on the maximum number of units that one family may own.

• Punishment of speculative developers

• commercial banks are not allowed to lend to developers who hold idle land or manipulate land reserve or price; and

• the CSRC may suspend review of applications from speculative developers for listing of shares, restructuring or refinancing.

• Disclosure of property ownership

• property developers who have filed with the local governmental information of the completed properties to be sold or who have obtained the pre-sale permits are required to disclose to the public the properties for sale all at once and within a

165 specified period of time and sell the properties they develop exactly at the price provided to the local government.

On September 29, 2010, the Ministry of Finance, SAT and the MOHURD jointly issued the Notice on Adjustments to Deed Tax and Individual Income Tax on Real Estate Transactions《關於調整房地產 ( 交易環節契稅個人所得稅優惠政策的通知》), according to which, a family (including the purchaser, the purchaser’s spouse and minor children) purchasing its first ordinary residential property will enjoy a 50% reduction on deed tax payment; in case that the GFA of fore-mentioned property is less than 90 sq.m., the deed tax rate will be 1%. Individuals who purchase another residential property within one year after selling their own residential properties shall no longer enjoy exemption or reduction of individual income tax.

On September 29, 2010, the PBOC and CBRC jointly issued the Notice on Relevant Issues Regarding the Improvement of Differential Mortgage Loan Policies《關於完善差別化住房信貸政策有 ( 關問題的通知》), according to which, the minimum down payment has been raised to 30% of the purchase price of the commodity residential property, and commercial banks shall suspend granting mortgage loans to families that purchase a third or further residential property or non-local residents who fail to provide one-year or longer tax payment certificates or social insurance payment certificates. For a mortgage on the second residential property, the minimum down payment must be 50% of the purchase price and the interest rate must be no less than 1.1 times that of the corresponding benchmark interest rate over the same corresponding period released by the PBOC.

On January 26, 2011, the State Council issued the Notice on Further Adjustment and Control of Property Markets《關於進一步做好房地產市場調控工作有關問題的通知》 ( ) which requires, among other restrictive measures: (i) a minimum down payment of 60% of the total purchase price with a minimum mortgage interest rate of 110% of the benchmark rate published by the PBOC for the purchase of a second residential property; and (ii) in municipalities directly under the central government, cities listed on state plans, provincial capitals, and cities where the housing prices are overly high or increasing at an excessively high rate, local residents with two or more residential properties, non-local residents with one or more residential properties and non-local residents that are unable to provide documentation certifying payment of local tax or social insurance payment for a specified time period, are not permitted to purchase any residential properties located in the local administrative area.

On January 27, 2011, the Ministry of Finance and SAT jointly issued the Notice on Adjusting the Business Tax Policies upon Transferring Residential Properties by Individuals《關於調整個人住房轉讓 ( 營業稅政策的通知》). Pursuant to the notice, business tax will be levied upon the transfer of a residential property held by an individual for less than five years and the amount of business tax to be paid will be calculated based on the full amount of the sale proceeds. For an individual transferring a non-ordinary residential property held for five years or more, the business tax to be paid will be calculated based on the difference between the sale proceeds and the original purchase price. An individual transferring an ordinary residential property held for five years or more will be exempted from the business tax.

On July 19, 2012, Ministry of Land and Resources and MOHURD issued the Urgent Notice to Further Tighten Up Real Property Land Administration and Consolidate the Achievement of Macroeconomic Control of the Real Property Market《國土資源部、住房城鄉建設部關於進一步嚴格 ( 房地產用地管理鞏固房地產市場調控成果的緊急通知》). According to this notice, the Ministry of Land and Resources, MOHURD and their respective local counterparts will continue to strictly regulate the market to prevent housing prices from rebounding. Local governments must ensure a supply of land for social security housing projects, and must try to increase the completion rate of such projects. Further, the governments will further improve the land price evaluation procedure, thereby allowing for the reasonable determination of base prices for land auction. For those auctions in which the land prices may be raised to a significantly higher level, the governments must adjust the bidding method in a timely manner. For those lands which are expected to reach unprecedentedly high prices and those lands whose final deal prices have a premium rate of more than 50%, the government should adjust the land transfer scheme in a timely manner, such as by limiting the final home prices or requiring the land purchaser to build additional social security housing projects. Further, the government will continue enforcing the system for reporting unusual transactions, which requires that governments at city-level and county-level

166 should, within two business days upon the signing of purchase confirmation letter or the dispatch of the letter of acceptance, submit the unusual transaction data to the national land market monitoring and administration system, thereby reporting the unusual transaction to the Ministry of Land and Resources and its agencies at the provincial level.

Additionally under this notice, the government emphasizes that the scope of land to be transferred should not exceed its scope limit, and some other acts will continue to be strictly prohibited, such as combining two or more separate tracts of land into one bidding subject, or transferring land without first completing the demolition and relocation work. The floor-area ratio of residential land should be no less than 1. Further, land allocation decision or land transfer contract should require real estate developer to commence the construction and development within one year after the land has been delivered to it and to complete the construction and development within three years. The government will strictly inspect the competence of bidders so as to prohibit any bank loan from being used for the payment of land price. The deposit for land auction or bidding should not be less than 20% of the base price. After the deal of land transfer has been reached, the land transfer agreement should be signed within 10 business days, 50% of the land price should be paid within one month after the signing of the land transfer agreement and the payment of remaining land price should be made within one year. Also, the government should prohibit the purchaser from purchasing land for a certain period if such a purchaser (a) failed to pay the land price in a timely manner; (b) intentionally left the land idle; (c) intentionally reserved land for the purpose of resale; (d) developed land beyond its development capability; or (e) failed to duly perform the land use contract.

On September 6, 2012, the Ministry of Land and Resources promulgated the Notice on Strictly Implementing Land Use Standards and Vigorously Promoting Economical and Intensive Land Use《關於嚴 ( 格執行土地使用標準大力促進節約集約用地的通知》), which stipulates, among other things, that: (a) land use standards shall be strictly implemented and continuously improved. For industrial and commercial land transferred through lawful public tender, auction and listing-for-sale, the administration of land and resources of cities and counties shall establish the requirements related to land use standards for the schemes and announcement of land assignment, and include such requirements in assignment contracts and strictly enforce the requirements. Construction lands that are listed in the Catalog for Prohibited Land Use Projects, or that fail to conform to the prescribed conditions in the Catalog for Restricted Land Use Projects《限制用 ( 地項目目錄》), or for which the intensity of investment, floor area ratio, construction coefficient, ratio of green land, or proportion of administrative offices and living facilities land fail to conform to relevant requirements for industrial projects or total area or each functional division area surpasses the required limits or the land area and floor area ratio fails to conform to the conditions of the residential land supply shall not pass the land supply and approval procedures; (b) the format and substantial content of land use standard shall be strictly examined; (c) the implementation of land use standard shall be further supervised and evaluated; and (d) the land use standard training program shall be given to the officials in land and resources authorities, and such the land use standards shall be widely publicized for the purpose of effectuation.

On November 5, 2012, the Ministry of Land and Resources, the Ministry of Finance, the PBOC and CBRC jointly promulgated the Notice on Strengthening Land Reserves and Financing Administration (Guotuzi Fa [2012] No. 162)《關於加強土地儲備與融資管理的通知》 ( （國土資發[2012] 162號）)in order to strengthen land bank institutions administration, determine the reasonable scale and structure of land bank, strengthen the administration of land pre-development, reservation and protection, and regulate the financing to land reservation and the use of land reservation funds.

On February 26, 2013, the General Office of the State Council issued the Notice on Continuing to Effectively Regulate the Real Estate Market《關於繼續做好房地產市場調控工作的通知》 ( ), requiring certain related cities to fine-tune the existing house purchase restrictions on the basis of strict compliance with the Notice of the General Office of the State Council on Further Improving the Regulation of the Real Estate Market (Guo Ban Fa [2011] No. 1)《國務院辦公廳關於進一步做好房地產市場調控工作有 ( 關問題的通知》國辦發[2011] 1號), which includes, among others: (i) all administrative regions of a city subject to purchase restrictions shall be covered under such restrictions, while the types of houses subject to purchase restrictions shall include all newly-constructed commercial housing and second-hand housing. The house purchase eligibility shall be examined before the conclusion of a house purchase contract (or a letter of purchase intent). For the time being, houses within the administrative regions of a

167 city shall not be sold to a family without local household register that already owns one or more houses, and a family without local household register that is unable to provide proofs for a certain number of consecutive years of local tax payment or social insurance contribution; (ii) with regard to cities with soaring housing prices, the local branches of the People’s Bank of China, may further raise the enforcing percentage of the minimum down payment (which shall not be lower than 60%) and loan interest rates which shall not be lower than 1.1 times of the benchmark interest rate for the second-home purchases, according to policy requirements and the price control targets determined by the local people’s governments for newly-constructed commercial housing; and (iii) tax authorities shall levy individual income tax payable on the sales of owner-occupied houses at 20% of the transfer income in strict compliance with the law if the original value of the houses sold can be verified through historical information such as tax collection and administration, house registration, etc.

On February 26, 2013, the General Office of the State Council issued the Notice on Continuing Adjustment and Control of Property Markets《關於繼續做好房地產市場調控工作的通知》 ( ) which requires, among other restrictive measures:

(i) Improving the responsibility system for stabilizing housing prices. Municipalities directly under the central government, cities listed on state plans and provincial capitals (excluding Lhasa) must set an annual objective for controlling housing prices and publish annual new commodity housing price control target in the first quarter of the year.

(ii) Firmly restraining purchases of residential housing for investment and speculation purposes. Municipalities directly under the central government, cities listed on state plans and provincial capitals which have implemented restrictions on the real estate market are required to cover all administrative areas of the cities as restricted areas, and restricted housing shall include new commodity housing and second-hand housing. Non-local residents who possess one or more residential properties and fail to provide one-year or longer tax payment certificates or social insurance payment certificates are to be barred from purchasing any residential properties located in the administrative area. For cities where housing prices are increasing at an excessively high rate, local branches of the PBOC may further raise the down payment rate and mortgage interest rate for the purchase of a second residential property. In addition, the state will strictly enforce a 20% tax on home sale profits.

(iii) Expanding ordinary commodity housing units and increasing the supply of land. The overall housing land supply in 2013 shall not be lower than the average actual land supply in the past five years. Financial institutions, subject to credit requirements, are to prioritize requests for loans for ordinary commodity housing construction projects in which medium and small housing units constitute 70% or more of the total units in such construction project.

According to the Notice on Adjusting Differentiated Housing Credit Policies in Hangzhou City 《關於調整杭州市區差別化住房信貸政策的通知》( ) issued on November 26, 2013 by Hangzhou Central Sub-branch of the PBOC, as of December 6, 2013, households that are making their second home purchase are required to pay a down payment of no less than 70% percent of the purchase price of the underlying property. The regulation that a down payment of no less than 30% percent of the purchase price of the underlying property required as down payment continues to apply to households purchasing their first home for their personal use. Households purchasing their third house or more will continue to be disqualified as the recipients of mortgage loans. However, the policies in this Notice are currently replaced by the new policies detailed below and are not being exercised for the time being.

Recently, the PRC government has gradually loosened control over the real property market in PRC by implementing various policies including:

168 speculative demands, and promote a healthy development of real property market’ in PRC. After several years of referring to controlling policies and suppressing the rising housing prices, this was the first year that such language was not included in the report.

• On June 27, 2014, the purchasing limit policy for Hohhot was officially cancelled. On August 28, 2014, the purchasing limit policy for Hangzhou was also cancelled. Other cities in China gradually followed and cancelled such policies. As of January 25, 2015, purchasing limit policy is only applicable in Beijing, Shanghai, Guangzhou, Shenzhen and Sanya.

• On March 25, 2015, the Ministry of Land and Resources and the Ministry of Housing and Urban-rural Development jointly issued the ‘Notice on Optimizing Housing and Land Supply Structure and Promoting the Steady and Healthy Development of Real Estate Market’《關於優化 ( 2015年住房及用地供應結構促進房地產市場平穩健康發展的通知》), designed to ensure the balance between market supply and demand and to require that the size of housing land be determined according to the specific local conditions. For cities and counties that obviously have a much larger supply, housing land supply should be reduced and controlled to optimize its size and structure and accelerate de-stocking.

169 • On March 30, 2015, the Notice of the Ministry of Finance and the State Administration of Taxation on Adjusting the Business Tax Policies Concerning Transfer of Individual Housing 《財政部、國家稅務總局關於調整個人住房轉讓營業稅政策的通知》( ) was promulgated, to come into effect on March 31, 2015. According to this notice, the sale of an ordinary residential house by an individual who purchased the same house more than two years (inclusive) ago shall be exempted from business tax. The exemption period is shortened from 5 years to 2 years to further stimulate the circulation of second-hand housing and stimulate the market.

Overseas Listing

In August 2006, MOFCOM, the State Assets Supervision and Administration Commission, the SAT, the State Administration of Industry and Commerce, the China Securities Regulatory Commission, and SAFE jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors《關於外國投資者併購境內企業的規定》 ( ), as amended on June 22, 2009 (the “New M&A Rule”), which became effective on September 8, 2006. This New M&A Rule requires, among other things, that offshore special purpose vehicles, formed for overseas listing purposes through acquisitions of PRC domestic companies controlled by PRC companies or individuals, obtain the approval of the China Securities Regulatory Commission prior to publicly listing their securities on an overseas stock exchange.

Environmental Protection

The laws and regulations governing the environmental protection requirements for real estate development in China include the PRC Environmental Protection Law《中華人民共和國環境保護法》 ( ), the PRC Prevention and Control of Noise Pollution Law《中華人民共和國環境噪音污染防治法》 ( ), the PRC Environmental Impact Assessment Law《中華人民共和國環境影響評價法》 ( ) and the PRC Administrative Regulations on Environmental Protection for Development Projects《建設項目環境保護管理條例》 ( ). Pursuant to these laws and regulations, depending on the impact of the project on the environment, an environmental impact report, an environmental impact analysis table or an environmental impact registration form must be submitted by a developer before the relevant authorities grant approval for the commencement of construction of the property development. In addition, upon completion of the property development, the relevant environmental authorities will also inspect the property to ensure compliance with the applicable environmental protection standards and regulations before the property can be delivered to the purchasers.

Labor Law and Labor Contract Law

Pursuant to the Labor Law of the PRC effective since January 1, 1995, the PRC Labor Contract Law effective since January 1, 2008, and the Implementing Regulations of the PRC Labor Contract Law effective since September 18, 2008, an employment relationship is established from the date when an employee commences working for an employer, and a written employment contract must be entered into on this same date. If an employment relationship has already been established with an employee but no written employment contract has been entered into simultaneously, a written employment contract must be entered into within one month from the date on which the employee commences work. If an employer fails to enter into a written employment contract with an employee within one year from the date on which the employment relationship is established, it must pay the employee twice his/her salary for each month of the eleven months’ period and rectify the situation by subsequently entering into a written employment contract with the employee.

Regulation on Social Insurance and Housing Fund

As required under Regulation of Insurance for Labor Injury, Provisional Insurance Measures for Maternity of Employees, Regulation of Unemployment Insurance, the Decision of the State Council on Setting up Basic Medical Insurance System for Staff Members and Workers in Cities and Towns, the Interim Regulations on the Collection and Payment of Social Insurance Premiums and the Interim Provisions on Registration of Social Insurance, business enterprises are obliged to provide their

170 employees in China with welfare schemes covering pension insurance, unemployment insurance, maternity insurance, injury insurance and medical insurance. Any enterprise that fails to make social insurance contributions in accordance with the relevant regulations may be ordered to rectify the noncompliance and pay the required contributions within a stipulated deadline. If the enterprise fails to rectify the noncompliance by the stipulated deadline set out by the governmental authorities, it can be assessed a late fee by the relevant authority in the amount of 0.2% of the amount overdue per day from the original due date.

In addition, on October 28, 2010, the Standing Committee of the National People’s Congress promulgated the Social Insurance Law, which became effective on July 1, 2011, to clarify the components of the social insurance system in China. According to the Social Insurance Law, employees will participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance and maternity insurance and the employers must, together with their employees or separately, pay the social insurance premiums for such employees. According to the Social Insurance Law, an employer that fails to make social insurance contributions may be ordered to pay the required contributions within a stipulated deadline and be subject to a late fee of 0.05% of the amount overdue per day from the original due date by the relevant authority. If the employer continues to fail to rectify the delinquent social insurance contribution payment within such stipulated deadline, it may be subject to a fine ranging from one to three times the amount overdue.

According to Regulations on Management of Housing Fund, enterprises must register at and be subject to review by housing fund administration centers with competent jurisdictions, and open accounts of housing fund for their employees with the designated banks. Enterprises are also obliged to pay and deposit housing fund in full amount in a timely manner. Any enterprise that fails to make housing fund contributions may be ordered to rectify the noncompliance and pay the required contributions within a stipulated deadline; otherwise, an application may be made to a local court for compulsory enforcement.

Foreign Exchange Controls

Under the PRC Foreign Currency Administration Rules《中華人民共和國外匯管理條例》 ( ) promulgated in 1996 and revised in 1997 and as amended in 2008 and various regulations issued by SAFE and other relevant PRC governmental authorities, Renminbi is convertible into other currencies for the purpose of current account items, such as trade related receipts and payments and the payment interest and dividend. The conversion of Renminbi into other currencies and remittance of the converted foreign currency outside China for the purpose of capital account items, such as direct equity investments, loans and repatriation of investment, requires the prior approval from SAFE or its local office. Payments for transactions that take place within China must be made in Renminbi. Unless otherwise provided, PRC companies may repatriate foreign currency payments received from abroad or retain the same abroad under capital account items after obtaining the prior approval from SAFE or its local office Foreign-invested enterprises may retain foreign exchange in accounts with designated foreign exchange banks subject to a cap set by SAFE or its local office. Foreign exchange proceeds under the current accounts may be either retained or sold to a financial institution engaging in settlement and sale of foreign exchange pursuant to relevant rules and regulations of the State. For foreign exchange proceeds under the capital accounts, approval from SAFE is required for its retention or sale to a financial institution engaging in settlement and sale of foreign exchange, except where such approval is not required under the rules and regulations of the State.

In October 2005, SAFE issued a Notice on Issues Relating to the Administration of Foreign Exchange in Fund-raising and Reverse Investment Activities of Domestic Residents Conducted via Offshore Special Purpose Companies《關於境內居民通過境外特殊目的公司融資及返程投資外匯管理 ( 有關問題的通知》). According to the notice, a special purpose company refers to an offshore company established or indirectly controlled by PRC residents for the special purpose of carrying out financing of their assets or equity interest in PRC domestic enterprises. Prior to establishing or assuming control of a special purpose company, each PRC resident, whether a natural or legal person, must complete the overseas investment foreign exchange registration procedures with the relevant local SAFE branch. The notice applies retroactively. These PRC residents must also amend the registration with the relevant SAFE branch in the following circumstances: (1) the PRC residents have completed the injection of

171 equity investment or assets of a domestic company into the special purpose company; (2) the overseas funding of the special purpose company has been completed; (3) there is a material change in the capital of the special purpose company. Under the rules, failure to comply with the foreign exchange registration procedures may result in restrictions being imposed on the foreign exchange activities of the violator, including restrictions on the payment of dividends and other distributions to its offshore parent company, and may also subject the violators to penalties under the PRC foreign exchange administration regulations.

In August 29, 2008, SAFE issued the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises《關於完善外商投資企業外匯資本金支付結匯管理有關業務操作問題的 ( 通知》) (the “Circular No. 142”). Pursuant to Circular No. 142, a foreign-invested enterprise’s Renminbi fund received from the settlement of its foreign currency capital must be used within the business scope as approved by the governmental authority that approved the establishment of such foreign-invested enterprise, and such Renminbi fund cannot be used for domestic equity investment unless it is otherwise provided for.

Mainland China Taxation

Because virtually all of our business operations are in mainland China and we carry out these business operations through operating subsidiaries and joint ventures organized under the PRC law, our PRC operations and our operating subsidiaries and joint ventures in mainland China are subject to PRC tax laws and regulations, which indirectly affect your investment in the Notes.

Dividends from our PRC Operations

Under the PRC tax laws effective prior to January 1, 2008, dividends paid by our PRC subsidiaries or joint ventures to us were exempt from PRC income tax. However, pursuant to the Enterprise Tax Laws 《中華人民共和國企業所得稅法》( ), dividends payable by foreign invested enterprises, such as subsidiaries and joint ventures in China, to their foreign investors are subject to a withholding tax at a rate of 10% unless any lower treaty rate is applicable.

Under the Enterprise Tax Laws, enterprises established under the laws of foreign jurisdictions but whose “de facto management body” is located in China are treated as “resident enterprises” for PRC tax purposes, and are subject to PRC income tax on their worldwide income. For such PRC tax purposes, dividends from PRC subsidiaries to their foreign shareholders are excluded from such taxable worldwide income. Under the implementation rules of the Enterprise Tax Law, “de facto management bodies” are defined as the bodies that have material and overall management control over the business, personnel, accounts and properties of an enterprise. There is uncertainty as to how this new law and its implementation rules will be interpreted or implemented by relevant tax bureaus.

Our Operations in Mainland China

Our subsidiaries and joint ventures through which we conduct our business operations in mainland China are subject to PRC tax laws and regulations.

Deed Tax

Under the PRC Interim Regulation on Deed Tax《中華人民共和國契稅暫行條例》 ( ) promulgated by the State Council in July 1997 and implemented in October 1997, deed tax is chargeable to transferees of land use rights and/or ownership in real properties within the territory of mainland China. These taxable transfers include:

• grant of use right of state-owned land;

• sale, gift and exchange of land use rights, other than transfer of right to manage rural collective land; and

172 • sale, gift and exchange of real properties.

Deed tax rate is between 3% to 5% subject to determination by local governments at the provincial level in light of the local conditions.

Corporate Income Tax

Prior to the implementation of the Enterprise Tax Laws, our PRC subsidiaries and joint ventures were generally subject to a 33% corporate income tax. Under the Enterprise Tax Law, effective from January 1, 2008, a unified EIT rate is set at 25% for both domestic enterprises and foreign-invested enterprises, The Enterprise Tax Laws provide certain relief to enterprises that were established prior to March 16, 2007, including (1) continuing to enjoy the previous preferential income tax rate during a five-year transition period if such enterprises are entitled to preferential income tax rates before the effectiveness of the Enterprise Tax Law; (2) continuing to enjoy the preferential income tax rate until its expiry if such enterprises are entitled to tax holidays for a fixed period under the relevant laws and regulations. However, where the preferential tax treatment has not commenced due to losses or accumulated loss not being fully offset, such preferential tax treatment was deemed to commence from January 1, 2008. In addition, according to the implementation ruler of the Enterprise Tax Laws, dividends from PRC subsidiaries to their foreign corporate shareholders are subject to a withholding tax at a rate of 10% unless any lower treaty rate is applicable. However, under the Enterprise Tax Laws, enterprises established under the laws of foreign jurisdictions but whose “de facto management body” is located in China are treated as “resident enterprises” for PRC tax purposes, and are subject to PRC income tax at a rate of 25% on their worldwide income. Dividends from PRC subsidiaries to their foreign corporate shareholders that are treated as resident enterprises for the reason mentioned above may be excluded from such taxable worldwide income. Under the implementation rules of the Enterprise Tax Law, “de facto management bodies” are defined as the bodies that have material and overall management control over the business, personnel, accounts and properties of an enterprise. There is uncertainty as to how this new law and its implementation rules will be interpreted or implemented by relevant tax bureaus.

In addition, pursuant to the Arrangement between mainland China and Hong Kong for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income《內地和香港特別行 ( 政區關於對所得避免雙重徵稅和防止偷漏稅的安排》) signed on August 21, 2006 and applicable in Hong Kong to income derived in any year of assessment commencing on or after April 1, 2007 and in mainland China to any year commencing on or after January 1, 2007, a company incorporated in Hong Kong is subject to withholding income tax at a rate of 5% on dividends it receives from its PRC subsidiaries if it holds a 25% or more equity interest in each such PRC subsidiary at the time of the distribution, or 10% if it holds less than a 25% equity interest in that subsidiary. On August 24, 2009, SAT issued the Notice Regarding the Publishing of the Administrative Measures for Non-residents to Enjoy the Treatment Under Taxation Treaties (Trial) 《關於印發〈非居民享受稅收協定待遇管理法〉( （試行）》), effective on October 1, 2009, and its supplemental regulation promulgated and effective on June 21, 2010, which provide that prior approvals from or filings with (as the case may be) the relevant local tax authorities are required before a non-resident taxpayer may enjoy any benefits under the relevant taxation treaties.

According to the Notice on the Prepayment of Enterprise Income Tax of the Real Estate Development Enterprises《關於房地產開發企業所得稅預繳問題的通知》 ( ) issued by the SAT on April 7, 2008 and effective on January 1, 2008, as amended on January 4, 2011 tax prepayments in respect of income generated from pre-sales before completion of the construction of the buildings for residential, commercial use or other uses shall be paid upon the calculation of the estimated quarterly or monthly profit according to the preset estimated profit rate and it must be readjusted according to the actual profit after the completion of the construction of the buildings and the settlement of the taxable costs.

On March 6, 2009, SAT issued the Measures Dealing with Income Tax of Enterprise Engaged in Real Estate Development and Operation《房地產開發經營業務企業所得稅處理辦法》 ( ) effective on January 1, 2008, amended on June 16, 2014, which specifically stipulates the rules regarding tax

173 treatment of income and deduction of cost and fees, verification of calculated tax cost and tax treatment on certain matters of the real estate development enterprise according to the Enterprise Tax Law and its implementation rules.

On May 12, 2010, SAT promulgated the Notice on the Confirmation of Completion Conditions for Development of Products by Real Estate Development Enterprises《關於房地產開發企業開發產品完工 ( 條件確認問題的通知》), which provides that a property will be deemed as completed when its delivery procedures (including move-in procedures) have commenced or when the property is in fact put in use. Real estate developers must conduct the settlement of cost in time and calculate the amount of corporate income tax for the current year.

Business Tax

Under the PRC Interim Regulation on Business Tax《中華人民共和國營業稅暫行條例》 ( ) of 1994, as amended in November 2008, and the Detailed Implementation Rules of the Interim Regulation of the PRC on Business Tax《中華人民共和國營業稅暫行條例實施細則 ( （2011年修訂）》) issued and implemented by MOF on December 25, 1993 and as amended on December 15, 2008 and October 28, 2011, services in China are subject to business tax. Taxable services include sale of real property in mainland China. The Business tax rate is between 3% to 20% depending on the type of services provided. Sale of real properties and other improvements on the land are levied a business tax at the rate of 5% of the turnover of the selling enterprise payable to the relevant local tax authorities.

Land Appreciation Tax

Under the PRC Interim Regulation on Land Appreciation Tax《中華人民共和國土地增值稅暫行 ( 條例》) of 1994 and its implementation rules of 1995, LAT applies to both domestic and foreign investors in real properties in mainland China, irrespective of whether they are corporate entities or individuals. The tax is payable by a taxpayer on the appreciation value derived from the transfer of land use rights, buildings or other facilities on such land, after deducting the “deductible items” that include the following:

• payments made to acquire land use rights;

• costs and charges incurred in connection with the land development;

• construction costs and charges in the case of newly constructed buildings and facilities;

• assessed value in the case of old buildings and facilities;

• taxes paid or payable in connection with the transfer of the land use rights, buildings or other facilities on such land; and

• other items allowed by the Ministry of Finance.

174 The tax rate is progressive and ranges from 30% to 60% of the appreciation value as compared with the “deductible items” as follows:

Appreciation value LAT rate Portion not exceeding 50% of deductible items ...... 30% Portion over 50% but not more than 100% of deductible items ...... 40% Portion over 100% but not more than 200% of deductible items ...... 50% Portion over 200% of deductible items ...... 60%

Exemptions from LAT are available in the following cases:

• Taxpayers constructing ordinary residential properties for sale (i.e. the residences built in accordance with the local standard for residential properties used by the general population, excluding deluxe apartments, villas, resorts and other high-end premises), where the appreciation amount does not exceed 20% of the sum of deductible items;

• Real estate taken over and repossessed according to laws due to the construction requirements of the state; and

• Due to redeployment of work or improvement of living standard, transfers by individuals of originally self-used residential properties, with five years or longer of self-used residence and with tax authorities’ approval.

According to a notice issued by the Ministry of Finance in January 1995, the LAT regulation does not apply to the following transfers of land use rights:

• real estate transfer contracts executed before January 1, 1994; and

• first time transfers of land use rights and/or premises and buildings during the five years commencing on January 1, 1994 if the land grant contracts were executed or the development projects were approved before January 1, 1994 and the capital has been injected for the development in compliance with the relevant regulations.

After the enactment of the LAT regulations and the implementation rules in 1994 and 1995, respectively, due to the long period of time typically required for real estate developments and their transfers, many jurisdictions, while implementing these regulations and rules, did not require real estate development enterprises to declare and pay the LAT as they did other taxes. Therefore, in order to assist the local tax authorities in the collection of LAT, the Ministry of Finance, SAT, Ministry of Construction and State Land Administration Bureau separately and jointly issued several notices to reiterate that, after the assignments are signed, the taxpayers should declare the tax to the local tax authorities where the real estate is located, and pay the LAT in accordance with the amount as calculated by the tax authority and within the time period as required. For those who fail to acquire proof as regards the tax paid or the tax exemption from the tax authorities, the real estate administration authority will not process the relevant title change procedures, and will not issue the property ownership certificates.

SAT issued a further the Notice on Serious Handling of Administration of the Collection of Land Appreciation Tax《關於認真做好土地增值稅徵收管理工作的通知》 ( ) in July 2002 to require local tax authorities to require prepayment of LAT on basis of proceeds from pre-sale of real estate.

In December 2006, SAT issued a Notice on the Administration of the Settlement of Land Appreciation Tax of Property Development Enterprises《關於房地產開發企業土地增值稅清算管理有 ( 關問題通知》), which came into effect on February 1, 2007. The notice required settlement of LAT liabilities by real estate developers. Provincial tax authorities are given authority to formulate their implementation rules according to the notice and their local situation.

To further strengthen LAT collection, in May 2009, SAT released the Rules on the Administration of the Settlement of Land Appreciation Tax《土地增值稅清算管理規程》 ( ), which came into force on June 1, 2009.

175 On May 19, 2010, SAT promulgated the Notice on Issues Regarding Land Appreciation Tax Settlement《關於土地增值稅清算有關問題的通知》 ( ), which provides further clarifications and guidelines on LAT settlement, revenue recognition, deductible expenses, timing of assessment and other related issues.

On May 25, 2010, SAT issued the Notice on Strengthening the Collection of Land Appreciation Tax《關於加強土地增值稅徵管工作的通知》 ( ), which provides for a minimum LAT prepayment rate at 2% for provinces in eastern China region, 1.5% for provinces in the central and northeastern China regions, and 1% for provinces in the western China region. The notice also delegate to the local tax authorities the authority to determine the applicable LAT prepayment rates based on the types of the properties in their respective regions.

Urban Land Use Tax and Buildings Tax

Pursuant to the PRC Interim Regulations on Land Use Tax in respect of Urban Land《中華人民共 ( 和國城鎮土地使用稅暫行條例》) promulgated by the State Council in September 1988, amended on December 31, 2006, January 8, 2011, and December 7, 2013, the land use tax in respect of urban land is levied according to the area of relevant land. The annual tax on urban land was between RMB0.6 and RMB30 per sq.m.

Buildings Tax

Under the PRC Interim Regulations on Buildings Tax《中華人民共和國房產稅暫行條例》 ( ) promulgated by the State Council in September 1986, and amended on January 8, 2011, buildings tax applicable to domestic enterprises is 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. On January 27, 2011, the governments of Shanghai and Chongqing respectively issued measures for implementing pilot individual property tax schemes which became effective on January 28, 2011.

According to the Notice on Issues Relating to Assessment of Buildings Tax against Foreign-invested Enterprises and Foreign Individuals《關於對外資企業及外籍個人徵收房產稅有關問 ( 題的通知》) issued by the Ministry of Finance and SAT in January 2009, the foreign-invested enterprises, foreign enterprises and foreign individuals are to be levied the same as domestic enterprise.

Stamp Duty

Under the PRC Interim Regulations on Stamp Duty《中華人民共和國印花稅暫行條例》 ( ) promulgated by the State Council in August 1988, and amended on January 8, 2011, for property transfer instruments, including those in respect of property ownership transfers, the duty rate is 0.05% of the amount stated therein; for permits and certificates relating to rights, including property ownership certificates and land use rights certificates, stamp duty is levied on an item-by-item basis of RMB5 per item.

Municipal Maintenance Tax

Under the PRC Interim Regulations on Municipal Maintenance Tax《中華人民共和國城市維護建 ( 設稅暫行條例》) promulgated by the State Council in 1985, and amended on January 8, 2011, any taxpayer, whether an individual or otherwise, of product tax, value-added tax or business tax is required to pay municipal maintenance tax calculated on the basis of product tax, value-added tax and business tax. The tax rate is 7% for a taxpayer whose domicile is in an urban area, 5% for a taxpayer whose domicile is in a county or a town, and 1% for a taxpayer whose domicile is not in any urban area or county or town.

According to the Circular Concerning Unification of Municipal Maintenance Tax and Education Surcharge for Foreign Investment and Domestic Enterprises and Individuals《關於統一內外資企業和個 ( 人城市維護建設稅和教育費附加制度的通知》) issued by State Council on October 18, 2010, the municipal maintenance tax is applicable to foreign invested enterprises, foreign enterprises and foreign individuals from December 1, 2010.

176 Education Surcharge

Under the Interim Provisions on Imposition of Education Surcharge《徵收教育費附加的暫行規 ( 定》) promulgated by the State Council in April 1986 and amended on June 7, 1990, August 20, 2005 and January 8, 2011, any taxpayer, whether an individual or otherwise, of value-added tax, business tax or consumption tax is liable for an education surcharge, unless such taxpayer is 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《國務院關於籌措農村學校辦學經費的通知》 ( ). The Education Surcharge rate is 3% calculated on the basis of consumption tax, value-added tax and business tax. According to the Circular Concerning Unification of Municipal Maintenance Tax and Education Surcharge for Foreign Investment and Domestic Enterprises and Individuals《關於統一內外資企業和個人城市維護建設稅和教育費附加制 ( 度的通知》) issued by State Council on October 18, 2010, the education surcharge will be applicable to foreign invested enterprises, foreign enterprises and foreign individuals since December 1, 2010.

177 PRC CURRENCY CONTROLS

The following is a general description of certain currency controls in the PRC and is based on the laws and relevant interpretations thereof in effect as at the date of this offering memorandum, all of which are subject to change, and does not constitute legal advice. It does not purport to be a complete analysis of all applicable currency controls in the PRC relating to the Notes. Prospective holders of Notes who are in any doubt as to PRC currency controls are advised to consult their own professional advisers.

Renminbi is not a freely convertible currency. The remittance of Renminbi into and outside the PRC is subject to control imposed under PRC law.

Current Account Items

Under PRC foreign exchange control regulations, current account items refer to any transaction for international receipts and payments involving goods, services, earnings and other frequent transfers.

Prior to July 2009, all current account items were required to be settled in foreign currencies with limited exceptions. In July 2009, the PRC commenced a pilot scheme pursuant to which Renminbi may be used for settlement of imports and exports of goods between approved pilot enterprises in five designated cities in the PRC including Shanghai, Guangzhou, Dongguan, Shenzhen and Zhuhai and enterprises in designated offshore jurisdictions including Hong Kong and Macau. On June 17, 2010, August 24, 2011 and February 3, 2012 respectively, the PRC government promulgated the Circular on Issues concerning the Expansion of the Scope of the Pilot Programme of Renminbi Settlement of Cross-Border Trades (關於擴大跨境貿易人民幣結算試點有關問題的通知), the Circular on Expanding the Regions of Cross-border Trade Renminbi Settlement (關於擴大跨境貿易人民幣結算地區的通知) and the Notice on Matters Relevant to the Administration of Enterprises Engaged in Renminbi Settlement of Export Trade in Goods (關於出口貨物貿易人民幣結算企業管理有關問題的通知) (together as “Circulars”). Pursuant to these Circulars, (i) Renminbi settlement of imports and exports of goods and of services and other current account items became permissible, (ii) the list of designated pilot districts were expanded to cover all provinces and cities in the PRC, (iii) the restriction on designated offshore districts has been lifted and (iv) any enterprise qualified for the export and import business is permitted to use Renminbi as settlement currency for exports of goods without obtaining the approval as previously required, provided that the relevant provincial government has submitted to the PBOC and five other PRC authorities (the “Six Authorities”) a list of key enterprises subject to supervision and the Six Authorities have verified and signed off such list (the “Supervision List”).

On 5 July, 2013, the PBOC promulgated the Circular on Policies related to Simplifying and Improving Cross-border Renminbi Business Procedures (關於簡化跨境人民幣業務流程和完善有關政策的通知) (the “2013 PBOC Circular”), which, in particular, simplifies the procedures for cross border Renminbi trade settlement under current account items. For example, PRC banks may conduct settlement for PRC enterprises (excluding those on the Supervision List) upon the PRC enterprises presenting the payment instruction. PRC banks may also allow PRC enterprises to make/receive payments under current account items prior to the relevant PRC bank’s verification of underlying transactions (noting that verification of underlying transactions is usually a precondition for cross border remittance).

As new regulations, the Circulars and the 2013 PBOC Circular will be subject to interpretation and application by the relevant PRC authorities. Local authorities may adopt different practices in applying the Circulars and the 2013 PBOC Circular and impose conditions for settlement of current account items.

Capital Account Items

Under PRC foreign exchange control regulations, capital account items include cross-border transfers of capital, direct investments, securities investments, derivative products and loans. Capital account payments are generally subject to approval of, and/or registration or filing with, the relevant PRC authorities.

178 Until recently, settlement for capital account items were generally required to be made in foreign currencies. For instance, foreign investors (including any Hong Kong investors) are required to make any capital contribution to foreign invested enterprises in a foreign currency in accordance with the terms set out in the relevant joint venture contracts and/or articles of association as approved by the relevant authorities. Foreign invested enterprises or relevant PRC parties were also generally required to make capital account payments including proceeds from liquidation, transfer of shares, reduction of capital, interest and principal repayment to foreign investors in a foreign currency.

On May 10, 2013, the State Administration of Foreign Exchange of the PRC (國家外匯管理局) (“SAFE”) promulgated the Provisions on the Foreign Exchange Administration of Domestic Direct Investment by Foreign Investors (外國投資者境內直接投資外匯管理規定) (the “SAFE Provisions”), which became effective on 13 May 2013. According to the SAFE Provisions, foreign investors can use cross-border Renminbi (including Renminbi inside and outside the PRC held in the capital accounts of non-PRC residents) to make a contribution to an onshore enterprise or make a payment for the transfer of an equity interest of an onshore enterprise by a PRC resident within the total investment amount approved by the competent authorities (for example, MOFCOM and/or its local counterparts as well as financial regulators). Capital account transactions in Renminbi must generally follow the current foreign exchange control regime applicable to foreign currencies.

Under current rules promulgated by SAFE, foreign debts borrowed and the foreign security provided by an onshore entity (including a financial institution) in Renminbi shall, in principle, be regulated under the current PRC foreign debt and foreign security regime. Furthermore, according to the 2013 PBOC Circular, upon enforcement of foreign security in Renminbi provided by onshore non-financial enterprises, PRC banks may provide Renminbi settlement services (i.e. remittance of enforcement proceeds) directly, which seems to indicate that SAFE approval for enforcement (which would be required in the case of the external guarantees in foreign currencies) is no longer required. However, SAFE has not amended its positions under the current applicable rules, nor has it issued any regulations to confirm the positions in the 2013 PBOC Circular. Therefore, there remain potential inconsistencies between the provisions of the SAFE rules and the provisions of the 2013 PBOC Circular and it is unclear how SAFE will deal with such inconsistencies in practice.

Approved onshore enterprises and enterprises that have filed with the competent authorities in the Shanghai free trade zone (the “Shanghai FTZ”) can extend loans in Renminbi to, or borrow loans in Renminbi from, offshore group entities within the same group under Renminbi cash pooling arrangements (through a bank in Shanghai) according to applicable rules and will no longer need to attend to normal procedures with the PBOC or SAFE for each sum under this arrangement. However, Renminbi funds obtained from financing activities may not be pooled under this arrangement.

According to the Circular on Supporting the Expanded Cross-border Utilisation of Renminbi in the Shanghai FTZ (關於支持中國(上海)自由貿易試驗區擴大人民幣跨境使用的通知) (the “PBOC Shanghai FTZ Circular”) issued on February 20, 2014, banks in Shanghai can settle Renminbi funds under FDI for enterprises in the Shanghai FTZ upon the client’s instruction. In addition, enterprises in the Shanghai FTZ can borrow Renminbi from offshore lenders within the prescribed limit, while there is no numerical limit for banks in the Shanghai FTZ to borrow offshore Renminbi, although the utilisation has geographic restriction, the interpretation of which is still unclear. The PBOC Shanghai FTZ Circular also allows, in principle, the China Foreign Exchange Trading System to offer trading facility relating to financial instrument denominated in Renminbi to offshore investors, and the Shanghai Gold Exchange to offer trading facility relating to precious metal transactions to offshore investors.

The SAFE Provisions, the MOFCOM Circular, the PBOC FDI Measures and the Shanghai PBOC FTZ Circular, which are new regulations, have been promulgated to control the remittance of Renminbi for payment of transactions categorized as capital account items and such new regulations will be subject to interpretation and application by the relevant PRC authorities. Further, if any new PRC regulations are promulgated in the future which have the effect of permitting or restricting (as the case may be) the remittance of Renminbi for payment of transactions categorized as capital account items, then such remittances will need to be made subject to the specific requirements or restrictions set out in such rules.

179 RELATED PARTY TRANSACTIONS

The following discussion describes certain material related party transactions between our consolidated subsidiaries and our directors, executive officers and controlling shareholders and, in each case, the companies with whom they are affiliated. Each of our related party transactions were entered into in the ordinary course of business on fair and reasonable commercial terms in our interests and the interests of our shareholders. As a listed company on the SEHK, we are subject to the requirements of Chapter 14A of the Listing Rules which require certain “connected transactions” with “connected persons” be approved by the Company’s independent shareholders. The following is a brief description of our major on-going related party transactions:

Amounts due from and to related parties

Historically, we have engaged in trade and other transactions with our related parties. The table below sets forth the balances between us and our related parties as at the dates indicated:

As at December 31, 2012 2013 2014 2014 (US$ in (RMB in thousands) thousands) Amounts due from related parties: Shareholders(1) ...... 14,439 — — — Shareholders’ Companies(2) ...... 4,485 165,141 8,558 1,379 Non-controlling shareholders ...... 6,891,445 6,843,772 6,760,154 1,089,539 Associates ...... 13,136,516 13,331,175 13,572,764 2,187,533 Joint ventures ...... 1,501,681 4,593,199 6,756,128 1,088,890 Officers ...... 70,519 47,919 59,110 9,527 Total ...... 21,619,085 24,981,206 27,156,714 4,376,868 Amounts due to related parties: Shareholders(1) ...... 13,160 13,160 10,380 1,673 Shareholders’ Companies(2) ...... 35,388 16,600 25,781 4,155 Non-controlling shareholders ...... 1,347,482 3,768,005 5,442,907 877,237 Associates ...... 4,332,551 4,223,442 2,317,742 373,552 Joint ventures ...... 1,385,138 2,745,754 2,046,598 329,851 Officers ...... 11,395 8,345 6,984 1,126 Total ...... 7,125,114 10,775,306 9,850,372 1,587,592

(1) Mr. Song Weiping, Mr. Shou Bainian and Ms. Xia Yibo are each a “Shareholder,” and collectively the “Shareholders,” of the Company. (2) Shareholders’ Companies represent companies directly or indirectly beneficially owned by the Shareholders and affiliates.

Guarantees

We provided guarantees to banks and other parties in respect of credit facilities utilized by our related parties as at the dates indicated:

As at December 31, 2012 2013 2014 2014 (US$ in (RMB in thousands) thousands) Associates ...... 3,821,076 6,825,405 6,717,608 1,082,682 Joint ventures ...... 4,230,736 792,910 1,956,350 315,306 Independent third parties ...... 200,000 300,000 300,000 48,351 Total ...... 8,251,812 7,918,315 8,973,958 1,446,340

180 Properties Leasing Agreements

On December 1, 2008, the Company and Greentown Holdings Group entered into two properties leasing agreements (the “Properties Leasing Agreements”), each for a term of three years commencing from January 1, 2009 and ended December 31, 2011:

(1) a properties leasing agreement pursuant to which the Company agreed to rent certain premises and properties for general commercial uses; and

(2) a framework property leasing agreement pursuant to which the Company agreed to rent 30 residential units to be used as staff quarters for the Group.

On January 20, 2012, the Company entered into renewed properties leasing agreements with Greentown Holdings Group extending the term to expire on December 31, 2014. On March 12, 2015, the Company entered into renewed properties leasing agreements with Greentown Holdings Group extending the term up to December 31, 2017. Pursuant to the renewed properties leasing agreements, the aggregate annual rental payable by the Company will be RMB15 million and will be settled twice a year, in every January and July, unless otherwise agreed by the parties.

Advertising Services Agreement

On December 1, 2008, the Company and Zhejiang Greentown Football Club Company Limited (浙江綠城足球俱樂部有限公司)(“Greentown Football Club”) entered into an advertising services agreement (the “Advertising Services Agreement”) for a term of three years commencing from January 1, 2009 and ended December 31, 2011, pursuant to which Greentown Football Club provided advertising services to the Company, including advertising the Company’s Greentown Real Estate brand name at the football games and events participated by Greentown Football Club as a marketing campaign which allowed the brand name of the Company to be publicized to spectators and the wider public through various public media reporting the football events.

On December 15, 2011, in view of the continuous development of the Group, the Company entered into a supplemental advertising services agreement to broaden the scope of advertising services provided by Greentown Football Club to the Company under the Advertising Services Agreement.

On January 20, 2012, the Company and Greentown Football Club entered into a renewed advertising services agreement on terms similar to the Advertising Services Agreement for a term expiring on December 31, 2014. On March 12, 2015, the Company entered into a renewed advertising services agreement on terms similar to the Advertising Services Agreement for a term expiring on December 31, 2017. Pursuant to the renewed advertising services agreement, annual advertising fees will be paid to Greentown Football Club in return for advertising the brand name of Greentown Real Estate. The annual advertising fees payable to Greentown Football Club will not exceed RMB70 million. Unless otherwise agreed between the parties, the annual advertising fees will be paid in three installments: as to fifty percent (50%) of the total annual advertising fees will be paid by January, as to thirty percent (30%) by June and as to the remaining twenty percent (20%) by September.

Comprehensive Services Agreement

On December 1, 2008, the Company, Shareholders and Greentown Holdings Group entered into a comprehensive services agreement (the “Comprehensive Services Agreement”), for a term of three years commencing from January 1, 2009 and ended December 31, 2011 for the provision of the following services: (1) Interior decoration services; (2) Property management services; (3) Supply of landscaping raw materials; and (4) Hotel management services.

On January 20, 2012, the Company, the Shareholders and Greentown Holdings Group entered into a renewed comprehensive services agreement on terms similar to the Comprehensive Services Agreement for a term expiring on December 31, 2014. On March 12, 2015, the Company entered into a renewed comprehensive services agreement on terms on terms not less favorable than those they offer to any third

181 parties from time to time for a term up to December 31, 2017. The Company is not obliged to use such services on an exclusive basis or at all and may terminate such services in respect of any project by serving three months’ prior written notice.

Education Services Framework Agreement

On December 23, 2010, the Company and Zhejiang Greentown Education Investment Company Limited (浙江綠城教育投資有限公司)(“Greentown Education”) entered into an early educational participation services framework agreement (the “Educational Services Framework Agreement”) for the provision of early educational participation services by Greentown Education to the Group in the Group’s development projects for a term of two years commencing from January 1, 2010 and ended December 31, 2011. The services were charged according to government determined or directed price or, in absence of such government determination or direction, at market price (including tender price) which might be charged by an independent third party under normal commercial terms in respect of the provision of similar services in the same area, the vicinity or the PRC. The services provided by Greentown Education to the Group under the Educational Services Framework Agreement were not exclusive and the Group might engage other service providers for the same services.

On January 20, 2012, the Company and Greentown Education entered into a renewed educational services framework agreement on terms similar to the Educational Services Framework Agreement for a term expiring on December 31, 2014. On March 12, 2015, the Company entered into a renewed comprehensive services agreement on terms similar to the Educational Services Framework Agreement for a term expiring on December 31, 2017. The services will be charged according to government determined or directed price or, in the absence of such government determination or direction, at market price (including tender price) which may be charged by an independent third party under normal commercial terms in respect of the provision of similar services in the same area, the vicinity or the PRC. The Company and Greentown Education, or their respective subsidiaries, may enter into individual agreements in respect of the services to be provided based on the terms of the renewed educational services framework agreement. The services under the renewed educational services framework agreement are not exclusive and the Group may engage other service providers for the same services. The Company may also terminate the services to be provided by Greentown Education by serving three months’ prior written notice.

Health Management Services Framework Agreement

On December 23, 2010, the Company and Zhejiang Greentown Health Promotion Management Company Limited (浙江綠城健康促進管理有限公司)(“Greentown Health”) entered into a health management services framework agreement (the “Health Management Services Framework Agreement”) for the provision of health management services to the Group for a term of two years commencing from January 1, 2010 and ended December 31, 2011. The services were charged according to government determined or directed price or, in absence of such government determination or direction, at market price (including tender price) which might be charged by an independent third party under normal commercial terms in respect of the provision of similar services in the same area, the vicinity or the PRC. The services provided by Greentown Health to the Group under the Health Management Services Framework Agreement were not exclusive and the Group might engage other service providers for the same services.

On January 20, 2012, the Company and Greentown Health entered into a renewed health management services framework agreement similar to the Health Management Services Framework Agreement for a term expiring on December 31, 2014. Greentown Health has since ceased to be a connected person of the Company.

182 Healthcare Services Framework Agreement

On December 23, 2010, the Company and Zhejiang Greentown Hospital Investment Company Limited (浙江綠城醫院投資有限公司)(“Greentown Hospital”) entered into a healthcare services framework agreement (the “Healthcare Services Framework Agreement”) for the provision of healthcare services to the Group for a term of two years commencing from January 1, 2010 and ended December 31, 2011. The services were charged according to government determined or directed price or, in absence of such government determination or direction, at market price (including tender price) which might be charged by an independent third party under normal commercial terms in respect of the provision of similar services in the same area, the vicinity or the PRC. The services provided by Greentown Hospital to the Group under the Healthcare Services Framework Agreement were not exclusive and the Group might engage other service providers for the same services.

On January 20, 2012, the Company and Greentown Hospital entered into a renewed healthcare services framework agreement on terms similar to the Healthcare Services Framework Agreement for a term expiring on December 31, 2014. On March 12, 2015, the Company entered into a renewed comprehensive services agreement on terms similar to the Healthcare Services Framework Agreement for a term expiring on December 31, 2017. The services will be charged according to government determined or directed price or, in the absence of such government determination or direction, at market price (including tender price) which may be charged by an independent third party under normal commercial terms in respect of the provision of similar services in the same area, the vicinity or the PRC. The Company and Greentown Hospital, or their respective subsidiaries, may enter into individual agreements in respect of the services to be provided based on the terms of the renewed healthcare services framework agreement. The services under the renewed healthcare services framework agreement are not exclusive and the Group may engage other service providers for the same services. The Company may also terminate the services to be provided by Greentown Hospital by serving three months’ prior written notice.

Framework Agreements

Wharf Framework Agreement

On November 15, 2012, the Company entered into a framework agreement with Wharf, pursuant to which the Company subscribed for 400 new shares at HKD1.00 each in Green Magic Investments Limited (“Green Magic”), a company incorporated in Hong Kong with limited liability, which is an indirect wholly owned subsidiary of Wharf. The Group also advanced a shareholder’s loan of HKD332,300,000 (equivalent to RMB269,462,000) to Green Magic which may be held in the form of shareholder loan or equity. After the subscription, the Company and Wharf holds 40% and 60% equity interest, respectively, in Green Magic. In 2013, in light of the Group’s 40% interest in Green Magic and its wholly owned subsidiary Dalian Wharf Greentown Real Estate Co., Ltd. (“Dalian Wharf Greentown”), Era Win Holdings Limited (“Era Win”), a wholly owned subsidiary of the Company charged its shares in Green Magic in favor of Wharf, pursuant to which the Company and Era Win have agreed, among other things, to secure 40% of the obligations under the loan facility of RMB350,000,000 (equivalent to approximately HK$437,350,514) granted by a bank to Dalian Wharf Greentown and the loan facility of US$260,000,000 (equivalent to approximately HK$324,888,953) granted by certain banks to (after novation) Green Magic.

Sunac-China Gold Framework Agreement

On March 16, 2013, Sunac, the Company, China Gold and the sole registered shareholder of China Gold entered into a framework agreement, pursuant to which Sunac and the Company conditionally agreed to acquire through their equally-shared offshore JV, and China Gold conditionally agreed to dispose of, the entire issued share capital of Golden Regal. The acquisition was completed on July 17, 2013. For the latest development of our partnership with Sunac, see “Recent Developments” and “Business—Strategic Partnerships from 2012 to 2014—Sunac.”

183 Sunac Framework Agreement

In connection with the dispute between the Company and Sunac with respect to the Purported Disposals, on May 15, 2015, the Company and Sunac entered into the Sunac Framework Agreement, pursuant to which the Company conditionally agreed, subject to the relevant shareholders’ approval of the Company, to transact with Sunac and its subsidiaries in relation to the following transactions:

• acquisition by Greentown Real Estate from Shanghai Sunac Greentown of the return on investment in respect of Shanghai Sunac Greentown’s 51% equity interests in Shanghai Huazhe Bund;

• acquisition by Greentown Real Estate from Beijing Sunac Construction Investment Real Estate Co., Ltd of its 45% equity interests in, and shareholder’s loan to, Beijing Xingye Wanfa Real Estate Development Co., Ltd.;

• acquisition by Greentown Real Estate from (i) Shanghai Forest Golf of its 50% equity interests in Zhejiang Jinying and (ii) Sunac Zhidi of its shareholder’s loan to Zhejiang Jinying;

• disposal by Greentown Real Estate to Sunac Zhidi of Greentown Real Estate’s 50% equity interests in Shanghai Forest Golf;

• disposal by On Century Investment Limited to Zhuo Yue Property Investment Holdings Limited of its 25% equity interests in Hangzhou Sunac Greentown Real Estate Development Co., Ltd.;

• disposal by Greentown Investment Management Co., Ltd. to Shanghai Sunac Real Estate Development Co., Ltd. of its 50% equity interests in Shanghai Sunac Greentown;

• disposal by the Company to Sunac of its 50% of the issued share capital of Sunac Greentown; and

• development of Tianjin Greentown National Game Village Construction and Development Co., Ltd. on a 51:49 joint venture between the Company and Sunac.

A circular containing, among other things, further details of the Sunac Framework Agreement, was despatched by the Company to its shareholders on June 28, 2015.

The foregoing transactions were subject to approval of the Company’s shareholders which was obtained at an extraordinary general meeting of the Company held on July 15, 2015. For further details of the framework agreement, see “Recent Developments—Sunac-Greentown Joint Venture Restructuring.”

Dalian Zhongshan Project

On November 15, 2012, the Company entered into a framework agreement with Wharf, pursuant to which the Group and the Wharf Group agreed to jointly develop land in the Zhongshan district of Dalian, on a 60:40 ownership basis, into residential properties, through Green Magic and through a wholly owned project company. The land was acquired for a total consideration of RMB2,028,000,000. To fund the land consideration, project development and construction costs, Green Magic and its wholly owned project company obtained bank loan facilities of an aggregate amount of HK$2,460,300,000. The amount outstanding on such facilities is guaranteed by Wharf. On May 2, 2013, the Company and its wholly owned subsidiary Era Win Holdings Limited (“Era Win”), which holds 40% of the issued share capital of Green Magic, executed a share charge in favor of Wharf, pursuant to which the Company and Era Win agreed, among others, to guarantee and secure 40% of the obligations under such bank loan facilities, proportional to the Group’s 40% equity interest in Green Magic, by charging its shares in Green Magic in favor of Wharf as security.

184 Shanghai Huangpu Project

On May 31, 2013, Sunac Greentown, Sunac and our Company as Sunac Greentown’s guarantors, Arch Capital and certain guarantors of Arch Capital entered into an agreement, pursuant to which Sunac Greentown conditionally agreed to acquire, and Arch Capital conditionally agreed to dispose of, the entire issued share capital of a certain company (the “Target Company”). As of the date of this agreement, Shanghai Huangpu Project was composed of four contiguous lands held by Arch Capital through Richport Property Development, Everbright Property Development, Fung Seng (Shanghai) Company and Feng Chang Company. Upon the completion of its internal reorganization and the investment, Sunac Greentown will hold the entire issued share capital of the Target Company, which in turn will hold the entire issued share capital of Wisdom Collection Holdings (International) Inc., which in turn will hold the entire issued share capital of Wisdom Collection Group, which in turn will hold the entire issued equity interest in each of Richport Property Development, Everbright Property Development and Fung Seng (Shanghai) Company, while one of Arch Capital’s guarantors (a Hong Kong Company) will hold the entire equity interest in Feng Chang Company.

Upon completion of the development of the Shanghai Huangpu Project in the manner contemplated in the agreement as described above, Sunac and our Company will each hold, through Sunac Greentown, a 50% interest in the Target Company, while Sunac Greentown, the Target Company and its subsidiaries (i) will become non-wholly owned subsidiaries of Sunac and their financial results will be consolidated into the consolidated financial statements of Sunac and its subsidiaries and (ii) will not become our subsidiaries and their financial results will not be consolidated into the consolidated financial statements of the Group.

The Shanghai Huangpu Project is subject to the restructuring arrangements in the Sunac Framework Agreement. For further details and the latest development of our partnerships and joint ventures with Sunac, see “Recent Developments—Sunac Share Sale” and “Recent Developments—Sunac-Greentown Joint Venture Restructuring.”

Hangzhou Xiao Shan Projects

On December 18, 2013, the Company entered into a framework agreement with Wharf (the “2013 Xiao Shan Framework Agreement”), pursuant to which the Group and the Wharf Group agreed to jointly develop land in the Xiao Shan District of Hangzhou, on a 50:50 ownership basis, into residential properties. The land use rights was acquired from the Hangzhou Municipal Bureau of Land Resources by Magic Delight Limited (the “Investment Company”), an indirect wholly owned subsidiary of Wharf as of the date of the 2013 Xiao Shan Framework Agreement, for the total consideration of RMB2,576,000,000, of which RMB303,400,000 has already been paid by the Investment Company as deposit as of the date of the Xiao Shan Framework Agreement. Accordingly, the Company shall be responsible for 50% of the deposit, subject to refund to the Company in the event that the Company is unable to obtain independent shareholders’ approval within three months from the date of the Xiao Shan Framework Agreement. Under the Xiao Shan Framework Agreement, Wharf (through its wholly owned subsidiary) and the Company (through its wholly owned subsidiary) will each own 50% of the issued share capital of the Investment Company. The Investment Company will establish a project company for the purpose of developing the land. The Investment Company intends to fund the remaining balance of the consideration partially by external financings for which Wharf and the Group will provide guarantees thereon in accordance with the terms of the Xiao Shan Framework Agreement.

On December 29, 2014, the Company entered into a framework agreement with Wharf (the “2014 Xiao Shan Framework Agreement”) pursuant to which the Group and the Wharf Group agreed to jointly develop a piece of land in the Xiao Shan District of Hangzhou of approximately 21,282 sq.m., on a 50:50 ownership basis, into residential properties. The land use rights were jointly acquired from the Hangzhou Municipal Bureau of Land Resources by Henan Jinjiang Real Estate Co., Ltd. (“Greentown Henan”), an indirect wholly owned subsidiary of the Company, and Long Run Property Development (Chengdu) Co., Ltd. (“Wharf Chengdu”), an indirect wholly owned subsidiary of Wharf, in each case as of the date of the Xiao Shan Framework Agreement, for a total consideration of RMB480.5 million, of which RMB143.8 million was paid by the Group and the Wharf Group as deposit as of the date of the Xiao Shan

185 Framework Agreement. Under the 2014 Xiao Shan Framework Agreement, Greentown Henan and Wharf Chengdu will establish, on a 50:50 ownership basis, a project company (the “Project Company”) for the purpose of developing the land. The Project Company is expected to be an indirect non-wholly owned subsidiary of the Company. Prior to obtaining major licenses for the development of the land, it is expected that Hangzhou Greentown Wharf Real Estate Co., Ltd. (“Greentown-Wharf Joint Venture Company”), being a joint venture company indirectly held by the Company and Wharf on a 50:50 ownership basis, will fund, on behalf of Greentown Henan and Wharf Chengdu, the balance of the consideration, relevant land tax and preliminary development costs. As security for such funding, each of Greentown Henan and Wharf Chengdu will pledge its equity interest in the Project Company to Greentown-Wharf Joint Venture Company. The Project Company is expected to satisfy all other funding needs for the development of the land through a combination of shareholder funding from Greentown Henan and Wharf Chengdu and external financing for which Greentown Henan and Wharf Chengdu will guarantee on a several and pro rata basis. The Project Company has been established and the project is currently under development.

Compensation of key management personnel

The remuneration of directors and other members of key management during the periods as indicated below is as follows:

For the year ended December 31, 2012 2013 2014 2014 (US$ in (RMB in thousands) thousands) Short-term benefits ...... 23,366 26,747 33,161 5,345 Post-employment benefits ...... 245 292 284 46 Share-based payments ...... 1,203 — — — Total ...... 24,814 27,039 33,445 5,390

The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends.

186 DESCRIPTION OF MATERIAL INDEBTEDNESS AND OTHER OBLIGATIONS

To fund our existing property projects and to finance our working capital requirements, we have borrowed money or incurred indebtedness from various financial institutions or trust companies and obtained financings through debt offerings. As of December 31, 2014, our total borrowings were RMB35,815.4 million (US$5,772.4 million). We set forth below a summary of the material terms and conditions of these loans and other indebtedness.

Project Loan Agreements

Certain of our PRC subsidiaries have entered into loan agreements with local branches of various PRC banks and financial institutions, including Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China and China Merchants Bank. These loans include project loans to finance the construction of our projects and loans to finance our working capital requirements. They have terms ranging from 12 months to 120 months, which generally correspond to the construction periods of the particular projects. Our PRC loans are typically secured by land use rights and properties as well as guaranteed by certain of our other PRC subsidiaries.

Interest

The principal amounts outstanding under the PRC loans generally bear interest at floating rates calculated with reference to the PBOC benchmark interest rate. Floating interest rates are generally subject to annual or quarterly review by the lending banks. Interest payments are payable either monthly or quarterly and must be made on each payment date as provided in the particular loan agreement.

Covenants

Under these PRC loans, many of our subsidiary borrowers have agreed, among other things, not to take the following actions without obtaining the relevant lender’s prior consent:

• creating encumbrances on any part of their property or assets or dealing with their assets in a way that may adversely affect their ability to repay their loans;

• granting guarantees to any third parties that may adversely affect their ability to repay their loans;

• making any major changes to their corporate structures, such as entering into joint ventures, mergers, acquisitions and reorganizations;

• altering the nature or scope of their business operations in any material respect;

• transferring part or all of their liabilities under the loans to a third party;

• prepaying the loans;

• selling or disposing of assets;

• distributing dividends or paying back shareholders’ loans before settling the loans; and

• incurring other indebtedness that may adversely affect their ability to repay their loans.

Events of default

The PRC loan agreements contain certain customary events of default, including failure to pay the amount payable on the due date, unauthorized use of loan proceeds, failure to obtain the lender’s approval for an act that requires the latter’s approval, and material breach of the terms of the loan agreement. The banks are entitled to terminate their respective agreements and/or demand immediate repayment of the loans and any accrued interest upon the occurrence of an event of default.

187 Customer guarantees

In line with industry practice, we provide guarantees to mortgagee banks in respect of mortgage loans taken out by purchasers of our properties. As of December 31, 2014, the aggregate outstanding amount guaranteed was RMB17,826 million.

US Dollar Facility Agreements

On July 23, 2013, Sunac Greentown Investment Holdings Limited, a joint venture of which we and Sunac are shareholders, entered into an up to US$450 million secured syndicated facility agreement with Industrial and Commercial Bank of China (Asia) Limited, Deutsche Bank AG, London Branch, China CITIC Bank International Limited and Bank of China Limited Macau Branch pursuant to which the joint venture borrowed loans in the aggregate amount of US$400 million to refinance certain shareholder loans from Sunac to the joint venture to finance its acquisition of a project in Shanghai. Interest on the loans accrues at a rate of LIBOR plus 3.88%. The Company is a guarantor under this facility and in addition pledged its shares in the joint venture to the lenders as security for the loans. Under the terms of this facility agreement, we are subject to certain financial covenants and undertakings, including certain negative pledges, limitations on our ability to undertake mergers or dispose of assets and to incur debt or provide guarantees. The aggregate principal amount of the loans outstanding under this facility is US$360 million as of the date of this offering memorandum.

On July 25, 2013, the Company and certain of its subsidiaries entered into a US$100 million unsecured facility agreement with BOCI Leveraged & Structured Finance Limited and Bank of China Limited Macau Branch pursuant to which we borrowed loans in the aggregate amount of US$100 million to finance our general working capital needs. Interest on the loans accrues at a rate of LIBOR plus 4%. Under the terms of this facility agreement we are subject to certain financial covenants and undertakings, including certain negative pledges, limitations on our ability to undertake mergers or dispose of assets and to incur debt or provide guarantees. The aggregate principal amount of the loans outstanding under this facility is US$90 million as of the date of this offering memorandum, which, in accordance with the repayment schedule under the facility agreement, will be reduced to US$80 million on July 25, 2015.

On September 5, 2013, the Company and certain of its subsidiaries entered into a US$300 million unsecured facility agreement with China CITIC Bank International Limited, The Hongkong and Shanghai Banking Corporation Limited, Industrial and Commercial Bank of China (Asia) Limited, Standard Chartered Bank (Hong Kong) Limited, Hang Seng Bank Limited, Deutsche Bank AG, Singapore Branch and Goldman Sachs (Asia) L.L.C. pursuant to which we borrowed loans in the aggregate amount of US$300 million to finance our general working capital needs. Interest on the loans accrues at a rate of LIBOR plus 3.85%. Under the terms of this facility agreement, we are subject to certain financial covenants and undertakings, including certain negative pledges, limitations on our ability to undertake mergers or dispose of assets and to incur debt or provide guarantees. The aggregate principal amount of the loans outstanding under this facility is US$270 million as of the date of this offering memorandum.

Senior Notes

On November 10, 2006, we issued 9.00% senior notes due 2013 in an aggregate principal amount of US$400 million pursuant to the indenture dated November 10, 2006 (the “November 2006 Notes”). On April 21, 2009, we commenced a tender offer to purchase for cash any and all of our outstanding November 2006 Notes. In conjunction with the tender offer, the Company also solicited consent to proposed amendments and waivers of the November 2006 Notes to (i) eliminate substantially all of the restrictive covenants, (ii) eliminate certain events of default and (iii) waive all defaults or events of default that have occurred or may have occurred. The tender offer and consent solicitation closed on May 19, 2009. We fully repaid the November 2006 Notes on November 8, 2013.

188 On February 4, 2013, we issued 8.50% senior notes due 2018 in an original aggregate principal amount of US$400 million and on March 26, 2013, we issued an additional aggregate principal amount of US$300 million, both pursuant to the 2018 USD Notes Indenture, and which together comprise the 2018 USD Notes. The aggregate principal amount of the 2018 USD Notes outstanding is US$700 million as of the date of this offering memorandum. The terms of the 2018 USD Notes limits the ability of the Group to incur indebtedness (as defined therein) except for permitted indebtedness (as defined therein).

On May 13, 2013, we issued the 2016 RMB Notes, which are 5.625% senior notes due 2016 in an aggregate principal amount of RMB2.5 billion pursuant to the 2016 RMB Notes Indenture. The aggregate principal amount of the 2016 RMB Notes outstanding is RMB2.5 billion as of the date of this offering memorandum. The terms of the 2016 RMB Notes limit the ability of the Group to incur indebtedness (as defined therein) except for permitted indebtedness (as defined therein).

On September 24, 2013, we issued 8.0% senior notes due 2019 in an original aggregate principal amount of US$300 million and on February 10, 2015, we issued an additional aggregate principal amount of US$200 million, both pursuant to the 2019 USD Notes Indenture, and which together comprise the 2019 USD Notes. The aggregate principal amount of the 2019 USD Notes outstanding is US$500 million as of the date of this offering memorandum. The terms of the 2019 USD Notes limit the ability of the Group to incur indebtedness (as defined therein) except for permitted indebtedness (as defined therein).

The terms of each of the Senior Notes are substantially the same as described below.

Guarantee

The obligations pursuant to the Senior Notes are guaranteed by our existing subsidiaries (the “Senior Notes Subsidiary Guarantors”) other than those organized under the laws of the PRC and certain other subsidiaries specified in the Senior Notes Indentures. Under certain circumstances and subject to certain conditions, a guarantee by an Senior Notes Subsidiary Guarantor may be replaced by a limited-recourse guarantee, referred to as a JV Subsidiary Guarantee in the Senior Notes Indentures.

Each of the Senior Notes Subsidiary Guarantors, jointly and severally, guarantees the due and punctual payment of the principal, any premium, and interest on, and all other amounts payable under, the Senior Notes.

Interest

The 2018 USD Notes bear an interest rate of 8.50% per annum. Interest is payable semi-annually in arrears.

The 2016 RMB Notes bear an interest rate of 5.625% per annum. Interest is payable semi-annually in arrears.

The 2019 USD Notes bear an interest rate of 8.0% per annum. Interest is payable semi-annually in arrears.

Covenants

Subject to certain conditions and exceptions, the Senior Notes Indentures contain certain covenants, restricting us and each of the related restricted subsidiaries from, among other things:

• incur additional indebtedness and issue disqualified or preferred stock;

• declare dividends on its capital stock or purchase or redeem capital stock;

• make investments or other specified restricted payments;

• issue or sell capital stock of restricted subsidiaries;

189 • guarantee indebtedness of restricted subsidiaries;

• sell assets;

• create liens;

• enter into sale and leaseback transactions;

• enter into agreements that restrict the restricted subsidiaries’ ability to pay dividends, transfer assets or make intercompany loans;

• enter into transactions with stakeholders or affiliates; and

• effect a consolidation or merger.

Events of Default

The Senior Notes Indentures contain certain customary events of default, including default in the payment of principal, or of any premium, on any of the Senior Notes, when such payments become due, default in payment of interest which continues for 30 days, breaches of covenants, insolvency and other events of default specified in the Senior Notes Indentures. If an event of default occurs and is continuing, the trustee under each of the Senior Notes Indentures or the holders of at least 25% of each of the outstanding Senior Notes may declare the principal of the Senior Notes plus any accrued and unpaid interest and premium (if any) to be immediately due and payable.

Change of Control

Upon the occurrence of a certain event of change of control and a rating decline, we are obligated to make an offer to repurchase all outstanding notes at a purchase price equal to 101% of their principal amount plus any accrued and unpaid interest.

Maturity and Redemption

The maturity date of the 2018 USD Notes is February 4, 2018.

At any time on or after February 4, 2016, we may redeem the 2018 USD Notes, in whole or in part, at a redemption price equal to the percentage of principal amount set forth in the 2018 USD Notes Indenture, plus any accrued and unpaid interest to (but not including) the redemption date.

At any time prior to February 4, 2016, we may redeem the 2018 USD Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount of the 2018 USD Notes, plus a premium and any accrued and unpaid interest to the redemption date.

At any time prior to February 4, 2016, we may redeem up to 35% of the aggregate principal amount of each of the Senior Notes at a redemption price equal to 108.5% of the principal amount of the 2018 USD Notes, plus any accrued and unpaid interest with the proceeds from sales of certain kinds of the Company’s capital stock, subject to certain conditions.

The maturity date of the 2016 RMB Notes is May 13, 2016.

At any time we may redeem the 2016 RMB Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount of the 2016 RMB Notes, plus a premium and any accrued and unpaid interest to the redemption date.

190 At any time we may redeem up to 35% of the aggregate principal amount of each of the Senior Notes at a redemption price equal to 105.625% of the principal amount of the 2016 RMB Notes, plus any accrued and unpaid interest with the proceeds from sales of certain kinds of the Company’s capital stock, subject to certain conditions.

The maturity date of the 2019 USD Notes is March 24, 2019.

At any time on or after March 24, 2017, we may redeem the 2019 USD Notes, in whole or in part, at a redemption price equal to the percentage of principal amount set forth in the 2019 USD Notes Indenture, plus any accrued and unpaid interest to (but not including) the redemption date.

At any time prior to March 24, 2017, we may redeem the 2019 USD Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount of the 2019 USD Notes, plus a premium and any accrued and unpaid interest to the redemption date.

At any time prior to March 24, 2017, we may redeem up to 35% of the aggregate principal amount of each of the Senior Notes at a redemption price equal to 108.5% of the principal amount of the 2019 USD Notes, plus any accrued and unpaid interest with the proceeds from sales of certain kinds of the Company’s capital stock, subject to certain conditions.

Additionally, if we or a subsidiary guarantor under the Senior Notes Indentures would become obligated to pay certain additional amounts as a result of certain changes in specified tax law, we may redeem each of the Senior Notes at a redemption price equal to 100% of the principal amount each of the Senior Notes, plus any accrued and unpaid interest, subject to certain exceptions.

On July 20, 2015, the Consent Solicitations Statement was distributed to the holders of each of the Senior Notes to seek the consent of the holders of each class of such notes to amend certain provisions in each Senior Notes Indenture to provide greater business flexibility to the Company and the Restricted Subsidiaries as well as to reflect CCCG as our new single largest shareholder. Specifically, the consent of holders of each class of such notes is being sought to introduce CCCG as “CCCG Permitted Holders” (in connection with modification of the definition of “Change of Control”) and “Qualifying Related Entity” under the Senior Notes Indentures, modify, and to allow greater flexibility to the Company and the Restricted Subsidiaries under, the covenants and other provisions under the Senior Notes Indentures titled, among others, “Limitation on Indebtedness and Preferred Stock,” “Limitation on Restricted Payments,” “Limitations on Liens,” “Limitations on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries,” “Limitations on Sales and Issuance of Capital Stock in Restricted Subsidiaries,” “Limitations on Issuances of Guarantees by Restricted Subsidiaries,” “Limitations on Sale and Leaseback Transactions,” “Limitation on Asset Sales,” “Limitation on Transactions with Shareholders and Affiliates,” “Subsidiary Guarantors,” “Provision of Financial Statements and Reports,” “Suspension of Certain Covenants” and “Events of Default” to enable the Company and the Restricted Subsidiaries to pursue business opportunities (including those in partnership with CCCG and its affiliates) that may not otherwise be available to us, to better suit our business needs and to bring the terms of the Senior Notes more in line with the terms of senior notes issued by comparable issuers in the market.

Wharf Investment Agreement and Subscription Agreement

191 Perpetual Securities

On January 28, 2014, the Company, through its indirect, wholly owned subsidiary Moon Wise Global Limited (月慧環球有限公司)(“Moon Wise”), issued subordinated perpetual capital securities callable 2019 with an aggregate principal amount of US$500 million (the “2014 Perpetual Securities”) pursuant to the trust deed dated January 28, 2014, as amended or supplemented from time to time, relating to the 2014 Perpetual Securities, which are listed on the SEHK. The 2014 Perpetual Securities confer a right to receive distributions, payable semi-annually in arrears at the applicable distribution rate. The net proceeds, after deduction of direct issuance costs, amounted to approximately US$493.25 million. A portion of the net proceeds from the 2014 Perpetual Securities was used to replace and refinance the 2012 Convertible Securities in full on February 20, 2014. The remaining balance was applied for refinancing certain existing term debts and for general corporate operation purposes. The 2014 Perpetual Securities have no fixed final redemption date. Moon Wise, on giving not less than 30 nor more than 60 days’ notice, can redeem all but not a portion of the 2014 Perpetual Securities on the first call date or on any distribution payment date after the first call date, as set forth in the written agreement between the Company and the trustee of the 2014 Perpetual Securities. The 2014 Perpetual Securities are unsecured general obligations of Moon Wise and are guaranteed by the Company.

The Company has provided and paid distributions in the amount of RMB138,650,000 for the year ended December 31, 2014.

Moon Wise was incorporated in the British Virgin Islands on January 2, 2014 under the Business Companies Act, 2004 as a BVI Business Company limited by shares (Company No.: 1805430). Its registered office is NovaSage Chambers, P.O. Box 4389, Road Town, Tortola, British Virgin Islands. Moon Wise is a wholly owned indirect subsidiary of the Company.

Moon Wise is an entity acquired for the issuance of the 2014 Perpetual Securities. It has not conducted any significant business activity.

The director of Moon Wise is Mr. Shou Bainian. The director does not hold any shares or options to acquire shares of Moon Wise.

The authorized share capital of Moon Wise is US$50,000, divided into 50,000 ordinary shares of US$1.00 each and one (1) share has been issued and is fully paid.

192 DESCRIPTION OF THE NOTES

For purposes of this “Description of the Notes,” the term “Company” refers only to Greentown China Holdings Limited, and any successor obligor on the Notes, and not to any of its subsidiaries. Each Subsidiary of the Company which guarantees the Notes is referred to as a “Subsidiary Guarantor,” and each such guarantee is referred to as a “Subsidiary Guarantee.” Each Subsidiary of the Company that in the future provides a JV Subsidiary Guarantee (as defined below) is referred to as a “JV Subsidiary Guarantor.”

The Notes are to be issued under an indenture (the “Indenture”), to be dated as of August 11, 2015 among the Company, the Subsidiary Guarantors, as guarantors, and DB Trustees (Hong Kong) Limited, as Trustee. The Notes will be issued under the same Indenture and form a single series with the Notes.

The following is a summary of the material provisions of the Indenture, the Notes, the Subsidiary Guarantees and the JV Subsidiary Guarantees. This summary does not purport to be complete and is qualified in its entirety by reference to all of the provisions of the Indenture, the Notes, the Subsidiary Guarantees and the JV Subsidiary Guarantees. It does not restate those agreements in their entirety. Whenever particular sections or defined terms of the Indenture not otherwise defined herein are referred to, such sections or defined terms are incorporated herein by reference. Copies of the Indenture will be available on or after the Original Issue Date at the corporate trust office of the Trustee at Level 52, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong.

Brief Description of the Notes

The Notes are:

• general obligations of the Company;

• senior in right of payment to any existing and future obligations of the Company expressly subordinated in right of payment to the Notes;

• at least pari passu in right of payment with the 2016 RMB Notes, the 2018 USD Notes, the 2019 USD Notes and all other unsecured, unsubordinated Indebtedness of the Company (subject to any priority rights of such unsubordinated Indebtedness pursuant to applicable law);

• guaranteed by the Subsidiary Guarantors and the JV Subsidiary Guarantors (if any) on a senior basis, subject to the limitations described below under the caption “—Subsidiary Guarantees and JV Subsidiary Guarantees” and in “Risk Factors—Risks Relating to the Subsidiary Guarantees and the JV Subsidiary Guarantees;”

• effectively subordinated to all existing and future obligations of the Non-Guarantor Subsidiaries (as defined below).

The Notes will mature on August 11, 2020, unless earlier redeemed pursuant to the term thereof and the Indenture. The Notes will bear interest at 5.875% per annum from the Original Issue Date or from the most recent interest payment date to which interest has been paid or duly provided for, payable semi-annually in arrears on February 11 and August 11 of each year (each an “Interest Payment Date”), commencing February 11, 2016. Interest on the Notes will be paid to Holders of record at the close of business on January 27 or July 27 immediately preceding an Interest Payment Date (each, a “Record Date”), notwithstanding any transfer, exchange or cancellation thereof after a Record Date and prior to the immediately following Interest Payment Date. Interest on the Notes will be calculated on the basis of a 360-day year comprised of twelve 30-day months.

193 Except as described under “Optional Redemption,” “Redemption for Taxation Reasons,” and otherwise provided in the Indenture, the Notes may not be redeemed prior to maturity (unless they have been repurchased by the Company).

In any case in which the date of the payment of principal of, premium on or interest on the Notes is not a Business Day in the relevant place of payment or in the place of business of the Principal Paying and Transfer Agent, then payment of such principal, premium or interest need not be made on such date but may be made on the next succeeding Business Day. Any payment made on such Business Day shall have the same force and effect as if made on the date on which such payment is due and no interest on the Notes shall accrue for the period after such date.

The Indenture allows additional Notes to be issued from time to time (the “Additional Notes”), subject to certain limitations described under “—Further Issues.” Unless the context requires otherwise, references to the “Notes” for all purposes of the Indenture and this “Description of the Notes” include any Additional Notes that are actually issued.

The Notes will be issued only in fully registered form, without coupons, in denominations of US$200,000 and integral multiples of US$1,000 in excess thereof. No service charge will be made for any registration of transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection therewith.

All payments on the Notes will be made in U.S. dollars by the Company at the office or agency of the Company maintained for that purpose (which initially will be the office of the Principal Paying and Transfer Agent, currently located at Level 52, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong), and the Notes may be presented for registration of transfer or exchange at such office or agency; provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the Holders as such address appears in the Note register. Interest payable on the Notes held through Euroclear or Clearstream will be available to Euroclear or Clearstream participants (as defined herein) on the Business Day following payment thereof.

Subsidiary Guarantees and JV Subsidiary Guarantees

The initial Subsidiary Guarantors that will execute the Indenture on the Original Issue Date will consist of all of the Offshore Restricted Subsidiaries, other than Active Way Development Limited, Hong Kong Greentown Trading and Development Co., Limited, Hong Kong Greentown Decoration Trading and Development Limited, Fortune Pointer Limited, Crown Gain Development Limited, Moon Wise Global Limited and Win Most Global Limited (each an “Initial Offshore Non-Guarantor Subsidiary”). The Subsidiary Guarantors are holding companies that do not have significant operations.

None of the existing Restricted Subsidiaries organized under the laws of the PRC will provide a Subsidiary Guarantee or JV Subsidiary Guarantee on the Original Issue Date or at any time in the future and no future Restricted Subsidiaries organized under the laws of the PRC will provide a Subsidiary Guarantee or JV Subsidiary Guarantee at any time in the future (together, the “PRC Restricted Subsidiaries”).

The Company may designate any Offshore Restricted Subsidiary as a Designated Offshore Non-Guarantor Subsidiary (each, a “Designated Offshore Non-Guarantor Subsidiary,” and, together with the Initial Offshore Non-Guarantor Subsidiaries, an “Offshore Non-Guarantor Subsidiary”), subject to the limitations described below under “Offshore Non-Guarantor Subsidiaries.” The Offshore Non-Guarantor Subsidiaries, together with the PRC Restricted Subsidiaries are referred to as the “Non-Guarantor Subsidiaries.” Although the Indenture contains limitations on the amount of additional Indebtedness that Restricted Subsidiaries may incur, the amount of such additional Indebtedness could be substantial. In the event of a bankruptcy, liquidation or reorganization of any Non-Guarantor Subsidiary, the Non-Guarantor Subsidiaries will pay the holders of their debt and their trade creditors before they will be able to distribute any of their assets to the Company.

194 The Company will cause each of its future Restricted Subsidiaries (other than the Non-Guarantor Subsidiaries or the Exempted Subsidiaries) promptly and in any event within 30 days of becoming a Restricted Subsidiary, to execute and deliver to the Trustee a supplemental indenture to the Indenture pursuant to which such Restricted Subsidiary will guarantee the payment of the Notes as either a Subsidiary Guarantor or a JV Subsidiary Guarantor.

As of the date of the Indenture, all of the Company’s Subsidiaries will be “Restricted Subsidiaries.” However, under the circumstances described below under the caption “—Certain Covenants—Designation of Restricted and Unrestricted Subsidiaries,” the Company will be permitted to designate certain of its Subsidiaries as “Unrestricted Subsidiaries.” The Company’s Unrestricted Subsidiaries will generally not be subject to the restrictive covenants in the Indenture. The Company’s Unrestricted Subsidiaries will not Guarantee the Notes.

Each Restricted Subsidiary that guarantees the Notes after the Original Issue Date other than a JV Subsidiary Guarantor is referred to as a “Future Subsidiary Guarantor” and upon execution of the applicable supplemental indenture to the Indenture will be a “Subsidiary Guarantor.”

Offshore Non-Guarantor Subsidiaries

An Offshore Restricted Subsidiary need not provide a Subsidiary Guarantee or JV Subsidiary Guarantee if it is designated by the Board of Directors as a Designated Offshore Non-Guarantor Subsidiary. The Board of Directors may designate any Offshore Restricted Subsidiary to be a Designated Offshore Non-Guarantor Subsidiary, provided that, after giving effect to the consolidated assets of such Offshore Restricted Subsidiary, if:

(1) at any time of determination, the total Non-Guaranteed Portion would not exceed 25.0% of Total Assets; and

(2) such designation would not cause a Default.

The Board of Directors may at any time remove the designation of any Offshore Non-Guarantor Subsidiary as such, and unless such Offshore Restricted Subsidiary is designated an Unrestricted Subsidiary, it will become a Subsidiary Guarantor or JV Subsidiary Guarantor and execute a supplemental indenture pursuant to which it will Guarantee the Notes under a Subsidiary Guarantee or a JV Subsidiary Guarantee in accordance with the provisions of the Indenture, within 30 days of the date on which its designation as an Offshore Non-Guarantor Subsidiary was removed.

Any designation of an Offshore Restricted Subsidiary as a Designated Offshore Non-Guarantor Subsidiary will be evidenced to the Trustee by filing with the Trustee a certified copy of a resolution of the Board of Directors giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions.

If, at any time, the Non-Guaranteed Portion exceeds 25.0% of Total Assets, the Company must remove the designation of one or more Offshore Non-Guarantor Subsidiaries and cause such Offshore Restricted Subsidiaries to provide a Subsidiary Guarantee or JV Subsidiary Guarantee such that the Non-Guaranteed Portion would not exceed 25.0% of Total Assets. This removal of designation must be made within 30 days from the date consolidated financial statements of the Company for the most recent fiscal quarter (which the Company must use its reasonable best efforts to compile on a timely basis) become available (which may be internal consolidated financial statements).

JV Subsidiary Guarantees

In the case of a Restricted Subsidiary (i) that is organized in any jurisdiction other than the PRC, (ii) that is not an Offshore Non-Guarantor Subsidiary and (iii) in respect of which the Company or any of its Restricted Subsidiaries (x) is proposing to sell, whether through the sale of existing shares or the issuance of new shares, no less than 20.0% and no more than 49.9% of the Capital Stock of such Restricted Subsidiary or (y) is proposing to purchase no less than 50.1% and no more than 80.0% of the

195 Capital Stock of an Independent Third Party and designate such entity as a Restricted Subsidiary, the Company may, concurrently with the consummation of such sale or purchase, provide a JV Subsidiary Guarantee instead of a Subsidiary Guarantee for (a) such Restricted Subsidiary and (b) the Restricted Subsidiaries of such Restricted Subsidiary that are organized in any jurisdiction other than the PRC, if the following conditions, in the case of both (a) and (b), are satisfied:

• as of the date of execution of the JV Subsidiary Guarantee, no document exists that is binding on the Company or any of the Restricted Subsidiaries that would have the effect of (a) prohibiting the Company or any of the Restricted Subsidiaries from providing such JV Subsidiary Guarantee or (b) requiring the Company or any of the Restricted Subsidiaries to deliver or keep in place a guarantee on terms that are more favorable to the recipients of such guarantee than the JV Subsidiary Guarantee;

• such sale or issuance of Capital Stock is made to, or such purchase of Capital Stock is purchased from, an Independent Third Party at a consideration that is not less than the appraised value of such Capital Stock by an independent appraisal firm of recognized international standing appointed by the Company;

• concurrently with providing the JV Subsidiary Guarantee, the Company shall or shall cause such JV Subsidiary Guarantor to deliver to the Trustee:

(i) (A) a duly executed JV Subsidiary Guarantee of such JV Subsidiary Guarantor (the “JV Subsidiary Guarantee”) and each Restricted Subsidiary of such JV Subsidiary Guarantor that is not organized under the laws of the PRC, and (B) a duly executed supplemental indenture to the Indenture pursuant to which such JV Subsidiary Guarantor will guarantee the payment of the Notes, each of which provides, among other things, that the aggregate claims of the Trustee under such JV Subsidiary Guarantee and all JV Subsidiary Guarantees provided by the Restricted Subsidiaries and shareholders of such JV Subsidiary Guarantor will be limited to the JV Entitlement Amount;

(ii) an Officers’ Certificate certifying a copy of the Board Resolution to the effect that such JV Subsidiary Guarantee has been approved by a majority of the disinterested members of the Board of Directors; and

(iii) a legal opinion by a law firm of recognized international standing confirming that under New York law such JV Subsidiary Guarantee is valid, binding and enforceable against the JV Subsidiary Guarantor providing such JV Subsidiary Guarantee (subject to customary qualifications and assumptions).

As of December 31, 2014, the Company and its consolidated subsidiaries had total consolidated indebtedness of approximately RMB35,815 million (US$5,772 million) of which approximately RMB21,475 million (US$3,461 million) was secured.

As of December 31, 2014, the Non-Guarantor Subsidiaries had total liabilities of approximately RMB22,756 million (US$3,668 million), capital commitments of approximately RMB13,786 million (US$2,222 million) and contingent liabilities of approximately RMB26,500 million (US$4,271 million).

The Subsidiary Guarantee of each Subsidiary Guarantor:

• is a general obligation of such Subsidiary Guarantor;

• is effectively subordinated to secured obligations of such Subsidiary Guarantor, to the extent of the value of the assets serving as security therefor;

• is senior in right of payment to all future obligations of such Subsidiary Guarantor expressly subordinated in right of payment to such Subsidiary Guarantee; and

196 • ranks at least pari passu with the subsidiary guarantee for the 2016 RMB Notes, the 2018 USD Notes, the 2019 USD Notes and all other unsecured, unsubordinated Indebtedness of such Subsidiary Guarantor (subject to any priority rights of such unsubordinated Indebtedness pursuant to applicable law).

If any is provided, the JV Subsidiary Guarantee of each JV Subsidiary Guarantor:

• will be a general obligation of such JV Subsidiary Guarantor;

• will be enforceable only up to the JV Entitlement Amount;

• will be effectively subordinated to secured obligations of such JV Subsidiary Guarantor, if any, to the extent of the value of the assets serving as security therefor;

Under the Indenture, and any supplemental indenture to the Indenture, as applicable, each of the Subsidiary Guarantors and JV Subsidiary Guarantors (if any) will jointly and severally guarantee the due and punctual payment of the principal of, premium, if any, and interest on, and all other amounts payable under, the Notes; provided that any JV Subsidiary Guarantee will be limited to the JV Entitlement Amount. The Subsidiary Guarantors and JV Subsidiary Guarantors will (1) agree that their respective obligations under the Subsidiary Guarantees and JV Subsidiary Guarantees, as the case may be, will be enforceable irrespective of any invalidity, irregularity or unenforceability of the Notes or the Indenture and (2) waive their right to require the Trustee to pursue or exhaust its legal or equitable remedies against the Company prior to exercising its rights under the Subsidiary Guarantees and the JV Subsidiary Guarantees, as the case may be. Moreover, if at any time any amount paid under a Note or the Indenture is rescinded or must otherwise be restored, the rights of the Holders under the Subsidiary Guarantees and the JV Subsidiary Guarantees, as the case may be, will be reinstated with respect to such payment as though such payment had not been made. All payments under the Subsidiary Guarantees and the JV Subsidiary Guarantees, as the case may be, are required to be made in U.S. dollars.

Under the Indenture, and any supplemental indenture to the Indenture, as applicable,

• each Subsidiary Guarantee will be limited to an amount not to exceed the maximum amount that can be guaranteed by the applicable Subsidiary Guarantor without rendering the Subsidiary Guarantee, as it relates to such Subsidiary Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally; and

• each JV Subsidiary Guarantee will be limited to an amount which is the lower of (i) the JV Entitlement Amount and (ii) an amount not to exceed the maximum amount that can be guaranteed by the applicable JV Subsidiary Guarantor without rendering the JV Subsidiary Guarantee, as it relates to such JV Subsidiary Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.

197 If a Subsidiary Guarantee or JV Subsidiary Guarantee were to be rendered voidable, it could be subordinated by a court to all other Indebtedness (including guarantees and other contingent liabilities) of the applicable Subsidiary Guarantor or JV Subsidiary Guarantor, as the case may be, and, depending on the amount of such Indebtedness, a Subsidiary Guarantor’s liability on its Subsidiary Guarantee or a JV Subsidiary Guarantor’s liability on its JV Subsidiary Guarantee, as the case may be, could in each case be reduced to zero.

The obligations of each Subsidiary Guarantor under its Subsidiary Guarantee may be limited, or possibly invalid, under applicable laws.

Similarly, the obligations of each JV Subsidiary Guarantor under its JV Subsidiary Guarantee may be limited, or possibly invalid, under applicable laws. See “Risk Factors—Risks Relating to the Subsidiary Guarantees and the JV Subsidiary Guarantees—The Subsidiary Guarantees or JV Subsidiary Guarantees may be challenged under applicable insolvency or fraudulent transfer laws, which could impair the enforceability of the Subsidiary Guarantees or JV Subsidiary Guarantees.”

Release of Subsidiary Guarantees and JV Subsidiary Guarantees

A Subsidiary Guarantee given by a Subsidiary Guarantor and a JV Subsidiary Guarantee given by a JV Subsidiary Guarantor may be released in certain circumstances, including:

• upon repayment in full of the Notes;

• upon a defeasance or discharge as described under “—Defeasance—Defeasance and Discharge” or “—Satisfaction and Discharge;”

• upon the designation by the Company of a Subsidiary Guarantor or a JV Subsidiary Guarantor, as the case may be, as an Unrestricted Subsidiary or an Offshore Non-Guarantor Subsidiary in compliance with the terms of the Indenture;

• upon the sale, merger or consolidation of a Subsidiary Guarantor or a JV Subsidiary Guarantor, as the case may be, in compliance with the terms of the Indenture (including the covenants under the captions “—Certain Covenants—Limitation on Sales and Issuances of Capital Stock in Restricted Subsidiaries,” “—Certain Covenants—Limitation on Asset Sales” and “—Consolidation, Merger and Sale of Assets”) resulting in such Subsidiary Guarantor or JV Subsidiary Guarantor, as the case may be, no longer being a Restricted Subsidiary, so long as (1) such Subsidiary Guarantor or JV Subsidiary Guarantor, as the case may be, is simultaneously released from its obligations in respect of any of the Company’s other Indebtedness or any Indebtedness of any other Restricted Subsidiary and (2) the proceeds from such sale or disposition are used for the purposes permitted or required by the Indenture; or

• in the case of a Subsidiary Guarantee, upon the replacement of a Subsidiary Guarantee with a JV Subsidiary Guarantee.

No release of a Subsidiary Guarantor from its Subsidiary Guarantee or a JV Subsidiary Guarantor from its JV Subsidiary Guarantee shall be effective against the Trustee or the Holders until the Company has delivered to the Trustee an Officers’ Certificate stating that all requirements relating to such release have been complied with and such release is authorized and permitted by the terms of the Indenture.

Replacement of Subsidiary Guarantees with JV Subsidiary Guarantees

A Subsidiary Guarantee given by a Subsidiary Guarantor may be released following the sale or issuance by the Company or any of its Restricted Subsidiaries of Capital Stock in (a) such Subsidiary Guarantor or (b) any other Subsidiary Guarantor that, directly or indirectly, owns a majority of the Capital Stock of such Subsidiary Guarantor, in each case where such sale or issuance, whether through the sale of existing shares or the issuance of new shares, is for no less than 20.0% and no more than 49.9% of the issued Capital Stock of the relevant Subsidiary Guarantor, provided that the following conditions are satisfied or complied with:

198 • as of the date of such proposed release, no document exists that is binding on the Company or any of the Restricted Subsidiaries that would have the effect of (a) prohibiting the Company or any of the Restricted Subsidiaries from releasing such Subsidiary Guarantee, (b) prohibiting the Company or any of the Restricted Subsidiaries from providing such JV Subsidiary Guarantee, or (c) requiring the Company or any of the Restricted Subsidiaries to deliver or keep in force a replacement guarantee on terms that are more favorable to the recipients of such guarantee than the JV Subsidiary Guarantee;

• such sale or issuance is made to an Independent Third Party at a consideration that is not less than the appraised value of such Capital Stock by an independent appraisal firm of recognized international standing appointed by the Company;

• concurrently with the release of such Subsidiary Guarantee, the Company shall or shall cause such JV Subsidiary Guarantor to deliver to the Trustee:

(i) (A) a duly executed JV Subsidiary Guarantee of such JV Subsidiary Guarantor and each Restricted Subsidiary of such JV Subsidiary Guarantor that is not organized under the laws of the PRC and (B) a duly executed supplemental indenture to the Indenture pursuant to which such JV Subsidiary Guarantor will guarantee the payment of the Notes, each of which provides, among other things, that the aggregate claims of the Trustee under such JV Subsidiary Guarantee and all JV Subsidiary Guarantees provided by the Restricted Subsidiaries and shareholders of such JV Subsidiary Guarantor will be limited to the JV Entitlement Amount;

(ii) an Officers’ Certificate certifying a copy of a Board Resolution to the effect that such JV Subsidiary Guarantee has been approved by a majority of the disinterested members of the Board of Directors; and

Notwithstanding the foregoing paragraph, any such sale or issuance of the Capital Stock of the relevant Subsidiary Guarantor (including where such sale results in the relevant Subsidiary Guarantor ceasing to be a Restricted Subsidiary) will need to comply with the other covenants set forth in the Indenture, including, without limitation, the “Limitation on Asset Sales” and “Limitation on Restricted Payments” covenants.

Any Net Cash Proceeds from the sale or issuance of such Capital Stock shall be applied by the Company (or any Restricted Subsidiary) in accordance with the “Limitation on Asset Sales” covenant.

Further Issues

Subject to the covenants described below and in accordance with the terms of the Indenture, the Company may, from time to time, without notice to or the consent of the Holders, create and issue Additional Notes having the same terms and conditions as the Notes (including the benefit of the Subsidiary Guarantees and JV Subsidiary Guarantees) in all respects (or in all respects except for the issue date, issue price and the date of the first payment of interest on them and, to the extent necessary, certain temporary securities law transfer restrictions) (a “Further Issue”) so that such Additional Notes may be consolidated and form a single class with the previously outstanding Notes and vote together as one class on all matters with respect to the Notes; provided that the issuance of any such Additional Notes shall then be permitted under the “Limitation on Indebtedness and Preferred Stock” covenant described below.

199 Optional Redemption

At any time and from time to time on or after August 11, 2018, the Company may at its option redeem the Notes, in whole or in part, at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, to (but not including) the redemption date if redeemed during the twelve-month period beginning on August 11 of each of the years indicated below.

Period Redemption Price 2018 ...... 102.938% 2019 and thereafter ...... 101.469%

At any time and from time to time prior to August 11, 2018, the Company may redeem up to 35.0% of the aggregate principal amount of the Notes with the Net Cash Proceeds of one or more sales of Common Stock of the Company in an Equity Offering at a redemption price of 105.875% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to (but not including) the redemption date; provided that at least 65.0% of the aggregate principal amount of the Notes issued on the Original Issue Date remains outstanding after each such redemption and any such redemption takes place within 60 days after the closing of the related Equity Offering.

Selection and Notice

The Company will give not less than 30 days’ nor more than 60 days’ notice of any redemption to the Holders and the Trustee. If less than all of the Notes are to be redeemed at any time, the Trustee will select or cause to be selected Notes for redemption as follows:

(1) if the Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the Notes are listed; or

(2) if the Notes are not listed on any national securities exchange, on a pro rata basis or by such method as the Trustee deems fair and appropriate and is otherwise in accordance with the procedures of the depositary.

A Note of US$200,000 in principal amount or less shall not be redeemed in part. If any Note is to be redeemed in part only, the notice of redemption relating to such Note will state the portion of the principal amount to be redeemed. A new Note in principal amount equal to the unredeemed portion will be issued upon cancellation of the original Note. On and after the redemption date, interest will cease to accrue on Notes or portions of them called for redemption.

Repurchase of Notes upon a Change of Control Triggering Event

Not later than 30 days following a Change of Control Triggering Event, the Company will make an Offer to Purchase all outstanding Notes (a “Change of Control Offer”) at a purchase price equal to 101.0% of the principal amount thereof plus accrued and unpaid interest, if any, to (but not including) the Offer to Purchase Payment Date.

200 The Company has agreed in the Indenture that it will timely repay all Indebtedness or obtain consents as necessary under, or terminate, agreements or instruments that would otherwise prohibit a Change of Control Offer required to be made pursuant to the Indenture. Notwithstanding this agreement of the Company, it is important to note that if the Company is unable to repay (or cause to be repaid) all of the Indebtedness, if any, that would prohibit repurchase of the Notes or is unable to obtain the requisite consents of the holders of such Indebtedness, or terminate any agreements or instruments that would otherwise prohibit a Change of Control Offer, it would continue to be prohibited from purchasing the Notes. In that case, the Company’s failure to purchase tendered Notes would constitute an Event of Default under the Indenture.

Certain of the events constituting a Change of Control Triggering Event under the Notes will also constitute an event of default under certain debt instruments of the Company and its Subsidiaries. Future debt of the Company may also (1) prohibit the Company from purchasing Notes in the event of a Change of Control Triggering Event; (2) provide that a Change of Control Triggering Event is a default; or (3) require repurchase of such debt upon a Change of Control Triggering Event. Moreover, the exercise by the Holders of their right to require the Company to purchase the Notes could cause a default under other Indebtedness, even if the Change of Control Triggering Event itself does not, due to the financial effect of the purchase on the Company. The Company’s ability to pay cash to the Holders following the occurrence of a Change of Control Triggering Event may be limited by the Company’s, the Subsidiary Guarantor’s and the JV Subsidiary Guarantor’s then-existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make the required purchase of the Notes. See “Risk Factors—Risks Relating to the Notes—We may not be able to repurchase the Notes upon a Change of Control Triggering Event.”

The phrase “all or substantially all,” as used with respect to the assets of the Company in the definition of “Change of Control,” will likely be interpreted under applicable law of the relevant jurisdictions and will be dependent upon particular facts and circumstances. As a result, there may be a degree of uncertainty in ascertaining whether a sale or transfer of “all or substantially all” the assets of the Company has occurred.

Except as described above with respect to a Change of Control Triggering Event, the Indenture does not contain provisions that permit the Holders to require that the Company purchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction.

No Mandatory Redemption or Sinking Fund

There will be no mandatory redemption or sinking fund payments for the Notes.

Additional Amounts

All payments of principal, premium (if any) and interest on the Notes or under the Subsidiary Guarantees and JV Subsidiary Guarantees will be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or within any jurisdiction in which the Company, a Surviving Person (as defined under the caption “—Consolidation, Merger and Sale of Assets”) or an applicable Subsidiary Guarantor or JV Subsidiary Guarantor is organized or resident for tax purposes (or any political subdivision or taxing authority thereof or therein), including, without limitation, if applicable, the PRC (each, as applicable, a “Relevant Taxing Jurisdiction”), or any jurisdiction through which payments are made (together with each Relevant Taxing Jurisdiction, a “Relevant Jurisdiction”), unless such withholding or deduction is required by law or by regulation or governmental policy having the force of law. In the event that any such withholding or deduction is so required, the Company, a Surviving Person or the applicable Subsidiary Guarantor or JV Subsidiary Guarantor, as the case may be, will pay such additional amounts (“Additional Amounts”) as will result in receipt by the Holder of each Note of such amounts as would

201 have been received by such Holder had no such withholding or deduction been required, except that no Additional Amounts shall be payable:

(1) for or on account of:

(a) any tax, duty, assessment or other governmental charge that would not have been imposed but for:

(i) the existence of any present or former connection between the Holder or beneficial owner of such Note, and the Relevant Jurisdiction other than merely holding such Note or the receipt of payments thereunder or under a Subsidiary Guarantee or JV Subsidiary Guarantee, including, without limitation, such Holder or beneficial owner being or having been a national, domiciliary or resident of such Relevant Jurisdiction or treated as a resident thereof or being or having been physically present or engaged in a trade or business therein or having or having had a permanent establishment therein;

(ii) the presentation of such Note (in cases in which presentation is required) more than 30 days after the later of the date on which the payment of the principal of, premium, if any, and interest on, such Note became due and payable pursuant to the terms thereof or was made or duly provided for, except to the extent that the Holder thereof would have been entitled to such Additional Amounts if it had presented such Note for payment on any date within such 30-day period;

(iii) the failure of the Holder or beneficial owner to comply with a timely request of the Company, a Surviving Person, Subsidiary Guarantor or JV Subsidiary Guarantor addressed to the Holder, to provide information concerning such Holder’s or beneficial owner’s nationality, residence, identity or connection with any Relevant Jurisdiction, if and to the extent that due and timely compliance with such request is required under the laws of the Relevant Jurisdiction in order to reduce or eliminate any withholding or deduction as to which Additional Amounts would have otherwise been payable to such Holder; or

(iv) the presentation of such Note (in cases in which presentation is required) for payment in the Relevant Jurisdiction, unless such Note could not have been presented for payment elsewhere;

(b) any estate, inheritance, gift, sale, transfer, personal property or similar tax, assessment or other governmental charge;

(c) any withholding or deduction that is required to be made pursuant to European Council Directive 2003/48/EC or any other Directive amending, supplementing or replacing such Directive or any law implementing or complying with, or introduced in order to conform to, such Directives; or

(d) any combination of taxes, duties, assessments or other governmental charges referred to in the preceding clauses (a), (b) and (c); or

(2) to a Holder that is a fiduciary, partnership or person other than the sole beneficial owner of any payment to the extent that such payment would be required to be included in the income under the laws of a Relevant Jurisdiction, for tax purposes, of a beneficiary or settlor with respect to the fiduciary, or a member of that partnership or a beneficial owner who would not have been entitled to such Additional Amounts had that beneficiary, settlor, partner or beneficial owner been the Holder thereof.

202 Whenever there is mentioned in any context the payment of principal of, and any premium or interest on, any Note or under any Subsidiary Guarantee or JV Subsidiary Guarantee, such mention shall be deemed to include payment of Additional Amounts provided for in the Indenture to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

Redemption for Taxation Reasons

The Notes may be redeemed, at the option of the Company or a Surviving Person with respect to the Company, as a whole but not in part, upon giving not less than 30 days’ nor more than 60 days’ notice to the Holders and the Trustee (which notice shall be irrevocable), provided that the notice is provided to the Trustee at least 5 days before it is provided to the Holders (unless such 5-day period shall extend prior to the foregoing 60-day period, in which case such notice shall be provided no more than 60 days’ prior to the Tax Redemption Date (as defined below)), at a redemption price equal to 100.0% of the principal amount thereof, together with accrued and unpaid interest (including any Additional Amounts), if any, to the date fixed by the Company or the Surviving Person, as the case may be, for redemption (the “Tax Redemption Date”) if, as a result of:

(1) any change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder) of a Relevant Taxing Jurisdiction affecting taxation; or

(2) any change in the existing official position or the stating of an official position regarding the application or interpretation of such laws, regulations or rulings (including a holding, judgment or order by a court of competent jurisdiction), which change or amendment is proposed and becomes effective (i) with respect to the Company or any initial Subsidiary Guarantor, on or after the Original Issue Date, or (ii) with respect to any Future Subsidiary Guarantor, JV Subsidiary Guarantor or Surviving Person, on or after the date such Future Subsidiary Guarantor, JV Subsidiary Guarantor or Surviving Person becomes a Subsidiary Guarantor, JV Subsidiary Guarantor or Surviving Person, with respect to any payment due or to become due under the Notes or the Indenture, the Company, a Surviving Person or a Subsidiary Guarantor or JV Subsidiary Guarantor, as the case may be, is, or on the next Interest Payment Date would be, required to pay Additional Amounts, and such requirement cannot be avoided by the taking of reasonable measures by the Company, a Surviving Person, a Subsidiary Guarantor or JV Subsidiary Guarantor, as the case may be; provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Company, a Surviving Person, a Subsidiary Guarantor or a JV Subsidiary Guarantor, as the case may be, would be obligated to pay such Additional Amounts if a payment in respect of the Notes were then due.

Prior to the mailing of any notice of redemption of the Notes pursuant to the foregoing, the Company, a Surviving Person, a Subsidiary Guarantor or a JV Subsidiary Guarantor, as the case may be, will deliver to the Trustee at least 30 days but not more than 60 days before a redemption date:

(1) an Officers’ Certificate stating that such change or amendment referred to in the prior paragraph has occurred, describing the facts related thereto and stating that such requirement cannot be avoided by the Company, a Surviving Person or a Subsidiary Guarantor or JV Subsidiary Guarantor, as the case may be, taking reasonable measures available to it; and

(2) an Opinion of Counsel or an opinion of a tax consultant, in either case of recognized standing with respect to tax matters of the Relevant Taxing Jurisdiction, stating that the requirement to pay such Additional Amounts results from such change or amendment or the stating of an official position referred to in the prior paragraph.

The Trustee shall accept such certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent described above, in which event it shall be conclusive and binding on the Holders.

Any Notes that are redeemed will be cancelled.

203 Certain Covenants

Set forth below are summaries of certain covenants contained in the Indenture.

Limitation on Indebtedness and Preferred Stock

(1) The Company will not, and will not permit any Restricted Subsidiary to, Incur any Indebtedness (including Acquired Indebtedness), and the Company will not permit any Restricted Subsidiary to issue Preferred Stock, provided that the Company, any Subsidiary Guarantor or any JV Subsidiary Guarantor may Incur Indebtedness (including Acquired Indebtedness) and any Non-Guarantor Subsidiary may Incur Permitted Subsidiary Indebtedness if, after giving effect to the Incurrence of such Indebtedness and the receipt and application of the proceeds therefrom, (x) no Default has occurred and is continuing and (y) the Fixed Charge Coverage Ratio would be not less than 2.75 to 1.0 if such Indebtedness is Incurred on or prior to December 31, 2013 and 2.50 to 1.0 if such Indebtedness is Incurred thereafter. Notwithstanding the foregoing, the Company will not permit any Restricted Subsidiary to Incur any Disqualified Stock (other than Disqualified Stock held by the Company or a Subsidiary Guarantor, so long as it is so held).

(2) Notwithstanding the foregoing, the Company and, to the extent provided below, any Restricted Subsidiary may Incur each and all of the following (“Permitted Indebtedness”):

(a) Indebtedness under the Notes (excluding any Additional Notes) and each Subsidiary Guarantee and JV Subsidiary Guarantee;

(b) any Pari Passu Subsidiary Guarantees by any Subsidiary Guarantor or any JV Subsidiary Guarantor;

(c) Indebtedness of the Company or any Restricted Subsidiary outstanding on the Original Issue Date excluding Indebtedness permitted under clause (d) below; provided that such Indebtedness of Non-Guarantor Subsidiaries shall be included in the calculation of Permitted Subsidiary Indebtedness;

(d) Indebtedness of the Company or Indebtedness or Preferred Stock of any Restricted Subsidiary owed to the Company or any Restricted Subsidiary; provided that (i) any event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness or Preferred Stock (other than to the Company or any Restricted Subsidiary) shall be deemed, in each case, to constitute an Incurrence of such Indebtedness not permitted by this clause (d) and (ii) if the Company is the obligor on such Indebtedness, such Indebtedness must be expressly subordinated in right of payment to the Notes, and if a Subsidiary Guarantor or a JV Subsidiary Guarantor is the obligor on such Indebtedness and the Company or any other Subsidiary Guarantor or JV Subsidiary Guarantor is not the obligee, such Indebtedness must be expressly subordinated in right of payment to the Subsidiary Guarantee of such Subsidiary Guarantor or the JV Subsidiary Guarantee of such JV Subsidiary Guarantor, as the case may be, provided further that,any Preferred Stock issued by a Subsidiary Guarantor or a JV Subsidiary Guarantor and held by the Company or another Restricted Subsidiary must be expressly subordinated in right of payment to the Subsidiary Guarantee of such Subsidiary Guarantor or the JV Subsidiary Guarantee of such JV Subsidiary Guarantor;

204 (e) Indebtedness (“Permitted Refinancing Indebtedness”) issued in exchange for, or the net proceeds of which are used to refinance or refund, replace, exchange, renew, repay, defease, discharge or extend (collectively, “refinance” and “refinances” and “refinanced” shall have a correlative meaning), then outstanding Indebtedness Incurred under the immediately preceding paragraph (1) or clauses (a), (b), (c), (h), (p), (q), (r), (s), (u), (v) or (w) of this paragraph (2) and any refinancings thereof in an amount not to exceed the amount so refinanced or refunded (plus premiums, accrued interest, fees and expenses); provided that (i) Indebtedness the proceeds of which are used to refinance or refund the Notes or Indebtedness that is pari passu with, or subordinated in right of payment to, the Notes or a Subsidiary Guarantee or a JV Subsidiary Guarantee shall only be permitted under this clause (e) if (A) in case the Notes are refinanced in part or the Indebtedness to be refinanced is pari passu with the Notes or a Subsidiary Guarantee or a JV Subsidiary Guarantee, such new Indebtedness, by its terms or by the terms of any agreement or instrument pursuant to which such new Indebtedness is outstanding, is expressly made pari passu with, or subordinate in right of payment to, the remaining Notes or such Subsidiary Guarantee or such JV Subsidiary Guarantee, as the case may be, or (B) in case the Indebtedness to be refinanced is subordinated in right of payment to the Notes or a Subsidiary Guarantee or a JV Subsidiary Guarantee, such new Indebtedness, by its terms or by the terms of any agreement or instrument pursuant to which such new Indebtedness is issued or remains outstanding, is expressly made subordinate in right of payment to the Notes or such Subsidiary Guarantee or such JV Subsidiary Guarantee, as the case may be, at least to the extent that the Indebtedness to be refinanced is subordinated to the Notes or such Subsidiary Guarantee or such JV Subsidiary Guarantee, (ii) such new Indebtedness, determined as of the date of Incurrence of such new Indebtedness, does not mature prior to the Stated Maturity of the Indebtedness to be refinanced or refunded, and the Average Life of such new Indebtedness is at least equal to the remaining Average Life of the Indebtedness to be refinanced or refunded, (iii) in no event may Indebtedness of the Company, any Subsidiary Guarantor or any JV Subsidiary Guarantor be refinanced pursuant to this clause by means of any Indebtedness of any Restricted Subsidiary that is not a Subsidiary Guarantor or a JV Subsidiary Guarantor, and (iv) in no event may Indebtedness of the Company or any Subsidiary Guarantor be refinanced pursuant to this clause by means of any Indebtedness of any JV Subsidiary Guarantor (provided that this sub-clause (iv) shall not prohibit the replacement of a Subsidiary Guarantee by a JV Subsidiary Guarantee if otherwise permitted by this Indenture);

(f) Indebtedness Incurred by the Company or any Restricted Subsidiary pursuant to Hedging Obligations entered into in the ordinary course of business and designed solely to protect the Company or any of its Restricted Subsidiaries from fluctuations in interest rates, currencies or the price of commodities and not for speculation;

(g) Pre-Registration Mortgage Guarantees by the Company or any Restricted Subsidiary;

205 (h) Indebtedness Incurred by the Company or any Restricted Subsidiary for the purpose of financing (x) all or any part of the purchase price of assets, real or personal property (including the lease purchase price of land use right) or equipment to be used in the ordinary course of business by the Company or a Restricted Subsidiary in the Permitted Business, including any such purchase through the acquisition of Capital Stock of any Person that owns such real or personal property or equipment which will, upon acquisition, become a Restricted Subsidiary, or (y) all or any part of the purchase price or the cost of development, construction or improvement of real or personal property (including the lease purchase price of land use right) or equipment to be used in the ordinary course of business by the Company or such Restricted Subsidiary in a Permitted Business; provided that in the case of (x) and (y) of this clause, (A) the aggregate principal amount of such Indebtedness shall not exceed such purchase price or cost, (B) such Indebtedness shall be Incurred no later than 180 days after the acquisition of such property or completion of such development, construction or improvement and (C) on the date of the Incurrence of such Indebtedness and after giving effect thereto, the sum of (1) the aggregate principal amount outstanding of all such Indebtedness permitted by this clause (h) (together with refinancings thereof, but excluding any Contractor Guarantee Incurred under this clause (h) to the extent the amount of such Contractor Guarantee is otherwise reflected in such aggregate principal amount) plus (2) the aggregate principal amount outstanding of all Indebtedness Incurred under clauses (p), (q), (r), (u), (v) or (w) below (together with any refinancings thereof, but excluding any Contractor Guarantee or Guarantees Incurred under clauses (p), (q), (r), (u), (v) or (w) to the extent the amount of such Contractor Guarantee or Guarantees Incurred are reflected in such aggregate principal amount) does not exceed an amount equal to 30.0% of Total Assets;

(i) Indebtedness Incurred by the Company or any Restricted Subsidiary constituting reimbursement obligations with respect to workers’ compensation claims or self-insurance obligations or bid, performance or surety bonds (in each case other than for an obligation for borrowed money);

(j) Indebtedness Incurred by the Company or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit, trade guarantees or similar instruments issued in the ordinary course of business to the extent that such letters of credit, trade guarantees or similar instruments are not drawn upon or, if drawn upon, to the extent such drawing is reimbursed no later than the 30 days following receipt by the Company or such Restricted Subsidiary of a demand for reimbursement;

(k) Indebtedness arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or from Guarantees or letters of credit, surety bonds or performance bonds securing any obligation of the Company or any Restricted Subsidiary pursuant to such agreements, in any case, Incurred in connection with the disposition of any business, assets or Restricted Subsidiary, other than Guarantees of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary for the purpose of financing such acquisition; provided that the maximum aggregate liability in respect of all such Indebtedness in the nature of such Guarantee shall at no time exceed the gross proceeds actually received from the sale of such business, assets or Restricted Subsidiary;

206 (l) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business provided, however, that such Indebtedness is extinguished within five Business Days of Incurrence;

(m) Guarantees by the Company or any Restricted Subsidiary of Indebtedness or Preferred Stock of the Company or any Restricted Subsidiary that was permitted to be Incurred by another provision of this covenant, subject to compliance with the covenants under the caption “—Limitation on Issuances of Guarantees by Restricted Subsidiaries;”

(n) Indebtedness of the Company or any Restricted Subsidiary maturing within one year; provided that the aggregate principal amount of Indebtedness permitted by this clause (n) at any time outstanding does not exceed US$50.0 million (or the Dollar Equivalent thereof);

(o) Indebtedness of the Company or any Restricted Subsidiary constituting an obligation to pay the deferred purchase price of Capital Stock in a Restricted Subsidiary pursuant to a Staged Acquisition Agreement, to the extent that such deferred purchase price is paid within 18 months after the date the Company or such Restricted Subsidiary enters into such Staged Acquisition Agreement;

(p) Indebtedness Incurred or Preferred Stock issued by the Company or any Restricted Subsidiary arising from any Investment made by a Trust Company Investor in a PRC Project Company; provided that on the date of the Incurrence of such Indebtedness or issuance of such Preferred Stock and after giving effect thereto, the sum of (1) the aggregate principal amount outstanding of all such Indebtedness Incurred and such Preferred Stock issued pursuant to this clause (p) (together with any refinancings thereof, but excluding any Contractor Guarantees or Guarantees Incurred under this clause (p) to the extent the amount of such Contractor Guarantees or Guarantees is otherwise reflected in such aggregate principal amount) plus (2) the aggregate principal amount outstanding of all such Indebtedness Incurred under clause (h) above or (q), (r), (u), (v) or (w) below (together with any refinancings thereof, but excluding any Contractor Guarantees or Guarantees Incurred under clauses (h) above or (q), (r), (u), (v) or (w) below to the extent the amount of such Contractor Guarantees or Guarantees is otherwise reflected in such aggregate principal amount), does not exceed an amount equal to 30.0% of Total Assets;

(q) Bank Deposit Secured Indebtedness or Cross Border Secured Indebtedness Incurred by the Company or any Restricted Subsidiary; provided that on the date of the Incurrence of such Indebtedness and after giving effect thereto, the sum of (1) the aggregate principal amount outstanding of all such Indebtedness Incurred pursuant to this clause (q) (together with any refinancings thereof, but excluding any Guarantees Incurred under this clause (q) to the extent the amount of such Guarantees is otherwise reflected in such aggregate principal amount), plus (2) the aggregate principal amount outstanding of all such Indebtedness Incurred pursuant to clauses (h) or (p) above or (r), (u), (v) or (w) below (together with any refinancings thereof, but excluding any Contractor Guarantees or Guarantees Incurred under clauses (h) or (p) above or (r), (u), (v) or (w) below to the extent the amount of such Contractor Guarantees or Guarantees is otherwise reflected in such aggregate principal amount), does not exceed an amount equal to 30.0% of Total Assets;

207 (r) Indebtedness Incurred by any PRC Restricted Subsidiary which is secured by Investment Properties, and Guarantees thereof by the Company or any PRC Restricted Subsidiary; provided that on the date of the Incurrence of such Indebtedness and after giving effect thereto, the sum of (1) the aggregate principal amount outstanding of all such Indebtedness Incurred pursuant to this clause (r) (together with any refinancings thereof, but excluding any Guarantees Incurred under this clause (r) to the extent the amount of such Guarantees is otherwise reflected in such aggregate principal amount), plus (2) the aggregate principal amount outstanding of all such Indebtedness Incurred pursuant to clauses (h), (p) or (q) above or (u), (v) or (w) below (together with any refinancings thereof, but excluding any Contractor Guarantees or Guarantees Incurred under clauses (h), (p) or (q) above or (u), (v) or (w) below to the extent the amount of such Contractor Guarantees or Guarantees is otherwise reflected in such aggregate principal amount), does not exceed an amount equal to 30.0% of Total Assets;

(s) Indebtedness of the Company or any Restricted Subsidiary in an aggregate principal amount outstanding at any time (together with refinancings thereof) not to exceed US$25.0 million (or the Dollar Equivalent thereof);

(t) Indebtedness Incurred by the Company or a Restricted Subsidiary constituting a Subordinated Shareholder Loan;

(u) Indebtedness Incurred by the Company or any Restricted Subsidiary constituting a Guarantee of Indebtedness of any Person (other than the Company or a Restricted Subsidiary) by the Company or such Restricted Subsidiary, provided that on the date of the Incurrence of such Indebtedness and after giving effect thereto, the sum of (1) the aggregate principal amount outstanding of all such Indebtedness Incurred pursuant to this clause (u) (together with any refinancings thereof, but excluding any Guarantees Incurred under this clause (u) to the extent the amount of such Guarantees is otherwise reflected in such aggregate principal amount), plus (2) the aggregate principal amount outstanding of all such Indebtedness Incurred pursuant to clauses (h), (p), (q) or (r) above or (v) or (w) below (together with any refinancings thereof, but excluding any Contractor Guarantees or Guarantees Incurred under clauses (h), (p), (q) or (r) above or (v) or (w) below to the extent the amount of such Contractor Guarantees or Guarantees is otherwise reflected in such aggregate principal amount), does not exceed an amount equal to 30.0% of Total Assets;

(v) Acquired Indebtedness of any Restricted Subsidiary Incurred and outstanding on the date on which such Person becomes a Restricted Subsidiary (other than Indebtedness Incurred (i) to provide all or any portion of the funds utilized to consummate the transaction or series of transactions pursuant to which a Person becomes a Restricted Subsidiary or (ii) otherwise in contemplation of a Person becoming a Restricted Subsidiary or any such acquisition); provided that on the date of the Incurrence of such Indebtedness and after giving effect thereto, the sum of (1) the aggregate principal amount outstanding of all such Indebtedness Incurred pursuant to this clause (v) (together with any refinancings thereof, but excluding any Guarantees Incurred under this clause (v) to the extent the amount of such Guarantees is otherwise reflected in such aggregate principal amount), plus (2) the aggregate principal amount outstanding of all such Indebtedness Incurred pursuant to clauses (h), (p), (q), (r) or (u) above or (w) below (together with any refinancings thereof, but excluding any Contractor Guarantees or Guarantees Incurred under clauses (h), (p), (q), (r) or (u) above or (w) below to the extent the amount of such Contractor Guarantees or Guarantees is otherwise reflected in such aggregate principal amount), does not exceed an amount equal to 30.0% of Total Assets; and

208 (w) Indebtedness of the Company or any Restricted Subsidiary constituting an obligation to pay the deferred purchase price of Capital Stock of a Person pursuant to a Minority Interest Staged Acquisition Agreement, to the extent that such deferred purchase price is paid within 12 months after the date the Company or such Restricted Subsidiary enters into such Minority Interest Staged Acquisition Agreement; provided that on the date of the Incurrence of such Indebtedness and after giving effect thereto, the sum of (1) the aggregate principal amount outstanding of all such Indebtedness Incurred pursuant to this clause (w) (together with any refinancings thereof, but excluding any Guarantees Incurred under this clause (w) to the extent the amount of such Guarantees is otherwise reflected in such aggregate principal amount), plus (2) the aggregate principal amount outstanding of all such Indebtedness Incurred pursuant to clauses (h), (p), (q), (r), (u) or (v) above (together with any refinancings thereof, but excluding any Contractor Guarantees or Guarantees Incurred under clauses (h), (p), (q), (r), (u) or (v) above to the extent the amount of such Contractor Guarantees or Guarantees is otherwise reflected in such aggregate principal amount), does not exceed an amount equal to 30.0% of Total Assets.

(3) For purposes of determining compliance with this “Limitation on Indebtedness and Preferred Stock” covenant, in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described above, including under the proviso in the first paragraph of part (1), the Company, in its sole discretion, shall classify, and from time to time may reclassify, such item of Indebtedness and only be required to include the amount of such Indebtedness as one or more of such types.

(4) Notwithstanding any other provision of the Indenture, the maximum amount of Indebtedness that may be Incurred pursuant to this covenant will not be deemed to be exceeded with respect to any outstanding Indebtedness due solely to the result of fluctuations in the exchange rates of currencies.

Limitation on Restricted Payments

The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly (the payments or any other actions described in clauses (1) through (4) below being collectively referred to as “Restricted Payments”):

(1) declare or pay any dividend or make any distribution on or with respect to the Company’s or any of its Restricted Subsidiaries’ Capital Stock (other than dividends or distributions payable or paid in shares of the Company’s or any of its Restricted Subsidiaries’ Capital Stock (other than Disqualified Stock or Preferred Stock) or in options, warrants or other rights to acquire shares of such Capital Stock) held by Persons other than the Company or any Wholly Owned Restricted Subsidiary;

(2) purchase, call for redemption or redeem, retire or otherwise acquire for value any shares of Capital Stock of the Company or any Restricted Subsidiary (including options, warrants or other rights to acquire such shares of Capital Stock) or any direct or indirect parent of the Company held by any Person other than the Company or any Wholly Owned Restricted Subsidiary other than (i) the purchase of Capital Stock of a Restricted Subsidiary pursuant to a Staged Acquisition Agreement permitted to be entered into under the Indenture or (ii) the purchase of Capital Stock of a Restricted Subsidiary held by a Trust Company Investor;

(3) make any voluntary or optional principal payment, or voluntary or optional redemption, repurchase, defeasance, or other acquisition or retirement for value, of Indebtedness that is subordinated in right of payment to the Notes or any of the Subsidiary Guarantees or any of the JV Subsidiary Guarantees (excluding any intercompany Indebtedness between or among the Company and any of its Wholly Owned Restricted Subsidiaries); or

(4) make any Investment, other than a Permitted Investment;

209 if, at the time of, and after giving effect to, the proposed Restricted Payment:

(a) a Default has occurred and is continuing or would occur as a result of such Restricted Payment;

(b) the Company could not Incur at least US$1.00 of Indebtedness under the proviso in the first paragraph of part (1) of the covenants under the caption “—Limitation on Indebtedness and Preferred Stock;” or

(c) such Restricted Payment, together with the aggregate amount of all Restricted Payments made by the Company and its Restricted Subsidiaries after the Measurement Date, shall exceed the sum of:

(i) 50.0% of the aggregate amount of the Consolidated Net Income of the Company (or, if the Consolidated Net Income is a loss, minus 100.0% of the amount of such loss) accrued on a cumulative basis during the period (taken as one accounting period) beginning on the first day of the fiscal quarter during which the 2018 USD Notes were first issued and ending on the last day of the Company’s most recently ended fiscal quarter for which consolidated financial statements of the Company (which the Company shall use its reasonable best efforts to compile in a timely manner) are available (which may include internal consolidated financial statements); plus

(ii) 100.0% of the aggregate Net Cash Proceeds received by the Company after the Measurement Date as a capital contribution to its common equity or from the issuance and sale of its Capital Stock (other than Disqualified Stock) to a Person who is not a Subsidiary of the Company, including any such Net Cash Proceeds received upon (A) the conversion of any Indebtedness (other than Subordinated Indebtedness) of the Company into Capital Stock (other than Disqualified Stock) of the Company, or (B) the exercise by a Person who is not a Subsidiary of the Company of any options, warrants or other rights to acquire Capital Stock of the Company (other than Disqualified Stock) in each case excluding the amount of any such Net Cash Proceeds used to redeem, repurchase, defease or otherwise acquire or retire for value any Subordinated Indebtedness or Capital Stock of the Company; plus

(iii) the amount by which Indebtedness of the Company or any of its Restricted Subsidiaries is reduced on the Company’s consolidated balance sheet upon the conversion or exchange (other than by a Subsidiary of the Company) subsequent to the Measurement Date of any Indebtedness of the Company or any of its Restricted Subsidiaries convertible or exchangeable into Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash, or the Fair Market Value of any other property, distributed by the Company upon such conversion or exchange); plus

(iv) an amount equal to the net reduction in Investments (other than reductions in Permitted Investments) that were made after the Measurement Date in any Person resulting from (A) payments of interest on Indebtedness, dividends or repayments of loans or advances by such Person, in each case to the Company or any Restricted Subsidiary (except, in each case, to the extent any such payment or proceeds are included in the calculation of Consolidated Net Income) after the Measurement Date, (B) the unconditional release of a Guarantee provided by the Company or a Restricted Subsidiary after the Measurement Date of an obligation of another Person, (C) to the extent that an Investment made after the Measurement Date was, after such date, or is sold or otherwise liquidated or repaid for cash, the lesser of (x) cash return of capital with respect to such Investment (less the cost of disposition, if any) and (y) the initial amount of such Investment, or (D) from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries, not to exceed, in each case, the amount of Investments (other than Permitted Investments) made by the Company or a Restricted Subsidiary after the Measurement Date in any such Person; plus

(v) US$30.0 million (or the Dollar Equivalent thereof).

210 The foregoing provision shall not be violated by reason of:

(1) the payment of any dividend or redemption of any Capital Stock within 60 days after the related date of declaration or call for redemption if, at said date of declaration or call for redemption, such payment or redemption would comply with the preceding paragraph;

(2) the redemption, repurchase, defeasance or other acquisition or retirement for value of Subordinated Indebtedness of the Company or any of the Subsidiary Guarantors or JV Subsidiary Guarantors with the Net Cash Proceeds of, or in exchange for, a substantially concurrent Incurrence of Permitted Refinancing Indebtedness;

(3) the redemption, repurchase or other acquisition of Capital Stock of the Company or any Subsidiary Guarantor or JV Subsidiary Guarantor (or options, warrants or other rights to acquire such Capital Stock) in exchange for, or out of the Net Cash Proceeds of a substantially concurrent capital contribution or a sale (other than to a Subsidiary of the Company) of, shares of the Capital Stock (other than Disqualified Stock) of the Company or any Subsidiary Guarantor (or options, warrants or other rights to acquire such Capital Stock); provided that the amount of any such Net Cash Proceeds that are utilized for any such Restricted Payment will be excluded from clause (c)(ii) of the preceding paragraph, provided however that any item that has been excluded pursuant to clause (c)(ii) of the preceding paragraph will not be excluded again as a result of the proviso in this clause (3);

(4) the redemption, repurchase, defeasance or other acquisition or retirement for value of Subordinated Indebtedness of the Company or any of the Subsidiary Guarantors or JV Subsidiary Guarantors in exchange for, or out of the Net Cash Proceeds of, a substantially concurrent capital contribution or sale (other than to a Subsidiary of the Company) of, shares of Capital Stock (other than Disqualified Stock) of the Company or any of the Subsidiary Guarantors or JV Subsidiary Guarantors (or options, warrants or other rights to acquire such Capital Stock); provided that the amount of any such Net Cash Proceeds that are utilized for any such Restricted Payment will be excluded from clause (c)(ii) of the preceding paragraph, provided however that any item that has been excluded pursuant to clause (c)(ii) of the preceding paragraph will not be excluded again as a result of the proviso in this clause (4);

(5) the payment of any dividends or distributions declared, paid or made by a Restricted Subsidiary payable, on a pro rata basis or on a basis more favorable to the Company, to all holders of any class of Capital Stock of such Restricted Subsidiary; provided that, with respect to a Restricted Subsidiary of which less than a majority of the Voting Stock is directly or indirectly owned by the Company, such dividend or distribution shall be declared, paid or made on a pro rata basis or on a basis more favorable to the Company, as determined by the ownership of the Voting Stock;

(6) dividends paid to, or the purchase of Capital Stock of any PRC Project Company held by, any Trust Company Investor in respect of any Indebtedness or Preferred Stock outstanding on the Original Issue Date or permitted to be Incurred under paragraph (2)(p) of the “Limitation on Indebtedness and Preferred Stock” covenant;

(7) the declaration and payment of dividends by the Company in an aggregate amount not to exceed 30% of the profit for the year attributable to the owners of the Company (or the Dollar equivalent thereof) with respect to the fiscal year ended December 31, 2012;

(8) payments, including distributions, made under or in connection with any Perpetual Bond Obligation pursuant to the terms thereof or in connection with a repurchase or redemption thereof;

211 (9) payments of cash, dividends, distributions, advances or other Restricted Payments by the Company or any of its Restricted Subsidiaries to allow the payment of cash in lieu of fractional shares; provided however, that any such payment, dividend, distribution, advance or other Restricted Payment shall not be for the purpose of evading the limitation of this “—Limitation on Restricted Payments” covenant (as determined in good faith by the Board of Directors);

(10) payments made under a Staged Acquisition Agreement to acquire the Capital Stock of a Person provided that such Person becomes a Restricted Subsidiary on or before the last date in the period stipulated in such Staged Acquisition Agreement for which the purchase price can be made (such date not to exceed 18 months from the date the Staged Acquisition Agreement was entered into) (the “Deadline Date”); provided further that in the event such Person does not become a Restricted Subsidiary on or before the Deadline Date, all payments previously made under this clause (8) shall be aggregated and constitute Restricted Payments made on the Deadline Date and such Restricted Payments must satisfy the other conditions under this “Limitations on Restricted Payments” covenant;

(11) (A) payments made to purchase return on investment in 51% of the outstanding Capital Stock of Shanghai Huazhe Bund Realty Co., Ltd. held by Shanghai Sunac Greentown Investment Holdings Limited in an aggregate amount not to exceed RMB1,971.0 million, (B) payments made to purchase 45% of the outstanding Capital Stock of Beijing Xingye Wanfa Real Estate Development Co., Ltd. held by Beijing Sunac Construction Investment Real Estate Co., Ltd. in an aggregate amount not to exceed RMB1,063.0 million, (C) payments made to purchase 50% of the outstanding Capital Stock of Zhejiang Jinying Real Estate Co., Ltd. held by Shanghai Greentown Forest Golf Villa Development Co., Ltd. in an aggregate amount not to exceed RMB200.0 million, (D) payments made to purchase the shareholder loan of Zhejiang Jinying Real Estate Co., Ltd. held by Tianjin Sunac Zhidi Co., Ltd. in an aggregate amount not to exceed RMB680.0 million;

(12) the purchase by the Company or a Restricted Subsidiary of Capital Stock of any Restricted Subsidiary that is not Wholly Owned, directly or indirectly, by the Company from an Independent Third Party pursuant to an agreement entered into between/among the Company or any Restricted Subsidiary and such Independent Third Party solely for the purpose of acquiring real property or land use rights, provided that (x) such purchase occurs within 12 months after such Restricted Subsidiary acquires the real property or land use rights it was formed to acquire and (y) the Company delivers to the Trustee a Board Resolution set forth in an Officers’ Certificate confirming that, in the opinion of the Board of Directors, the purchase price of such Capital Stock is less than or equal to the Fair Market Value of such Capital Stock; or

(13) (A) the repurchase, redemption or other acquisition or retirement for value of the Capital Stock of the Company or any Restricted Subsidiary (directly or indirectly, including through any trustee, agent or nominee) in connection with an employee benefit plan, and any corresponding Investment by the Company or any Restricted Subsidiary in any trust or similar arrangements to the extent of such repurchased, redeemed, acquired or retired Capital Stock, or (B) the repurchase, redemption or other acquisition or retirement for value of any Capital Stock of the Company or any Restricted Subsidiary held by an employee benefit plan of the Company or any Restricted Subsidiary, any current or former officer, director, consultant, or employee of the Company or any Restricted Subsidiary (or permitted transferees, estates or heirs of any of the foregoing); provided that the aggregate consideration paid for all such repurchased, redeemed, acquired or retired Capital Stock shall not exceed US$25.0 million (or the Dollar Equivalent thereof),

212 provided that, in the case of clause (2), (3) or (4) of the preceding paragraph, no Default shall have occurred and be continuing or would occur as a consequence of the actions or payments set forth therein.

Each Restricted Payment permitted pursuant to clause (1) of the preceding paragraph shall be included in calculating whether the conditions of clause (c) of the first paragraph of this “Limitation on Restricted Payments” covenant have been met with respect to any subsequent Restricted Payments.

Notwithstanding any other provision of this ‘‘Limitation on Restricted Payments’’ covenant, clause (b) of the first paragraph of this “Limitation on Restricted Payments “ covenant does not have to be satisfied with respect to any Restricted Payment consisting solely of the declaration or payment of dividends in cash on the Common Stock of the Company; provided that the aggregate amount of any and all declarations and payments of dividends on such Common Stock with respect to any fiscal year of the Company ending on and after December 31, 2014, to the extent made pursuant to this clause, may not exceed 15.0% of the profit for the year attributable to the owners of the Company for such fiscal year (or the Dollar equivalent thereof).

The amount of any Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or the Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The value of any assets or securities that are required to be valued by this covenant will be their Fair Market Value. The Board of Directors’ determination of the Fair Market Value of a Restricted Payment or any such assets or securities must be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of recognized international standing if the Fair Market Value exceeds US$15.0 million (or the Dollar Equivalent thereof).

Not later than the date of making any Restricted Payment (other than any Restricted Payment set forth in clauses (5) through (13) above) in excess of US$15.0 million (or the Dollar Equivalent thereof), the Company will deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this “—Limitation on Restricted Payments” covenant were computed, together with a copy of any fairness opinion or appraisal required by the Indenture.

Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

(1) Except as provided below, the Company will not, and will not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to:

(a) pay dividends or make any other distribution on any Capital Stock of such Restricted Subsidiary owned by the Company or any other Restricted Subsidiary;

(b) pay any Indebtedness or other obligation owed to the Company or any other Restricted Subsidiary;

(d) sell, lease or transfer any of its property or assets to the Company or any other Restricted Subsidiary.

(2) The provisions of paragraph (1) do not apply to any encumbrances or restrictions:

(a) existing in agreements as in effect on the Original Issue Date, or in the Notes, the Subsidiary Guarantees, the JV Subsidiary Guarantees, the Indenture, and any extensions, refinancings, renewals or replacements of any of the foregoing agreements; provided that the encumbrances and restrictions in any such extension, refinancing, renewal or replacement, taken as a whole, are no more restrictive in any material respect to the Holders than those encumbrances or restrictions that are then in effect and that are being extended, refinanced, renewed or replaced;

213 (b) existing under or by reason of applicable law, rule, regulation or order;

(c) existing with respect to any Person or the property or assets of such Person acquired by the Company or any Restricted Subsidiary, at the time of such acquisition and not Incurred in contemplation thereof, which encumbrances or restrictions are not applicable to any Person or the property or assets of any Person other than such Person or the property or assets of such Person so acquired, and any extensions, refinancings, renewals or replacements thereof; provided that the encumbrances and restrictions in any such extension, refinancing, renewal or replacement, taken as a whole, are no more restrictive in any material respect to the Holders than those encumbrances or restrictions that are then in effect and that are being extended, refinanced, renewed or replaced;

(d) that otherwise would be prohibited by the provision described in clause (1)(d) of this covenant if they arise, or are agreed to, in the ordinary course of business and, that (i) restrict in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease or license, or (ii) exist by virtue of any Lien on, or agreement to transfer, option or similar right with respect to any property or assets of the Company or any Restricted Subsidiary not otherwise prohibited by the Indenture or (iii) do not relate to any Indebtedness, and that do not, individually or in the aggregate, detract from the value of property or assets of the Company or any Restricted Subsidiary in any manner material to the Company or any Restricted Subsidiary;

(e) with respect to a Restricted Subsidiary and imposed pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock of, or property and assets of, such Restricted Subsidiary that is permitted by the “—Limitation on Sales and Issuances of Capital Stock in Restricted Subsidiaries,” “—Limitation on Indebtedness and Preferred Stock” and “—Limitation on Asset Sales” covenants;

(f) with respect to any Restricted Subsidiary and imposed pursuant to an agreement that has been entered into for the Incurrence of Indebtedness or issuance of Preferred Stock of the type described under clause (2)(h), (2)(n), 2(o), (2)(p), (2)(q), (2)(r), (2)(s) (u), (v) or (w) of the “Limitation on Indebtedness and Preferred Stock” covenant if, as determined by the Board of Directors, such encumbrances or restrictions are (i) customary for such types of agreements and (ii) would not, at the time agreed to, be expected to materially and adversely affect the ability of the Company to make required payment on the Notes and any extensions, refinancings, renewals or replacements of any of the foregoing agreements; provided that the encumbrances and restrictions in any such extension, refinancing, renewal or replacement, taken as a whole, are no more restrictive in any material respect to the Holders than those encumbrances or restrictions that are then in effect and that are being extended, refinanced, renewed or replaced;

(g) existing in customary provisions in joint venture agreements and other similar agreements permitted under the Indenture, to the extent such encumbrance or restriction relates to the activities or assets of a Restricted Subsidiary that is a party to such joint venture and if (as determined in good faith by the Board of Directors) (i) the encumbrances or restrictions are customary for a joint venture or similar agreement of that type and (ii) the encumbrances or restrictions would not, at the time agreed to, be expected to materially and adversely affect (x) the ability of the Company to make the required payments on the Notes, or (y) any Subsidiary Guarantor or JV Subsidiary Guarantor to make required payments under its Subsidiary Guarantee or JV Subsidiary Guarantee, as applicable; or

214 (h) existing with respect to any Unrestricted Subsidiary or the property or assets of such Unrestricted Subsidiary that is designated as a Restricted Subsidiary in accordance with the terms of the Indenture at the time of such designation and not incurred in contemplation of such designation, which encumbrances or restrictions are not applicable to any Person or the property or assets of any Person other than such Subsidiary or its subsidiaries or the property or assets of such Subsidiary or its subsidiaries, and any extensions, refinancing, renewals or replacements thereof; provided that the encumbrances and restrictions in any such extension, refinancing, renewal or replacement, taken as a whole, are no more restrictive in any material respect to the Holders than those encumbrances or restrictions that are then in effect and that are being extended, refinanced, renewed or replaced.

Limitation on Sales and Issuances of Capital Stock in Restricted Subsidiaries

The Company will not sell, and will not permit any Restricted Subsidiary, directly or indirectly, to issue or sell any shares of Capital Stock of a Restricted Subsidiary (including options, warrants or other rights to purchase shares of such Capital Stock) except:

(1) to the Company or a Wholly Owned Restricted Subsidiary, or in the case of a Restricted Subsidiary that is not Wholly Owned, pro rata to its shareholders or incorporators;

(2) to the extent such Capital Stock represents director’s qualifying shares or is required by applicable law to be held by a Person other than the Company or a Wholly Owned Restricted Subsidiary;

(3) for the sale of all of the shares of the Capital Stock of a Restricted Subsidiary if permitted under, and made in accordance with, the “—Limitation on Asset Sales” covenant;

(4) the sale or issuance of Capital Stock of a Restricted Subsidiary if, immediately after giving effect to such sale or issuance, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any remaining Investment in such Person would have been permitted to be made under the “Limitation on Restricted Payments” covenant if made on the date of such sale or issuance, provided that the Company complies with the “—Limitation on Asset Sales” covenant and provided further that paragraph (17)(b) of the definition of “Permitted Investments” shall not apply if such Investment in such Person immediately after giving effect to such issuance or sale would otherwise have been permitted under paragraph (17) of such definition; or

(5) the sale or issuance of Capital Stock of a Restricted Subsidiary (which remains a Restricted Subsidiary after any such sale or issuance); provided that the Company or such Restricted Subsidiary applies the Net Cash Proceeds of such sale or issuance in accordance with the “—Limitation on Asset Sales” covenant.

Limitation on Issuances of Guarantees by Restricted Subsidiaries

The Company will not permit any Restricted Subsidiary which is not a Subsidiary Guarantor or a JV Subsidiary Guarantor, directly or indirectly, to Guarantee any Indebtedness (“Guaranteed Indebtedness”) of the Company or any Subsidiary Guarantor or JV Subsidiary Guarantor, unless (1) (a) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to the Indenture providing for an unsubordinated Subsidiary Guarantee (in the case of a Subsidiary Guarantor) or JV Subsidiary Guarantee (in the case of a JV Subsidiary Guarantor) of payment of the Notes by such Restricted Subsidiary and (b) such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Company or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Subsidiary Guarantee or JV Subsidiary Guarantee, as the case may be, until the Notes have been paid in full or (2) such Guarantee is permitted by clauses (2)(c), (d) or (q) (in

215 the case of clause (2)(q), with respect to the Guarantee provided by the Company or any Restricted Subsidiary in connection with any Cross Border Secured Indebtedness or through security over bank accounts, cash deposits or other assets to secure, directly or indirectly, any Bank Deposit Secured Indebtedness) under the caption “—Limitation on Indebtedness and Preferred Stock.”

If the Guaranteed Indebtedness (1) ranks pari passu in right of payment with the Notes, any Subsidiary Guarantee or any JV Subsidiary Guarantee, then the Guarantee of such Guaranteed Indebtedness shall rank pari passu in right of payment with, or subordinated to, the Subsidiary Guarantee or the JV Subsidiary Guarantee, as the case may be, or (2) is subordinated in right of payment to the Notes, any Subsidiary Guarantee or any JV Subsidiary Guarantee, then the Guarantee of such Guaranteed Indebtedness shall be subordinated in right of payment to the Subsidiary Guarantee or the JV Subsidiary Guarantee, as the case may be, at least to the extent that the Guaranteed Indebtedness is subordinated to the Notes, the Subsidiary Guarantee or the JV Subsidiary Guarantee.

The Company will not permit any JV Subsidiary Guarantor, directly or indirectly, to guarantee any Indebtedness of the Company or any other Restricted Subsidiary unless the aggregate claims of the creditor under such guarantee will be limited to the JV Entitlement Amount. If any JV Subsidiary Guarantor guarantees any Indebtedness of the Company or any other Restricted Subsidiary where the aggregate claims of the creditor under such guarantee exceeds the JV Entitlement Amount, such JV Subsidiary Guarantee shall be replaced with a Subsidiary Guarantee given by a Subsidiary Guarantor.

Limitation on Transactions with Shareholders and Affiliates

The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, enter into, renew or extend any transaction or arrangement (including, without limitation, the purchase, sale, lease or exchange of property or assets, or the rendering of any service) with (x) any holder (or any Affiliate of such holder) of 10.0% or more of any class of Capital Stock of the Company or (y) any Affiliate of the Company (each an “Affiliate Transaction”), unless:

(1) the Affiliate Transaction is on fair and reasonable terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or the relevant Restricted Subsidiary with a Person that is not an Affiliate of the Company; and

(2) the Company delivers to the Trustee:

(a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of US$15.0 million (or the Dollar Equivalent thereof), a Board Resolution set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with this covenant and such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors; and

(b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of US$20.0 million (or the Dollar Equivalent thereof), in addition to the Board Resolution required in clause 2(a) above, an opinion as to the fairness to the Company or the relevant Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of recognized international standing.

The foregoing limitation does not limit, and shall not apply to:

(1) the payment of reasonable and customary regular fees and other compensation to directors of the Company or any Restricted Subsidiary who are not employees of the Company or any Restricted Subsidiary;

(2) transactions between or among the Company and any of its Wholly Owned Restricted Subsidiaries or between or among Wholly Owned Restricted Subsidiaries;

216 (3) any Restricted Payment of the type described in clauses (1), (2) or (3) of the first paragraph of the covenant described above under the caption “—Limitation on Restricted Payments” if permitted by that covenant;

(4) any sale of Capital Stock (other than Disqualified Stock) of the Company or Incurrence by the Company or any Restricted Subsidiary of Subordinated Shareholder Loans;

(5) the payment of compensation to officers and directors of the Company or any Restricted Subsidiary pursuant to an employee benefit, share option or similar schemes, for so long as such scheme is in compliance with the listing rules of the Hong Kong Stock Exchange, which as of the Original Issue Date require majority shareholder approval of any such scheme;

(6) loans or advances to employees, officers or directors in the ordinary course of business not to exceed US$5.0 million in the aggregate at any one time outstanding; and

(7) any employment, consulting, service or termination agreement, or reasonable and customary indemnification arrangements, entered into by the Company or any of its Restricted Subsidiaries with directors, officers, employees and consultants in the ordinary course of business and the payment of compensation pursuant thereto.

In addition, the requirements of clause (2) of the first paragraph of this covenant shall not apply to (i) Investments (other than Permitted Investments) not prohibited by the “Limitation on Restricted Payments” covenant, (ii) transactions pursuant to agreements in effect on the Original Issue Date and described in this offering memorandum, or any amendment or modification or replacement thereof, so long as such amendment, modification or replacement is not more disadvantageous to the Company and its Restricted Subsidiaries than the original agreement in effect on the Original Issue Date, (iii) any transaction between or among any of the Company, any Wholly Owned Restricted Subsidiary and any Restricted Subsidiary that is not a Wholly Owned Restricted Subsidiary or between or among Restricted Subsidiaries that are not Wholly Owned Restricted Subsidiaries; provided that in the case of clause (iii)(a) such transaction is entered into in the ordinary course of business and (b) none of the minority shareholders or minority partners of or in such Restricted Subsidiary that is not a Wholly Owned Subsidiary Guarantor is a Person described in clauses (x) or (y) of the first paragraph of this covenant (other than by reason of such minority shareholder or minority partner being an officer or director of such Restricted Subsidiary) and (iv) any transaction between or among any of the Company and the Restricted Subsidiaries and any Qualifying Related Entity that is an HKSE Compliant Transaction.

Limitation on Liens

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, incur, assume or permit to exist any Lien on any Capital Stock of an Offshore Restricted Subsidiary (other than a Permitted Lien specified in clause (1)) unless the Notes are equally and ratably secured by such Lien.

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, incur, assume or permit to exist any Lien of any nature whatsoever on any of its assets or properties of any kind, whether owned at the Original Issue Date or thereafter acquired, except Permitted Liens, unless the Notes are equally and ratably secured by such Lien.

217 Limitation on Sale and Leaseback Transactions

The Company will not, and will not permit any of its Restricted Subsidiaries to, enter into any Sale and Leaseback Transaction; provided that the Company or any Restricted Subsidiary may enter into a Sale and Leaseback Transaction if:

(1) the Company or any Restricted Subsidiary could have (a) Incurred Indebtedness in an amount equal to the Attributable Indebtedness relating to such Sale and Leaseback Transaction under the first paragraph of the covenant described above under “—Limitation on Indebtedness and Preferred Stock” and (b) incurred a Lien to secure such Indebtedness pursuant to the covenant described above under the caption “—Limitation on Liens,” in which case, the corresponding Indebtedness and Lien will be deemed incurred pursuant to those provisions;

(2) the gross cash proceeds of that Sale and Leaseback Transaction are at least equal to the Fair Market Value of the property that is the subject of such Sale and Leaseback Transaction; and

(3) the transfer of assets in that Sale and Leaseback Transaction is permitted by, and the Company or any Restricted Subsidiary applies the proceeds of such transaction in compliance with, the covenant described below under the caption “—Limitation on Asset Sales.”

Limitation on Asset Sales

The Company will not, and will not permit any Restricted Subsidiary to, consummate any Asset Sale, unless:

(1) no Default shall have occurred and be continuing or would occur as a result of such Asset Sale;

(2) the consideration received by the Company or such Restricted Subsidiary, as the case may be, is at least equal to the Fair Market Value of the assets sold or disposed of; and

(3) at least 75.0% of the consideration received consists of cash, Temporary Cash Investments or Replacement Assets; provided that in the case of an Asset Sale in which the Company or such Restricted Subsidiary receives Replacement Assets involving aggregate consideration in excess of US$50.0 million (or the Dollar Equivalent thereof), the Company shall deliver to the Trustee an opinion as to the fairness to the Company or such Restricted Subsidiary of such Asset Sale from a financial point of view issued by an accounting, appraisal or investment banking firm of international standing. For purposes of this provision, each of the following will be deemed to be cash:

(a) any liabilities, as shown on the Company’s most recent consolidated balance sheet, of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes, any Subsidiary Guarantee or any JV Subsidiary Guarantee) that are assumed by the transferee of any such assets pursuant to a customary assumption, assignment, novation or similar agreement that releases the Company or such Restricted Subsidiary from further liability; and

(b) any securities, notes or other obligations received by the Company or any Restricted Subsidiary from such transferee that are promptly, but in any event within 30 days of closing, converted by the Company or such Restricted Subsidiary into cash, to the extent of the cash received in that conversion.

218 Within 360 days after the receipt of any Net Cash Proceeds from an Asset Sale, the Company (or the applicable Restricted Subsidiary, as the case may be) may apply such Net Cash Proceeds to:

(1) permanently repay Senior Indebtedness of the Company or a Subsidiary Guarantor or any Indebtedness of a Restricted Subsidiary that is not a Subsidiary Guarantor (and, if such Senior Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto) in each case owing to a Person other than the Company or a Restricted Subsidiary; or

(2) acquire Replacement Assets.

Any Net Cash Proceeds from Asset Sales that are not applied or invested as provided in clauses (1) and (2) in the immediately preceding paragraph will constitute “Excess Proceeds.” Excess Proceeds of less than US$15.0 million (or the Dollar Equivalent thereof) will be carried forward and accumulated. When accumulated Excess Proceeds exceeds US$15.0 million (or the Dollar Equivalent thereof), within 10 days thereof, the Company must make an Offer to Purchase Notes having a principal amount equal to:

(1) accumulated Excess Proceeds, multiplied by

(2) a fraction (x) the numerator of which is equal to the Dollar Equivalent of the outstanding principal amount of the Notes and (y) the denominator of which is equal to the Dollar Equivalent of the outstanding principal amount of the Notes and all pari passu Indebtedness similarly required to be repaid, redeemed or tendered for in connection with the related Asset Sale, rounded down to the nearest US$1,000.

The offer price in any Offer to Purchase will be equal to 100.0% of the principal amount plus accrued and unpaid interest to the date of purchase, and will be payable in cash.

If any Excess Proceeds remain after consummation of an Offer to Purchase, the Company may use those Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes (and any other pari passu Indebtedness) tendered in such Offer to Purchase exceeds the amount of Excess Proceeds, the Trustee will select the Notes (and such other pari passu Indebtedness) to be purchased on a pro rata basis. Upon completion of each Offer to Purchase, the amount of Excess Proceeds will be reset at zero.

Limitation on the Company’s Business Activities

The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, engage in any business other than Permitted Businesses; provided, however, that the Company or any Restricted Subsidiary may own Capital Stock of an Unrestricted Subsidiary or joint venture or other entity that is engaged in a business other than Permitted Businesses as long as any Investment therein was not prohibited when made by the covenants under the caption “—Limitation on Restricted Payments.”

Use of Proceeds

The Company will not, and will not permit any Restricted Subsidiary to, use the net proceeds from the sale of the Notes, in any amount, for any purpose other than (1) in the approximate amounts and for the purposes specified, including any adjustment in response to changes in acquisition or development plans, as contemplated under the caption “Use of Proceeds” in this offering memorandum and (2) pending the application of all of such net proceeds in such manner, to invest the portion of such net proceeds not yet so applied in Temporary Cash Investments.

219 Designation of Restricted and Unrestricted Subsidiaries

The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary; provided that (1) no Default shall have occurred and be continuing at the time of or after giving effect to such designation; (2) neither the Company nor any Restricted Subsidiary provides credit support for the Indebtedness of such Restricted Subsidiary; (3) such Restricted Subsidiary has no outstanding Indebtedness that could trigger a cross-default to the Indebtedness of the Company; (4) such Restricted Subsidiary does not own any Disqualified Stock of the Company or Disqualified or Preferred Stock of another Restricted Subsidiary or hold any Indebtedness of, or any Lien on any property of, the Company or any Restricted Subsidiary, if such Disqualified or Preferred Stock or Indebtedness could not be Incurred under the covenant described under the caption “—Limitation on Indebtedness and Preferred Stock” or such Lien would violate the covenant described under the caption “—Limitation on Liens;” (5) such Restricted Subsidiary does not own any Voting Stock of another Restricted Subsidiary, and all of its Subsidiaries are Unrestricted Subsidiaries or are being concurrently designated to be Unrestricted Subsidiaries in accordance with this paragraph; and (6) the Investment deemed to have been made thereby in such newly-designated Unrestricted Subsidiary and each other newly-designated Unrestricted Subsidiary being concurrently redesignated would be permitted to be made by the covenant described under “—Limitation on Restricted Payments.”

The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that (1) no Default shall have occurred and be continuing at the time of or after giving effect to such designation; (2) any Indebtedness of such Unrestricted Subsidiary outstanding at the time of such designation which will be deemed to have been Incurred by such newly-designated Restricted Subsidiary as a result of such designation would be permitted to be Incurred by the covenant described under the caption “—Limitation on Indebtedness and Preferred Stock;” (3) any Lien on the property of such Unrestricted Subsidiary at the time of such designation which will be deemed to have been incurred by such newly-designated Restricted Subsidiary as a result of such designation would be permitted to be incurred by the covenant described under the caption “—Limitation on Liens;” (4) such Unrestricted Subsidiary is not a Subsidiary of another Unrestricted Subsidiary (that is not concurrently being designated as a Restricted Subsidiary); and (5) if such Restricted Subsidiary is not organized under the laws of the PRC (other than the Exempted Subsidiaries) and is not an Offshore Non-Guarantor Subsidiary, such Restricted Subsidiary shall upon such designation execute and deliver to the Trustee a supplemental indenture to the Indenture by which such Restricted Subsidiary shall become a Subsidiary Guarantor or a JV Subsidiary Guarantor.

Governmental Approvals and Licenses; Compliance with Law

The Company will, and will cause each Restricted Subsidiary to, (1) obtain and maintain in full force and effect all governmental approvals, authorizations, consents, permits, concessions and licenses as are necessary to engage in the Permitted Businesses; (2) preserve and maintain good and valid title to its properties and assets (including land-use rights) free and clear of any Liens other than Permitted Liens; and (3) comply with all laws, regulations, orders, judgments and decrees of any governmental body, except to the extent that failure so to obtain, maintain, preserve and comply would not reasonably be expected to have a material adverse effect on (a) the business, results of operations or prospects of the Company and its Restricted Subsidiaries, taken as a whole, or (b) the ability of the Company, any Subsidiary Guarantor or any JV Subsidiary Guarantor to perform its obligations under the Notes, the relevant Subsidiary Guarantee, the relevant JV Subsidiary Guarantee or the Indenture.

Anti-Layering

The Company will not Incur, and will not permit any Subsidiary Guarantor or JV Subsidiary Guarantor to Incur, any Indebtedness if such Indebtedness is contractually subordinated in right of payment to any other Indebtedness of the Company, such Subsidiary Guarantor or such JV Subsidiary Guarantor, as the case may be, unless such Indebtedness is also contractually subordinated in right of payment to the Notes, the applicable Subsidiary Guarantee or the applicable JV Subsidiary Guarantee, on substantially identical terms. This does not apply to distinctions between categories of Indebtedness that exist by reason of any Liens or Guarantees securing or in favor of some but not all of such Indebtedness.

220 Suspension of Certain Covenants

If, on any date following the date of the Indenture, the Notes have a rating of Investment Grade from at least one Rating Agency and no Default has occurred and is continuing (a “Suspension Event”), then, beginning on that day and continuing until such time, if any, at which the Notes cease to have a rating of Investment Grade from at least one Rating Agency, the provisions of the Indenture summarized under the following captions will be suspended:

(1) “—Certain Covenants—Limitation on Indebtedness and Preferred Stock;”

(2) “—Certain Covenants—Limitation on Restricted Payments;”

(3) “—Certain Covenants—Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries;”

(4) “—Certain Covenants—Limitation on Sales and Issuances of Capital Stock in Restricted Subsidiaries;”

(5) “—Certain Covenants—Limitation on Issuances of Guarantees by Restricted Subsidiaries;”

(6) “—Certain Covenants—Limitation on the Company’s Business Activities;”

(7) “—Certain Covenants—Limitation on Sale and Leaseback Transactions;” and

(8) “—Certain Covenants—Limitation on Asset Sales.”

During any period that the foregoing covenants have been suspended, the Board of Directors may not designate any of the Restricted Subsidiaries as Unrestricted Subsidiaries pursuant to the covenant summarized under the caption “—Certain Covenants—Designation of Restricted and Unrestricted Subsidiaries” or the definition of “Unrestricted Subsidiary.”

Such covenants will be reinstituted and apply according to their terms as of and from the first day on which a Suspension Event ceases to be in effect. Such covenants will not, however, be of any effect with regard to actions of the Company or any Restricted Subsidiary properly taken in compliance with the provisions of the Indenture during the continuance of the Suspension Event, and following reinstatement the calculations under the covenant summarized under “—Certain Covenants—Limitation on Restricted Payments” will be made as if such covenant had been in effect since the date of the Indenture except that no Default will be deemed to have occurred solely by reason of a Restricted Payment made while that covenant was suspended. There can be no assurance that the Notes will ever achieve a rating of Investment Grade or that any such rating will be maintained.

Provision of Financial Statements and Reports

(1) So long as any of the Notes remain outstanding, the Company will file with the Trustee and furnish to the Holders upon request, as soon as they are available but in any event not more than 10 calendar days after they are filed with The Stock Exchange of Hong Kong Limited or any other recognized exchange on which the Company’s ordinary shares are at any time listed for trading, true and correct copies of any financial or other report in the English language filed with such exchange; provided that if at any time the Common Stock of the Company ceases to be listed for trading on a recognized stock exchange, the Company will file with the Trustee and furnish to the Holders:

(a) as soon as they are available, but in any event within 90 calendar days after the end of the fiscal year of the Company, copies of its financial statements (on a consolidated basis in English) in respect of such financial year (including a statement of income, balance sheet and cash flow statement) audited by a member firm of an internationally-recognized firm of independent accountants;

221 (b) as soon as they are available, but in any event within 60 calendar days after the end of the second financial quarter of the Company, copies of its financial statements (on a consolidated basis in English) in respect of such half-year period (including a statement of income, balance sheet and cash flow statement) reviewed by a member firm of an internationally-recognized firm of independent accountants; and

(c) as soon as they are available, but in any event within 60 calendar days after the end of each of the first and third financial quarter of the Company, copies of its unaudited financial statements (on a consolidated basis), including a statement of income, balance sheet and cash flow statement, prepared on a basis consistent with the audited financial statements of the Company together with a certificate signed by the person then authorized to sign financial statements on behalf of the Company to the effect that such financial statements are true in all material respects and present fairly the financial position of the Company as at the end of, and the results of its operations for, the relevant quarterly period.

(2) In addition, so long as any of the Notes remain outstanding, the Company will provide to the Trustee (a) within 120 days after the close of each fiscal year, an Officers’ Certificate stating the Fixed Charge Coverage Ratio with respect to the two most recent fiscal semi-annual periods and showing in reasonable detail the calculation of the Fixed Charge Coverage Ratio, including the arithmetic computations of each component of the Fixed Charge Coverage Ratio, with a certificate from the Company’s external auditors verifying the accuracy and correctness of the calculation and arithmetic computation, provided that the Company shall not be required to provide such auditor certification if its external auditors refuse to provide such certification as a result of a policy of such external auditors not to provide such certification; and (b) as soon as possible and in any event within 30 days after the Company becomes aware or should reasonably become aware of the occurrence of a Default, an Officers’ Certificate setting forth the details of the Default, and the action which the Company proposes to take with respect thereto.

Events of Default

The following events will be defined as “Events of Default” in the Indenture:

(1) default in the payment of principal of (or premium, if any, on) the Notes when the same becomes due and payable at maturity, upon acceleration, redemption or otherwise;

(2) default in the payment of interest on any Note when the same becomes due and payable, and such default continues for a period of 30 consecutive days;

(3) default in the performance or breach of the provisions of the covenant described under “—Consolidation, Merger and Sale of Assets,” or the failure by the Company to make or consummate an Offer to Purchase in the manner described under the captions “—Repurchase of Notes upon a Change of Control Triggering Event” or “—Limitation on Asset Sales;”

(4) the Company or any Restricted Subsidiary defaults in the performance of or breaches any other covenant or agreement in the Indenture or under the Notes (other than a default specified in clause (1), (2) or (3) above) and such default or breach continues for a period of 30 consecutive days after written notice by the Trustee or the Holders of 25.0% or more in aggregate principal amount of the Notes;

222 (5) there occurs with respect to any Indebtedness of the Company or any Restricted Subsidiary having an outstanding principal amount of US$20.0 million (or the Dollar Equivalent thereof) or more in the aggregate for all such Indebtedness of all such Persons, whether such Indebtedness now exists or shall hereafter be created, (a) an event of default that has caused the holder thereof to declare such Indebtedness to be due and payable prior to its Stated Maturity and/or (b) the failure to make a payment of principal when due and payable;

(6) one or more final judgments or orders for the payment of money are rendered against the Company or any of its Restricted Subsidiaries and are not paid or discharged, and there is a period of 60 consecutive days following entry of the final judgment or order that causes the aggregate amount for all such final judgments or orders outstanding and not paid or discharged against all such Persons to exceed US$20.0 million (or the Dollar Equivalent thereof) (in excess of amounts that the Company’s insurance carriers have agreed to pay under applicable policies) during which a stay of enforcement, by reason of a pending appeal or otherwise, is not in effect;

(7) an involuntary case or other proceeding is commenced against the Company or any Significant Subsidiary with respect to it or its debts under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect seeking the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or any Significant Subsidiary or for any substantial part of the property and assets of the Company or any Significant Subsidiary and such involuntary case or other proceeding remains undismissed and unstayed for a period of 60 consecutive days; or an order for relief is entered against the Company or any Significant Subsidiary under any applicable bankruptcy, insolvency or other similar law as now or hereafter in effect;

(8) the Company or any Significant Subsidiary (a) commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, (b) consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or any Significant Subsidiary or for all or substantially all of the property and assets of the Company or any Significant Subsidiary or (c) effects any general assignment for the benefit of creditors (other than, in each case under (b) above, any of the foregoing that arises from any solvent liquidation or restructuring of a Significant Subsidiary in the ordinary course of business that shall result in the net assets of such Significant Subsidiary being transferred to or otherwise vested in the Company or any Restricted Subsidiary on a pro rata basis or on a basis more favorable to the Company); or

(9) any Subsidiary Guarantor or JV Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary Guarantee or JV Subsidiary Guarantee or, except as permitted by the Indenture, any Subsidiary Guarantee or JV Subsidiary Guarantee is determined to be unenforceable or invalid or shall for any reason cease to be in full force and effect.

If an Event of Default (other than an Event of Default specified in clause (7) or (8) above) occurs and is continuing under the Indenture, the Trustee or the Holders of at least 25.0% in aggregate principal amount of the Notes then outstanding, by written notice to the Company (and to the Trustee if such notice is given by the Holders), may, and the Trustee at the written request of such Holders (subject to being indemnified or secured to its satisfaction (including by way of pre-funding)) shall, declare the principal of, premium, if any, and accrued and unpaid interest on the Notes to be immediately due and payable. Upon a declaration of acceleration, such principal of, premium, if any, and accrued and unpaid interest shall be immediately due and payable. If an Event of Default specified in clause (7) or (8) above occurs with respect to the Company or any Significant Subsidiary, the principal of, premium, if any, and accrued and unpaid interest on the Notes then outstanding shall automatically become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.

223 The Holders of at least a majority in principal amount of the outstanding Notes by written notice to the Company and to the Trustee may on behalf of the Holders waive all past defaults and rescind and annul a declaration of acceleration and its consequences if:

(1) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived, and

(2) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction.

Upon such waiver, the Default will cease to exist, and any Event of Default arising therefrom will be deemed to have been cured, but no such waiver will extend to any subsequent or other Default or impair any right consequent thereon.

If an Event of Default occurs and is continuing, the Trustee may pursue, in its own name or as trustee of an express trust, any available remedy by proceeding at law or in equity to collect the payment of principal of and interest on the Notes or to enforce the performance of any provision of the Notes or the Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. Subject to the provisions of the Indenture, the Trustee is under no obligation to exercise any of its rights or powers under the Indenture unless indemnity and/or security (including by way of pre-funding) satisfactory to the Trustee against any loss, liability or expense shall have been offered to the Trustee.

The Holders of at least a majority in aggregate principal amount of the outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or the Indenture, that may involve the Trustee in personal liability, or that the Trustee determines may be unduly prejudicial to the rights of Holders not joining in the giving of such direction and may take any other action it deems proper that is not inconsistent with any such direction received from Holders.

A Holder may not institute any proceeding, judicial or otherwise, with respect to the Indenture or the Notes, or for the appointment of a receiver or trustee, or for any other remedy under the Indenture or the Notes, unless:

(1) the Holder has previously given the Trustee written notice of a continuing Event of Default;

(2) the Holders of at least 25.0% in aggregate principal amount of outstanding Notes make a written request to the Trustee to pursue the remedy;

(3) such Holder or Holders offer the Trustee indemnity and/or security (including by way of pre-funding) satisfactory to the Trustee against any costs, liability or expense to be incurred in compliance with such request;

(4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity and/or security (including by way of pre-funding); and

(5) during such 60-day period, the Holders of a majority in aggregate principal amount of the outstanding Notes do not give the Trustee a direction that is inconsistent with the request.

However, such limitations do not apply to the right of any Holder to receive payment of the principal of, premium, if any, or interest on, such Note, or to bring suit for the enforcement of any such payment, on or after the due date expressed in the Notes, which right shall not be impaired or affected without the consent of the Holder.

224 Officers of the Company must certify, on or before a date not more than 120 days after the end of each fiscal year, that a review has been conducted of the activities of the Company and its Restricted Subsidiaries and the Company’s and its Restricted Subsidiaries’ performance under the Indenture and that the Company has fulfilled all obligations thereunder, or, if there has been a default in the fulfillment of any such obligation, specifying each such default and the nature and status thereof. The Company will also be obligated to notify the Trustee of any default or defaults in the performance of any covenants or agreements under the Indenture. See “—Provision of Financial Statements and Reports.”

Consolidation, Merger and Sale of Assets

The Company will not consolidate with, merge with or into another Person, permit any Person to merge with or into it, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its and its Restricted Subsidiaries’ properties and assets (computed on a consolidated basis) (as an entirety or substantially an entirety in one transaction or a series of related transactions), unless:

(1) the Company shall be the continuing Person, or the Person (if other than it) formed by such consolidation or merger or that acquired or leased such property and assets (the “Surviving Person”) shall be a corporation organized and validly existing under the laws of the Cayman Islands, Hong Kong or the British Virgin Islands and shall expressly assume, by a supplemental indenture to the Indenture, executed and delivered to the Trustee, all the obligations of the Company under the Indenture and the Notes, as the case may be, including the obligation to pay Additional Amounts with respect to any jurisdiction in which it is organized or resident for tax purposes or through which it makes payments, and the Indenture and the Notes, as the case may be, shall remain in full force and effect;

(2) immediately after giving effect to such transaction, no Default shall have occurred and be continuing;

(3) immediately after giving effect to such transaction on a pro forma basis, the Company or the Surviving Person, as the case may be, shall have a Consolidated Net Worth equal to or greater than the Consolidated Net Worth of the Company immediately prior to such transaction;

(4) immediately after giving effect to such transaction on a pro forma basis the Company or the Surviving Person, as the case may be, could Incur at least US$1.00 of Indebtedness under the first paragraph of the covenants under the caption “—Limitation on Indebtedness and Preferred Stock;”

(5) the Company delivers to the Trustee (x) an Officers’ Certificate (attaching the arithmetic computations to demonstrate compliance with clauses (3) and (4)) and (y) an Opinion of Counsel, in each case stating that such consolidation, merger or transfer and the relevant supplemental indenture complies with this provision and that all conditions precedent provided for in the Indenture relating to such transaction have been complied with;

(6) each Subsidiary Guarantor and JV Subsidiary Guarantor, unless such Subsidiary Guarantor or JV Subsidiary Guarantor is the Person with which the Company has entered into a transaction described under the caption “—Consolidation, Merger and Sale of Assets,” shall execute and deliver a supplemental indenture to the Indenture confirming that its Subsidiary Guarantee or JV Subsidiary Guarantee, as applicable, shall apply to the obligations of the Company or the Surviving Person in accordance with the Notes and the Indenture; and

(7) no Rating Decline shall have occurred.

225 No Subsidiary Guarantor or JV Subsidiary Guarantor will consolidate with, merge with or into another Person, permit any Person to merge with or into it, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its and its Restricted Subsidiaries’ properties and assets (computed on a consolidated basis) (as an entirety or substantially an entirety in one transaction or a series of related transactions) to another Person (other than the Company or another Subsidiary Guarantor or, in the case of a JV Subsidiary Guarantor, other than to another JV Subsidiary Guarantor, the Company or a Subsidiary Guarantor), unless:

(1) such Subsidiary Guarantor or JV Subsidiary Guarantor shall be the continuing Person, or the Person (if other than it) formed by such consolidation or merger or that acquired or leased such property and assets shall be the Company, another Subsidiary Guarantor or shall become a Subsidiary Guarantor concurrently with the transaction (or, in the case of a JV Subsidiary Guarantor, another JV Subsidiary Guarantor, the Company or a Subsidiary Guarantor); and shall expressly assume, by a supplemental indenture to the Indenture, executed and delivered to the Trustee, all the obligations of such Subsidiary Guarantor or JV Subsidiary Guarantor under the Indenture and the Notes, as the case may be, including the obligation to pay Additional Amounts with respect to any jurisdiction in which it is organized or resident for tax purposes or through which it makes payments, and the Indenture and the Notes, as the case may be, shall remain in full force and effect;

(2) immediately after giving effect to such transaction, no Default shall have occurred and be continuing;

(3) immediately after giving effect to such transaction on a pro forma basis, the Company shall have a Consolidated Net Worth equal to or greater than the Consolidated Net Worth of the Company immediately prior to such transaction;

(4) immediately after giving effect to such transaction on a pro forma basis, the Company could Incur at least US$1.00 of Indebtedness under the first paragraph of the covenants under the caption “—Limitation on Indebtedness and Preferred Stock;”

(6) no Rating Decline shall have occurred; provided that this paragraph shall not apply to any sale or other disposition that complies with the “—Limitation on Asset Sales” covenant or any Subsidiary Guarantor or JV Subsidiary Guarantor whose Subsidiary Guarantee or JV Subsidiary Guarantee, as the case may be, is unconditionally released in accordance with the provisions described under “—The Subsidiary Guarantees—Release of the Subsidiary Guarantees and JV Subsidiary Guarantees.”

Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve “all or substantially all” of the property or assets of a Person.

The foregoing requirements shall not apply to a consolidation or merger of any Subsidiary Guarantor or JV Subsidiary Guarantor with and into the Company or any other Subsidiary Guarantor or JV Subsidiary Guarantor, so long as the Company or such Subsidiary Guarantor or JV Subsidiary Guarantor survives such consolidation or merger.

The foregoing provisions would not necessarily afford Holders protection in the event of highly-leveraged or other transactions involving the Company that may adversely affect Holders.

226 No Payments for Consents

The Company will not, and shall not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration is offered to be paid or is paid to all Holders that consent, waive or agree to amend such term or provision within the time period set forth in the solicitation documents relating to such consent, waiver or amendment.

Defeasance

Defeasance and Discharge

The Indenture will provide that the Company will be deemed to have paid and will be discharged from any and all obligations in respect of the Notes on the 183rd day after the deposit referred to below, and the provisions of the Indenture will no longer be in effect with respect to the Notes (except for, among other matters, certain obligations to register the transfer or exchange of the Notes, to replace stolen, lost or mutilated Notes, to maintain paying agencies, to hold monies for payment in trust and to pay Additional Amounts) if, among other things:

(1) the Company (a) has deposited with the Trustee (or its agent), in trust, money and/or U.S. Government Obligations that through the payment of interest and principal in respect thereof in accordance with their terms will provide money in an amount sufficient to pay the principal of, premium, if any, and accrued interest on the Notes on the Stated Maturity for such payments in accordance with the terms of the Indenture and the Notes and (b) delivers to the Trustee an Opinion of Counsel or a certificate of an internationally-recognized firm of independent accountants to the effect that the amount deposited by the Company is sufficient to provide payment for the principal of, premium, if any, and accrued interest on, the Notes on the Stated Maturity for such payment in accordance with the terms of the Indenture;

(2) the Company has delivered to the Trustee an Opinion of Counsel of recognized international standing to the effect that the creation of the defeasance trust does not violate the U.S. Investment Company Act of 1940, as amended, and after the passage of 123 days following the deposit, the trust fund will not be subject to the effect of Section 547 of the United States Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law; and

(3) immediately after giving effect to such deposit on a pro forma basis, no Event of Default, or event that after the giving of notice or lapse of time or both would become an Event of Default, shall have occurred and be continuing on the date of such deposit or during the period ending on the 183rd day after the date of such deposit, and such defeasance shall not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which the Company or any of its Restricted Subsidiaries is a party or by which the Company or any of its Restricted Subsidiaries is bound.

In the case of either discharge or defeasance of the Notes, the Subsidiary Guarantees and JV Subsidiary Guarantees will terminate.

Defeasance of Certain Covenants

The Indenture further will provide that (i) the provisions of the Indenture applicable to the Notes will no longer be in effect with respect to clauses (3), (4), (5)(x) and (7) under the first paragraph, and clauses (3), (4), (5)(x) and (6) under the second paragraph under “—Consolidation, Merger and Sale of Assets” and all the covenants described herein under “—Certain Covenants,” other than as described under “—Certain Covenants-Governmental Approvals and Licenses; Compliance with Law” and “—Certain Covenants-Anti-Layering,” and (ii) clause (3) under “Events of Default” with respect to clauses (3), (4), (5)(x) and (7) under the first paragraph, and clauses (3), (4), (5)(x) and (6) under the

227 second paragraph under “Consolidation, Merger and Sale of Assets” and with respect to the other events set forth in clause (i) above, clause (4) under “Events of Default” with respect to such other covenants in clause (i) above and clauses (5) and (6) under “Events of Default” shall be deemed not to be Events of Default upon, among other things, the deposit with the Trustee (or its agent), in trust, of money, U.S. Government Obligations or a combination thereof that through the payment of interest and principal in respect thereof in accordance with their terms will provide money in an amount sufficient to pay the principal of, premium, if any, and accrued interest on the Notes on the Stated Maturity of such payments in accordance with the terms of the Indenture and the Notes, the satisfaction of the provisions described in clause (2) of the preceding paragraph.

Defeasance and Certain Other Events of Default

In the event that the Company exercises its option to omit compliance with certain covenants and provisions of the Indenture as described in the immediately preceding paragraph and the Notes are declared due and payable because of the occurrence of an Event of Default that remains applicable, the amount of money and/or U.S. Government Obligations on deposit with the Trustee will be sufficient to pay amounts due on the Notes at the time of their Stated Maturity but may not be sufficient to pay amounts due on the Notes at the time of the acceleration resulting from such Event of Default. However, the Company will remain liable for such payments.

Satisfaction and Discharge

The Indenture will be discharged and will cease to be of further effect (except as to surviving rights of registration of transfer or exchange of the Notes, as expressly provided for in the Indenture) as to all outstanding Notes when:

(a) either:

(1) all of the Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust by the Company and thereafter repaid to the Company) have been delivered to the Trustee for cancellation or

(2) all Notes not theretofore delivered to the Trustee for cancellation have become due and payable pursuant to an optional redemption notice or otherwise or will become due and payable within one year, and the Company or any Subsidiary Guarantor has irrevocably deposited or caused to be deposited with the Trustee funds, in cash in U.S. dollars, non-callable U.S. Government Obligations or a combination thereof, in an amount sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on the Notes (and Additional Amounts, if any) to the date of maturity or redemption together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;

(b) the Company, any Subsidiary Guarantor or any JV Subsidiary Guarantor has paid all other sums payable under the Indenture by the Company; and

(c) no Default or Event of Default will have occurred and be continuing on the date of such deposit or will occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instruments to which the Company, any Subsidiary Guarantor or any JV Subsidiary Guarantor is a party or by which the Company, any Subsidiary Guarantor or any JV Subsidiary Guarantor is bound.

The Trustee will acknowledge the satisfaction and discharge of the Indenture if the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture have been complied with.

228 Amendments and Waiver

Amendments without Consent of Holders

The Indenture may be amended, without the consent of any Holder, to:

(1) cure any ambiguity, defect, omission or inconsistency in the Indenture and the Notes;

(2) comply with the provisions described under “—Consolidation, Merger and Sale of Assets,” including the assumption of obligations required thereby;

(3) evidence and provide for the acceptance of appointment by a successor Trustee;

(4) add any Subsidiary Guarantor or JV Subsidiary Guarantor, or any Subsidiary Guarantee or JV Subsidiary Guarantee, or release any Subsidiary Guarantor or JV Subsidiary Guarantor from any Subsidiary Guarantee or JV Subsidiary Guarantee, as the case may be, as provided or permitted by the terms of the Indenture;

(5) provide for the issuance of Additional Notes in accordance with the limitations set forth in the Indenture;

(6) add collateral to secure the Notes, any Subsidiary Guarantee or any JV Subsidiary Guarantee;

(7) in any other case where a supplemental indenture to the Indenture is required or permitted to be entered into pursuant to the provisions of the Indenture without the consent of any Holder;

(8) effect any changes to the Indenture in a manner necessary to comply with the procedures of Euroclear or Clearstream;

(9) make any other change that does not materially and adversely affect the rights of any Holder; or

(10) conform the text of the Indenture, the Notes, the Subsidiary Guarantees or the JV Subsidiary Guarantees to any provision of this “Description of the Notes” to the extent that such provision in this “Description of the Notes” was intended to be a verbatim recitation of a provision in the Indenture, the Notes, the Subsidiary Guarantees or the JV Subsidiary Guarantees.

Amendments with Consent of Holders

The Indenture may be amended with the consent of the Holders of not less than a majority in aggregate principal amount of the outstanding Notes and the Trustee and agents may waive future compliance by the Company or any Subsidiary Guarantor with any provision thereof; provided, however, that no such modification, amendment or waiver may, without the consent of each Holder affected thereby:

(1) change the Stated Maturity of the principal of, or any installment of interest on, any Note;

(2) reduce the principal amount of, or premium, if any, or interest on, any Note;

(3) change the currency or time of payment of principal of, or premium, if any, or interest on, any Note;

(4) impair the right to institute suit for the enforcement of any payment on or after the Stated Maturity (or, in the case of a redemption, on or after the redemption date) of any Note, any Subsidiary Guarantee or any JV Subsidiary Guarantee;

229 (5) reduce the above-stated percentage of outstanding Notes the consent of whose Holders is necessary to modify or amend the Indenture;

(6) waive a default in the payment of principal of, premium, if any, or interest on the Notes;

(7) release any Subsidiary Guarantor or JV Subsidiary Guarantor from its Subsidiary Guarantee or JV Subsidiary Guarantee, as the case may be, except as provided in the Indenture;

(8) reduce the percentage or aggregate principal amount of outstanding Notes the consent of whose Holders is necessary for waiver of compliance with certain provisions of the Indenture or for waiver of certain defaults;

(9) amend, change or modify any Subsidiary Guarantee or JV Subsidiary Guarantee in a manner that adversely affects the Holders;

(10) reduce the amount payable upon a Change of Control Offer or an Offer to Purchase with the Excess Proceeds from any Asset Sale or, change the time or manner by which a Change of Control Offer or an Offer to Purchase with the Excess Proceeds or other proceeds from any Asset Sale may be made or by which the Notes must be repurchased pursuant to a Change of Control Offer or an Offer to Purchase with the Excess Proceeds or other proceeds from any Asset Sale;

(11) change the redemption date or the redemption price of the Notes from that stated under the captions “—Optional Redemption” or “—Redemption for Taxation Reasons;”

(12) amend, change or modify the obligation of the Company or any Subsidiary Guarantor or any JV Subsidiary Guarantor to pay Additional Amounts; or

(13) amend, change or modify any provision of the Indenture or the related definition affecting the ranking of the Notes, any Subsidiary Guarantee or any JV Subsidiary Guarantee in a manner which adversely affects the Holders.

Unclaimed Money

Claims against the Company for the payment of principal of, premium, if any, or interest on, the Notes will become void unless presentation for payment is made as required in the Indenture within a period of six years.

No Personal Liability of Incorporators, Stockholders, Officers, Directors or Employees

No recourse for the payment of the principal of, premium, if any, or interest on any of the Notes or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company, any of the Subsidiary Guarantors or any of the JV Subsidiary Guarantors in the Indenture, or in any of the Notes, the Subsidiary Guarantees or the JV Subsidiary Guarantees, or because of the creation of any Indebtedness represented thereby, shall be had against any incorporator, stockholder, officer, director, employee or controlling person of the Company, any of the Subsidiary Guarantors or JV Subsidiary Guarantors, or of any successor Person thereof. Each Holder, by accepting the Notes, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes, the Subsidiary Guarantees and the JV Subsidiary Guarantees. Such waiver may not be effective to waive liabilities under the federal securities laws.

230 Concerning the Trustee and the Principal Paying and Transfer Agent

DB Trustees (Hong Kong) Limited has been appointed as Trustee under the Indenture, Deutsche Bank Luxembourg S.A. has been appointed as Registrar and Deutsche Bank AG, Hong Kong Branch has been appointed as the Principal Paying and Transfer Agent with regard to the Notes. Except during the continuance of an Event of Default, the Trustee undertakes to perform such duties and only such duties as are specifically set forth in the Indenture and no implied covenants or obligations will be read into the Indenture against the Trustee. If an Event of Default has occurred and is continuing, the Trustee will use the same degree of care and skill in its exercise of the rights and powers vested in it under the Indenture as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs. The Trustee shall not be deemed to have knowledge of an Event of Default until one of its Responsible Officers has actual knowledge thereof or receipt of written notice thereof.

The Indenture contains limitations on the rights of the Trustee, should it become a creditor of the Company or any of the Subsidiary Guarantors or JV Subsidiary Guarantors, to obtain payment of claims in certain cases or to realize on certain property received by it in respect of any such claims, as security or otherwise. The Trustee is permitted to engage in other transactions, including normal banking and trustee relationships, with the Company and its Affiliates; provided, however, that if it acquires any conflict of interest, it must eliminate such conflict or resign.

If the Company maintains a paying agent with respect to the Notes in a member state of the European Union, such paying agent will be located in a member state of the European Union that is not obligated to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any other directive implementing the conclusions of ECOFIN Council meeting of November 26–27, 2000 on the taxation of savings income, or any law implementing or complying with, or introduced in order to conform to, such Directive or such other directive.

Book-Entry; Delivery and Form

The Notes will be represented by a global note in registered form without interest coupons attached (the “Global Note”). On the Original Issue Date, the Global Note will be deposited with a common depositary and registered in the name of the common depositary or its nominee for the accounts of Euroclear and Clearstream.

Global Note

Ownership of beneficial interests in the Global Note (the “book-entry interests”) will be limited to persons that have accounts with Euroclear and/or Clearstream or persons that may hold interests through such participants. Book-entry interests will be shown on, and transfers thereof will be effected only through, records maintained in book-entry form by Euroclear and Clearstream and their participants.

Except as set forth below under “—Individual Definitive Notes,” the book-entry interests will not be held in definitive form. Instead, Euroclear and/or Clearstream will credit on their respective book-entry registration and transfer systems a participant’s account with the interest beneficially owned by such participant. The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. The foregoing limitations may impair the ability to own, transfer or pledge book-entry interests.

So long as the Notes are held in global form, the common depositary for Euroclear and/or Clearstream (or its nominee) will be considered the sole holder of the Global Note for all purposes under the Indenture and “holders” of book-entry interests will not be considered the owners or “Holders” of Notes for any purpose. As such, participants must rely on the procedures of Euroclear and Clearstream and indirect participants must rely on the procedures of the participants through which they own book-entry interests in order to transfer their interests in the Notes or to exercise any rights of Holders under the Indenture.

None of the Company, the Trustee, the Principal Paying and Transfer Agent, the Registrar or any of their respective agents will have any responsibility or be liable for any aspect of the records relating to the book-entry interests. The Notes are not issuable in bearer form.

231 Payments on the Global Note

Payments of any amounts owing in respect of the Global Note (including principal, premium, interest and Additional Amounts) will be made to the Principal Paying and Transfer Agent in U.S. dollars. The Principal Paying and Transfer Agent will, in turn, make such payments to the common depositary for Euroclear and Clearstream, which will distribute such payments to participants in accordance with their procedures. Each of the Company, the Subsidiary Guarantors and the JV Subsidiary Guarantors will make payments of all such amounts without deduction or withholding for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature, except as may be required by law and as described under “—Additional Amounts.”

Under the terms of the Indenture, the Company, any Subsidiary Guarantor, any JV Subsidiary Guarantor, the Trustee, the Principal Paying and Transfer Agent and the Registrar will treat the registered holder of the Global Note (i.e., the common depositary or its nominee) as the owner thereof for the purpose of receiving payments and for all other purposes. Consequently, none of the Company, the Subsidiary Guarantors, the JV Subsidiary Guarantors, the Trustee, the Principal Paying and Transfer Agent, the Registrar or any of their respective agents has or will have any responsibility or liability for:

• any aspect of the records of Euroclear, Clearstream or any participant or indirect participant relating to or payments made on account of a book-entry interest, for any such payments made by Euroclear, Clearstream or any participant or indirect participants, or for maintaining, supervising or reviewing any of the records of Euroclear, Clearstream or any participant or indirect participant relating to or payments made on account of a book-entry interest; or

• Euroclear, Clearstream or any participant or indirect participant.

Payments by participants to owners of book-entry interests held through participants are the responsibility of such participants.

Redemption of Global Note

In the event any Global Note, or any portion thereof, is redeemed, the common depositary will distribute the amount received by it in respect of the Global Note so redeemed to Euroclear and/or Clearstream, as applicable, who will distribute such amount to the holders of the book- entry interests in such Global Note. The redemption price payable in connection with the redemption of such book-entry interests will be equal to the amount received by the common depositary, Euroclear or Clearstream, as applicable, in connection with the redemption of such Global Note (or any portion thereof). The Company understands that under existing practices of Euroclear and Clearstream, if fewer than all of the Notes are to be redeemed at any time, Euroclear and Clearstream will credit their respective participants’ accounts on a proportionate basis (with adjustments to prevent fractions) or by lot or on such other basis as they deem fair and appropriate; provided, however, that no book-entry interest of US$200,000 principal amount, or less, as the case may be, will be redeemed in part.

Action by Owners of Book-Entry Interests

Euroclear and Clearstream have advised that they will take any action permitted to be taken by a Holder of Notes only at the direction of one or more participants to whose account the book-entry interests in the Global Note are credited and only in respect of such portion of the aggregate principal amount of Notes as to which such participant or participants has or have given such direction. Euroclear and Clearstream will not exercise any discretion in the granting of consents, waivers or the taking of any other action in respect of the Global Note. If there is an Event of Default under the Notes, however, each of Euroclear and Clearstream reserves the right to exchange the Global Note for individual definitive notes in certificated form, and to distribute such individual definitive notes to their participants.

232 Transfers

Transfers between participants in Euroclear and Clearstream will be effected in accordance with Euroclear and Clearstream’s rules and will be settled in immediately available funds. If a Holder requires physical delivery of individual definitive notes for any reason, including to sell the Notes to persons in jurisdictions which require physical delivery of such securities or to pledge such securities, such Holder must transfer its interest in the Global Note in accordance with the normal procedures of Euroclear and Clearstream and in accordance with the provisions of the Indenture.

Book-entry interests in the Global Note will be subject to the restrictions on transfer discussed under “Transfer Restrictions.”

Any book-entry interest in a Global Note that is transferred to a person who takes delivery in the form of a book-entry interest in another Global Note will, upon transfer, cease to be a book- entry interest in the first-mentioned Global Note and become a book-entry interest in the other Global Note and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to book-entry interests in such other Global Note for as long as it retains such a book-entry interest.

Global Clearance and Settlement under the Book-Entry System

Book-entry interests owned through Euroclear or Clearstream accounts will follow the settlement procedures applicable. Book-entry interests will be credited to the securities custody accounts of Euroclear and Clearstream holders on the business day following the settlement date against payment for value on the settlement date.

The book-entry interests will trade through participants of Euroclear or Clearstream, and will settle in same-day funds. Since the purchaser determines the place of delivery, it is important to establish at the time of trading of any book-entry interests where both the purchaser’s and seller’s accounts are located to ensure that settlement can be made on the desired value date.

Information Concerning Euroclear and Clearstream

The Company understands as follows with respect to Euroclear and Clearstream:

Euroclear and Clearstream hold securities for participating organizations and facilitate the clearance and settlement of securities transactions between their respective participants through electronic book-entry changes in accounts of such participants. Euroclear and Clearstream provide to their participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Euroclear and Clearstream interface with domestic securities markets. Euroclear and Clearstream participants are financial institutions, such as underwriters, securities brokers and dealers, banks and trust companies, and certain other organizations. Indirect access to Euroclear or Clearstream is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodian relationship with a Euroclear or Clearstream participant, either directly or indirectly.

Although the foregoing sets out the procedures of Euroclear and Clearstream in order to facilitate the original issue and subsequent transfers of interests in the Notes among participants of Euroclear and Clearstream, neither Euroclear nor Clearstream is under any obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time.

None of the Company, the Subsidiary Guarantors, the JV Subsidiary Guarantors, the Trustee, the Principal Paying and Transfer Agent, the Registrar or any of their respective agents will have responsibility for the performance of Euroclear or Clearstream or their respective participants of their respective obligations under the rules and procedures governing their operations, including, without limitation, rules and procedures relating to book-entry interests.

233 Individual Definitive Notes

If (1) the common depositary or any successor to the common depositary is at any time unwilling or unable to continue as a depositary for the reasons described in the Indenture and a successor depositary is not appointed by the Company within 90 days, (2) either Euroclear or Clearstream, or a successor clearing system is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention to permanently cease business or does in fact do so, or (3) any of the Notes has become immediately due and payable in accordance with “—Events of Default” and the Company has received a written request from a Holder, the Company will issue individual definitive notes in registered form in exchange for the Global Note. Upon receipt of such notice from the common depositary or the Trustee, as the case may be, the Company will use its best efforts to make arrangements with the common depositary for the exchange of interests in the Global Note for individual definitive notes and cause the requested individual definitive notes to be executed and delivered to the Registrar in sufficient quantities and authenticated by the Registrar for delivery to Holders. Persons exchanging interests in a Global Note for individual definitive notes will be required to provide the Registrar, through the relevant clearing system, with written instruction and other information required by the Company and the Registrar to complete, execute and deliver such individual definitive notes. In all cases, individual definitive notes delivered in exchange for any Global Note or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by the relevant clearing system.

Individual definitive notes will not be eligible for clearing and settlement through Euroclear or Clearstream.

Notices

All notices or demands required or permitted by the terms of the Notes or the Indenture to be given to or by the Holders are required to be in writing and may be given or served by being sent by prepaid courier or by being deposited, first-class mail (if intended for the Company, any Subsidiary Guarantor, JV Subsidiary Guarantor or the Trustee) addressed to the Company, such Subsidiary Guarantor, JV Subsidiary Guarantor or the Trustee, as the case may be, at the corporate trust office of the Trustee and marked “Attention: Managing Director,” and (if intended for any Holder) addressed to such Holder at such Holder’s last address as it appears in the Note register.

Any such notice or demand will be deemed to have been sufficiently given or served when so sent or deposited and, if to the Holders, when delivered in accordance with the applicable rules and procedures of Euroclear or Clearstream, as the case may be. Any such notice shall be deemed to have been delivered on the day such notice is delivered to Euroclear or Clearstream, as the case may be, or if by mail, when so sent or deposited.

Consent to Jurisdiction; Service of Process

The Company and each of the Subsidiary Guarantors will irrevocably (1) submit to the non-exclusive jurisdiction of any U.S. federal or New York state court located in the Borough of Manhattan, The City of New York in connection with any suit, action or proceeding arising out of, or relating to, the Notes, any Subsidiary Guarantee, any JV Subsidiary Guarantee, the Indenture or any transaction contemplated thereby; and (2) designate and appoint CT Corporation System located at 111 Eighth Avenue, New York, New York 10011 for receipt of service of process in any such suit, action or proceeding.

Governing Law

Each of the Notes, the Subsidiary Guarantees, the JV Subsidiary Guarantees and the Indenture provides that such instrument will be governed by, and construed in accordance with, the laws of the State of New York.

234 Definitions

Set forth below are defined terms used in the covenants and other provisions of the Indenture. Reference is made to the Indenture for other capitalized terms used in this “Description of the Notes” for which no definition is provided.

“2012 Convertible Securities” means the perpetual subordinated convertible callable securities issued pursuant to the securities deed dated August 2, 2012 by Active Way Development Limited for the issuance of HK$2,550,000,000 Perpetual Subordinated Convertible Callable Securities Guaranteed by Greentown China Holdings Limited and any related agreements, as amended, restated, extended, renewed or replaced from time to time; provided that any such amendment, restatement, extension, renewal or replacement shall not have increased the aggregate principal amount of such securities.

“2014 Perpetual Securities” means the subordinated perpetual capital securities issued pursuant to the trust deed dated January 28, 2014 by Moon Wise Global Limited for the issuance of US$500,000,000 subordinated perpetual capital securities guaranteed by the Company and any related agreements, as amended, restated, extended, renewed or replaced from time to time, provided that any such amendment, restatement, extension, renewal or replacement shall not have increased the aggregate principal amount of such securities.

“2016 RMB Notes” means the 5.625% Senior Notes due 2016 issued by the Company.

“2018 USD Notes” means the 8.50% Senior Notes due 2018 issued by the Company.

“2019 USD Notes” means the 8.0% Senior Notes due 2019 issued by the Company.

“Acquired Indebtedness” means Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary or Indebtedness of a Restricted Subsidiary assumed in connection with an Asset Acquisition by such Restricted Subsidiary whether or not Incurred in connection with, or in contemplation of, the Person merging with or into or becoming a Restricted Subsidiary.

“Adjusted Treasury Rate” means, with respect to any redemption date, (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three (3) months before or after August 11, 2018, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Adjusted Treasury Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date, in each case calculated on the third Business Day immediately preceding the redemption date.

“Affiliate” means, with respect to any Person, any other Person (1) directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person; (2) who is a director or officer of such Person or any Subsidiary of such Person or of any Person referred to in clause (1) of this definition; or (3) who is a spouse or any person cohabiting as a spouse, child or step-child, parent or step-parent, brother, sister, step-brother or step-sister, parent-in-law, grandchild, grandparent, uncle, aunt, nephew or niece of a Person described in clause (1) or (2). For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

235 “Applicable Premium” means with respect to any Note at any redemption date, the greater of (1) 1.00% of the principal amount of such Note and (2) the excess of (A) the present value at such redemption date of (x) the redemption price of such Note on August 11, 2018 (such redemption price being set forth in the table appearing above under the caption “—Optional Redemption”), plus (y) all required remaining scheduled interest payments due on such Note through, August 11, 2018 (but excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to the Adjusted Treasury Rate plus 100 basis points, over (B) the principal amount of such Note on such redemption date. The Applicable Premium shall be calculated by the Company and notified in writing to the Trustee and Principal Paying and Transfer Agent.

“Asset Acquisition” means (1) an investment by the Company or any of its Restricted Subsidiaries in any other Person pursuant to which such Person shall become a Restricted Subsidiary or shall be merged into or consolidated with the Company or any of its Restricted Subsidiaries; or (2) an acquisition by the Company or any of its Restricted Subsidiaries of the property and assets of any Person other than the Company or any of its Restricted Subsidiaries that constitute substantially all of a division or line of business of such Person.

“Asset Disposition” means the sale or other disposition by the Company or any of its Restricted Subsidiaries (other than to the Company or another Restricted Subsidiary) of (1) all or substantially all of the Capital Stock of any Restricted Subsidiary; or (2) all or substantially all of the assets that constitute a division or line of business of the Company or any of its Restricted Subsidiaries.

“Asset Sale” means any sale, transfer or other disposition (including by way of merger, consolidation or Sale and Leaseback Transaction) of any of its property or assets (including any sale of Capital Stock of a Subsidiary or issuance of Capital Stock by a Restricted Subsidiary) in one transaction or a series of related transactions by the Company or any of its Restricted Subsidiaries to any Person; provided that “Asset Sale” shall not include:

(1) sales or other dispositions of inventory, receivables and other current assets (including properties under development for sale and completed properties for sale) in the ordinary course of business;

(2) sales, transfers or other dispositions of assets constituting a Permitted Investment or Restricted Payment permitted to be made under the “—Limitation on Restricted Payments” covenant;

(3) sales, transfers or other dispositions of assets with a Fair Market Value not in excess of US$1.0 million (or the Dollar Equivalent thereof) in any transaction or series of related transactions;

(4) any sale, transfer, assignment or other disposition of any property, or equipment that has become damaged, worn out, obsolete or otherwise unsuitable for use in connection with the business of the Company or its Restricted Subsidiaries;

(5) any transfer, assignment or other disposition deemed to occur in connection with creating or granting any Permitted Lien;

(6) a transaction covered by the covenants under the caption “—Consolidation, Merger and Sale of Assets;” and

(7) any sale, transfer or other disposition by the Company or any of its Restricted Subsidiaries, including the sale or issuance by the Company or any Restricted Subsidiary of any Capital Stock of any Restricted Subsidiary, to the Company or any Restricted Subsidiary.

“Associate” has the meaning assigned to such term in paragraph (17) of the definition of “Permitted Investment.”

236 “Attributable Indebtedness” means, in respect of a Sale and Leaseback Transaction, the present value, discounted at the interest rate implicit in the Sale and Leaseback Transaction, of the total obligations of the lessee for rental payments during the remaining term of the lease in the Sale and Leaseback Transaction.

“Average Life” means, at any date of determination with respect to any Indebtedness, the quotient obtained by dividing (1) the sum of the products of (a) the number of years from such date of determination to the dates of each successive scheduled principal payment of such Indebtedness and (b) the amount of such principal payment by (2) the sum of all such principal payments.

“Bank Deposit Secured Indebtedness” means Indebtedness of the Company or any Restricted Subsidiary that is secured by bank accounts, cash deposits or other assets of the Company or a Restricted Subsidiary.

“Board of Directors” means the board of directors elected or appointed by the stockholders of the Company to manage the business of the Company or any committee of such board duly authorized to take the action purported to be taken by such committee.

“Board Resolution” means any resolution of the Board of Directors taking an action which it is authorized to take and adopted at a meeting duly called and held at which a quorum of disinterested members (if so required) was present and acting throughout or adopted by written resolution executed by every member of the Board of Directors.

“Business Day” means any day which is not a Saturday, Sunday, legal holiday or other day on which banking institutions or trust companies in The City of New York, London or Hong Kong (or in any other place in which payments on the Notes are to be made) are authorized by law or governmental regulation to close.

“Capitalized Lease” means, with respect to any Person, any lease of any property (whether real, personal or mixed) which, in conformity with GAAP, is required to be capitalized on the balance sheet of such Person.

“Capitalized Lease Obligations” means the discounted present value of the rental obligations under a Capitalized Lease.

“Capital Stock” means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) in equity of such Person, whether outstanding on the Original Issue Date or issued thereafter, including, without limitation, all Common Stock and Preferred Stock.

“CCCG Entity” means (i) any Person directly or indirectly controlled by China Communication and Construction Group (Limited) (中國交通建設集團有限公司) and (ii) any Person that is directly or indirectly jointly controlled by (x) any Person falling within clause (i) and (y) the Company or any Subsidiary of the Company.

“CCCG Permitted Holders” means any or all of the following:

(1) China Communication and Construction Group (Limited) (中國交通建設集團有限公司);

(2) any Affiliate (other than an Affiliate as defined in clause (2) or (3) of the definition of Affiliate) of the Person specified in clause (1); and

(3) any Person both the Capital Stock and the Voting Stock of which (or in the case of a trust, the beneficial interests in which) are owned 80.0% by Persons specified in clauses (1) and (2).

237 “Change of Control” means the occurrence of one or more of the following events:

(1) the merger, amalgamation or consolidation of the Company with or into another Person (other than one or more Permitted Holders) or the merger or amalgamation of another Person (other than one or more Permitted Holders) with or into the Company, or the sale of all or substantially all the assets of the Company to another Person;

(2) the CCCG Permitted Holders are the beneficial owners of less than 25.0% of the total voting power of the Voting Stock of the Company;

(3) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the U.S. Exchange Act) is or becomes the “beneficial owner” (as such term is used in Rule 13d-3 of the U.S. Exchange Act), directly or indirectly, of total voting power of the Voting Stock of the Company greater than such total voting power held beneficially by the CCCG Permitted Holders;

(4) individuals who on the Original Issue Date constituted the Board of Directors, together with any new directors whose election by the Board of Directors was approved by a vote of at least two-thirds of the directors then still in office who were either directors or whose election was previously so approved, cease for any reason to constitute a majority of the members of the Board of Directors then in office;

(5) the number of individuals nominated by the CCCG Permitted Holders (and approved by the Board of Directors) as members of the Board of Directors constitute less than 40.0% of the total number of members of the Board of Directors; or

(6) the adoption of a plan relating to the liquidation or dissolution of the Company.

“Change of Control Triggering Event” means the occurrence of both a Change of Control and, provided that the Notes are rated by at least one Rating Agency, a Rating Decline.

“Clearstream” means Clearstream Banking, société anonyme, Luxembourg.

“Commodity Hedging Agreement” means any spot, forward or option commodity price protection agreements or other similar agreement or arrangement designed to protect against fluctuations in commodity prices.

“Common Stock” means, with respect to any Person, any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person’s common stock or ordinary shares, whether or not outstanding at the date of the Indenture, and include, without limitation, all series and classes of such common stock or ordinary shares.

“Comparable Treasury Issue” means the U.S. Treasury security having a maturity comparable to August 11, 2018 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to August 11, 2018.

“Comparable Treasury Price” means, with respect to any redemption date, if clause (ii) of the Adjusted Treasury Rate is applicable, the average of three (or such lesser number as is obtained by the Trustee) Reference Treasury Dealer Quotations for such redemption date.

“Consolidated EBITDA” means, for any period, Consolidated Net Income for such period plus, to the extent such amount was deducted in calculating such Consolidated Net Income:

(1) Consolidated Interest Expense,

(2) income taxes (other than income taxes attributable to extraordinary and non-recurring gains (or losses) or sales of assets not included in the calculation of Consolidated EBITDA) including, without limitation, land appreciation tax, and

238 (3) depreciation expense, amortization expense and all other non-cash items reducing Consolidated Net Income (other than non-cash items in a period which reflect cash expenses paid or to be paid in another period and other than losses in Investment Properties arising from fair value adjustments made in conformity with GAAP), less all non-cash items increasing Consolidated Net Income (other than gains on Investment Properties arising from fair value adjustments made in conformity with GAAP), all as determined on a consolidated basis for the Company and its Restricted Subsidiaries in conformity with GAAP; provided that (1) if any Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary, Consolidated EBITDA shall be reduced (to the extent not otherwise reduced in accordance with GAAP) by an amount equal to (A) the amount of the Consolidated Net Income attributable to such Restricted Subsidiary multiplied by (B) the percentage ownership interest in the income of such Restricted Subsidiary not owned on the last day of such period by the Company or any of its Restricted Subsidiaries and (2) in the case of any future PRC CJV (consolidated in accordance with GAAP), Consolidated EBITDA shall be reduced (to the extent not already reduced in accordance with GAAP) by any payments, distributions or amounts (including the Fair Market Value of any non-cash payments, distributions or amounts) required to be made or paid by such PRC CJV to the PRC CJV Partner, or to which the PRC CJV Partner otherwise has a right or is entitled, pursuant to the joint venture agreement governing such PRC CJV.

“Consolidated Fixed Charges” means, for any period, the sum (without duplication) of (1) Consolidated Interest Expense for such period and (2) all cash and non-cash dividends paid, declared, accrued or accumulated during such period on any Disqualified Stock or Preferred Stock of the Company or any Restricted Subsidiary held by Persons other than the Company or any Wholly Owned Restricted Subsidiary, except for dividends payable in the Company’s Capital Stock (other than Disqualified Stock) or paid to the Company or to a Wholly Owned Restricted Subsidiary.

“Consolidated Interest Expense” means, for any period, the amount that would be included in gross interest expense on a consolidated income statement prepared in accordance with GAAP for such period of the Company and its Restricted Subsidiaries, minus interest income for such period, and plus, to the extent not included in such gross interest expense, and to the extent incurred, accrued or payable during such period by the Company and its Restricted Subsidiaries, without duplication, (1) interest expense attributable to Capitalized Lease Obligations, (2) amortization of debt issuance costs and original issue discount expense and non-cash interest payments in respect of any Indebtedness, (3) the interest portion of any deferred payment obligation, (4) all commissions, discounts and other fees and charges with respect to letters of credit or similar instruments issued for financing purposes or in respect of any Indebtedness, (5) the net costs associated with Hedging Obligations (including the amortization of fees), (6) interest accruing on Indebtedness of any other Person that is Guaranteed (other than Pre-Registration Mortgage Guarantees) by, or secured by a Lien on any asset (other than a Lien on any Capital Stock of a Person that is not a Restricted Subsidiary) of, the Company or any Restricted Subsidiary, only to the extent such interest has become due and payable by the Company or any Restricted Subsidiary or the enforcement of such Lien has been initiated by the relevant creditors, as applicable, and (7) any capitalized interest, provided that interest expense attributable to interest on any Indebtedness bearing a floating interest rate will be computed on a pro forma basis as if the rate in effect on the date of determination had been the applicable rate for the entire relevant period, and provided further that, for the avoidance of doubt, distributions incurred, accrued or payments on any Perpetual Bond Obligation shall not be included in the calculation of Consolidated Interest Expense.

239 “Consolidated Net Income” means, with respect to any specified Person for any period, the aggregate of the net income (or loss) of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in conformity with GAAP; provided that the following items shall be excluded in computing Consolidated Net Income (without duplication):

(1) the net income (or loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting except that:

(a) subject to the exclusion contained in clause (5) below, the Company’s equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to a Restricted Subsidiary, to the limitations contained in clause (3) below); and

(b) the Company’s equity in a net loss of any such Person for such period shall be included in determining such Consolidated Net Income to the extent funded with cash or other assets of the Company or Restricted Subsidiaries;

(2) the net income (or loss) of any Person accrued prior to the date it becomes a Restricted Subsidiary or is merged into or consolidated with the Company or any of its Restricted Subsidiaries or all or substantially all of the property and assets of such Person are acquired by the Company or any of its Restricted Subsidiaries;

(3) the net income (but not loss) of any Restricted Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of such net income is not at the time permitted by the operation of the terms of its charter, articles of association or other similar constitutive documents, or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Restricted Subsidiary;

(4) the cumulative effect of a change in accounting principles;

(5) any net after tax gains realized on the sale or other disposition of (a) any property or assets of the Company or any Restricted Subsidiary which is not sold in the ordinary course of its business or (b) any Capital Stock of any Person (including any gains by the Company realized on sales of Capital Stock of the Company or other Restricted Subsidiaries);

(6) any translation gains and losses due solely to fluctuations in currency values and related tax effects; and

(7) any net after-tax extraordinary or non-recurring gains; provided that (A) solely for the purposes of calculating Consolidated EBITDA and the Fixed Charge Coverage Ratio, any gross pre-tax gains derived from direct or indirect sale by the Company or any Restricted Subsidiary of (i) Capital Stock of a Restricted Subsidiary primarily engaged in the holding of Investment Property or (ii) an interest in any Investment Property arising from the difference between the current book value and the cash sale price shall be added to Consolidated Net Income; (B) for purposes of calculating Consolidated Net Income (but not for purposes of calculating Consolidated EBITDA and the Fixed Charge Coverage Ratio) any net after-tax gains derived from direct or indirect sale by the Company or any Restricted Subsidiary of (i) Capital Stock of a Restricted Subsidiary primarily engaged in the holding of Investment Property or (ii) an interest in any Investment Property arising from the difference between the original cost basis and the cash sale price shall be added to Consolidated Net Income to the extent not already included in the net income for such period as determined in conformity with GAAP and Consolidated Net Income; (C) solely for the purposes of calculating Consolidated EBITDA and the Fixed Charge Coverage Ratio, any gross pre-tax gains on Investment Properties arising from fair value adjustments made in conformity with GAAP shall be added to Consolidated Net Income; (D) solely for

240 the purposes of calculating Consolidated EBITDA and the Fixed Charge Coverage Ratio, any gross pre-tax gains derived from direct or indirect sale by the Company or any Restricted Subsidiary of (i) Capital Stock of a Restricted Subsidiary (including a PRC Project Company) primarily engaged in a Permitted Business or (ii) an interest in any Permitted Business arising from the difference between the current book value and the cash sale price shall be added to Consolidated Net Income; (E) for purposes of calculating Consolidated Net Income (but not for purposes of calculating Consolidated EBITDA and the Fixed Charge Coverage Ratio) any net after-tax gains derived from direct or indirect sale by the Company or any Restricted Subsidiary of (i) Capital Stock of a Restricted Subsidiary (including a PRC Project Company) primarily engaged in a Permitted Business or (ii) an interest in any Permitted Business arising from the difference between the original cost basis and the cash sale price, shall be added to Consolidated Net Income to the extent not already included in the net income for such period as determined in conformity with GAAP and Consolidated Net Income; and (F) solely for the purposes of calculating Consolidated EBITDA and the Fixed Charge Coverage Ratio, any net income of any Person which is (y) treated as an “associate” or a “joint venture” of the Company in accordance with GAAP, and (z) attributable to the Company and the Restricted Subsidiaries, in each case shall be added to Consolidated Net Income to the extent not already included in the net income for such period as determined in conformity with GAAP and Consolidated Net Income.

“Consolidated Net Worth” means, at any date of determination, stockholders’ equity as set forth on the most recently available fiscal quarter, semi-annual or annual consolidated balance sheet of the Company and its Restricted Subsidiaries, plus, to the extent not included, any Preferred Stock of the Company, less any amounts attributable to Disqualified Stock or any equity security convertible into or exchangeable for Indebtedness, the cost of treasury stock and the principal amount of any promissory notes receivable from the sale of the Capital Stock of the Company or any of its Restricted Subsidiaries, each item to be determined in conformity with GAAP.

“Contractor Guarantees” means any Guarantee by the Company or any Restricted Subsidiary of Indebtedness of any contractor, builder or other similar Person engaged by the Company or such Restricted Subsidiary in connection with the development, construction or improvement of real or personal property or equipment to be used in a Permitted Business by the Company or any Restricted Subsidiary in the ordinary course of business, which Indebtedness was Incurred by such contractor, builder or other similar Person to finance the cost of such development, construction or improvement.

“Cross Border Secured Indebtedness” means (i) Indebtedness the proceeds of which are disbursed in one jurisdiction but which Indebtedness or credit support therefor is guaranteed by a guarantor located in another jurisdiction, or secured by Liens over assets located in another jurisdiction, and (ii) any Guarantees or Indebtedness (including reimbursement obligations in respect of credit support) related to the Indebtedness referred to in clause (i).

“Currency Agreement” means any foreign exchange forward contract, currency swap agreement or other similar agreement or arrangement designed to protect against fluctuations in foreign exchange rates.

“Default” means any event that is, or after notice or passage of time or both would be, an Event of Default.

“Disqualified Stock” means any class or series of Capital Stock of any Person that by its terms or otherwise is (1) required to be redeemed prior to the date that is 183 days after the Stated Maturity of the Notes, (2) redeemable at the option of the holder of such class or series of Capital Stock at any time prior to the date that is 183 days after the Stated Maturity of the Notes or (3) convertible into or exchangeable for Capital Stock referred to in clause (1) or (2) above or Indebtedness having a scheduled maturity prior to the Stated Maturity of the Notes; provided that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an “asset sale” or “change of control” occurring prior to the Stated Maturity of the Notes shall not constitute Disqualified Stock if the “asset sale” or “change of control” provisions applicable to such Capital Stock are no more favorable to the holders of such Capital Stock than the provisions contained in the “—Limitation on Asset Sales” and

241 “—Repurchase of Notes upon a Change of Control Triggering Event” covenants and such Capital Stock specifically provides that such Person will not repurchase or redeem any such stock pursuant to such provision prior to the Company’s repurchase of such Notes as are required to be repurchased pursuant to the “—Limitation on Asset Sales” and “—Repurchase of Notes upon a Change of Control Triggering Event” covenants.

“Dollar Equivalent” means, with respect to any monetary amount in a currency other than U.S. dollars, at any time for the determination thereof, the amount of U.S. dollars obtained by converting such foreign currency involved in such computation into U.S. dollars at the base rate for the purchase of U.S. dollars with the applicable foreign currency as quoted by the Federal Reserve Bank of New York on the date of determination.

“Entrusted Loans” means borrowings by a PRC Restricted Subsidiary from a bank that are secured by a pledge of deposits made by another PRC Restricted Subsidiary to the lending banks as security for such borrowings, provided that such borrowings are not reflected on the consolidated balance sheet of the Company.

“Equity Offering” means (i) any underwritten primary public offering or private placement of Common Stock of the Company after the Original Issue Date or (ii) any underwritten secondary public offering or secondary private placement of Common Stock of the Company beneficially owned by a Permitted Holder, after the Original Issue Date, to the extent that a Permitted Holder or a company controlled by a Permitted Holder concurrently with such public offering or private placement purchases in cash an equal amount of Common Stock from the Company at the same price as the public offering or private placing price; provided that any offering or placing referred to in (A) clause (i), (B) clause (ii), or (C) a combination of clauses (i) and (ii) result in the aggregate gross cash proceeds received by the Company being no less than US$20.0 million (or the Dollar Equivalent thereof).

“Euroclear” means Euroclear Bank S.A/N.V.

“Exempted Subsidiary” means any Restricted Subsidiary organized in any jurisdiction other than the PRC that is prohibited by applicable law or regulation to provide a Subsidiary Guarantee or a JV Subsidiary Guarantee; provided that (x) the Company shall have failed, upon using commercially reasonable efforts, to obtain any required governmental or regulatory approval or registration with respect to such Subsidiary Guarantee or JV Subsidiary Guarantee, to the extent that such approval or registration is available under any applicable law or regulation and (y) such Restricted Subsidiary shall cease to be an Exempted Subsidiary immediately upon such prohibition ceasing to be in force or apply to such Restricted Subsidiary or upon the Company having obtained such applicable approval or registration.

“Fair Market Value” means the price that would be paid in an arm’s-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy, as determined in good faith by the Board of Directors, whose determination shall be conclusive if evidenced by a Board Resolution, except in the case of a determination of Fair Market Value of total assets for the purposes of determining a JV Entitlement Amount, in which case such price shall be determined by an accounting, appraisal or investment banking firm of recognized international standing appointed by the Company.

“Fitch” means Fitch Ratings Ltd., a subsidiary of the Fitch Group, a jointly owned subsidiary of Fimalae, S.A. and Hearst Corporation, and its successors.

242 “Fixed Charge Coverage Ratio” means, on any Transaction Date, the ratio of (1) the aggregate amount of Consolidated EBITDA for the then most recent period of four fiscal quarters prior to such Transaction Date for which consolidated financial statements of the Company (which the Company shall use its reasonable best efforts to compile in a timely manner) are available (which may be internal consolidated financial statements) (the “Four Quarter Period”) to (2) the aggregate Consolidated Fixed Charges during such Four Quarter Period. In making the foregoing calculation:

(a) pro forma effect shall be given to any Indebtedness, Disqualified Stock or Preferred Stock Incurred, repaid or redeemed during the period (the “Reference Period”) commencing on and including the first day of the Four Quarter Period and ending on and including the Transaction Date (other than Indebtedness Incurred or repaid under a revolving credit or similar arrangement (or under any predecessor revolving credit or similar arrangement) in effect on the last day of such Four Quarter Period), in each case as if such Indebtedness, Disqualified Stock or Preferred Stock had been Incurred, repaid or redeemed on the first day of such Reference Period; provided that, in the event of any such repayment or redemption, Consolidated EBITDA for such period shall be calculated as if the Company or such Restricted Subsidiary had not earned any interest income actually earned during such period in respect of the funds used to repay or redeem such Indebtedness, Disqualified Stock or Preferred Stock;

(b) Consolidated Interest Expense attributable to interest on any Indebtedness (whether existing or being Incurred) computed on a pro forma basis and bearing a floating interest rate shall be computed as if the rate in effect on the Transaction Date (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months or, if shorter, at least equal to the remaining term of such Indebtedness) had been the applicable rate for the entire period;

(c) pro forma effect shall be given to the creation, designation or redesignation of Restricted and Unrestricted Subsidiaries as if such creation, designation or redesignation had occurred on the first day of such Reference Period;

(d) pro forma effect shall be given to Asset Dispositions and Asset Acquisitions (including giving pro forma effect to the application of proceeds of any Asset Disposition) that occur during such Reference Period as if they had occurred and such proceeds had been applied on the first day of such Reference Period; and

(e) pro forma effect shall be given to asset dispositions and asset acquisitions (including giving pro forma effect to the application of proceeds of any asset disposition) that have been made by any Person that has become a Restricted Subsidiary or has been merged with or into the Company or any Restricted Subsidiary during such Reference Period and that would have constituted Asset Dispositions or Asset Acquisitions had such transactions occurred when such Person was a Restricted Subsidiary as if such asset dispositions or asset acquisitions were Asset Dispositions or Asset Acquisitions that occurred on the first day of such Reference Period; provided that to the extent that clause (d) or (e) of this sentence requires that pro forma effect be given to an Asset Acquisition or Asset Disposition (or asset acquisition or asset disposition), such pro forma calculation shall be based upon the four full fiscal quarter periods immediately preceding the Transaction Date of the Person, or division or line of business of the Person, that is acquired or disposed for which financial information is available.

“GAAP” means generally accepted accounting principles in Hong Kong as in effect from time to time. All ratios and computations contained or referred to in the Indenture shall be computed in conformity with GAAP applied on a consistent basis.

243 “Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), provided that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning.

“Hedging Obligation” of any Person means the obligations of such Person pursuant to any Commodity Hedging Agreement, Currency Agreement or Interest Rate Agreement.

“HKSE Compliant Transaction” means any transaction between or among any of the Company and the Restricted Subsidiaries and a Qualifying Related Entity; provided that, at the time of the transaction, (i) the Common Stock of the Company remains listed on The Stock Exchange of Hong Kong and (ii) if such transaction is required to be specifically approved by the shareholders and/or the Board of Directors of the Company, as the case may be, in order to comply with the “connected-party transactions rules” then in effect for companies whose common stock is listed on The Stock Exchange of Hong Kong, it has been so approved.

“Holder” means the Person in whose name a Note is registered in the Note register.

“Incur” means, with respect to any Indebtedness or Capital Stock, to incur, create, issue, assume, Guarantee or otherwise become liable for or with respect to, or become responsible for, the payment of, contingently or otherwise, such Indebtedness or Capital Stock; provided that (1) any Indebtedness and Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary (or fails to meet the qualifications necessary to remain an Unrestricted Subsidiary) will be deemed to be Incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary and (2) the accretion of original issue discount shall not be considered an Incurrence of Indebtedness. The terms “Incurrence,” “Incurred” and

“Incurring” have meanings correlative with the foregoing.

“Indebtedness” means, with respect to any Person at any date of determination (without duplication):

(1) all indebtedness of such Person for borrowed money;

(2) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(3) all obligations of such Person in respect of letters of credit, bankers’ acceptances or other similar instruments;

(4) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, except Trade Payables;

(5) all Capitalized Lease Obligations and Attributable Indebtedness;

(6) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided that the amount of such Indebtedness shall be the lesser of (a) the Fair Market Value of such asset at such date of determination and (b) the amount of such Indebtedness;

(7) all Indebtedness of other Persons Guaranteed by such Person to the extent such Indebtedness is Guaranteed by such Person;

244 (8) to the extent not otherwise included in this definition, Hedging Obligations; and

(9) all Disqualified Stock issued by such Person valued at the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price plus accrued dividends.

For the avoidance of doubt, a mandatory put option granted to a Person that obligates the Company or any Restricted Subsidiary to repurchase the Capital Stock of any Restricted Subsidiary or any other Person prior to 180 days after the Stated Maturity of the Notes shall be deemed to be “Indebtedness.”

Notwithstanding the foregoing, Indebtedness shall not include any Perpetual Bond Obligation, Entrusted Loans, capital commitments, deferred payment obligation, pre-sale receipts in advance from customers or similar obligations Incurred in the ordinary course of business in connection with the acquisition, development, construction or improvement of real or personal property (including land use right) to be used in a Permitted Business; provided that such Indebtedness is not reflected as borrowings on the consolidated balance sheet of the Company (contingent obligations and commitments referred to in a footnote to financial statements and not otherwise reflected as borrowings on the balance sheet will not be deemed to be reflected on such balance sheet).

The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation; provided that

(1) the amount outstanding at any time of any Indebtedness issued with original issue discount is the face amount of such Indebtedness less the remaining unamortized portion of the original issue discount of such Indebtedness at such time as determined in conformity with GAAP,

(2) money borrowed and set aside at the time of the Incurrence of any Indebtedness in order to prefund the payment of the interest on such Indebtedness shall not be deemed to be “Indebtedness” so long as such money is held to secure the payment of such interest, and

(3) the amount of Indebtedness with respect to any Hedging Obligation shall be: (i) zero if Incurred pursuant to paragraph (2)(f) under the “Limitation on Indebtedness and Preferred Stock” covenant, and (ii) equal to the net amount payable if such Hedging Obligation terminated at that time due to default by such Person if not Incurred pursuant to such paragraph.

“Independent Third Party” means any Person that is not an Affiliate of the Company.

“Interest Rate Agreement” means any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement, option or future contract or other similar agreement or arrangement designed to protect against fluctuations in interest rates, convert a fixed rate of interest into a floating rate of interest, convert a floating rate of interest into a different floating rate of interest or lower interest currently paid on Indebtedness of any Person.

“Investment” means:

(1) any direct or indirect advance, loan or other extension of credit to another Person;

(2) any capital contribution to another Person (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others);

(3) any purchase or acquisition of Capital Stock, Indebtedness, bonds, notes, debentures or other similar instruments or securities issued by another Person; or

245 (4) any Guarantee of any obligation of another Person.

For the purposes of the provisions of the “Designation of Restricted and Unrestricted Subsidiaries” and “Limitation on Restricted Payments” covenants: (1) the Company will be deemed to have made an Investment in an Unrestricted Subsidiary in an amount equal to the Company’s proportional interest in the Fair Market Value of the assets (net of the Company’s proportionate interest in the liabilities owed to any Person other than the Company or a Restricted Subsidiary and that are not Guaranteed by the Company or a Restricted Subsidiary) of a Restricted Subsidiary that is designated an Unrestricted Subsidiary at the time of such designation, and (2) any property transferred to or from any Person shall be valued at its Fair Market Value at the time of such transfer, as determined in good faith by the Board of Directors.

“Investment Grade” means a rating of “AAA,” “AA,” “A” or “BBB,” as modified by a “+” or “-” indication, or an equivalent rating representing one of the four highest rating categories, by S&P or any of its successors or assigns, a rating of “Aaa,” or “Aa,” “A” or “Baa,” as modified by a “1,” “2” or “3” indication, or an equivalent rating representing one of the four highest rating categories, by Moody’s or any of its successors or assigns, or a rating of “AAA,” “AA,” “A,” “BBB,” as modified by a “+” or “-” indication, or an equivalent rating representing one of the four highest rating categories, by Fitch or any of its successors or assigns, or the equivalent ratings of any internationally recognized rating agency or agencies, as the case may be, which shall have been designated by the Company as having been substituted for S&P, Moody’s or Fitch or two or three of them, as the case may be.

“Investment Property” means any property that is owned and held by any PRC Restricted Subsidiary primarily for long-term rental yield or for capital appreciation or both, or any hotel owned by the Company or any Restricted Subsidiary from which the Company or any Restricted Subsidiary derives or expects to derive operating income.

“JV Entitlement Amount” means, with respect to any JV Subsidiary Guarantor and its Subsidiaries, an amount that is equal to the product of (i) the Fair Market Value of the total assets of such JV Subsidiary Guarantor and its Subsidiaries, on a consolidated basis (without deducting any Indebtedness or other liabilities of such JV Subsidiary Guarantor and its subsidiaries) as of the date of the last fiscal year end of the Company; and (ii) a percentage equal to the direct equity ownership percentage of the Company and/or its Restricted Subsidiaries in the Capital Stock of such JV Subsidiary Guarantor and its Subsidiaries.

“JV Subsidiary Guarantee” has the meaning set forth under the caption “—Subsidiary Guarantees and JV Subsidiary Guarantees.”

“JV Subsidiary Guarantor” means a Restricted Subsidiary that executes a JV Subsidiary Guarantee, provided that the Company and/or its Restricted Subsidiaries owns no less than 50.1% and no more than 80.0% of the Capital Stock of such Restricted Subsidiary.

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including, without limitation, any conditional sale or other title retention agreement or lease in the nature thereof or any agreement to create any mortgage, pledge, security interest, lien, charge, easement or encumbrance of any kind).

“Measurement Date” means February 4, 2013.

“Minority Interest Staged Acquisition Agreement” means an agreement between the Company or a Restricted Subsidiary and an Independent Third Party (x) pursuant to which the Company or such Restricted Subsidiary agrees to acquire less than a majority of the Capital Stock of a Person for a consideration that is not more than the Fair Market Value of such Capital Stock of such Person at the time the Company or such Restricted Subsidiary enters into such agreement and (y) which provides that the payment of the purchase price for such Capital Stock is made in more than one installment over a period of time.

246 “Moody’s” means Moody’s Investors Service, Inc. and its successors.

“Net Cash Proceeds” means:

(1) with respect to any Asset Sale, the proceeds of such Asset Sale in the form of cash or cash equivalents, including payments in respect of deferred payment obligations (to the extent corresponding to the principal, but not interest, component thereof) when received in the form of cash or cash equivalents and proceeds from the conversion of other property received when converted to cash or cash equivalents, net of:

(a) brokerage commissions and other fees and expenses (including fees and expenses of counsel and investment bankers) related to such Asset Sale;

(b) provisions for all taxes (whether or not such taxes will actually be paid or are payable) as a result of such Asset Sale without regard to the consolidated results of operations of the Company and its Restricted Subsidiaries, taken as a whole;

(c) payments made to repay Indebtedness or any other obligation outstanding at the time of such Asset Sale that either (x) is secured by a Lien on the property or assets sold or (y) is required to be paid as a result of such sale;

(d) appropriate amounts to be provided by the Company or any Restricted Subsidiary as a reserve against any liabilities associated with such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as determined in conformity with GAAP; and

(2) with respect to any sale or issuance of Capital Stock, the proceeds of such sale or issuance in the form of cash or cash equivalents, including payments in respect of deferred payment obligations (to the extent corresponding to the principal, but not interest, component thereof) when received in the form of cash or cash equivalents and proceeds from the conversion of other property received when converted to cash or cash equivalents, net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, discounts or commissions and brokerage, consultant and other fees incurred in connection with such sale or issuance and net of taxes paid or payable as a result thereof.

“Non-Guaranteed Portion” means, at any time of determination, the total consolidated assets of all Offshore Non-Guarantor Subsidiaries attributable to the Company or the Restricted Subsidiaries as shown on the balance sheet of such Offshore Non-Guarantor Subsidiaries for the most recently ended full fiscal quarter for which financial statements (which the Company shall use its reasonable best efforts to compile in a timely manner) of the Company and the Restricted Subsidiaries are available (which may be internal consolidated financial statements); provided that, when calculating the Non-Guaranteed Portion, pro forma effect shall be given to (i) any designation of an Offshore Restricted Subsidiary as a Designated Offshore Non-Guarantor Subsidiary (or any designation of an Offshore Non-Guarantor Subsidiary as a Subsidiary Guarantor or JV Subsidiary Guarantor) giving rise to the calculation of the Non-Guaranteed Portion, (ii) any other Offshore Restricted Subsidiary that was designated as a Designated Offshore Non-Guarantor Subsidiary (or Offshore Non-Guarantor Subsidiary that was designated as a Subsidiary Guarantor or JV Subsidiary Guarantor) after the end of such fiscal quarter and (iii) with respect to the fiscal quarter ended December 31, 2012, the status of the Initial Offshore Non-Guarantor Subsidiaries.

“November 2006 Notes” means the 9.00% Senior Notes due 2013 issued by the Company.

247 “Offer to Purchase” means an offer to purchase Notes by the Company from the Holders commenced by the Company mailing a notice by first class mail, postage prepaid, to the Trustee, the Principal Paying and Transfer Agent and each Holder at its last address appearing in the Note register stating:

(1) the covenant pursuant to which the offer is being made and that all Notes validly tendered will be accepted for payment on a pro rata basis;

(2) the purchase price and the date of purchase (which shall be a Business Day no earlier than 30 days nor later than 60 days from the date such notice is mailed) (the “Offer to Purchase Payment Date”);

(3) that any Note not tendered will continue to accrue interest pursuant to its terms;

(4) that, unless the Company defaults in the payment of the purchase price, any Note accepted for payment pursuant to the Offer to Purchase shall cease to accrue interest on and after the Offer to Purchase Payment Date;

(5) that Holders electing to have a Note purchased pursuant to the Offer to Purchase will be required to surrender the Note, together with the form entitled “Option of the Holder to Elect Purchase” on the reverse side of the Note completed, to the Principal Paying and Transfer Agent at the address specified in the notice prior to the close of business on the Business Day immediately preceding the Offer to Purchase Payment Date;

(6) that Holders will be entitled to withdraw their election if the Principal Paying and Transfer Agent receives, not later than the close of business on the third Business Day immediately preceding the Offer to Purchase Payment Date, a facsimile transmission or letter setting forth the name of such Holder, the principal amount of Notes delivered for purchase and a statement that such Holder is withdrawing his election to have such Notes purchased; and

(7) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered; provided that each Note purchased and each new Note issued shall be in a principal amount of US$200,000 and integral multiples of US$1,000 in excess thereof.

On the Offer to Purchase Payment Date, the Company shall (a) accept for payment on a pro rata basis Notes or portions thereof tendered pursuant to an Offer to Purchase; (b) deposit with the Principal Paying and Transfer Agent money sufficient to pay the purchase price of all Notes or portions thereof so accepted; and (c) deliver, or cause to be delivered, to the Trustee all Notes or portions thereof so accepted together with an Officers’ Certificate specifying the Notes or portions thereof accepted for payment by the Company. The Principal Paying and Transfer Agent shall promptly mail to the Holders of Notes so accepted payment in an amount equal to the purchase price, and the Trustee or an authenticating agent shall promptly authenticate and mail to such Holders a new Note equal in principal amount to any unpurchased portion of the Note surrendered; provided that each Note purchased and each new Note issued shall be in a principal amount of US$200,000 and integral multiples of US$1,000 in excess thereof. The Company will publicly announce the results of an Offer to Purchase as soon as practicable after the Offer to Purchase Payment Date. The Company will comply with Rule 14e-1 under the U.S. Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable, in the event that the Company is required to repurchase Notes pursuant to an Offer to Purchase.

The offer is required to contain or incorporate by reference information concerning the business of the Company and its Subsidiaries which the Company in good faith believes will assist such Holders to make an informed decision with respect to the Offer to Purchase, including a brief description of the events requiring the Company to make the Offer to Purchase, and any other information required by applicable law to be included therein. The offer is required to contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Offer to Purchase.

248 “Officer” means one of the executive officers of the Company or, in the case of a Subsidiary Guarantor or JV Subsidiary Guarantor, one of the directors or officers of such Subsidiary Guarantor or JV Subsidiary Guarantor, as the case may be.

“Officers’ Certificate” means a certificate signed by two Officers; provided, however, with respect to the Officers’ Certificate required to be delivered by any entity where there is only one director in such entity at the time such Officers’ Certificate is required to be delivered, Officers’ Certificate means a certificate signed by such director and a senior officer.

“Offshore Non-Guarantor Subsidiary” means any Offshore Restricted Subsidiary of the Company that does not provide a Subsidiary Guarantee or a JV Subsidiary Guarantee and that is designated by the Board of Directors as an Offshore Non-Guarantor Subsidiary in accordance with the provisions of the Indenture, which for the avoidance of doubt, includes the Initial Offshore Non-Guarantor Subsidiaries and excludes the Exempted Subsidiaries.

“Offshore Restricted Subsidiary” means any Restricted Subsidiary of the Company that is incorporated in any jurisdiction other than the PRC.

“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee.

“Original Issue Date” means the date on which the Notes are originally issued under the Indenture.

“Pari Passu Subsidiary Guarantee” means a guarantee by any Subsidiary Guarantor or any JV Subsidiary Guarantor of Indebtedness of the Company (including Additional Notes); provided that (1) the Company was permitted to Incur such Indebtedness under the covenants under the caption “—Limitation on Indebtedness and Preferred Stock” and (2) such guarantee ranks pari passu with any outstanding Subsidiary Guarantee of such Subsidiary Guarantor, or with any outstanding JV Subsidiary Guarantee of such JV Subsidiary Guarantor, as the case may be.

“Payment Default” means (1) any default in the payment of interest on any Note when the same becomes due and payable, (2) any default in the payment of principal of (or premium, if any, on) the Notes when the same becomes due and payable at maturity, upon acceleration, redemption or otherwise, (3) the failure by the Company to make or consummate a Change of Control Offer in the manner described under the caption “—Repurchase of Notes upon a Change of Control Triggering Event,” or an Offer to Purchase in the manner described under the caption “—Limitation on Asset Sales” or (4) any Event of Default specified in clause (5) of the definition of Events of Default.

“Permitted Businesses” means any business which is the same as or related, ancillary or complementary to any of the businesses of the Company and its Restricted Subsidiaries on the Original Issue Date, including, without limitation the ownership or sponsoring of sports teams, real estate acquisition, development, leasing and management, hotel acquisition, development, operation and management, the acquisition, development, management and operation of sports and leisure facilities and other infrastructure, the acquisition, development, operation and management of schools and hospitals and real estate investment trusts and the supply of goods, other supplies and services, including the production, manufacture or generation of such goods, supplies or services, provided to or in connection with any of the foregoing.

“Permitted Holders” means any or all of the following:

(1) Mr. Song Weiping, Mr. Shou Bainian, China Communication and Construction Group (Limited) (中國交通建設集團有限公司) and The Wharf (Holdings) Limited;

(2) any Affiliate (other than an Affiliate as defined in clause (2) or (3) of the definition of Affiliate) of the Person specified in clause (1); and

(3) any Person both the Capital Stock and the Voting Stock of which (or in the case of a trust, the beneficial interests in which) are owned 80.0% by Persons specified in clauses (1) and (2).

249 “Permitted Investment” means:

(1) any Investment in the Company or a Restricted Subsidiary that is primarily engaged in a Permitted Business or a Person which will, upon the making of such Investment, become a Restricted Subsidiary that is primarily engaged in a Permitted Business or be merged or consolidated with or into or transfer or convey all or substantially all its assets to, the Company or a Restricted Subsidiary that is primarily engaged in a Permitted Business;

(2) Temporary Cash Investments;

(3) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses in accordance with GAAP;

(4) stock, obligations or securities received in satisfaction of judgments;

(5) an Investment in an Unrestricted Subsidiary consisting solely of an Investment in another Unrestricted Subsidiary;

(6) any Investment pursuant to a Hedging Obligation designed solely to protect the Company or any Restricted Subsidiary against fluctuations in commodity prices, interest rates or foreign currency exchange rates;

(7) receivables owing to the Company or any Restricted Subsidiary, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms;

(8) Investments made by the Company or any Restricted Subsidiary consisting of consideration received in connection with an Asset Sale made in compliance with the covenants under the caption “—Limitation on Asset Sales;”

(9) pledges or deposits (x) with respect to leases or utilities provided to third parties in the ordinary course of business or (y) otherwise described in the definition of “Permitted Liens” or made in connection with Liens permitted under the covenant described under “—Limitation on Liens;”

(10) any Investment pursuant to Pre-Registration Mortgage Guarantees or Contractor Guarantees by the Company or any Restricted Subsidiary otherwise permitted to be Incurred under the Indenture;

(11) Investments in securities of trade creditors, trade debtors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditor, trade debtor or customer;

(12) advances to contractors and suppliers for the acquisition of assets or consumables or services in the ordinary course of business that are recorded as deposits or prepaid expenses on the Company’s consolidated balance sheet;

(13) deposits of pre-sale proceeds made in order to secure the completion and delivery of pre-sold properties and issuance of the related land use title in the ordinary course of business;

(14) deposits made in order to comply with statutory or regulatory obligations to maintain deposits for workers compensation claims and other purposes specified by statute or regulation from time to time in the ordinary course of business;

250 (15) deposits made in order to secure the performance of the Company or any of its Restricted Subsidiaries and prepayments made in connection with the direct or indirect acquisition of real property, land use right or personal property (including Capital Stock) by the Company or any of its Restricted Subsidiaries (including by way of acquisition of Capital Stock of a Person), in each case in the ordinary course of business;

(16) any Investment by the Company or any Restricted Subsidiary in any Qualifying Related Entity that is an HKSE Compliant Transaction; provided that no Default has occurred and is continuing or would occur as a result of such Investment; and provided further that if a such investee ceases to be a Qualifying Related Entity, any such Investment, to the extent such Investment has not been reduced by (A) the receipt of payments in cash by the Company or any Restricted Subsidiary in respect of such Investments, including interest on or repayments of loans or advances, dividends or other distributions (except, in each case, to the extent any such payments are included in the calculation of Consolidated Net Income), (B) the unconditional release of a Guarantee of any obligation of such investee provided under this clause (16) after the Measurement Date by the Company or any Restricted Subsidiary, or (C) to the extent that an Investment made after the Measurement Date under this clause (16) is sold or otherwise liquidated or repaid for cash, the lesser of (i) cash return of capital with respect to such Investment (less the cost of disposition, if any) and (ii) the initial amount of such Investment, will be deemed not to have been made in accordance with this clause (16) and such Investment must at the time such investee ceases to be a Qualifying Related Entity satisfy the other requirements of the covenant described under “—Limitation on Restricted Payments” (including meeting the requirements of any other clauses of this “Permitted Investment” definition);

(17) any Investment by the Company or any Restricted Subsidiary in any corporation, association, or other business entity primarily engaged in a Permitted Business, (i) of which 10% or more of the Capital Stock and the Voting Stock is owned, directly or indirectly, by the Company or any Restricted Subsidiary and (ii) which is treated as an “associate” or a “joint venture” in accordance with GAAP (such corporation, association or other business entity, an “Associate”); provided that:

(a) none of the other holders of Capital Stock of such Associate is a Person described in clauses (x) or (y) of the first paragraph of the covenant described under the caption “—Limitation on Transactions with Shareholders and Affiliates” (other than by reason of such holder being an officer or director of the Company or a Restricted Subsidiary);

(b) the Company must be able to incur at least US$1.00 of Indebtedness under the proviso in the first paragraph of the covenant described under the caption “—Limitation on Indebtedness and Preferred Stock;”

(d) the amount of such Investment, together with (x) the aggregate amount of all other Investments made under this clause (17) since the Measurement Date, less (y) an amount equal to the net reduction in the amount of all Investments made under this clause (17) since the Measurement Date resulting from (A) receipt of payments in cash by the Company or any Restricted Subsidiary in respect of all such Investments, including interest on or repayments of loans or advances, dividends or other distributions (except, in each case, to the extent any such payments are included in the calculation of Consolidated Net Income), (B) the unconditional release of a Guarantee of any obligation of such Associate provided under this clause (17) after the Measurement Date by the Company or any Restricted Subsidiary, (C) to the extent that an Investment made after the Measurement Date under this clause (17) is sold or

251 otherwise liquidated or repaid for cash, the lesser of (i) cash return of capital with respect to such Investment (less the cost of disposition, if any) and (ii) the initial amount of such Investment, or (D) such Associate becoming a Restricted Subsidiary (whereupon all Investments (other than Permitted Investments) made by the Company or any Restricted Subsidiary in such Associate since the Measurement Date shall be deemed to have been made pursuant to clause (1) of this “Permitted Investment” definition), shall not exceed an aggregate amount equal to 15% of Total Assets provided further that if at the time of such Investment the Company could not Incur at least US$1.00 of Indebtedness under the proviso in Section 4.05(a), subject to compliance with the requirements set out in paragraphs (a) and (c) of this clause (17), the Company may make such Investment if the aggregate amount of all other Investments made pursuant to this proviso (net of any reductions in such Investments on the same basis as paragraph (d) of this clause (17)) does not exceed 5.0% of Total Assets;

(e) with respect to such Associate in which the Company or any Restricted Subsidiary has made an Investment pursuant to this clause (17), if (x) the Company or such Restricted Subsidiary no longer owns at least 10% of the Capital Stock and the Voting Stock of such Associate or such Associate is no longer treated as an “associate” or a “joint venture” in accordance with GAAP and (y) such Associate has not become a Restricted Subsidiary, such Investment (to the extent such Investment has not been reduced in accordance with paragraph (d) of this clause (17)) will be deemed not to have been made in accordance with this clause (17) and such Investment must at the time such Associate is no longer treated as an Associate satisfy the other requirements of the covenant described under “—Limitation on Restricted Payments” (including meeting the requirements of one of the other clauses set forth under this “Permitted Investment” definition); and

(f) if a Restricted Subsidiary is redesignated an Unrestricted Subsidiary, any Investment made by such Restricted Subsidiary pursuant to this clause (17), to the extent such Investment has not been reduced in accordance with paragraph (d) of this clause (17), will be deemed not to have been made in accordance with this clause (17) and such Investment must at the time such Restricted Subsidiary is redesignated an Unrestricted Subsidiary satisfy the other requirements of the covenant described under “—Limitation on Restricted Payments” (including meeting the requirements of any other clauses of this “Permitted Investment” definition);

(18) advances to government affiliated entities, collective economic organizations, existing land or building owners, holders, occupants or lessees, or related agents in respect of primary land development or urban development plans in the ordinary course of business that are recorded as assets on the Company’s balance sheet;

(19) Guarantees permitted under paragraph (2)(u) of the covenant described under “—Limitation on Indebtedness and Preferred Stock;” and

(20) payments made pursuant to a Minority Interest Staged Acquisition Agreement, if, on the date that such Minority Interest Staged Acquisition Agreement was entered into, such payments would be permitted to be made under (i) clause (c) of the first paragraph of the covenant described under “—Limitation on Restricted Payments,” no Default has occurred and is continuing or would occur as a result of such payment and the Company could Incur at least US$1.00 of Indebtedness under the proviso in the first paragraph of part (1) of the covenants under the caption “—Limitation on Indebtedness and Preferred Stock” after giving effect to such payment, provided that each payment made with respect to such Minority Interest Staged Acquisition Agreement pursuant to this clause (20) after the Measurement Date shall be included in calculating whether the conditions of clause (c) of the first paragraph under the covenant captioned “—Limitation on Restricted Payments” have been met with respect to any subsequent Restricted Payments, or (ii) clause (17) of

252 “Permitted Investments,” provided that each payment made with respect to such Minority Interest Staged Acquisition Agreement pursuant to this clause (20)(ii) after the Measurement Date shall be included in calculating whether the conditions of sub-clause (d) of clause (17) of “Permitted Investments” have been met with respect to any subsequent Investments made pursuant to such clause (17) of “Permitted Investments” (for the avoidance of doubt, the Company shall have discretion to determine whether such payments are to be made under sub-clause (i) or (ii) of this clause (20)).

“Permitted Liens” means:

(1) Liens for taxes, assessments, governmental charges or claims that are being contested in good faith by appropriate legal or administrative proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made;

(2) statutory and common law Liens of landlords and carriers, warehousemen, mechanics, suppliers, repairmen or other similar Liens arising in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate legal or administrative proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made;

(3) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory or regulatory obligations, bankers’ acceptances, surety and appeal bonds, government contracts, performance and return-of-money bonds and other obligations of a similar nature incurred in the ordinary course of business (exclusive of obligations for the payment of borrowed money);

(4) leases or subleases granted to others that do not materially interfere with the ordinary course of business of the Company and its Restricted Subsidiaries, taken as a whole;

(5) Liens encumbering property or assets under construction arising from progress or partial payments by a customer of the Company or its Restricted Subsidiaries relating to such property or assets;

(6) Liens on property of, or on shares of Capital Stock or Indebtedness of, any Person existing at the time such Person becomes, or becomes a part of, any Restricted Subsidiary; provided that such Liens do not extend to or cover any property or assets of the Company or any Restricted Subsidiary other than the property or assets acquired; provided further that such Liens were not created in contemplation of or in connection with the transactions or series of transactions pursuant to which such Person became a Restricted Subsidiary;

(7) Liens in favor of the Company or any Restricted Subsidiary;

(8) Liens arising from the rendering of a final judgment or order against the Company or any Restricted Subsidiary that does not give rise to an Event of Default;

(9) Liens securing reimbursement obligations with respect to letters of credit that encumber documents and other property relating to such letters of credit and the products and proceeds thereof;

(10) Liens encumbering customary initial deposits and margin deposits, and other Liens that are within the general parameters customary in the industry and incurred in the ordinary course of business, in each case, securing Indebtedness under Hedging Obligations permitted by clause (f) of the second paragraph of the covenants under the caption “—Limitation on Indebtedness and Preferred Stock;”

(11) Liens existing on the Original Issue Date;

253 (12) Liens securing Indebtedness which is Incurred to refinance secured Indebtedness which is permitted to be Incurred under clause (e) of the second paragraph of the covenant described under the caption entitled “—Limitation on Indebtedness and Preferred Stock;” provided that such Liens do not extend to or cover any property or assets of the Company or any Restricted Subsidiary other than the property or assets securing the Indebtedness being refinanced;

(13) any interest or title of a lessor in the property subject to any operating lease;

(14) Liens securing Indebtedness of the Company or any Restricted Subsidiary under any Pre-Registration Mortgage Guarantee which is permitted to be Incurred under clause (g) of the second paragraph of the covenants under the caption “—Limitation on Indebtedness and Preferred Stock;”

(15) easements, rights-of-way, municipal and zoning ordinances or other restrictions as to the use of properties in favor of governmental agencies or utility companies that do not materially adversely affect the value of such properties or materially impair the use for the purposes of which such properties are held by the Company or any Restricted Subsidiary;

(16) Liens (including extensions and renewals thereof) upon real or personal property acquired after the Original Issue Date; provided that, (a) such Lien is created solely for the purpose of securing Indebtedness of the type described under clause (2)(h) of the covenants under the caption entitled “—Certain Covenants—Limitation on Indebtedness and Preferred Stock” and such Lien is created prior to, at the time of or within 180 days after the later of the acquisition or the completion of development, construction or improvement of such property, (b) the principal amount of the Indebtedness secured by such Lien does not exceed 100.0% of the cost of such property, development, construction or improvement and (c) such Lien shall not extend to or cover any property or assets other than such item of property and any improvements on such item; provided that, in the case of clauses (b) and (c), such Lien may cover other property or assets (instead of or in addition to such item of property or improvements) and the principal amount of Indebtedness secured by such Lien may exceed 100.0% of such cost if (x) such Lien is incurred in the ordinary course of business and (y) the aggregate book value of property or assets (as reflected in the most recent available consolidated financial statements of the Company (which may be internal consolidated financial statements) or, if any such property or assets have been acquired since the date of such financial statements, the cost of such property or assets) subject to Liens incurred pursuant to this clause (16) does not exceed 130.0% of the aggregate principal amount of Indebtedness secured by such Liens;

(17) Liens on deposits of pre-sale proceeds made in order to secure the completion and delivery of pre-sold properties and issuance of the related land use title made in the ordinary course of business and not securing Indebtedness of the Company or any Restricted Subsidiary;

(18) Liens on deposits made in order to comply with statutory obligations to maintain deposits for workers compensation claims and other purposes specified by statute made in the ordinary course of business and not securing Indebtedness of the Company or any Restricted Subsidiary;

(19) Liens on deposits made in order to secure the performance of the Company or any of its Restricted Subsidiaries in connection with the direct or indirect acquisition of real property, land use right or personal property (including, without limitation, Capital Stock) by the Company or any of its Restricted Subsidiaries (including, without limitation, by way of acquisition of Capital Stock of a Person) in the ordinary course of business and not securing Indebtedness of the Company or any Restricted Subsidiary;

254 (20) Liens on the Capital Stock of a PRC Project Company granted by the Company or any PRC Restricted Subsidiary in favor of any Trust Company Investor in respect of, and to secure, Indebtedness of the type permitted to be Incurred under clause (2)(p) of the covenant described under “—Limitation on Indebtedness and Preferred Stock;”

(21) (i) Liens securing Cross Border Indebtedness permitted to be incurred under clause (2)(q) of the covenant “—Limitation on Indebtedness and Preferred Stock;” provided that the aggregate book value of any property or asset (as reflected in the most recent available consolidated financial statements of the Company (which may be internal consolidated financial statements) or, if any such property or assets have been acquired since the date of such financial statements, the cost of such property or assets) subject to Liens incurred pursuant to this clause (21)(i) does not exceed 130% of the aggregate principal amount of Indebtedness secured by such Lien or (ii) Liens incurred on bank accounts, cash deposits or other assets to secure Bank Deposit Secured Indebtedness;

(22) Liens on Investment Properties securing Indebtedness of the Company or any PRC Restricted Subsidiary of the type described under clause (2)(r) of the covenant described under “—Limitation on Indebtedness and Preferred Stock;”

(23) Liens incurred or deposits made to secure Entrusted Loans;

(24) Liens on current assets securing Indebtedness which is permitted to be Incurred under clause (2)(n) of the covenant described under “—Limitation on Indebtedness and Preferred Stock;”

(25) Liens on the Capital Stock of the Person that is to be acquired under the relevant Staged Acquisition Agreement securing Indebtedness which is permitted to be Incurred under clause (2)(o) of the covenant described under “—Limitation on Indebtedness and Preferred Stock;”

(26) Liens securing Indebtedness Incurred under clause (2)(u) of the covenant described under “—Limitation on Indebtedness and Preferred Stock;”

(27) Liens on assets of a Non-Guarantor Subsidiary securing any Permitted Subsidiary Indebtedness of any Non-Guarantor Subsidiary permitted to be Incurred under clause (1) of the covenant described under “—Limitation on Indebtedness and Preferred Stock;”

(28) Liens securing Indebtedness of Restricted Subsidiaries (other than Subsidiary Guarantors or JV Subsidiary Guarantors) Incurred pursuant to clause (2)(s) of the covenant described under “—Limitation on Indebtedness and Preferred Stock;”

(29) Liens on and pledges of Capital Stock of, or any Indebtedness owed to the Company or any Restricted Subsidiary from, any Unrestricted Subsidiary or any Person that is not a Subsidiary of the Company, in each case securing Indebtedness other than Indebtedness of the Company or any Restricted Subsidiary;

(30) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that do not exceed US$5.0 million at any one time outstanding; and

(31) Liens on the Capital Stock of the Person that is to be acquired under the relevant Minority Staged Acquisition Agreement securing Indebtedness permitted to be Incurred under clause (2)(w) of the covenant described under “—Limitation on Indebtedness and Preferred Stock.”

“Permitted Subsidiary Indebtedness” means Indebtedness of, and all Preferred Stock issued by, the Non-Guarantor Subsidiaries, taken as a whole; provided that, on the date of the Incurrence of such Indebtedness and after giving effect thereto and the application of the proceeds thereof, the aggregate

255 principal amount outstanding of all such Indebtedness (excluding any Public Indebtedness and any Indebtedness of any Non-Guarantor Subsidiary permitted under clauses 2(a), (b), (d), (f), (g) and (m) of the covenant described under “—Certain Covenants—Limitation on Indebtedness and Preferred Stock”) does not exceed an amount equal to 15.0% of the Total Assets.

“Perpetual Bond Obligation” means any debt security or other obligation (howsoever described) incurred by the Company or any Restricted Subsidiary under any “perpetual bond,” “perpetual loan” or similar instruments which is treated as equity under GAAP, including the 2012 Convertible Securities and the 2014 Perpetual Securities.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof.

“PRC” means the People’s Republic of China, excluding Hong Kong Special Administrative Region, Macau and Taiwan.

“PRC CJV” means any Subsidiary that is a Sino-foreign cooperative joint venture enterprise with limited liability, established in the PRC pursuant to the Law of the People’s Republic of China on Sino-foreign Cooperative Joint Ventures adopted on April 13, 1988 (as most recently amended on October 13, 2000) and the Detailed Rules for the Implementation of the Law of the People’s Republic of China on Sino-foreign Cooperative Joint Ventures promulgated on September 4, 1995, as such laws may be amended.

“PRC CJV Partner” means with respect to a PRC CJV, the other party to the joint venture agreement relating to such PRC CJV with the Company or any Restricted Subsidiary.

“PRC Project Company” means any Restricted Subsidiary organized under the laws of the PRC primarily engaged in a Permitted Business.

“PRC Restricted Subsidiary” means a Restricted Subsidiary organized under the laws of the PRC.

“Pre-Registration Mortgage Guarantee” means any Indebtedness of the Company or any Restricted Subsidiary consisting of a guarantee in favor of any bank or other similar financial institutions in the ordinary course of business of secured loans of purchasers of individual units of properties from the Company or any Restricted Subsidiary; provided that, any such guarantee shall be released in full on or before the perfection of a security interest in such properties under applicable law in favor of the relevant lender.

“Preferred Stock” as applied to the Capital Stock of any Person means Capital Stock of any class or classes that by its terms is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person, valued at the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price plus accrued dividends.

“Public Indebtedness” means any bonds, debentures, notes or similar debt securities issued in a public offering or a private placement (other than the Notes) to institutional investors.

“Qualifying Related Entity” means any CCCG Entity, any Sunac Entity and any Wharf Entity.

“Rating Agencies” means (1) S&P, (2) Moody’s and (3) Fitch, provided that if S&P, Moody’s, Fitch, two of any of the three or all three of them shall not make a rating of the Notes publicly available, a nationally recognized securities rating agency or agencies, as the case may be, selected by the Company, which shall be substituted for S&P, Moody’s, Fitch, two of any of the three or all three of them, as the case may be.

“Rating Category” means (1) with respect to S&P, any of the following categories: “BB,” “B,” “CCC,” “CC,” “C” and “D” (or equivalent successor categories); (2) with respect to Moody’s, any of the

256 following categories: “Ba,” “B,” “Caa,” “Ca,” “C” and “D” (or equivalent successor categories); and (3) with respect to Fitch, any of the following categories: “BB,” “B,” “CCC,” “CC,” “C” and “D” (or equivalent successor categories); and (4) the equivalent of any such category of S&P, Moody’s or Fitch used by another Rating Agency. In determining whether the rating of the Notes has decreased by one or more gradations, gradations within Rating Categories (“+” and “-” for S&P; “1,” “2” and “3” for Moody’s; “+” and “-” for Fitch; or the equivalent gradations for another Rating Agency) shall be taken into account (e.g., with respect to S&P, a decline in a rating from “BB+” to “BB,” as well as from “BB-” to “B+,” will constitute a decrease of one gradation).

“Rating Date” means (1) in connection with a Change of Control Triggering Event, that date which is 90 days prior to the earlier of (x) a Change of Control and (y) a public notice of the occurrence of a Change of Control or of the intention by the Company or any other Person or Persons to effect a Change of Control or (2) in connection with actions contemplated under the caption “—Consolidation, Merger and Sale of Assets,” that date which is 90 days prior to the earlier of (x) the occurrence of any such actions as set forth therein and (y) a public notice of the occurrence of any such actions.

“Rating Decline” means (1) in connection with a Change of Control Triggering Event, the occurrence on, or within six months after, the date, or public notice of the occurrence of, a Change of Control or the intention by the Company or any other Person or Persons to effect a Change of Control (which period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by any of the Rating Agencies) of any of the events listed below, or (2) in connection with actions contemplated under the caption “—Consolidation, Merger and Sale of Assets,” the notification by any of the Rating Agencies that such proposed actions will result in any of the events listed below:

(a) in the event the Notes are rated by all three of the Rating Agencies on the Rating Date as Investment Grade, the rating of the Notes by any two of the three Rating Agencies shall be below Investment Grade;

(b) in the event the Notes are rated by any two, but not all three, of the three Rating Agencies on the Rating Date as Investment Grade, the rating of the Notes by any of such two Rating Agencies shall be below Investment Grade;

(c) in the event the Notes are rated by one, and only one, of the three Rating Agencies on the Rating Date as Investment Grade, the rating of the Notes by such Rating Agency shall be below Investment Grade; or

(d) in the event the Notes are rated by three or less than three Rating Agencies and are rated below Investment Grade by all such Rating Agencies on the Rating Date, the rating of the Notes by any Rating Agency shall be decreased by one or more gradations (including gradations within Rating Categories as well as between Rating Categories).

“Reference Treasury Dealer” means each of any three investment banks of recognized standing that is a primary U.S. Government securities dealer in The City of New York, selected by the Company in good faith.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to such Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such redemption date.

“Renminbi” or RMB” means yuan, the lawful currency of the PRC.

“Replacement Assets” means, on any date, property or assets (other than current assets) of a nature or type or that are used in a Permitted Business.

“Responsible Officer” when used with respect to the Trustee, means any officer of the Trustee with direct responsibility for the administration of the Indenture.

257 “Restricted Subsidiary” means any Subsidiary of the Company other than an Unrestricted Subsidiary.

“S&P” means Standard & Poor’s Ratings Services and its affiliates.

“Sale and Leaseback Transaction” means any direct or indirect arrangement relating to property (whether real, personal or mixed), now owned or hereafter acquired whereby the Company or any Restricted Subsidiary transfers such property to another Person and the Company or any Restricted Subsidiary leases it from such Person.

“Senior Indebtedness” of the Company or a Restricted Subsidiary, as the case may be, means all Indebtedness of the Company or the Restricted Subsidiary, as relevant, whether outstanding on the Original Issue Date or thereafter created, except for Indebtedness which, in the instrument creating or evidencing the same, is expressly stated to be subordinated in right of payment to (a) in respect of the Company, the Notes, (b) in respect of any Restricted Subsidiary that is a Subsidiary Guarantor, its Subsidiary Guarantee, or (c) in respect of any Restricted Subsidiary that is a JV Subsidiary Guarantor, its JV Subsidiary Guarantee; provided that Senior Indebtedness does not include (1) any obligation to the Company or any Restricted Subsidiary, (2) trade payables or (3) Indebtedness Incurred in violation of the Indenture.

“Significant Subsidiary” means any Restricted Subsidiary, or group of Restricted Subsidiaries, that would, taken together, be a “significant subsidiary” using the conditions specified in the definition of significant subsidiary in Article 1, Rule 1-02(w) of Regulation S-X, promulgated pursuant to the US Securities Act of 1933, as amended, as such Regulation is in effect on the date of the Indenture, if any of the conditions exceeds 5%.

“Staged Acquisition Agreement” means an agreement between the Company or a Restricted Subsidiary and an Independent Third Party (x) pursuant to which the Company or such Restricted Subsidiary agrees to acquire 50% or more of the Capital Stock of a Person for a consideration that is not more than the Fair Market Value of such Capital Stock of such Person at the time the Company or such Restricted Subsidiary enters into such agreement and (y) which provides that the payment of the purchase price for such Capital Stock is made in more than one installment over a period of time not to exceed 18 months from the date the Company or such Restricted Subsidiary enters into such Staged Acquisition Agreement.

“Stated Maturity” means, (1) with respect to any Indebtedness, the date specified in such debt security as the fixed date on which the final installment of principal of such Indebtedness is due and payable as set forth in the documentation governing such Indebtedness and (2) with respect to any scheduled installment of principal of or interest on any Indebtedness, the date specified as the fixed date on which such installment is due and payable as set forth in the documentation governing such Indebtedness.

“Subordinated Indebtedness” means any Indebtedness of the Company, any Subsidiary Guarantor or any JV Subsidiary Guarantor which is contractually subordinated or junior in right of payment to the Notes, any Subsidiary Guarantee or any JV Subsidiary Guarantee, as applicable, pursuant to a written agreement to such effect.

“Subordinated Shareholder Loan” means any loan to the Company or any Restricted Subsidiary from Permitted Holders which (1) is subordinated in right of payment to the Notes, (2) by its terms (and by the terms of any security into which it is convertible or for which it is exchangeable) does not mature and is not required to be repaid, pursuant to a sinking fund obligation, event of default or otherwise, in whole or in part, until 180 days after the Stated Maturity of the Notes and (3) does not provide for any cash payment of interest until 180 days after the Stated Maturity of the Notes.

258 “Subsidiary” means, with respect to any Person, any corporation, association or other business entity (i) of which more than 50.0% of the voting power of the outstanding Voting Stock is owned, directly or indirectly, by such Person and one or more other Subsidiaries of such Person or (ii) of which 50% or less of the outstanding Voting Stock is owned, directly or indirectly, by such Person and which is “controlled” and consolidated by such Person in accordance with GAAP.

“Subsidiary Guarantee” means any Guarantee of the obligations of the Company under the Indenture and the Notes by any Subsidiary Guarantor.

“Subsidiary Guarantor” means any initial Subsidiary Guarantor named herein and any other Restricted Subsidiary which guarantees the payment of the Notes pursuant to the Indenture and the Notes; provided that Subsidiary Guarantor will not include (a) any Person whose Subsidiary Guarantee has been released in accordance with the Indenture and the Notes or (b) any JV Subsidiary Guarantor.

“Sunac Entity” means (i) any Person directly or indirectly controlled by Sunac China Holdings Limited and (ii) any Person that is directly or indirectly jointly controlled by (x) any Person falling within clause (i) and (y) the Company or any Subsidiary of the Company.

“Temporary Cash Investment” means any of the following:

(1) direct obligations of the United States of America, any state of the European Economic Area, the People’s Republic of China and Hong Kong or any agency of any of the foregoing or obligations fully and unconditionally Guaranteed by the United States of America, any state of the European Economic Area, the People’s Republic of China and Hong Kong or any agency of any of the foregoing, in each case maturing within one year, which in the case of obligations of, or obligations Guaranteed by, any state of the European Economic Area, shall be rated at least “A” by S&P or Moody’s;

(2) demand or time deposit accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust company which is organized under the laws of the United States of America, any state thereof, any state of the European Economic Area or Hong Kong, and which bank or trust company has capital, surplus and undivided profits aggregating in excess of US$100.0 million (or the Dollar Equivalent thereof) and has outstanding debt which is rated “A” (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the U.S. Securities Act) or any money market fund sponsored by a registered broker dealer or mutual fund distributor;

(3) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (1) above entered into with a bank or trust company meeting the qualifications described in clause (2) above;

(4) commercial paper, maturing not more than 180 days after the date of acquisition thereof, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of “P-1” (or higher) according to Moody’s or “A-1” (or higher) according to S&P;

(5) securities, maturing within one year of the date of acquisition thereof, issued or fully and unconditionally Guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least “A” by S&P or Moody’s;

(6) any money market fund that has at least 95.0% of its assets continuously invested in investments of the types described in clauses (1) through (5) above;

(7) demand or time deposit accounts, certificates of deposit, overnight or call deposits and money market deposits with any bank or financial institution organized under the laws of the PRC or Hong Kong; and

259 (8) structured deposit products that are principal protected with any bank or financial institution organized under the laws of the PRC or Hong Kong if held to maturity (which shall not be more than one year) and can be withdrawn at any time with no more than six-month notice.

“Total Assets” means, as of any date, the total consolidated assets of the Company and its Restricted Subsidiaries measured in accordance with GAAP as of the last day of the most recent full fiscal quarter for which consolidated financial statements of the Company (which the Company shall use its reasonable best efforts to compile on a timely manner) are available (which may be internal consolidated financial statements); provided that only with respect to clause (2)(h) of “—Certain Covenants—Limitation on Indebtedness and Preferred Stock” covenant and the definition of “Permitted Subsidiary Indebtedness,” Total Assets shall be calculated after giving pro forma effect to include the cumulative value of all of the real or personal property or equipment the acquisition, development, construction or improvement of which requires or required the Incurrence of Indebtedness and calculation of Total Assets thereunder, as measured by the purchase price or cost therefor or budgeted cost provided in good faith by the Company or any of its Restricted Subsidiaries to the bank or other similar financial institutional lender providing such Indebtedness, provided further that only with respect to the calculation of “Non-Guaranteed Portion,” in the case of a JV Subsidiary Guarantor executing a JV Subsidiary Guarantee and any other Restricted Subsidiary of the Company that became a JV Subsidiary Guarantor after the end of the most recently ended semi-annual or annual period, the amount of Total Assets shall be calculated after giving pro forma effect to the sale or issuance of Capital Stock to the relevant Independent Third Parties.

“Trade Payables” means, with respect to any Person, any accounts payable or any other indebtedness or monetary obligation to trade creditors created, assumed or Guaranteed by such Person or any of its Subsidiaries arising in the ordinary course of business in connection with the acquisition of goods or services.

“Transaction Date” means, with respect to the Incurrence of any Indebtedness, the date such Indebtedness is to be Incurred and, with respect to any Restricted Payment, the date such Restricted Payment is to be made.

“Trust Company Investor” means an Independent Third Party that is a financial institution or an insurance company organized under the laws of the PRC, or an Affiliate thereof, that invests in any Capital Stock of a PRC Project Company.

“Unrestricted Subsidiary” means (1) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors in the manner provided in the Indenture; and (2) any Subsidiary of an Unrestricted Subsidiary.

“U.S. Government Obligations” means securities that are (1) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally Guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof at any time prior to the Stated Maturity of the Notes, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depository receipt.

“Voting Stock” means, with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the election of directors, managers or other voting members of the governing body of such Person.

260 “Wharf Entity” means (i) any Person directly or indirectly controlled by The Wharf Holdings Limited and (ii) any Person that is directly or indirectly jointly controlled by (x) any Person falling within clause (i) and (y) the Company or any Subsidiary of the Company.

“Wholly Owned” means, with respect to any Subsidiary of any Person, the ownership of all of the outstanding Capital Stock of such Subsidiary (other than any director’s qualifying shares or Investments by foreign nationals mandated by applicable law) by such Person or one or more Wholly Owned Subsidiaries of such Person; provided that Subsidiaries that are PRC CJVs shall not be considered Wholly Owned Subsidiaries unless such Person or one or more Wholly Owned Subsidiaries of such Person is entitled to 95.0% or more of the economic benefits distributable by such Subsidiary.

261 DESCRIPTION OF THE KEEPWELL DEED

The following contains summaries of certain key provisions of the Keepwell Deed. Such statements do not purport to be complete and are qualified in their entirety by reference to the Keepwell Deed.

Under the Keepwell Deed, CCCG will undertake with the Company, each of the Subsidiary Guarantors and the Trustee that it shall, directly or indirectly, beneficially own and hold no less than 25% of the Capital Stock (as defined in the Indenture) of the Company.

In addition, CCCG will undertake that it shall cause:

(i) each of the Company and the Subsidiary Guarantors to remain solvent and a going concern at all times under the laws of their respective place of incorporation or applicable accounting standards;

(ii) each of the Company and the Subsidiary Guarantors to have Consolidated Net Assets (as defined in the Keepwell Deed) of at least US$1.00 at all times; and

(ii) each of the Company and the Subsidiary Guarantors to have sufficient liquidity to ensure timely payment by it of any amounts payable in respect of the Notes and the Subsidiary Guarantees (as applicable) in accordance with the terms and conditions of the Notes and the Subsidiary Guarantees (as applicable) and otherwise in the Indenture.

CCCG will cause the Company or such Subsidiary Guarantor to obtain, before the due date of the relevant payment obligations, funds sufficient to enable the Company or such Subsidiary Guarantor to pay such payment obligations in full as they fall due. The Company or such Subsidiary Guarantor shall apply any funds it obtains in accordance with the Keepwell Deed solely for the payment, when due, towards the discharge of such payment obligations under the Notes, its Subsidiary Guarantee (as the case may be) or the Indenture.

CCCG will further undertake:

• not to exercise its voting rights as a shareholder (through its subsidiaries) amend the memorandum or articles of association of the Company in a manner that is adverse to the holders of the Notes;

• to maintain the Company as its sole listed real estate overseas platform at all times;

• to use reasonable efforts to cause each of the Company and the Subsidiary Guarantors to remain in full compliance with the terms and conditions of, and perform its obligation under, the Notes, the Subsidiary Guarantees, the Indenture, the Keepwell Deed, the Deed of Undertaking and all applicable rules and regulations; and

• promptly to do all such things and take any and all such actions necessary to comply with its obligations under the Keepwell Deed and the Deed of Undertaking.

The Keepwell Deed is not, and nothing therein contained and nothing done pursuant thereto by CCCG shall be deemed to constitute, or shall be construed as, or shall be deemed an evidence of, a guarantee by CCCG of the payment of any obligation, responsibilities, indebtedness or liability, of any kind or character whatsoever, of the Company or the Subsidiary Guarantors under the laws of any jurisdiction, including the PRC.

The Keepwell Deed may be modified, amended or terminated only by the written agreement of the parties thereto.

The Keepwell Deed will be governed by and construed in accordance with Hong Kong law.

262 DESCRIPTION OF THE DEED OF EQUITY INTEREST PURCHASE, INVESTMENT AND LIQUIDITY SUPPORT UNDERTAKING

The following contains summaries of certain key provisions of the Deed of Undertaking. Such statements do not purport to be complete and are qualified in their entirety by reference to the Deed of Undertaking.

CCCG intends to assist the Company and the Subsidiary Guarantors in meeting their respective obligations under the Notes, the Subsidiary Guarantees and the Indenture. Pursuant to the terms of the Deed of Undertaking, CCCG agrees to, upon receiving a written obligation notice from the Trustee, (i) purchase, either by itself or through one of its PRC incorporated subsidiaries (the “Designated Purchaser”), certain equity interests of the Company or such Subsidiary Guarantor; (ii) invest, either by itself or through one of its PRC incorporated subsidiaries (the “Designated Investor”), in the Company or such Subsidiary Guarantor; or (iii) execute a loan agreement with the Company or such Subsidiary Guarantor and pay to the Company or such Subsidiary Guarantor a certain amount. The equity interests comprise the interests held by the Company or such Subsidiary Guarantor in the registered capital (the “Equity Interest”) of a PRC incorporated subsidiary of the Company or such Subsidiary Guarantor held by the Company or such Subsidiary Guarantor as jointly selected by the Company and CCCG (the “PRC Target Subsidiary”).

Purchase Obligation

Upon the receipt of a written obligation notice from the Trustee following the occurrence of an Event of Default, CCCG agrees that it shall, subject to obtaining all Relevant Purchase Approvals (as defined in the Deed of Undertaking), purchase (either by itself or through a Designated Purchaser) the Equity Interests held by the Company or such Subsidiary Guarantor. CCCG shall within 20 business days after the date of the written obligation notice determine the purchase price, as an amount in U.S. dollars, for the Equity Interest (the “Purchase Price”). CCCG is obliged to determine the Purchase Price in compliance with any applicable PRC laws and regulations. In any event, the Purchase Price shall be no less than the higher of (A) the Shortfall Amount and (B) the fair market value of the Equity Interest. The Shortfall Amount means:

(i) the principal amount of the Notes then outstanding at the date of the written obligation notice; plus

(ii) any premium and interest accrued but unpaid on the Notes up to but excluding the date of the written obligation notice; plus

(iii) an amount reflecting the interest due and payable for one interest period under the Notes (calculated based on the principal amount outstanding on the issue date of the Notes); plus

(iv) all costs, fees and expenses and other amounts payable to the Trustee under or in connection with the Notes, the Subsidiary Guarantees, the Indenture, the Keepwell Deed and/or the Deed of Undertaking as at the date of such written obligation notice plus provisions for costs, fees and expenses and other amounts which may be incurred after the date of the written obligation notice.

Within 60 business days after the date of the written obligation notice, CCCG shall execute the relevant equity interest transfer agreement(s) with the Company or such Subsidiary Guarantor and file the same with the relevant Approval Authorities for approval of the transfer(s) of the Equity Interest(s). Within 20 business days after receipt of the Relevant Purchase Approvals, CCCG shall submit an application to the competent AIC for the change of AIC registration of the transfer(s) of the Equity Interest(s). As soon as reasonably practicable after receipt of AIC registration from the competent AIC, CCCG shall complete the procedures in respect of withholding tax for the Company or such Subsidiary Guarantor required by applicable laws and regulations of the PRC with the competent tax authority to obtain the tax clearance certificate from such tax authority.

263 Within 20 business days after completion of the change of AIC registration and the receipt of the tax clearance certificate, CCCG shall submit an application to SAFE (i) to change the SAFE registration of the companies the Equity Interests in which is or (as the case may be) are subject to the purchase and (ii) for the SAFE registration in relation to the outbound remittance of the Purchase Price (if applicable). Closing shall take place on or prior to the 20th business day after receipt of the approvals from SAFE whereupon CCCG shall pay to or to the order of the Company or such Subsidiary Guarantor the corresponding amount of the Purchase Price in immediately available funds in U.S. dollars to an account in Hong Kong designated by the Company or such Subsidiary Guarantor, which account shall be in the name of either the Company or the Subsidiary Guarantors.

Investment Obligation

Upon the receipt of a written obligation notice following the occurrence of an Event of Default, CCCG agrees that it shall, subject to obtaining Relevant Investment Approvals (as defined in the Deed of Undertaking), invest (either by itself or through a Designated Investor) in the Company or such Subsidiary Guarantor, as the case may be (by equity investment or otherwise) in an amount equal to the Shortfall Amount on the Investment Closing Date (as defined below) on the terms set out in the Deed of Undertaking and in an investment agreement substantially the same as the form set out the Deed of Undertaking.

CCCG further undertakes that:

(a) within 60 business days after the date of the written obligation notice, CCCG (or, as the case may be, the Designated Investor) shall, and shall procure the Company or any Subsidiary Guarantor, as the case may be, to, use all reasonable efforts to execute an investment agreement and all other application documents required by applicable laws and regulations of the PRC and Hong Kong (including, without limitation, the Listing Rules) and shall file such agreements and/or documents as required by applicable laws and regulations with the relevant Approval Authorities (where applicable) in such sequence and timing as required by applicable laws, regulations and the relevant Approval Authorities, for the Relevant Investment Approvals; and

(b) within 20 business days after the receipt of the Relevant Investment Approvals (where applicable), CCCG shall submit all application documents required by applicable laws and regulations of the PRC to SAFE for the investment of the Shortfall Amount and the outbound remittance of the Shortfall Amount (if applicable);

(c) closing of such Investment shall take place on or prior to the 20th business day after the date of receipt of the approvals from SAFE (the “Investment Closing Date”), and on the Investment Closing Date CCCG or the Designated Investor shall pay to or to the order of the Company or such Subsidiary Guarantor, as the case may be, the Shortfall Amount payable in immediately available funds in U.S. dollars to such U.S. dollar bank account of the Company or such Subsidiary Guarantor, as the case may be, as may be designated by the Company or such Subsidiary Guarantor, as the case may be, whereupon the Company or such Subsidiary Guarantor, as the case may be, shall take all actions necessary for the proceeds received in such Investment to be applied in and towards the payment in accordance with the Deed of Undertaking of any outstanding amounts as they fall due under the Deed of Undertaking, the Subsidiary Guarantees, the Indenture and the Notes (including any interest accrued but unpaid on the Notes), prior to any other use, disposal or transfer of the proceeds received.

264 The performance by CCCG of its investment obligations described herein may be subject to obtaining Relevant Investment Approvals. CCCG agrees, and agrees to procure the Company or such Subsidiary Guarantor, as the case may be, to, use its reasonable efforts to do all such things and take all such actions as may be necessary to obtaining the Relevant Investment Approvals as soon as reasonably practicable, to (i) procure the completion of the Investment no later than the date falling 120 days from the date of the relevant written obligation notice; and (ii) procure the remittance of the sum of the Shortfall Amount to or to the order of the Company or such Subsidiary Guarantor, as the case may be, in accordance with the Deed of Undertaking.

Liquidity Support Obligation

CCCG undertakes, in the event that an Event of Default has occurred:

(a) within 15 business days after receipt of a written obligation notice provided by the Trustee, to execute a loan agreement with the Company or such Subsidiary Guarantor, as the case may be, pursuant to which CCCG agrees to lend, and the Company or such Subsidiary Guarantor, as the case may be, agrees to borrow, a loan in an amount equal to the Shortfall Amount, sign and submit all application documents in connection with the giving of the loan to the Company or such Subsidiary Guarantor, as the case may be, as required by applicable laws and regulations of the PRC and Hong Kong (including, without limitation, the Listing Rules) and register the loan agreement with SAFE, and pay to or to the order of the Company or such Subsidiary Guarantor, as the case may be, the Shortfall Amount payable in immediately available funds in U.S. dollars to a specified account of the Company or such Subsidiary Guarantor, as the case may be;

(b) procure that the Company or such Subsidiary Guarantor, as the case may be, shall take all actions necessary for the proceeds received from the loan granted under paragraph (a) above to be applied in and towards the payment as described in the Deed of Undertaking of any outstanding amounts as they fall due under the Deed of Undertaking, the Subsidiary Guarantees, the Indenture and the Notes (including any interest accrued but unpaid on the Notes), prior to any other use, disposal or transfer of the proceeds received; and

(c) it shall, and shall procure the Company to, use all reasonable efforts to do all such things and take all such actions as may be necessary in order for CCCG to grant, and, for as long as the Notes are outstanding, to maintain in force, the loan granted under paragraph (a) above (including without limitation the SAFE registration).

General

The Deed of Undertaking is not, and nothing therein contained and nothing done pursuant thereto by CCCG shall be deemed to constitute, or shall be construed as, or shall be deemed an evidence of, a guarantee by CCCG of the payment of any obligation, responsibilities, indebtedness or liability, of any kind or character whatsoever, of the Company or the Subsidiary Guarantors under the laws of any jurisdiction, including the PRC.

This Deed of Undertaking may only be modified, amended or terminated by the written agreement of the parties thereto subject to the provisions of the Indenture.

The Deed of Undertaking will be governed by and construed in accordance with Hong Kong law.

265 TAXATION

The following summary of certain Cayman Islands, British Virgin Islands, Hong Kong, PRC and European Union tax consequences of the purchase, ownership and disposition of the Notes is based upon applicable laws, regulations, rulings and decisions in effect as of the date of this offering memorandum, all of which are subject to change (possibly with retroactive effect). This discussion does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase, own or dispose of the Notes and does not purport to deal with consequences applicable to all categories of investors, some of which may be subject to special rules. Prospective investors in the Notes should consult their own tax advisers concerning the tax consequences of the purchase, ownership and disposition of the Notes, including such possible consequences under the laws of their country of citizenship, residence or domicile.

Cayman Islands

The following is a discussion on certain Cayman Islands income tax consequences of an investment in the Notes. The discussion is a general summary of present law, which is subject to prospective and retroactive change. It is not intended as tax advice, does not consider any investor’s particular circumstances, and does not consider tax consequences other than those arising under Cayman Islands law.

Under the laws of the Cayman Islands, payments of interest, principal or premium on the Notes will not be subject to taxation and no withholding will be required on the payment of interest, principal or premium to any holder of the Notes, as the case may be, nor will gains derived from the disposal of the Notes be subject to any capital gains, income or corporation tax in the Cayman Islands. The Cayman Islands currently have no exchange control restrictions and are not party to any double taxation treaties. The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty.

No stamp duties or similar taxes or charges are payable under the laws of the Cayman Islands in respect of the execution and issue of the Notes unless they are executed in or brought within (for example, for the purposes of enforcement) the jurisdiction of the Cayman Islands, in which case stamp duty of Cayman Islands dollars (“CI$”) 0.25 per CI$1.00 or part thereof of the face value of each Note may be payable (up to a maximum of CI$250) unless stamp duty of CI$500 has been paid in respect of the entire issue of Notes and the issue is not secured by immovable property situated in the Cayman Islands.

Pursuant to section 6 of the Tax Concessions Law (2011 Revision) of the Cayman Islands, the Company has obtained an undertaking from the Governor-in-Cabinet:

• that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciation shall apply to the Company or its operations; and

• that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable on or in respect of the shares, debentures or other obligations of the Company.

The undertaking for the Company is for a period of twenty (20) years from September 13, 2005.

British Virgin Islands

There is no income or other tax of the British Virgin Islands imposed by withholding or otherwise on any payment to be made to or by the Subsidiary Guarantors pursuant to the Subsidiary Guarantees.

Hong Kong

Withholding Tax

No withholding tax in Hong Kong is payable on payments of principal (including any premium payable on redemption of the Notes) or interest in respect of the Notes.

266 Profits Tax

Hong Kong profits tax is charged on every person carrying on a trade, profession or business in Hong Kong in respect of assessable profits arising in or derived from Hong Kong from such trade, profession or business. Under the Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong) (the “Inland Revenue Ordinance”), as it is currently applied, Hong Kong profits tax may be charged on revenue profits arising on the sale, disposal or redemption of the Notes where such sale, disposal or redemption is or forms part of a trade, profession or business carried on in Hong Kong.

Interest on the Notes will be subject to Hong Kong profits tax where such interest has a Hong Kong source, and is received by or accrues to:

• a financial institution (as defined in the Inland Revenue Ordinance) and arises through or from the carrying on by the financial institution of its business in Hong Kong; or

• a corporation carrying on a trade, profession or business in Hong Kong; or

• a person, other than a corporation, carrying on a trade, profession or business in Hong Kong and such interest is in respect of the funds of the trade, profession or business.

Although no tax is imposed in Hong Kong in respect of capital gains, Hong Kong profits tax may be chargeable on trading gains arising on the sale or disposal of the Notes where such transactions are or form part of a trade, profession or business carried on in Hong Kong.

Stamp Duty

No Hong Kong stamp duty will be chargeable upon the issue or transfer of a Note (for so long as the register of holders of the Notes is maintained outside Hong Kong, as is expected to be the case).

PRC Taxation

The following summary of certain PRC tax consequences of the purchase, ownership and disposition of Notes is based upon applicable laws, rules and regulations in effect as of the date of this offering memorandum, all of which are subject to change (possibly with retroactive effect). This discussion does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision purchase, own or dispose of the Notes and does not purport to deal with consequences applicable to all categories of investors, some of which may be subject to special rules. Prospective investors in the Notes should consult their own tax advisers concerning the tax consequences of the purchase, ownership and disposition of Notes, including such possible consequences under the laws of their country of citizenship, residence or domicile.

We may be deemed a “resident enterprise” for PRC tax purposes. See “Risk Factors — Risks relating to China — Our income tax obligations have increased, dividends from our PRC subsidiaries are currently subject to withholding tax under PRC tax laws and we may be subject to PRC tax under the Enterprise Income Tax Law.” If we are deemed a “resident enterprise,” interest paid to the non-resident holders of the Notes and any gains realized by the holders of the Notes from the transfer of the Notes may be treated as income derived from sources within China. In that case, non-resident enterprise holders of the Notes may be subject to PRC withholding tax at a rate of 10% on their interest and other income paid by the Company and PRC tax at a rate of 10% on their capital gains from disposition of the Notes, if they do not have an establishment or place of business in China or, despite the existence of establishment or place of business in China, the relevant income or gain is not effectively connected with such establishment or place of business in China. If we are treated as a “resident enterprise” for PRC tax purposes, non-resident individual holders may be subject to PRC withholding tax at a rate of 20% on their interest and other income paid by the Company and PRC tax at a rate of 20% on their capital gains from disposition of the Notes. Currently, we are of the view that we are not required to withhold such tax. However, there can be no assurance that our view will not be challenged in the future. If we are not deemed a “resident enterprise” for PRC tax purposes, non-resident enterprise and non-resident individual

267 holders of the Notes will not be subject to PRC tax on interest received or gains from the transfer of the Notes. It is unclear whether the PRC tax authorities will treat us as a PRC “resident enterprise” and whether PRC tax on interest income or capital gains will apply to the holders of the Notes. To the extent that China has entered into arrangements for the avoidance of double-taxation with any jurisdiction, such as Hong Kong, that provide for a lower tax rate, such lower rate may apply to the holders of the Notes who are entitled to such treaty benefits.

Stamp duty

No PRC stamp tax will be chargeable upon the issue or transfer of a Note (for so long as the register of holders of the Notes is maintained outside mainland China, as is expected to be the case).

The Proposed Financial Transactions Tax (“FTT”)

On February 14, 2013, the European Commission published a proposal (the “Commission’s Proposal”) for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the “participating Member States”).

The Commission’s Proposal has very broad scope and could, if introduced, apply to certain dealings in the Notes (including secondary market transactions) in certain circumstances.

Under the Commission’s Proposal the FTT could apply in certain circumstances to persons both within and outside of the participating Member States. Generally, it would apply to certain dealings in the Notes where at least one party is a financial institution, and at least one party is established in a participating Member State. A financial institution may be, or be deemed to be, “established” in a participating Member State in a broad range of circumstances, including (a) by transacting with a person established in a participating Member State or (b) where the financial instrument which is subject to the dealings is issued in a participating Member State.

Joint statements by participating Member States indicated an intention to implement the FTT by 1 January 2016.

However, the FTT proposal remains subject to negotiation between the participating Member States. It may be altered prior to any implementation, the timing of which remains unclear. Additional EU Member States may decide to participate and/or certain of the participating Member States may decide to withdraw. Prospective holders of the Notes are advised to seek their own professional advice in relation to the FTT.

EU Savings Directive

On March 24, 2014, the Council of the European Union adopted a Council Directive (the “Amending Directive”) amending and broadening the scope of the requirements described above. The Amending Directive requires Member States to apply these new requirements from 1 January 2017, and if they were to take effect the changes would expand the range of payments covered by the Savings Directive, in particular to include additional types of income payable on securities. They would also

268 expand the circumstances in which payments that indirectly benefit an individual resident in a Member State must be reported or subject to withholding. This approach would apply to payments made to, or secured for, persons, entities or legal arrangements (including trusts) where certain conditions are satisfied, and may in some cases apply where the person, entity or arrangement is established or effectively managed outside of the European Union.

Investors should consult their professional advisers.

269 PLAN OF DISTRIBUTION

Credit Suisse Securities (Europe) Limited, The Hongkong and Shanghai Banking Corporation Limited, UBS AG, Hong Kong Branch and BOCI Asia Limited are acting as Joint Bookrunners and Joint Lead Managers of the offering. Subject to the terms and conditions stated in the purchase agreement dated the date of this offering memorandum, each Joint Lead Manager named below has severally but not jointly agreed to purchase or procure purchasers to purchase the Notes, and we have agreed to sell to that Joint Lead Manager, the principal amount of the Notes in the proportions indicated in the following table set forth opposite the Joint Lead Manager’s name below.

Principal Amount Joint Lead Manager of Notes Credit Suisse Securities (Europe) Limited ...... US$26,857,000 The Hongkong and Shanghai Banking Corporation Limited ...... US$16,520,000 UBS AG, Hong Kong Branch ...... US$19,895,000 BOCI Asia Limited ...... US$7,030,000

Total ...... US$70,302,000

The purchase agreement provides that the obligations of the Joint Lead Managers to purchase or procure purchasers to purchase the Notes are subject to approval of certain legal matters by counsel and to other conditions. The Joint Lead Managers must purchase all the Notes if they purchase any of the Notes.

The Joint Lead Managers propose to resell the Notes directly to investors at the offering price set forth on the cover page of this offering memorandum only outside the United States in offshore transactions in reliance on Regulation S. See “Transfer Restrictions.” The price at which the Notes are offered may be changed at any time without notice.

The Notes, the Subsidiary Guarantees and the JV Subsidiary Guarantee (if any) have not been and will not be registered under the U.S. Securities Act or any state securities laws and may not be offered or sold within the United States except in transactions exempt from, or not subject to, the registration requirements of the U.S. Securities Act. See “Transfer Restrictions.”

We and the Subsidiary Guarantors have agreed that, for a period of 30 days from the date on which the Notes are issued, we and the Subsidiary Guarantors will not, without the prior written consent of the Joint Lead Managers, offer, sell, contract to sell, or otherwise dispose of, any securities issued by us or guaranteed by us or the Subsidiary Guarantors that are substantially similar to the Notes. The Joint Lead Managers in their sole discretion may release any of the securities subject to these lock-up agreements at any time without notice.

The Notes will constitute a new class of securities with no established trading market. An application will be made to the SEHK for the listing of, and permission to deal in, the Notes by way of issue of debt securities to professional investors only. However, we cannot assure you that the prices at which the Notes will sell in the market after this offering will not be lower than the initial offering price or that an active trading market for the Notes will develop and continue after this offering. The Joint Lead Managers have advised us that they currently intend to make a market in the Notes. However, they are not obligated to do so and they may discontinue any market-making activities with respect to the Notes at any time without notice. Accordingly, we cannot assure you as to the liquidity of, or the trading market for, the Notes.

One or more of the Joint Lead Managers, or any person acting for such Joint Lead Managers may engage in stabilizing transactions, syndicate covering transactions and penalty bids to the extent permitted by applicable laws and regulations. Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. Covering transactions involve purchase of the Notes in the open market after the distribution has been completed in

270 order to cover short positions. Penalty bids permit one or more of the Joint Lead Managers, or any person acting for such Joint Lead Managers to reclaim a selling concession from a dealer when the Notes originally sold by such dealer are purchased in a stabilizing transaction or a covering transaction to cover short positions. Neither we nor the Joint Lead Managers make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the Notes. In addition, neither we nor the Joint Lead Managers make any representation that one or more of the Joint Lead Managers, or any person acting for such Joint Lead Managers will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

We expect to deliver the Notes against payment for the Notes on or about the date specified in the last paragraph of the cover page of this offering memorandum, which will be the seventh business day following the date of the pricing of the Notes. Under Rule 15c6-1 of the Exchange Act, trades in the secondary market generally settle in three business days; purchasers who wish to trade the Notes on the date of pricing or the next seven succeeding business days will be required, by virtue of the fact that the Notes initially will settle in T+7, to specify alternative settlement arrangements to prevent a failed settlement. Purchasers of the Notes who wish to trade the Notes on the date of pricing or the next three succeeding business days should consult their own adviser.

The Joint Lead Managers and/or their affiliates have performed commercial banking, investment banking or advisory services for us from time to time for which they have received customary fees and reimbursement of expenses. The Joint Lead Managers and/or their affiliates may, from time to time, engage in transactions with and perform services for, us in the ordinary course of business for which they may receive customary fees and reimbursement of expenses. We may enter into hedging or other derivative transactions as part of our risk management strategy with one or more of the Joint Lead Managers, which may include transactions relating to our obligations under the Notes. Our obligations under these transactions may be secured by cash or other collateral.

In connection with this offering of the Notes, each Joint Lead Manager and/or its affiliate(s) may act as an investor for its own account and may take up the Notes in the offering and in that capacity may retain, purchase or sell for its own account such securities and any securities of the Company or related investments and may offer or sell such securities or other investments otherwise than in connection with the offering of the Notes. Accordingly, references herein to the Notes being offered should be read as including any offering of the Notes to the Joint Lead Managers and/or their affiliates acting in such capacity. Such persons do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so.

We and the Subsidiary Guarantors have agreed to indemnify the Joint Lead Managers against certain liabilities, including liabilities under the U.S. Securities Act, or to contribute to payments that the Joint Lead Managers may be required to make because of any of those liabilities.

Selling Restrictions

General

No action has been taken or will be taken in any jurisdiction by the Company or the Joint Lead Managers that would permit a public offering of the Notes, or the possession, circulation or distribution of this offering memorandum or any other material relating to the Notes or this offering, in any jurisdiction where action for that purpose is required. Accordingly, the Notes may not be offered or sold, directly or indirectly, and neither this offering memorandum nor such other material may be distributed or published, in or from any country or jurisdiction except in compliance with any applicable rules and regulations of such country or jurisdiction.

United Kingdom

No invitation or inducement to engage in investment activity (within the meanings of Section 21 of the Financial Services and Markets Act 2000 (the “FSMA”)) received by the Joint Lead Managers in connection with the issue or sale of the Notes may be communicated or caused to be communicated

271 except in circumstances in which Section 21(1) of the FSMA does not apply to the Joint Lead Managers. All applicable provisions of the FSMA must be complied with respect to anything done or to be done by the Joint Lead Managers in relation to any Notes in, from or otherwise involving the United Kingdom.

Hong Kong

The Notes may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the SFO and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the Notes may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to the Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the SFO and any rules made thereunder.

Japan

The Notes have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948) (as amended) (the “FIEL”), and disclosure under the FIEL has not been made with respect to the Notes. Accordingly, the Notes may not be offered or sold, directly or indirectly, in Japan or to, or for the account of, any resident of Japan, or to others for re-offering or re-sale, directly or indirectly in Japan or to, or for the benefit of, any resident of Japan, except pursuant to any exemption from the registration requirements of the FIEL and otherwise in compliance with the FIEL and other applicable provisions of Japanese laws and regulations. As used in this paragraph, “resident of Japan” means any person residing in Japan, including any corporation or other entity organized under the laws of Japan.

Singapore

This offering memorandum has not been and will not be registered as a prospectus with the Monetary Authority of Singapore (the “MAS”). Accordingly, this offering memorandum and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Notes may not be circulated or distributed, nor may the Notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Notes are subscribed or purchased in reliance of an exemption under Sections 274 or 275 of the SFA, the Notes shall not be sold within the period of six months from the date of the initial acquisition of the Notes, except to any of the following persons:

(a) an institutional investor (as defined in Section 4A of the SFA);

(b) a relevant person (as defined in Section 275(2) of the SFA); or

(c) any person pursuant to an offer referred to in Section 275(1A) of the SFA, unless expressly specified otherwise in Section 276(7) of the SFA.

Where the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

272 (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Notes pursuant to an offer made under Section 275 of the SFA except:

• to an institutional investor (as defined in Section 4A of the SFA), or to a relevant person (as defined in Section 275(2) of the SFA) and in accordance with the conditions specified in Section 275 of the SFA;

• (in the case of a corporation) where the transfer arises from an offer referred to in Section 276(3)(i)(B) of the SFA or (in the case of a trust) where the transfer arises from an offer referred to in Section 276(4)(i)(B) of the SFA;

• where no consideration is or will be given for the transfer;

• where the transfer is by operation of law; or

• as specified in Section 276(7) of the SFA.

PRC

The Joint Lead Managers have acknowledged that this offering memorandum does not constitute a public offer of the Notes, whether by way of sale or subscription, in the PRC. Each of the Joint Lead Managers has severally represented and agreed that, except to the extent consistent with applicable laws and regulations in the PRC, the Notes are not being offered and may not be offered or sold, directly or indirectly, in the PRC to, or for the benefit of, legal or natural persons of the PRC. According to the laws and regulatory requirements in the PRC, with the exception to the extent consistent with applicable laws and regulations in the PRC, the Notes may, subject to the laws and regulations of the relevant jurisdictions, only be offered or sold to non-PRC natural or legal persons in any country other than the PRC.

Cayman Islands

No invitation whether directly or indirectly may be made to the public in the Cayman Islands to subscribe for the Notes unless the Company is listed on the Cayman Islands Stock Exchange.

British Virgin Islands

No invitation will be made directly or indirectly to any person resident in the British Virgin Islands to subscribe for any of the Notes.

273 TRANSFER RESTRICTIONS

By purchasing the Notes, you will be deemed to have made the following acknowledgements, representations to, and agreements with, us and the Joint Lead Managers:

1. You understand and acknowledge that:

• the Notes have not been and will not be registered under the U.S. Securities Act or any other applicable securities laws;

• the Notes are being offered for resale in transactions that do not require registration under the U.S. Securities Act or any other securities laws; and

• the Notes are being offered and sold only outside the United States in offshore transactions in reliance on Regulation S under the U.S. Securities Act.

2. You represent that you are not an affiliate (as defined in Rule 144 under the U.S. Securities Act) of ours, that you are not acting on our behalf, and you are purchasing the Notes in an offshore transaction in accordance with Regulation S.

3. You acknowledge that none of us, CCCG, the Joint Lead Managers, or any person representing us, CCCG or the Joint Lead Managers has made any representation to you with respect to us or the offering of the Notes, other than the information contained in this offering memorandum. You represent that you are relying only on this offering memorandum in making your investment decision with respect to the Notes. You agree that you have had access to such financial and other information concerning us and the Notes as you have deemed necessary in connection with your decision to purchase the Notes including an opportunity to ask questions of and request information from us.

4. You represent that you are purchasing the Notes for your own account, or for one or more investor accounts for which you are acting as a fiduciary or agent, in each case not with a view to, or for offer or sale in connection with, any distribution of the Notes in violation of the U.S. Securities Act.

5. You acknowledge that we, the Joint Lead Managers and others will rely upon the truth and accuracy of the above acknowledgments, representations and agreements. You agree that if any of the acknowledgments, representations or agreements you are deemed to have made by your purchase of the Notes is no longer accurate, you will promptly notify us and the Joint Lead Managers. If you are purchasing any Notes as a fiduciary or agent for one or more investor accounts, you represent that you have sole investment discretion with respect to each of those accounts and that you have full power to make the above acknowledgments, representations and agreements on behalf of each account.

274 RATINGS

The Notes are expected to be rated “BB-” by Standard & Poor’s Ratings Services and rated “Ba3” by Moody’s Investors Service. Such ratings are provisional and subject to each rating agency’s review of the final terms and conditions of the Notes. The ratings reflect the rating agencies’ assessment of the likelihood of timely payment of the principal of and interest on the Notes. The ratings do not address the payment of any additional amounts and do not constitute recommendations to purchase, hold or sell the Notes inasmuch as such ratings do not comment as to market price or suitability for a particular investor. As of July 20, 2015, Standard & Poor’s Ratings Services has upgraded the Company’s long-term corporate credit rating to BB with a stable outlook from BB- and long-term issue rating on the Company’s senior unsecured notes to BB- from B+. Moody’s Investors Service has also recently, on June 30, 2015, upgraded the Company’s corporate family rating to Ba3 with a positive outlook from B1 and senior unsecured bond rating to B1 from B2. See “Recent Developments — Ratings Upgrade.” We cannot assure you that the ratings will remain in effect for any given period or that the ratings will not be revised by such rating agencies in the future if in their judgment circumstances so warrant. Each such rating should be evaluated independently of any other rating on the Notes, on other securities of ours, or on us. We cannot assure you that the ratings will remain in effect for any given period or that the ratings will not be revised by such rating agencies in the future if in their judgment circumstances so warrant.

275 LEGAL MATTERS

Certain legal matters with respect to the Notes will be passed upon for us by White & Case Pte. Ltd. and White & Case as to matters of New York law and Hong Kong law, Maples & Calder as to matters of Cayman Islands law and British Virgin Islands law and T&C Law Firm as to matters of PRC law. Certain legal matters with respect to the Notes will be passed upon for the Joint Lead Managers by Davis Polk & Wardwell as to matters of New York law and Jingtian & Gongcheng as to matters of PRC law. The due authorization and due execution of the Keepwell Deed and the Deed of Undertaking by CCCG will be certified and opined on by CCCG’s in-house counsel for the benefit of the Trustee and the Joint Lead Managers and the enforceability of the Keepwell Deed and the Deed of Undertaking will be opined on by White & Case.

INDEPENDENT AUDITOR

Our audited consolidated annual results for the year ended December 31, 2014 reproduced in this offering memorandum are extracted from the audited consolidated financial statements which have been audited by Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong, as stated in the report therein and in our annual report for the year ended December 31, 2014 which was published in April 2015. Our audited consolidated financial statements as of and for the year ended December 31, 2013 reproduced in this offering memorandum have been audited by Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong, as stated in the report therein and in our annual report for the year ended December 31, 2013. Our audited consolidated financial statements as of and for the year ended December 31, 2012 reproduced in this offering memorandum have been audited by Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong, as stated in the report therein and in our annual report for the year ended December 31, 2012.

276 GENERAL INFORMATION

Consents

We have obtained all necessary consents, approvals and authorizations in the Cayman Islands, the British Virgin Islands, the PRC and Hong Kong in connection with the issue and performance of the Notes, the Subsidiary Guarantees, the Indenture, the Keepwell Deed and the Deed of Undertaking. The issue of the Notes has been authorized by a resolution of the Board dated July 19, 2015.

Litigation

Except as disclosed in this offering memorandum, there are no legal or arbitration proceedings against or affecting us, any of our subsidiaries or any of our assets, nor are we aware of any pending or threatened proceedings, which are or might be material in the context of the issue of the Notes.

No Material Adverse Change

Except as disclosed in this offering memorandum, there has been no adverse change, or any development reasonably likely to involve an adverse change, in the condition (financial or otherwise) of our general affairs since December 31, 2014 that is material in the context of the issue of the Notes.

Documents Available

For so long as any of the Notes is outstanding, copies of the Indenture, the Keepwell Deed and the Deed of Undertaking may be inspected free of charge during normal business hours on any weekday (except public holidays) at the corporate trust office of the Trustee.

For so long as any of the Notes is outstanding, copies of the independent auditor’s reports and/or our published financial statements, if any, including the independent auditor’s report set out in the section entitled “Index to Financial Information,” may be obtained during normal business hours on any weekday (except public holidays) at the corporate trust office of the Trustee.

Clearing Systems and Settlement

The Notes are expected to be cleared through the facilities of Euroclear and Clearstream. Certain trading information with respect to the Notes is set forth below:

ISIN Common Code Notes ...... XS1272206209 127220620

Only Notes evidenced by a Global Note will be accepted for clearance through Euroclear and Clearstream.

The address of Euroclear is 1 Boulevard du Roi Albert II, B-1210 Brussels, Belgium, and the address of Clearstream is 42 Avenue JF Kennedy, L-1855 Luxembourg.

Listing of the Notes

Application will be made to the SEHK for the listing of, and permission to deal in, the Notes by way of debt issues to “professional investors” only as defined in the SFO and any rules made thereunder. A confirmation of the eligibility of the listing of the Notes has been received from the SEHK. Hong Kong Exchanges and Clearing Limited and the SEHK take no responsibility for the correctness of any statements made on opinions or reports contained in this offering memorandum, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this offering memorandum. The Notes will be traded on the SEHK subject to a minimum board lot size requirement of the equivalent of HKD500,000 for so long as the Notes are listed on the SEHK.

277 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page in this offering Page in Description memorandum annual report Audited Consolidated Financial Statements for the Year Ended December 31, 2014 Independent Auditor’s Report ...... F-2 80 Consolidated Statement of Profit or Loss and Other Comprehensive Income ...... F-4 82 Consolidated Statement of Financial Position ...... F-5 83 Consolidated Statement of Changes in Equity ...... F-7 85 Consolidated Statement of Cash Flows ...... F-8 86 Notes to the Consolidated Financial Statements ...... F-11 89

Audited Consolidated Financial Statements for the Year Ended December 31, 2013 Independent Auditor’s Report ...... F-122 76 Consolidated Statement of Profit or Loss and Other Comprehensive Income ...... F-123 77 Consolidated Statement of Financial Position ...... F-124 78 Consolidated Statement of Changes in Equity ...... F-126 80 Consolidated Statement of Cash Flows ...... F-127 81 Notes to the Consolidated Financial Statements ...... F-129 83

Audited Consolidated Financial Statements for the Year Ended December 31, 2012 Independent Auditor’s Report ...... F-222 101 Consolidated Statement of Comprehensive Income ...... F-224 103 Consolidated Statement of Financial Position ...... F-225 104 Consolidated Statement of Changes in Equity ...... F-227 106 Consolidated Statement of Cash Flows ...... F-229 108 Notes to the Consolidated Financial Statements ...... F-232 111

The financial statements in this section titled “Index to Consolidated Financial Statements” have been reproduced from the annual reports of Greentown China Holdings Limited for the financial years ended December 31, 2012, 2013 and 2014, respectively, and have not been specifically prepared for inclusion in this offering memorandum. Prospective investors should read the consolidated financial data in conjunction with the related notes.

F-1 Independent Auditor’s Report

TO THE MEMBERS OF GREENTOWN CHINA HOLDINGS LIMITED (incorporated in the Cayman Islands with limited liability)

We have audited the consolidated financial statements of Greentown China Holdings Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) set out on pages 82 to 199, which comprise the consolidated statement of financial position as at 31 December 2014, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Directors’ Responsibilities for the Consolidated Financial Statements The directors of the Company are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit and to report our opinion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the consolidated financial statements are free from material misstatement.

080 Greentown China Holdings Limited Annual Report 2014

F-2 Independent Auditor’s Report

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the consolidated financial statements that give a true and fair view 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated financial statements give a true and fair view of the state of affairs of the Group as at 31 December 2014 and of the Group’s profit and cash flows for the year then ended in accordance with International Financial Reporting Standards and have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance.

Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong 27 March 2015

Greentown China Holdings Limited Annual Report 2014 081

F-3 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 December 2014

2014 2013 NOTES RMB’000 RMB’000 Revenue 7 32,048,979 28,990,570 Cost of sales (23,916,319) (20,215,201) Gross profit 8,132,660 8,775,369 Other income 8 964,263 728,329 Selling expenses (991,966) (848,771) Administrative expenses (1,835,533) (1,491,574) Finance costs 9 (679,688) (506,815) Reversal of impairment loss on property, plant and equipment 15 16,799 60,685 Impairment loss on completed properties for sale (70,604) – Impairment loss on amounts due from a joint venture (122,198) – Gain from changes in fair value of investment properties 16 60,000 100,900 Fair value changes on cross currency swaps (121,022) 49,849 Gain on re-measurement of associates to acquisition date fair value in business combination achieved in stages 30 37,196 3,923 Gain on acquisition of a subsidiary 30 1,363 – Net gain on disposal of subsidiaries 8,670 – Gain on disposal of associates 17 120,773 – Gain relating to a newly acquired joint venture 18 – 704,131 Share of results of associates 339,873 1,092,037 Share of results of joint ventures 67,879 477,999 Profit before taxation 10 5,928,465 9,146,062 Taxation 12 (2,718,644) (3,155,857) Profit and total comprehensive income for the year 3,209,821 5,990,205 Attributable to: Owners of the Company 2,071,722 4,885,514 Non-controlling interests 1,138,099 1,104,691 3,209,821 5,990,205 Earnings per share 14 Basic RMB0.80 RMB2.18 Diluted RMB0.80 RMB1.94

082 Greentown China Holdings Limited Annual Report 2014

F-4 Consolidated Statement of Financial Position As at 31 December 2014

2014 2013 NOTES RMB’000 RMB’000 NON-CURRENT ASSETS Property, plant and equipment 15 6,216,092 4,864,054 Investment properties 16 1,891,500 1,831,500 Interests in associates 17 8,724,954 10,015,706 Interests in joint ventures 18 1,807,755 1,848,221 Available-for-sale investments 19 388,617 377,010 Prepaid lease payment 20 662,061 664,713 Rental paid in advance 8,697 9,385 Deferred tax assets 21 1,116,046 1,053,244 Cross currency swaps – 49,849 20,815,722 20,713,682 CURRENT ASSETS Properties for development 22 5,749,961 6,280,067 Properties under development 23 41,312,223 38,967,574 Completed properties for sale 15,651,236 13,062,500 Inventories 123,062 101,920 Trade and other receivables, deposits and prepayments 24 5,215,241 4,380,556 Amounts due from related parties 37(ii) 27,156,714 24,981,206 Prepaid income taxes 1,055,775 1,304,209 Prepaid other taxes 979,687 1,262,909 Pledged bank deposits 24, 34 1,350,690 595,038 Bank balances and cash 24 7,733,567 10,686,041 106,328,156 101,622,020 CURRENT LIABILITIES Trade and other payables 25 19,380,948 17,910,929 Pre-sale deposits 20,116,444 23,428,384 Amounts due to related parties 37(ii) 9,850,372 10,775,306 Income taxes payable 5,290,359 5,777,814 Other taxes payable 969,807 1,217,041 Bank and other borrowings – due within one year 26 12,167,171 6,017,895 67,775,101 65,127,369

Greentown China Holdings Limited Annual Report 2014 083

F-5 Consolidated Statement of Financial Position As at 31 December 2014

2014 2013 NOTES RMB’000 RMB’000 NET CURRENT ASSETS 38,553,055 36,494,651 TOTAL ASSETS LESS CURRENT LIABILITIES 59,368,777 57,208,333 NON-CURRENT LIABILITIES Bank and other borrowings – due after one year 26 15,056,123 15,935,463 Senior notes 27 8,592,129 8,558,184 Cross currency swaps 71,174 – Deferred tax liabilities 21 804,043 703,714 24,523,469 25,197,361 34,845,308 32,010,972 CAPITAL AND RESERVES Share capital 28 208,850 208,656 Reserves 23,431,221 22,654,206 Convertible securities 29 – 2,084,472 Equity attributable to owners of the Company 23,640,071 24,947,334 Perpetual securities 29 3,014,681 – Non-controlling interests 8,190,556 7,063,638 34,845,308 32,010,972

The consolidated financial statements on page 82 to 199 were approved and authorised for issue by the Board of Directors on 27 March 2015 and are signed on its behalf by:

SONG Weiping SHOU Bainian DIRECTOR DIRECTOR

084 Greentown China Holdings Limited Annual Report 2014

F-6 Consolidated Statement of Changes in Equity For the year ended 31 December 2014

Attributable to Owners of the Company Share Non- Share Share Special Statutory Option Convertible Retained Perpetual controlling Capital Premium Reserve Reserve Reserve Securities Earnings Subtotal Securities Interests Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (i) At 1 January 2013 207,422 8,395,764 (410,856) 449,470 267,863 2,084,472 10,148,028 21,142,163 – 6,345,912 27,488,075 Profit and total comprehensive income for the period –––––– 4,885,514 4,885,514 – 1,104,691 5,990,205 Dividends recognised as distributions (Note 13) ––––––(1,077,319) (1,077,319) – – (1,077,319) Dividends paid to non-controlling interests –––––––––(518,512) (518,512) Transfer (i) – – – 865,120 – – (865,120) –––– Exercise of share options 1,234 134,565 – – (50,085) – – 85,714 – – 85,714 Distribution relating to Convertible Securities ––––––(182,914) (182,914) – – (182,914) Acquisition of subsidiaries (Note 30) –––––––––25,314 25,314 Purchase of additional interest in Subsidiaries – – 33,257 – – – – 33,257 – (230,957) (197,700) Partial disposal of a subsidiary without loss of control – – 60,919 – – – – 60,919 – (38,419) 22,500 Capital contribution from non-controlling shareholders of subsidiaries ––––––––– 375,609 375,609 At 31 December 2013 208,656 8,530,329 (316,680) 1,314,590 217,778 2,084,472 12,908,189 24,947,334 – 7,063,638 32,010,972 Profit and total comprehensive income for the period –––––– 2,071,722 2,071,722 – 1,138,099 3,209,821 Dividends recognised as distributions (Note 13) ––––––(928,301) (928,301) – – (928,301) Dividends paid to non-controlling interests –––––––––(530,738) (530,738) Transfer (i) – – – 429,122 – – (429,122) –––– Exercise of share options 194 7,909 – – (2,494) – – 5,609 – – 5,609 Issue of Perpetual Securities ––––––––3,014,681 – 3,014,681 Redemption of Convertible Securities –––––(2,151,149) – (2,151,149) – – (2,151,149) Transfer on redemption of Convertible Securities –––––66,677 (66,677) –––– Distribution relating to Convertible Securities (Note 29) ––––––(99,896) (99,896) – – (99,896) Distribution relating to Perpetual Securities (Note 29) ––––––(138,650) (138,650) – – (138,650) Acquisition of subsidiaries (Note 30) –––––––––77,375 77,375 Purchase of additional interest in subsidiaries – – (66,598) – – – – (66,598) – (360,766) (427,364) Disposal of subsidiaries –––––––––(105,514) (105,514) Liquidation of subsidiaries –––––––––(6,125) (6,125) Capital contribution from non-controlling shareholders of subsidiaries ––––––––– 914,587 914,587 At 31 December 2014 208,850 8,538,238 (383,278) 1,743,712 215,284 – 13,317,265 23,640,071 3,014,681 8,190,556 34,845,308

Note:

(i) The statutory reserve is non-distributable and the transfer to this reserve is determined by the board of directors of the relevant companies in accordance with the relevant laws and regulations of the People’s Republic of China (the “PRC”). This reserve can be used to offset accumulated losses and increase capital upon approval from the relevant authorities.

Greentown China Holdings Limited Annual Report 2014 085

F-7 Consolidated Statement of Cash Flows For the year ended 31 December 2014

2014 2013 RMB’000 RMB’000 OPERATING ACTIVITIES Profit before taxation 5,928,465 9,146,062 Adjustments for: Share of results of associates (339,873) (1,092,037) Share of results of joint ventures (67,879) (477,999) Depreciation and amortisation 228,702 158,598 Impairment loss on completed properties for sale 70,604 – Impairment loss on amounts due from a joint venture 122,198 – Reversal of impairment loss on property, plant and equipment (16,799) (60,685) Interest income (665,206) (493,693) Dividends from available-for-sale investments (76,168) – Finance costs 679,688 506,815 Net unrealised foreign exchange losses (gains) 21,920 (162,086) Net gain on disposal of property, plant and equipment (414) (1,390) Gain from changes in fair value of investment properties (60,000) (100,900) Fair value changes on cross currency swaps 121,022 (49,849) Net gain on disposal of subsidiaries (8,670) – Gain on disposal of associates (120,773) – Gain relating to a newly acquired joint venture – (704,131) Gain on acquisition of a subsidiary (1,363) – Gain on re-measurement of associates to acquisition date fair value in business combination achieved in stages (37,196) (3,923) Operating cash flows before movements in working capital 5,778,258 6,664,782 Decrease (increase) in properties for development 1,641,524 (109,972) Decrease in properties under development 4,048,767 6,912,820 Increase in completed properties for sale (3,195,335) (5,564,024) Increase in inventories (19,705) (25,621) (Increase) decrease in trade and other receivables, deposits and prepayments (553,791) 336,711 Decrease in prepaid other taxes 483,629 215,824 Increase in rental paid in advance (5,188) (2,212) Decrease in pre-sale deposits (6,924,117) (5,624,538) Increase in trade and other payables 1,628,890 1,338,825 (Decrease) increase in other taxes payable (66,757) 231,941 Cash generated from operations 2,816,175 4,374,536 Income taxes paid (2,719,703) (3,100,766) NET CASH FROM OPERATING ACTIVITIES 96,472 1,273,770

086 Greentown China Holdings Limited Annual Report 2014

F-8 Consolidated Statement of Cash Flows For the year ended 31 December 2014

2014 2013 NOTE RMB’000 RMB’000 INVESTING ACTIVITIES Purchase of property, plant and equipment (1,432,227) (1,384,734) Proceeds from disposal of property, plant and equipment 8,107 3,138 Increase in prepaid lease payment (8,085) – Investments in associates (252,484) (3,034,074) Investments in joint ventures (361,758) (100,000) Investments in a joint venture and purchase of shareholders’ loans as part of acquisition of a joint venture – (1,130,000) Dividends received from available-for-sale investments 76,168 – Dividends received from associates and joint ventures 1,322,404 671,516 Consideration paid for acquisition of subsidiaries recognised in prior year (139,600) – Proceeds from receipt of consideration receivable from disposal/partial disposal of subsidiaries and associates and relevant shareholders’ loans recognised in prior year – 323,606 Acquisition of subsidiaries which constitute business (net of cash and cash equivalents acquired) 30 6,615 (90,202) Disposal of subsidiaries (net of cash and cash equivalents disposed of) 76,747 – Proceeds from disposal of interests in associates 1,065,000 – Advance to third parties (201,318) (115,242) Advance to related parties (2,491,717) (1,670,179) (Increase) decrease in pledged bank deposits (755,652) 1,139,299 Interest received 486,686 448,888 Purchase of available-for-sale investments (6,607) (46,465) NET CASH USED IN INVESTING ACTIVITIES (2,607,721) (4,984,449)

Greentown China Holdings Limited Annual Report 2014 087

F-9 Consolidated Statement of Cash Flows For the year ended 31 December 2014

2014 2013 RMB’000 RMB’000 FINANCING ACTIVITIES Bank and other borrowings raised 12,373,988 17,032,730 Repayment of bank and other borrowings (8,374,625) (16,721,142) Advance from (repayment of) borrowings from related parties (1,049,554) 3,217,907 Contribution by non-controlling shareholders of subsidiaries 914,587 375,609 Interest paid (3,044,729) (2,305,181) Dividends paid to owners of the Company (928,301) (1,077,319) Dividends paid to non-controlling interests (536,863) (518,512) Redemption of Convertible Securities (2,151,149) – Redemption of 2006 Senior Notes – (237,699) Distribution relating to Convertible Securities (99,896) (182,914) Proceeds from exercise of share options 5,609 85,714 Proceeds from issue of Perpetual Securities 3,014,681 – Distribution relating to Perpetual Securities (138,650) – Proceeds from issue of senior notes – 8,717,517 Share option premium received 682 25,922 Purchase of additional interests in subsidiaries (427,364) (197,700) Proceeds from partial disposal of subsidiaries – 22,500 NET CASH (USED IN) FROM FINANCING ACTIVITIES (441,584) 8,237,432 NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (2,952,833) 4,526,753 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR 10,686,041 6,163,632 Effects of exchange rate changes on the balance of cash held in foreign currencies 359 (4,344) CASH AND CASH EQUIVALENTS AT THE END OF YEAR 7,733,567 10,686,041 REPRESENTED BY BANK BALANCES AND CASH 7,733,567 10,686,041

088 Greentown China Holdings Limited Annual Report 2014

F-10 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

1. General The Company was incorporated in the Cayman Islands on 31 August 2005 as an exempted company with limited liability under the Companies Law (2004 Revision) and its shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) with effect from 13 July 2006. The address of the registered office of the Company is disclosed in the section headed “Corporate Information” of the annual report.

The consolidated financial statements are presented in Renminbi (“RMB”), which is also the functional currency of the Company.

The Company is an investment holding company. The principal activity of its subsidiaries (together with the Company referred to as the “Group”) is the development for sale of residential properties in the PRC.

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”) New and Revised Standards and Interpretations Applied in the Current Year In the current year, the Group has applied, for the first time, a new interpretation and several amendments to IFRSs issued by the International Accounting Standards Board (the “IASB”) that are effective for the Group’s financial year beginning on 1 January 2014.

The application of the new interpretation and amendments to IFRSs in the current year has had no material effect on the amounts reported in these consolidated financial statements and/or disclosures set out in these consolidated financial statements.

New and Revised Standards and Interpretations Issued But Not Yet Effective The Group has not early applied the following new and revised IFRSs that have been issued but are not yet effective:

IFRS 9 Financial Instruments1 IFRS 14 Regulatory Deferral Accounts2 IFRS 15 Revenue from Contracts with Customers3 Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations5 Amendments to IAS 1 Disclosure Initiative5 Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation And Amortisation2 Amendments to IAS 19 Defined Benefit Plans: Employee Contributions4 Amendments to IFRSs Annual Improvements to IFRSs 2010-2012 Cycle6 Amendments to IFRSs Annual Improvements to IFRSs 2011-2013 Cycle4 Amendments to IFRSs Annual Improvements to IFRSs 2012-2014 Cycle5 Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants5 Amendments to IAS 27 Equity Method in Separate Financial Statements5

Greentown China Holdings Limited Annual Report 2014 089

F-11 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”) (continued) New and Revised Standards and Interpretations Issued But Not Yet Effective (continued) Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor And its Associate or Joint Venture5 Amendments to IFRS 10, IFRS 12 Investment Entities: Applying the Consolidation Exception5 and IAS 28

1 Effective for annual periods beginning on or after 1 January 2018 2 Effective for first annual IFRS financial statements beginning on or after 1 January 2016 3 Effective for annual periods beginning on or after 1 January 2017 4 Effective for annual periods beginning on or after 1 July 2014 5 Effective for annual periods beginning on or after 1 January 2016 6 Effective for annual periods beginning on or after 1 July 2014, with limited exceptions

IFRS 9 Financial Instruments IFRS 9 issued in 2009 introduces new requirements for the classification and measurement of financial assets. IFRS 9 was subsequently amended in 2010 to include the requirements for the classification and measurement of financial liabilities and for derecognition, and further amended in 2013 to include the new requirements for hedge accounting. Another revised version of IFRS 9 was issued in 2014 mainly to include a) impairment requirements for financial assets and b) limited amendments to the classification and measurement requirements by introducing a ‘fair value through other comprehensive income’ (FVTOCI) measurement category for certain simple debt instruments.

Key requirements of IFRS 9 are described as follows:

• All recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair values at the end of subsequent reporting periods. In addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss.

• With regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value of financial liabilities attributable to changes in the financial liabilities’ credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as fair value through profit or loss was presented in profit or loss.

090 Greentown China Holdings Limited Annual Report 2014

F-12 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

• The new general hedge accounting requirements retain the three types of hedge accounting. However, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an ‘economic relationship’. Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity’s risk management activities have also been introduced.

The directors anticipate that the adoption of IFRS 9 in the future may have impact on amounts reported in respect of the Group’s financial assets and financial liabilities. However, it is not practicable to provide a reasonable estimate of that effect until a detailed review has been completed.

IFRS 15 Revenue from Contracts with Customers In May 2014, IFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related Interpretations when it becomes effective.

The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5-step approach to revenue recognition:

• Step 1: Identify the contract(s) with a customer

• Step 2: Identify the performance obligations in the contract

• Step 3: Determine the transaction price

• Step 4: Allocate the transaction price to the performance obligations in the contract

• Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

Greentown China Holdings Limited Annual Report 2014 091

F-13 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”) (continued) New and Revised Standards and Interpretations Issued But Not Yet Effective (continued) IFRS 15 Revenue from Contracts with Customers (continued) Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by IFRS 15.

The directors of the Company anticipate that the application of IFRS 15 in the future may have a material impact on the amounts reported and disclosures made in the Group’s consolidated financial statements. However, it is not practicable to provide a reasonable estimate of the effect of IFRS 15 until the Group performs a detailed review.

Amendments to IFRs 11 Accounting for Acquisitions of Interests in Joint Operations The amendments to IFRS 11 provide guidance on how to account for the acquisition of a joint operation that constitutes a business as defined in IFRS 3 Business Combinations. Specifically, the amendments state that the relevant principles on accounting for business combinations in IFRS 3 and other standards (e.g. IAS 36 Impairment of Assets regarding impairment testing of a cash generating unit to which goodwill on acquisition of a joint operation has been allocated) should be applied. The same requirements should be applied to the formation of a joint operation if and only if an existing business is contributed to the joint operation by one of the parties that participate in the joint operation.

A joint operator is also required to disclose the relevant information required by IFRS 3 and other standards for business combinations.

The amendments to IFRS 11 apply prospectively for annual periods beginning on or after 1 January 2016. The directors of the Company do not anticipate that the application of these amendments to IFRS 11 will have a material impact on the Group’s consolidated financial statements.

Amendments to IAS 1 The amendments to IAS 1 are designed to further encourage entities to apply professional judgement in determining what information to disclose in the financial statements, the amendments introduce changes and clarifications to the following areas of IAS:

• Materiality: The amendments clarify that (1) information should not be obscured by aggregating or by providing immaterial information, (2) materiality considerations apply to all parts of the financial statements, and (3) even when a standard requires a specific disclosure, materiality considerations do apply.

• Statement of financial position and statement of profit or loss and other comprehensive income. The amendments (1) introduce a clarification that the list of line items to be presented in these statements can be disaggregated and aggregated as relevant and additional guidance on subtotals in these statements and (2) clarify that an entity’s share of other comprehensive income of equity-accounted associates and joint ventures should be presented in aggregate as single line items based on whether or not it will subsequently be reclassified to profit or loss.

092 Greentown China Holdings Limited Annual Report 2014

F-14 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”) (continued) New and Revised Standards and Interpretations Issued But Not Yet Effective (continued) Amendments to IAS 1 (continued) • Notes. The amendments add additional examples of possible ways of ordering the notes to clarify that understandability and comparability should be considered when determining the order of the notes and to demonstrate that the notes need not be presented in the order so far listed in IAS 1. The IASB also removed guidance and examples with regard to the identification of significant accounting policies that were perceived as being potentially unhelpful.

The directors of the Company do not anticipate that the application of these amendments to IAS 1 will have a material impact on presentation of the Group’s consolidated financial statements.

Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation The amendments to IAS 16 prohibit entities from using a revenue-based depreciation method for items of property, plant and equipment. The amendments to IAS 38 introduce a rebuttable presumption that revenue is not an appropriate basis for amortisation of an intangible asset. This presumption can only be rebutted in the following two limited circumstances:

(a) when the intangible asset is expressed as a measure of revenue; or

(b) when it can be demonstrated that revenue and consumption of the economic benefits of the intangible asset are highly correlated.

The amendments apply prospectively for annual periods beginning on or after 1 January 2016. Currently, the Group uses the straight-line method for depreciation and amortisation for its property, plant and equipment, and intangible assets respectively. The directors of the Company believe that the straight-line method is the most appropriate method to reflect the consumption of economic benefits inherent in the respective assets and accordingly, the directors of the Company do not anticipate that the application of these amendments to IAS 16 and IAS 38 will have a material impact on the Group’s consolidated financial statements.

Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants The amendments to IAS 16 and IAS 41 define a bearer plant and require biological assets that meet the definition of a bearer plant to be accounted for as property, plant and equipment in accordance with IAS 16, instead of IAS 41. The produce growing on bearer plants continues to be accounted for in accordance with IAS 41.

The directors of the Company do not anticipate that the application of these amendments to IAS 16 and IAS 41 will have impact on the Group’s consolidated financial statements as the Group is not engaged in agricultural activities.

Greentown China Holdings Limited Annual Report 2014 093

F-15 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”) (continued) New and Revised Standards and Interpretations Issued But Not Yet Effective (continued) Amendments to IAS 19 Defined Benefit Plans: Employee Contributions The amendments to IAS 19 clarify how an entity should account for contributions made by employees or third parties to defined benefit plans, based on whether those contributions are dependent on the number of years of service provided by the employee.

For contributions that are independent of the number of years of service, the entity may either recognise the contributions as a reduction in the service cost in the period in which the related service is rendered, or to attribute them to the employees’ periods of service using the projected unit credit method; whereas for contributions that are dependent on the number of years of service, the entity is required to attribute them to the employees’ periods of service.

The directors of the Company do not anticipate that the application of these amendments to IAS 19 will have impact on the Group’s consolidated financial statements as the Group does not have any defined benefit plans.

Amendments to IAS 27 Equity Method in Separate Financial Statements The amendments allow an entity to account for investments in subsidiaries, joint ventures and associates in its separate financial statements

• At cost

• In accordance with IFRS 9 Financial Instruments (or IAS 39 Financial Instruments: Recognition and Measurement for entities that have not yet adopted IFRS 9), or

• Using the equity method as described in IAS 28 Investments in Associates and Joint Ventures.

The Accounting Option Must be Applied by Category of Investments.

The amendments also clarify that when a parent ceases to be an investment entity, or becomes an investment entity, it shall account for the change from the date when the change in status occurred.

In addition to the amendments to IAS 27, there are consequential amendments to IAS 28 to avoid a potential conflict with IFRS 10 Consolidated Financial Statements and to IFRS 1 First-time Adoption of Hong Kong Financial Reporting Standards.

The directors of the Company do not anticipate that the application of these amendments to IAS 27 will have a material impact on the Group’s consolidated financial statements.

094 Greentown China Holdings Limited Annual Report 2014

F-16 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”) (continued) New and Revised Standards and Interpretations Issued But Not Yet Effective (continued) Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture Amendments to IAS 28:

• The requirements on gains and losses resulting from transactions between an entity and its associate or joint venture have been amended to relate only to assets that do not constitute a business.

• A new requirement has been introduced that gains or losses from downstream transactions involving assets that constitute a business between an entity and its associate or joint venture must be recognised in full in the investor’s financial statements.

• A requirement has been added that an entity needs to consider whether assets that are sold or contributed in separate transactions constitute a business and should be accounted for as a single transaction.

Amendments to IFRS 10:

• An exception from the general requirement of full gain or loss recognition has been introduced into IFRS 10 for the loss control of a subsidiary that does not contain a business in a transaction with an associate or a joint venture that is accounted for using the equity method.

• New guidance has been introduced requiring that gains or losses resulting from those transactions are recognised in the parent’s profit or loss only to the extent of the unrelated investors’ interests in that associate or joint venture. Similarly, gains and losses resulting from the remeasurement at fair value of investments retained in any former subsidiary that has become an associate or a joint venture that is accounted for using the equity method are recognised in the former parent’s profit or loss only to the extent of the unrelated investors’ interests in the new associate or joint venture.

The directors of the Company do not anticipate that the application of these amendments to IFRS 10 and IAS 28 will have a material impact on the Group’s consolidated financial statements.

Annual Improvements to IFRSs 2010–2012 Cycle The Annual Improvements to IFRSs 2010–2012 Cycle include a number of amendments to various IFRSs, which are summarised below.

The amendments to IFRS 2 (i) change the definitions of ‘vesting condition’ and ‘market condition’; and (ii) add definitions for ‘performance condition’ and ‘service condition’ which were previously included within the definition of ‘vesting condition’. The amendments to IFRS 2 are effective for share-based payment transactions for which the grant date is on or after 1 July 2014.

Greentown China Holdings Limited Annual Report 2014 095

F-17 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”) (continued) New and Revised Standards and Interpretations Issued But Not Yet Effective (continued) Annual Improvements to IFRSs 2010–2012 Cycle (continued) The amendments to IFRS 3 clarify that contingent consideration that is classified as an asset or a liability should be measured at fair value at each reporting date, irrespective of whether the contingent consideration is a financial instrument within the scope of IFRS 9 or IAS 39 or a non-financial asset or liability. Changes in fair value (other than measurement period adjustments) should be recognised in profit and loss. The amendments to IFRS 3 are effective for business combinations for which the acquisition date is on or after 1 July 2014.

The amendments to IFRS 8 (i) require an entity to disclose the judgements made by management in applying the aggregation criteria to operating segments, including a description of the operating segments aggregated and the economic indicators assessed in determining whether the operating segments have ‘similar economic characteristics’; and (ii) clarify that a reconciliation of the total of the reportable segments’ assets to the entity’s assets should only be provided if the segment assets are regularly provided to the chief operating decision-maker.

The amendments to the basis for conclusions of IFRS 13 clarify that the issue of IFRS 13 and consequential amendments to IAS 39 and IFRS 9 did not remove the ability to measure short-term receivables and payables with no stated interest rate at their invoice amounts without discounting, if the effect of discounting is immaterial.

The amendments to IAS 16 and IAS 38 remove perceived inconsistencies in the accounting for accumulated depreciation/ amortisation when an item of property, plant and equipment or an intangible asset is revalued. The amended standards clarify that the gross carrying amount is adjusted in a manner consistent with the revaluation of the carrying amount of the asset and that accumulated depreciation/amortisation is the difference between the gross carrying amount and the carrying amount after taking into account accumulated impairment losses.

The amendments to IAS 24 clarify that a management entity providing key management personnel services to a reporting entity is a related party of the reporting entity. Consequently, the reporting entity should disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services. However, disclosure of the components of such compensation is not required.

The directors do not anticipate that the application of the amendments included in the Annual Improvements to IFRSs 2010-2012 Cycle will have a material effect on the Group’s consolidated financial statements.

096 Greentown China Holdings Limited Annual Report 2014

F-18 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”) (continued) New and Revised Standards and Interpretations Issued But Not Yet Effective (continued) Annual Improvements to IFRSs 2011–2013 Cycle The Annual Improvements to IFRSs 2011–2013 Cycle include a number of amendments to various IFRSs, which are summarised below.

The amendments to IFRS 3 clarify that the standard does not apply to the accounting for the formation of all types of joint arrangement in the financial statements of the joint arrangement itself.

The amendments to IFRS 13 clarify that the scope of the portfolio exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis includes all contracts that are within the scope of, and accounted for in accordance with, IAS 39 or IFRS 9, even if those contracts do not meet the definitions of financial assets or financial liabilities within IAS 32.

The amendments to IAS 40 clarify that IAS 40 and IFRS 3 are not mutually exclusive and application of both standards may be required. Consequently, an entity acquiring investment property must determine whether:

(a) the property meets the definition of investment property in terms of IAS 40; and

(b) the transaction meets the definition of a business combination under IFRS 3.

The directors do not anticipate that the application of the amendments included in the Annual Improvements to IFRSs 2011–2013 Cycle will have a material effect on the Group’s consolidated financial statements.

Annual Improvements to IFRSs 2012–2014 Cycle The Annual Improvements to IFRSs 2012–2014 Cycle include a number of amendments to various IFRSs, which are summarised below.

The amendments to IFRS 5 introduce specific guidance in IFRS 5 for when an entity reclassifies an asset (or disposal group) from held for sale to held for distribution to owners (or vice versa), or when held-for-distribution accounting is discontinued. The amendments apply prospectively.

The amendments to IFRS 7 provide additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset for the purpose of the disclosures required in relation to transferred assets and clarify that the offsetting disclosures (introduced in the amendments to IFRS 7 Disclosure – Offsetting Financial Assets and Financial Liabilities issued in December 2011 and effective for periods beginning on or after 1 January 2013) are not explicitly required for all interim periods. However, the disclosures may need to be included in condensed interim financial statements to comply with IAS 34 Interim Financial Reporting.

The amendments to IAS 19 clarify that the high quality corporate bonds used to estimate the discount rate for post-employment benefits should be issued in the same currency as the benefits to be paid. These amendments would result in the depth of the market for high quality corporate bonds being assessed at currency level. The amendments apply from the beginning of the earliest comparative period presented in the financial statements in which the amendments are first applied. Any initial adjustment arising should be recognised in retained earnings at the beginning of that period.

Greentown China Holdings Limited Annual Report 2014 097

F-19 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”) (continued) New and Revised Standards and Interpretations Issued But Not Yet Effective (continued) Annual Improvements to IFRSs 2012–2014 Cycle (continued) The amendments to IAS 34 clarify the requirements relating to information required by IAS 34 that is presented elsewhere within the interim financial report but outside the interim financial statements. The amendments require that such information be incorporated by way of a cross-reference from the interim financial statements to the other part of the interim financial report that is available to users on the same terms and at the same time as the interim financial statements.

The directors do not anticipate that the application of the amendments included in the Annual Improvements to IFRSs 2012–2014 Cycle will have a material effect on the Group’s consolidated financial statements.

Amendments to IFRS 10, IFRS 12 and IAS 28 The exemption from preparing consolidated financial statements for an intermediate parent entity is available to a parent entity that is a subsidiary of an investment entity, even if that parent entity measures all of its subsidiaries at fair value. Consequential amendments have also been made to the IAS 28 exemption from applying the equity method for entities that are subsidiaries and hold interests in associates and joint ventures.

The amendments have clarified that the requirement for an investment entity to consolidate a subsidiary providing services related to its investment activities applies only to subsidiaries that are not themselves investment entities.

In applying the equity method to an associate or a joint venture that is an investment entity, an investor may retain the fair value measurements that the associate or joint venture used for its subsidiaries.

The amendments have clarified that an investment entity that measures all its subsidiaries at fair value should provide the disclosures required by IFRS 12 Disclosures of Interests in other entities.

3. Principal Accounting Policies The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards. In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and by the Hong Kong Companies Ordinance, which for the current year, continue to be those of the predecessor Companies Ordinance, in accordance with transitional and saving arrangements for Part 9 of the Hong Kong Companies Ordinance, “Accounts and Audit”, which are set out in sections 76 to 87 of Schedule 11 of the Ordinance.

The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments and investment properties, which are measured at fair values, as explained in the accounting policies set out below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

098 Greentown China Holdings Limited Annual Report 2014

F-20 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

3. Principal Accounting Policies (continued) Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2 Share-based Payment, leasing transactions that are within the scope of IAS 17 Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 Inventories or value in use in IAS 36 Impairment of Assets.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

The principal accounting policies are set out below.

• has power over the investee;

• is exposed, or has rights, to variable returns from its involvement with the investee; and

• has the ability to use its power to affect its returns.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Greentown China Holdings Limited Annual Report 2014 099

F-21 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

3. Principal Accounting Policies (continued) Basis of Consolidation (continued) When the Group has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Group considers all relevant facts and circumstances in assessing whether or not the Group’s voting rights in an investee are sufficient to give it power, including:

• the size of the Group’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

• potential voting rights held by the Group, other vote holders or other parties;

• rights arising from other contractual arrangements; and

• any additional facts and circumstances that indicate that the Group has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Group gains control until the date when the Group ceases to control the subsidiary.

Profit or loss and each item of other comprehensive income are attributed to the owners of the Company and to the non- controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non- controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Changes in the Group’s Ownership Interests in Existing Subsidiaries Changes in the Group’s ownership interests in existing subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

100 Greentown China Holdings Limited Annual Report 2014

F-22 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

3. Principal Accounting Policies (continued) Basis of Consolidation (continued) Changes in the Group’s Ownership Interests in Existing Subsidiaries (continued) When the Group loses control of a subsidiary, it (i) derecognises the assets (including any goodwill) and liabilities of the subsidiary at their carrying amounts at the date when control is lost, (ii) derecognises the carrying amount of any non-controlling interests in the former subsidiary at the date when control is lost (including any components of other comprehensive income attributable to them), and (iii) recognises the aggregate of the fair value of the consideration received and the fair value of any retained interest, with any resulting difference being recognise as a gain or loss in profit or loss attributable to the Group. When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognised in other comprehensive income and accumulated in equity, the amounts previously recognised in other comprehensive income and accumulated in equity are accounted for as if the Group had directly disposed of the related assets (i.e. reclassified to profit or loss or transferred directly to retained earnings as specified by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in a joint venture or an associate.

Business Combinations Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally recognised in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:

• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;

• liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 Share-based Payment at the acquisition date (see the accounting policy below); and

• assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after re-assessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

Greentown China Holdings Limited Annual Report 2014 101

F-23 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

3. Principal Accounting Policies (continued) Basis of Consolidation (continued) Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at their fair value or, when applicable, on the basis specified in another Standard.

Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and considered as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with the corresponding adjustments made against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the “measurement period” (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39, or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss.

When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the Group obtains control), and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

102 Greentown China Holdings Limited Annual Report 2014

F-24 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

3. Principal Accounting Policies (continued) Goodwill Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business (see the accounting policy above) less accumulated impairment losses, if any.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash- generating units) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more frequently when there is indication that the unit may be impaired. For goodwill arising on an acquisition in a reporting period, the cash-generating unit to which goodwill has been allocated is tested for impairment before the end of that reporting period. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the amount of profit or loss on disposal.

Acquisition of Assets When the Group acquires a subsidiary, a group of assets or net assets that does not constitute a business, the cost of the acquisition is allocated between the individual identifiable assets and liabilities in the group based on their relative fair values at the acquisition date. No goodwill will be recognised for acquisition of a subsidiary that is accounted for as acquisition of assets.

Investments in Associates and Joint Ventures An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

The results and assets and liabilities of associates and joint ventures are incorporated in these consolidated financial statements using the equity method of accounting. The financial statements of associates and joint ventures used for equity accounting purposes are prepared using uniform accounting policies as those of the Group for like transactions and events in similar circumstances. Under the equity method, an investment in an associate or a joint venture is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or joint venture. When the Group’s share of losses of an associate or joint venture exceeds the Group’s interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate or joint venture), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.

Greentown China Holdings Limited Annual Report 2014 103

F-25 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

3. Principal Accounting Policies (continued) Investments in Associates and Joint Ventures (continued) An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.

The requirements of IAS 39 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment in an associate or a joint venture. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.

The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or a joint venture, or when the investment (or a portion thereof) is classified as held for sale. When the Group retains an interest in the former associate or joint venture and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with IAS 39. The difference between the carrying amount of the associate or joint venture at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate or joint venture is included in the determination of the gain or loss on disposal of the associate or joint venture. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate or joint venture on the same basis as would be required if that associate or joint venture had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate or joint venture would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity method is discontinued.

When the Group reduces its ownership interest in an associate or a joint venture but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.

When a group entity transacts with an associate or a joint venture of the Group (such as a sale or contribution of assets), profits and losses resulting from the transactions with the associate or joint venture are recognised in the Group’s consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Group.

104 Greentown China Holdings Limited Annual Report 2014

F-26 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

3. Principal Accounting Policies (continued) Revenue Recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts received or receivable for goods sold and services provided in the normal course of business, net of discounts and sales-related taxes.

Revenue from sales of properties in the ordinary course of business is recognised when the respective properties have been completed and delivered to the buyers. Deposits received from pre-sales of properties are carried as pre-sale deposits.

Revenue from sales of other goods is recognised when the goods are delivered and title has passed.

Service income is recognised when services are provided.

Comprehensive service income is recognised on sales or pre-sales of properties by comprehensive service users at agreed fee rates.

Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

The Group’s accounting policy for recognition of revenue from operating leases is described in the accounting policy for leasing below.

Foreign Currencies In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recorded in the respective functional currency (i.e. the currency of the primary economic environment in which the entity operates) at the rates of exchange prevailing on the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the period in which they arise.

Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the year in which they are incurred.

Greentown China Holdings Limited Annual Report 2014 105

F-27 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

3. Principal Accounting Policies (continued) Taxation Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from “profit before taxation” as reported in the consolidated statement of profit or loss and other comprehensive income because it excludes items of income and expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated 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 goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of the reporting period 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.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

For the purposes of measuring deferred tax liabilities or deferred tax assets for investment properties that are measured using the fair value model, the carrying amounts of such properties are presumed to be recovered entirely through sale, unless the presumption is rebutted. The presumption is rebutted when the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale. If the presumption is rebutted, deferred tax liabilities and deferred tax assets for such investment properties are measured in accordance with the above general principles set out in IAS 12 (i.e. based on the expected manner as to how the properties will be recovered).

106 Greentown China Holdings Limited Annual Report 2014

F-28 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

3. Principal Accounting Policies (continued) Taxation (continued) Deferred tax is recognised in profit or loss, except when it relates to items that are recognised in other comprehensive income or directly in equity, in which case the deferred tax is also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

Government Grants Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.

Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as Lessor Rental income from operating leases is recognised in profit or loss on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised as an expense on a straight-line basis over the lease term.

The Group as Lessee Operating lease payments are recognised as an expense on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are recognised as a reduction of rental expense over the lease term on a straight-line basis.

Leasehold Land and Buildings When a lease includes both land and building elements, the Group assesses the classification of each element as a finance lease or an operating lease separately based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the Group. Specifically, the minimum lease payments (including any lump- sum upfront payments) are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of the lease.

Greentown China Holdings Limited Annual Report 2014 107

F-29 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

3. Principal Accounting Policies (continued) Leasing (continued) Leasehold Land and Buildings (Continued) To the extent the allocation of the lease payments can be made reliably, interest in leasehold land that is accounted for as an operating lease is presented as “prepaid lease payments” in the consolidated statement of financial position and is amortised over the lease term on a straight-line basis except for those that are classified and accounted for as investment properties under the fair value model. When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified as a finance lease and accounted for as property, plant and equipment, unless it is clear that both elements are operating leases, in which case the entire lease is classified as an operating lease.

Retirement Benefit Costs The Group participates in state-managed retirement benefit schemes, which are defined contribution schemes, pursuant to which the Group pays a fixed percentage of its qualifying staff’s wages as contributions to the plans. Payments to such retirement benefit schemes are charged as an expense when employees have rendered service entitling them to the contributions.

Property, Plant and Equipment Property, plant and equipment, including land and buildings held for use in the production or supply of goods or services, or for administrative purposes other than construction in progress, are stated in the consolidated statement of financial position at cost less accumulated depreciation and accumulated impairment losses.

Depreciation is recognised so as to write off the cost of items of property, plant and equipment other than construction in progress less their residual values over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Property, plant and equipment in the course of construction for production, supply or administrative purposes are carried at cost less any recognised impairment loss. Costs include professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Group’s accounting policy and, where appropriate, the amortisation of prepaid lease payments provided during the construction period. Such properties are classified to the appropriate category of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

108 Greentown China Holdings Limited Annual Report 2014

F-30 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

3. Principal Accounting Policies (continued) Investment Properties Investment properties are properties (including the leasehold interest under an operating lease for a property which would otherwise meet the definition of an investment property) held to earn rentals and/or for capital appreciation.

Construction costs incurred for investment properties under construction are capitalised as part of the carrying amount of the investment properties under construction.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use or no future economic benefits are expected from its disposals. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year in which the item is derecognised.

Impairment of Tangible Assets At the end of the reporting period, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.

Greentown China Holdings Limited Annual Report 2014 109

F-31 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

3. Principal Accounting Policies (continued) Properties for Development Properties for development, representing leasehold land located in the PRC for development for future sale in the ordinary course of business, are stated at the lower of cost and net realisable value. Cost comprises the costs of land use rights and other directly attributable costs. Net realisable value represents the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale. Properties for development are transferred to properties under development upon commencement of development.

Properties Under Development Properties under development, representing leasehold land and buildings located in the PRC under development for future sale in the ordinary course of business, are stated at the lower of cost and net realisable value. Cost comprises the costs of land use rights, construction costs, borrowing costs capitalised and other direct development expenditure. Net realisable value represents the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale. Properties under development are transferred to completed properties for sale upon completion of development.

Completed Properties for Sale Completed properties for sale are stated at the lower of cost and net realisable value. Cost comprises the costs of land use rights, construction costs, borrowing costs capitalised and other direct development expenditure. Net realisable value represents the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

The Group transfers a property from completed properties for sale to investment property when there is a change of intention to hold the property to earn rentals or/and for capital appreciation rather than for sale in the ordinary course of business, which is evidenced by the commencement of an operating lease to another party. Any difference between the fair value of the property at the date of transfer and its previous carrying amount is recognised in profit or loss.

Inventories Inventories other than properties for development, properties under development and completed properties for sale are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average method.

Financial Instruments Financial assets and financial liabilities are recognised on the consolidated statement of financial position when a group entity becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

110 Greentown China Holdings Limited Annual Report 2014

F-32 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

3. Principal Accounting Policies (continued) Financial Instruments (continued) Financial Assets The Group’s financial assets are classified into the following specified categories: financial assets at fair value through profit or loss (“FVTPL”), loans and receivables and available-for-sale financial assets. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Effective Interest Method The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period to the net carrying amount on initial recognition.

Interest income is recognised on an effective interest basis.

Financial Assets at FVTPL Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL.

A financial asset is classified as held for trading if:

• it has been acquired principally for the purpose of selling in the near term; or

• on initial recognition it is a part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if:

• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

• the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

• it forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. Fair value is determined in the manner described in Note 6(c).

Greentown China Holdings Limited Annual Report 2014 111

F-33 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

3. Principal Accounting Policies (continued) Financial Instruments (continued) Financial Assets (continued) Loans and Receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, loans and receivables (including trade and other receivables, amounts due from related parties, pledged bank deposits, bank balances and cash) are carried at amortised cost using the effective interest method, less any identified impairment losses (see accounting policy on impairment loss on financial assets below).

Available-for-sale Financial Assets Available-for-sale financial assets are non-derivatives that are either designated or not classified as financial assets at FVTPL, loans and receivables or held-to-maturity investments.

Equity and debt securities held by the Group that are classified as available-for-sale and are traded in an active market are measured at fair value at the end of each reporting period. Changes in the carrying amount of available-for-sale monetary financial assets relating to interest income calculated using the effective interest method and dividends on available-for-sale equity investments are recognised in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss (see the accounting policy in respect of impairment loss on financial assets below).

Dividends on available-for-sale equity instruments are recognised in profit or loss when the Group’s right to receive the dividends is established.

For available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, they are measured at cost less any identified impairment losses at the end of the reporting period (see accounting policy on impairment loss on financial assets below).

Impairment of Financial Assets Financial assets are assessed for indicators of impairment at the end of the reporting period. Financial assets are considered to be impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial assets have been affected.

For an available-for-sale equity investment, a significant or prolonged decline in the fair value of that investment below cost is considered to be objective evidence of impairment.

112 Greentown China Holdings Limited Annual Report 2014

F-34 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

3. Principal Accounting Policies (continued) Financial Instruments (continued) Financial Assets (continued) Impairment of Financial Assets (continued) For all other financial assets, objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or

• breach of contract, such as default or delinquency in interest or principal payments; or

• it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or

• the disappearance of an active market for that financial asset because of financial difficulties.

For certain categories of financial assets, such as trade and other receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 90 days, observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the financial asset’s original effective interest rate.

For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade and other receivables, where the carrying amount is reduced through the use of an allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. When a trade or other receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to profit or loss.

When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period.

Greentown China Holdings Limited Annual Report 2014 113

F-35 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

3. Principal Accounting Policies (continued) Financial Instruments (continued) Financial Assets (continued) Impairment of Financial Assets (continued) For financial assets measured at amortised cost, if, in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of available-for-sale equity investments, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income. In respect of available-for-sale debt investments, impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

Financial Liabilities and Equity Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

The Group’s financial liabilities are generally classified into financial liabilities at fair value through profit or loss (“FVTPL”) and other financial liabilities.

Effective Interest Method The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Interest expense is recognised on an effective interest basis.

Financial Liabilities at Fair Value Through Profit or Loss Financial liabilities at FVTPL include financial liabilities held for trading.

A financial liability is classified as held for trading if:

• it has been incurred principally for the purpose of repurchasing in the near future; or

• on initial recognition it is a part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

114 Greentown China Holdings Limited Annual Report 2014

F-36 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

3. Principal Accounting Policies (continued) Financial Instruments (continued) Financial Liabilities and Equity (continued) Financial Liabilities at Fair Value Through Profit or Loss (continued) Financial liabilities at FVTPL are measured at fair value, with changes in fair value arising on remeasurement recognised directly in profit or loss in the period in which they arise. The net gain or loss recognised in profit or loss excludes any interest paid on the financial liabilities and is included in the other income item.

Other Financial Liabilities Other financial liabilities including bank and other borrowings, trade and other payables, amounts due to related parties, liability portion of senior notes are subsequently measured at amortised cost, using the effective interest method.

Senior Notes Senior notes issued by the Company that contain both liability and early redemption option (which is not closely related to the host contract) are classified separately into respective items on initial recognition. At the date of issue, both the liability and early redemption option components are recognised at fair value.

In subsequent periods, the liability component of the senior notes is carried at amortised cost using the effective interest method. The early redemption option is measured at fair value with changes in fair value recognised in profit or loss.

Transaction costs that relate to the issue of the senior notes are allocated to the liability and early redemption option components in proportion to their relative fair values. Transaction costs relating to the early redemption option are charged to profit or loss immediately. Transaction costs relating to the liability component are included in the carrying amount of the liability portion and amortised over the period of the senior notes using the effective interest method.

Equity Instruments Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Convertible Securities Convertible securities with no contractual obligation to repay its principal or to pay any distribution are classified as equity. Respective distributions if and when declared are treated as equity dividends.

Embedded Derivatives Derivatives embedded in non-derivative host contracts are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at fair value with changes in fair value recognised in profit or loss.

Financial Guarantee Contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. A financial guarantee contract issued by the Group and not designated as at fair value through profit or loss is recognised initially at its fair value. Subsequent to initial recognition, the Group measures the financial guarantee contract at the higher of: (i) the amount of obligation under the contract, as determined in accordance with IAS 37 provisions, Contingent Liabilities and Contingent Assets; and (ii) the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with the revenue recognition policy.

Greentown China Holdings Limited Annual Report 2014 115

F-37 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

3. Principal Accounting Policies (continued) Financial Instruments (continued) Derecognition The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group continues to recognise the asset to the extent of its continuing involvement and recognises an associated liability. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

The Group derecognises a financial liability when, and only when, the Group’s obligations are discharged, cancelled or expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

Share-Based Payment Transactions Equity-Settled Share-Based Payment Transactions Share Options Granted to Employees The fair value of services received determined by reference to the fair value of share options granted at the grant date is expensed on a straight-line basis over the vesting period, with a corresponding increase in equity (share options reserve). Share option premiums received or receivable from grantees are recognised in share options reserve.

At the end of the reporting period, the Group revises its estimates of the number of options that are expected to ultimately vest. The impact of the revision of the estimates during the vesting period, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to share options reserve.

At the time when the share options are exercised, the amount previously recognised in share options reserve will be transferred to share premium. When the share options are forfeited after the vesting date or are still not exercised at the expiry date, the amount previously recognised in share options reserve will continue to be held in share options reserve.

4. Critical Accounting Judgements and Key Sources of Estimation Uncertainty Critical Judgements in Applying Accounting Policies The critical judgements, apart from those involving estimations (see below), that the directors have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements are disclosed below.

116 Greentown China Holdings Limited Annual Report 2014

F-38 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

4. Critical Accounting Judgements and Key Sources of Estimation Uncertainty (continued) Critical Judgements in Applying Accounting Policies (continued) Deferred Taxation on Investment Properties For the purposes of measuring deferred tax liabilities or deferred tax assets arising from investment properties that are measured using the fair value model, the directors have reviewed the Group’s investment property portfolios and concluded that the Group’s investment properties are not held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time, rather than through sale. Therefore, in measuring the Group’s deferred taxation on investment properties, the directors have determined that the presumption that the carrying amounts of investment properties measured using the fair value model are recovered entirely through sale is not rebutted. As a result, the Group has recognised deferred taxes of both enterprise income tax and land appreciation tax on changes in fair value of investment properties.

Key Sources of Estimation Uncertainty The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are disclosed below.

Net Realisable Value for Properties for Development, Properties Under Development and Completed Properties for Sale Properties for development, properties under development and completed properties remaining unsold at the end of each reporting period are stated at the lower of cost and net realisable value.

Net realisable value for properties for development and properties under development is determined by reference to management estimates of the selling price based on prevailing market conditions, less applicable variable selling expenses and the anticipated costs to completion. Net realisable value for completed properties for sale is determined by reference to management estimates of the selling price based on prevailing market conditions, less applicable variable selling expenses. During the course of their assessment, management will also make reference to property valuations conducted by independent qualified professional valuers based on comparable market prices. Management are required to revise these estimates if there is a change in market condition or demand. If actual market conditions are less favourable than those projected by management, additional adjustments to the value of properties for development, properties under development and completed properties for sale may be required. As at 31 December 2014, the carrying amounts of properties for development, properties under development and completed properties for sale are RMB5,749,961,000 (2013: RMB6,280,067,000), RMB41,312,223,000 (2013: RMB38,967,574,000) and RMB15,651,236,000 (2013: RMB13,062,500,000) respectively (net of accumulated impairment loss of RMB nil (2013: RMB nil), RMB nil (2013: RMB nil) and RMB70,604,000 (2013: RMB nil) respectively).

Greentown China Holdings Limited Annual Report 2014 117

F-39 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

4. Critical Accounting Judgements and Key Sources of Estimation Uncertainty (continued) Key Sources of Estimation Uncertainty (continued) Fair Value of Investment Properties Investment properties are carried in the consolidated statement of financial position at 31 December 2014 at their fair value of approximately RMB1,891,500,000 (2013: RMB1,831,500,000).

The fair value was based on valuation on these properties conducted by the independent qualified professional valuers using property valuation techniques which adopt the investment approach by capitalising the net rental income derived from the existing tenancies with due provision for the reversionary income potential of the property interests, or where appropriate, by direct comparison approach by making reference to comparable sales transactions as available in the relevant markets. Favourable or unfavourable changes to the assumptions such as rental yield and estimation of future rentals would result in changes in the fair value of the Group’s investment properties and corresponding adjustments to the amount of gain or loss reported in the consolidated statement of profit or loss and other comprehensive income.

Revision on the Estimates on Expected Cash Flows of the Shareholder’s Loan Made to Zhejiang Jinying When the Group revises its estimates of receipts of the shareholder’s loan, the Group shall adjust the carrying amount of the loan to reflect actual and revised estimated cash flows. The group recalculates the carrying amount by computing the present value of estimated future cash flows at the loan’s original effective interest rate. The adjustment is recognised in profit or loss as income or expense.

As at 31 December 2014, the carrying amount of the shareholder’s loan made to Zhejiang Jinying is RMB1,732,137,000 (2013: RMB1,732,137,000).

Estimated Impairment of Trade and Other Receivables and Amounts Due From Related Parties when there is objective evidence of impairment loss, the Group takes into consideration the estimation of future cash flows to determine impairment loss. The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). Where the actual future cash flows are less than expected, a material impairment loss may arise. As at 31 December 2014, the carrying amount of trade and other receivables and amounts due from related parties are RMB4,258,469,000 (2013: RMB3,452,865,000) and RMB27,156,714,000 (2013: RMB24,981,206,000) respectively (net of accumulated impairment loss of RMB nil (2013: RMB nil) and RMB122,198,000 (2013: RMB nil) respectively).

Land Appreciation Tax The provision for Land Appreciation Tax (“LAT”) amounting to RMB2,587,195,000 (2013: RMB2,717,856,000) (included in income taxes payable) is estimated and made according to the requirements set forth in the relevant PRC tax laws and regulations. The actual LAT liabilities are subject to the determination by the tax authorities upon completion of the property development projects and the tax authorities might disagree with the basis on which the provision for LAT is calculated.

118 Greentown China Holdings Limited Annual Report 2014

F-40 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

5. Capital Risk Management The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged from prior year.

The capital structure of the Group consists of net debt, which includes the borrowings disclosed in Notes 26, 27 and 37(ii) (net of cash and cash equivalents), and capital and reserves.

The directors of the Company review the capital structure on a regular basis. As part of this review, the directors consider the cost of capital and the risks associated with each class of capital. The Group will balance its overall capital structure through the payment of dividends, new share issues and share buy-backs as well as the issue of new debt or the redemption of existing debt.

6. Financial Instruments (a) Categories of Financial Instruments

2014 2013 RMB’000 RMB’000 Financial assets Loans and receivables (including cash and cash equivalents) 39,863,615 39,637,058 Available-for-sale financial assets 388,617 377,010 Cross currency swaps – 49,849

Financial liabilities Amortised cost 64,121,425 59,048,601 Cross currency swaps 71,174 –

(b) Financial Risk Management Objectives and Policies The Group’s major financial instruments include available-for-sale investments, cross currency swaps, trade and other receivables, amounts due from related parties, pledged bank deposits, bank balances and cash, trade and other payables, amounts due to related parties, bank and other borrowings and senior notes. Details of the financial instruments are disclosed in respective notes. The risks associated with these financial instruments include market risk (currency risk and interest rate risk), credit risk and liquidity risk. The policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner. There has been no significant change in the Group’s exposure to these risks or the manner in which it manages and measures risks.

Market Risk (i) Currency Risk The Group has bank balances, other payables, other receivables, amounts due from related parties, amounts due to related parties, bank and other borrowings and senior notes denominated in foreign currencies, which expose the Group to foreign currency risk. In addition, the Company issued senior notes in the aggregate principal amount of RMB2,500,000,000 in May 2013 and entered into cross currency swap contracts with certain banks, which also expose the Group to foreign currency risk.

Greentown China Holdings Limited Annual Report 2014 119

F-41 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

6. Financial Instruments (continued) (b) Financial Risk Management Objectives and Policies (continued) Market Risk (continued) (i) Currency Risk (continued) The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

Liabilities Assets 2014 2013 2014 2013 RMB’000 RMB’000 RMB’000 RMB’000 Hong Kong dollars (“HKD”) 9,754 424 102,438 93,017 United States dollars (“USD”) 12,114,520 11,151,171 1,284,725 1,005,914

The Group does not use any derivative contracts to hedge against its exposure to currency risk.

Sensitivity Analysis The Group is mainly exposed to the fluctuations in exchange rates between RMB and HKD/USD. The exposure in HKD/USD arises mainly from the Group’s bank balances and cash, other receivables, other payables, bank and other borrowings, senior notes and amounts due from/to related parties.

The following table details the Group’s sensitivity to a 5% (2013: 5%) increase and decrease in RMB against the relevant foreign currencies. 5% represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 5% change in foreign currency rates. A positive number below indicates an increase in post-tax profit where RMB strengthens 5% against the relevant currency. For a 5% weakening of RMB against the relevant currency, there would be an equal and opposite impact on post-tax profit.

HKD Impact USD Impact 2014 2013 2014 2013 RMB’000 RMB’000 RMB’000 RMB’000 Profit or loss (3,476) (3,472) 406,117 380,447

(ii) Interest Rate Risk The Group is exposed to fair value interest rate risk in relation to fixed-rate bank deposits, amounts due from/to related parties, bank and other borrowings and senior notes (see Notes 24, 26, 27 and 37 for details).

The Group is also exposed to cash flow interest rate risk in relation to variable-rate bank deposits, amounts due from/to related parties and bank and other borrowings (see Notes 24, 26 and 37 for details).

The Group does not use any derivative contracts to hedge against its exposure to interest rate risk.

The Group’s exposures to interest rates on financial liabilities are detailed in the liquidity risk management section of this note.

120 Greentown China Holdings Limited Annual Report 2014

F-42 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

6. Financial Instruments (continued) (b) Financial Risk Management Objectives and Policies (continued) Market Risk (continued) (ii) Interest Rate Risk (continued) Sensitivity analysis The sensitivity analyses below have been determined based on the exposure to market deposit and lending interest rates for non-derivative instruments. For variable-rate bank deposits, bank and other borrowings and amounts due from/to related parties, the analysis is prepared assuming the balances outstanding at the end of the reporting period were outstanding for the whole year. A 5 basis point (2013: 5 basis point) increase or decrease in market deposit interest rates and a 50 basis point (2013: 50 basis point) increase or decrease in market lending interest rates represent management’s assessment of the reasonably possible change in interest rates.

If the market deposit interest rates had been 5 basis points higher/lower and all other variables were held constant, the Group’s post-tax profit for the year ended 31 December 2014 would have increased/decreased by RMB2,642,000 (2013: increased/decreased by RMB3,918,000). This is mainly attributable to the Group’s exposure to interest rates on its variable-rate bank deposits.

If the market lending interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group’s post-tax profit for the year ended 31 December 2014 would have decreased/increased by RMB58,131,000 (2013: decreased/increased by RMB51,823,000). This is mainly attributable to the Group’s exposure to interest rates on its variable-rate bank and other borrowings and amounts due from/to related parties.

Credit Risk As at 31 December 2014, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties and financial guarantees provided by the Group arises from:

• the carrying amount of the respective recognised financial assets as stated in the consolidated statement of financial position; and

• the amount of contingent liabilities disclosed in Note 36.

In order to minimise the credit risk, the management of the Group has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue trade debts, other receivables and amounts due from related parties. In addition, the Group reviews the recoverable amount of each overdue debt at the end of the reporting period to ensure that adequate impairment losses are made for irrecoverable amounts. To minimise the credit risk arising from customer mortgage guarantees, the Group has reserved the right to collect the properties sold to customers should they default on their mortgage payments and demanded the application for building ownership certificates by customers since these guarantees provided by the Group to the banks will be released upon receiving such certificates. To minimise the credit risk arising from guarantees provided to banks and other parties in respect of credit facilities utilised by joint ventures and associates, the Group has delegated a team responsible for assessing the credit standing of such entities and the limits to the guarantees to be provided. In this regard, the directors of the Company consider that the Group’s credit risk is significantly reduced.

Greentown China Holdings Limited Annual Report 2014 121

F-43 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

6. Financial Instruments (continued) (b) Financial Risk Management Objectives and Policies (continued) Credit Risk (continued) The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies or with a good reputation.

The Group’s concentration of credit risk by geographical locations is mainly in the PRC. Other than the concentration of credit risk on liquid funds which are deposited with several large state-owned banks and commercial banks in the PRC, the Group does not have any other significant concentration of credit risk, with exposure spread over a number of counterparties and customers.

Liquidity risk In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. The management monitors the utilisation of borrowings and ensures compliance with loan covenants.

The Group relies on bank and other borrowings, senior notes and amounts due to related parties as a significant source of liquidity.

The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. Specifically, bank loans with a repayment on demand clause are included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non- derivative financial liabilities are based on the agreed repayment dates. The table includes both interest and principal cash flows.

In addition, the following table details the Group’s liquidity analysis for its derivative financial instruments. The table has been drawn up based on the undiscounted contractual net cash inflows and outflows on derivative instruments that are settled on a net basis. The liquidity analysis for the Group’s derivative financial instruments are prepared based on the contractual maturities as the management consider that the contractual maturities are essential for an understanding of the timing of the cash flows of derivatives.

122 Greentown China Holdings Limited Annual Report 2014

F-44 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

6. Financial Instruments (continued) (b) Financial Risk Management Objectives and Policies (continued) Liquidity Risk (continued) Liquidity and Interest Risk Tables

Carrying Weighted On Demand Total Amount Average or Less Than Undiscounted at Interest Rate 1 Year 1–5 Years >5 Years Cash Flows 31/12/2014 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 2014 Non-derivative financial liabilities Trade and other payables – 16,987,067 1,468,563 – 18,455,630 18,455,630 Bank and other borrowings – fixed-rate 9.81% 6,807,092 4,113,131 – 10,920,223 9,597,644 – variable-rate 6.46% 7,439,538 11,800,030 856,719 20,096,287 17,625,650 Amounts due to related parties – interest-free – 5,174,982 – – 5,174,982 5,174,982 – fixed-rate 11.00% 4,215,791 – – 4,215,791 3,798,110 – variable-rate 6.24% 945,778 – – 945,778 877,280 Senior notes 7.56% 650,639 9,892,997 – 10,543,636 8,592,129 Financial guarantee contracts – 26,800,206 – – 26,800,206 – 69,021,093 27,274,721 856,719 97,152,533 64,121,425

Greentown China Holdings Limited Annual Report 2014 123

F-45 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

6. Financial Instruments (continued) (b) Financial Risk Management Objectives and Policies (continued) Liquidity Risk (continued) Liquidity and Interest Risk Tables (continued)

Carrying Weighted On Demand Total Amount Average or Less Than Undiscounted at Interest Rate 1 Year 1-5 Years >5 Years Cash Flows 31/12/2013 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 2013 Non-derivative financial liabilities Trade and other payables – 16,324,924 1,436,829 – 17,761,753 17,761,753 Bank and other borrowings – fixed-rate 11.32% 4,544,620 5,084,665 575 9,629,860 8,113,896 – variable-rate 7.62% 3,445,621 12,134,638 1,087,789 16,668,048 13,839,462 Amounts due to related parties – interest-free – 5,565,738 – – 5,565,738 5,565,738 – fixed-rate 9.90% 4,252,341 – – 4,252,341 3,869,168 – variable-rate 5.69% 1,416,673 – – 1,416,673 1,340,400 Senior notes 7.71% 686,639 9,096,195 1,910,282 11,693,116 8,558,184 Financial guarantee contracts – 25,543,434 – – 25,543,434 – 61,779,990 27,752,327 2,998,646 92,530,963 59,048,601

Bank loans with a repayment on demand clause are included in the “less than 1 year” time band in the above maturity analysis. As at 31 December 2014, the aggregate undiscounted principal amounts of these bank loans amounted to RMB17,525,000 (2013: RMB56,525,000). Taking into account the Group’s financial position, the directors do not believe that it is probable that the banks will exercise their discretionary rights to demand immediate repayment. The directors believe that such bank loans will be repaid after the reporting date in accordance with the scheduled repayment dates set out in the loan agreements. At that time, the aggregate principal and interest cash outflows will amount to RMB22,011,000 (2013: RMB68,930,000).

The amounts included above for financial guarantee contracts are the maximum amounts the Group could be required to settle under the arrangement for the full guaranteed amount if that amount is claimed by the counterparty to the guarantee. Based on expectations at the end of the reporting period, the Group considers that it is more likely than not that no amount will be payable under the arrangement. However, this estimate is subject to change depending on the probability of the counterparty claiming under the guarantee which is a function of the likelihood that the financial receivables held by the counterparty which are guaranteed suffer credit losses.

The amounts included above for variable interest rate non-derivative financial liabilities is subject to change if changes in variable interest rate differ from those interest rate estimates determined at the end of the reporting period.

124 Greentown China Holdings Limited Annual Report 2014

F-46 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

6. Financial Instruments (continued) (c) Fair Value Measurements of Financial Instruments Fair Value of the Group’s Financial Assets and Financial Liabilities That Are Measured at Fair Value on A Recurring Basis At the end of the reporting period, the Group had the following cross currency swaps not designated as hedging instruments. Major terms of the cross currency swaps are as follows:

Notional Amount Maturity Exchange Rates Interest Rate Swap Sell RMB600,000,000 05/09/2016 USD 1: RMB6.1640 From fixed rate 5.625% per annum to fixed rate 4.625% per annum Sell RMB600,000,000 05/13/2016 USD 1: RMB6.1600 From fixed rate 5.625% per annum to fixed rate 4.625% per annum Sell RMB700,000,000 05/13/2016 USD 1: RMB6.1600 From fixed rate 5.625% per annum to fixed rate 4.625% per annum Sell RMB600,000,000 05/13/2016 USD 1: RMB6.1700 From fixed rate 5.625% per annum to fixed rate 4.625% per annum

Some of the Group’s financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation technique(s) and inputs used).

Fair Value Financial Instrument Fair Value Hierarchy Valuation Technique and Key Inputs RMB’000 Cross currency swaps (71,174) Level 2 Broker quotes: The quotes are calculated by (2013: 49,849) discounting estimated future cash flows based on contracted interest rates discounted at respective currency’s observable yield curves at the end of the year

Greentown China Holdings Limited Annual Report 2014 125

F-47 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

6. Financial Instruments (continued) (c) Fair Value Measurements of Financial Instruments (continued) Fair Value of Financial Assets and Financial Liabilities That Are Not Measured at Fair Value on A Recurring Basis (But Fair Value Disclosures Are Required) Except as detailed in the following table, the directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the consolidated financial statements approximate their fair values:

2014 2013 Carrying Carrying Amount of Amount of Liability Liability Component Fair Value Component Fair Value RMB’000 RMB’000 RMB’000 RMB’000 Financial liabilities 1 1 Senior notes (Level 2) 8,592,129 8,565,155 8,558,184 8,869,747

1 Based on quoted price

7. Revenue and Segment Information An analysis of the Group’s revenue from its major products and services is as follows:

2014 2013 RMB’000 RMB’000 Property sales 30,110,664 27,460,381 Hotel operations 439,571 305,340 Project management 460,805 350,060 Property rental income 121,561 113,864 Design and decoration 748,647 581,651 Sales of construction materials 19,066 63,172 Other business 148,665 116,102 32,048,979 28,990,570

126 Greentown China Holdings Limited Annual Report 2014

F-48 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

7. Revenue and Segment Information (continued) The chief operating decision-maker of the Group has been identified as the executive directors and certain senior management (collectively referred to as the “CODM”). Operating segments are determined based on the Group’s internal reports which are submitted to the CODM for performance assessment and resources allocation. This is also the basis upon which the Group is organised and managed.

The Group’s consolidated revenue and results are attributable to the market in the PRC (country of domicile) and almost all of the Group’s consolidated assets are located in the PRC. The Group has identified four reportable segments, namely property development, hotel operations, property investment and others.

The Group’s reportable segments under IFRS 8 are as follows:

1 Property development 2 Hotel operations 3 Property investment 4 Others (including sales of construction materials, design and decoration, project management, etc.)

For the property development operations, the CODM reviews the financial information of each property development project, hence each property development project constitutes a separate operating segment. However, the property development projects possess similar economic characteristics, and are with similar development and selling activities as well as similar customer bases. Therefore, all property development projects are aggregated into one reportable segment for segment reporting purposes.

For the hotel operations, the CODM reviews the financial information of each hotel, hence each hotel constitutes a separate operating segment. However, the hotels possess similar economic characteristics, and are with similar development and selling activities as well as similar customer bases. Therefore, all hotels are aggregated into one reportable segment for segment reporting purposes.

For the property investment operations, the CODM reviews the financial information of each investment property, hence each investment property constitutes a separate operating segment. However, the investment properties possess similar economic characteristics, and are with similar development and selling activities as well as similar customer bases. Therefore, all investment properties are aggregated into one reportable segment for segment reporting purposes.

Greentown China Holdings Limited Annual Report 2014 127

F-49 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

7. Revenue and Segment Information (continued) The CODM assess the performance of the operating segments based on the post-tax profit of the group entities engaged in the respective segment activities, which includes share of results of joint ventures and associates and related finance costs. Financial information provided to the CODM is measured in a manner consistent with the accounting policies adopted in the preparation of the consolidated financial statements as described in Note 3.

Sales between segments are carried out on terms agreed between the counterparties.

No customers account for 10% or more of the Group’s revenue.

An analysis of the Group’s revenue and results by reportable and operating segment is as follows:

Property Hotel Property Segment Development Operations Investment Others Total Eliminations Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 For the year ended 31 December 2014

Segment revenue External revenue 30,110,664 439,571 121,561 1,377,183 32,048,979 – 32,048,979 Inter-segment revenue – 9,388 112 451,748 461,248 (461,248) – Total 30,110,664 448,959 121,673 1,828,931 32,510,227 (461,248) 32,048,979 Segment results 3,359,750 7,167 42,267 123,566 3,532,750 (18,793) 3,513,957 Unallocated administrative expenses (54,197) Unallocated other income 10,339 Unallocated finance costs (41,926) Fair value changes on cross currency swaps (121,022) Unallocated taxation (97,330) Profit for the year 3,209,821

128 Greentown China Holdings Limited Annual Report 2014

F-50 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

7. Revenue and Segment Information (continued)

Segment revenue External revenue 27,460,381 305,340 113,864 1,110,985 28,990,570 – 28,990,570 Inter-segment revenue – 5,098 490 1,347,475 1,353,063 (1,353,063) – Total 27,460,381 310,438 114,354 2,458,460 30,343,633 (1,353,063) 28,990,570 Segment results 5,687,139 44,740 78,133 241,455 6,051,467 (19,238) 6,032,229 Unallocated administrative expenses (25,197) Unallocated other income 109,301 Unallocated finance costs (30,136) Fair value changes on cross currency swaps 49,849 Unallocated taxation (145,841) Profit for the year 5,990,205

Segment Assets and Liabilities The following is an analysis of the Group’s assets and liabilities by reportable and operating segment:

Segment Assets

2014 2013 RMB’000 RMB’000 Property development 115,207,207 111,780,398 Hotel operations 6,057,524 5,067,566 Property investment 1,921,244 1,853,416 Others 2,923,431 1,900,384 Total segment assets 126,109,406 120,601,764 Unallocated 1,034,472 1,733,938 Consolidated assets 127,143,878 122,335,702

Greentown China Holdings Limited Annual Report 2014 129

F-51 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

7. Revenue and Segment Information (continued) Segment Assets and Liabilities (continued) Segment Liabilities

2014 2013 RMB’000 RMB’000 Property development 86,659,435 85,710,438 Hotel operations 321,269 261,676 Property investment 916,091 1,003,689 Others 3,560,398 2,793,658 Total segment liabilities 91,457,193 89,769,461 Unallocated 841,377 555,269 Consolidated liabilities 92,298,570 90,324,730

For the purposes of monitoring segment performances and allocating resources among segments:

• all assets are allocated to operating segments other than bank balances and cash, property, plant and equipment, derivative financial instruments, trade and other receivables, deposits and prepayments, and deferred tax assets pertaining to non-operating group entities.

• all liabilities are allocated to operating segments other than derivative financial instruments, bank and other borrowings, other taxes payable and deferred tax liabilities pertaining to non-operating group entities.

130 Greentown China Holdings Limited Annual Report 2014

F-52 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

7. Revenue and Segment Information (continued) Other Segment Information For the year ended 31 December 2014

Reportable Property Hotel Property Segment Development Operations Investment Others Total Unallocated Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Amounts included in the measure of segment profit or loss or segment assets: Addition to non-current assets (Note) (1,042,065) 1,230,962 775 33,082 222,754 – 222,754 Interests in associates 8,724,954 – – – 8,724,954 – 8,724,954 Interests in joint ventures 1,807,755 – – – 1,807,755 – 1,807,755 Reversal of impairment loss on property, plant and equipment – (16,799) – – (16,799) – (16,799) Impairment loss on completed properties for sale 70,604 – – – 70,604 – 70,604 Impairment loss on amounts due from a joint venture 122,198 – – – 122,198 – 122,198 Gain from changes in fair value of investment properties – – (60,000) – (60,000) – (60,000) Gain on re-measurement of an associate to acquisition date fair value in business combination achieved in stages (37,196) – – – (37,196) – (37,196) Gain on acquisition of a subsidiary (1,363) – – – (1,363) – (1,363) Net gain on disposal of subsidiaries (8,670) – – – (8,670) – (8,670) Gain on disposal of associates (120,773) – – – (120,773) – (120,773) Depreciation of property, plant and equipment 91,876 101,274 6,448 18,964 218,562 – 218,562 Loss (gain) on disposal of property, plant and equipment (964) 47 58 445 (414) – (414) Interest income (642,727) (1,391) (43) (13,080) (657,241) (7,965) (665,206) Finance costs 550,418 7,024 52,759 27,561 637,762 41,926 679,688 Share of results of associates (339,873) – – – (339,873) – (339,873) Share of results of joint ventures (67,879) – – – (67,879) – (67,879) Taxation 2,524,209 4,865 15,096 77,144 2,621,314 97,330 2,718,644

Greentown China Holdings Limited Annual Report 2014 131

F-53 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

7. Revenue and Segment Information (continued) Other Segment Information (continued) For the year ended 31 December 2013

Reportable Property Hotel Property Segment Development Operations Investment Others Total Unallocated Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Amounts included in the measure of segment profit or loss or segment assets: Addition to non-current assets (Note) 3,565,958 1,533,616 520 26,912 5,127,006 – 5,127,006 Interests in associates 10,015,706 – – – 10,015,706 – 10,015,706 Interests in joint ventures 1,848,221 – – – 1,848,221 – 1,848,221 Gain from changes in fair value of investment properties – – (100,900) – (100,900) – (100,900) Reversal of impairment loss on property, plant and equipment – (60,685) – – (60,685) – (60,685) Gain relating to a newly acquired joint venture (704,131) – – – (704,131) – (704,131) Gain on re-measurement of associates to acquisition date fair value in business combination achieved in stages (3,923) – – – (3,923) – (3,923) Depreciation of property, plant and equipment 46,665 87,113 6,651 17,324 157,753 – 157,753 Loss (gain) on disposal of property, plant and equipment (1,259) (26) 20 (125) (1,390) – (1,390) Interest income (458,795) (3,749) (9,196) (5,861) (477,601) (16,092) (493,693) Finance costs 414,731 102 51,469 10,377 476,679 30,136 506,815 Share of results of associates (1,092,037) – – – (1,092,037) – (1,092,037) Share of results of joint ventures (477,999) – – – (477,999) – (477,999) Taxation 2,900,450 15,989 25,127 68,450 3,010,016 145,841 3,155,857

Note: Non-current assets mainly included property, plant and equipment, investment properties (excluding gain from changes in fair value of investment properties), prepaid lease payment, interests in joint ventures, interests in associates and rental paid in advance and excluded financial instruments and deferred tax assets.

132 Greentown China Holdings Limited Annual Report 2014

F-54 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

8. Other Income

2014 2013 RMB’000 RMB’000 Interest income on bank balances 107,188 139,282 Interest income on amounts due from related parties 558,018 354,411 Government grants 26,203 23,058 Net foreign exchange gains – 90,240 Comprehensive service income 129,901 79,406 Dividends from available-for-sale investments 76,168 1,213 Others 66,785 40,719 964,263 728,329 9. Finance Costs

2014 2013 RMB’000 RMB’000 Interest on: – bank borrowings wholly repayable within five years 1,366,155 1,056,005 – bank borrowings not wholly repayable within five years 43,131 57,919 – other borrowings wholly repayable within five years 1,052,578 851,594 Interest on senior notes wholly repayable within five years (Note 27) 662,637 465,879 3,124,501 2,431,397

Less: capitalised in properties under development and construction in progress (2,444,813) (1,924,582) 679,688 506,815

Borrowing costs capitalised during the year arose on the specific loan and general borrowing pool and are calculated by applying a capitalisation rate of 7.87% (2013: 8.66%) per annum to expenditure on the development of properties for sale and for own use.

Greentown China Holdings Limited Annual Report 2014 133

F-55 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

10. Profit Before Taxation

2014 2013 RMB’000 RMB’000 Profit before taxation has been arrived at after charging (crediting):

Salaries and other benefits 1,231,707 964,339 Retirement benefits scheme contributions 54,703 42,210 Staff costs (including directors’ emoluments) 1,286,410 1,006,549 Less: Capitalised in properties under development (336,158) (283,235) 950,252 723,314

Depreciation of property, plant and equipment 218,562 157,753 Less: Capitalised in properties under development (7,412) (8,712) 211,150 149,041 Amortisation of prepaid lease payment (included in administrative expenses) 17,552 9,557 Auditors’ remuneration 12,654 10,268 Cost of properties and inventories recognised as an expense 23,567,280 20,042,035 Net gain on disposal of property, plant and equipment (414) (1,390)

134 Greentown China Holdings Limited Annual Report 2014

F-56 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

11. Directors’, Chief Executive’s and Employees’ Emoluments The emoluments paid or payable to each of the 13 (2013: 13) directors and the chief executive of the Company were as follows:

SZE Tsai SONG SHOU LUO GUO CAO NG TSUI JIA ping, TANG JIANG KE HUI 2014 Weiping Bainian Zhaoming Jiafeng Zhounan Tin Hoi Yiu Cheung Shenghua Michael Shiding^ Wei* Huanzhang Wan Fai Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Fees – – – – – 260 260 260 260 129 157 260 260 1,846 Other emoluments: Salaries and other benefits 4,500 4,500 1,200 1,000 1,200 – – – – – – – – 12,400 Contributions to retirement benefits/ pension schemes 94 32 49 99 62 – – – – – – – – 336 Performance related incentive payments (Note) 4,379 4,500 157 426 360 – – – – – – – – 9,822 Total emoluments 8,973 9,032 1,406 1,525 1,622 260 260 260 260 129 157 260 260 24,404

SZE Tsai SONG SHOU LUO GUO CAO NG TSUI JIA ping, TANG JIANG KE HUI 2013 Weiping Bainian Zhaoming Jiafeng Zhounan Tin Hoi Yiu Cheung Shenghua Michael Shiding Wei Huanzhang Wan Fai Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Fees – – – – – 260 260 260 260 260 260 260 260 2,080 Other emoluments: Salaries and other benefits 2,000 2,000 1,200 1,000 1,200 – – – – – – – – 7,400 Contributions to retirement benefits/ pension schemes 88 88 79 95 55 – – – – – – – – 405 Performance related incentive payments (Note) 2,058 2,058 360 384 360 – – – – – – – – 5,220 Total emoluments 4,146 4,146 1,639 1,479 1,615 260 260 260 260 260 260 260 260 15,105

^ Mr TANG Shiding retired by rotation as an independent non-executive director and ceased to be a member of the audit committee and nomination committee of the Company on 27 June 2014.

* Mr JIANG Wei retired by rotation as an independent non-executive director and ceased to be a member of the audit committee of the Company on 8 August 2014.

Mr SHOU Bainian is also the Chief Executive of the Company and his emoluments disclosed above include those for services rendered by him as the Chief Executive.

Note: The performance related incentive payments is determined as a percentage of the results of the Group for both years.

Greentown China Holdings Limited Annual Report 2014 135

F-57 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

11. Directors’, Chief Executive’s And Employees’ Emoluments (continued) No directors waived any emoluments in both years.

Of the five individuals with the highest emoluments in the Group, four (2013: two) were directors of the Company whose emoluments are included in the disclosure above. The emoluments of the remaining one (2013: three) individuals were as follows:

2014 2013 RMB’000 RMB’000 Salaries and other benefits 906 4,755 Contributions to retirement benefits/pension schemes 76 215 Performance related incentive payments 1,519 3,051 2,501 8,021

The individuals’ emoluments were within the following bands:

2014 2013 No. of No. of employees employees HKD2,500,001 to HKD3,000,000 – 1 HKD3,000,001 to HKD3,500,000 1 1 HKD3,500,001 to HKD4,000,000 – 1

During the year, no emoluments were paid by the Group to any of the directors or the five highest paid individuals as an inducement to join or upon joining the Group or as compensation for loss of office (2013: nil).

12. Taxation

2014 2013 RMB’000 RMB’000 Current tax: PRC enterprise income tax 1,271,129 1,997,345 LAT 1,396,485 1,253,216 2,667,614 3,250,561 Under-provision in prior years: PRC enterprise income tax 448 10,013 Deferred tax (Note 21): Current year 50,582 (104,717) 2,718,644 3,155,857

136 Greentown China Holdings Limited Annual Report 2014

F-58 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

12. Taxation (continued) No provision for income tax has been made for the Company and group entities incorporated in Hong Kong as they have no assessable profits derived from Hong Kong.

Under the Law of the People’s Republic of China on Enterprise Income Tax (the “EIT Law”) and Implementation Regulation of the EIT Law, the tax rate of the PRC subsidiaries is 25%.

In addition, the EIT Law provides that qualified dividend income between two “resident enterprises” that have a direct investment relationship is exempted from income tax. Otherwise, such dividends will be subject to a 5% or 10% withholding tax under the EIT Law. A 10% withholding tax rate is applicable to the Group.

The tax charge for the year can be reconciled to the profit per the consolidated statement of profit or loss and other comprehensive income as follows:

2014 2013 RMB’000 RMB’000

Profit before taxation 5,928,465 9,146,062 Tax at the applicable PRC enterprise income tax rate of 25% (2013: 25%) 1,482,116 2,286,515 Effect of different tax rates (17,247) (65,574) Tax effect of share of results of associates (84,968) (273,009) Tax effect of share of results of joint ventures (16,970) (119,500) Tax effect of income not taxable for tax purposes (19,028) (100,975) Tax effect of expenses not deductible for tax purposes 213,958 197,873 Under-provision in respect of prior year 448 10,013 Tax effect of tax losses not recognised 63,086 156,003 Recognition of deferred tax assets on tax losses previously not recognised (5,276) (9,311) Utilisation of tax losses previously not recognised (4,839) (16,090) LAT provision for the year 1,396,485 1,253,216 Tax effect of LAT (349,121) (313,304) Tax effect of undistributed profits 60,000 150,000 Tax charge for the year 2,718,644 3,155,857

Details of deferred taxation for the year ended 31 December 2014 are set out in Note 21.

Greentown China Holdings Limited Annual Report 2014 137

F-59 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

12. Taxation (continued) PRC LAT According to the requirements of the Provisional Regulations of the PRC on LAT (中華人民共和國土地增值稅暫行條例) effective from 1 January 1994, and the Detailed Implementation Rules on the Provisional Regulations of the PRC on LAT (中華人民共和國土地增值稅暫行條例實施細則) effective from 27 January 1995, all income from the sale or transfer of state-owned land use rights, buildings and their attached facilities in the PRC is subject to LAT at progressive rates ranging from 30% to 60% of the appreciation value, with an exemption provided for property sales of ordinary residential properties (普通標準住宅) if their appreciation values do not exceed 20% of the sum of the total deductible items.

According to the Notices for the Strengthening of Administration on LAT (關於加强土地增值稅管理工作的通知), the Group is required to pre-pay LAT on pre-sale proceeds at 0.5% – 3% for ordinary residential properties and 1% – 6% for other properties.

For the year ended 31 December 2014, the Group estimated and made a provision for LAT in the amount of RMB1,396,485,000 (2013: RMB1,253,216,000), according to the requirements set forth in the relevant PRC tax laws and regulations. The actual LAT liabilities are subject to the determination by the tax authorities upon completion of the property development projects and the tax authorities might disagree with the basis on which the provision for LAT is calculated.

13. Dividends On 12 July 2013, a final dividend for 2012 of RMB0.50 per ordinary share, or RMB1,077,319,000 in total, was paid to the shareholders.

On 18 July 2014, a final dividend for 2013 of RMB0.43 per ordinary share, or RMB928,301,000 in total, was paid to the shareholders.

The Board has resolved not to declare any final dividend for the year ended 31 December 2014.

138 Greentown China Holdings Limited Annual Report 2014

F-60 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

14. Earnings Per Share The calculation of the basic and diluted earnings per share attributable to the owners of the Company is based on the following data:

Earnings

2014 2013 RMB’000 RMB’000 Profit for the year attributable to the owners of the Company 2,071,722 4,885,514 Premium of Convertible Securities on redemption (66,677) – Distribution related to Perpetual Securities (254,986) – Distribution related to Convertible Securities (25,282) (182,914) Earnings for the purpose of basic earnings per share 1,724,777 4,702,600 Effect of dilutive potential ordinary shares: Distribution related to Convertible Securities – 182,914 Earnings for the purpose of diluted earnings per share 1,724,777 4,885,514

Number of Shares

2014 2013 Weighted average number of ordinary shares for the purpose of basic earnings per share 2,159,405,822 2,154,876,654 Effect of dilutive potential ordinary shares: Share options 8,014,885 23,149,554 Convertible Securities – 344,594,594 Weighted average number of ordinary shares for the purpose of diluted earnings per share 2,167,420,707 2,522,620,802

The computation of 2014 diluted earnings per share does not assume the conversion of the Convertible Securities since their exercise would result in an increase in diluted earnings per share for the year. The computation of 2014 diluted earnings per share also does not assume the exercise of some of the share options because the exercise price of these share options was higher than the average market price for shares for the year.

Greentown China Holdings Limited Annual Report 2014 139

F-61 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

15. Property, Plant and Equipment

Furniture, Hotel Land and Leasehold Fixtures and Transportation Construction Buildings Buildings Improvements Machinery Equipment Equipment in Progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 COST At 1 January 2013 2,733,455 236,071 72,340 15,329 250,067 290,198 802,526 4,399,986 Additions 79 26,261 7,197 3,513 34,856 35,834 1,318,575 1,426,315 Transfer – 569 – 105 – – (674) – Disposals – – (462) (10) (2,551) (8,234) – (11,257) Acquisition of subsidiaries (Note 30) – – – – 513 4,653 – 5,166 At 31 December 2013 2,733,534 262,901 79,075 18,937 282,885 322,451 2,120,427 5,820,210 Additions 6,873 7,634 18,929 7,406 78,282 53,208 1,387,352 1,559,684 Transfer 3,156,381 – – – 68,902 – (3,225,283) – Disposals – (81) (3,551) (159) (9,920) (21,806) – (35,517) Acquisition of subsidiaries (Note 30) – – – 300 715 2,216 – 3,231 Disposal of subsidiaries – – (3,612) (6) (1,984) (4,022) – (9,624) At 31 December 2014 5,896,788 270,454 90,841 26,478 418,880 352,047 282,496 7,337,984 DEPRECIATION AND IMPAIRMENT At 1 January 2013 (320,265) (34,583) (50,595) (8,302) (146,787) (164,198) – (724,730) Provided for the year (58,910) (21,131) (10,069) (2,873) (27,960) (36,810) – (157,753) Reclassify impairment losses from properties under development – – – – – – (143,867) (143,867) Reversal of impairment losses on property, plant and equipment – – – – – – 60,685 60,685 Eliminated on disposals – – 254 7 1,855 7,393 – 9,509 At 31 December 2013 (379,175) (55,714) (60,410) (11,168) (172,892) (193,615) (83,182) (956,156) Provided for the year (94,747) (22,370) (6,042) (6,350) (48,492) (40,561) – (218,562) Eliminated on disposals – 33 1,265 89 8,024 18,415 – 27,826 Eliminated on disposal of subsidiaries – – 3,612 – 1,405 3,184 – 8,201 Reversal of impairment losses on property, plant and equipment – – – – – – 16,799 16,799 Transfer impairment losses (66,383) – – – – – 66,383 – At 31 December 2014 (540,305) (78,051) (61,575) (17,429) (211,955) (212,577) – (1,121,892) CARRYING VALUES At 31 December 2014 5,356,483 192,403 29,266 9,049 206,925 139,470 282,496 6,216,092 At 31 December 2013 2,354,359 207,187 18,665 7,769 109,993 128,836 2,037,245 4,864,054

140 Greentown China Holdings Limited Annual Report 2014

F-62 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

15. Property, Plant and Equipment (continued) The above items of property, plant and equipment other than construction in progress are depreciated on a straight-line basis, taking into account their residual value, at the following rates per annum:

Hotel buildings Over the shorter of the term of the land use rights or 40 years Land and buildings Over the shorter of the term of the land use rights or 20 years Leasehold improvements Over the shorter of the lease term or five years 1 Machinery 10% to 33 /3% 1 Furniture, fixtures and equipment 10% to 33 /3% Transportation equipment 10% to 20%

The land and buildings and hotel buildings shown above are located on:

2014 2013 RMB’000 RMB’000 Land and buildings Land in the PRC under: Medium-term lease 192,403 207,187 Hotel buildings Land in the PRC under: Medium-term lease 5,356,483 2,354,359

Details of the hotel buildings, land and buildings and construction in progress pledged to secure banking facilities granted to the Group are disclosed in Note 34.

In view of the improving performance of the hotel operations, the Group engaged DTZ Debenham Tie Leung Limited to update their review of the Group’s hotel buildings as at 31 December 2013 and as a result an impairment loss of RMB60,685,000 of a hotel building under construction was reversed in 2013 in respect of hotel buildings based on their value in use.

In view of the improving performance of the hotel operations, the Group engaged DTZ Debenham Tie Leung Limited to update their review of the Group’s hotel buildings as at 31 December 2014 and as a result an impairment loss of RMB16,799,000 of a hotel building was reversed during the year in respect of hotel buildings based on their value in use.

Greentown China Holdings Limited Annual Report 2014 141

F-63 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

16. Investment Properties

RMB’000 FAIR VALUE At 1 January 2013 1,730,600 Unrealised gain on property revaluation included in profit or loss 100,900 At 31 December 2013 1,831,500 Unrealised gain on property revaluation included in profit or loss 60,000 At 31 December 2014 1,891,500

All of the Group’s property interests held under operating leases to earn rentals or for capital appreciation purposes are measured using the fair value model and are classified and accounted for as investment properties.

The investment properties shown above are located on:

2014 2013 RMB’000 RMB’000 Land in the PRC under: Medium-term lease 1,891,500 1,831,500

The fair value of the Group’s investment property at 31 December 2014 and 2013 have been arrived at on the basis of a valuation carried out on that date by DTZ Debenham Tie Leung Limited.

In estimating the fair value of the properties, the highest and best use of the properties is their current use.

142 Greentown China Holdings Limited Annual Report 2014

F-64 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

16. Investment Properties (continued) The following table gives information about how the fair values of these investment properties are determined (in particular, the valuation techniques and inputs used), as well as the fair value hierarchy into which the fair value measurements are categorised (Level 3) based on the degree to which the inputs to the fair value measurements is observable.

Carrying Value of Investment Properties Held by the Group in the Relationship of Consolidated Statements Fair Value Valuation Technique(s) Significant Unobservable Unobservable of Financial Positions Hierarchy and Key Input(s) Input(s) Inputs to Fair Value Serviced apartments in Level 3 Investment approach Reversionary yield, taking The higher the Beijing RMB1,860,000,000 into account the annual reversionary yield, (2013: RMB1,800,000,000) The Key inputs are: rental income potential and the lower the fair 1. Reversionary yield; and unit market value of the value. 2. Market unit rent. comparable properties, of 7.5% (2013: 7.5%) for serviced apartments and 8.0% (2013: 8.0%) for auxiliary retail area.

Market unit rent, using direct The higher the market market comparables and unit rent, the higher taking into account of similar the fair value. character, location and sizes.

Commercial property in Level 3 Investment approach Reversionary yield, taking into The higher the Hangzhou RMB31,500,000 account annual rental income reversionary yield, (2013: RMB31,500,000) The Key inputs are: potential and unit market the lower the fair 1. Reversionary yield; and value of the comparable value. 2. Market unit rent. properties, of 6.5% (2013: 6.5%).

Market unit rent, using direct The higher the market market comparables and unit rent, the higher taking into account of similar the fair value. character, location and sizes.

Significant increases/(decreases) in the reversionary yield in isolation would result in a significantly lower/(higher) fair value of the investment properties. There is no indication that any slight increases/(decreases) in market unit rent in isolation would result in a significantly higher/(lower) fair value of the investment properties.

There was no transfer into or out of Level 3 during the year.

Greentown China Holdings Limited Annual Report 2014 143

F-65 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

17. Interests in Associates

2014 2013 RMB’000 RMB’000 Cost of unlisted investments in associates 8,758,737 9,415,606 Share of post-acquisition profits, net of dividends received (33,783) 600,100 8,724,954 10,015,706

On 13 October 2014, the Group entered into a framework agreement to dispose of to an independent third party (i) 24.5% equity interest in Poly Link Management Limited (“Poly Link Management”), an investment holding company; and (ii) the shareholder’s loan made to Poly Link Management for a total cash consideration of RMB1,090,000,000. Details of this disposal were set out in the Company’s announcement dated 13 October 2014. The disposal was completed on 20 October 2014 and the gain on disposal of approximately RMB121,073,000 was recognised by the Group.

On 15 October 2014, a 35.4%-owned subsidiary of the Group disposed of its 10% equity interest in Greentown Dingyi Real Estate Investment Management Co., Ltd. (“Greentown Dingyi”) to an independent third party for a cash consideration of RMB5,000,000. The loss on disposal was approximately RMB300,000. After the disposal, this subsidiary retains the remaining 10% equity interest in Greentown Dingyi. The Group has classified the retained investments as available-for-sale investments measured at cost.

As at 31 December 2014 and 2013, the Group had interests in the following principal associates established and operating in the PRC:

Proportion of Ownership Interest/Voting Rights Name of Associate Registered Capital Held by the Group Principal Activities 2014 2013 上海融創綠城投資控股有限公司 RMB2,000,000,000 50% 50% Investment holding Shanghai Sunac Greentown Investment (i), (ii) (i), (ii) Holdings Co., Ltd. (“Shanghai Sunac Greentown“)

上海華浙外灘置業有限公司 RMB50,000,000 26% 26% Real estate development Shanghai Huazhe Bund Real Estate Co., Ltd. (ii) (ii) (“Huazhe Bund“)

上海綠順房地產開發有限公司 RMB1,000,000,000 50% 50% Real estate development Shanghai Lvshun Real Estate Development (ii) (ii) Co., Ltd. (“Lvshun Real Estate”)

144 Greentown China Holdings Limited Annual Report 2014

F-66 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

17. Interests in Associates (continued)

Proportion of Ownership Interest/Voting Rights Name of Associate Registered Capital Held by the Group Principal Activities 2014 2013 天津逸駿投資有限公司 RMB30,000,000 40% 40% Real estate development Tianjin Yijun Investment Co., Ltd. (ii) (ii) (“Tianjin Yijun”)

無錫綠城房地產開發有限公司 RMB174,807,000 43% 43% Real estate development Wuxi Greentown Real Estate Development (ii) (ii) Co., Ltd. (“Wuxi Greentown”)

融創綠城投資控股有限公司 USD2 50% 50% Investment holding Sunac Greentown Investment Holdings (iii), (iv) (iii), (iv) Limited (“Sunac Greentown Investment”)

蘇州綠城御園房地產開發有限公司 RMB250,000,000 50% 50% Real estate development Suzhou Greentown Yuyuan (iv) (iv) Real Estate Development Co., Ltd. (“Suzhou Greentown Yuyuan”)

上海新富港房地產發展有限公司 RMB2,500,000,000 50% 50% Real estate development New Richport Property Development (iv) (iv) Shanghai Co., Ltd. (“New Richport”)

上海豐明房地產發展有限公司 RMB135,000,000 50% 50% Real estate development Everbright Property Development (iv) (iv) Shanghai Co., Ltd. (“Everbright”)

豐盛地產發展（上海）有限公司 USD10,000,000 50% 50% Real estate development Fung Seng Estate Development Shanghai (iv) (iv) Co., Ltd. (“Fung Seng”)

浙江中青旅綠城投資置業有限公司 RMB200,000,000 49% 49% Investment holding and Zhejiang Zhongqinglv Greentown (v) (v) consulting Real Estate Investment Co., Ltd. (“Zhejiang Zhongqinglv”)

慈溪綠城投資置業有限公司 RMB98,000,000 49% 49% Real estate development Cixi Greentown Real Estate Investment (v) (v) Co., Ltd. (“Cixi Greentown”)

Greentown China Holdings Limited Annual Report 2014 145

F-67 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

17. Interests in Associates (continued)

Proportion of Ownership Interest/Voting Rights Name of Associate Registered Capital Held by the Group Principal Activities 2014 2013 穎澤投資有限公司 HKD1,500,000,000 40% 40% Investment holding Green Magic Investments Limited (vi) (vi) (“Green Magic”)

大連九龍倉綠城置業有限公司 USD434,000,000 40% 40% Real estate development Dalian Wharf Greentown Real Estate Co., Ltd. (vi) (vi) (“Dalian Wharf Greentown)

杭州濱綠房地產開發有限公司 RMB1,389,140,188 50% 50% Real estate development Hangzhou Binlv Real (vii) (vii) Estate Development Co., Ltd. (“Hangzhou Binlv”)

上海浙鐵綠城房地產開發有限公司 RMB50,000,000 38% 32% Real estate development Shanghai Zhetie Greentown Real Estate (viii) Development Co., Ltd. (“Zhetie Greentown”)

寧波都市房產開發有限公司 USD200,000,000 49% 47% Real estate development Ningbo Dushi Real Estate Development (ix) Co., Ltd. (“Ningbo Dushi”)

中投發展有限責任公司 RMB2,000,000,000 24% 24% Infrastructure China Investment Development Co., Ltd. construction and investment holding

杭州余杭綠城九洲房地產開發有限公司 RMB85,000,000 35% 35% Real estate development Hangzhou Yuhang Greentown Jiuzhou Real Estate Development Co., Ltd.

杭州翡翠城房地產開發有限公司 RMB50,000,000 45% 45% Real estate development Hangzhou Hope Town Real Estate Development Co., Ltd.

紹興金綠泉置業有限公司 RMB580,000,000 35% 35% Real estate development Shaoxing Jinlvquan Real Estate Co., Ltd.

146 Greentown China Holdings Limited Annual Report 2014

F-68 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

17. Interests in Associates (continued)

Proportion of Ownership Interest/Voting Rights Name of Associate Registered Capital Held by the Group Principal Activities 2014 2013 濟南海爾綠城置業有限公司 RMB200,000,000 45% 45% Real estate development Jinan Haier Greentown Real Estate Co., Ltd.

台州浙能綠城置業有限公司 RMB300,000,000 49% 49% Real estate development Taizhou Zheneng Greentown Real Estate Co., Ltd.

杭州浙能綠城置業有限公司 RMB300,000,000 49% 49% Real estate development Hangzhou Zheneng Greentown Real Estate Co., Ltd.

台州浙信綠城房地產開發有限公司 RMB20,000,000 40% 40% Real estate development Taizhou Zhexin Greentown Real Estate Development Co., Ltd.

浙江鐵建綠城房地產開發有限公司 RMB100,000,000 38% 38% Real estate development Zhejiang Tiejian Greentown Real Estate Development Co., Ltd.

杭州百大置業有限公司 RMB530,000,000 30% 30% Real estate development Hangzhou Baida Real Estate Co., Ltd.

杭州賽麗綠城申花置業有限公司 RMB100,000,000 25% 25% Real estate development Hangzhou Saili Greentown Shenhua Real Estate Co., Ltd.

杭州紫元綠西房地產有限公司 RMB100,000,000 33% 33% Real estate development Hangzhou Ziyuan Lvxi Real Estate Co., Ltd.

北京東部綠城置業有限公司 RMB50,000,000 49% 49% Real estate development Beijing Eastern Greentown Real Estate Co., Ltd.

Greentown China Holdings Limited Annual Report 2014 147

F-69 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

17. Interests in Associates (continued)

Proportion of Ownership Interest/Voting Rights Name of Associate Registered Capital Held by the Group Principal Activities 2014 2013 杭州海航綠城置業有限公司 RMB1,860,180,000 40% 40% Real estate development Hangzhou Haihang Greentown Real Estate Co., Ltd.

杭州綠城金久房地產開發有限公司 RMB100,000,000 40% 40% Real estate development Hangzhou Greentown Jinjiu Real Estate Development Co., Ltd.

上海綠恒房地產開發有限公司 RMB100,000,000 40% 40% Real estate development Shanghai Lvheng Real Estate Development Co., Ltd.

上海青蓮房地產開發有限公司 RMB50,000,000 20% 20% Real estate development Shanghai Qinglian Real Estate Development Co., Ltd.

溫州綠城發展房地產開發有限公司 RMB200,000,000 40% 40% Real estate development Wenzhou Greentown Development Real Estate Development Co., Ltd.

大冶有色綠城房地產開發有限公司 RMB160,000,000 30% 30% Real estate development Daye Youse Greentown Real Estate Development Co., Ltd.

山東高速綠城萊蕪雪野湖開發有限公司 RMB50,000,000 49% 49% Real estate development Shandong Gaosu Greentown Laiwu Xueyehu Development Co., Ltd.

山東財富縱橫置業有限公司 RMB50,000,000 39% 39% Real estate development Shandong Caifu Zongheng Real Estate Co., Ltd.

信陽市萬恒置業有限公司 RMB50,000,000 20% 20% Real estate development Xinyang Wanheng Real Estate Co., Ltd.

148 Greentown China Holdings Limited Annual Report 2014

F-70 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

17. Interests in Associates (continued)

Proportion of Ownership Interest/Voting Rights Name of Associate Registered Capital Held by the Group Principal Activities 2014 2013 青島綠城華景置業有限公司 RMB2,000,000,000 40% 40% Real estate development Qingdao Greentown Huajing Real Estate Co., Ltd.

義烏浙鐵綠城房地產開發有限公司 RMB200,000,000 35% 35% Real estate development Yiwu Zhetie Greentown Real Estate Development Co., Ltd.

奉化綠城房地產開發有限公司 RMB100,000,000 31% 31% Real estate development Fenghua Greentown Real Estate Development Co., Ltd.

杭州綠城墅園置業有限公司 RMB200,000,000 30% 30% Real estate development Hangzhou Greentown Shuyuan Real Estate Co., Ltd.

杭州融創綠城房地產開發有限公司 USD102,000,000 25% 25% Real estate development Hangzhou Sunac Greentown Real Estate Development Co., Ltd.

杭州地鐵武林置業有限公司 RMB20,000,000 45% 45% Real estate development Hangzhou Metro Wulin Real Estate Co., Ltd.

蘇州融綠泛庭置業有限公司 RMB50,000,000 50% – Real estate development Suzhou Sunac Greentown (ii), (x) Fanting Real Estate Co., Ltd. (“Sunac Greentown Fanting”)

盛聯管理有限公司 USD50,000 – 25% Investment holding Poly Link Management (xi), (xii) (xii)

Greentown China Holdings Limited Annual Report 2014 149

F-71 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

17. Interests in Associates (continued)

Proportion of Ownership Interest/Voting Rights Name of Associate Registered Capital Held by the Group Principal Activities 2014 2013 杭州遠洋天祺置業有限公司 USD147,760,000 – 25% Real estate development Hangzhou Sino-Ocean Tian Qi (xi), (xii) (xii) Properties Limited (“Sino-Ocean Tian Qi”)

杭州遠洋運河商務區開發有限公司 USD143,210,000 – 25% Real estate development Hangzhou Sino-Ocean Canal Business (xi), (xii) (xii) District Development Co., Ltd. (“Sino-Ocean Canal Business District”)

杭州遠洋新河酒店置業有限公司 USD93,414,000 – 25% Real estate development Hangzhou Sino-Ocean New River Hotel (xi), (xii) (xii) Properties Limited (“Sino-Ocean New River Hotel”)

杭州綠城錦玉置業有限公司 RMB250,000,000 – 35% Real estate development Hangzhou Greentown Jinyu Real Estate (xiii) Co., Ltd. (“Greentown Jinyu”)

The above table lists the associates of the Group which, in the opinion of the directors, principally affected the results or assets of the Group. To give details of other associates would, in the opinion of the directors, result in particulars of excessive length.

Notes:

(i) Only two out of five directors of Shanghai Sunac Greentown are appointed by the Group, while a valid board resolution requires half of the total votes. The Group thus does not have the power to control or jointly control Shanghai Sunac Greentown. Therefore, Shanghai Sunac Greentown is accounted for as an associate of the Group.

(ii) Huazhe Bund, Lvshun Real Estate, Wuxi Greentown, Tianjin Yijun, Sunac Greentown Fanting are subsidiaries of Shanghai Sunac Greentown.

(iii) Only one out of three directors of Sunac Greentown Investment is appointed by the Group, while a valid board resolution requires a majority of the total votes. The Group thus does not have the power to control or jointly control Sunac Greentown Investment. Therefore, Sunac Greentown investment is accounted for as an associate of the Group.

(iv) New Richport, Everbright, Fung Seng and Suzhou Greentown Yuyuan are subsidiaries of Sunac Greentown Investment.

(v) Cixi Greentown is a subsidiary of Zhejiang Zhongqinglv.

(vi) Dalian Wharf Greentown is a subsidiary of Green Magic.

150 Greentown China Holdings Limited Annual Report 2014

F-72 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

17. Interests in Associates (continued) Notes: (continued)

(vii) Only two out of five directors of Hangzhou Binlv are appointed by the Group, while a valid board resolution requires half of the total votes. The Group thus does not have the power to control or jointly control Hangzhou Binlv. Therefore, Hangzhou Binlv is accounted for as an associate of the Group.

(viii) The Group acquired an additional 6% equity interest in Zhetie Greentown from an independent third party for a consideration of RMB3,000,000 in 2014.

(ix) The Group acquired an additional 2% equity interest in Ningbo Dushi in 2014.

(x) Sunac Greentown Fanting was newly established in 2014.

(xi) The Group disposed of its 25% equity interest in and its shareholder’s loan to Poly Link Management to an independent third party for a total consideration of RMB1,090,000,000 in 2014.

(xii) Sino-Ocean Tian Qi, Sino-Ocean Canal Business District and Sino-Ocean New River Hotel are subsidiaries of Poly Link Management.

(xiii) Greentown Jinyu became an 85%-owned subsidiary of the Group in 2014 and the Group previously held a 35% equity interest in Greentown Jinyu. For details please refer to Note 30.

Summarised Financial Information of Material Associates Summarised financial information in respect of the Group’s material associates is set out below. The summarised financial information below represents amounts shown in the associates’ financial statements prepared in accordance with IFRSs.

All of these associates are accounted for using the equity method in these consolidated financial statements.

Associate Group A The financial information of the associates within Associate Group A are aggregated for disclosure purpose. The directors believe it is appropriate to aggregate these information as these associates are formed with the partners from the same group and are exposed to similar risks and returns.

2014 2013 RMB’000 RMB’000 Current assets 35,932,342 34,587,406 Non-current assets 3,033,645 2,116,784 Current liabilities 19,428,219 16,961,164 Non-current liabilities 12,266,367 12,694,705 Non-controlling interests of Associate Group A 1,049,442 1,062,604 Revenue 5,576,990 7,407,435 Profit for the year 223,080 629,959

Greentown China Holdings Limited Annual Report 2014 151

F-73 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

17. Interests in Associates (continued) Summarised Financial Information of Material Associates (continued) Associate Group A (continued) Reconciliation of the above summarised financial information to the carrying amount of the interest in the associate recognised in the consolidated financial statements:

2014 2013 RMB’000 RMB’000 Net assets attributable to owners of Associate Group A 6,221,958 5,985,717 Weighted average proportion of the Group’s ownership interests in Associate Group A 50% 50% Other adjustment 11,504 11,504 Carrying amount of the Group’s interest in Associate Group A 3,122,483 3,004,362

Aggregate Information of Associates that are not Individually Material:

2014 2013 RMB’000 RMB’000 Group’s share of total profit for the year 221,752 804,680 Aggregate carrying amount of the Group’s interests in these associates 5,602,471 7,011,344

The Group has discontinued recognition of its share of losses of certain associates as its share of losses of those associates equals or exceeds its interests in those associates. The amounts of unrecognised share of losses of these associates, both for the year and cumulatively, are as follows:

2014 2013 RMB’000 RMB’000 Unrecognised share of losses of associates for the year 67,814 26,088 Accumulated unrecognised share of losses of associates 93,902 26,088

152 Greentown China Holdings Limited Annual Report 2014

F-74 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

18. Interests in Joint Ventures

2014 2013 RMB’000 RMB’000 Cost of unlisted investments in joint venture 1,628,179 1,266,421 Share of post-acquisition profits, net of dividends received 179,708 581,800 1,807,755 1,848,221

As at 31 December 2014 and 2013, the Group had interests in the following principal joint ventures established and operating in the PRC:

Proportion of Ownership Interest/Voting Rights Name of Joint Venture Registered Capital Held by the Group Principal Activities 2014 2013 浙江綠西房地產集團有限公司 RMB100,000,000 50% 50% Investment holding, real Zhejiang Lvxi Real Estate Group Co., Ltd. (i) (i) estate development (“Zhejiang Lvxi Group”) and business consulting

臨安西子房地產開發有限公司 RMB100,000,000 50% 50% Real estate development Lin’an Xizi Real Estate Development Co., Ltd. (i) (i) (“Lin’an Xizi”)

浙江鐵投綠城投資有限公司 RMB80,000,000 50% 50% Investment holding Zhejiang Tietou Greentown Investment (ii) (ii) Co., Ltd. (“Zhejiang Tietou Greentown Investment”)

浙江鐵投綠城房地產開發有限公司 RMB80,000,000 50% 50% Real estate development Zhejiang Tietou Greentown Real Estate (ii) (ii) Development Co., Ltd. (“Zhejiang Tietou Greentown Real Estate”)

盈高有限公司 HKD10,000 50% 50% Investment holding Profit Pointer Limited (iii) (iii)

瀋陽全運村建設有限公司 USD290,000,000 50% 50% Real estate development Shenyang National Games Project Co., Ltd. (iii) (iii) (“Shenyang National Games”)

紹興綠城寶業房地產開發有限公司 RMB100,000,000 51% 51% Real estate development Shaoxing Greentown Baoye Real Estate (iv) (iv) Co., Ltd. (“Shaoxing Greentown Baoye”)

Greentown China Holdings Limited Annual Report 2014 153

F-75 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

18. Interests in Joint Ventures (continued)

Proportion of Ownership Interest/Voting Rights Name of Joint Venture Registered Capital Held by the Group Principal Activities 2014 2013 山東東城置業有限公司 RMB200,000,000 49% 49% Real estate development Shandong Dongc heng Real Estate Co., Ltd. (v) (v) (“Shandong Dongcheng”)

杭州綠城中勝置業有限公司 RMB100,000,000 55% 55% Real estate development Hangzhou Greentown Zhongsheng Real Estate (vi) (vi) Co., Ltd. (“Greentown Zhongsheng”)

浙江金盈置業有限公司 RMB400,000,000 25% 25% Real estate development Zhejiang Jinying (vii) (vii)

余姚綠城房地產開發有限公司 RMB99,000,000 47% 47% Real estate development Yuyao Greentown Real Estate Development (viii) (viii) Co., Ltd. (“Yuyao Greentown”)

舟山綠城海盛置業發展有限公司 RMB100,000,000 51% 51% Real estate development Zhoushan Greentown Haisheng Real Estate (ix) (ix) Co., Ltd. (“Zhoushan Greentown Haisheng”)

海寧綠城新湖房地產開發有限公司 RMB20,000,000 50% 50% Real estate development Haining Greentown Sinhoo Real Estate Development Co., Ltd.

杭州綠城北秀置業有限公司 RMB50,000,000 50% 50% Real estate development Hangzhou Greentown Beixiu Real Estate Co., Ltd.

杭州臨宜房地產開發有限公司 USD50,000,000 50% 50% Real estate development Hangzhou Linyi Real Estate Development Co., Ltd.

德清莫干山樂城置業有限公司 RMB100,000,000 50% 50% Real estate development Deqing Moganshan Lecheng Real Estate Co., Ltd.

154 Greentown China Holdings Limited Annual Report 2014

F-76 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

18. Interests in Joint Ventures (continued) The above table lists the joint venture of the Group which, in the opinion of the directors, principally affected the results or assets of the Group. To give details of other joint ventures would, in the opinion of the directors, result in particulars of excessive length.

Notes:

(i) Lin’an Xizi is a subsidiary of Zhejiang Lvxi Group.

(ii) Zhejiang Tietou Greentown Investment holds 100% equity interest in Zhejiang Tietou Greentown Real Estate.

(iii) Shenyang National Games is a subsidiary of Profit Pointer Limited.

(iv) Three out of five directors of Shaoxing Greentown Baoye are appointed by the Group, while a valid board resolution requires unanimous approval from all directors. Therefore, Shaoxing Greentown Baoye is accounted for as a joint venture of the Group.

(v) Two out of five directors of Shandong Dongcheng are appointed by the Group and the remaining three directors by the other equity holder, while a valid board resolution requires four-fifths of the total votes. Decisions about relevant activities of Shandong Dongcheng require unanimous consent from the Group and the other equity holders. Therefore, Shandong Dongcheng is accounted for as a joint venture of the Group.

(vi) Three out of five directors of Greentown Zhongsheng are appointed by the Group and the remaining two directors by the other equity holder, while a valid board resolution requires four-fifths approval from the directors. Decisions about relevant activities of Greentown Zhongsheng require unanimous consent from the Group and the other equity holders. Therefore, Greentown Zhongsheng is accounted for as a joint venture of the Group.

(vii) Zhejiang Jinying is a 50% joint venture of the Shanghai Greentown Woods Golf Villas Development Co., Ltd. Shanghai Greentown Woods Golf Villas Development Co., Ltd. is a 50%-owned subsidiary of the Group.

(viii) Two out of five directors of Yuyao Greentown are appointed by the Group, while a valid board resolution requires unanimous approval from all directors. Therefore, Yuyao Greentown is accounted for as a joint venture of the Group.

(ix) Three out of five directors of Zhoushan Greentown Haisheng are appointed by the Group, while a valid board resolution requires two thirds above approval from all directors. Decisions about relevant activities of Zhoushan Greentown Haisheng require unanimous consent from the Group and the other equity holders. Therefore, Zhoushan Greentown Haisheng is accounted for as a joint venture of the Group.

Summarised Financial Information of Material Joint Ventures Summarised financial information in respect of each of the Group’s material joint ventures is set out below. The summarised financial information below represents amounts shown in the joint ventures’ financial statements prepared in accordance with IFRSs.

The joint ventures are accounted for using the equity method in these consolidated financial statements.

Greentown China Holdings Limited Annual Report 2014 155

F-77 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

18. Interests in Joint Ventures (continued) Summarised Financial Information of Material Joint Ventures (continued) Joint Venture Company A

2014 2013 RMB’000 RMB’000 Current assets 1,415,804 3,679,326 Non-current assets 860 1,591 Current liabilities 769,781 2,708,090 Non-current liabilities 352,000 795,000

The above amounts of assets and liabilities include the following:

2014 2013 RMB’000 RMB’000 Cash and cash equivalents 149,578 177,490 Non-current financial liabilities (excluding trade and other payables and provisions) 352,000 795,000

2014 2013 RMB’000 RMB’000 Revenue 3,210,708 2,793,049 Profit for the year 178,184 134,243 Dividends received from the joint venture during the year 55,000 –

The above profit for the year include the following:

2014 2013 RMB’000 RMB’000 Depreciation and amortisation 703 696 Interest income 758 2,213 Income tax expense 104,301 74,671

156 Greentown China Holdings Limited Annual Report 2014

F-78 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

18. Interests in Joint Ventures (continued) Summarised Financial Information of Material Joint Ventures (continued) Joint Venture Company A (continued) Reconciliation of the above summarised financial information to the carrying amount of the interest in the joint venture recognised in the consolidated financial statements:

2014 2013 RMB’000 RMB’000 Net assets of Joint venture Company A 294,884 177,827 Proportion of the Group’s ownership interest in Joint venture Company A 55% 55% Effect of fair value adjustments at acquisition 3,127 20,948 Carrying amount of the Group’s interest in Joint venture Company A 165,313 118,753

Joint Venture Company B

2014 2013 RMB’000 RMB’000 Current assets 2,576,371 3,045,103 Non-current assets 12,426 18,868 Current liabilities 1,559,585 2,582,859 Non-current liabilities 727,950 335,000

The above amounts of assets and liabilities include the following:

2014 2013 RMB’000 RMB’000 Cash and cash equivalents 167,088 64,887 Current financial liabilities (excluding trade and other payables and provisions) 120,000 938,475 Non-current financial liabilities (excluding trade and other payables and provisions) 727,950 335,000

2014 2013 RMB’000 RMB’000 Revenue 1,497,955 – Profit (loss) for the year (25,133) (25,340)

Greentown China Holdings Limited Annual Report 2014 157

F-79 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

18. Interests in Joint Ventures (continued) Summarised Financial Information of Material Joint Ventures (continued) Joint Venture Company B (continued) The above profit (loss) for the year includes the following:

2014 2013 RMB’000 RMB’000 Depreciation and amortisation 708 841 Interest income 870 294 Income tax expense 90,298 (7,334)

Reconciliation of the above summarised financial information to the carrying amount of the interest in the joint venture recognised in the consolidated financial statements:

2014 2013 RMB’000 RMB’000 Net assets of Joint venture Company B 301,263 146,112 Proportion of the Group’s ownership interest in Joint venture Company B 49% 49% Effect of fair value adjustments at acquisition 197,092 285,432 Other adjustments 29,068 29,068 Carrying amount of the Group’s interest in Joint venture Company B 373,779 386,094

Aggregate Information of Joint Ventures that are Not Individually Material

2014 2013 RMB’000 RMB’000 Group’s share of (loss) profit for the year (17,807) 416,582

The Group has discontinued recognition of its share of losses of certain joint ventures as its share of losses of those joint ventures equals or exceeds its interests in those joint ventures. The amounts of unrecognised share of losses of these joint ventures, both for the year and cumulatively, are as follows:

2014 2013 RMB’000 RMB’000 Unrecognised share of losses of joint ventures for the year 196,976 162,578 Accumulated unrecognised share of losses of joint ventures 438,471 241,495

158 Greentown China Holdings Limited Annual Report 2014

F-80 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

19. Available-for-Sale Investments Available-for-sale investments comprise:

2014 2013 RMB’000 RMB’000 Non-current portion: Unlisted equity securities 388,617 377,010

The above unlisted equity securities were issued by private entities established in the PRC. The available-for-sale investments are measured at cost less impairment at the end of the reporting period because the range of reasonable fair value estimates is so significant that the directors are of the opinion that their fair values cannot be measured reliably.

20. Prepaid Lease Payment

2014 2013 RMB’000 RMB’000 The Group’s prepaid lease payment comprises:

Leasehold land in the PRC: Medium-term lease 684,274 678,159 Analysed for reporting purposes as: Current asset (included in trade and other receivables) 22,213 13,446 Non-current asset 662,061 664,713 684,274 678,159

Greentown China Holdings Limited Annual Report 2014 159

F-81 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

21. Deferred Taxation The following are the major deferred tax assets (liabilities) recognised and movements thereon during the current and prior years:

Temporary Differences on Revenue Recognition and Related Impairment Fair Value LAT Undistributed Cost of Sales Losses Tax Losses Adjustments Provision Profits Others Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 At 1 January 2013 29,122 57,063 133,771 (194,160) 571,652 (337,184) (16,938) 243,326 (Charge) credit to profit or loss 185,157 (15,663) (3,410) (21,475) 103,573 (150,000) 6,534 104,716 Acquisition of subsidiaries (Note 30) – – 1,488 – – – – 1,488 At 31 December 2013 214,279 41,400 131,849 (215,635) 675,225 (487,184) (10,404) 349,530 (Charge) credit to profit or loss (18,644) 43,985 25,290 (13,008) (22,651) (60,000) (5,554) (50,582) Acquisition of subsidiaries (Note 30) – – 18,830 – – – – 18,830 Disposal of subsidiaries – – – – (5,775) – – (5,775) At 31 December 2014 195,635 85,385 175,969 (228,643) 646,799 (547,184) (15,958) 312,003

Others represent mainly deferred tax liabilities recognised in respect of temporary differences arising from accelerated tax depreciation.

For the purpose of presentation in the consolidated statement of financial position, deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same legal entity and fiscal authority. The following is the analysis of the deferred tax balances for financial reporting purposes:

2014 2013 RMB’000 RMB’000 Deferred tax assets 1,116,046 1,053,244 Deferred tax liabilities (804,043) (703,714) 312,003 349,530

160 Greentown China Holdings Limited Annual Report 2014

F-82 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

21. Deferred Taxation (continued) At the end of the reporting period, the Group had unutilised tax losses of RMB2,134,358,000 (2013: RMB1,878,354,000) available for offset against future profits. Deferred tax asset has been recognised in respect of RMB703,874,000 (2013: RMB527,395,000) of such losses. No deferred tax asset has been recognised in respect of the remaining RMB1,430,484,000 (2013: RMB1,350,959,000) due to the unpredictability of future profit streams. Pursuant to the relevant laws and regulations in the PRC, the unrecognised tax losses at the end of the reporting period will expire in the following years:

2014 2013 RMB’000 RMB’000 2014 – 144,444 2015 93,491 94,903 2016 185,505 187,924 2017 385,987 389,832 2018 510,690 533,856 2019 254,811 – 1,430,484 1,350,959

Based on the latest budgets, management believes that there will be sufficient future profits for the realisation of the deferred tax assets recognised in respect of these tax losses.

Under the EIT Law of PRC, withholding tax is imposed on dividends declared in respect of profits earned by PRC subsidiaries from 1 January 2008 onwards. Deferred taxation has not been provided for in the consolidated financial statements in respect of certain temporary differences attributable to accumulated profits of the PRC subsidiaries amounting to RMB12,500,973,000 (31 December 2013: RMB11,100,973,000) as the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

22. Properties for Development Included in properties for development as at 31 December 2014 is an amount of RMB2,253,436,000 (2013: RMB2,139,387,000) in respect of long-term leasehold land for which the Group was in the process of obtaining the land use rights certificates.

All properties for development are expected to be recovered after more than 12 months from the end of the reporting period.

Greentown China Holdings Limited Annual Report 2014 161

F-83 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

23. Properties Under Development

2014 2013 RMB’000 RMB’000 Long-term leasehold land – at cost 19,325,206 18,096,461 Development costs 17,781,481 17,025,985 Finance costs capitalised 4,205,536 3,845,128 41,312,223 38,967,574

Properties under development for sale amounting to RMB16,044,213,000 (2013: RMB22,865,603,000) are expected to be recovered after more than 12 months from the end of the reporting period.

24. Other Current Assets Trade and Other Receivables, Deposits and Prepayments

2014 2013 RMB’000 RMB’000 Trade receivables 611,334 411,777 Other receivables 3,583,985 3,041,088 Prepayments and deposits 956,772 927,691 Consideration receivables from disposal of a subsidiary and an associate 63,150 – 5,215,241 4,380,556

The Group allows an average credit period of 90 days to certain trade customers with good credit standing. The aged analysis of trade receivables is stated below. The trade receivables which are aged 91 days or above are all past due but not impaired. The Group does not notice any significant changes in the credit quality of its trade receivables and the amounts are considered to be recoverable.

2014 2013 RMB’000 RMB’000 Within 30 days 256,574 146,659 31–90 days 104,182 62,526 91–180 days 19,494 19,550 181–365 days 91,240 49,080 Over 365 days 139,844 133,962 Trade receivables 611,334 411,777

162 Greentown China Holdings Limited Annual Report 2014

F-84 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

24. Other Current Assets (continued) Trade and Other Receivables, Deposits and Prepayments (continued) Most of the Group’s customers take out mortgages from banks to buy their properties. Should a customer fail to obtain a mortgage and honour the property sale and purchase agreement between himself and the Group, the Group has the right to revoke the agreement, reclaim the property and re-sell it in the market. The Group does not notice any significant changes in the credit quality of its trade receivables and the amounts are considered to be recoverable.

Included in other receivables were advances to third parties of RMB1,664,585,000 (2013: RMB1,865,066,000) as at 31 December 2014. The advances are interest free, unsecured and expected to be recovered within one year except for RMB712,196,000 (2013: RMB522,799,000) which carries interest at 8.5% to 14.5% (2013: 8% to 15%) per annum, is unsecured and is expected to be recovered within one year. The advances comprise mainly earnest money for potential projects. The Group has concentration of credit risk as 58% (2013: 53%) of the total advances to third parties was due from the five largest counterparties. The Group does not notice any significant changes in the credit quality of its advances to third parties and the amounts are considered to be recoverable.

Other receivables, other than advances to third parties which were mainly earnest money for potential projects, are repayable on demand. Prepayments and deposits are expected to be recovered after more than 12 months.

No allowance was made for trade and other receivables.

Bank Balances and Cash/Pledged Bank Deposits Bank balances and cash comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less. Bank balances carry interest at market rates which range from 0.35% to 2.35% (2013: 0.35% to 2.6%) per annum.

Pledged bank deposits represent deposits pledged to banks to secure short-term banking facilities granted to the Group. The pledged bank deposits carry interest at fixed rates which range from 0.35% to 4% (2013: 0.35% to 4.3%) per annum.

As at 31 December 2014, the Group had bank balances and cash (including pledged bank deposits) denominated in Renminbi amounting to RMB9,019,024,000 (2013: RMB11,146,577,000). Renminbi is not freely convertible into other currencies.

Bank balances and cash/pledged bank deposits that are denominated in currencies other than the functional currency of the respective group entities are set out below:

HKD USD RMB’000 RMB’000 As at 31 December 2014 11,275 53,958 As at 31 December 2013 5,984 128,518

Greentown China Holdings Limited Annual Report 2014 163

F-85 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

25. Trade and Other Payables The aged analysis of trade payables is stated as follows:

2014 2013 RMB’000 RMB’000 Within 30 days 5,307,305 5,682,270 31–90 days 1,455,515 850,113 91–180 days 2,291,915 1,050,500 181–365 days 1,459,852 1,637,541 Over 365 days 1,270,961 1,294,420 Trade payables 11,785,548 10,514,844 Other payables and accrued expenses 7,595,400 7,256,485 Consideration payables on acquisition of subsidiaries and a joint venture – 139,600 19,380,948 17,910,929

Trade payables and other payables principally comprise amounts outstanding for trade purposes and ongoing costs.

26. Bank and Other Borrowings

2014 2013 RMB’000 RMB’000 Secured bank loans (Note 34) 16,503,229 13,164,350 Unsecured bank loans 5,617,662 2,992,189 22,120,891 16,156,539 Secured other loans (Note 34) 4,971,908 5,796,819 Unsecured other loans 130,495 – 5,102,403 5,796,819 27,223,294 21,953,358

164 Greentown China Holdings Limited Annual Report 2014

F-86 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

26. Bank and Other Borrowings (continued)

2014 2013 RMB’000 RMB’000 Carrying amount repayable*:

Within one year 12,149,646 5,961,370 More than one year, but not exceeding two years 9,865,879 8,416,933 More than two years, but not exceeding three years 3,095,363 5,049,782 More than three years, but not exceeding four years 719,516 822,464 More than four years, but not exceeding five years 570,615 634,964 More than five years 804,750 1,011,320 27,205,769 21,896,833 Carrying amount of loans that are not repayable within one year from the end of the reporting period but contain a repayment on demand clause (shown under current liabilities), which is originally repayable:

More than one year, but not exceeding two years – 13,300 More than two years, but not exceeding three years 900 13,300 More than three years, but not exceeding four years 13,300 13,300 More than four years, but not exceeding five years 3,325 13,300 More than five years – 3,325 17,525 56,525 27,223,294 21,953,358

Less: Amounts due within one year shown under current liabilities (12,167,171) (6,017,895) Amounts shown under non-current liabilities 15,056,123 15,935,463

* The amounts due are based on scheduled repayment dates set out in the loan agreements.

Greentown China Holdings Limited Annual Report 2014 165

F-87 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

26. Bank and Other Borrowings (continued) Bank and other borrowings can be further analysed as follows:

2014 2013 RMB’000 RMB’000 Fixed-rate 9,597,644 8,113,896 Variable-rate 17,625,650 13,839,462 27,223,294 21,953,358

Interest on variable-rate bank and other borrowings is based on:

2014 2013 RMB’000 RMB’000 The People’s Bank of China benchmark rate 11,638,688 11,474,273 London Interbank Offered Rate 5,986,962 2,365,189 17,625,650 13,839,462

The average interest rates were as follows:

2014 2013 Bank loans 6.66% 7.52% Other loans 10.51% 12.19%

Bank and other borrowings that are denominated in currencies other than the functional currency of the respective group entities are set out below:

USD RMB’000 As at 31 December 2014 5,986,962 As at 31 December 2013 2,365,189

166 Greentown China Holdings Limited Annual Report 2014

F-88 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

26. Bank and Other Borrowings (continued) At the end of the reporting period, certain bank loans are guaranteed by the following companies:

2014 2013 RMB’000 RMB’000 Secured bank loans:

Associates – 490,000 Non-controlling shareholders of subsidiaries 186,200 1,018,380 Independent third parties 360,000 580,000 Unsecured bank loans:

Independent third parties 195,500 207,000 27. Senior Notes New USD Senior Notes – Unsecured On 4 February 2013, the Company issued senior notes with an aggregate principal amount of USD400,000,000 at 100% of face value (the “USD Senior Notes”), which are listed on The Stock Exchange of Hong Kong Limited (“Stock Exchange”). The USD Senior Notes carry interest at the rate of 8.5% per annum payable semi-annually in arrears. The net proceeds, after deduction of direct issuance costs, amounted to approximately USD394,626,000 (approximately RMB2,480,617,000). The USD Senior Notes will mature on 4 February 2018.

On 26 March 2013, the Company issued another senior notes with an aggregate principal amount of USD300,000,000 at 102.5% of face value plus accrued interest (the “Additional USD Senior Notes”) that were consolidated and formed a single series with the USD Senior Notes. The Additional USD Senior Notes are listed on the Stock Exchange and carry the same terms and conditions as the USD Senior Notes. The net proceeds, after deduction of direct issuance costs, amounted to approximately USD308,515,000 (approximately RMB1,934,851,000).

The principal terms of the USD Senior Notes and Additional USD Senior Notes (collectively as “New USD Senior Notes”) are disclosed in the Group’s 2013 consolidated financial statements.

The movements of New USD Senior Notes during the year are set out below:

RMB’000 At 1 January 2014 4,265,827 Exchange realignment 17,422 Interest charged during the year 363,975 Interest paid/payable during the year (365,444) At 31 December 2014 4,281,780

Greentown China Holdings Limited Annual Report 2014 167

F-89 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

27. Senior Notes (continued) RMB Senior Notes – Unsecured On 13 May 2013, the Company issued senior notes with an aggregate principal amount of RMB2,500,000,000 at 100% of face value (the “RMB Senior Notes”), which are listed on the Stock Exchange. The RMB Senior Notes carry interest at the rate of 5.625% per annum payable semi-annually in arrears. The net proceeds, after deduction of direct issuance costs, amounted to approximately RMB2,475,911,000. The RMB Senior Notes will mature on 13 May 2016.

The principal terms of RMB Senior Notes is disclosed in the Group’s 2013 consolidated financial statements.

The movements of RMB Senior Notes during the year are set out below:

RMB’000 At 1 January 2014 2,480,996 Interest charged during the year 148,655 Interest paid/payable during the year (140,625) At 31 December 2014 2,489,026

Second USD Senior Notes – Unsecured On 24 September 2013, the Company issued senior notes with an aggregate principal amount of USD300,000,000 at 100% of face value (the “Second USD Senior Notes”), which are listed on the Stock Exchange. The Second USD Senior Notes carry interest at the rate of 8.0% per annum payable semi-annually in arrears. The net proceeds, after deduction of direct issuance costs, amounted to approximately USD296,947,000 (approximately RMB1,826,138,000). The Second USD Senior Notes will mature on 24 March 2019.

The principal terms of Second USD Senior Notes is disclosed in the Group’s 2013 consolidated financial statements.

The movements of Second USD Senior Notes during the year are set out below:

RMB’000 At 1 January 2014 1,811,361 Exchange realignment 7,325 Interest charged during the year 150,007 Interest paid/payable during the year (147,370) At 31 December 2014 1,821,323

168 Greentown China Holdings Limited Annual Report 2014

F-90 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

27. Senior Notes (continued) The summary of movements of all senior notes during the year is set out below:

RMB’000 At 1 January 2014 8,558,184 Exchange realignment 24,747 Interest charged during the year 662,637 Interest paid/payable during the year (653,439) At 31 December 2014 8,592,129

All of the senior notes contain early redemption options. Early redemption options are regarded as embedded derivatives not closely related to the host contracts. The directors consider that the fair value of the early redemption options is insignificant on 31 December 2014.

28. Share Capital

Number of Share Shares Capital HKD’000 Authorised Ordinary shares of HKD0.10 each At 31 December 2013 and 2014 10,000,000,000 1,000,000 Issued and fully paid Ordinary shares of HKD0.10 each At 1 January 2013 2,143,175,190 214,317 Exercise of share options 15,325,500 1,533 At 31 December 2013 2,158,500,690 215,850 Exercise of share options 2,447,000 245 At 31 December 2014 2,160,947,690 216,095

RMB’000 Shown on the consolidated statement of financial position As at 31 December 2014 208,850 As at 31 December 2013 208,656

All shares issued during the year rank pari passu with other shares in issue in all respects.

Greentown China Holdings Limited Annual Report 2014 169

F-91 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

29. Convertible Securities/Perpetual Securities On 28 January 2014 (the “Issue Date”), Moon Wise Global Limited (“Moon Wise”), a wholly-owned subsidiary of the Company, issued USD denominated subordinated perpetual capital securities (“Perpetual Securities”) with an aggregate principal amount of USD500,000,000. The Company has agreed to guarantee on a subordinated basis the due payment of all sums expressed to be payable by Moon Wise under the Perpetual Securities.

The Perpetual Securities confer the holders a right to receive distribution at the applicable distribution rate from the Issue Date semi-annually in arrears. The distribution rate shall be (i) in respect of the period from, and including the Issue Date to, but excluding the 5th anniversary from the Issue Date (the “First Call Date”), 9% per annum and (ii) in respect of the periods (A) from and including the First Call Date to, but excluding the immediately following reset date and (B) from, and including, each reset date falling after the First Call Date to, but excluding, the immediately following reset date, the initial spread of 7.373% plus the applicable 5-year U.S. treasury rate plus 5% per annum. A reset date is defined as the First Call Date and each day falling on the expiry of every five calendar years after the First Call Date. The applicable 5-year U.S. treasury rate refers to the prevailing rate that represents the average for the week immediately prior to the date on which the reset is calculated as published by the Board of Governors of the U.S. Federal Reserve.

Moon Wise may at its sole discretion elect to defer any scheduled distribution to the next scheduled distribution payment date by giving prior written notice. Moon Wise may further defer any arrears of distribution following the foregoing notice requirement and is not subject to any limits as to the number of times distributions and arrears of distribution can be deferred. Unless and until (i) Moon Wise or the Company satisfies in full all outstanding arrears of distribution and any additional distribution amount or (ii) it is permitted by a resolution passed by a majority of not less than three quarters of the votes casted at a duly convened meeting of the holders of the Perpetual Securities, Moon Wise and the Company shall not declare or pay any dividends, distributions or make payment on, and will procure that no dividend or other payment is made on or redeem, reduce, cancel, buy-back or acquire for any consideration any share capital thereof (including preference shares) or parity securities.

As the Perpetual Securities only impose contractual obligations on the Group to repay principal or to pay any distributions under certain circumstances which are at the Group’s discretion, they have in substance confer the Group an unconditional right to avoid delivering cash or other financial asset to settle contractual obligations, therefore they do not meet the definition for classification as financial liabilities under IAS 32 Financial Instruments: Presentation. As a result, the whole instrument is classified as equity, and distributions if and when declared are treated as equity dividends.

Distribution of RMB138,650,000 for the year ended 31 December 2014 has been provided and paid by the Company.

The net proceeds of the Perpetual Securities was used to replace the convertible securities issued in June 2012 (“Convertible Securities”) and for general working capital purposes. The principal terms and conditions of the Convertible Securities is disclosed in the Group’s 2013 consolidated financial statements. The Convertible Securities has been redeemed on 20 February 2014 at a premium and a final distribution of RMB99,896,000 has been paid by the Company.

170 Greentown China Holdings Limited Annual Report 2014

F-92 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

30. Acquisition of Subsidiaries Particulars of the subsidiaries acquired during 2014 were as follows:

Effective Equity Interest Acquired Company Principal Activities Acquisition Date Acquired Consideration RMB’000 馬鞍山偉華置業發展有限公司 Real estate 27 Feb 2014 70% 74,200 Ma’anshan Weihua Property development Development Co., Ltd. (“Ma’anshan Weihua”) (i)

麒愉有限公司 Investment holding 27 March 2014 50% – Magic Delight Limited (“Magic Delight”)(ii)

杭州綠城九龍倉置業有限公司 Real estate 27 March 2014 50% – Hangzhou Greentown Wharf development Property Co., Ltd. (“Hangzhou Greentown Wharf”) (ii)

杭州綠城錦玉置業有限公司 Real estate 30 May 2014 50% 147,370 Greentown Jinyu (iii) development

杭州余杭綠城藍庭護理院 Health care 7 July 2014 85% 1,500 Hangzhou Yuhang Greentown Lanting Nursing Home (“Lanting Nursing Home” )(iv)

杭州余杭綠城藍庭老年頤養公寓 Health care 7 July 2014 85% 300 Hangzhou Yuhang Greentown Lanting Elderly Apartment (“Lanting Elderly Apartment”)(v)

杭州西郊農莊有限公司 Agriculture 25 Sept 2014 100% 10,000 Hangzhou Western Suburbs Farm Co., Ltd. (“Western Suburbs Farm”) (vi) 233,370

Greentown China Holdings Limited Annual Report 2014 171

F-93 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

30. Acquisition of Subsidiaries (continued) Notes:

(i) Greentown Real Estate Group Co., Ltd., a wholly-owned subsidiary of the Company acquired 70% equity interest of Ma’anshan Weihua. The Group acquired Ma’anshan Weihua so as to continue the expansion of the Group’s property development operation.

(ii) Onnex Limited, a wholly-owned subsidiary of the Company, acquired 50% equity interest of Magic Delight. Magic Delight became a subsidiary of the Group because the Group has the right to appoint majority of directors of Magic Delight and hence the power over Magic Delight and has the ability to use its power to affect its returns. Hangzhou Greentown Wharf is a wholly-owned subsidiary of Magic Delight, therefore was also acquired by the Group. The Group acquired Magic Delight and Hangzhou Greentown Wharf so as to continue the expansion of the Group’s property development operation.

(iii) Greentown Real Estate Group Co., Ltd., a wholly-owned subsidiary of the Company acquired additional 50% equity interest of Greentown Jinyu in 2014. Greentown Jinyu was previously a 35%-owned associate of the Group. The Group acquired additional 50% equity interest so as to continue the expansion of the Group’s property development operation.

(iv) Hangzhou Yuhang Jinteng Real Estate Development Co., Ltd. (“Yuhang Jinteng”), an 85%-owned subsidiary of the Company acquired 100% equity interest of Lanting Nursing Home in 2014.

(v) Yuhang Jinteng, an 85%-owned subsidiary of the Company acquired 100% equity interest of Lanting Elderly Apartment in 2014.

(vi) Hangzhou Nuozhen Investment Co., Ltd., a newly established wholly-owned subsidiary of the Company acquired 100% equity interest of Western Suburbs Farm in 2014.

172 Greentown China Holdings Limited Annual Report 2014

F-94 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

30. Acquisition of Subsidiaries (continued) Particulars of the subsidiaries acquired during 2013 were as follows:

Effective Equity Interest Acquired Company Principal Activities Acquisition Date Acquired Consideration RMB’000 浙江文瀾文化發展有限公司 Production of literary 5 March 2013 52.85% 2,400 Zhejiang Wenlan Culture Development products Co., Ltd (“Zhejiang Wenlan”) (i)

海南中油深海養殖科技開發有限公司 Real estate 15 January 2013 51% 104,090 Hainan Zhongyou Deep Sea Cultivation development Technology Development Co., Ltd. (“Hainan Zhongyou”) (ii)

綠城恒基（大慶）置業有限公司 Real estate 11 October 2013 51% 13,000 Greentown Hengji Daqing Real Estate development Development Co., Ltd. (“Greentown Hengji Daqing “) (iii)

慈溪綠城房地產發展有限公司 Real estate 5 July 2013 100% 68,600 Cixi Greentown Property (iv) development 188,090

Notes:

(i) Hangzhou Golden Horse Real Estate Development Co., Ltd., a 51%-owned subsidiary of the Company, and Hangzhou Greentown Haiqi Real Estate Development Co., Ltd., a wholly-owned subsidiary of the Company, each acquired 35% equity interest of Zhejiang Wenlan.

(ii) Hainan Greentown Gaodi Investment Co., Ltd., a 51%-owned subsidiary of the Company, acquired 100% equity interest of Hainan Zhongyou.

(iii) Greentown Hengji Daqing was previously a 25% associate of the Group. Greentown Hengji Daqing is engaged in property development business. The Group acquired additional 26% equity interest so as to continue the expansion of the Group’s property development operation.

(iv) Cixi Greentown Property was previously a 30% associate of the Group. Cixi Greentown Property is engaged in property development business. The Group acquired additional 70% equity interest so as to continue the expansion of the Group’s property development operation.

Greentown China Holdings Limited Annual Report 2014 173

F-95 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

30. Acquisition of Subsidiaries (continued) A summary of the effects of the acquisition of these subsidiaries is as follows:

2014 2013 RMB’000 RMB’000 Net assets acquired: Property, plant and equipment 3,231 5,166 Prepaid lease payment 44,416 – Rental paid in advance – 429 Deferred tax assets 18,830 1,488 Properties for development 1,461,330 149,571 Properties under development 4,651,022 1,297,648 Inventories 1,437 – Trade and other receivables, deposits and prepayments 30,776 240,652 Amounts due from related parties 15 2,165 Prepaid income taxes 154,835 – Prepaid other taxes 213,614 13,995 Bank balances and cash 239,985 28,288 Trade and other payables (148,220) (347,653) Pre-sale deposits (4,060,190) (204,637) Amounts due to related parties (468,903) (432,285) Income taxes payable (3,129) (74) Other taxes payable (1) – Bank and other borrowings (1,724,681) (499,950) 414,367 254,803 Goodwill 900 501 Non-controlling interests (77,375) (25,314) 337,892 229,990 Less: Transferred from interests previously held and classified as associates (65,963) (37,977) Gain on re-measurement of associates to acquisition date fair value in business combination achieved in stages (Note i) (37,196) (3,923) Gain on acquisition of a subsidiary (Note ii) (1,363) – 233,370 188,090 Total consideration, satisfied by: Cash 233,370 118,490 Consideration payable – 69,600 233,370 188,090 Net cash flow arising on acquisition Cash paid (233,370) (118,490) Bank balances and cash acquired 239,985 28,288 6,615 (90,202)

174 Greentown China Holdings Limited Annual Report 2014

F-96 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

30. Acquisition of Subsidiaries (continued) Note:

(i) The Group’s 35% equity interest in Greentown Jinyu, which was previously accounted for as an associate, was remeasured to its fair value upon acquisition, resulting in a gain of RMB37,196,000.

(ii) The acquisition of Magic Delight and Hangzhou Greentown Wharf was completed with a consideration of HK$1, resulting in a gain of RMB1,363,000.

The acquisition of the subsidiaries has been accounted for using the acquisition method. The effect of the acquisitions was presented together as the assets and liabilities acquired from Magic Delight, Hangzhou Greentown Wharf, Lanting Nursing Home, Lanting Elderly Apartment and Western Suburbs Farm were not material in comparison to the assets and liabilities acquired from Ma’anshan Weihua and Greentown Jinyu.

The receivables acquired (which principally comprised trade and other receivables, deposits and prepayments, amounts due from related parties) with a fair value of RMB30,791,000 at the date of acquisition had gross contractual amounts of RMB30,791,000, which were expected to be fully collected.

The non-controlling interest recognised at the acquisition date was measured by reference to the proportionate share of the recognised amounts of net assets of subsidiaries and amounted to RMB77,375,000.

Ma’anshan Weihua, Magic Delight, Hangzhou Greentown Wharf, Lanting Nursing Home, Lanting Elderly Apartment and Western Suburbs Farm did not contribute any revenue to the Group between the date of acquisition and the end of the year. Greentown Jinyu contributed RMB3,743,750,000 in revenue to the Group between the date of acquisition and the end of the period.

The losses attributable to Ma’anshan Weihua, Magic Delight, Hangzhou Greentown Wharf, Lanting Nursing Home, Lanting Elderly Apartment and Western Suburbs Farm amounted to RMB6,869,000, RMB18,068,000, RMB4,028,000, RMB353,000, RMB518,000 and RMB1,432,000 respectively have been recognised in the Group’s profit for the year between the date of acquisition and the end of the year. The profits attributable to Greentown Jinyu amounted to RMB173,744,000 have been recognised in the Group’s profit for the year between the date of acquisition and the end of the year.

Had the acquisition of the subsidiaries been effected at 1 January 2014, the effect on the Group’s revenue and profit for the year ended 31 December 2014 would have been insignificant.

Acquisition-related costs were immaterial and had been excluded from the consideration transferred and had been recognised as an expense in the current year, within the Administrative expenses line item in the consolidated statement of profit or loss and other comprehensive income.

Greentown China Holdings Limited Annual Report 2014 175

F-97 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

31. Operating Leases The Group as Lessee

2014 2013 RMB’000 RMB’000 Minimum lease payments made under operating leases in respect of buildings during the year 104,860 93,034

At the end of the reporting period, the Group had commitments for future minimum lease payments under non-cancellable operating leases which fall due as follows:

2014 2013 RMB’000 RMB’000 Within one year 41,632 34,377 In the second to fifth year inclusive 78,417 27,262 120,049 61,639

Operating lease payments represent rentals payable by the Group for certain office premises. Leases are negotiated for a term ranging from 1 to 5 years with fixed rentals.

The Group as Lessor

2014 2013 RMB’000 RMB’000 Property rental income, net of negligible outgoings 135,072 121,381

At the end of the reporting period, the Group had contracted with tenants for the following future minimum lease payments:

2014 2013 RMB’000 RMB’000 Within one year 54,158 40,590 In the second to fifth year inclusive 29,194 14,537 After five years 30,957 5,563 114,309 60,690

Property rental income represents rentals receivable by the Group. Leases are negotiated for a term ranging from three months to fifteen years with fixed rentals.

176 Greentown China Holdings Limited Annual Report 2014

F-98 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

32. Commitments

2014 2013 RMB’000 RMB’000 Commitments contracted for but not provided in the consolidated financial statements in respect of: Properties for development and properties under development and construction in progress 13,786,137 14,064,585

In addition to the above, the Group’s share of the commitments of its joint ventures are as follows:

2014 2013 RMB’000 RMB’000 Contracted for but not provided in respect of properties for development and properties under development 6,968,762 2,136,249 33. Share-Based Payment Transactions The Company’s share option scheme (the “Scheme”) was adopted pursuant to the shareholders’ resolution passed on 22 June 2006 for the primary purpose of providing incentives and/or reward to directors and employees of the Group and will expire on 21 June 2016. Under the Scheme, the Board of Directors of the Company may grant options to eligible employees, including directors of the Company and its subsidiaries, to subscribe for shares in the Company.

The total number of shares in respect of which options may be granted under the Scheme is not permitted to exceed 10% of the shares of the Company in issue at any point in time, without prior approval from the Company’s shareholders. The number of shares issued and to be issued in respect of which options granted and may be granted to any individual in any one year is not permitted to exceed 1% of the shares of the Company in issue at any point in time, without prior approval from the Company’s shareholders. Options granted to independent non-executive directors and substantial shareholders of the Company in excess of 0.1% of the Company’s share capital or with a value in excess of HKD5 million must be approved in advance by the Company’s shareholders.

Options may be exercised at any time from the date of grant of the share option to the expiry of the Scheme, unless otherwise specified in the Scheme. The exercise price is determined by the directors of the Company, and will not be less than the higher of (i) the closing price of the Company’s shares on the date of grant; (ii) the average closing price of the share for the five business dates immediately preceding the date of grant; and (iii) the nominal value of the Company’s shares.

Greentown China Holdings Limited Annual Report 2014 177

F-99 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

33. Share-Based Payment Transactions (continued) Details of specific categories of options granted in 2009 are as follows:

Date of Grant Vesting Period Exercise Period Exercise Price Fair Value 2009A 22/1/2009 22/1/2009-21/1/2011 22/1/2009-21/1/2019 HK$2.89 HK$1.19 2009B 13/5/2009 13/5/2009-12/5/2012 13/5/2009-12/5/2019 HK$7.16 HK$3.41 2009C 22/6/2009 22/6/2009-21/6/2011 22/6/2009-21/6/2019 HK$11.00 HK$4.71 2009D 17/7/2009 17/7/2009-16/7/2011 17/7/2009-16/7/2019 HK$11.59 HK$4.17

The closing prices of the Company’s shares on 22 January, 13 May, 22 June and 17 July 2009, the dates of grant, were HK$2.75, HK$7.16, HK$11.00 and HK$11.52 respectively.

The share options are exercisable during the following periods:

2009A (i) up to 50% of the share options granted to each grantee from 22 January 2009; (ii) up to 75% of the share options granted to each grantee at any time after the expiration of 12 months from 22 January 2009; and (iii) all the remaining share options granted to each grantee at any time after the expiration of 24 months from 22 January 2009, and in each case, not later than 21 January 2019.

2009B (i) up to 33% of the share options granted to each grantee from 13 May 2009; (ii) up to 67% of the share options granted to each grantee at any time after the expiration of 24 months from 13 May 2009; and (iii) all the remaining share options granted to each grantee at any time after the expiration of 36 months from 13 May 2009, and in each case, not later than 12 May 2019.

2009C (i) up to 50% of the share options granted to each grantee from 22 June 2009; (ii) up to 75% of the share options granted to each grantee at any time after the expiration of 12 months from 22 June 2009; and (iii) all the remaining share options granted to each grantee at any time after the expiration of 24 months from 22 June 2009, and in each case, not later than 21 June 2019.

2009D (i) up to 50% of the share options granted to each grantee from 17 July 2009; (ii) up to 75% of the share options granted to each grantee at any time after the expiration of 12 months from 17 July 2009; and (iii) all the remaining share options granted to each grantee at any time after the expiration of 24 months from 17 July 2009, and in each case, not later than 16 July 2019.

178 Greentown China Holdings Limited Annual Report 2014

F-100 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

33. Share-Based Payment Transactions (continued) The following table discloses movements of the Company’s share options held by directors and employees during the year:

Outstanding at Exercised Forfeited Option Type 1/1/2014 During Year During Year 31/12/2014 2009A 12,122,000 (2,447,000) (53,000) 9,622,000 2009B 3,359,000 – – 3,359,000 2009C 29,576,500 – (127,500) 29,449,000 2009D 15,000,000 – – 15,000,000 60,057,500 (2,447,000) (180,500) 57,430,000 Exercisable at the end of the year 57,430,000 Weighted average exercise price HK$9.30 HK$2.89 HK$8.62 HK$9.57

Outstanding at Exercised Forfeited Option Type 1/1/2013 During Year During Year 31/12/2013 2009A 18,903,500 (6,781,500) – 12,122,000 2009B 5,216,500 (1,857,500) – 3,359,000 2009C 36,437,000 (6,686,500) (174,000) 29,576,500 2009D 15,000,000 – – 15,000,000 75,557,000 (15,325,500) (174,000) 60,057,500 Exercisable at the end of the year 60,057,500 Weighted average exercise price HK$8.82 HK$6.95 HK$11.00 HK$9.30

In respect of the share options exercised during the year, the weighted average share price at the dates of exercise is HK$8.09 (2013: HK$15.36).

HK$1.00 is payable for each acceptance of grant of share options. In addition, (i) in respect of the 2009A share options, certain grantees were required to pay an option premium of HK$1.00 per share option up front; and (ii) in respect of the 2009C share options, certain grantees were required to pay an option premium of HK$3.50 per share option in three annual instalments. As at 31 December 2014, share option premiums receivable amounting to RMB62,844,000 (2013: RMB63,526,000) were included in current other receivables according to the payment terms of the share option premiums.

The estimated fair values of the 2009A, 2009B, 2009C and 2009D share options at their respective dates of grant are RMB39,173,000, RMB30,023,000, RMB168,173,000 and RMB55,132,000 respectively.

Greentown China Holdings Limited Annual Report 2014 179

F-101 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

33. Share-Based Payment Transactions (continued) The following assumptions were used to calculate the fair values of the share options:

2009A 2009B 2009C 2009D Grant date share price HK$2.75 HK$7.16 HK$11.00 HK$11.52 Exercise price HK$2.89 HK$7.16 HK$11.00 HK$11.59 Expected life 10 years 10 years 10 years 5.1 years Expected volatility 58% 59% 59% 57% Dividend yield 2.81% 2.81% 4.16% 4.16% Risk-free interest rate 1.450% 2.372% 2.951% 1.79%

The Binomial model has been used to estimate the fair value of the 2009A, 2009B and 2009C share options. The Black-Scholes pricing model has been used to estimate the fair value of the 2009D share options. The variables and assumptions used in computing the fair value of the share options are based on the directors’ best estimate. Changes in variables and assumptions may result in changes in the fair value of the share options.

Expected volatility was determined by using the historical volatility of the share price of comparable listed companies over the most recent period. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

34. Pledge of Assets At the end of the reporting period, the following assets were pledged to banks and other parties to secure credit facilities granted to the Group:

2014 2013 RMB’000 RMB’000 Land and buildings 15,762 16,317 Hotel buildings 3,487,208 1,484,407 Construction in progress 49,131 533,039 Prepaid lease payment 536,345 470,343 Properties for development 600,577 431,533 Properties under development 13,808,752 15,843,475 Completed properties for sale 3,967,235 1,201,163 Investment properties 1,860,000 1,800,000 Pledged bank deposits 1,350,690 595,038 Interests in associates 429,987 255,270 Interests in joint ventures 111,491 94,004 26,217,178 22,724,589

180 Greentown China Holdings Limited Annual Report 2014

F-102 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

35. Retirement Benefits Plans The employees of the Group’s subsidiaries in the PRC are members of the state-managed retirement benefits schemes operated by the PRC government. The PRC subsidiaries are required to contribute a certain percentage of payroll costs to the retirement benefits schemes to fund the benefits. The only obligation of the Group with respect to the retirement benefits schemes is to make the specified contributions.

36. Contingent Liabilities (i) Guarantees The Group provided guarantees of RMB17,826,248,000 (2013: RMB17,625,119,000) at 31 December 2014 to banks in favour of its customers in respect of the mortgage loans provided by the banks to those customers for the purchase of the Group’s developed properties. These guarantees provided by the Group to the banks will be released upon receiving the building ownership certificates of the respective properties by the banks from the customers as a pledge for security to the mortgage loans granted.

The Group also provided guarantees to banks and other parties in respect of credit facilities utilised by the following companies:

2014 2013 RMB’000 RMB’000 Credit guarantees provided to: Associates 5,912,621 6,570,135 Joint ventures 1,532,470 336,000 Independent third parties 300,000 300,000 7,745,091 7,206,135

2014 2013 RMB’000 RMB’000 Mortgage and charge guarantees provided to: Associates 804,987 255,270 Joint ventures 423,880 456,910 1,228,867 712,180 Total 8,973,958 7,918,315

Greentown China Holdings Limited Annual Report 2014 181

F-103 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

36. Contingent Liabilities (continued) (i) Guarantees (continued) Contingent liabilities arising from interests in associates at the end of the reporting period:

2014 2013 RMB’000 RMB’000 Share of mortgage loan guarantees provided by associates to banks in favour of its customers 5,097,567 5,076,552

Contingent liabilities arising from interests in joint ventures at the end of the reporting period:

2014 2013 RMB’000 RMB’000 Share of mortgage loan guarantees provided by joint ventures to banks in favour of its customers 2,317,055 1,667,378

The directors consider that the fair value of the above guarantees is insignificant on initial recognition and it is not probable that an outflow in settlement will be required.

(ii) Litigation against Zhejiang Fosun Commerce Development Limited (“Zhejiang Fosun”) On 29 December 2011, Zhejiang Jiahe Industrial Co., Ltd. (“Greentown Jiahe”), a wholly-owned subsidiary of the Company, Shanghai Zendai Land Company Limited (“Shanghai Zendai Land”), a wholly-owned subsidiary of Shanghai Zendai Property Limited, a company listed on the Stock Exchange and an independent third party, and Shanghai Chang Ye Investment Management Consulting Co., Ltd. (“Shanghai Chang Ye”), a wholly-owned subsidiary of SOHO China Limited, entered into an agreement pursuant to which Shanghai Chang Ye had conditionally agreed to acquire, and (i) Greentown Jiahe had conditionally agreed to sell its 100% equity interest in Hangzhou Greentown Hesheng Investment Company (“Greentown Hesheng”) and its loan granted to Greentown Hesheng; and (ii) Shanghai Zendai Land had conditionally agreed to sell its 100% equity interest in Shanghai Zendai Wudaokou Property Company Limited (“Shanghai Zendai Wudaokou”) and its loan granted to Shanghai Zendai Wudaokou. Pursuant to a supplementary agreement dated 9 January 2012, the relevant parties agreed that Shanghai Chang Sheng Investment Management Consulting Co., Ltd. (“Shanghai Chang Sheng”) should assume all rights, obligations and liabilities of Shanghai Chang Ye under the equity transfers and loan assignments. Greentown Hesheng and Shanghai Zendai Wudaokou owned 10% and 40% equity interests respectively in Shanghai Haizhimen Property Management Co., Ltd. (“Shanghai Haizhimen”), while Zhejiang Fosun, a wholly-owned subsidiary of Fosun International Limited, a company listed on the Stock Exchange, owned the remaining 50% equity interest in Shanghai Haizhimen. Shanghai Haizhimen indirectly owns 100% interest in a land parcel in Shanghai. The disposal of the 100% equity interest in Greentown Hesheng resulted in a gain of RMB115,330,000 to the Group in 2012.

182 Greentown China Holdings Limited Annual Report 2014

F-104 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

36. Contingent Liabilities (continued) (ii) Litigation against Zhejiang Fosun Commerce Development Limited (“Zhejiang Fosun”) (continued) On 30 May 2012, Zhejiang Fosun filed a civil suit to Shanghai No. 1 Intermediate People’s Court (the “Court”) and received a notification of acceptance from the Court, pursuant to which Zhejiang Fosun had initiated a civil action against the relevant parties to protect its pre-emptive rights in the above-mentioned indirect transfers of equity interests in Shanghai Haizhimen by asking for the transactions to be invalidated.

On 4 June 2012, the Group was served with a document of summons issued by the Court in relation to the civil action, pursuant to which Greentown Jiahe, among others, is named as a defendant.

On 29 November 2012, a preliminary trial was held at the Court. On 24 April 2013, the Court issued its judgment (the “Judgment”), granting orders for (among other things):

1. the invalidation of the agreement to transfer 100% equity interests in Shanghai Zendai Wudaokou and Greentown Hesheng respectively from Shanghai Zendai Land and Greentown Jiahe to Shanghai Chang Ye as stipulated under the agreement dated 29 December 2011;

2. the invalidation of the equity transfer agreement in relation to the transfer of 100% equity interests in Shanghai Zendai Wudaokou by Shanghai Zendai Land to Shanghai Chang Sheng (“Shanghai Zendai Wudaokou Transfer”) dated 29 December 2011;

3. the invalidation of the equity transfer agreement in relation to the transfer of 100% equity interests in Greentown Hesheng by Greentown Jiahe to Shanghai Chang Sheng (“Greentown Hesheng Transfer”) dated 12 January 2012; and

4. the restatement of the ownership of Shanghai Zendai Wudaokou and Greentown Hesheng back to the state before the Shanghai Zendai Wudaokou Transfer and Greentown Hesheng Transfer, respectively.

The Company has reviewed the Judgment and SOHO China Limited had made an appeal to the Higher People’s Court of Shanghai in relation to the Judgment. As of the date of these financial statements, the second trial is in process.

Having consulted with its legal advisers, the Company believes the Judgment cannot be enforced and will not become effective pending the results of the appeal. The Company considers that the Judgement does not have any material adverse effect on the operation of financial position of the Group.

Greentown China Holdings Limited Annual Report 2014 183

F-105 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

37. Related Party Disclosures (i) During the year, in addition to those disclosed in other notes to the consolidated financial statements, the Group entered into the following transactions with related parties:

2014 2013 RMB’000 RMB’000 Sale of properties to a non-controlling shareholder – 249,613 Sale of materials to joint ventures and associates (Note) 4,621 32,911 Construction service income from associates (Note) 872 2,143 Construction service income from joint ventures (Note) 3,551 3,820 Construction consulting service income from joint ventures and associates (Note) 4,039 29,543 Rental expenses paid/payable to: – shareholders’ companies 8,534 8,624 – non-controlling shareholders 64 561 Purchases from shareholders’ companies (Note) 4,480 7,956 Interior decoration service fees paid/payable to associates (Note) 40,216 12,962 Property management fees paid/payable to shareholders’ companies 135,697 102,230 Interest income arising from amounts due from: – associates (Note) 501,547 270,612 – joint ventures (Note) 133,408 50,304 – non-controlling shareholders 12,292 12,124 Interest expense arising from amounts due to: – associates (Note) 168,408 49,914 – joint ventures (Note) 19,944 58,042 – non-controlling shareholders 272,180 90,924 Advertising expenses paid/payable to shareholders’ companies 70,000 70,000 Comprehensive service income from joint ventures and associates (Note) 129,269 62,279 Hotel management fees paid/payable to shareholders’ companies 9,693 9,627 Hotel service income from associates (Note) 599 1,270 Interior decoration service income from: – joint ventures and associates (Note) 393,474 266,981 – shareholders’ companies 1,816 3,363 Health management service fee to shareholders’ companies 975 1,118 Healthcare service fee to shareholders’ companies 4,393 1,191 Educational service fee to shareholders’ companies 401 69 Marketing service income from joint ventures and associates (Note) 7,294 8,442 Advertising income from joint ventures and associates (Note) 4,678 8,380 Landscape construction fee to associates (Note) 65,882 90,155

184 Greentown China Holdings Limited Annual Report 2014

F-106 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

37. Related Party Disclosures (continued) (i) During the year, in addition to those disclosed in other notes to the consolidated financial statements, the Group entered into the following transactions with related parties: (continued)

Note: Purchases from shareholders’ companies represent raw materials purchased for use by construction contractors, the costs of which are included in the overall construction contracts. The transactions with associates and joint ventures are presented gross before elimination of unrealised profits or losses attributable to the Group.

The directors considered that the transactions above were carried out in accordance with the terms agreed with the counterparties.

Mr SONG Weiping, Mr SHOU Bainian and Ms XIA Yibo are each a “Shareholder”, and collectively the “Shareholders”, of the Company. Shareholders’ Companies represent companies owned by the Shareholders and affiliates.

(ii) As at the end of the reporting period, the Group had balances with related parties, which are all unsecured, as follows:

2014 Project-related Non-project Related Total Interest Non-interest Interest Non-interest Interest Non-interest Bearing Bearing Bearing Bearing Bearing Bearing RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Due from Shareholders’ Companies – 6,350 – 2,208 – 8,558 Non-controlling shareholders 2,296,721 4,423,622 – 39,811 2,296,721 4,463,433 Associates 4,995,659 8,577,105 – – 4,995,659 8,577,105 Joint ventures 984,016 5,772,112 – – 984,016 5,772,112 Officers – 59,110––– 59,110 8,276,396 18,838,299 – 42,019 8,276,396 18,880,318 Due to Shareholder – 10,380–––10,380 Shareholders’ Companies – 14,081 – 11,700 – 25,781 Non-controlling shareholders 3,114,305 2,328,602 – – 3,114,305 2,328,602 Associates 427,268 1,890,474 – – 427,268 1,890,474 Joint ventures 1,133,817 912,781 – – 1,133,817 912,781 Officers – 6,964 – – – 6,964 4,675,390 5,163,282 – 11,700 4,675,390 5,174,982

Greentown China Holdings Limited Annual Report 2014 185

F-107 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

37. Related Party Disclosures (continued) (ii) As at the end of the reporting period, the Group had balances with related parties, which are all unsecured, as follows: (continued)

2013 Project-related Non-project Related Total Interest Non-interest Interest Non-interest Interest Non-interest Bearing Bearing Bearing Bearing Bearing Bearing RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Due from Shareholders’ Companies – 152,971 – 12,170 – 165,141 Non-controlling shareholders 2,197,909 4,283,694 315,447 46,722 2,513,356 4,330,416 Associates 5,000,323 8,330,852 – – 5,000,323 8,330,852 Joint ventures 1,339,558 3,253,641 – – 1,339,558 3,253,641 Officers – 47,919 – – – 47,919 8,537,790 16,069,077 315,447 58,892 8,853,237 16,127,969 Due to Shareholder – 13,160 – – – 13,160 Shareholders’ Companies – 16,600 – – – 16,600 Non-controlling shareholders 1,308,315 2,457,796 – 1,894 1,308,315 2,459,690 Associates 1,475,925 2,747,517 – – 1,475,925 2,747,517 Joint ventures 2,425,328 320,426 – – 2,425,328 320,426 Officers – 8,345 – – – 8,345 5,209,568 5,563,844 – 1,894 5,209,568 5,565,738

In respect of project-related balances with related parties:

(a) The trade balances due from officers arise mainly from property sales and are with a normal credit term of two months.

(b) The trade balances due from Shareholders’ Companies are mainly construction prepayments and trade receivables.

Construction prepayments are billed according to the construction contracts and are settled within one to two months after the construction cost incurred are verified and agreed.

Trade receivables arise mainly from materials sales and are with a normal credit terms of two months.

(c) The project-related balances due from non-controlling shareholders are mainly prepaid distributions. The project- related balances due from joint ventures/associates are mainly project advances to these joint ventures/associates and are tied to the project development cycle. In the opinion of the directors, these balances are expected to be settled when the projects concerned commence pre-sales.

(d) The trade balances due to Shareholders and officers are mainly pre-sale deposits.

186 Greentown China Holdings Limited Annual Report 2014

F-108 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

37. Related Party Disclosures (continued) (ii) As at the end of the reporting period, the Group had balances with related parties, which are all unsecured, as follows: (continued)

(e) The trade balances due to shareholders’ companies arise mainly from construction purchases and are with a normal credit term of one to two months after the construction costs incurred are verified and agreed. Typically as much as 85% of the construction costs incurred will be settled by the time the construction of a project is completed and up to 95% by the time the amount of the aggregate construction costs are finally agreed. A warranty fee of up to 5% of the aggregate construction cost will be withheld and settled within two to five years.

(f) The project-related balances due to non-controlling shareholders are mainly project advances from these non- controlling shareholders and are tied to the project development cycle. In the opinion of the directors, these balances are repayable on demand and are expected to be settled when the projects concerned commence pre- sales.

(g) The project-related balances due to joint ventures/associates are mainly prepaid distributions.

The non-project related balances with related parties are mainly unsecured advances and repayable on demand.

The non-interest bearing balances due from (to) related parties are unsecured and repayable on demand. The key terms of the interest bearing balances due from (to) related parties are as follows:

(a) The project-related amounts due from non-controlling shareholders of RMB2,296,721 (2013: 2,197,909,000) at 31 December 2014 carried interest at variable rates from 0.35% to 6.0% (2013: At fixed rates from 7.31% to 7.82%) per annum.

(b) The project-related amounts due from associates of RMB4,995,659,000 (2013: RMB5,000,323,000) at 31 December 2014 carried interest at fixed rates ranging from 7.19% to 12.00% (2013: 7.19% to 12.00%) per annum.

(c) The project-related amounts due from joint ventures of RMB984,016,000 (2013: RMB1,339,558,000) at 31 December 2014 carried interest at fixed rates ranging from 7.52% to 10.00% (2013: 6.67% to 10.00%) per annum.

(d) The project-related amounts due to non-controlling shareholders of RMB3,114,305,000 (2013: RMB1,308,315,000) at 31 December 2014 carried interest at fixed rates ranging from 8.00% to 15.00% (2013: 7.34% to 15.00%) per annum.

Greentown China Holdings Limited Annual Report 2014 187

F-109 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

37. Related Party Disclosures (continued) (ii) As at the end of the reporting period, the Group had balances with related parties, which are all unsecured, as follows: (continued)

(e) The project-related amounts due to associates of RMB49,491,000 (2013: RMB785,085,000) at 31 December 2014 carried interest at a fixed rate of 8.32% (2013: 0.35% to 15.00%) per annum.

(f) The project-related amounts due to associates of RMB377,777,000 (2013: RMB690,840,000) at 31 December 2014 carried interest at variable rates ranging from 0.35% to 6.85% (2013: 7.05% to 8.15%) per annum.

(g) The project-related amounts due to joint ventures of RMB634,314,000 (2013: RMB1,775,768,000) at 31 December 2014 carried interest at fixed rates ranging from 7.00% to 7.52% (2013: 7.19% to 10.00%) per annum.

(h) The project-related amounts due to joint ventures of RMB499,503,000 (2013: RMB649,560,000) at 31 December 2014 carried interest at a variable rate of 8.76% (2013: 0.35% to 8.76%) per annum.

(i) The non-project related amounts due from non-controlling shareholders of RMB315,447,000 at 31 December 2013 carried interest at variable rates ranging from 0.40% to 6.00% per annum.

(iii) (a) During the year, in addition to those disclosed in note 30, the Group made acquisitions from related parties as follows:

2014 2013 RMB’000 RMB’000 Purchase of additional interests in subsidiaries from non-controlling shareholders 427,364 197,700 Acquisition of an associate from a non-controlling shareholder – 160,520

On 11 July 2014, the Group entered into an agreement with a non-controlling shareholder to acquire 30% equity interest in Zhuji Yuedu Real Estate Co., Ltd. (“Zhuji Yuedu”) for a consideration of RMB246,464,000.

On 17 October 2014, the Group entered into an agreement with a non-controlling shareholder to acquire 30% equity interest in Hangzhou Greentown Dongyou Real Estate Development Co., Ltd. (“Hangzhou Greentown Dongyou”) for a consideration of RMB163,400,000.

On 10 July 2014 and 15 December 2014, the Group entered into an agreement with a non-controlling shareholder to acquire 20% and 15% equity interest respectively in Lin’an Greentown Real Estate Co., Ltd. (“Lin’an Greentown “) for a total consideration of RMB17,500,000.

On 31 August 2013, the Group entered into agreements with a non-controlling shareholder to acquire 20% equity interest of Wenzhou Greentown Real Estate Co., Ltd. and 30% equity interest of Wenzhou Lvjing Real Estate Co., Ltd. for a consideration of RMB77,200,000 and RMB112,500,000 respectively.

188 Greentown China Holdings Limited Annual Report 2014

F-110 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

37. Related Party Disclosures (continued) (iii) (a) During the year, in addition to those disclosed in notes 30, the Group made acquisitions from related parties as follows: (continued)

On 20 August 2013, the Group entered into an agreement to acquire 30% equity interest in Zhejiang Greentown Tiantaishan Lianhua Resort Co., Ltd. from an individual person for a consideration of RMB8,000,000.

On 21 March 2013, the Group entered into an agreement with a non-controlling shareholder to acquire 25% equity interest in Hangzhou Sunac Greentown for a approximately RMB160,520,000.

(b) During the year, the Group made disposals to related parties as follows:

2014 2013 RMB’000 RMB’000 Disposal of subsidiaries to non-controlling shareholders 91,150 – Partial disposal of interests in a subsidiary to a non-controlling shareholder – 22,500

In July 2014, the Group entered into an agreement to dispose of its whole 51% equity interest in Changxing Greentown Real Estate Development Co., Ltd. (“Changxing Greentown”) for a consideration of RMB58,000,000 to a non-controlling shareholder.

In September 2014, the Group entered into an agreement to dispose of its whole 51% equity interest in Qidong Greentown Xiangge Real Estate Co., Ltd. (“Qidong Greentown”) for a consideration of RMB33,150,000 to a non- controlling shareholder.

In April 2013, the Group entered into an agreement to dispose of its 45% equity interest in Beijing Xingye Wanfa Real Estate Development Co., Ltd. for a consideration of RMB22,500,000 to a non-controlling shareholder.

(c) On 29 December 2014, the Company entered into a framework agreement with Wharf, a non-controlling shareholder of the Company, pursuant to which the Group and Wharf together with its subsidiaries will jointly develop a piece of land in the Xiaoshan District of Hangzhou, Zhejiang province of the PRC, on a 50:50 ownership basis, into residential properties. This company was established on 24 March 2015.

In 2013, in light of the Group’s 40% interest in Green Magic and its wholly-owned subsidiary Dalian Wharf Greentown, Era Win Holdings Limited(“Era Win”), a wholly-owned subsidiary of the Company charged its shares in Green Magic in favour of Wharf, a non-controlling shareholder of the Company, pursuant to which the Company and Era Win have agreed, among other things, to secure 40% of the obligations under the loan facility of RMB350,000,000 (equivalent to approximately HK$437,500,000) granted by a bank to Dalian Wharf Greentown and the loan facility of US$260,000,000 (equivalent to approximately HK$2,022,800,000) granted by certain banks to (after novation) Green Magic.

On 18 December 2013, the Company entered into a framework agreement with Wharf, a non-controlling shareholder of the Company, pursuant to which the Group and Wharf together with its subsidiaries would jointly develop a piece of land in the Xiaoshan District of Hangzhou, Zhejiang province of the PRC, on a 50:50 ownership basis, into residential properties. The framework agreement was passed at an extraordinary general meeting held on 28 February 2014 and this company was established in 2014.

Greentown China Holdings Limited Annual Report 2014 189

F-111 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

37. Related Party Disclosures (continued) (iv) Compensation of Key Management Personnel The remuneration of directors and other members of key management during the year was as follows:

2014 2013 RMB’000 RMB’000 Short-term benefits 33,161 26,747 Post-employment benefits 284 292 33,445 27,039

The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends.

38. Statement of Financial Position of the Company

2014 2013 RMB’000 RMB’000 ASSETS Property, plant and equipment 362 636 Investment in a subsidiary and amounts due from subsidiaries and related parties 20,075,146 18,385,985 Other receivables 412,188 613,580 Bank balances and cash 9,524 67,115 20,497,220 19,067,316 LIABILITIES Other payables 203,993 203,735 Amounts due to related parties 5,078,339 2,841,177 Other taxes payable 6,316 6,293 Bank and other borrowings 2,401,625 2,365,189 Senior notes 8,592,129 8,558,184 16,282,402 13,974,578 ASSETS LESS LIABILITIES 4,214,818 5,092,738 CAPITAL AND RESERVES Share capital 208,850 208,656 Reserves (Note) 4,005,968 4,884,082 4,214,818 5,092,738

190 Greentown China Holdings Limited Annual Report 2014

F-112 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

38. Statement of Financial Position of the Company (Continued) Note:

The movement of the reserves of the Company is as follows:

RMB’000

At 1 January 2013 4,769,945 Profit for the year 1,106,976 Dividends recognised as distributions (1,077,319) Exercise of share options 84,480 At 31 December 2013 4,884,082 Profit for the year 44,772 Dividends recognised as distributions (928,301) Exercise of share options 5,415 At 31 December 2014 4,005,968

39. Events After the End of the Reporting Period The following significant events took place subsequent to 31 December 2014:

On 10 February 2015, the Company, along with certain offshore subsidiaries of the Company that act as guarantors, entered into a purchase agreement with China Orient Asset Management (International) Holding Limited and Credit Suisse International acting as purchasers in relation to the issue of the USD denominated senior notes (the “New Notes”) by the Company. The 8% New Notes have an aggregate principal amount of USD200,000,000 and will mature on 24 March 2019. The listing of and permission to deal in the New Notes was approved by the Stock Exchange. The New Notes constituted a further issuance of, and be consolidated and form a single series with, the USD300,000,000 8.0% Second USD Senior Notes issued by the Company on 24 September 2013. The listing of and permission to deal in the New Notes became effective on 16 February 2015. 40. Other Matters Sunac China Holdings Limited (“Sunac China”) alleged in its announcement dated 31 December 2014 (the “Sunac Announcement”) that, among other things, (i) Sunac Greentown Investment has agreed to dispose of its entire shareholding in Elegant Trend Limited, a direct wholly-owned subsidiary of Sunac Greentown Investment, to Lead Sunny Investments Limited, a wholly-owned subsidiary of Sunac China (the “Purported Offshore Disposal”), and (ii) Shanghai Sunac Greentown has agreed to dispose of its equity interests in certain PRC project companies to Tianjin Sunac Ao Cheng Investment Co., Ltd., a wholly-owned subsidiary of Sunac China (the “Purported Onshore Disposal”, together with the Purported Offshore Disposal, the “Purported Disposals”). In the Sunac Announcement, Sunac China alleged that the Purported Offshore Disposal had been approved by the Company and the Purported Onshore Disposal had been approved by Greentown Investment Management Co., Ltd (a wholly- owned subsidiary of the Company).

On 5 January 2015, the Company made an announcement to refute Sunac China’s allegations in the Sunac Announcement with respect to the Purported Disposals that while the Board had considered the Purported Disposals, the Board had not approved the Purported Disposals and the unilateral actions by Sunac China as alleged in the Sunac Announcement did not create a legally binding agreement with respect to the Purported Disposals.

The Company is discussing with Sunac China in good faith with a view to resolving the disagreement arising from the Purported Disposals amicably. Further announcement(s) will be made by the Company as and when appropriate.

The directors of the Company anticipate that the above mentioned matter does not have material adverse effect on the consolidated financial statements of the Group.

Greentown China Holdings Limited Annual Report 2014 191

F-113 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

41. Particulars of Principal Subsidiaries of the Company Particulars of the principal subsidiaries as at 31 December 2014 and 2013 are set out below:

Place and Date of Proportion of Ownership Interest/ Name of Subsidiary Registration Registered Capital Voting Rights Held by the Company Principal Activities Legal Form Direct Indirect 2014 2013 2014 2013 綠城房地產集團有限公司 The PRC RMB895,000,000 – – 100% 100% Real estate Wholly foreign-owned Greentown Real Estate Group Co., Ltd. 6 January 1995 development enterprise

上海綠城森林高爾夫別墅開發有限公司 The PRC RMB196,080,000 – – 50% 50% Real estate Limited liability Shanghai Greentown Woods Golf Villas 19 June 2002 (i) (i) development company Development Co., Ltd.

新疆俊發綠城房地產開發有限公司 The PRC RMB211,079,000 – – 50% 50% Real estate Limited liability Xinjiang Junfa Greentown Real Estate 16 January 2008 (i) (i) development company Development Co., Ltd.

北京亞奧綠城房地產開發有限公司 The PRC RMB50,000,000 – – 50% 50% Real estate Limited liability Beijing Ya’ao Greentown Real Estate 19 August 2008 (i) (i) development company Development Co., Ltd.

杭州休博園湖畔綠景休閑開發有限公司 The PRC RMB120,000,000 – – 50% 50% Real estate Limited liability Hangzhou Xiuboyuan Hupan Lvjing Xiuxian 2 April 2008 (i) (i) development company Development Co., Ltd.

寧波象山綠城房地產開發有限公司 The PRC RMB100,000,000 – – 50% 50% Real estate Limited liability Ningbo Xiangshan Greentown Real Estate 19 February 2008 (i) (i) development company Development Co., Ltd.

藍城房產建設管理集團有限公司 The PRC RMB200,000,000 – – 35% 35% Project management Limited liability （原名「綠城房產建設管理有限公司」） 8 September 2010 (i) (i) company Bluetown Property Construction Management Group Co., Ltd. (Formerly known as “Greentown Property Construction Management Co., Ltd.”)

湖南青竹湖國際商務社區開發有限公司 The PRC RMB50,600,000 – – 49% 49% Real estate Limited liability Hunan Bamboo Lake International Business 26 September 2003 (ii) (ii) development company Community Development Co., Ltd.

溫州綠城置業有限公司 The PRC RMB915,000,000 – – 80% 80% Real estate Sino-foreign equity Wenzhou Greentown Real Estate Co., Ltd. 21 May 2007 development joint venture

192 Greentown China Holdings Limited Annual Report 2014

F-114 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

41. Particulars of Principal Subsidiaries of the Company (Continued)

Place and Date of Proportion of Ownership Interest/ Name of Subsidiary Registration Registered Capital Voting Rights Held by the Company Principal Activities Legal Form Direct Indirect 2014 2013 2014 2013 溫州綠景置業有限公司 The PRC RMB915,000,000 – – 90% 90% Real estate Sino-foreign equity Wenzhou Lvjing Real Estate Co., Ltd. 26 November 2007 development joint venture

浙江綠城天台山蓮花度假村有限公司 The PRC RMB50,000,000 – – 100% 100% Real estate Limited liability Zhejiang Greentown Tiantaishan Lianhua 8 August 2011 development company Resort Co., Ltd.

北京興業萬發房地產開發有限公司 The PRC RMB50,000,000 – – 55% 55% Real estate Limited liability Beijing Xingye Wanfa Real Estate 26 October 2000 development company Development Co., Ltd.

溫州綠城房地產開發有限公司 The PRC RMB768,000,000 – – 60% 60% Real estate Sino-foreign equity Wenzhou Greentown Real Estate 15 February 2007 development joint venture Development Co., Ltd.

溫州綠城家景房地產開發有限公司 The PRC RMB386,000,000 – – 60% 60% Real estate Sino-foreign equity Wenzhou Greentown Jiajing Real Estate 21 May 2007 development joint venture Development Co., Ltd.

舟山綠城房地產開發有限公司 The PRC RMB100,000,000 – – 100% 100% Real estate Limited liability Zhoushan Greentown Real Estate 16 December 1999 development company Development Co., Ltd.

北京陽光綠城房地產開發有限公司 The PRC RMB50,000,000 – – 80% 80% Real estate Limited liability Beijing Sunshine Greentown Real Estate 15 January 2001 development company Development Co., Ltd.

杭州余杭綠城房地產開發有限公司 The PRC RMB30,000,000 – – 64% 64% Real estate Limited liability Hangzhou Yuhang Greentown Real Estate 12 November 1999 development company Development Co., Ltd.

杭州余杭金騰房地產開發有限公司 The PRC RMB100,000,000 – – 85% 85% Real estate Limited liability Yuhang Jinteng 25 December 2001 development company

Greentown China Holdings Limited Annual Report 2014 193

F-115 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

41. Particulars of Principal Subsidiaries of the Company (Continued)

Place and Date of Proportion of Ownership Interest/ Name of Subsidiary Registration Registered Capital Voting Rights Held by the Company Principal Activities Legal Form Direct Indirect 2014 2013 2014 2013 南通綠城房地產開發有限公司 The PRC RMB50,000,000 – – 77% 77% Real estate Limited liability Nantong Greentown Real Estate 23 August 2007 development company Development Co., Ltd.

青島綠城華川置業有限公司 The PRC RMB517,764,600 – – 80% 80% Real estate Sino-foreign equity Qingdao Greentown Huachuan Real Estate 21 August 2007 development joint venture Co., Ltd.

舟山綠城聯海置業有限公司 The PRC RMB250,000,000 – – 100% 100% Real estate Limited liability Zhoushan Greentown Lianhai Real Estate 5 June 2007 development company Co., Ltd.

寧波太平洋實業有限公司 The PRC RMB177,000,000 – – 60% 60% Real estate Foreign equity joint Ningbo Pacific Real Estate Co., Ltd. 11 July 2003 development venture

台州吉利嘉苑房地產開發有限公司 The PRC RMB40,000,000 – – 55% 55% Real estate Limited liability Taizhou Jilijiayuan Real Estate Development 15 October 2001 development company Co., Ltd.

養生堂浙江千島湖房地產有限公司 The PRC RMB200,000,000 – – 51% 51% Real estate Limited liability Yangshengtang Zhejiang Qiandaohu Real 24 January 2005 development company Estate Co., Ltd.

杭州綠城海企房地產開發有限公司 The PRC RMB1,000,000,000 – – 100% 100% Real estate Limited liability Hangzhou Greentown Haiqi Real Estate 23 November 2007 development company Development Co., Ltd.

湖州新錦江房地產開發有限公司 The PRC RMB50,000,000 – – 70% 70% Real estate Limited liability Huzhou Xinjinjiang Real Estate 3 February 2004 development company Development Co., Ltd.

杭州金馬房地產有限公司 The PRC USD50,000,000 – – 51% 51% Real estate Sino-foreign joint Hangzhou Golden Horse Real Estate 22 October 1992 development venture Development Co., Ltd.

194 Greentown China Holdings Limited Annual Report 2014

F-116 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

41. Particulars of Principal Subsidiaries of the Company (Continued)

Place and Date of Proportion of Ownership Interest/ Name of Subsidiary Registration Registered Capital Voting Rights Held by the Company Principal Activities Legal Form Direct Indirect 2014 2013 2014 2013 浙江報業綠城房地產開發有限公司 The PRC RMB1,200,000,000 – – 100% 100% Real estate Wholly foreign-owned Zhejiang Newspapering Greentown Real 7 July 2008 development enterprise Estate Development Co., Ltd.

北京萊福世紀置業有限公司 The PRC RMB30,000,000 – – 100% 100% Real estate Limited liability Beijing Laifu Century Property Co., Ltd. 24 April 2007 development company

杭州綠城北盛置業有限公司 The PRC RMB503,823,400 – – 100% 100% Real estate Wholly foreign-owned Hangzhou Greentown Beisheng Real Estate 1 December 2009 development enterprise Co., Ltd.

溫州景楊置業有限公司 The PRC RMB340,000,000 – – 60% 60% Real estate Sino-foreign equity Wenzhou Jingyang Real Estate Co., Ltd. 19 July 2010 development joint venture

杭州千島湖綠城投資置業有限公司 The PRC RMB30,000,000 – – 80% 80% Real estate Limited liability Hangzhou Qiandaohu Real Estate 15 June 2005 development company Investment Co., Ltd.

新昌綠城置業有限公司 The PRC RMB77,600,000 – – 80% 80% Real estate Limited liability Xinchang Greentown Real Estate Co., Ltd. 12 December 2006 development company

寧波高新區研發園綠城建設有限公司 The PRC RMB50,000,000 – – 60% 60% Real estate Sino-foreign equity Ningbo Gaoxinqu Yanfayuan Greentown 21 August 2003 development joint venture Construction Co., Ltd.

南京天浦置業有限公司 The PRC RMB50,000,000 – – 70% 70% Real estate Limited liability Nanjing Tianpu Real Estate Co., Ltd. 12 November 2002 development company

浙江嘉和實業有限公司 The PRC RMB50,000,000 – – 100% 100% Real estate Limited liability Zhejiang Jiahe Industrial Co., Ltd. 25 April 1995 development company

杭州玫瑰園度假村有限公司 The PRC RMB184,410,000 – – 100% 100% Real estate Limited liability Hangzhou Rose Garden Resort Co., Ltd. 15 August 2006 development company

安徽綠城玫瑰園房地產開發有限公司 The PRC RMB200,000,000 – – 100% 100% Real estate Limited liability Anhui Greentown Rose Garden Real Estate 23 December 2009 development company Development Co., Ltd.

Greentown China Holdings Limited Annual Report 2014 195

F-117 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

41. Particulars of Principal Subsidiaries of the Company (Continued)

Place and Date of Proportion of Ownership Interest/ Name of Subsidiary Registration Registered Capital Voting Rights Held by the Company Principal Activities Legal Form Direct Indirect 2014 2013 2014 2013 舟山綠城蔚藍海岸房地產開發有限公司 The PRC RMB50,000,000 – – 60% 60% Real estate Limited liability Zhoushan Greentown Weilanhai’an Real 6 May 2008 development company Estate Development Co., Ltd.

舟山市普陀綠城房地產開發有限公司 The PRC RMB50,000,000 – – 90% 90% Real estate Limited liability Zhoushan Putuo Greentown Real Estate 5 November 2009 development company Co., Ltd.

舟山市普陀綠城實業投資有限公司 The PRC RMB100,000,000 – – 100% 100% Real estate Limited liability Zhoushan Putuo Greentown Industry 5 November 2009 development company Investment Co., Ltd.

城建中稷（浙江）實業發展有限公司 The PRC RMB160,000,000 – – 97% 97% Real estate Limited liability City-Urban Construction (Zhejiang) Industrial 5 February 2005 development company Development Co., Ltd.

舟山市明程房地產開發有限公司 The PRC RMB10,000,000 – – 97% 97% Real estate Limited liability Zhoushan Mingcheng Real Estate 31 October 2005 development company Development Co., Ltd.

舟山市乾源房地產開發有限公司 The PRC RMB10,000,000 – – 97% 97% Real estate Limited liability Zhoushan Qianyuan Real Estate 31 October 2005 development company Development Co., Ltd.

河南錦江置業有限公司 The PRC RMB80,000,000 – – 100% 100% Real estate Limited liability Henan Jinjiang Real Estate Co., Ltd. 8 August 2002 development company

海南綠城高地投資有限公司 The PRC RMB60,000,000 – – 51% 51% Real estate Limited liability Hainan Greentown Gaodi Investment 15 November 2007 development company Co., Ltd.

慈溪綠城房地產開發有限公司 The PRC RMB98,000,000 – – 60% 60% Real estate Limited liability Cixi Greentown Real Estate Development 27 July 2009 development company Co., Ltd.

196 Greentown China Holdings Limited Annual Report 2014

F-118 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

41. Particulars of Principal Subsidiaries of the Company (Continued)

Place and Date of Proportion of Ownership Interest/ Name of Subsidiary Registration Registered Capital Voting Rights Held by the Company Principal Activities Legal Form Direct Indirect 2014 2013 2014 2013 杭州綠城玉園房地產開發有限公司 The PRC RMB1,300,000,000 – – 100% 100% Real estate Wholly foreign-owned Hangzhou Greentown Yuyuan Real Estate 11 November 2009 development enterprise Development Co., Ltd.

大連綠城房地產開發有限公司 The PRC RMB120,000,000 – – 80% 80% Real estate Limited liability Dalian Greentown Real Estate Development 11 November 2008 development company Co., Ltd.

青島綠城膠州灣房地產開發有限公司 The PRC USD100,000,000 – – 100% 100% Real estate Wholly foreign-owned Qingdao Jiaozhouwan Real Estate 25 November 2009 development enterprise Development Co., Ltd.

新泰綠城置業有限公司 The PRC RMB98,000,000 – – 70% 70% Real estate Limited liability Xintai Greentown Real Estate Co., Ltd. 12 January 2010 development company

大連綠城置業有限公司 The PRC RMB100,000,000 – – 90% 90% Real estate Limited liability Dalian Greentown Real Estate Co., Ltd. 15 March 2010 development company

德清綠城房地產開發有限公司 The PRC RMB100,000,000 – – 100% 100% Real estate Limited liability Deqing Greentown Real Estate 1 February 2010 development company Development Co., Ltd.

紹興綠城金昌置業有限公司 The PRC RMB100,000,000 – – 51% 51% Real estate Limited liability Shaoxing Greentown Jinchang Real Estate 6 November 2009 development company Co., Ltd.

北京綠城銀石置業有限公司 The PRC RMB50,000,000 – – 100% 100% Real estate Limited liability Beijing Greentown Yinshi Real Estate 20 February 2008 development company Co., Ltd.

杭州銀嘉房地產開發有限公司 The PRC RMB100,000,000 – – 56% 56% Real estate Limited liability Hangzhou Yinjia Real Estate 17 September 2003 development company Development Co., Ltd.

台州綠城泰業房地產開發有限公司 The PRC RMB130,000,000 – – 51% 51% Real estate Limited liability Taizhou Greentown Taiye Real Estate 18 February 2011 development company Development Co., Ltd.

Greentown China Holdings Limited Annual Report 2014 197

F-119 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

41. Particulars of Principal Subsidiaries of the Company (Continued)

Place and Date of Proportion of Ownership Interest/ Name of Subsidiary Registration Registered Capital Voting Rights Held by the Company Principal Activities Legal Form Direct Indirect 2014 2013 2014 2013 新疆鴻遠投資有限公司 The PRC RMB42,500,000 – – 60% 60% Real estate Limited liability Xinjiang Hongyuan Investment Co., Ltd. 22 January 2003 development company

慈溪綠城房地產發展有限公司 The PRC RMB98,000,000 – – 100% 100% Real estate Limited liability Cixi Greentown Property 7 July 2011 development company

浙江建德綠城置業有限公司 The PRC RMB305,000,000 – – 100% 100% Real estate Wholly foreign-owned Zhejiang Jiande Greentown Real Estate 6 December 2013 development enterprise Co., Ltd.

綠城恒基（大慶）置業有限公司 The PRC RMB250,000,000 – – 51% 51% Real estate Limited liability Greentown Hengji Daqing 30 August 2011 development company

杭州綠城東友房產開發有限公司 The PRC RMB500,000,000 – – 100% 70% Real estate Sino-foreign equity Hangzhou Greentown Dongyou 11 January 2013 (iii) development joint venture

臨安綠城置業有限公司 The PRC RMB50,000,000 – – 100% 65% Real estate Limited liability Lin’an Greentown 2 July 2009 (iv) development company

諸暨市越都置業有限公司 The PRC RMB300,000,000 – – 90% 60% Real estate Limited liability Zhuji Yuedu 31 October 2008 (v) development company

新昌綠城佳園房地產開發有限公司 The PRC RMB100,000,000 – – 80% – Real estate Limited liability Xinchang Greentown Jiayuan Real Estate 25 February 2014 (vi) development company Development Co., Ltd.

臨海綠城泰業房地產開發有限公司 The PRC RMB100,000,000 – – 51% – Real estate Limited liability Linhai Greentown Taiye Real Estate 20 January 2014 (vi) development company Development Co., Ltd.

淄博綠城置業有限公司 The PRC RMB500,000,000 – – 100% – Real estate Sino-foreign equity Zibo Greentown Real Estate Co., Ltd. 25 March 2014 (vi) development joint venture

198 Greentown China Holdings Limited Annual Report 2014

F-120 Notes to the Consolidated Financial Statements For the year ended 31 December 2014

41. Particulars of Principal Subsidiaries of the Company (continued)

Place and Date of Proportion of Ownership Interest/ Name of Subsidiary Registration Registered Capital Voting Rights Held by the Company Principal Activities Legal Form Direct Indirect 2014 2013 2014 2013 杭州綠城九龍倉置業有限公司 The PRC USD 460,000,000 – – 50% – Real estate wholly foreign-owned Hangzhou Greentown Wharf 20 February 2014 (i), (ii), (vii) development enterprise

馬鞍山偉華置業發展有限公司 The PRC RMB106,000,000 – – 70% – Real estate Limited liability Ma’anshan Weihua 11 June 2012 (vii) development company

長興綠城房地產開發有限公司 The PRC RMB100,000,000 – – – 51% Real estate Limited liability Changxing Greentown 30 January 2008 (viii) development company

啟東綠城香格置業有限公司 The PRC RMB65,000,000 – – – 51% Real estate Limited liability Qidong Greentown 27 October 2009 (viii) development company

The above table lists the subsidiaries of the Group which, in the opinion of the directors, principally affected the results or assets of the Group. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.

Notes:

(i) The Group has the right to appoint a majority of directors to the board of directors. Hence the Group has the power over these entities and has the ability to use its power to affect its returns. Therefore, these entities are accounted for as subsidiaries of the Group.

(ii) The entity is a subsidiary of non-wholly owned subsidiaries of the Group.

(iii) The Group acquired additional 30% equity interest in Hangzhou Greentown Dongyou from its non-controlling shareholder in 2014. Please refer to Note 37 for details.

(iv) The Group acquired additional 35% equity interest in Lin’an Greentown from its non-controlling shareholder in 2014. Please refer to Note 37 for details.

(v) The Group acquired additional 30% equity interest in Zhuji Yuedu from its non-controlling shareholder in 2014. Please refer to Note 37 for details.

(vi) These entities were newly established in 2014.

(vii) These entities became subsidiaries of the Group in 2014 as the Group acquired equity interest in it. Please refer to Note 30 for details.

(viii) In 2014, the Group disposed of its 51% equity interest in these entities to non-controlling shareholders respectively. Please refer to Note 37 for details.

The directors of the Company are of the opinion that none of the Group’s subsidiaries that has non-controlling interests are material to the consolidated financial statements as a whole and therefore, the financial information in respect of those subsidiaries that has non-controlling interests are not presented.

Greentown China Holdings Limited Annual Report 2014 199

F-121 Greentown China Holdings Limited 76 Independent Auditor’s Report

TO THE MEMBERS OF GREENTOWN CHINA HOLDINGS LIMITED (incorporated in the Cayman Islands with limited liability)

We have audited the consolidated financial statements of Greentown China Holdings Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) set out on pages 77 to 175, which comprise the consolidated statement of financial position as at 31 December 2013, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Directors’ Responsibilities for the Consolidated Financial Statements

The directors of the Company are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit and to report our opinion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the consolidated financial statements are free from material misstatement.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements give a true and fair view of the state of affairs of the Group as at 31 December 2013 and of the Group’s profit and cash flows for the year then ended in accordance with International Financial Reporting Standards and have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance.

Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong 21 March 2014

F-122 Annual Report 2013 77 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 December 2013

2013 2012 NOTES RMB’000 RMB’000 Revenue 7 28,990,570 35,392,506 Cost of sales (20,215,201) (24,678,810) Gross profit 8,775,369 10,713,696 Other income 8 728,329 1,000,594 Selling expenses (848,771) (665,170) Administrative expenses (1,491,574) (1,403,873) Finance costs 9 (506,815) (564,115) Reversal of impairment losses on property, plant and equipment 15 60,685 – Impairment losses on property, plant and equipment 15 – (81,485) Gain from changes in fair value of investment properties 16 100,900 600 Fair value changes on cross currency swaps 49,849 – Fair value changes on trust-related financial derivatives – 82,520 Net gain on disposal of subsidiaries – 549,697 Gain on re-measurement of associates to acquisition date fair value in business combination achieved in stages 30 3,923 3,399 Gain on disposal of associates – 56,505 Gain relating to a newly acquired joint venture 18 704,131 – Gain on re-measurement of an associate to acquisition date fair value upon re- consolidation of a subsidiary 30 – 49,980 Net gain on disposal of joint ventures – 1,377 Share of results of associates 1,092,037 209,356 Share of results of joint ventures 477,999 304,119 Profit before taxation 10 9,146,062 10,257,200 Taxation 12 (3,155,857) (4,204,149) Profit and total comprehensive income for the year 5,990,205 6,053,051 Attributable to: Owners of the Company 4,885,514 4,851,123 Non-controlling interests 1,104,691 1,201,928 5,990,205 6,053,051 Earnings per share 14 Basic RMB2.18 RMB2.57 Diluted RMB1.94 RMB2.37

F-123 Greentown China Holdings Limited 78 Consolidated Statement of Financial Position As at 31 December 2013

2013 2012 NOTES RMB’000 RMB’000 NON-CURRENT ASSETS Property, plant and equipment 15 4,864,054 3,675,256 Investment properties 16 1,831,500 1,730,600 Interests in associates 17 10,015,706 6,573,266 Interests in joint ventures 18 1,848,221 1,003,745 Available-for-sale investments 19 377,010 346,545 Prepaid lease payment 20 664,713 254,968 Rental paid in advance 9,385 6,744 Deferred tax assets 21 1,053,244 782,241 Cross currency swaps 49,849 – 20,713,682 14,373,365 CURRENT ASSETS Properties for development 22 6,280,067 6,020,524 Properties under development 23 38,967,574 43,136,154 Completed properties for sale 13,062,500 7,330,358 Inventories 101,920 76,299 Trade and other receivables, deposits and prepayments 24 4,380,556 4,712,786 Amounts due from related parties 37(ii) 24,981,206 21,619,085 Prepaid income taxes 1,304,209 1,076,018 Prepaid other taxes 1,262,909 1,464,738 Pledged bank deposits 24, 34 595,038 1,734,337 Bank balances and cash 24 10,686,041 6,163,632 101,622,020 93,333,931 CURRENT LIABILITIES Trade and other payables 25 17,910,929 15,958,635 Pre-sale deposits 23,428,384 28,848,285 Amounts due to related parties 37(ii) 10,775,306 7,125,114 Income taxes payable 5,777,814 5,389,742 Other taxes payable 1,217,041 985,100 Bank and other borrowings – due within one year 26 6,017,895 15,014,288 Senior notes 27 – 241,327 65,127,369 73,562,491

F-124 Annual Report 2013 79 / Consolidated Statement of Financial Position As at 31 December 2013

2013 2012 NOTES RMB’000 RMB’000 NET CURRENT ASSETS 36,494,651 19,771,440 TOTAL ASSETS LESS CURRENT LIABILITIES 57,208,333 34,144,805 NON-CURRENT LIABILITIES Bank and other borrowings – due after one year 26 15,935,463 6,117,815 Senior notes 27 8,558,184 – Deferred tax liabilities 21 703,714 538,915 25,197,361 6,656,730 32,010,972 27,488,075 CAPITAL AND RESERVES Share capital 28 208,656 207,422 Reserves 22,654,206 18,850,269 Convertible securities 29 2,084,472 2,084,472 Equity attributable to owners of the Company 24,947,334 21,142,163 Non-controlling interests 7,063,638 6,345,912 32,010,972 27,488,075

The consolidated financial statements on page 77 to 175 were approved and authorised for issue by the Board of Directors on 21 March 2014 and are signed on its behalf by:

SHOU Bainian LUO Zhaoming DIRECTOR DIRECTOR

F-125 Greentown China Holdings Limited 80 Consolidated Statement of Changes in Equity For the year ended 31 December 2013

Attributable to Owners of the Company Conversion Share Non- Share Share Special Statutory Option Options Convertible Retained Controlling Total Capital Premium Reserve Reserve Reserve Reserve Securities Earnings Total Interests Equity RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note i) At 1 January 2012 166,441 6,299,722 (552,744) 346,150 27,275 280,105 – 5,372,950 11,939,899 5,703,415 17,643,314 Profit and total comprehensive income for the year – – – – – – – 4,851,123 4,851,123 1,201,928 6,053,051 Dividends paid to non-controlling interests – – – – – – – – – (186,676) (186,676) Transfer (Note i) – – – 103,320 – – – (103,320) – – – Shares issued (Note 28) 39,910 2,035,406 – – – – – – 2,075,316 – 2,075,316 Issue of convertible securities (Note 29) – – – – – – 2,084,472 – 2,084,472 – 2,084,472 Recognition of equity-settled share-based payments – – – – – 1,203 – – 1,203 – 1,203 Exercise of share options 1,071 60,636 – – – (13,445) – – 48,262 – 48,262 Transfer on redemption of 2007 convertible bonds – – – – (27,275) – – 27,275 – – – Disposal of subsidiaries – – – – – – – – – (1,407,985) (1,407,985) Partial disposal of subsidiaries without loss of control – – 141,888–––––141,888 405,385 547,273 Acquisition of subsidiaries which constitute business (Note 30) – – – – – – – – – 102,857 102,857 Liquidation of subsidiaries – – – – – – – – – (6,072) (6,072) Acquisition of a subsidiary which constitutes assets – – – – – – – – – 17,000 17,000 Capital contribution from non-controlling shareholders of subsidiaries – – – – – – – – – 516,060 516,060 At 31 December 2012 207,422 8,395,764 (410,856) 449,470 – 267,863 2,084,472 10,148,028 21,142,163 6,345,912 27,488,075 Profit and total comprehensive income for the year – – – – – – – 4,885,514 4,885,514 1,104,691 5,990,205 Dividends recognised as Distributions (Note 13) – – – – – – – (1,077,319) (1,077,319) – (1,077,319) Dividends paid to non-controlling interests – – – – – – – – – (518,512) (518,512) Transfer (Note i) – – – 865,120 – – – (865,120) – – – Exercise of share options 1,234 134,565 – – – (50,085) – – 85,714 – 85,714 Distribution relating to convertible securities (Note 29) – – – – – – – (182,914) (182,914) – (182,914) Purchase of additional interest in subsidiaries – – 33,257 – – – – – 33,257 (230,957) (197,700) Partial disposal of subsidiaries without loss of control – – 60,919 – – – – – 60,919 (38,419) 22,500 Acquisition of subsidiaries (Note 30) – – – – – – – – – 25,314 25,314 Capital contribution from non-controlling shareholders of subsidiaries – – – – – – – – – 375,609 375,609 At 31 December 2013 208,656 8,530,329 (316,680) 1,314,590 – 217,778 2,084,472 12,908,189 24,947,334 7,063,638 32,010,972

Notes:

F-126 Annual Report 2013 81 Consolidated Statement of Cash Flows For the year ended 31 December 2013

2013 2012 RMB’000 RMB’000 OPERATING ACTIVITIES Profit before taxation 9,146,062 10,257,200 Adjustments for: Share of results of associates (1,092,037) (209,356) Share of results of joint ventures (477,999) (304,119) Depreciation and amortisation 158,598 169,381 Reversal of impairment losses on property, plant and equipment (60,685) – Impairment losses on property, plant and equipment – 81,485 Interest income (493,693) (700,482) Trust income – (130,769) Finance costs 506,815 564,115 Net unrealised foreign exchange gains (162,086) (1,466) Net gain on disposal of property, plant and equipment (1,390) (806) Gain from changes in fair value of investment properties (100,900) (600) Equity-settled share based payments – 1,203 Fair value changes on trust-related financial derivatives – (82,520) Fair value changes on cross currency swaps (49,849) – Net gain on disposal of subsidiaries – (549,697) Net gain on disposal of joint ventures – (1,377) Net gain on disposal of associates – (56,505) Gain relating to a newly acquired joint venture (704,131) – Gain on re-measurement of associates to acquisition date fair value in business combination achieved in stages (3,923) (3,399) Gain on re-measurement of an associate to acquisition date fair value upon re- consolidation of a subsidiary – (49,980) Operating cash flows before movements in working capital 6,664,782 8,982,308 Increase in properties for development (109,972) (1,877,434) Decrease in properties under development 6,912,820 12,407,149 Increase in completed properties for sale (5,564,024) (5,010,740) (Increase) decrease in inventories (25,621) 19,067 Decrease (increase) in trade and other receivables, deposits and prepayments 336,711 (745,381) Decrease in prepaid other taxes 215,824 964,768 (Increase) decrease in rental paid in advance (2,212) 6,687 Decrease in pre-sale deposits (5,624,538) (14,148,066) Increase in trade and other payables 1,338,825 5,147,959 Increase in other taxes payable 231,941 62,425 Cash generated from operations 4,374,536 5,808,742 Income taxes paid (3,100,766) (1,108,948) NET CASH FROM OPERATING ACTIVITIES 1,273,770 4,699,794

F-127 Greentown China Holdings Limited 82 / Consolidated Statement of Cash Flows For the year ended 31 December 2013

2013 2012 NOTE RMB’000 RMB’000 INVESTING ACTIVITIES Purchase of property, plant and equipment (1,384,734) (1,077,664) Proceeds from disposal of property, plant and equipment 3,138 4,766 Increase in prepaid lease payment – (67,336) Investments in associates (3,034,074) (509,207) Investments in joint ventures (100,000) (50,000) Investments in a joint venture and purchase of shareholders’ loans as part of acquisition of a joint venture (1,130,000) – Dividends received from associates and joint ventures 671,516 879,726 Proceeds from disposal of interests in associates – 110,300 Proceeds from disposal of interests in joint ventures – 5,976 Proceeds from disposal of shareholders’ loans as part of disposal/partial disposal of subsidiaries and associates – 4,392,611 Proceeds from receipt of consideration receivable from disposal/partial disposal of subsidiaries and associates and relevant shareholders’ loans recognised in prior year 323,606 751,515 Acquisition of subsidiaries which constitute business (net of cash and cash equivalents acquired) 30 (90,202) 60,311 Acquisition of a subsidiary which constitutes assets – 61,621 Disposal of subsidiaries (net of cash and cash equivalents disposed of) – 2,452,999 (Advance to) repayment from third parties (115,242) 286,270 Advance to related parties (1,670,179) (2,436,836) Decrease in pledged bank deposits 1,139,299 534,305 Interest received 448,888 1,090,204 Trust income received – 130,769 (Purchase) disposal of available-for-sale investments (46,465) 91,175 NET CASH (USED IN) FROM INVESTING ACTIVITIES (4,984,449) 6,711,505 FINANCING ACTIVITIES Bank and other borrowings raised 17,032,730 11,483,218 Repayment of bank and other borrowings (16,721,142) (18,505,478) Advance from (repayment of) borrowings from related parties 3,217,907 (2,168,517) Trust loans repaid – (819,650) Contribution by non-controlling shareholders of subsidiaries 375,609 516,060 Interest paid (2,305,181) (3,586,481) Dividends paid to owners of the Company (1,077,319) (164,026) Dividends paid to non-controlling interests (518,512) (186,676) Redemption of 2007 Convertible Bonds – (189,725) Redemption of 2006 Senior Notes (237,699) – Distribution relating to Convertible Securities (182,914) – Proceeds from exercise of share options 85,714 48,262 Proceeds from issue of new shares – 2,075,316 Proceeds from issue of convertible securities – 2,084,472 Proceeds from issue of senior notes 8,717,517 – Share option premium received 25,922 3,122 Purchase of additional interests in subsidiaries (197,700) – Proceeds from partial disposal of subsidiaries 22,500 547,273 NET CASH FROM (USED IN) FINANCING ACTIVITIES 8,237,432 (8,862,830) NET INCREASE IN CASH AND CASH EQUIVALENTS 4,526,753 2,548,469 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR 6,163,632 3,615,149 Effects of exchange rate changes on the balance of cash held in foreign currencies (4,344) 14 CASH AND CASH EQUIVALENTS AT THE END OF YEAR 10,686,041 6,163,632 REPRESENTED BY BANK BALANCES AND CASH 10,686,041 6,163,632

F-128 Annual Report 2013 83 Notes to the Consolidated Financial Statements For the year ended 31 December 2013

1. General

The Company was incorporated in the Cayman Islands on 31 August 2005 as an exempted company with limited liability under the Companies Law (2004 Revision) and its shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) with effect from 13 July 2006. The address of the registered office of the Company is disclosed in the section headed “Corporate Information” of the annual report.

The consolidated financial statements are presented in Renminbi (“RMB”), which is also the functional currency of the Company.

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”)

New and Revised Standards and Interpretations Applied in the Current Year

In the current year, the Group has applied, for the first time, the following new and revised IFRSs issued by the International Accounting Standards Board (the “IASB”) that are effective for the Group’s financial year beginning on 1 January 2013.

Amendments to IFRSs Annual Improvements to IFRSs 2009–2011 Cycle Amendments to IFRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities Amendments to IFRS 10, Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other IFRS 11 and IFRS 12 Entities: Transition Guidance IFRS 10 Consolidated Financial Statements IFRS 11 Joint Arrangements IFRS 12 Disclosure of Interests in Other Entities IFRS 13 Fair Value Measurement IAS 19 (as revised in 2011) Employee Benefits IAS 27 (as revised in 2011) Separate Financial Statements IAS 28 (as revised in 2011) Investments in Associates and Joint Ventures Amendments to IAS 1 Presentation of Items of Other Comprehensive Income IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine

Except as described below, the application of these new and revised IFRSs in the current year has had no material impact on the Group’s financial performance and positions for the current and prior years and/or on the disclosures set out in these consolidated financial statements.

Impact of the Application of IFRS 10

IFRS 10 replaces the parts of IAS 27 Consolidated and Separate Financial Statements that deal with consolidated financial statements and SIC-Int 12 Consolidation – Special Purpose Entities. IFRS 10 changes the definition of control such that an investor has control over an investee when a) it has power over the investee; b) it is exposed, or has rights, to variable returns from its involvement with the investee and c) has the ability to use its power to affect its returns. All three of these criteria must be met for an investor to have control over an investee. Previously, control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Additional guidance has been included in IFRS 10 to explain when an investor has control over an investee.

The directors had performed a detailed analysis of the impact of the application of IFRS 10, and confirmed the application of IFRS 10 in the current year has had no material impact on the Group’s financial performance and positions for the current and prior years set out in these consolidated financial statements.

F-129 Greentown China Holdings Limited 84 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”) (continued)

Impact of the Application of IFRS 11

IFRS 11 replaces IAS 31 Interests in Joint Ventures, and the guidance contained in a related interpretation, SIC-Int 13 jointly controlled entities – Non-Monetary Contributions by Venturers, has been incorporated in IAS 28 (as revised in 2011). IFRS 11 deals with how a joint arrangement of which two or more parties have joint control should be classified and accounted for. Under IFRS 11, there are only two types of joint arrangements – joint operations and joint ventures. The classification of joint arrangements under IFRS 11 is determined based on the rights and obligations of parties to the joint arrangements by considering the structure, the legal form of the arrangements, the contractual terms agreed by the parties to the arrangement, and, when relevant, other facts and circumstances. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint operators) have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint venturers) have rights to the net assets of the arrangement. Previously, IAS 31 had three types of joint arrangements – jointly controlled entities, jointly controlled operations and jointly controlled assets. The classification of joint arrangements under IAS 31 was primarily determined based on the legal form of the arrangement (e.g. a joint arrangement that was established through a separate entity was classified as a jointly controlled entity).

The initial and subsequent accounting of joint ventures and joint operations are different. Investments in joint ventures are accounted for using the equity method (proportionate consolidation is no longer allowed). Investments in joint operations are accounted for such that each joint operator recognises its assets (including its share of any assets jointly held), its liabilities (including its share of any liabilities incurred jointly), its revenue (including its share of revenue from the sale of the output by the joint operation) and its expenses (including its share of any expenses incurred jointly). Each joint operator accounts for the assets and liabilities, as well as revenues and expenses, relating to its interest in the joint operation in accordance with the applicable standards.

The directors reviewed and assessed the classification of the Group’s investments in joint arrangements in accordance with the requirements of IFRS 11. The directors concluded that the Group’s investment in its joint arrangements which were classified as jointly controlled entities under IAS 31 and was accounted for using the equity method, should be classified as joint ventures under IFRS 11 and continue to accounted for using the equity method.

Impact of the Application of IFRS 12

IFRS 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the application of IFRS 12 has resulted in more extensive disclosures in the financial statements.

IFRS 13 Fair Value Measurement

The Group has applied IFRS 13 for the first time in the current year. IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The scope of IFRS 13 is broad; the fair value measurement requirements of IFRS 13 apply to both financial instrument items and non-financial instrument items for which other IFRSs require or permit fair value measurements and disclosures about fair value measurements, except for share based payment transactions that are within the scope of IFRS 2 Share-based Payment, leasing transactions that are within the scope of IAS 17 Leases, and measurements that have some similarities to fair value but are not fair value (e.g. net realisable value for the purposes of measuring inventories or value in use for impairment assessment purposes).

IFRS 13 defines the fair value of an asset as the price that would be received to sell an asset (or paid to transfer a liability, in the case of determining the fair value of a liability) in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair value under IFRS 13 is an exit price regardless of whether that price is directly observable or estimated using another valuation technique. Also, IFRS 13 includes extensive disclosure requirements.

IFRS 13 requires prospective application from 1 January 2013. In addition, specific transitional provisions were given to entities such that they need not apply the disclosure requirements set out in the Standard in comparative information provided for periods before the initial application of the Standard.

F-130 Annual Report 2013 85 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”) (continued)

IFRS 13 Fair Value Measurement (continued)

In accordance with these transitional provisions, the Group has not made any new disclosures required by IFRS 13 for the 2012 comparative period (see Notes 6(c), 16 for the 2013 disclosures). Other than the additional disclosures, the application of IFRS 13 has not had any material impact on the amounts recognised in the consolidated financial statements.

New and Revised Standards and Interpretations Issued But Not Yet Effective

The Group has not early applied the following new and revised IFRSs that have been issued but are not yet effective:

Amendments to IFRSs Annual Improvements to IFRSs 2010–2012 Cycle4 Amendments to IFRSs Annual Improvements to IFRSs 2011–2013 Cycle2 IFRS 9 Financial Instruments3 Amendments to IFRS 9 and IFRS 7 Mandatory Effective Date of IFRS 9 and Transition Disclosures3 Amendments to IFRS 10, IFRS 12 Investment Entities1 and IAS 27 Amendments to IAS 19 Defined Benefit Plans: Employee Contributions2 Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities1 Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets1 Amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting1 IFRIC 21 Levies1 IFRS 14 Regulatory Deferral Accounts5

1 Effective for annual periods beginning on or after 1 January 2014 2 Effective for annual periods beginning on or after 1 July 2014. 3 Available for application – the mandatory effective date will be determined when the outstanding phases of IFRS 9 are finalised. 4 Effective for annual periods beginning on or after 1 July 2014, with limited exceptions. 5 Effective for first annual IFRS financial statements beginning on or after 1 January 2016.

Annual Improvements to IFRSs 2010–2012 Cycle The Annual Improvements to IFRSs 2010-2012 Cycle include a number of amendments to various IFRSs, which are summarised below.

The amendments to IFRS 3 clarify that contingent consideration that is classified as an asset or a liability should be measured at fair value at each reporting date, irrespective of whether the contingent consideration is a financial instrument within the scope of IFRS 9 or IAS 39 or a non-financial asset or liability. Changes in fair value (other than measurement period adjustments) should be recognised in profit and loss. The amendments to IFRS 3 are effective for business combinations for which the acquisition date is on or after 1 July 2014.

The amendments to the basis for conclusions of IFRS 13 clarify that the issue of IFRS 13 and consequential amendments to IAS 39 and IFRS 9 did not remove the ability to measure short – term receivables and payables with no stated interest rate at their invoice amounts without discounting, if the effect of discounting is immaterial.

F-131 Greentown China Holdings Limited 86 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”) (continued)

New and Revised Standards and Interpretations Issued But Not Yet Effective (continued)

Annual Improvements to IFRSs 2010–2012 Cycle (continued) The amendments to IAS 16 and IAS 38 remove perceived inconsistencies in the accounting for accumulated depreciation/ amortisation when an item of property, plant and equipment or an intangible asset is revalued. The amended standards clarify that the gross carrying amount is adjusted in a manner consistent with the revaluation of the carrying amount of the asset and that accumulated depreciation/amortisation is the difference between the gross carrying amount and the carrying amount after taking into account accumulated impairment losses.

Annual Improvements to IFRSs 2011-2013 Cycle The Annual Improvements to IFRSs 2011-2013 Cycle include a number of amendments to various IFRSs, which are summarised below.

The amendments to IFRS 3 clarify that the standard does not apply to the accounting for the formation of all types of joint arrangement in the financial statements of the joint arrangement itself.

(a) the property meets the definition of investment property in terms of IAS 40; and

(b) the transaction meets the definition of a business combination under IFRS 3.

The directors do not anticipate that the application of the amendments included in the Annual Improvements to IFRSs 2011-2013 Cycle will have a material effect on the Group’s consolidated financial statements.

F-132 Annual Report 2013 87 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”) (continued)

New and Revised Standards and Interpretations Issued But Not Yet Effective (continued)

IFRS 9 Financial Instruments (continued) Key requirements of IFRS 9 are described as follows:

Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities The amendments to IFRS 10 define an investment entity and require a reporting entity that meets the definition of an investment entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair value through profit or loss in its financial statements.

To qualify as an investment entity, a reporting entity is required to:

• obtain funds from one or more investors for the purpose of providing them with professional investment management services;

• commit to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both; and

• measure and evaluate performance of substantially all of its investments on a fair value basis.

Consequential amendments have been made to IFRS 12 and IAS 27 to introduce new disclosure requirements for investment entities.

The directors of the Company do not anticipate that the investment entities amendments will have any effect on the Group’s consolidated financial statements as the Company is not an investment entity.

F-133 Greentown China Holdings Limited 88 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”) (continued)

New and Revised Standards and Interpretations Issued But Not Yet Effective (continued)

Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities The amendments to IAS 32 clarify existing application issues relating to the offset of financial assets and financial liabilities requirements. Specifically, the amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’ and ‘simultaneous realisation and settlement’.

The directors of the Company do not anticipate that the application of these amendments to IAS 32 will have a significant impact on the Group’s consolidated financial statements as the Group does not have any financial assets and financial liabilities that qualify for offset.

Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets The amendments to IAS 36 remove the requirement to disclose the recoverable amount of a cash-generating unit (CGU) to which goodwill or other intangible assets with indefinite useful lives had been allocated when there has been no impairment or reversal of impairment of the related CGU. Furthermore, the amendments introduce additional disclosure requirements regarding the fair value hierarchy, key assumptions and valuation techniques used when the recoverable amount of an asset or CGU was determined based on its fair value less costs of disposal.

The directors of the Company do not anticipate that the application of these amendments to IAS 36 will have a significant impact on the Group’s consolidated financial statements.

Amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting The amendments to IAS 39 provide relief from the requirement to discontinue hedge accounting when a derivative hedging instrument is novated under certain circumstances. The amendments also clarify that any change to the fair value of the derivative hedging instrument arising from the novation should be included in the assessment of hedge effectiveness.

The directors of the Company do not anticipate that the application of these amendments to IAS 39 will have any effect on the Group’s consolidated financial statements as the Group does not have any derivatives that are subject to novation.

IFRIC 21 Levies IFRIC 21 Levies addresses the issue of when to recognise a liability to pay a levy. The Interpretation defines a levy, and specifies that the obligating event that gives rise to the liability is the activity that triggers the payment of the levy, as identified by legislation. The Interpretation provides guidance on how different levy arrangements should be accounted for, in particular, it clarifies that neither economic compulsion nor the going concern basis of financial statements preparation implies that an entity has a present obligation to pay a levy that will be triggered by operating in a future period.

The directors of the Company do not anticipate that the application of IFRIC 21 will have any effect on the Group’s consolidated financial statements as the Group does not have any levy.

3. Principal Accounting Policies

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards. In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and by the Hong Kong Companies Ordinance.

F-134 Annual Report 2013 89 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

3. Principal Accounting Policies (continued)

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2 Share-based Payment, leasing transactions that are within the scope of IAS 17 Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 Inventories or value in use in IAS 36 Impairment of Assets.

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

The principal accounting policies are set out below.

Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved when the Company:

• has power over the investee;

• is exposed, or has rights, to variable returns from its involvement with the investee; and

• has the ability to use its power to affect its returns.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

When the Group has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Group considers all relevant facts and circumstances in assessing whether or not the Group’s voting rights in an investee are sufficient to give it power, including:

• the size of the Group’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

• potential voting rights held by the Group, other vote holders or other parties;

• rights arising from other contractual arrangements; and

F-135 Greentown China Holdings Limited 90 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

3. Principal Accounting Policies (continued)

Basis of Consolidation (continued)

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

When the Group loses control of a subsidiary, it (i) derecognises the assets (including any goodwill) and liabilities of the subsidiary at their carrying amounts at the date when control is lost, (ii) derecognises the carrying amount of any non-controlling interests in the former subsidiary at the date when control is lost (including any components of other comprehensive income attributable to them), and (iii) recognises the aggregate of the fair value of the consideration received and the fair value of any retained interest, with any resulting difference being recognise as a gain or loss in profit or loss attributable to the Group. When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognised in other comprehensive income and accumulated in equity, the amounts previously recognised in other comprehensive income and accumulated in equity are accounted for as if the Group had directly disposed of the related assets (i.e. reclassified to profit or loss or transferred directly to retained earnings as specified by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in a joint venture or an associate.

Business Combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally recognised in profit or loss as incurred.

F-136 Annual Report 2013 91 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

3. Principal Accounting Policies (continued)

Business Combinations (continued)

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition- date amounts of the identifiable assets acquired and the liabilities assumed. If, after re-assessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at their fair value or, when applicable, on the basis specified in another Standard.

F-137 Greentown China Holdings Limited 92 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

3. Principal Accounting Policies (continued)

Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business (see the accounting policy above) less accumulated impairment losses, if any.

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the amount of profit or loss on disposal.

Acquisition of Assets

When the Group acquires a subsidiary, a group of assets or net assets that does not constitute a business, the cost of the acquisition is allocated between the individual identifiable assets and liabilities in the group based on their relative fair values at the acquisition date. No goodwill will be recognised for acquisition of a subsidiary that is accounted for as acquisition of assets.

Investments in Associates and Joint Ventures

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates and joint ventures are incorporated in these consolidated financial statements using the equity method of accounting. The financial statements of associates and joint ventures used for equity accounting purposes are prepared using uniform accounting policies as those of the Group for like transactions and events in similar circumstances. Under the equity method, an investment in an associate or a joint venture is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or joint venture. When the Group’s share of losses of an associate or joint venture exceeds the Group’s interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate or joint venture), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.

An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.

F-138 Annual Report 2013 93 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

3. Principal Accounting Policies (continued)

Investments in Associates and Joint Ventures (continued)

When the Group reduces its ownership interest in an associate or a joint venture but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.

When a group entity transacts with an associate or a joint venture of the Group (such as a sale or contribution of assets), profits and losses resulting from the transactions with the associate or joint venture are recognised in the Group’s consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Group.

Revenue Recognition

Revenue from sales of other goods is recognised when the goods are delivered and title has passed.

Service income is recognised when services are provided.

Brand usage related income is recognised on sales or pre-sales of properties by brand users at agreed fee rates.

The Group’s accounting policy for recognition of revenue from operating leases is described in the accounting policy for leasing below.

F-139 Greentown China Holdings Limited 94 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

3. Principal Accounting Policies (continued)

Foreign Currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recorded in the respective functional currency (i.e. the currency of the primary economic environment in which the entity operates) at the rates of exchange prevailing on the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non- monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the period in which they arise.

Borrowing Costs

All other borrowing costs are recognised in profit or loss in the year in which they are incurred.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

F-140 Annual Report 2013 95 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

3. Principal Accounting Policies (continued)

Taxation (continued)

Deferred tax is recognised in profit or loss, except when it relates to items that are recognised in other comprehensive income or directly in equity, in which case the deferred tax is also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

Government Grants

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

To the extent the allocation of the lease payments can be made reliably, interest in leasehold land that is accounted for as an operating lease is presented as “prepaid lease payments” in the consolidated statement of financial position and is amortised over the lease term on a straight-line basis except for those that are classified and accounted for as investment properties under the fair value model. When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified as a finance lease and accounted for as property, plant and equipment, unless it is clear that both elements are operating leases, in which case the entire lease is classified as an operating lease.

F-141 Greentown China Holdings Limited 96 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

3. Principal Accounting Policies (continued)

Retirement Benefit Costs

The Group participates in state-managed retirement benefit schemes, which are defined contribution schemes, pursuant to which the Group pays a fixed percentage of its qualifying staff’s wages as contributions to the plans. Payments to such retirement benefit schemes are charged as an expense when employees have rendered service entitling them to the contributions.

Property, Plant and Equipment

Property, plant and equipment, including land and buildings held for use in the production or supply of goods or services, or for administrative purposes other than construction in progress, are stated in the consolidated statement of financial position at cost less accumulated depreciation and accumulated impairment losses.

Investment Properties

Construction costs incurred for investment properties under construction are capitalised as part of the carrying amount of the investment properties under construction.

Impairment of Tangible Assets

At the end of the reporting period, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

F-142 Annual Report 2013 97 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

3. Principal Accounting Policies (continued)

Impairment of Tangible Assets (continued)

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.

Properties for Development

Properties for development, representing leasehold land located in the PRC for development for future sale in the ordinary course of business, are stated at the lower of cost and net realisable value. Cost comprises the costs of land use rights and other directly attributable costs. Net realisable value represents the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale. Properties for development are transferred to properties under development upon commencement of development.

Properties Under Development

Properties under development, representing leasehold land and buildings located in the PRC under development for future sale in the ordinary course of business, are stated at the lower of cost and net realisable value. Cost comprises the costs of land use rights, construction costs, borrowing costs capitalised and other direct development expenditure. Net realisable value represents the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale. Properties under development are transferred to completed properties for sale upon completion of development.

Completed Properties for Sale

Completed properties for sale are stated at the lower of cost and net realisable value. Cost comprises the costs of land use rights, construction costs, borrowing costs capitalised and other direct development expenditure. Net realisable value represents the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

Inventories

Inventories other than properties for development, properties under development and completed properties for sale are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average method.

Financial Instruments

Financial assets and financial liabilities are recognised on the consolidated statement of financial position when a group entity becomes a party to the contractual provisions of the instrument.

F-143 Greentown China Holdings Limited 98 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

3. Principal Accounting Policies (continued)

Financial Instruments (continued)

Financial Assets The Group’s financial assets are classified into the following specified categories: financial assets at fair value through profit or loss (“FVTPL”), loans and receivables and available-for-sale financial assets. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Interest income is recognised on an effective interest basis.

Financial Assets at FVTPL Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL.

A financial asset is classified as held for trading if:

• it has been acquired principally for the purpose of selling in the near term; or

• on initial recognition it is a part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if:

• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. Fair value is determined in the manner described in Note 6(c).

F-144 Annual Report 2013 99 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

3. Principal Accounting Policies (continued)

Financial Instruments (continued)

Financial Assets (continued) Loans and Receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, loans and receivables (including trade and other receivables, amounts due from related parties, pledged bank deposits, bank balances and cash) are carried at amortised cost using the effective interest method, less any identified impairment losses (see accounting policy on impairment loss on financial assets below).

Dividends on available-for-sale equity instruments are recognised in profit or loss when the Group’s right to receive the dividends is established.

For an available-for-sale equity investment, a significant or prolonged decline in the fair value of that investment below cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or

• breach of contract, such as default or delinquency in interest or principal payments; or

• it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or

• the disappearance of an active market for that financial asset because of financial difficulties.

F-145 Greentown China Holdings Limited 100 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

3. Principal Accounting Policies (continued)

Financial Instruments (continued)

Financial Assets (continued) Impairment of Financial Assets (continued) For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the financial asset’s original effective interest rate.

For financial assets measured at amortised cost, if, in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

The Group’s financial liabilities are generally classified into financial liabilities at fair value through profit or loss (“FVTPL”) and other financial liabilities.

Financial Liabilities at Fair Value Through Profit or Loss Financial liabilities at FVTPL include financial liabilities held for trading.

F-146 Annual Report 2013 101 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

3. Principal Accounting Policies (continued)

Financial Instruments (continued)

Financial Liabilities and Equity (continued) Financial Liabilities at Fair Value Through Profit or Loss (continued) A financial liability is classified as held for trading if:

• it has been incurred principally for the purpose of repurchasing in the near future; or

• on initial recognition it is a part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

Financial liabilities at FVTPL are measured at fair value, with changes in fair value arising on remeasurement recognised directly in profit or loss in the period in which they arise. The net gain or loss recognised in profit or loss excludes any interest paid on the financial liabilities and is included in the other income item.

Equity Instruments Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Financial Guarantee Contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. A financial guarantee contract issued by the Group and not designated as at fair value through profit or loss is recognised initially at its fair value. Subsequent to initial recognition, the Group measures the financial guarantee contract at the higher of: (i) the amount of obligation under the contract, as determined in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets; and (ii) the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with the revenue recognition policy.

F-147 Greentown China Holdings Limited 102 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

3. Principal Accounting Policies (continued)

Financial Instruments (continued)

Derecognition The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group continues to recognise the asset to the extent of its continuing involvement and recognises an associated liability. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

Share-Based Payment Transactions

Equity-Settled Share-Based Payment Transactions Share Options Granted to Employees The fair value of services received determined by reference to the fair value of share options granted at the grant date is expensed on a straight-line basis over the vesting period, with a corresponding increase in equity (share options reserve). Share option premiums received or receivable from grantees are recognised in share options reserve.

4. Critical Accounting Judgements and Key Sources of Estimation Uncertainty

Critical Judgements in Applying Accounting Policies

The critical judgements, apart from those involving estimations (see below), that the directors have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements are disclosed below.

Deferred Taxation on Investment Properties For the purposes of measuring deferred tax liabilities or deferred tax assets arising from investment properties that are measured using the fair value model, the directors have reviewed the Group’s investment property portfolios and concluded that the Group’s investment properties are not held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time, rather than through sale. Therefore, in measuring the Group’s deferred taxation on investment properties, the directors have determined that the presumption that the carrying amounts of investment properties measured using the fair value model are recovered entirely through sale is not rebutted. As a result, the Group has recognised deferred taxes of both enterprise income tax and land appreciation tax on changes in fair value of investment properties.

F-148 Annual Report 2013 103 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

4. Critical Accounting Judgements and Key Sources of Estimation Uncertainty (continued)

Key Sources of Estimation Uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are disclosed below.

Net realisable value for properties for development and properties under development is determined by reference to management estimates of the selling price based on prevailing market conditions, less applicable variable selling expenses and the anticipated costs to completion. Net realisable value for completed properties for sale is determined by reference to management estimates of the selling price based on prevailing market conditions, less applicable variable selling expenses. During the course of their assessment, management will also make reference to property valuations conducted by independent qualified professional valuers based on comparable market prices. Management are required to revise these estimates if there is a change in market condition or demand. If actual market conditions are less favourable than those projected by management, additional adjustments to the value of properties for development, properties under development and completed properties for sale may be required. As at 31 December 2013, the carrying amounts of properties for development, properties under development and completed properties for sale are RMB6,280,067,000 (2012: RMB6,020,524,000), RMB38,967,574,000 (2012: RMB43,136,154,000) and RMB13,062,500,000 (2012: RMB7,330,358,000) respectively (net of accumulated impairment loss of RMB nil (2012: RMB nil), RMB nil (2012: RMB143,867,000) and RMB nil (2012: RMB nil) respectively).

Fair Value of Investment Properties Investment properties are carried in the consolidated statement of financial position at 31 December 2013 at their fair value of approximately RMB1,831,500,000 (2012: RMB1,730,600,000).

Revision on the Estimates on Expected Cash Flows of the Shareholder’s Loan Made to Zhejiang Jinying When the Group revises its estimates of receipts of the shareholder’s loan, the Group shall adjust the carrying amount of the loan to reflect actual and revised estimated cash flows. The Group recalculates the carrying amount by computing the present value of estimated future cash flows at the loan’s original effective interest rate. The adjustment is recognised in profit or loss as income or expense.

As at 31 December 2013, the carrying amount of the shareholder’s loan made to Zhejiang Jinying is RMB1,732,137,000 (2012: nil).

Estimated Impairment of Trade and Other Receivables and Amounts Due From Related Parties When there is objective evidence of impairment loss, the Group takes into consideration the estimation of future cash flows to determine impairment loss. The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). Where the actual future cash flows are less than expected, a material impairment loss may arise.

F-149 Greentown China Holdings Limited 104 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

4. Critical Accounting Judgements and Key Sources of Estimation Uncertainty (continued)

Key Sources of Estimation Uncertainty (continued)

Land Appreciation Tax The provision for Land Appreciation Tax (“LAT”) amounting to RMB2,717,856,000 (2012: RMB2,237,657,000) (included in income taxes payable) is estimated and made according to the requirements set forth in the relevant PRC tax laws and regulations. The actual LAT liabilities are subject to the determination by the tax authorities upon completion of the property development projects and the tax authorities might disagree with the basis on which the provision for LAT is calculated.

5. Capital Risk Management

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged from prior year.

The capital structure of the Group consists of net debt, which includes the borrowings disclosed in Notes 26, 27 and 37(ii) (net of cash and cash equivalents), and capital and reserves.

6. Financial Instruments

(a) Categories of Financial Instruments

2013 2012 RMB’000 RMB’000 Financial assets Loans and receivables (including cash and cash equivalents) 39,637,058 32,939,725 Available-for-sale financial assets 377,010 346,545 Cross currency swaps 49,849 –

Financial liabilities Amortised cost 59,048,601 44,192,216

(b) Financial Risk Management Objectives and Policies

The Group’s major financial instruments include available-for-sale investments, cross currency swaps, trade and other receivables, amounts due from related parties, pledged bank deposits, bank balances and cash, trade and other payables, amounts due to related parties, bank and other borrowings and senior notes. Details of the financial instruments are disclosed in respective notes. The risks associated with these financial instruments include market risk (currency risk and interest rate risk), credit risk and liquidity risk. The policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner. There has been no significant change in the Group’s exposure to these risks or the manner in which it manages and measures risks.

Market Risk (i) Currency Risk The Group has bank balances, other payables, other receivables, amounts due from related parties, bank and other borrowings and senior notes denominated in foreign currencies, which expose the Group to foreign currency risk.

F-150 Annual Report 2013 105 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

6. Financial Instruments (continued)

(b) Financial Risk Management Objectives and Policies (continued)

Market Risk (continued) (i) Currency Risk (continued) The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

Liabilities Assets 2013 2012 2013 2012 RMB’000 RMB’000 RMB’000 RMB’000 Hong Kong dollars (“HKD”) 424 818,959 93,017 456,264 United States dollars (“USD”) 11,151,171 1,710,876 1,005,914 83,678

The Group does not use any derivative contracts to hedge against its exposure to currency risk.

The following table details the Group’s sensitivity to a 5% (2012: 5%) increase and decrease in RMB against the relevant foreign currencies. 5% represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 5% change in foreign currency rates. A positive number below indicates an increase in post-tax profit where RMB strengthens 5% against the relevant currency. For a 5% weakening of RMB against the relevant currency, there would be an equal and opposite impact on post-tax profit.

HKD Impact USD Impact 2013 2012 2013 2012 RMB’000 RMB’000 RMB’000 RMB’000 Profit or loss (3,472) 13,601 380,447 61,020

The Group does not use any derivative contracts to hedge against its exposure to interest rate risk.

The Group’s exposures to interest rates on financial liabilities are detailed in the liquidity risk management section of this note.

F-151 Greentown China Holdings Limited 106 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

6. Financial Instruments (continued)

(b) Financial Risk Management Objectives and Policies (continued)

Market Risk (continued) (ii) Interest Rate Risk (continued) Sensitivity Analysis The sensitivity analyses below have been determined based on the exposure to market deposit and lending interest rates for non-derivative instruments. For variable-rate bank deposits, bank and other borrowings and amounts due from/to related parties, the analysis is prepared assuming the balances outstanding at the end of the reporting period were outstanding for the whole year. A 5 basis point (2012: 5 basis point) increase or decrease in market deposit interest rates and a 50 basis point (2012: 50 basis point) increase or decrease in market lending interest rates represent management’s assessment of the reasonably possible change in interest rates.

If the market deposit interest rates had been 5 basis points higher/lower and all other variables were held constant, the Group’s post-tax profit for the year ended 31 December 2013 would have increased/decreased by RMB3,918,000 (2012: increased/decreased by RMB2,311,000). This is mainly attributable to the Group’s exposure to interest rates on its variable-rate bank deposits.

If the market lending interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group’s post-tax profit for the year ended 31 December 2013 would have decreased/increased by RMB51,823,000 (2012: decreased/increased by RMB62,522,000). This is mainly attributable to the Group’s exposure to interest rates on its variable-rate bank and other borrowings and amounts due from/to related parties.

Credit Risk As at 31 December 2013, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties and financial guarantees provided by the Group arises from:

• the carrying amount of the respective recognised financial assets as stated in the consolidated statement of financial position; and

• the amount of contingent liabilities disclosed in Note 36.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies or with a good reputation.

F-152 Annual Report 2013 107 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

6. Financial Instruments (continued)

(b) Financial Risk Management Objectives and Policies (continued)

Liquidity Risk In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. The management monitors the utilisation of borrowings and ensures compliance with loan covenants.

The Group relies on bank and other borrowings, senior notes and amounts due to related parties as a significant source of liquidity.

The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. Specifically, bank loans with a repayment on demand clause are included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities are based on the agreed repayment dates. The table includes both interest and principal cash flows.

Liquidity and Interest Risk Tables

Weighted On Demand Total Carrying Average or Less Than Undiscounted Amount at Interest Rate 1 Year 1-5 Years >5 Years Cash Flows 31/12/2013 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 2013 Non-derivative financial liabilities Trade and other payables – 16,324,924 1,436,829 – 17,761,753 17,761,753 Bank and other borrowings – fixed-rate 11.32% 4,544,620 5,084,665 575 9,629,860 8,113,896 – variable-rate 7.62% 3,445,621 12,134,638 1,087,789 16,668,048 13,839,462 Amounts due to related parties – interest-free – 5,565,738 – – 5,565,738 5,565,738 – fixed-rate 9.90% 4,252,341 – – 4,252,341 3,869,168 – variable-rate 5.69% 1,416,673 – – 1,416,673 1,340,400 Senior notes 7.71% 686,639 9,096,195 1,910,282 11,693,116 8,558,184 Financial guarantee contracts – 25,543,434 – – 25,543,434 – 61,779,990 27,752,327 2,998,646 92,530,963 59,048,601

F-153 Greentown China Holdings Limited 108 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

6. Financial Instruments (continued)

(b) Financial Risk Management Objectives and Policies (continued)

Liquidity Risk (continued) Liquidity and Interest Risk Tables (continued)

Carrying Weighted On Demand Total Amount Average or Less Than Undiscounted at Interest Rate 1 Year 1-5 Years >5 Years Cash Flows 31/12/2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 2012 Non-derivative financial liabilities Trade and other payables – 14,426,570 1,267,102 – 15,693,672 15,693,672 Bank and other borrowings – fixed-rate 13.71% 4,796,679 1,903,742 92,142 6,792,563 5,719,056 – variable-rate 7.08% 12,092,626 4,350,168 818,825 17,261,619 15,413,047 Amounts due to related parties – interest-free – 3,984,322 – – 3,984,322 3,984,322 – fixed-rate 4.94% 1,974,274 – – 1,974,274 1,881,247 – variable-rate 7.46% 1,353,515 – – 1,353,515 1,259,545 Senior notes 9% 260,210 – – 260,210 241,327 Financial guarantee contracts – 25,396,108 – – 25,396,108 – 64,284,304 7,521,012 910,967 72,716,283 44,192,216

Bank loans with a repayment on demand clause are included in the “less than 1 year” time band in the above maturity analysis. As at 31 December 2013, the aggregate undiscounted principal amounts of these bank loans amounted to RMB56,525,000 (2012: RMB69,291,000). Taking into account the Group’s financial position, the directors do not believe that it is probable that the banks will exercise their discretionary rights to demand immediate repayment. The directors believe that such bank loans will be repaid after the reporting date in accordance with the scheduled repayment dates set out in the loan agreements. At that time, the aggregate principal and interest cash outflows will amount to RMB68,930,000 (2012: RMB86,263,000).

F-154 Annual Report 2013 109 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

6. Financial Instruments (continued)

Fair Value of the Group’s Financial Assets That are Measured at Fair Value on a Recurring Basis At the end of the reporting period, the Group had the following cross currency swaps not designated as hedging instruments. Major terms of the cross currency swaps are as follows:

Notional Amount Maturity Exchange Rates Interest Rate Swap Sell RMB600,000,000 05/09/2016 USD1: RMB6.1640 From fixed rate 5.625% per annum to fixed rate 4.625% per annum

Sell RMB600,000,000 05/13/2016 USD1: RMB6.1600 From fixed rate 5.625% per annum to fixed rate 4.625% per annum

Sell RMB700,000,000 05/13/2016 USD1: RMB6.1600 From fixed rate 5.625% per annum to fixed rate 4.625% per annum

Sell RMB600,000,000 05/13/2016 USD1: RMB6.1700 From fixed rate 5.625% per annum to fixed rate 4.625% per annum

Fair Value Financial Instrument Fair Value Hierarchy Valuation Technique and Key Inputs RMB’000 Cross currency swaps 49,849 Level 2 Broker quotes: The quotes are calculated by discounting estimated future cash flows based on contracted interest rates discounted at respective currency’s observable yield curves at the end of the year

Fair Value of Financial Assets and Financial Liabilities That are Not Measured at Fair Value on a Recurring Basis (But Fair Value Disclosures are Required) Except as detailed in the following table, the directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the consolidated financial statements approximate their fair values:

2013 2012 Carrying Carrying Amount of Amount of Liability Liability Component Fair Value Component Fair Value RMB’000 RMB’000 RMB’000 RMB’000 Financial liabilities 1 1 Senior notes (Level 2) 8,558,184 8,869,747 241,327 248,200

1 Based on quoted price

F-155 Greentown China Holdings Limited 110 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

7. Revenue and Segment Information

An analysis of the Group’s revenue from its major products and services is as follows:

2013 2012 RMB’000 RMB’000 Property sales 27,460,381 34,214,430 Hotel operations 305,340 298,476 Project management 350,060 254,783 Property rental income 113,864 111,480 Design and decoration 581,651 324,800 Sales of construction materials 63,172 104,320 Other business 116,102 84,217 28,990,570 35,392,506

The chief operating decision-maker of the Group has been identified as the executive directors and certain senior management (collectively referred to as the “CODM”). Operating segments are determined based on the Group’s internal reports which are submitted to the CODM for performance assessment and resources allocation. This is also the basis upon which the Group is organised and managed.

The Group’s reportable segments under IFRS 8 are as follows:

1 Property development 2 Hotel operations 3 Property investment 4 Others (including sales of construction materials, design and decoration, project management, etc.)

The CODM assesses the performance of the operating segments based on the post-tax profit of the group entities engaged in the respective segment activities, which includes share of results of joint ventures and associates and related finance costs. Financial information provided to the CODM is measured in a manner consistent with the accounting policies adopted in the preparation of the consolidated financial statements as described in Note 3.

Sales between segments are carried out on terms agreed between the counterparties.

No customers account for 10% or more of the Group’s revenue.

F-156 Annual Report 2013 111 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

7. Revenue and Segment Information (continued)

An analysis of the Group’s revenue and results by reportable and operating segment is as follows:

Segment revenue External revenue 34,214,430 298,476 111,480 768,120 35,392,506 – 35,392,506 Inter-segment revenue – 11,707 703 1,054,283 1,066,693 (1,066,693) – Total 34,214,430 310,183 112,183 1,822,403 36,459,199 (1,066,693) 35,392,506 Segment results 6,269,967 (41,654) (17,566) (17,043) 6,193,704 (47,573) 6,146,131 Unallocated administrative expenses (48,252) Unallocated other income 19,762 Unallocated finance costs (13,659) Fair value changes on trust-related financial derivatives 82,520 Unallocated taxation (133,451) Profit for the year 6,053,051

F-157 Greentown China Holdings Limited 112 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

7. Revenue and Segment Information (continued)

Segment Assets and Liabilities

The following is an analysis of the Group’s assets and liabilities by reportable and operating segment:

Segment Assets

2013 2012 RMB’000 RMB’000 Property development 111,780,398 97,895,112 Hotel operations 5,067,566 2,951,674 Property investment 1,853,416 1,784,857 Others 1,900,384 2,721,404 Total segment assets 120,601,764 105,353,047 Unallocated 1,733,938 2,354,249 Consolidated assets 122,335,702 107,707,296

Segment Liabilities

2013 2012 RMB’000 RMB’000 Property development 85,710,438 73,911,205 Hotel operations 261,676 180,623 Property investment 1,003,689 1,091,446 Others 2,793,658 4,230,237 Total segment liabilities 89,769,461 79,413,511 Unallocated 555,269 805,710 Consolidated liabilities 90,324,730 80,219,221

For the purposes of monitoring segment performances and allocating resources between segments:

• all assets are allocated to operating segments other than bank balances and cash, property, plant and equipment, financial instruments, trade and other receivables, deposits and prepayments, and deferred tax assets pertaining to non-operating group entities.

• all liabilities are allocated to operating segments other than senior notes, bank and other borrowings, other taxes payable and deferred tax liabilities pertaining to non-operating group entities.

F-158 Annual Report 2013 113 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

7. Revenue and Segment Information (continued)

Other Segment Information

For the year ended 31 December 2013

Property Hotel Property Reportable Development Operations Investment Others Segment Total Unallocated Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Amounts included in the measure of segment profit or loss or segment assets: Addition to non-current assets (Note) 3,565,958 1,533,616 520 26,912 5,127,006 – 5,127,006 Interests in associates 10,015,706 – – – 10,015,706 – 10,015,706 Interests in joint ventures 1,848,221–––1,848,221 – 1,848,221 Gain from changes in fair value of investment properties – – (100,900) – (100,900) – (100,900) Reversal of impairment losses on property, plant and equipment – (60,685) – – (60,685) – (60,685) Gain relating to a newly acquired joint venture (704,131) – – – (704,131) – (704,131) Gain on re-measurement of associates to acquisition date fair value in business combination achieved in stages (3,923) – – – (3,923) – (3,923) Depreciation of property, plant and equipment 46,665 87,113 6,651 17,324 157,753 – 157,753 Loss (gain) on disposal of property, plant and equipment (1,259) (26) 20 (125) (1,390) – (1,390) Interest income (458,795) (3,749) (9,196) (5,861) (477,601) (16,092) (493,693) Finance costs 414,731 102 51,469 10,377 476,679 30,136 506,815 Share of results of associates (1,092,037) – – – (1,092,037) – (1,092,037) Share of results of joint ventures (477,999) – – – (477,999) – (477,999) Taxation 2,900,450 15,989 25,127 68,450 3,010,016 145,841 3,155,857

F-159 Greentown China Holdings Limited 114 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

7. Revenue and Segment Information (continued)

Other Segment Information (continued)

For the year ended 31 December 2012

Property Hotel Property Reportable Development Operations Investment Others Segment Total Unallocated Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Amounts included in the measure of segment profit or loss or segment assets: Addition to non-current assets (Note) 2,896,640 92,718 147 21,081 3,010,586 – 3,010,586 Interests in associates 6,573,266 – – – 6,573,266 – 6,573,266 Interests in joint ventures 1,003,745 – – – 1,003,745 – 1,003,745 Gain on disposal of associates (56,505) – – – (56,505) – (56,505) Net gain on disposal of joint ventures (1,377) – – – (1,377) – (1,377) Net gain on disposal of subsidiaries (549,697) – – – (549,697) – (549,697) Gain on re-measurement of an associate to acquisition date fair value upon re- consolidation of a subsidiary (49,980) – – – (49,980) – (49,980) Gain on re-measurement of an associate to acquisition date fair value in business combination achieved in stages (3,399) – – – (3,399) – (3,399) Depreciation of property, plant and equipment 69,129 75,676 7,469 17,503 169,777 – 169,777 Impairment losses on property, plant and equipment – 81,485 – – 81,485 – 81,485 Gains on disposal of property, plant and equipment (580) (13) (17) (196) (806) – (806) Interest income (665,745) (10,134) (20,039) (3,078) (698,996) (1,486) (700,482) Finance costs 370,896 4,683 70,405 104,472 550,456 13,659 564,115 Share of results of associates (209,356) – – – (209,356) – (209,356) Share of results of joint ventures (304,119) – – – (304,119) – (304,119) Taxation 4,061,183 (2,482) 277 11,720 4,070,698 133,451 4,204,149

Note: Non-current assets included mainly property, plant and equipment, investment properties (excluding gain from changes in fair value of investment properties), prepaid lease payment, interests in joint ventures, interests in associates and rental paid in advance and excluded financial instruments and deferred tax assets.

F-160 Annual Report 2013 115 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

8. Other Income

2013 2012 RMB’000 RMB’000 Interest income on bank balances 139,282 80,825 Interest income on amounts due from related parties 354,411 619,657 Trust income – 130,769 Government grants 23,058 46,416 Net foreign exchange gains 90,240 26,126 Brand usage related income 79,406 50,198 Others 41,932 46,603 728,329 1,000,594

9. Finance Costs

2013 2012 RMB’000 RMB’000 Interest on: – bank borrowings wholly repayable within five years 1,056,005 1,601,308 – bank borrowings not wholly repayable within five years 57,919 52,181 – other borrowings wholly repayable within five years 851,594 1,460,947 Effective interest expense on trust-related amounts due to related parties – 341,024 Effective interest expense on 2007 Convertible Bonds – 3,259 Interest on senior notes (Note 27) 465,879 21,899 2,431,397 3,480,618 Less: Capitalised in properties under development (1,919,987) (2,913,604) Capitalised in construction in progress (4,595) (2,899) 506,815 564,115

Borrowing costs capitalised during the year arose on the specific loan and general borrowing pool and are calculated by applying a capitalisation rate of 8.66% (2012: 8.80%) per annum to expenditure on the development of properties for sale and for own use.

F-161 Greentown China Holdings Limited 116 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

10. Profit Before Taxation

2013 2012 RMB’000 RMB’000 Profit before taxation has been arrived at after charging (crediting):

Salaries and other benefits 964,339 900,970 Equity-settled share-based payments – 1,203 Retirement benefits scheme contributions 42,210 38,564 Staff costs (including directors’ emoluments) 1,006,549 940,737 Less: Capitalised in properties under development (283,235) (273,150) 723,314 667,587 Depreciation of property, plant and equipment 157,753 169,777 Less: Capitalised in properties under development (8,712) (9,490) 149,041 160,287 Amortisation of prepaid lease payment (included in administrative expenses) 9,557 9,094 Auditors’ remuneration 17,573 18,101 Cost of properties and inventories recognised as an expense 20,042,035 24,522,092 Net gain on disposal of property, plant and equipment (1,390) (806)

11. Directors’, Chief Executive’s and Employees’ Emoluments

The emoluments paid or payable to each of the 13 (2012: 13) directors and the chief executive of the Company were as follows:

TSUI SZE Tsai SONG SHOU LUO GUO CAO NG Yiu JIA Ping, TANG JIANG KE HUI 2013 Weiping Bainian Zhaoming Jiafeng Zhounan Tin Hoi Cheung Shenghua Michael Shiding Wei Huanzhang Wan Fai Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Fees – – – – – 260 260 260 260 260 260 260 260 2,080 Other emoluments: Salaries and other benefits 2,000 2,000 1,200 1,000 1,200––––––––7,400 Contributions to retirement benefits/pension schemes 8888799555––––––––405 Performance related incentive payments (Note) 2,058 2,058 360 384 360 –––––––– 5,220 Total emoluments 4,146 4,146 1,639 1,479 1,615 260 260 260 260 260 260 260 260 15,105

F-162 Annual Report 2013 117 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

11. Directors’, Chief Executive’s and Employees’ Emoluments (continued)

TSUI SZE Tsai SONG SHOU LUO GUO CAO NG Yiu JIA Ping, TANG JIANG KE HUI 2012 Weiping Bainian Zhaoming Jiafeng Zhounan Tin Hoi ^ Cheung* Shenghua Michael Shiding Wei Huanzhang Wan Fai+ Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Fees – ––––1411082252362252362251951,591 Other emoluments: Salaries and other benefits 2,000 2,000 1,200 1,000 1,200 ––––––––7,400 Contributions to retirement benefits/ pension schemes 83 83 68 91 16––––––––341 Performance related incentive payments (Note) 2,058 2,058 380 598 360––––––––5,454 Equity-settled share- based payments – – – – 1,203 –––––––– 1,203 Total emoluments 4,141 4,141 1,648 1,689 2,779 141 108 225 236 225 236 225 195 15,989

^ Mr NG Tin Hoi was appointed as a non-executive director of the Company with effect from 15 June 2012. He was also appointed as a member of the Remuneration Committee with effect from 16 July 2012.

* Mr TSUI Yiu Cheung was appointed as a non-executive director of the Company, a member of the Audit Committee and Nomination Committee with effect from 2 August 2012.

+ Mr HUI Wan Fai was appointed as an independent non-executive director of the Company, a member of the Audit Committee and Nomination Committee with effect from 1 April 2012.

Mr SHOU Bainian is also the Chief Executive of the Company and his emoluments disclosed above include those for services rendered by him as the Chief Executive.

Note: The performance related incentive payments is determined as a percentage of the results of the Group for both years.

No directors waived any emoluments in both years.

Of the five individuals with the highest emoluments in the Group, two (2012: three) were directors of the Company whose emoluments are included in the disclosure above. The emoluments of the remaining three (2012: two) individuals were as follows:

2013 2012 RMB’000 RMB’000 Salaries and other benefits 4,755 1,590 Contributions to retirement benefits/pension schemes 215 118 Performance related incentive payments 3,051 3,165 8,021 4,873

F-163 Greentown China Holdings Limited 118 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

11. Directors’, Chief Executive’s and Employees’ Emoluments (continued)

The individuals’ emoluments were within the following bands:

2013 2012 No. of No. of Employees Employees HKD2,000,001 to HKD2,500,000 – 1 HKD2,500,001 to HKD3,000,000 1 – HKD3,000,001 to HKD3,500,000 1 – HKD3,500,001 to HKD4,000,000 1 1

12. Taxation

2013 2012 RMB’000 RMB’000 Current tax: PRC enterprise income tax 1,997,345 2,192,930 LAT 1,253,216 2,066,294 3,250,561 4,259,224 Under (Over)-provision in prior years: PRC enterprise income tax 10,013 (54,006) Deferred tax (Note 21): Current year (104,717) (1,069) 3,155,857 4,204,149

No provision for income tax has been made for the Company and group entities incorporated in Hong Kong as they have no assessable profits derived from Hong Kong.

Under the Law of the People’s Republic of China on Enterprise Income Tax (the “EIT Law”) and Implementation Regulation of the EIT Law, the tax rate of the PRC subsidiaries is 25%.

F-164 Annual Report 2013 119 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

12. Taxation (continued)

The tax charge for the year can be reconciled to the profit per the consolidated statement of profit or loss and other comprehensive income as follows:

2013 2012 RMB’000 RMB’000 Profit before taxation 9,146,062 10,257,200 Tax at the applicable PRC enterprise income tax rate of 25% (2012: 25%) 2,286,515 2,564,300 Effect of different tax rates (65,574) (17,164) Tax effect of share of results of associates (273,009) (52,339) Tax effect of share of results of joint ventures (119,500) (76,030) Tax effect of income not taxable for tax purposes (100,975) (138,095) Tax effect of expenses not deductible for tax purposes 197,873 191,671 Under (Over)-provision in respect of prior year 10,013 (54,006) Tax effect of tax losses not recognised 156,003 122,906 Recognition of deferred tax assets on tax losses previously not recognised (9,311) (9,826) Utilisation of tax losses previously not recognised (16,090) (6,988) LAT provision for the year 1,253,216 2,066,294 Tax effect of LAT (313,304) (516,574) Tax effect of undistributed profits 150,000 130,000 Tax charge for the year 3,155,857 4,204,149

Details of deferred taxation for the year ended 31 December 2013 are set out in Note 21.

PRC LAT

According to the requirements of the Provisional Regulations of the PRC on LAT (中華人民共和國土地增值稅暫行條例) effective from 1 January 1994, and the Detailed Implementation Rules on the Provisional Regulations of the PRC on LAT (中華人民共和國土地增值稅暫行條例實施細則) effective from 27 January 1995, all income from the sale or transfer of state-owned land use rights, buildings and their attached facilities in the PRC is subject to LAT at progressive rates ranging from 30% to 60% of the appreciation value, with an exemption provided for property sales of ordinary residential properties (普通標準住宅) if their appreciation values do not exceed 20% of the sum of the total deductible items.

According to the Notices for the Strengthening of Administration on LAT (關於加強土地增值稅管理工作的通知), the Group is required to pre-pay LAT on pre-sale proceeds at 0.5% – 3% for ordinary residential properties and 1% – 6% for other properties.

For the year ended 31 December 2013, the Group estimated and made a provision for LAT in the amount of RMB1,253,216,000 (2012: RMB2,066,294,000), according to the requirements set forth in the relevant PRC tax laws and regulations. The actual LAT liabilities are subject to the determination by the tax authorities upon completion of the property development projects and the tax authorities might disagree with the basis on which the provision for LAT is calculated.

13. Dividends

On 19 March 2012, an interim dividend for 2011 of RMB0.10 per ordinary share, or RMB164,026,000 in total, was paid to the shareholders.

On 12 July 2013, a final dividend for 2012 of RMB0.50 per ordinary share, or RMB1,077,319,000 in total, was paid to the shareholders.

F-165 Greentown China Holdings Limited 120 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

13. Dividends (continued)

The Board did not declare any interim dividend for the six months ended 30 June 2013 (for the six months ended 30 June 2012: nil).

A final dividend of RMB0.43 per ordinary share for the year ended 31 December 2013 has been proposed by the directors and is subject to approval by the shareholders at the forthcoming annual general meeting.

14. Earnings Per Share

The calculation of the basic and diluted earnings per share attributable to the owners of the Company is based on the following data:

Earnings

2013 2012 RMB’000 RMB’000 Profit for the year attributable to the owners of the Company 4,885,514 4,851,123 Distribution related to Convertible Securities (182,914) – Earnings for the purpose of basic earnings per share 4,702,600 4,851,123 Effect of dilutive potential ordinary shares: Interest on the 2007 Convertible Bonds – 3,259 Distribution related to Convertible Securities 182,914 – Earnings for the purpose of diluted earnings per share 4,885,514 4,854,382

Number of Shares

2013 2012 Weighted average number of ordinary shares for the purpose of basic earnings per share 2,154,876,654 1,889,150,532 Effect of dilutive potential ordinary shares: Share options 23,149,554 15,782,728 The 2007 Convertible Bonds – 3,091,716 Convertible Securities (as defined in Note 29) 344,594,594 143,502,407 Weighted average number of ordinary shares for the purpose of diluted earnings per share 2,522,620,802 2,051,527,383

F-166 Annual Report 2013 121 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

15. Property, Plant and Equipment

Furniture, Land and Leasehold Fixtures and Transportation Construction Hotel Buildings Buildings Improvements Machinery Equipment Equipment in Progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 COST At 1 January 2012 2,102,916 59,898 68,286 10,539 233,223 279,875 604,730 3,359,467 Additions 1,634 4,573 10,002 4,894 25,097 30,087 1,001,377 1,077,664 Transfer 628,913 174,668 – – – – (803,581) – Disposals (8) – (2,878) (17) (2,221) (8,647) – (13,771) Disposal of subsidiaries – (3,068) (6,108) (1,286) (8,742) (15,954) – (35,158) Acquisition of a subsidiary which constitutes assets – – – 1,185 1,248 4,235 – 6,668 Acquisition of subsidiaries which constitute business (Note 30) – – 3,038 14 1,462 602 – 5,116 At 31 December 2012 2,733,455 236,071 72,340 15,329 250,067 290,198 802,526 4,399,986 Additions 79 26,261 7,197 3,513 34,856 35,834 1,318,575 1,426,315 Transfer – 569 – 105 – – (674) – Disposals – – (462) (10) (2,551) (8,234) – (11,257) Acquisition of subsidiaries (Note 30) – – – – 513 4,653 – 5,166 At 31 December 2013 2,733,534 262,901 79,075 18,937 282,885 322,451 2,120,427 5,820,210 DEPRECIATION AND IMPAIRMENT At 1 January 2012 (183,286) (22,016) (44,175) (1,353) (110,266) (137,230) – (498,326) Provided for the year (55,499) (13,234) (11,730) (7,053) (41,207) (41,054) – (169,777) Impairment loss recognised in profit or loss (81,485) – – – – – – (81,485) Eliminated on disposals 5 – 1,772 16 1,493 6,525 – 9,811 Eliminated on disposal of subsidiaries – 667 3,538 88 3,193 7,561 – 15,047 At 31 December 2012 (320,265) (34,583) (50,595) (8,302) (146,787) (164,198) – (724,730) Provided for the year (58,910) (21,131) (10,069) (2,873) (27,960) (36,810) – (157,753) Reclassify impairment losses from properties under development – – – – – – (143,867) (143,867) Reversal of impairment losses on property, plant and equipment – – – – – – 60,685 60,685 Eliminated on disposals – – 254 7 1,855 7,393 – 9,509 At 31 December 2013 (379,175) (55,714) (60,410) (11,168) (172,892) (193,615) (83,182) (956,156) CARRYING VALUES At 31 December 2013 2,354,359 207,187 18,665 7,769 109,993 128,836 2,037,245 4,864,054 At 31 December 2012 2,413,190 201,488 21,745 7,027 103,280 126,000 802,526 3,675,256

F-167 Greentown China Holdings Limited 122 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

15. Property, Plant and Equipment (continued)

The above items of property, plant and equipment other than construction in progress are depreciated on a straight-line basis, taking into account their residual value, at the following rates per annum:

The land and buildings and hotel buildings shown above are located on:

2013 2012 RMB’000 RMB’000 Land and buildings Land in the PRC under: Medium-term lease 207,187 201,488 Hotel buildings Land in the PRC under: Medium-term lease 2,354,359 2,413,190

Details of the hotel buildings, land and buildings and construction in progress pledged to secure banking facilities granted to the Group are disclosed in Note 34.

During 2012, the Group engaged DTZ Debenham Tie Leung Limited, independent qualified professional valuers not related to the Group, to conduct review of the Group’s hotel buildings. The professional valuers from DTZ Debenham Tie Leung Limited are members of the Hong Kong Institute of Surveyors. It was determined that one of those buildings was impaired on the basis of its projected performance. Accordingly, an impairment loss of RMB81,485,000 was recognised in 2012 in respect of hotel buildings. The recoverable amount of the relevant hotel building has been determined on the basis of its value in use. The discount rate adopted in measuring the amount of value in use of the relevant hotel building was 10%.

In view of the improving performance of the hotel operations, the Group engaged DTZ Debenham Tie Leung Limited to update their review of the Group’s hotel buildings as at 31 December 2013 and as a result an impairment loss of RMB60,685,000 of a hotel building under construction was reversed during the year in respect of hotel buildings based on their value in use.

16. Investment Properties

RMB’000 FAIR VALUE At 1 January 2012 1,730,000 Unrealised gain on property revaluation included in profit or loss 600 At 31 December 2012 1,730,600 Unrealised gain on property revaluation included in profit or loss 100,900 At 31 December 2013 1,831,500

F-168 Annual Report 2013 123 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

16. Investment Properties (continued)

The investment properties shown above are located on:

2013 2012 RMB’000 RMB’000 Land in the PRC under: Medium-term lease 1,831,500 1,730,600

The fair value of the Group’s investment property at 31 December 2013 and 2012 have been arrived at on the basis of a valuation carried out on that date by DTZ Debenham Tie Leung Limited.

In estimating the fair value of the properties, the highest and best use of the properties is their current use.

The following table gives information about how the fair values of these investment properties are determined (in particular, the valuation techniques and inputs used), as well as the fair value hierarchy into which the fair value measurements are categorised (Level 3) based on the degree to which the inputs to the fair value measurements is observable.

Carrying Value of Investment Properties Held by the Group in the Relationship of Consolidated Statements Fair Value Valuation Technique(S) Significant Unobservable Inputs of Financial Positions Hierarchy and Key Input(S) Unobservable Input(S) to Fair Value Serviced apartments in Beijing Level 3 Investment approach Reversionary yield, taking The higher the RMB1,800,000,000 into account annual rental reversionary yield, the The Key inputs are: income potential and lower the fair value. 1. Reversionary yield; and unit market value of the 2. Market unit rent. comparable properties, of 7.5% for serviced apartments and 8.0% for auxiliary retail area.

Market unit rent, The higher the market using direct market unit rent, the higher comparables and taking the fair value. into account of similar character, location and sizes.

F-169 Greentown China Holdings Limited 124 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

16. Investment Properties (continued)

Carrying Value of Investment Properties Held by the Group in the Relationship of Consolidated Statements Fair Value Valuation Technique(S) Significant Unobservable Inputs of Financial Positions Hierarchy and Key Input(S) Unobservable Input(S) to Fair Value Commercial property in Level 3 Investment approach Reversionary yield, taking The higher the Hangzhou into account annual rental reversionary yield, the RMB31,500,000 The Key inputs are: income potential and lower the fair value. 1. Reversionary yield; and unit market value of the 2. Market unit rent. comparable properties, of 6.5%.

Market unit rent, The higher the market using direct market unit rent, the higher comparables and taking the fair value. into account of similar character, location and sizes.

There was no transfer into or out of Level 3 during the year.

17. Interests in Associates

2013 2012 RMB’000 RMB’000 Cost of unlisted investments in associates 9,415,606 6,051,578 Share of post-acquisition profits, net of dividends received 600,100 521,688 10,015,706 6,573,266

F-170 Annual Report 2013 125 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

17. Interests in Associates (continued)

As at 31 December 2013 and 2012, the Group had interests in the following principal associates established and operating in the PRC:

Proportion of Ownership Interest/Voting Rights Name of Associate Registered Capital Held by the Group Principal Activities 2013 2012 上海融創綠城投資控股有限公司 RMB2,000,000,000 50% 50% Investment holding (原名為”上海融創綠城房地產開發有限公司”) (i), (ii) (i), (ii) Shanghai Sunac Greentown Investment Holdings Co., Ltd. (“Shanghai Sunac Greentown“) (Formerly known as “Shanghai Sunac Greentown Real Estate Development Co., Ltd.”)

上海華浙外灘置業有限公司 RMB50,000,000 26% 26% Real estate development Shanghai Huazhe Bund Real Estate Co., Ltd. (ii) (ii) (“Huazhe Bund “)

上海綠順房地產開發有限公司 RMB1,000,000,000 50% 50% Real estate development Shanghai Lvshun Real Estate Development (ii) (ii) Co., Ltd. (“Lvshun Real Estate”)

蘇州綠城御園房地產開發有限公司 RMB250,000,000 50% 50% Real estate development Suzhou Greentown Yuyuan (iv) (ii) Real Estate Development Co., Ltd. (“Suzhou Greentown Yuyuan”)

天津逸駿投資有限公司 RMB30,000,000 40% 40% Real estate development Tianjin Yijun Investment Co., Ltd. (ii) (ii) (“Tianjin Yijun”)

無錫綠城房地產開發有限公司 RMB174,807,000 43% 43% Real estate development Wuxi Greentown Real Estate Development (ii) (ii) Co., Ltd. (“Wuxi Greentown”)

融創綠城投資控股有限公司 USD2 50% – Investment holding Sunac Greentown Investment Holdings Limited (iii), (iv) (“Sunac Greentown Investment”)

上海新富港房地產發展有限公司 RMB765,000,000 50% – Real estate development New Richport Property Development Shanghai (iv) Co., Ltd. (“New Richport”)

上海豐明房地產發展有限公司 RMB135,000,000 50% – Real estate development Everbright Property Development Shanghai Co., Ltd. (iv) (“Everbright”)

豐盛地產發展（上海）有限公司 USD10,000,000 50% – Real estate development Fung Seng Estate Development Shanghai Co., Ltd. (iv) (“Fung Seng”)

F-171 Greentown China Holdings Limited 126 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

17. Interests in Associates (continued)

Proportion of Ownership Interest/Voting Rights Name of Associate Registered Capital Held by the Group Principal Activities 2013 2012 浙江中青旅綠城投資置業有限公司 RMB200,000,000 49% 49% Investment and consulting Zhejiang Zhongqinglv Greentown (v) (v) Real Estate Investment Co., Ltd. (“Zhejiang Zhongqinglv”)

慈溪綠城投資置業有限公司 RMB98,000,000 49% 49% Real estate development Cixi Greentown Real Estate Investment Co., Ltd. (v) (v) (“Cixi Greentown”)

盛聯管理有限公司 USD50,000 25% 25% Investment holding Poly Link Management Limited (vi) (vi) (“Poly Link Management”)

杭州遠洋天祺置業有限公司 USD147,760,000 25% 25% Real estate development Hangzhou Sino-Ocean Tian Qi (vi) (vi) Properties Limited (“Sino-Ocean Tian Qi”)

杭州遠洋運河商務區開發有限公司 USD143,210,000 25% 25% Real estate development Hangzhou Sino-Ocean Canal Business (vi) (vi) District Development Co., Ltd. (“Sino-Ocean Canal Business District”)

杭州遠洋新河酒店置業有限公司 USD93,414,000 25% 25% Real estate development Hangzhou Sino-Ocean New River Hotel (vi) (vi) Properties Limited (“Sino-Ocean New River Hotel”)

穎澤投資有限公司 HKD1,500,000,000 40% 40% Investment holding Green Magic Investments Limited (vii) (“Green Magic”)

大連九龍倉綠城置業有限公司 USD387,000,000 40% – Real estate development Dalian Wharf Greentown Real Estate Co., Ltd. (vii), (xi) (“Dalian Wharf Greentown)

杭州濱綠房地產開發有限公司 RMB1,389,140,188 50% 50% Real estate development Hangzhou Binlv Real (viii) (viii) Estate Development Co., Ltd. (“Hangzhou Binlv”)

寧波都市房產開發有限公司 USD200,000,000 47% 45% Real estate development Ningbo Dushi Real Estate Development Co., Ltd. (ix) (“Ningbo Dushi”)

慈溪綠城房地產發展有限公司 RMB98,000,000 – 30% Real estate development Cixi Greentown Property (x) Development Co., Ltd. (“Cixi Greentown Property”)

中投發展有限責任公司 RMB2,000,000,000 24% 24% Infrastructure construction China Investment Development Co., Ltd. and investment holding (“China Investment Development”)

F-172 Annual Report 2013 127 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

17. Interests in Associates (continued)

Proportion of Ownership Interest/Voting Rights Name of Associate Registered Capital Held by the Group Principal Activities 2013 2012 杭州余杭綠城九洲房地產 RMB85,000,000 35% 35% Real estate development 開發有限公司 Hangzhou Yuhang Greentown Jiuzhou Real Estate Development Co., Ltd. (“Yuhang Greentown Jiuzhou)

杭州翡翠城房地產開發有限公司 RMB50,000,000 45% 45% Real estate development Hangzhou Hope Town Real Estate Development Co., Ltd. (“Hangzhou Hope Town”)

紹興金綠泉置業有限公司 RMB580,000,000 35% 35% Real estate development Shaoxing Jinlvquan Real Estate Co., Ltd. (“Shaoxing Jinlvquan”)

濟南海爾綠城置業有限公司 RMB200,000,000 45% 45% Real estate development Jinan Haier Greentown Real Estate Co., Ltd. (“Jinan Haier Greentown”)

台州浙能綠城置業有限公司 RMB300,000,000 49% 49% Real estate development Taizhou Zheneng Greentown Real Estate Co., Ltd. (“Taizhou Zheneng”)

杭州浙能綠城置業有限公司 RMB300,000,000 49% 49% Real estate development Hangzhou Zheneng Greentown Real Estate Co., Ltd. (“Hangzhou Zheneng”)

台州浙信綠城房地產開發有限公司 RMB20,000,000 40% 40% Real estate development Taizhou Zhexin Greentown Real Estate Development Co., Ltd. (“Taizhou Zhexin”)

浙江鐵建綠城房地產開發有限公司 RMB100,000,000 38% 38% Real estate development Zhejiang Tiejian Greentown Real Estate Development Co., Ltd. (“Zhejiang Tiejian Greentown”)

杭州百大置業有限公司 RMB530,000,000 30% 30% Real estate development Hangzhou Baida Real Estate Co., Ltd. (“Hangzhou Baida”)

杭州賽麗綠城申花置業有限公司 RMB100,000,000 25% 25% Real estate development Hangzhou Saili Greentown Shenhua Real Estate Co., Ltd. (“Saili Greentown”)

F-173 Greentown China Holdings Limited 128 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

17. Interests in Associates (continued)

Proportion of Ownership Interest/Voting Rights Name of Associate Registered Capital Held by the Group Principal Activities 2013 2012 杭州紫元綠西房地產有限公司 RMB100,000,000 33% 33% Real estate development Hangzhou Ziyuan Lvxi Real Estate Co., Ltd. (“Ziyuan Lvxi”)

北京東部綠城置業有限公司 RMB50,000,000 49% 49% Real estate development Beijing Eastern Greentown Real Estate Co., Ltd. (“Beijing Eastern Greentown”)

杭州海航綠城置業有限公司 RMB1,860,180,000 40% 40% Real estate development Hangzhou Haihang Greentown Real Estate Co., Ltd. (“Haihang Greentown “)

杭州綠城錦玉置業有限公司 RMB250,000,000 35% 35% Real estate development Hangzhou Greentown Jinyu Real Estate Co., Ltd. (“Greentown Jinyu”)

杭州綠城金久房地產開發有限公司 RMB100,000,000 40% 40% Real estate development Hangzhou Greentown Jinjiu Real Estate Development Co., Ltd. (“Greentown Jinjiu”)

上海綠恒房地產開發有限公司 RMB100,000,000 40% 40% Real estate development Shanghai Lvheng Real Estate Development Co., Ltd. (“Shanghai Lvheng”)

上海青蓮房地產開發有限公司 RMB50,000,000 20% 20% Real estate development Shanghai Qinglian Real Estate Development Co., Ltd. (“Shanghai Qinglian”)

溫州綠城發展房地產開發有限公司 RMB200,000,000 40% 40% Real estate development Wenzhou Greentown Development Real Estate Development Co., Ltd. (“Wenzhou Greentown”)

大冶有色綠城房地產開發有限公司 RMB160,000,000 30% 30% Real estate development Daye Youse Greentown Real Estate Development Co., Ltd. (“Daye Youse Greentown”)

上海浙鐵綠城房地產開發有限公司 RMB50,000,000 32% 32% Real estate development Shanghai Zhetie Greentown Real Estate Development Co., Ltd. (“Zhetie Greentown”)

山東高速綠城萊蕪雪野湖開發有限公司 RMB50,000,000 49% 49% Real estate development Shandong Gaosu Greentown Laiwu Xueyehu Development Co., Ltd. (“Greentown Laiwu Xueyehu”)

山東財富縱橫置業有限公司 RMB50,000,000 39% 39% Real estate development Shandong Caifu Zongheng Real Estate Co., Ltd. (“Shandong Caifu Zongheng”)

F-174 Annual Report 2013 129 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

17. Interests in Associates (continued)

Proportion of Ownership Interest/Voting Rights Name of Associate Registered Capital Held by the Group Principal Activities 2013 2012 信陽市萬恒置業有限公司 RMB50,000,000 20% 20% Real estate development Xinyang Wanheng Real Estate Co., Ltd. (“Xinyang Wanheng”)

無錫融創綠城湖濱置業有限公司 RMB100,000,000 49% 49% Real estate development Wuxi Sunac Greentown Hubin Real Estate Co., Ltd. (“Sunac Greentown Hubin”)

青島綠城華景置業有限公司 RMB2,000,000,000 40% 40% Real estate development Qingdao Greentown Huajing Real Estate Co., Ltd. (“Qingdao Greentown Huajing”)

義烏浙鐵綠城房地產開發有限公司 RMB200,000,000 35% – Real estate development Yiwu Zhetie Greentown Real Estate (xi) Development Co., Ltd. (“Yiwu Zhetie Greentown”)

奉化綠城房地產開發有限公司 RMB100,000,000 31% – Real estate development Fenghua Greentown Real Estate Development (xi) Co., Ltd.

杭州綠城墅園置業有限公司 RMB200,000,000 30% – Real estate development Hangzhou Greentown Shuyuan (xii) Real Estate Co., Ltd. (“Hangzhou Greentown Shuyuan”)

杭州融創綠城房地產開發有限公司 USD102,000,000 25% – Real estate development Hangzhou Sunac Greentown Real Estate (xii) Development Co., Ltd. (“Hangzhou Sunac Greentown”)

杭州地鐵武林置業有限公司 RMB20,000,000 45% – Real estate development Hangzhou Metro Wulin Real Estate Co., Ltd. (xii) (“Hangzhou Metro Wulin”)

F-175 Greentown China Holdings Limited 130 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

17. Interests in Associates (continued)

Notes:

(i) Only two out of five directors of Shanghai Sunac Greentown are appointed by the Group, while a valid board resolution requires half of the total votes. The Group does not have the power to control or jointly control Shanghai Sunac Greentown. Therefore, Shanghai Sunac Greentown is accounted for as an associate of the Group.

(ii) Huazhe Bund, Lvshun Real Estate, Suzhou Greentown Yuyuan, Wuxi Greentown and Tianjin Yijun are subsidiaries of Shanghai Sunac Greentown.

(iii) Only one out of three directors of Sunac Greentown Investment is appointed by the Group, while a valid board resolution requires a majority of the total votes. The Group does not have the power to control or jointly control Sunac Greentown Investment. Therefore, Sunac Greentown investment is accounted for as an associate of the Group.

(iv) New Richport, Everbright, Fung Seng and Suzhou Greentown Yuyuan are subsidiaries of Sunac Greentown Investment.

(v) Cixi Greentown is a subsidiary of Zhejiang Zhongqinglv.

(vi) Sino-Ocean Tian Qi, Sino-Ocean Canal Business District and Sino-Ocean New River Hotel are subsidiaries of Poly Link Management.

(vii) Dalian Wharf Greentown is a subsidiary of Green Magic.

(viii) Only two out of five directors of Hangzhou Binlv are appointed by the Group, while a valid board resolution requires half of the total votes. The Group does not have the power to control or jointly control Hangzhou Binlv. Therefore, Hangzhou Binlv is accounted for as an associate of the Group.

(ix) The Group gained additional 2.2% equity interest in Ningbo Dushi during the year.

(x) Cixi Greentown Property became a subsidiary of the Group as the Group acquired its additional 70% equity interest during the year.

(xi) These companies were newly established in 2013.

(xii) These companies became associates of the Group in 2013 as the Group acquired equity interests in them.

F-176 Annual Report 2013 131 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

17. Interests in Associates (continued)

Summarised Financial Information of Material Associates

Summarised financial information in respect of each of the Group’s material associates is set out below. The summarised financial information below represents amounts shown in the associates’ financial statements prepared in accordance with IFRSs.

All of these associates are accounted for using the equity method in these consolidated financial statements.

Associate Group A

The financial information of the associates within Associate Group A are aggregated for disclosure purpose. The directors believe it is appropriate to aggregate the information as these associates are formed with the partners from the same group and are exposed to similar risks and returns.

2013 2012 RMB’000 RMB’000 Current assets 34,587,406 22,842,771 Non-current assets 2,116,784 1,239,426 Current liabilities 16,961,164 17,648,877 Non-current liabilities 12,694,705 3,370,648 Non-controlling interests of Associate Group A 1,062,604 905,641 Revenue 7,407,435 1,965,327 Profit for the year 629,959 172,428

Reconciliation of the above summarised financial information to the carrying amount of the interests in the associate group recognised in the consolidated financial statements:

2013 2012 RMB’000 RMB’000 Net assets attributable to owners of Associate Group A 5,985,717 2,157,031 Weighted average proportion of the Group’s ownership interests in Associate Group A 50% 50% Other adjustment 11,504 – Carrying amount of the Group’s interests in Associate Group A 3,004,362 1,078,515

Associate Company B

2013 2012 RMB’000 RMB’000 Current assets 2,178,366 3,974,213 Non-current assets 1,245 1,850 Current liabilities 960,427 3,071,954 Non-current liabilities – 255,000 Revenue 2,769,931 27,481 Profit for the year 570,074 39,987

F-177 Greentown China Holdings Limited 132 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

17. Interests in Associates (continued)

Summarised Financial Information of Material Associates (continued)

Reconciliation of the above summarised financial information to the carrying amount of the interest in the associate recognised in the consolidated financial statements:

2013 2012 RMB’000 RMB’000 Net assets of Associate Company B 1,219,184 649,109 Proportion of the Group’s ownership interest in Associate Company B 35% 35% Other adjustment 10,315 6,894 Carrying amount of the Group’s interest in Associate Company B 437,029 234,082

Aggregate information of associates that are not individually material:

2013 2012 RMB’000 RMB’000 Group’s share of profit for the year 605,154 116,845 Aggregate carrying amount of the Group’s interests in these associates 6,574,315 5,260,669

2013 2012 RMB’000 RMB’000 Unrecognised share of losses of associates for the year 26,088 – Accumulated unrecognised share of losses of associates 26,088 –

18. Interests in Joint Ventures

2013 2012 RMB’000 RMB’000 Cost of unlisted investments in joint ventures 1,266,421 829,559 Share of post-acquisition profits, net of dividends received 581,800 174,186 1,848,221 1,003,745

On 16 April 2013, the Group entered into a framework agreement to acquire from an independent third party (i) a 50% equity interest in Zhejiang Jinying Real Estate Co., Ltd. (“Zhejiang Jinying “), a company engaged in the property development business, for a cash consideration of RMB200,000,000; and (ii) the shareholder’s loan made to Zhejiang Jinying by such party in the principal amount of RMB1,672,637,000, for a cash consideration of RMB1,000,000,000. The shareholder’s loan is unsecured, interest free and repayable on demand. Details of the transaction were set out in the Company’s announcement dated 2 June 2013.

F-178 Annual Report 2013 133 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

18. Interests in Joint Ventures (continued)

The Group has since obtained joint control over Zhejiang Jinying and accounts for it as a joint venture. Subsequent to the aforesaid transaction, the Group has revised the estimates on expected cash flows from Zhejiang Jinying for repayment of the shareholder’s loan based on the current business plan of Zhejiang Jinying, and adjusted the carrying amount of the loan to reflect revised estimated cash flows, resulting in a gain of approximately RMB672,637,000.

As at 31 December 2013 and 2012, the Group had interests in the following principal joint ventures established and operating in the PRC:

Proportion of Ownership Interest/Voting Rights Name of Joint Venture Registered Capital Held by the Group Principal Activities 2013 2012 浙江綠西房地產集團有限公司 RMB100,000,000 50% 50% Investment holding, Zhejiang Lvxi Real Estate Group Co., Ltd. (i) (i) real estate development (“Zhejiang Lvxi Group”) and business consulting

臨安西子房地產開發有限公司 RMB100,000,000 50% 50% Real estate development Lin’an Xizi Real Estate (i) (i) Development Co., Ltd. (“Lin’an Xizi”)

浙江鐵投綠城投資有限公司 RMB80,000,000 50% 50% Investment holding Zhejiang Tietou Greentown Investment Co., Ltd. (ii) (ii) (“Zhejiang Tietou Greentown Investment”)

浙江鐵投綠城房地產開發有限公司 RMB80,000,000 50% 50% Real estate development Zhejiang Tietou Greentown (ii) (ii) Real Estate Development Co., Ltd. (“Zhejiang Tietou Greentown Real Estate”)

盈高有限公司 HKD10,000 50% – Investment holding Profit Pointer Limited (iii), (iv)

瀋陽全運村建設有限公司 USD290,000,000 50% 50% Real estate development Shenyang National Games (iv) Project Co., Ltd. (“Shenyang National Games”)

F-179 Greentown China Holdings Limited 134 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

18. Interests in Joint Ventures (continued)

Proportion of Ownership Interest/Voting Rights Name of Joint Venture Registered Capital Held by the Group Principal Activities 2013 2012 紹興綠城寶業房地產開發有限公司 RMB100,000,000 51% 51% Real estate development Shaoxing Greentown Baoye (v) (v) Real Estate Development Co., Ltd. (“Shaoxing Greentown Baoye”)

山東東城置業有限公司 RMB200,000,000 49% 49% Real estate development Shandong Dongcheng Real Estate Co., Ltd. (vi) (vi) (“Shandong Dongcheng”)

杭州綠城中勝置業有限公司 RMB100,000,000 55% 55% Real estate development Hangzhou Greentown Zhongsheng (vii) (vii) Real Estate Co., Ltd. (“Greentown Zhongsheng”)

海寧綠城新湖房地產開發有限公司 RMB20,000,000 50% 50% Real estate development Haining Greentown Sinhoo Real Estate Development Co., Ltd. (“Haining Greentown”)

杭州綠城北秀置業有限公司 RMB50,000,000 50% 50% Real estate development Hangzhou Greentown Beixiu Real Estate Co., Ltd. (“Greentown Beixiu”)

杭州臨宜房地產開發有限公司 USD50,000,000 50% 50% Real estate development Hangzhou Linyi Real Estate Development Co., Ltd. (“Hangzhou Linyi”)

浙江金盈置業有限公司 RMB400,000,000 25% – Real estate development Zhejiang Jinying (viii)

德清莫干山樂城置業有限公司 RMB100,000,000 50% – Real estate development Deqing Moganshan Lecheng Real Estate Co., Ltd. (ix)

余姚綠城房地產開發有限公司 RMB99,000,000 47% – Real estate development Yuyao Greentown Real Estate (iii), (x) Development Co., Ltd. (“Yuyao Greentown”)

舟山綠城海盛置業發展有限公司 RMB100,000,000 51% – Real estate development Zhoushan Greentown Haisheng Real Estate Co., Ltd. (iii), (xi) (“Zhoushan Greentown Haisheng”)

F-180 Annual Report 2013 135 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

18. Interests in Joint Ventures (continued)

The above table lists the joint ventures of the Group which, in the opinion of the directors, principally affected the results or assets of the Group. To give details of other joint ventures would, in the opinion of the directors, result in particulars of excessive length.

Notes:

(i) Lin’an Xizi is a subsidiary of Zhejiang Lvxi Group.

(ii) Zhejiang Tietou Greentown Investment holds 100% equity interest in Zhejiang Tietou Greentown Real Estate.

(iii) These companies were newly established in 2013.

(iv) Shenyang National Games is a subsidiary of Profit Pointer Limited.

(v) Three out of five directors of Shaoxing Greentown Baoye are appointed by the Group, while a valid board resolution requires unanimous approval from all directors. Therefore, Shaoxing Greentown Baoye is accounted for as a joint venture of the Group.

(vi) Two out of five directors of Shandong Dongcheng are appointed by the Group and the remaining three directors by the other equity holder, while a valid board resolution requires four-fifths of the total votes. Decisions about relevant activities of Shandong Dongcheng require unanimous consent from the Group and the other equity holders. Therefore, Shandong Dongcheng is accounted for as a joint venture of the Group.

(vii) Three out of five directors of Greentown Zhongsheng are appointed by the Group and the remaining two directors by the other equity holder, while a valid board resolution requires four-fifths approval from the directors. Decisions about relevant activities of Greentown Zhongsheng require unanimous consent from the Group and the other equity holders. Therefore, Greentown Zhongsheng is accounted for as a joint venture of the Group.

(viii) Zhejiang Jinying became a joint venture of the Group in 2013 as Shanghai Greentown Woods Golf Villas Development Co., Ltd. acquired 50% equity interest in Zhejiang Jinying. Please refer to Note 18 for details. Shanghai Greentown Woods Golf Villas Development Co., Ltd. is a 50%-owned subsidiary of the Group.

(ix) The Company became a joint venture of the Group in 2013 as the Group acquired equity interest in it.

(x) Two out of five directors of Yuyao Greentown are appointed by the Group, while a valid board resolution requires unanimous approval from all directors. Therefore, Yuyao Greentown is accounted for as a joint venture of the Group.

(xi) Three out of five directors of Zhoushan Greentown Haisheng are appointed by the Group, while a valid board resolution requires two thirds above approval from all directors. Decisions about relevant activities of Zhoushan Greentown Haisheng require unanimous consent from the Group and the other equity holders. Therefore, Zhoushan Greentown Haisheng is accounted for as a joint venture of the Group.

Summarised Financial Information of Material Joint Ventures

Summarised financial information in respect of each of the Group’s material joint ventures is set out below. The summarised financial information below represents amounts shown in the joint ventures’ financial statements prepared in accordance with IFRSs.

The joint ventures are accounted for using the equity method in these consolidated financial statements.

F-181 Greentown China Holdings Limited 136 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

18. Interests in Joint Ventures (continued)

Summarised Financial Information of Material Joint Ventures (continued)

Joint Venture Company A

2013 2012 RMB’000 RMB’000 Current assets 1,409,378 2,398,031 Non-current assets 17,658 5,703 Current liabilities 769,691 2,379,247 Non-current liabilities – –

The above amounts of assets and liabilities include the following:

2013 2012 RMB’000 RMB’000 Cash and cash equivalents 221,094 103,271 Current financial liabilities (excluding trade and other payables and provisions) – 350,000

2013 2012 RMB’000 RMB’000 Revenue 2,994,900 – Profit (loss) for the year 632,961 (1,157)

The above profit (loss) for the year include the following:

2013 2012 RMB’000 RMB’000 Depreciation and amortisation 634 634 Interest income 4,614 7,819 Income tax expense 255,372 (386)

Reconciliation of the above summarised financial information to the carrying amount of the interest in the joint venture recognised in the consolidated financial statements:

2013 2012 RMB’000 RMB’000 Net assets of Joint venture Company A 657,345 24,487 Proportion of the Group’s ownership interest in Joint venture Company A 50% 50% Other adjustments (701) (752) Carrying amount of the Group’s interest in Joint venture Company A 327,972 11,492

Joint Venture Company B

2013 2012 RMB’000 RMB’000 Current assets 3,045,103 2,112,840 Non-current assets 18,868 11,114 Current liabilities 2,582,859 793,552 Non-current liabilities 335,000 1,158,951

F-182 Annual Report 2013 137 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

18. Interests in Joint Ventures (continued)

Summarised Financial Information of Material Joint Ventures (continued)

Joint Venture Company B (continued) The above amounts of assets and liabilities include the followings:

2013 2012 RMB’000 RMB’000 Cash and cash equivalents 64,887 89,800 Current financial liabilities (excluding trade and other payables and provisions) 938,475 – Non-current financial liabilities (excluding trade and other payables and provisions) 335,000 1,158,951

2013 2012 RMB’000 RMB’000 Revenue – – Profit (loss) for the year (25,340) (16,280)

The above profit (loss) for the year include the following:

2013 2012 RMB’000 RMB’000 Depreciation and amortisation 841 651 Interest income 294 296 Income tax expense (7,334) (5,427)

Reconciliation of the above summarised financial information to the carrying amount of the interest in the joint venture recognised in the consolidated financial statements:

2013 2012 RMB’000 RMB’000 Net assets of Joint venture Company B 146,112 171,451 Proportion of the Group’s ownership interest in Joint venture Company B 49% 49% Effect of fair value adjustments at acquisition 285,432 285,432 Other adjustments 29,068 13,783 Carrying amount of the Group’s interest in Joint venture Company B 386,094 383,226

Aggregate Information of Joint Ventures That Are Not Individually Material

2013 2012 RMB’000 RMB’000 Group’s share of profit for the year 173,935 312,674

2013 2012 RMB’000 RMB’000 Unrecognised share of losses of joint ventures for the year 162,578 17,846 Accumulated unrecognised share of losses of joint ventures 241,495 78,917

F-183 Greentown China Holdings Limited 138 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

19. Available-for-Sale Investments

Available-for-sale investments comprise:

2013 2012 RMB’000 RMB’000 Non-current portion: Unlisted equity securities 377,010 346,545

20. Prepaid Lease Payment

2013 2012 RMB’000 RMB’000 The Group’s prepaid lease payment comprises:

Leasehold land in the PRC: Medium-term lease 678,159 264,525 Analysed for reporting purposes as: Current asset (included in trade and other receivables) 13,446 9,557 Non-current asset 664,713 254,968 678,159 264,525

21. Deferred Taxation

The following are the major deferred tax assets (liabilities) recognised and movements thereon during the current and prior years:

Temporary Differences on Revenue Recognition and Related Impairment Fair Value Lat Undistributed Cost of Sales Losses Tax Losses Adjustments Provision Profits Others Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 At 1 January 2012 10,142 52,890 399,580 (240,228) 298,285 (207,184) (19,857) 293,628 (Charge) credit to profit or loss 12,471 19,719 (223,475) 46,068 273,367 (130,000) 2,919 1,069 Disposal of subsidiaries 6,509 (15,546) (42,334) – – – – (51,371) At 31 December 2012 29,122 57,063 133,771 (194,160) 571,652 (337,184) (16,938) 243,326 (Charge) credit to profit or loss 185,157 (15,663) (3,410) (21,475) 103,573 (150,000) 6,534 104,716 Acquisition of subsidiaries (Note 30) – – 1,488 – – – – 1,488 At 31 December 2013 214,279 41,400 131,849 (215,635) 675,225 (487,184) (10,404) 349,530

Others represent mainly deferred tax liabilities recognised in respect of temporary differences arising from accelerated tax depreciation.

F-184 Annual Report 2013 139 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

21. Deferred Taxation (continued)

2013 2012 RMB’000 RMB’000 Deferred tax assets 1,053,244 782,241 Deferred tax liabilities (703,714) (538,915) 349,530 243,326

At the end of the reporting period, the Group had unutilised tax losses of RMB1,878,354,000 (2012: RMB1,637,272,000) available for offset against future profits. A deferred tax asset has been recognised in respect of RMB527,395,000 (2012: RMB535,086,000) of such losses. No deferred tax asset has been recognised in respect of the remaining RMB1,350,959,000 (2012: RMB1,102,186,000) due to the unpredictability of future profit streams. Pursuant to the relevant laws and regulations in the PRC, the unrecognised tax losses at the end of the reporting period will expire in the following years:

2013 2012 RMB’000 RMB’000 2013 – 157,850 2014 144,444 149,582 2015 94,903 123,751 2016 187,924 232,334 2017 389,832 438,669 2018 533,856 – 1,350,959 1,102,186

Based on the latest budgets, management believes that there will be sufficient future profits for the realisation of the deferred tax assets recognised in respect of these tax losses.

At the end of the reporting period, the Group has deductible temporary differences of RMB192,792,000 (2012: RMB192,792,000) in respect of which no deferred tax asset has been recognised as it is not probable that taxable profit will be available against which the deductible temporary differences can be utilised.

Under the EIT Law of PRC, withholding tax is imposed on dividends declared in respect of profits earned by PRC subsidiaries from 1 January 2008 onwards. Deferred taxation has not been provided for in the consolidated financial statements in respect of certain temporary differences attributable to accumulated profits of the PRC subsidiaries amounting to RMB11,100,973,000 (31 December 2012: RMB7,600,973,000) as the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

22. Properties for Development

Included in properties for development as at 31 December 2013 is an amount of RMB2,139,387,000 (2012: RMB1,857,329,000) in respect of long-term leasehold land for which the Group was in the process of obtaining the land use rights certificates.

All properties for development are expected to be recovered after more than 12 months from the end of the reporting period.

F-185 Greentown China Holdings Limited 140 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

23. Properties Under Development

2013 2012 RMB’000 RMB’000 Long-term leasehold land – at cost 18,096,461 22,615,786 Development costs 17,025,985 16,776,048 Finance costs capitalised 3,845,128 3,744,320 38,967,574 43,136,154

Properties under development for sale amounting to RMB22,865,603,000 (2012: RMB26,233,022,000) are expected to be recovered after more than 12 months from the end of the reporting period.

24. Other Current Assets

Trade and Other Receivables, Deposits and Prepayments

2013 2012 RMB’000 RMB’000 Trade receivables 411,777 459,907 Other receivables 3,041,088 2,828,812 Prepayments and deposits 927,691 1,100,461 Consideration receivable from disposal of associates – 323,606 4,380,556 4,712,786

2013 2012 RMB’000 RMB’000 Within 30 days 146,659 80,382 31–90 days 62,526 26,816 91–180 days 19,550 130,170 181–365 days 49,080 67,118 Over 365 days 133,962 155,421 Trade receivables 411,777 459,907

Most of the Group’s customers take out mortgages from banks to buy their properties. Should a customer fail to obtain a mortgage and honour the property sale and purchase agreement between himself and the Group, the Group has the right to revoke the agreement, reclaim the property and re-sell it in the market. The Group does not notice any significant changes in the credit quality of its trade receivables and the amounts are considered to be recoverable.

Included in other receivables were advances to third parties of RMB1,865,066,000 (2012: RMB1,749,824,000) as at 31 December 2013. The advances are interest free, unsecured and expected to be recovered within one year except for RMB522,799,000 (2012: RMB643,649,000) which carries interest at 8% to 15% (2012: 7% to 15%) per annum, is unsecured and is expected to be recovered within one year. The advances comprise mainly earnest money for potential projects. The Group has concentration of credit risk as 53% (2012: 50%) of the total advances to third parties was due from the five largest counterparties. The Group does not notice any significant changes in the credit quality of its advances to third parties and the amounts are considered to be recoverable.

F-186 Annual Report 2013 141 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

24. Other Current Assets (continued)

Trade and Other Receivables, Deposits and Prepayments (continued)

No allowance was made for trade and other receivables.

Bank Balances and Cash/Pledged Bank Deposits

Bank balances and cash comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less. Bank balances carry interest at market rates which range from 0.35% to 2.6% (2012: 0.4% to 2.9%) per annum.

As at 31 December 2013, the Group had bank balances and cash (including pledged bank deposits) denominated in Renminbi amounting to RMB11,146,577,000 (2012: RMB7,748,349,000). Renminbi is not freely convertible into other currencies.

Bank balances and cash/pledged bank deposits that are denominated in currencies other than the functional currency of the respective group entities are set out below:

HKD USD RMB’000 RMB’000 As at 31 December 2013 5,984 128,518 As at 31 December 2012 97,370 52,250

25. Trade and Other Payables

The aged analysis of trade payables is stated as follows:

2013 2012 RMB’000 RMB’000 Within 30 days 5,682,270 6,107,937 31–90 days 850,113 1,933,377 91–180 days 1,050,500 1,304,746 181–365 days 1,637,541 870,156 Over 365 days 1,294,420 598,458 Trade payables 10,514,844 10,814,674 Other payables and accrued expenses 7,256,485 5,143,961 Consideration payables on acquisition of subsidiaries and a joint venture 139,600 – 17,910,929 15,958,635

Trade payables and other payables principally comprise amounts outstanding for trade purposes and ongoing costs.

F-187 Greentown China Holdings Limited 142 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

26. Bank and Other Borrowings

2013 2012 RMB’000 RMB’000 Secured bank loans (Note 34) 13,164,350 14,725,150 Unsecured bank loans 2,992,189 1,311,938 16,156,539 16,037,088 Secured other loans (Note 34) 5,796,819 3,990,915 Unsecured other loans – 1,104,100 5,796,819 5,095,015 21,953,358 21,132,103

2013 2012 RMB’000 RMB’000 Carrying amount repayable*:

Within one year 5,961,370 14,944,997 More than one year, but not exceeding two years 8,416,933 3,274,835 More than two years, but not exceeding three years 5,049,782 1,043,516 More than three years, but not exceeding four years 822,464 589,840 More than four years, but not exceeding five years 634,964 363,890 More than five years 1,011,320 845,734 21,896,833 21,062,812 Carrying amount of loans that are not repayable within one year from the end of the reporting period but contain a repayment on demand clause (shown under current liabilities), which is originally repayable:

More than one year, but not exceeding two years 13,300 12,766 More than two years, but not exceeding three years 13,300 13,300 More than three years, but not exceeding four years 13,300 13,300 More than four years, but not exceeding five years 13,300 13,300 More than five years 3,325 16,625 56,525 69,291 21,953,358 21,132,103

Less: Amounts due within one year shown under current liabilities (6,017,895) (15,014,288) Amounts shown under non-current liabilities 15,935,463 6,117,815

* The amounts due are based on scheduled repayment dates set out in the loan agreements.

Bank and other borrowings can be further analysed as follows:

2013 2012 RMB’000 RMB’000 Fixed-rate 8,113,896 5,719,056 Variable-rate 13,839,462 15,413,047 21,953,358 21,132,103

F-188 Annual Report 2013 143 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

26. Bank and Other Borrowings (continued)

Interest on variable-rate bank and other borrowings is based on:

2013 2012 RMB’000 RMB’000 The People’s Bank of China benchmark rate 11,474,273 13,124,539 London Interbank Offered Rate 2,365,189 1,469,549 Hong Kong Interbank Offered Rate – 818,959 13,839,462 15,413,047

The average interest rates were as follows:

2013 2012 Bank loans 7.52% 7.19% Other loans 12.19% 12.39%

Bank and other borrowings that are denominated in currencies other than the functional currency of the respective group entities are set out below:

HKD USD RMB’000 RMB’000 As at 31 December 2013 – 2,365,189 As at 31 December 2012 818,959 1,469,550

At the end of the reporting period, certain bank loans are guaranteed by the following companies:

2013 2012 RMB’000 RMB’000 Secured bank loans:

Associates 490,000 – Non-controlling shareholders of subsidiaries 1,018,380 446,800 Independent third parties 580,000 643,964 Unsecured bank loans:

Non-controlling shareholders of subsidiaries – 142,000 Independent third parties 207,000 1,000,000

27. Senior Notes

2006 Senior Notes – Secured

On 10 November 2006, the Company issued at par senior notes in an aggregate principal amount of USD400,000,000 (“2006 Senior Notes”). The 2006 Senior Notes are designated for trading in the National Association of Securities Dealer Inc.’s PORTAL market and are listed on the Singapore Exchange Securities Trading Limited. The 2006 Senior Notes carry interest at the rate of 9% per annum, payable semi-annually in arrears.

Please refer to 2012 consolidated financial statements for the principal terms of the 2006 Senior Notes.

On 8 November 2013, the 2006 Senior Notes were matured and the principal were repaid.

F-189 Greentown China Holdings Limited 144 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

27. Senior Notes (continued)

2006 Senior Notes – Secured (continued)

The movements of the 2006 Senior Notes during the year are set out below:

RMB’000 At 1 January 2012 241,718 Exchange realignment (391) Interest charged during the year 21,899 Interest paid/payable during the year (21,899) At 31 December 2012 241,327 Exchange realignment (3,628) Principal repaid during the year (237,699) Interest charged during the year 20,048 Interest paid during the year (20,048) At 31 December 2013 –

New USD Senior Notes – Unsecured

On 4 February 2013, the Company issued senior notes with an aggregate principal amount of USD400,000,000 at 100% of face value (the “USD Senior Notes”), which are listed on the Stock Exchange. The USD Senior Notes carry interest at the rate of 8.5% per annum payable semi-annually in arrears. The net proceeds, after deduction of direct issuance costs, amounted to approximately USD394,626,000 (approximately RMB2,480,617,000). The USD Senior Notes will mature on 4 February 2018.

The principal terms of the USD Senior Notes and Additional USD Senior Notes (collectively as “New USD Senior Notes”) are as follows:

The New USD Senior Notes are:

(i) general obligations of the Company;

(ii) senior in right of payment to any existing and future obligations of the Company expressly subordinated in right of payment to the New USD Senior Notes;

(iii) at least pari passu in right of payment with all other unsecured, unsubordinated indebtedness of the Company (subject to any priority rights of such unsubordinated indebtedness pursuant to applicable law);

(iv) guaranteed by certain offshore subsidiaries of the Company from time to time, on a senior basis, subject to certain limitations;

(v) effectively subordinated to secured obligations, including the 2006 Senior Notes, of the Company, and its subsidiaries guaranteeing the New USD Senior Notes from time to time, subject to certain limitations; and

(vi) effectively subordinated to all existing and future obligations of the subsidiaries of the Company that do not guarantee the New USD Senior Notes.

F-190 Annual Report 2013 145 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

27. Senior Notes (continued)

New USD Senior Notes – Unsecured (continued)

At any time and from time to time on or after 4 February 2016, the Company may at its option redeem the New USD Senior Notes, in whole or in part, at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, to (but not including) the redemption date if redeemed during the twelve-month period beginning on 4 February of each of the years indicated below.

Period Redemption Price 2016 104.250% 2017 102.125%

At any time prior to 4 February 2016, the Company may at its option redeem the New USD Senior Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount of the New USD Senior Notes plus the SN2 Applicable Premium (as defined below) as of, and accrued and unpaid interest, if any, to (but not including) the redemption date.

“SN2 Applicable Premium” means with respect to the New USD Senior Notes at any redemption date, the greater of (1) 1.00% of the principal amount of New USD Senior Notes and (2) the excess of (A) the present value at such redemption date of (i) the redemption price of New USD Senior Notes on 4 February 2016 plus (ii) all required remaining scheduled interest payments due on New USD Senior Notes through 4 February 2016 (but excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to the Adjusted Treasury Rate, the rate per annum equal to the semi-annual equivalent yield in maturity of the comparable US Treasury security, plus 100 basis points, over (B) the principal amount of New USD Senior Notes on such redemption date.

At any time and from time to time prior to 4 February, 2016, the Company may redeem up to 35.0% of the aggregate principal amount of the New USD Senior Notes with the net cash proceeds of one or more sales of common stock of the Company in an equity offering at a redemption price of 108.5% of the principal amount of the New USD Senior Notes, plus accrued and unpaid interest, if any, to (but not including) the redemption date; provided that at least 65.0% of the aggregate principal amount of the New USD Senior Notes issued on the original issue date remains outstanding after each such redemption and any such redemption takes place within 60 days after the closing of the related equity offering.

The New USD Senior Notes contain a liability component and an early redemption option:

(i) Liability component represents the present value of the contractually determined stream of future cash flows discounted at the prevailing market interest rate at that time applicable to instruments of comparable credit status and providing substantially the same cash flows, on the same terms, but without the embedded derivatives.

The interest charged for the year is calculated by applying an effective interest rate of approximately 8.5% per annum to the liability component since the senior notes were issued.

(ii) Early redemption option is regarded as an embedded derivative not closely related to the host contract. The directors consider that the fair value of the early redemption option is insignificant on initial recognition and on 31 December 2013.

The movements of New USD Senior Notes during the year are set out below:

RMB’000 Fair value at the dates of issuance 4,415,468 Exchange realignment (128,916) Interest charged during the year 309,294 Interest paid/payable during the year (330,019) At 31 December 2013 4,265,827

F-191 Greentown China Holdings Limited 146 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

27. Senior Notes (continued)

RMB Senior Notes – Unsecured

On 13 May 2013, the Company issued senior notes with an aggregate principal amount of RMB2,500,000,000 at 100% of face value (the “RMB Senior Notes”), which are listed on the Stock Exchange. The RMB Senior Notes carry interest at the rate of 5.625% per annum payable semi-annually in arrears. The net proceeds, after deduction of direct issuance costs, amounted to approximately RMB2,475,911,000. The RMB Senior Notes will mature on 13 May 2016.

The principal terms of RMB Senior Notes are as follows:

The RMB Senior Notes are:

(i) general obligations of the Company;

(ii) senior in right of payment to any existing and future obligations of the Company expressly subordinated in right of payment to the RMB Senior Notes;

(iii) at least pari passu in right of payment with New USD Senior Notes and all other unsecured, unsubordinated indebtedness of the Company (subject to any priority rights of such unsubordinated indebtedness pursuant to applicable law);

(iv) guaranteed by certain offshore subsidiaries of the Company from time to time, on a senior basis, subject to certain limitations;

(v) effectively subordinated to secured obligations, including the 2006 Senior Notes, of the Company, and its subsidiaries guaranteeing the RMB Senior Notes, subject to certain limitations; and

(vi) effectively subordinated to all existing and future obligations of subsidiaries of the Company that do not guarantee the RMB Senior Notes.

At any time, the Company may at its option redeem the RMB Senior Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount of the RMB Senior Notes plus the SN3 Applicable Premium (as defined below) as of, and accrued and unpaid interest, if any, to (but not including) the redemption date.

“SN3 Applicable Premium” means with respect to the RMB Senior Notes at any redemption date, the greater of (1) 1.00% of the principal amount of RMB Senior Notes and (2) the excess of (A) the present value at such redemption date of (i) the principal amount of RMB Senior Notes plus (ii) all required remaining scheduled interest payments due on RMB Senior Notes through the maturity date of the RMB Senior Notes (but excluding accrued and unpaid interest to the redemption date), computed using a discount rate of 2.0% per annum, over (B) the principal amount of RMB Senior Notes on such redemption date.

At any time, the Company may redeem up to 35.0% of the aggregate principal amount of the RMB Senior Notes with the net cash proceeds of one or more sales of common stock of the Company in an equity offering at a redemption price of 105.625% of the principal amount of the RMB Senior Notes, plus accrued and unpaid interest, if any, to (but not including) the redemption date; provided that at least 65.0% of the aggregate principal amount of the RMB Senior Notes on the original issue date remains outstanding after each such redemption and any such redemption takes place within 60 days after the closing of the related equity offering.

F-192 Annual Report 2013 147 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

27. Senior Notes (continued)

RMB Senior Notes – Unsecured (continued)

The RMB Senior Notes contain a liability component and an early redemption option:

The interest charged for the year is calculated by applying an effective interest rate of approximately 5.9% per annum to the liability component since the senior notes were issued.

The movements of RMB Senior Notes during the year are set out below:

RMB’000 Fair value at the dates of issuance 2,475,911 Interest charged during the year 94,148 Interest paid/payable during the year (89,063) At 31 December 2013 2,480,996

Second USD Senior Notes – Unsecured

On 24 September 2013, the Company issued senior notes with an aggregate principal amount of USD300,000,000 at 100% of face value (the “Second USD Senior Notes”), which are listed on the Stock Exchange. The Second USD Senior Notes carry interest at the rate of 8.0% per annum payable semi-annually in arrears. The net proceeds, after deduction of direct issuance costs, amounted to approximately USD296,947,000 (approximately RMB1,826,138,000). The Second USD Senior Notes will mature on 24 March 2019.

The Second USD Senior Notes are:

(vii) general obligations of the Company;

(viii) senior in right of payment to any existing and future obligations of the Company expressly subordinated in right of payment to the Second USD Senior Notes;

(ix) at least pari passu in right of payment with New USD Senior Notes, RMB Senior Notes and all other unsecured, unsubordinated indebtedness of the Company (subject to any priority rights of such unsubordinated indebtedness pursuant to applicable law);

(x) guaranteed by certain offshore subsidiaries of the Company from time to time, on a senior basis, subject to certain limitations;

(xi) effectively subordinated to secured obligations, including the 2006 Senior Notes, of the Company, and its subsidiaries guaranteeing the Second USD Senior Notes from time to time, subject to certain limitations; and

(xii) effectively subordinated to all existing and future obligations of the subsidiaries of the Company that do not guarantee the Second USD Senior Notes.

F-193 Greentown China Holdings Limited 148 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

27. Senior Notes (continued)

Second USD Senior Notes – Unsecured (continued)

At any time and from time to time on or after 24 March 2017, the Company may at its option redeem the Second USD Senior Notes, in whole or in part, at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, to (but not including) the redemption date if redeemed during the twelve-month period beginning on 24 March of each of the years indicated below.

Period Redemption Price 2017 104% 2018 102%

At any time prior to 24 March 2017, the Company may at its option redeem the Second USD Senior Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount of the Second USD Senior Notes plus the SN4 Applicable Premium (as defined below) as of, and accrued and unpaid interest, if any, to (but not including) the redemption date.

“SN4 Applicable Premium” means with respect to the Second USD Senior Notes at any redemption date, the greater of (1) 1.00% of the principal amount of Second USD Senior Notes and (2) the excess of (A) the present value at such redemption date of (i) the redemption price of Second USD Senior Notes on 24 March 2017 plus (ii) all required remaining scheduled interest payments due on Second USD Senior Notes through 24 March 2017 (but excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to the Adjusted Treasury Rate, the rate per annum equal to the semi-annual equivalent yield in maturity of the comparable US Treasury security, plus 100 basis points, over (B) the principal amount of Second USD Senior Notes on such redemption date.

At any time and from time to time prior to 24 March 2017, the Company may redeem up to 35.0% of the aggregate principal amount of the Second USD Senior Notes with the net cash proceeds of one or more sales of common stock of the Company in an equity offering at a redemption price of 108% of the principal amount of the Second USD Senior Notes, plus accrued and unpaid interest, if any, to (but not including) the redemption date; provided that at least 65.0% of the aggregate principal amount of the Second USD Senior Notes issued on the original issue date remains outstanding after each such redemption and any such redemption takes place within 60 days after the closing of the related equity offering.

The Second USD Senior Notes contain a liability component and an early redemption option:

The interest charged for the year is calculated by applying an effective interest rate of approximately 8.2% per annum to the liability component since the senior notes were issued.

The movements of Second USD Senior Notes during the year are set out below:

RMB’000 Fair value at the dates of issuance 1,826,138 Exchange realignment (18,146) Interest charged during the year 42,389 Interest payable during the year (39,020) At 31 December 2013 1,811,361

F-194 Annual Report 2013 149 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

27. Senior Notes (continued)

The summary of movements of all senior notes during the year is set out below:

RMB’000 At 1 January 2012 241,718 Exchange realignment (391) Interest charged during the year 21,899 Interest paid/payable during the year (21,899) At 31 December 2012 241,327 Fair value at the dates of issuance 8,717,517 Exchange realignment (150,690) Principal repaid during the year (237,699) Interest charged during the year 465,879 Interest paid/payable during the year (478,150) At 31 December 2013 8,558,184

28. Share Capital

Number of Share Shares Capital HKD’000 Authorised Ordinary shares of HKD0.10 each At 31 December 2012 and 2013 10,000,000,000 1,000,000 Issued and fully paid Ordinary shares of HKD0.10 each At 1 January 2012 1,640,022,897 164,002 Exercise of share options 13,189,000 1,319 Issuance of new shares (Note a) 327,849,579 32,785 Issuance of new shares (Note b) 162,113,714 16,211 At 31 December 2012 2,143,175,190 214,317 Exercise of share options 15,325,500 1,533 At 31 December 2013 2,158,500,690 215,850

RMB’000 Shown on the consolidated statement of financial position As at 31 December 2013 208,656 As at 31 December 2012 207,422

Notes:

(a) On 15 June 2012, the Company issued and allotted 327,849,579 shares of HKD0.10 each to Target Smart Investments Limited (“Target Smart”), a wholly-owned subsidiary of The Wharf (Holdings) Limited (“Wharf”), a company listed on the Stock Exchange, at HKD5.20 per share pursuant to a subscription agreement dated 8 June 2012. The total consideration received amounted to approximately HKD 1,704,818,000 (equivalent to approximately RMB1,386,221,000).

(b) On 2 August 2012, the Company further allotted and issued 162,113,714 shares of HKD0.10 each to Target Smart at HKD5.20 per share pursuant to an investment agreement dated 8 June 2012. The total consideration received amounted to approximately HKD 842,991,000 (equivalent to approximately RMB689,095,000).

All shares issued during the year rank pari passu with other shares in issue in all respects.

F-195 Greentown China Holdings Limited 150 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

29. Convertible Securities

Active Way Development Limited (“Active Way”), a wholly-owned subsidiary of the Company, issued the Hong Kong dollar denominated perpetual subordinated convertible callable securities (“Convertible Securities”) with an aggregate principal amount of HKD2,550,000,000 on 2 August 2012 to Enzio Investments Limited, a wholly-owned subsidiary of Wharf, pursuant to an investment agreement dated 8 June 2012. The Company has agreed to guarantee on a subordinated basis the due payment of all sums expressed to be payable by Active Way under the Convertible Securities. The Convertible Securities are convertible into a maximum of 344,594,594 new shares of the Company at an initial conversion price of HK$7.4 per share, subject to conversion price adjustments. The Convertible Securities are convertible at any time after the expiry of three years from the issue date, except if an offer is made to shareholders for all the outstanding shares of the Company or if a breach event occurs, in which case, the Convertible Securities may be converted at any time on or after the offer is formally announced in compliance with applicable rules and regulations or for so long as the breach event is continuing, as the case may be.

The Convertible Securities confer the holders a right to receive distribution at the applicable distribution rate from and including the issue date to but excluding and payable, on the first anniversary from the issue date, thereafter semi-annually in arrears. The distribution rate shall be (i) in respect of the period from, and including the issue date to, but excluding the 5th anniversary from the issue date, 9% per annum and (ii) in respect of the period from and including the 5th anniversary from the issue date to, but excluding the 10th anniversary from the issue date, 9% per annum plus 2% per annum and thereafter from, and including, each reset date falling after the 5th anniversary from the issue date to, but excluding, the immediately following reset date, the initial spread of 8.4% plus the applicable 5-year U.S. treasury rate plus 2% per annum. A reset date is defined as the fifth anniversary of the issue date and each day falling on the expiry of every five calendar years after the fifth anniversary of the issue date. The applicable 5-year U.S. treasury rate refers to the prevailing rate that represents the average for the week immediately prior to the date on which the reset is calculated as published by the Board of Governors of the U.S. Federal Reserve.

Active Way may at its sole discretion elect to defer any scheduled distribution to the next scheduled distribution payment date by giving prior written notice. Active Way may further defer any arrears of distribution following the foregoing notice requirement and is not subject to any limits as to the number of times distributions and arrears of distribution can be deferred. Any arrears of distribution and any additional distribution amount shall be extinguished upon any voluntary conversion by the holders of the Convertible Securities. Unless and until Active Way or the Company satisfies in full all outstanding arrears of distribution and any additional distribution amount, Active Way and the Company shall not declare or pay any dividends, distributions or make payment on, and will procure that no dividend or other payment is made on or redeem, reduce, cancel, buy-back or acquire for any consideration any share capital thereof (including preference shares) or parity securities.

As the Convertible Securities impose no contractual obligation on the Group to repay their principal or to pay any distributions, they do not meet the definition for classification as financial liabilities under IAS 32. As a result, the whole instrument is classified as equity, and distributions if and when declared are treated as equity dividends.

A distribution of RMB182,914,000 for the year ended 31 December 2013 has been paid by the Company.

F-196 Annual Report 2013 151 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

30. Acquisition of Subsidiaries

Particulars of the subsidiary acquired during 2012 were as follows:

Effective Equity Interest Acquired Company Principal Activity Acquisition Date Acquired Consideration RMB’000 無錫綠城房地產開發有限公司 Real estate development 11 January 2012 85% – Wuxi Greentown (Note (i))

台州綠城泰業房地產開發有限公司 Real estate development 27 September 2012 51% 13,000 Taizhou Greentown Taiye Real Estate Development Co., Ltd. (“Taizhou Taiye”) (Note (ii))

杭州合仁裝飾有限公司 Design and decoration 14 September 2012 32% 1,500 Hangzhou Heren Decoration Co., Ltd. (“Hangzhou Heren”) (Note (iii)) 14,500

Notes:

(i) Wuxi Greentown was previously accounted for as an associate of the Group under the Zhonghai Trust arrangement. Upon the maturity of the Zhonghai Tust in 2012, Wuxi Greentown became a subsidiary of the Company. The entire equity interest in Wuxi Greentown was subsequently disposed of to an associate of the Group on 1 July 2012.

(ii) Taizhou Taiye was previously a 41%-owned associate of the Group. Taizhou Taiye is engaged in property development business. The Group acquired additional 10% equity interest so as to continue the expansion of the Group’s property development operation.

(iii) Hangzhou Heren was previously a 15%-owned available-for-sale investment of Greentown Construction Management Co., Ltd., (“Greentown Construction Management”), a 35%-owned subsidiary of the Group. Greentown Construction Management is a subsidiary of the Group because the Group has the right to appoint the majority of directors of Greentown Construction Management and hence the power over Greentown Construction Management and has the ability to use its power to affect its returns. Greentown Construction Management acquired additional 75% equity interest in Hangzhou Heren in 2012. Therefore, Hangzhou Heren being a 90%-owned subsidiary of Greentown Property is also accounted for as a subsidiary of the Group. Hangzhou Heren is engaged in design and decoration business. It was acquired so as to provide design and decoration services to the Group’s property development companies.

F-197 Greentown China Holdings Limited 152 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

30. Acquisition of Subsidiaries (continued)

Particulars of the subsidiary acquired during 2013 were as follows:

海南中油深海養殖科技開發有限公司 Real estate development 15 January 2013 51% 104,090 Hainan Zhongyou Deep Sea Cultivation Technology Development Co., Ltd. (“Hainan Zhongyou”) (Note (ii))

綠城恒基（大慶）置業有限公司 Real estate development 11 October 2013 51% 13,000 Greentown Hengji Daqing Real Estate Development Co., Ltd. (“Greentown Hengji Daqing “)(Note (iii))

慈溪綠城房地產發展有限公司 Real estate development 5 July 2013 100% 68,600 Cixi Greentown Property (Note (iv)) 188,090

Notes:

(ii) Hainan Greentown Gaodi Investment Co., Ltd., a 51%-owned subsidiary of the Company, acquired 100% equity interest of Hainan Zhongyou.

F-198 Annual Report 2013 153 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

30. Acquisition of Subsidiaries (continued)

A summary of the effects of the acquisition of these subsidiaries is as follows:

2013 2012 RMB’000 RMB’000 Net assets acquired: Property, plant and equipment 5,166 5,116 Rental paid in advance 429 – Deferred tax assets 1,488 – Properties for development 149,571 – Properties under development 1,297,648 1,764,835 Completed properties for sale – 270,678 Trade and other receivables, deposits and prepayments 240,652 56,538 Amounts due from related parties 2,165 282,399 Prepaid income tax – 23,504 Prepaid other taxes 13,995 18,239 Bank balances and cash 28,288 74,811 Trade and other payables (347,653) (131,239) Pre-sale deposits (204,637) (400,476) Amounts due to related parties (432,285) (925,829) Income taxes payable (74) (33,159) Other taxes payable – (25) Bank and other borrowings (499,950) (613,650) 254,803 391,742 Goodwill 501 – Non-controlling interests (25,314) (102,857) 229,990 288,885 Less: Transferred from interests previously held and classified as associates/ available-for-sale investments (37,977) (221,006) Gain on re-measurement of associates to acquisition date fair value in business combination achieved in stages (Note i) (3,923) (3,399) Gain on re-measurement of an associate to acquisition date fair value upon re-consolidation of a subsidiary (Note ii) – (49,980) 188,090 14,500 Total consideration, satisfied by: Cash 118,490 14,500 Consideration payable 69,600 – 188,090 14,500 Net cash flow arising on acquisition Cash paid (118,490) (14,500) Bank balances and cash acquired 28,288 74,811 (90,202) 60,311

F-199 Greentown China Holdings Limited 154 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

30. Acquisition of Subsidiaries (continued)

Note:

(i) The Group’s equity interest in Greentown Hengji Daqing and Cixi Greentown Property were remeasured to its fair value upon acquisition during the year, resulting in a gain of RMB2,584,000 and RMB1,339,000 respectively. There was a gain of RMB3,399,000 for the remeasurement of the Group’s equity interest in Taizhou Taiye in 2012.

(ii) The Group’s 85% equity interest in Wuxi Greentown, which was previously accounted for as an associate, was remeasured to its fair value upon the maturity of the Zhonghai Trust in 2012, resulting in a gain of RMB49,980,000.

The acquisition of Hainan Zhongyou has been accounted for as acquisition of assets and liabilities, which do not constitute a business. The acquisition of the other companies has been accounted for using the acquisition method. The effect of the acquisitions was presented together as the assets and liabilities acquired from Zhejiang Wenlan were not material in comparison to the assets and liabilities acquired from Greentown Hengji Daqing and Cixi Greentown Property.

The receivables acquired (which principally comprised trade and other receivables, deposits and prepayments, and amounts due from related parties) with a fair value of RMB242,817,000 at the date of acquisition had gross contractual amounts of RMB242,817,000, which were expected to be fully collected.

The non-controlling interest recognised at the acquisition date was measured by reference to the proportionate share of the recognised amounts of net assets of Zhejiang Wenlan, Greentown Hengji Daqing and Cixi Greentown Property and amounted to RMB25,314,000. The goodwill arising from the acquisition was subsequently written off in the current year.

Zhejiang Wenlan, Greentown Hengji Daqing and Cixi Greentown Property did not contribute any revenue to the Group between the date of acquisition and the end of the year.

Zhejiang Wenlan did not contribute any significant profit or loss to the Group between the date of acquisition and the end of the year. The losses attributable to Greentown Hengji Daqing and Cixi Greentown Property amounted to RMB6,932,000 and RMB2,925,000 respectively have been recognised in the Group’s profit for the year between the date of acquisition and the end of the year.

Had the acquisition of Zhejiang Wenlan, Greentown Hengji Daqing and Cixi Greentown Property been effected at 1 January 2013, the effect on the Group’s revenue and profit for the year ended 31 December 2013 would have been insignificant.

F-200 Annual Report 2013 155 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

31. Operating Leases

The Group as Lessee

2013 2012 RMB’000 RMB’000

Minimum lease payments made under operating leases in respect of buildings during the year 93,034 78,905

At the end of the reporting period, the Group had commitments for future minimum lease payments under non-cancellable operating leases which fall due as follows:

2013 2012 RMB’000 RMB’000 Within one year 34,377 42,914 In the second to fifth year inclusive 27,262 26,434 After five years – 431 61,639 69,779

Operating lease payments represent rentals payable by the Group for certain office premises. Leases are negotiated for a term ranging from 1 to 5 years with fixed rentals.

The Group as Lessor

2013 2012 RMB’000 RMB’000 Property rental income, net of negligible outgoings 121,381 122,604

At the end of the reporting period, the Group had contracted with tenants for the following future minimum lease payments:

2013 2012 RMB’000 RMB’000 Within one year 40,590 26,612 In the second to fifth year inclusive 14,537 15,076 After five years 5,563 12,274 60,690 53,962

Property rental income represents rentals receivable by the Group. Leases are negotiated for a term ranging from three months to 15 years with fixed rentals.

F-201 Greentown China Holdings Limited 156 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

32. Commitments

2013 2012 RMB’000 RMB’000 Commitments contracted for but not provided in the consolidated financial statements in respect of:

Properties for development and properties under development 14,038,730 15,079,597 Construction in progress 25,855 196,766 14,064,585 15,276,363

In addition to the above, the Group’s share of the commitments of its joint ventures are as follows:

2013 2012 RMB’000 RMB’000 Contracted for but not provided in respect of properties for development and properties under development 2,136,249 2,283,607

33. Share-based Payment Transactions

The Company’s share option scheme (the “Scheme”) was adopted pursuant to the shareholders’ resolution passed on 22 June 2006 for the primary purpose of providing incentives and/or reward to directors and employees of the Group and will expire on 21 June 2016. Under the Scheme, the Board of Directors of the Company may grant options to eligible employees, including directors of the Company and its subsidiaries, to subscribe for shares in the Company.

Options may be exercised at any time from the date of grant of the share option to the expiry of the Scheme, unless otherwise specified in the Scheme. The exercise price is determined by the directors of the Company, and will not be less than the higher of (i) the closing price of the Company’s shares on the date of grant; (ii) the average closing price of the share for the five business dates immediately preceding the date of grant; and (iii) the nominal value of the Company’s shares.

F-202 Annual Report 2013 157 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

33. Share-based Payment Transactions (continued)

Details of specific categories of options granted in 2009 are as follows:

The closing prices of the Company’s shares on 22 January, 13 May, 22 June and 17 July 2009, the dates of grant, were HK$2.75, HK$7.16, HK$11.00 and HK$11.52 respectively.

The share options are exercisable during the following periods:

F-203 Greentown China Holdings Limited 158 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

33. Share-based Payment Transactions (continued)

The following table discloses movements of the Company’s share options held by directors and employees during the year:

Outstanding Granted Exercised Forfeited Option Type at 1/1/2013 During Year During Year During Year 31/12/2013 2009A 18,903,500 – (6,781,500) – 12,122,000 2009B 5,216,500 – (1,857,500) – 3,359,000 2009C 36,437,000 – (6,686,500) (174,000) 29,576,500 2009D 15,000,000 – – – 15,000,000 75,557,000 – (15,325,500) (174,000) 60,057,500 Exercisable at the end of the year 60,057,500 Weighted average exercise price HK$8.82 – HK$6.95 HK$11.00 HK$9.30

Outstanding Granted Exercised Forfeited Option Type at 1/1/2012 During Year During Year During Year 31/12/2012 2009A 27,199,000 – (8,295,500) – 18,903,500 2009B 10,000,000 – (4,783,500) – 5,216,500 2009C 37,382,000 – (110,000) (835,000) 36,437,000 2009D 15,000,000 – – – 15,000,000 89,581,000 – (13,189,000) (835,000) 75,557,000 Exercisable at the end of the year 75,557,000 Weighted average exercise price HK$8.21 – HK$4.51 HK$11.00 HK$8.82

In respect of the share options exercised during the year, the weighted average share price at the dates of exercise is HK$15.36 (2012: HK$10.84).

HK$1.00 is payable for each acceptance of grant of share options. In addition, (i) in respect of the 2009A share options, certain grantees were required to pay an option premium of HK$1.00 per share option up front; and (ii) in respect of the 2009C share options, certain grantees were required to pay an option premium of HK$3.50 per share option in three annual instalments. As at 31 December 2013, share option premiums receivable amounting to RMB63,526,000 (2012: RMB89,448,000) were included in current other receivables according to the payment terms of the share option premiums.

The estimated fair values of the 2009A, 2009B, 2009C and 2009D share options at their respective dates of grant are RMB39,173,000, RMB30,023,000, RMB168,173,000 and RMB55,132,000 respectively.

F-204 Annual Report 2013 159 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

33. Share-based Payment Transactions (continued)

The following assumptions were used to calculate the fair values of the share options:

The Group recognised the total expense of RMB1,203,000 for the year ended 31 December 2012 in relation to share options granted by the Company.

34. Pledge of Assets

At the end of the reporting period, the following assets were pledged to banks and other parties to secure credit facilities granted to the Group:

2013 2012 RMB’000 RMB’000 Land and buildings 16,317 32,807 Hotel buildings 1,484,407 1,964,841 Construction in progress 533,039 262,565 Prepaid lease payment 470,343 229,419 Properties for development 431,533 261,497 Properties under development 15,843,475 17,540,720 Completed properties for sale 1,201,163 900,363 Investment properties 1,800,000 1,700,000 Pledged bank deposits 595,038 1,734,337 Interests in associates 255,270 177,232 Interests in joint ventures 94,004 44,552 22,724,589 24,848,333

35. Retirement Benefits Plans

The employees of the Group’s subsidiaries in the PRC are members of the state-managed retirement benefits schemes operated by the PRC government. The PRC subsidiaries are required to contribute a certain percentage of payroll costs to the retirement benefits schemes to fund the benefits. The only obligation of the Group with respect to the retirement benefits schemes is to make the specified contributions.

F-205 Greentown China Holdings Limited 160 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

36. Contingent Liabilities

(i) Guarantees

The Group provided guarantees of RMB17,625,119,000 (2012: RMB17,144,296,000) at 31 December 2013 to banks in favour of its customers in respect of the mortgage loans provided by the banks to those customers for the purchase of the Group’s developed properties. These guarantees provided by the Group to the banks will be released upon receiving the building ownership certificates of the respective properties by the banks from the customers as a pledge for security to the mortgage loans granted.

The Group also provided guarantees to banks and other parties in respect of credit facilities utilised by the following companies:

2013 2012 RMB’000 RMB’000 Credit guarantees provided to: – Associates 6,570,135 3,643,844 – Joint ventures 336,000 3,822,224 – Independent third parties 300,000 200,000 7,206,135 7,666,068 Mortgage and charge guarantees provided to: – Associates 255,270 177,232 – Joint ventures 456,910 408,512 712,180 585,744 Total 7,918,315 8,251,812

Contingent liabilities arising from interests in associates at the end of the reporting period:

2013 2012 RMB’000 RMB’000 Share of mortgage loan guarantees provided by associates to banks in favour of its customers 5,076,552 3,773,850

Contingent liabilities arising from interests in joint ventures at the end of the reporting period:

2013 2012 RMB’000 RMB’000 Share of mortgage loan guarantees provided by joint ventures to banks in favour of its customers 1,667,378 1,333,389

The directors consider that the fair value of the above guarantees is insignificant on initial recognition and it is not probable that an outflow in settlement will be required.

F-206 Annual Report 2013 161 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

36. Contingent Liabilities (continued)

(ii) Litigation against Zhejiang Fosun Commerce Development Limited (“Zhejiang Fosun”)

On 29 December 2011, Zhejiang Jiahe Industrial Co., Ltd. (“Greentown Jiahe”), a wholly-owned subsidiary of the Company, Shanghai Zendai Land Company Limited (“Shanghai Zendai Land”), a wholly-owned subsidiary of Shanghai Zendai Property Limited, a company listed on the Stock Exchange and an independent third party, and Shanghai Chang Ye Investment Management Consulting Co., Ltd. (“Shanghai Chang Ye”), a wholly-owned subsidiary of SOHO China Limited, entered into an agreement pursuant to which Shanghai Chang Ye had conditionally agreed to acquire, and (i) Greentown Jiahe had conditionally agreed to sell its 100% equity interest in Hangzhou Greentown Hesheng Investment Company (“Greentown Hesheng”) and its loan granted to Greentown Hesheng; and (ii) Shanghai Zendai Land had conditionally agreed to sell its 100% equity interest in Shanghai Zendai Wudaokou Property Company Limited (“Shanghai Zendai Wudaokou”) and its loan granted to Shanghai Zendai Wudaokou. Pursuant to a supplementary agreement dated 9 January 2012, the relevant parties agreed that Shanghai Chang Sheng Investment Management Consulting Co., Ltd (“Shanghai Chang Sheng”) should assume all rights, obligations and liabilities of Shanghai Chang Ye under the equity transfers and loan assignments. Greentown Hesheng and Shanghai Zendai Wudaokou owned 10% and 40% equity interests respectively in Shanghai Haizhimen Property Management Co., Ltd. (“Shanghai Haizhimen”), while Zhejiang Fosun, a wholly-owned subsidiary of Fosun International Limited, a company listed on the Stock Exchange, owned the remaining 50% equity interest in Shanghai Haizhimen. Shanghai Haizhimen indirectly owns 100% interest in a land parcel in Shanghai. The disposal of the 100% equity interest in Greentown Hesheng resulted in a gain of RMB115,330,000 to the Group in 2012.

On 30 May 2012, Zhejiang Fosun filed a civil suit to Shanghai No. 1 Intermediate People’s Court (the “Court”) and received a notification of acceptance from the Court, pursuant to which Zhejiang Fosun had initiated a civil action against the relevant parties to protect its pre-emptive rights in the above-mentioned indirect transfers of equity interests in Shanghai Haizhimen by asking for the transactions to be invalidated.

On 4 June 2012, the Group was served with a document of summons issued by the Court in relation to the civil action, pursuant to which Greentown Jiahe, among others, was named as a defendant.

On 29 November 2012, a preliminary trial was held at the Court. On 24 April 2013, the Court issued its preliminary judgment (the “Judgment”), granting orders for (among other things):

4. the restatement of the ownership of Shanghai Zendai Wudaokou and Greentown Hesheng back to the state before the Shanghai Zendai Wudaokou Transfer and Greentown Hesheng Transfer, respectively.

F-207 Greentown China Holdings Limited 162 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

36. Contingent Liabilities (continued)

(ii) Litigation against Zhejiang Fosun Commerce Development Limited (“Zhejiang Fosun”) (continued)

(iii) Litigation against Ms Zhao Xingru (“Ms Zhao”)

On 26 and 27 July 2010, Greentown Real Estate entered into a cooperation agreement and a supplementary agreement (collectively the “Cooperation Agreements”) with Ms Zhao and Mr Zhou Dingwen (“Mr Zhou”), pursuant to which Greentown Real Estate acquired 60% of equity interest in Xinjiang Hongyuan Investment Co., Ltd. (“Xinjiang Hongyuan”) at a consideration of RMB25,500,000. The acquisition was completed on 29 July 2010. The acquisition was accounted for as an acquisition of assets and liabilities.

On 5 September 2011, the Group conditionally disposed of its entire 60% equity interest in Xinjiang Hongyuan to Shanghai Jiechen Investment Consulting Service Co., Ltd. (“Jiechen”) and commissioned Jiechen to manage such interest. Pursuant to a termination agreement dated 11 June 2012, the agreement dated 5 September 2011 in respect of the conditional disposal by the Group and the entrusting management of the Group’s entire 60% equity interest in Xinjiang Hongyuan to Jiechen was terminated.

On 5 November 2012, Ms Zhao filed a civil suit to Xinjiang Uygur Autonomous Region Urumqi Intermediate People’s Court (the “Urumqi Court”) and received a notification of acceptance from the Urumqi Court, pursuant to which Ms Zhao claimed, among other things, the above-mentioned disposal of equity interest in Xinjiang Hongyuan to Jiechen had injured her shareholder’s rights and thus requested that (i) the Cooperative Agreements be revoked; (ii) Greentown Real Estate pay Ms Zhao damages of RMB11,000,000; and (iii) Greentown Real Estate bear the litigation costs.

On 14 May 2013, a preliminary trial was held at the Urumqi Court, the Company and Ms Zhao were not able to reach a settlement through mediation.

On 3 March 2014, Ms Zhao had withdrawn the civil suit against the Group.

F-208 Annual Report 2013 163 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

37. Related Party Disclosures

(i) During the year, in addition to those disclosed in other notes to the consolidated financial statements, the Group entered into the following transactions with related parties:

2013 2012 RMB’000 RMB’000 Sale of properties to a non-controlling Shareholder 249,613 1,737 Sale of materials to joint ventures and associates (Note) 32,911 81,050 Construction service income from associates (Note) 2,143 1,308 Construction service income from joint ventures (Note) 3,820 1,479 Construction consulting service income from joint ventures and associates (Note) 29,543 25,669 Rental expenses paid/payable to: – Shareholders’ Companies 8,624 8,623 – non-controlling shareholders 561 500 Purchases from Shareholders’ Companies (Note) 7,956 9,839 Interior decoration service fees paid/payable to associates (Note) 12,962 – Property management fees paid/payable to Shareholders’ Companies 102,230 97,931 Interest income arising from amounts due from: – associates (Note) 270,612 1,200,668 – joint ventures (Note) 50,304 116,119 – non-controlling shareholders 12,124 12,375 Interest expense arising from amounts due to: – associates (Note) 49,914 227,524 – joint ventures (Note) 58,042 4,544 – non-controlling shareholders 90,924 599,803 Advertising expenses paid/payable to Shareholders’ Companies 70,000 70,000 Brand usage related income from joint ventures and associates (Note) 62,279 54,148 Hotel management fees paid/payable to Shareholders’ Companies 9,627 7,414 Hotel service income from associates (Note) 1,270 662 Interior decoration service income from – joint ventures and associates (Note) 266,981 107,273 – Shareholders’ Companies 3,363 – Health management service fee to Shareholders’ Companies 1,118 1,280 Healthcare service fee to Shareholders’ Companies 1,191 1,224 Educational service fee to Shareholders’ Companies 69 529 Marketing service income from joint ventures and associates (Note) 8,442 14,902 Advertising income from joint ventures and associates (Note) 8,380 4,830 Landscape construction fee to associates (Note) 90,155 45,812

F-209 Greentown China Holdings Limited 164 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

37. Related Party Disclosures (continued)

(i) During the year, in addition to those disclosed in other notes to the consolidated financial statements, the Group entered into the following transactions with related parties: (continued)

Note: Purchases from Shareholders’ Companies represent raw materials purchased for use by construction contractors, the costs of which are included in the overall construction contracts. The transactions with associates and joint ventures are presented gross before elimination of unrealised profits or losses attributable to the Group.

The directors considered that the transactions above were carried out in accordance with the terms agreed with the counterparties.

(ii) As at the end of the reporting period, the Group had balances with related parties, which are all unsecured, as follows:

2013 Project-related Non-project Related Total Non- Non- Non- Interest interest Interest interest Interest interest Bearing Bearing Bearing Bearing Bearing Bearing RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Due from Shareholders’ Companies – 152,971 – 12,170 – 165,141 Non-controlling shareholders 2,197,909 4,283,694 315,447 46,722 2,513,356 4,330,416 Associates 5,000,323 8,330,852 – – 5,000,323 8,330,852 Joint ventures 1,339,558 3,253,641 – – 1,339,558 3,253,641 Officers – 47,919 – – – 47,919 8,537,790 16,069,077 315,447 58,892 8,853,237 16,127,969 Due to Shareholder – 13,160 – – – 13,160 Shareholders’ Companies – 16,600 – – – 16,600 Non-controlling shareholders 1,308,315 2,457,796 – 1,894 1,308,315 2,459,690 Associates 1,475,925 2,747,517 – – 1,475,925 2,747,517 Joint ventures 2,425,328 320,426 – – 2,425,328 320,426 Officers – 8,345 – – – 8,345 5,209,568 5,563,844 – 1,894 5,209,568 5,565,738

F-210 Annual Report 2013 165 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

37. Related Party Disclosures (continued)

(ii) As at the end of the reporting period, the Group had balances with related parties, which are all unsecured, as follows: (continued)

2012 Project-related Non-project Related Total Non- Non- Non- Interest interest Interest interest Interest interest Bearing Bearing Bearing Bearing Bearing Bearing RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Due from Shareholder – 14,439 – – – 14,439 Shareholders’ Companies – – – 4,485 – 4,485 Non-controlling shareholders 2,651,153 3,752,412 453,186 34,694 3,104,339 3,787,106 Associates 8,574,686 4,561,830 – – 8,574,686 4,561,830 Joint ventures 1,322,714 177,299 – 1,668 1,322,714 178,967 Officers – 60,519 – 10,000 – 70,519 12,548,553 8,566,499 453,186 50,847 13,001,739 8,617,346 Due to Shareholder – 13,160 – – – 13,160 Shareholders’ Companies – 16,538 – 18,850 – 35,388 Non-controlling shareholders 322,276 1,023,312 – 1,894 322,276 1,025,206 Associates 1,677,069 2,655,171 – 311 1,677,069 2,655,482 Joint ventures 1,141,447 243,691 – – 1,141,447 243,691 Officers – 11,395 – – – 11,395 3,140,792 3,963,267 – 21,055 3,140,792 3,984,322

In respect of project-related balances with related parties:

(a) The trade balances due from officers arise mainly from property sales and are with a normal credit term of two months.

(b) The trade balances due from Shareholders’ Companies are mainly construction prepayments and trade receivables.

Construction prepayments are billed according to the construction contracts and are settled within one to two months after the construction cost incurred are verified and agreed.

Trade receivables arise mainly from materials sales and are with a normal credit terms of two months.

(d) The trade balances due to Shareholders and officers are mainly pre-sale deposits.

F-211 Greentown China Holdings Limited 166 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

37. Related Party Disclosures (continued)

(ii) As at the end of the reporting period, the Group had balances with related parties, which are all unsecured, as follows: (continued)

(e) The trade balances due to Shareholders’ Companies arise mainly from construction purchases and are with a normal credit term of one to two months after the construction costs incurred are verified and agreed. Typically as much as 85% of the construction costs incurred will be settled by the time the construction of a project is completed and up to 95% by the time the amount of the aggregate construction costs are finally agreed. A warranty fee of up to 5% of the aggregate construction cost will be withheld and settled within two to five years.

(g) The project-related balances due to joint ventures/associates are mainly prepaid distributions.

The non-project related balances with related parties are mainly unsecured advances and repayable on demand.

The non-interest bearing balances due from (to) related parties are unsecured and repayable on demand. The key terms of the interest bearing balances due from (to) related parties are as follows:

(a) The project-related amounts due from non-controlling shareholders of RMB2,197,909,000 (2012: RMB2,651,153,000) at 31 December 2013 carried interest at fixed rates ranging from 7.31% to 7.82% (2012: 7.31% to 7.82%) per annum.

(b) The project-related amounts due from associates of RMB5,000,323,000 (2012: RMB8,574,686,000) at 31 December 2013 carried interest at fixed rates ranging from 7.19% to 12.00% (2012: 5.40% to 12.00%) per annum.

(c) The project-related amounts due from joint ventures of RMB1,339,558,000 (2012: RMB1,322,714,000) at 31 December 2013 carried interest at fixed rates ranging from 6.67% to 10.00% (2012: 6.67%) per annum.

(d) The project-related amounts due to non-controlling shareholders of RMB1,308,315,000 (2012: RMB322,276,000) at 31 December 2013 carried interest at fixed rates ranging from 7.34% to 15.00% (2012: 7.34% to 8.00%) per annum.

(e) The project-related amounts due to associates of RMB785,085,000 (2012: RMB417,524,000) at 31 December 2013 carried interest at fixed rates ranging from 0.35% to 15.00% (2012: 0.50% to 7.02%) per annum.

(f) The project-related amounts due to associates of RMB690,840,000 (2012: RMB1,259,545,000) at 31 December 2013 carried interest at variable rates ranging from 7.05% to 8.15% (2012: 6.67% to 8.21%) per annum.

(g) The project-related amounts due to joint ventures of RMB1,775,768,000 (2012: RMB1,141,447,000) at 31 December 2013 carried interest at fixed rates ranging from 7.19% to 10.00% (2012: 0.50% to 10.00%) per annum.

(h) The project-related amounts due to joint ventures of RMB649,560,000 (2012: Nil) at 31 December 2013 carried interest at variable rates ranging from 0.35% to 8.76% (2012: Nil) per annum.

(i) The non-project related amounts due from non-controlling shareholders of RMB315,447,000 (2012: RMB453,186,000) at 31 December 2013 carried interest at variable rates ranging from 0.40% to 6.00% (2012: 0.50% to 6.56%) per annum.

F-212 Annual Report 2013 167 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

37. Related Party Disclosures (continued)

(iii) (a) During the year, in addition to those disclosed in Notes 30, the Group made acquisitions from related parties as follows:

2013 2012 RMB’000 RMB’000 Purchase of additional interests in subsidiaries from non-controlling shareholders 197,700 – Acquisition of an associate from a non-controlling shareholder 160,520 –

On 31 August 2013, the Group entered into agreements with a non-controlling shareholder to acquire 20% equity interest of Wenzhou Greentown Real Estate Co., Ltd. and 30% equity interest of Wenzhou Lvjing Real Estate Co., Ltd for a consideration of RMB77,200,000 and RMB112,500,000 respectively.

On 31 January 2013, the Group entered into an agreement with a non-controlling shareholder to acquire 25% equity interest in Hangzhou Sunac Greentown for a consideration of approximately RMB160,520,000.

(b) During the year, the Group made disposals to related parties as follows:

2013 2012 RMB’000 RMB’000 Disposal of interests in subsidiaries to a non-controlling shareholder 22,500 –

On 25 April 2013, the Group entered into an agreement to dispose of its 45% equity interest in Beijing Xingye Wanfa Real Estate Development Co., Ltd. for a consideration of RMB22,500,000 to a non-controlling shareholder.

(c) During the year, in light of the Group’s 40% interest in Green Magic and its wholly-owned subsidiary Dalian Wharf Greentown, Era Win Holdings Limited (“Era Win”), a wholly-owned subsidiary of the Company charged its shares in Green Magic in favour of Wharf, a non-controlling shareholder of the Company, pursuant to which the Company and Era Win have agreed, among other things, to secure 40% of the obligations under the loan facility of RMB350,000,000 (equivalent to approximately HK$437,500,000) granted by a bank to Dalian Wharf Greentown and the loan facility of US$260,000,000 (equivalent to approximately HK$2,022,800,000) granted by certain banks to (after novation) Green Magic.

On 18 December 2013, the Company entered into a framework agreement with Wharf, a non-controlling shareholder of the Company, pursuant to which the Group and Wharf together with its subsidiary will jointly develop a piece of land in the Xiaoshan District of Hangzhou, Zhejiang province of the PRC, on a 50:50 ownership basis, into residential properties. The framework agreement was passed at an extraordinary general meeting held on 28 February 2014.

F-213 Greentown China Holdings Limited 168 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

37. Related Party Disclosures (continued)

(iv) Compensation of Key Management Personnel

The remuneration of directors and other members of key management during the year was as follows:

2013 2012 RMB’000 RMB’000 Short-term benefits 26,747 23,366 Post-employment benefits 292 245 Share-based payments – 1,203 27,039 24,814

The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends.

38. Statement of Financial Position of the Company

2013 2012 RMB’000 RMB’000 ASSETS Property, plant and equipment 636 771 Investment in a subsidiary, an associate and amounts due from subsidiaries and related parties 18,385,985 10,345,082 Other receivables 613,580 121,186 Bank balances and cash 67,115 48,276 19,067,316 10,515,315 LIABILITIES Other payables 203,735 110,087 Amounts due to related parties 2,841,177 5,179,904 Other taxes payable 6,293 6,630 Bank and other borrowings 2,365,189 – Senior notes 8,558,184 241,327 13,974,578 5,537,948 ASSETS LESS LIABILITIES 5,092,738 4,977,367 CAPITAL AND RESERVES Share capital 208,656 207,422 Reserves (Note) 4,884,082 4,769,945 5,092,738 4,977,367

Note:

The movement of the reserves of the Company is as follows:

RMB’000 At 1 January 2012 2,810,056 Loss for the year (123,911) Shares issued 2,035,406 Recognition of equity-settled share-based payments 1,203 Exercise of share options 47,191 At 31 December 2012 4,769,945 Profit for the year 1,106,976 Dividends recognised as distributions (1,077,319) Exercise of share options 84,480 At 31 December 2013 4,884,082

F-214 Annual Report 2013 169 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

39. Events After the End of the Reporting Period

The following significant events took place subsequent to 31 December 2013:

On 20 January 2014, the Company entered into a subscription agreement as guarantor with, among others, certain joint lead managers and book runners in relation to the issue of the USD denominated subordinated perpetual capital securities (“Perpetual securities”) by Moon Wise Global Limited, a wholly-owned indirect subsidiary of the Company. The Perpetual securities have an aggregate principal amount of USD500,000,000. The listing of and permission to deal in the Perpetual securities was approved by the Stock Exchange. The net proceeds of the Perpetual securities of approximately USD493,250,000 was intended to replace the Convertible Securities and refinance and for general working capital purposes.

As the Perpetual securities impose no contractual obligation on the Group to repay their principal or to pay any distributions, they do not meet the definition for classification as financial liabilities under IAS 32. As a result, the Perpetual securities will be classified as equity, and distributions if and when declared are treated as equity dividends.

40. Particulars of Principal Subsidiaries of the Company

Particulars of the principal subsidiaries as at 31 December 2013 and 2012 are set out below:

Proportion of Ownership Place and Date of Registered Interest/Voting Rights Principal Name of Subsidiary Registration Capital Held by the Company Activities Legal Form Direct Indirect 2013 2012 2013 2012 綠城房地產集團有限公司 The PRC RMB895,000,000 – – 100% 100% Real estate Wholly foreign- Greentown Real Estate Group Co., Ltd. 6 January 1995 development owned enterprise

上海綠城森林高爾夫別墅開發有限公司 The PRC RMB196,080,000 – – 50% 50% Real estate Limited liability Shanghai Greentown Woods Golf Villas 19 June 2002 (Note i) (Note i) development company Development Co., Ltd.

新疆俊發綠城房地產開發有限公司 The PRC RMB211,079,000 – – 50% 50% Real estate Limited liability Xinjiang Junfa Greentown Real Estate 16 January 2008 (Note i) (Note i) development company Development Co., Ltd.

北京亞奧綠城房地產開發有限公司 The PRC RMB50,000,000 – – 50% 50% Real estate Limited liability Beijing Ya’ao Greentown Real Estate 19 August 2008 (Note i) (Note i) development company Development Co., Ltd.

杭州休博園湖畔綠景休閑開發有限公司 The PRC RMB120,000,000 – – 50% 50% Real estate Limited liability Hangzhou Xiuboyuan Hupan Lvjing 2 April 2008 (Note i) (Note i) development company Xiuxian Development Co., Ltd.

寧波象山綠城房地產開發有限公司 The PRC RMB100,000,000 – – 50% 50% Real estate Limited liability Ningbo Xiangshan Greentown 19 February 2008 (Note i) (Note i) development company Real Estate Development Co., Ltd.

綠城房產建設管理有限公司 The PRC RMB200,000,000 – – 35% 35% Project Limited liability Greentown Property Construction 8 September 2010 (Note i) (Note i) management company Management Co., Ltd.

F-215 Greentown China Holdings Limited 170 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

40. Particulars of Principal Subsidiaries of the Company (continued)

Proportion of Ownership Place and Date of Registered Interest/Voting Rights Principal Name of Subsidiary Registration Capital Held by the Company Activities Legal Form Direct Indirect 2013 2012 2013 2012 湖南青竹湖國際商務社區開發有限公司 The PRC RMB50,600,000 – – 49% 49% Real estate Limited liability Hunan Bamboo Lake International 26 September 2003 (Note ii) (Note ii) development company Business Community Development Co., Ltd.

溫州綠城置業有限公司 The PRC RMB915,000,000 – – 80% 60% Real estate Sino-foreign equity Wenzhou Greentown Real Estate Co., Ltd. 21 May 2007 (Note iii) (Note iii) development joint venture

溫州綠景置業有限公司 The PRC RMB915,000,000 – – 90% 60% Real estate Sino-foreign equity Wenzhou Lvjing Real Estate Co., Ltd. 26 November 2007 (Note iii) (Note iii) development joint venture

浙江綠城天台山蓮花度假村有限公司 The PRC RMB50,000,000 – – 100% 70% Real estate Limited liability Zhejiang Greentown Tiantaishan 8 August 2011 (Note iii) (Note iii) development company Lianhua Resort Co., Ltd.

北京興業萬發房地產開發有限公司 The PRC RMB50,000,000 – – 55% 100% Real estate Limited liability Beijing Xingye Wanfa Real Estate 26 October 2000 (Note iv) (Note iv) development company Development Co., Ltd.

溫州綠城家景房地產開發有限公司 The PRC RMB386,000,000 – – 60% 60% Real estate Limited liability Wenzhou Greentown Jiajing Real Estate 21 May 2007 development company Development Co., Ltd.

杭州余杭綠城房地產開發有限公司 The PRC RMB30,000,000 – – 64% 64% Real estate Limited liability Hangzhou Yuhang Greentown 12 November 1999 development company Real Estate Development Co., Ltd. (Hangzhou Yuhang Greentown”) (Note i)

F-216 Annual Report 2013 171 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

40. Particulars of Principal Subsidiaries of the Company (continued)

Proportion of Ownership Place and Date of Registered Interest/Voting Rights Principal Name of Subsidiary Registration Capital Held by the Company Activities Legal Form Direct Indirect 2013 2012 2013 2012 杭州余杭金騰房地產開發有限公司 The PRC RMB50,000,000 – – 85% 85% Real estate Limited liability Hangzhou Yuhang Jinteng Real Estate 25 December 2001 development company Development Co., Ltd.

南通綠城房地產開發有限公司 The PRC RMB50,000,000 – – 77% 77% Real estate Limited liability Nantong Greentown Real Estate 23 August 2007 development company Development Co., Ltd.

青島綠城華川置業有限公司 The PRC RMB517,764,600 – – 80% 80% Real estate Sino-foreign equity Qingdao Greentown Huachuan 21 August 2007 development joint venture Real Estate Co., Ltd.

舟山綠城聯海置業有限公司 The PRC RMB250,000,000 – – 100% 100% Real estate Limited liability Zhoushan Greentown Lianhai 5 June 2007 development company Real Estate Co., Ltd.

寧波太平洋實業有限公司 The PRC RMB177,000,000 – – 60% 60% Real estate Foreign equity joint Ningbo Pacific Real Estate Co., Ltd. 11 July 2003 development venture

台州吉利嘉苑房地產開發有限公司 The PRC RMB40,000,000 – – 55% 55% Real estate Limited liability Taizhou Jilijiayuan Real Estate 15 October 2001 development company Development Co., Ltd.

養生堂浙江千島湖房地產開發有限公司 The PRC RMB200,000,000 – – 51% 51% Real estate Limited liability Yangshengtang Zhejiang Qiandaohu 24 January 2005 development company Real Estate Development Co., Ltd.

湖州新錦江房地產開發有限公司 The PRC RMB50,000,000 – – 70% 70% Real estate Limited liability Huzhou Xinjinjiang Real Estate 3 February 2004 development company Development Co., Ltd.

長興綠城房地產開發有限公司 The PRC RMB100,000,000 – – 51% 51% Real estate Limited liability Changxing Greentown Real Estate 30 January 2008 development company Development Co., Ltd.

杭州金馬房地產有限公司 The PRC USD50,000,000 – – 51% 51% Real estate Sino-foreign joint Hangzhou Golden Horse Real Estate 22 October 1992 development venture Development Co., Ltd.

F-217 Greentown China Holdings Limited 172 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

40. Particulars of Principal Subsidiaries of the Company (continued)

Proportion of Ownership Place and Date of Registered Interest/Voting Rights Principal Name of Subsidiary Registration Capital Held by the Company Activities Legal Form Direct Indirect 2013 2012 2013 2012 浙江報業綠城房地產開發有限公司 The PRC RMB1,200,000,000 – – 100% 100% Real estate Wholly foreign Zhejiang Newspapering Greentown 7 July 2008 development owned enterprise Real Estate Development Co., Ltd.

北京萊福世紀置業有限公司 The PRC RMB30,000,000 – – 100% 100% Real estate Limited liability Beijing Laifu Century Property Co., Ltd. 24 April 2007 development company

諸暨市越都置業有限公司 The PRC RMB300,000,000 – – 60% 60% Real estate Limited liability Zhuji Yuedu Real Estate Co., Ltd. 31 October 2008 development company

杭州綠城北盛置業有限公司 The PRC RMB530,000,000 – – 100% 100% Real estate Wholly foreign Hangzhou Greentown Beisheng 1 December 2009 development owned enterprise Real Estate Co., Ltd.

溫州景楊置業有限公司 The PRC RMB340,000,000 – – 60% 60% Real estate Sino-foreign equity Wenzhou Jingyang Real Estate Co., Ltd. 19 July 2010 development joint venture

杭州千島湖綠城投資置業有限公司 The PRC RMB30,000,000 – – 80% 80% Real estate Limited liability Hangzhou Qiandaohu Real Estate 15 June 2005 development company Investment Co., Ltd.

新昌綠城置業有限公司 The PRC RMB77,600,000 – – 80% 80% Real estate Limited liability Xinchang Greentown Real Estate Co., Ltd. 12 December 2006 development company

南京天浦置業有限公司 The PRC RMB50,000,000 – – 70% 70% Real estate Limited liability Nanjing Tianpu Real Estate Co., Ltd. 12 November 2002 development company

浙江嘉和實業有限公司 The PRC RMB50,000,000 – – 100% 100% Real estate Limited liability Zhejiang Jiahe Industrial Co., Ltd. 25 April 1995 development company

杭州玫瑰園度假村有限公司 The PRC RMB184,410,000 – – 100% 100% Real estate Limited liability Hangzhou Rose Garden Resort Co., Ltd. 15 August 2006 development company

安徽綠城玫瑰園房地產開發有限公司 The PRC RMB200,000,000 – – 100% 100% Real estate Limited liability Anhui Greentown Rose Garden 23 December 2009 development company Real Estate Development Co., Ltd.

舟山綠城蔚藍海岸房地產開發有限公司 The PRC RMB50,000,000 – – 60% 60% Real estate Limited liability Zhoushan Greentown Weilanhai’an 6 May 2008 development company Real Estate Development Co., Ltd.

F-218 Annual Report 2013 173 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

40. Particulars of Principal Subsidiaries of the Company (continued)

Proportion of Ownership Place and Date of Registered Interest/Voting Rights Principal Name of Subsidiary Registration Capital Held by the Company Activities Legal Form Direct Indirect 2013 2012 2013 2012 舟山市普陀綠城房地產開發有限公司 The PRC RMB50,000,000 – – 90% 90% Real estate Limited liability Zhoushan Putuo Greentown 5 November 2009 development company Real Estate Co., Ltd.

城建中稷（浙江）實業發展有限公司 The PRC RMB160,000,000 – – 97% 97% Real estate Limited liability City-Urban Construction (Zhejiang) 5 February 2005 development company Industrial Development Co., Ltd.

舟山市瑞豐房地產開發有限公司 The PRC RMB10,000,000 – – 60% 60% Real estate Limited liability Zhoushan Ruifeng Real Estate 12 April 2005 development company Development Co., Ltd.

舟山市明程房地產開發有限公司 The PRC RMB10,000,000 – – 97% 97% Real estate Limited liability Zhoushan Mingcheng Real Estate 31 October 2005 development company Development Co., Ltd.

舟山市乾源房地產開發有限公司 The PRC RMB10,000,000 – – 97% 97% Real estate Limited liability Zhoushan Qianyuan Real Estate 31 October 2005 development company Development Co., Ltd.

河南錦江置業有限公司 The PRC RMB80,000,000 – – 100% 100% Real estate Limited liability Henan Jinjiang Real Estate Co., Ltd. 8 August 2002 development company

海南綠城高地投資有限公司 The PRC RMB60,000,000 – – 51% 51% Real estate Limited liability Hainan Greentown Gaodi Investment 15 November 2007 development company Co., Ltd.

慈溪綠城房地產開發有限公司 The PRC RMB98,000,000 – – 60% 60% Real estate Limited liability Cixi Greentown Real Estate 27 July 2009 development company Development Co., Ltd.

杭州綠城玉園房地產開發有限公司 The PRC RMB1,300,000,000 – – 100% 100% Real estate Wholly foreign Hangzhou Greentown Yuyuan 11 November 2009 development owned enterprise Real Estate Development Co., Ltd.

大連綠城房地產開發有限公司 The PRC RMB120,000,000 – – 80% 80% Real estate Limited liability Dalian Greentown Real Estate 11 November 2008 development company Development Co., Ltd.

F-219 Greentown China Holdings Limited 174 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

40. Particulars of Principal Subsidiaries of the Company (continued)

Proportion of Ownership Place and Date of Registered Interest/Voting Rights Principal Name of Subsidiary Registration Capital Held by the Company Activities Legal Form Direct Indirect 2013 2012 2013 2012 青島綠城膠州灣房地產開發有限公司 The PRC USD100,000,000 – – 100% 100% Real estate Sino-foreign equity Qingdao Jiaozhouwan Real Estate 25 November 2009 development joint venture Development Co., Ltd.

臨安綠城置業有限公司 The PRC RMB50,000,000 – – 65% 65% Real estate Limited liability Lin’an Greentown Real Estate Co., Ltd. 2 July 2009 development company

新泰綠城置業有限公司 The PRC RMB98,000,000 – – 70% 70% Real estate Limited liability Xintai Greentown Real Estate Co., Ltd. 12 January 2010 development company

大連綠城置業有限公司 The PRC RMB100,000,000 – – 90% 90% Real estate Limited liability Dalian Greentown Real Estate Co., Ltd. 15 March 2010 development company

德清綠城房地產開發有限公司 The PRC RMB100,000,000 – – 100% 100% Real estate Limited liability Deqing Greentown Real Estate 1 February 2010 development company Development Co., Ltd.

紹興綠城金昌置業有限公司 The PRC RMB100,000,000 – – 51% 51% Real estate Limited liability Shaoxing Greentown Jinchang 6 November 2009 development company Real Estate Co., Ltd.

啟東綠城香格置業有限公司 The PRC RMB65,000,000 – – 51% 51% Real estate Limited liability Qidong Greentown Xiangge 27 October 2009 development company Real Estate Co., Ltd.

北京綠城銀石置業有限公司 The PRC RMB50,000,000 – – 100% 100% Real estate Limited liability Beijing Greentown Yinshi Real Estate 20 February 2008 development company Co., Ltd.

杭州銀嘉房地產開發有限公司 The PRC RMB100,000,000 – – 56% 56% Real estate Limited liability Hangzhou Yinjia Real Estate 17 September 2003 development company Development Co., Ltd.

F-220 Annual Report 2013 175 / Notes to the Consolidated Financial Statements For the year ended 31 December 2013

40. Particulars of Principal Subsidiaries of the Company (continued)

Proportion of Ownership Place and Date of Registered Interest/Voting Rights Principal Name of Subsidiary Registration Capital Held by the Company Activities Legal Form Direct Indirect 2013 2012 2013 2012 新疆鴻遠投資有限公司 The PRC RMB42,500,000 – – 60% 60% Real estate Limited liability Xinjiang Hongyuan Investment Co., Ltd. 22 January 2003 development company

慈溪綠城房地產發展有限公司 The PRC RMB98,000,000 – – 100% – Real estate Limited liability Cixi Greentown Property 7 July 2011 (Note v) (Note v) development company

杭州綠城東友房產開發有限公司 The PRC RMB500,000,000 – – 70% – Real estate Sino-foreign equity Hangzhou Greentown Dongyou 11 January 2013 (Note vi) development joint venture Real Estate Development Co., Ltd. (“Hangzhou Greentown Dongyou”)

浙江建德綠城置業有限公司 The PRC RMB305,000,000 – – 100% – Real estate Wholly foreign Zhejiang Jiande Greentown Real Estate 6 December 2013 (Note vi) development owned enterprise Co., Ltd.

綠城恒基（大慶）置業有限公司 The PRC RMB50,000,000 – – 51% – Real estate Limited liability Greentown Hengji Daqing 30 August 2011 (Note vii) (Note vii) development company

Notes:

(ii) The entity is a subsidiary of non-wholly owned subsidiaries of the Group.

(iii) These entities were partially acquired during the year. Please refer to Note 37(iii)(a) for details.

(iv) The entity was partially disposed of during the year. Please refer to Note 37(iii)(b) for details.

(v) Cixi Greentown Property was previously a 30% associate of the Group. The Group acquired its additional 70% equity interest during the year. Please refer to Note 30 for details.

(vi) These entities were newly established in 2013.

(vii) Greentown Hengji Daqing was previously a 25% associate of the Group. The Group acquired its additional 26% equity interest during the year. Please refer to Note 30 for details.

The directors of the Company are of the opinion that none of the Group’s subsidiaries that has non-controlling interests are material to the consolidated financial statements as a whole and therefore, the financial information in respect of the subsidiaries that has non-controlling interest are not presented.

F-221 Independent Auditor’s Report

TO THE MEMBERS OF GREENTOWN CHINA HOLDINGS LIMITED (incorporated in the Cayman Islands with limited liability)

We have audited the consolidated financial statements of Greentown China Holdings Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) set out on pages 103 to 215, which comprise the consolidated statement of financial position as at 31 December 2012, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

101 Greentown China Holdings Limited Annual Report 2012

F-222 Independent Auditor’s Report

Opinion In our opinion, the consolidated financial statements give a true and fair view of the state of affairs of the Group as at 31 December 2012 and of the Group’s profit and cash flows for the year then ended in accordance with International Financial Reporting Standards and have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance.

Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong 22 March 2013

Greentown China Holdings Limited Annual Report 2012 102

F-223 Consolidated Statement of Comprehensive Income For the year ended 31 December 2012

2012 2011 NOTES RMB’000 RMB’000 Revenue 7 35,392,506 21,963,747 Cost of sales (24,678,810) (14,555,354) Gross profit 10,713,696 7,408,393 Other income 8 1,000,594 683,146 Selling expenses (665,170) (599,914) Administrative expenses (1,403,873) (1,320,020) Finance costs 9 (564,115) (415,698) Reversal of impairment losses on property, plant and equipment 15 – 13,067 Impairment losses on properties for development – (62,187) Impairment losses on properties under development – (143,867) Impairment losses on property, plant and equipment 15 (81,485) – Gain from changes in fair value of investment properties 16 600 5,000 Fair value changes on trust-related financial derivatives 27 82,520 168,960 Net gain on disposal of subsidiaries 33 549,697 3,639 Gain on re-measurement of an associate to acquisition date fair value in business combination achieved in stages 32 3,399 – Gain on disposal of associates 56,505 104,507 Gain on partial disposal of an associate – 1,573 Gain on de-consolidation of a subsidiary – 20,948 Gain on re-measurement of an associate to acquisition date fair value upon re-consolidation of a subsidiary 32 49,980 – Net gain on disposal of jointly controlled entities 1,377 – Share of results of associates 209,356 777,498 Share of results of jointly controlled entities 304,119 55,669 Profit before taxation 10 10,257,200 6,700,714 Taxation 12 (4,204,149) (2,582,772) Profit and total comprehensive income for the year 6,053,051 4,117,942 Attributable to: Owners of the Company 4,851,123 2,574,637 Non-controlling interests 1,201,928 1,543,305 6,053,051 4,117,942 Earnings per share 14 Basic RMB2.57 RMB1.57 Diluted RMB2.37 RMB1.55

103 Greentown China Holdings Limited Annual Report 2012

F-224 Consolidated Statement of Financial Position As at 31 December 2012

2012 2011 NOTES RMB’000 RMB’000 NON-CURRENT ASSETS Property, plant and equipment 15 3,675,256 2,861,141 Investment properties 16 1,730,600 1,730,000 Interests in associates 17 6,573,266 5,866,392 Interests in jointly controlled entities 18 1,003,745 1,061,033 Available-for-sale investments 19 346,545 303,300 Prepaid lease payment 20 254,968 196,726 Rental paid in advance 6,744 15,358 Deferred tax assets 21 782,241 728,165 14,373,365 12,762,115 CURRENT ASSETS Properties for development 22 6,020,524 14,127,886 Properties under development 23 43,136,154 67,597,987 Completed properties for sale 7,330,358 2,956,620 Inventories 76,299 73,387 Available-for-sale investments 19 – 234,720 Trade and other receivables, deposits and prepayments 24 4,712,786 5,180,473 Amounts due from related parties 40(ii) 21,619,085 15,131,620 Prepaid income taxes 1,076,018 1,509,285 Prepaid other taxes 1,464,738 2,518,644 Pledged bank deposits 24, 37 1,734,337 2,268,642 Bank balances and cash 24 6,163,632 3,615,149 93,333,931 115,214,413 CURRENT LIABILITIES Trade and other payables 25 15,958,635 13,238,106 Pre-sale deposits 28,848,285 45,758,782 Amounts due to related parties 40(ii) 7,125,114 13,689,413 Dividend payable – 164,026 Income taxes payable 5,389,742 2,935,305 Other taxes payable 985,100 926,474 Bank and other borrowings – due within one year 26 15,014,288 15,877,335 Trust-related financial derivatives 27 – 82,520 Convertible bonds 28 – 186,466 Senior notes 29 241,327 – 73,562,491 92,858,427

Greentown China Holdings Limited Annual Report 2012 104

F-225 Consolidated Statement of Financial Position As at 31 December 2012

2012 2011 NOTES RMB’000 RMB’000 NET CURRENT ASSETS 19,771,440 22,355,986 TOTAL ASSETS LESS CURRENT LIABILITIES 34,144,805 35,118,101 NON-CURRENT LIABILITIES Bank and other borrowings – due after one year 26 6,117,815 15,806,358 Amounts due to related parties 27, 40(ii) – 992,174 Senior notes 29 – 241,718 Deferred tax liabilities 21 538,915 434,537 6,656,730 17,474,787 27,488,075 17,643,314 CAPITAL AND RESERVES Share capital 30 207,422 166,441 Reserves 18,850,269 11,773,458 Convertible securities 31 2,084,472 – Equity attributable to owners of the Company 21,142,163 11,939,899 Non-controlling interests 6,345,912 5,703,415 27,488,075 17,643,314

The consolidated financial statements on page 103 to 215 were approved and authorised for issue by the Board of Directors on 22 March 2013 and are signed on its behalf by:

SHOU Bainian LUO Zhaoming DIRECTOR DIRECTOR

105 Greentown China Holdings Limited Annual Report 2012

F-226 Consolidated Statement of Changes in Equity For the year ended 31 December 2012

Attributable to Owners of the Company Conversion Share Non- Share Share Special Statutory Option Options Convertible Retained controlling Total Capital Premium Reserve Reserve Reserve Reserve Securities Earnings Total Interests Equity RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note i) At 1 January 2011 166,243 6,291,728 (453,909) 339,060 27,275 270,652 – 3,558,465 10,199,514 4,253,177 14,452,691 Profit and total comprehensive income for the year – – – – – – – 2,574,637 2,574,637 1,543,305 4,117,942 Dividends recognised as distributions (Note 13) – – – – – – – (753,062) (753,062) – (753,062) Dividends paid to non- controlling interests – – – – – – – – – (35,470) (35,470) Transfer (Note i) – – – 7,090 – – – (7,090) – – – Recognition of equity- settled share-based payments – – – – – 11,907 – – 11,907 – 11,907 Exercise of share options 198 7,994 – – – (2,454) – – 5,738 – 5,738 Disposal of subsidiaries – – – – – – – – – (34,977) (34,977) Purchase of additional interests in subsidiaries – – (97,583) – – – – – (97,583) (8,171) (105,754) Partial disposal of subsidiaries – – (1,252) – – – – – (1,252) 6,372 5,120 De-consolidation of a subsidiary – – – – – – – – – (38,759) (38,759) Liquidation of a subsidiary – – – – – – – – – (14,977) (14,977) Capital contribution from non-controlling shareholders of subsidiaries – – – – – – – – – 32,915 32,915 At 31 December 2011 166,441 6,299,722 (552,744) 346,150 27,275 280,105 – 5,372,950 11,939,899 5,703,415 17,643,314

Greentown China Holdings Limited Annual Report 2012 106

F-227 Consolidated Statement of Changes in Equity For the year ended 31 December 2012

Attributable to Owners of the Company Conversion Share Non- Share Share Special Statutory Option Options Convertible Retained controlling Total Capital Premium Reserve Reserve Reserve Reserve Securities Earnings Total Interests Equity RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note i) Profit and total comprehensive income for the year – – – – – – – 4,851,123 4,851,123 1,201,928 6,053,051 Dividends paid to non- controlling interests – – – – – – – – – (186,676) (186,676) Transfer (Note i) – – – 103,320 – – – (103,320) – – – Shares issued (Note 30) 39,910 2,035,406 – – – – – – 2,075,316 – 2,075,316 Issue of convertible securities (Note 31) – – – – – – 2,084,472 – 2,084,472 – 2,084,472 Recognition of equity- settled share-based payments – – – – – 1,203 – – 1,203 – 1,203 Exercise of share options 1,071 60,636 – – – (13,445) – – 48,262 – 48,262 Transfer on redemption of 2007 convertible bonds (Note 28) – – – – (27,275) – – 27,275 – – – Disposal of subsidiaries (Note 33) – – – – – – – – – (1,407,985) (1,407,985) Partial disposal of subsidiaries – – 141,888 – – – – – 141,888 405,385 547,273 Acquisition of subsidiaries which constitute business (Note 32) – – – – – – – – – 102,857 102,857 Liquidation of subsidiaries – – – – – – – – – (6,072) (6,072) Acquisition of a subsidiary which constitutes assets (Note 42) – – – – – – – – – 17,000 17,000 Capital contribution from non-controlling shareholders of subsidiaries – – – – – – – – – 516,060 516,060 At 31 December 2012 207,422 8,395,764 (410,856) 449,470 – 267,863 2,084,472 10,148,028 21,142,163 6,345,912 27,488,075

Notes:

107 Greentown China Holdings Limited Annual Report 2012

F-228 Consolidated Statement of Cash Flows For the year ended 31 December 2012

2012 2011 RMB’000 RMB’000 OPERATING ACTIVITIES Profit before taxation 10,257,200 6,700,714 Adjustments for: Share of results of associates (209,356) (777,498) Share of results of jointly controlled entities (304,119) (55,669) Depreciation and amortisation 169,381 147,604 Reversal of impairment losses on property, plant and equipment – (13,067) Impairment losses on property, plant and equipment 81,485 – Impairment losses on properties for development – 62,187 Impairment losses on properties under development – 143,867 Interest income (700,482) (376,158) Trust income (130,769) (17,469) Finance costs 564,115 415,698 Net unrealised foreign exchange gains (1,466) (141,797) (Gain) loss on disposal of property, plant and equipment (806) 118 Change in fair value of investment properties (600) (5,000) Equity-settled share based payments 1,203 11,907 Fair value changes on trust-related financial derivatives (82,520) (168,960) Net gain on disposal of subsidiaries (549,697) (3,639) Net gain on disposal of jointly controlled entities (1,377) – Net gain on disposal of associates (56,505) (104,507) Gain on partial disposal of an associate – (1,573) Gain on re-measurement of an associate to acquisition date fair value in business combination achieved in stages (3,399) – Gain on de-consolidation of a subsidiary – (20,948) Gain on re-measurement of an associate to acquisition date fair value upon re-consolidation of a subsidiary (49,980) – Operating cash flows before movements in working capital 8,982,308 5,795,810 (Increase) decrease in properties for development (1,877,434) 3,281,496 Decrease (increase) in properties under development 12,407,149 (9,936,958) Increase in completed properties for sale (5,010,740) (979,818) Decrease (increase) in inventories 19,067 (15,983) (Increase) decrease in trade and other receivables, deposits and prepayments (745,381) 70,415 (Increase) decrease in amounts due from related parties – 266,683 Decrease (increase) in prepaid other taxes 964,768 (590,403) Decrease (increase) in rental paid in advance 6,687 (1,799) Decrease in pre-sale deposits (14,148,066) (443,996) Increase in trade and other payables 5,147,959 4,754,075 Increase (decrease) in amounts due to related parties – (926,936) Increase in other taxes payable 62,425 282,754 Cash generated from operations 5,808,742 1,555,340 Income taxes paid (1,108,948) (1,680,219) NET CASH FROM (USED IN) OPERATING ACTIVITIES 4,699,794 (124,879)

Greentown China Holdings Limited Annual Report 2012 108

F-229 Consolidated Statement of Cash Flows For the year ended 31 December 2012

2012 2011 NOTES RMB’000 RMB’000 INVESTING ACTIVITIES Purchase of property, plant and equipment (1,077,664) (569,242) Proceeds from disposal of property, plant and equipment 4,766 6,388 Increase in prepaid lease payment (67,336) (51,123) Investments in associates (509,207) (2,368,374) Investments in jointly controlled entities (50,000) (249,383) Dividends received from associates and jointly controlled entities 879,726 – Proceeds from disposal of interests in associates 110,300 50,000 Proceeds from disposal of interests in jointly controlled entities 5,976 – Proceeds from disposal of shareholders’ loans as part of disposal/partial disposal of subsidiaries and associates 4,392,611 – Proceeds from receipt of consideration receivable from disposal/partial disposal of subsidiaries and associates and relevant shareholders’ loans recognised in prior year 751,515 – Acquisition of subsidiaries which constitute business (net of cash and cash equivalents acquired) 32 60,311 (19,998) Acquisition of a subsidiary which constitutes assets 42 61,621 – De-consolidation of a subsidiary – (579,578) Disposal of subsidiaries (net of cash and cash equivalents disposed of) 33 2,452,999 (15,685) Proceeds from partial disposal of interest in associates – 26,250 Deposit received for disposal of a subsidiary – 900,000 Repayment from (advances to) third parties 286,270 (923,460) Advance to related parties (2,436,836) (433,623) Decrease in pledged bank deposits 534,305 296,592 Interest received 1,090,204 520,934 Trust income received 130,769 17,469 Disposal (purchase) of available-for-sale investments 91,175 (109,076) NET CASH FROM (USED IN) INVESTING ACTIVITIES 6,711,505 (3,501,909)

109 Greentown China Holdings Limited Annual Report 2012

F-230 Consolidated Statement of Cash Flows For the year ended 31 December 2012

2012 2011 RMB’000 RMB’000 FINANCING ACTIVITIES Bank and other borrowings raised 11,483,218 14,958,498 Repayment of bank and other borrowings (18,505,478) (16,290,135) Repayment of borrowings from related parties (2,168,517) (519,696) Trust loans raised – 3,323,750 Trust loans repaid (819,650) (3,150,000) Contribution by non-controlling shareholders of subsidiaries 516,060 32,915 Interest paid (3,586,481) (2,820,814) Dividends paid to owners of the Company (164,026) (589,036) Dividends paid to non-controlling interests (186,676) (35,470) Redemption of 2007 Convertible Bonds (189,725) – Proceeds from exercise of share options 48,262 5,738 Proceeds from issue of new shares 2,075,316 – Proceeds from issue of convertible securities 2,084,472 – Share option premium received 3,122 28,149 Purchase of additional interests in subsidiaries – (105,754) Proceeds from partial disposal of subsidiaries 547,273 5,120 NET CASH USED IN FINANCING ACTIVITIES (8,862,830) (5,156,735) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,548,469 (8,783,523) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR 3,615,149 12,407,659 Effects of exchange rate changes on the balance of cash held in foreign currencies 14 (8,987) CASH AND CASH EQUIVALENTS AT THE END OF YEAR 6,163,632 3,615,149 REPRESENTED BY BANK BALANCES AND CASH 6,163,632 3,615,149

Greentown China Holdings Limited Annual Report 2012 110

F-231 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

The consolidated financial statements are presented in Renminbi (“RMB”), which is also the functional currency of the Company.

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”) New and Revised Standards and Interpretations Applied in the Current Year In the current year, the Group has applied certain amendments to IFRSs issued by the International Accounting Standards Board (the “IASB”) that are effective for the Group’s financial year beginning on 1 January 2012.

The application of these amendments to IFRSs in the current year has had no material impact on the Group’s financial performance and positions for the current and prior years and/or on the disclosures set out in these consolidated financial statements.

New and Revised Standards and Interpretations Issued But Not Yet Effective The Group has not early applied the following new and revised IFRSs that have been issued but are not yet effective:

IFRSs (Amendments) Annual Improvement to IFRSs 2009–2011 Cycle1 IFRS 7 (Amendments) Disclosures – Offsetting Financial Assets and Financial Liabilities1 IFRS 9 and IFRS 7 (Amendments) Mandatory Effective Date of IFRS 9 and Transition Disclosures3 IFRS 10, IRFS 11 and IFRS 12 Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in (Amendments) Other Entities: Transition Guidance1 IFRS 10, IFRS 12 and IAS 27 Investment Entities2 (Amendments) IFRS 9 Financial Instruments3 IFRS 10 Consolidated Financial Statements1 IFRS 11 Joint Arrangements1 IFRS 12 Disclosure of Interests in Other Entities1 IFRS 13 Fair Value Measurement1 IAS 1 (Amendments) Presentation of Items of Other Comprehensive Income4 IAS 19 (Revised 2011) Employee Benefits1 IAS 27 (Revised 2011) Separate Financial Statements1 IAS 28 (Revised 2011) Investments in Associates and Joint Ventures1 IAS 32 (Amendments) Offsetting Financial Assets and Financial Liabilities2 IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine1

1 Effective for annual periods beginning on or after 1 January 2013 2 Effective for annual periods beginning on or after 1 January 2014 3 Effective for annual periods beginning on or after 1 January 2015 4 Effective for annual periods beginning on or after 1 July 2012

111 Greentown China Holdings Limited Annual Report 2012

F-232 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”) (continued) New and Revised Standards and Interpretations Issued But Not Yet Effective (continued) Annual Improvements to IFRSs 2009–2011 Cycle Issued in June 2012 The Annual Improvements to IFRSs 2009–2011 Cycle include a number of amendments to various IFRSs. The amendments are effective for annual periods beginning on or after 1 January 2013. Amendments to IFRSs include the amendments to IAS 1 Presentation of Financial Statements, the amendments to IAS 16 Property, Plant and Equipment and the amendments to IAS 32 Financial Instruments: Presentation.

IAS 1 requires an entity that changes accounting policies retrospectively, or makes a retrospective restatement or reclassification to present a statement of financial position as at the beginning of the preceding period (third statement of financial position). The amendments to IAS 1 clarify that an entity is required to present a third statement of financial position only when the retrospective application, restatement or reclassification has a material effect on the information in the third statement of financial position and that related notes are not required to accompany the third statement of financial position.

The amendments to IAS 16 clarify that spare parts, stand-by equipment and servicing equipment should be classified as property, plant and equipment when they meet the definition of property, plant and equipment in IAS 16 and as inventory otherwise. The directors do not anticipate that the application of the amendments will have a material effect on the Group’s consolidated financial statements.

The amendments to IAS 32 clarify that income tax on distributions to holders of an equity instrument and transaction costs of an equity transaction should be accounted for in accordance with IAS 12 Income Taxes. The directors anticipate that the amendments to IAS 32 will have no effect on the Group’s consolidated financial statements as the Group has already adopted this treatment.

IFRS 9 Financial Instruments IFRS 9 issued in 2009 introduces new requirements for the classification and measurement of financial assets. IFRS 9 amended in 2010 includes the requirements for the classification and measurement of financial liabilities and for derecognition.

Key requirements of IFRS 9 are described as follows:

Greentown China Holdings Limited Annual Report 2012 112

F-233 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”) (continued) New and Revised Standards and Interpretations Issued But Not Yet Effective (continued) IFRS 9 Financial Instruments (continued) • With regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value of financial liabilities attributable to changes in the financial liabilities’ credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as fair value through profit or loss was presented in profit or loss.

IFRS 9 is effective for annual periods beginning on or after 1 January 2015, with earlier application permitted.

The directors anticipate that the adoption of IFRS 9 in the future may have impact on amounts reported in respect of the Group’s financial assets and financial liabilities. Regarding the Group’s financial assets, it is not practicable to provide a reasonable estimate of that effect until a detailed review has been completed.

New and Revised Standards on Consolidation, Joint Arrangements, Associates and Disclosures In May 2011, a package of five standards on consolidation, joint arrangements, associates and disclosures was issued, including IFRS 10, IFRS 11, IFRS 12, IAS 27 (as revised in 2011) and IAS 28 (as revised in 2011).

Key requirements of these five standards are described below.

IFRS 10 replaces the parts of IAS 27 Consolidated and Separate Financial Statements that deal with consolidated financial statements and SIC – 12 Consolidation – Special Purpose Entities. IFRS 10 includes a new definition of control that contains three elements: (a) power over an investee, (b) exposure, or rights, to variable returns from its involvement with the investee, and (c) the ability to use its power over the investee to affect the amount of the investor’s returns. Extensive guidance has been added in IFRS 10 to deal with complex scenarios.

IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC – 13 Jointly Controlled Entities – Non-Monetary Contributions by Venturers. IFRS 11 deals with how a joint arrangement of which two or more parties have joint control should be classified. Under IFRS 11, joint arrangements are classified as joint operations or joint ventures, depending on the rights and obligations of the parties to the arrangements. In contrast, under IAS 31, there are three types of joint arrangements: jointly controlled entities, jointly controlled assets and jointly controlled operations.

In addition, joint ventures under IFRS 11 are required to be accounted for using the equity method of accounting, whereas jointly controlled entities under IAS 31 can be accounted for using the equity method of accounting or proportionate accounting.

IFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure requirements in IFRS 12 are more extensive than those in the current standards.

113 Greentown China Holdings Limited Annual Report 2012

F-234 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

2. Application of New and Revised International Financial Reporting Standards (“IFRSs”) (continued) New and Revised Standards and Interpretations Issued But Not Yet Effective (continued) New and Revised Standards on Consolidation, Joint Arrangements, Associates and Disclosures (continued) These five standards are effective for annual periods beginning on or after 1 January 2013. Earlier application is permitted provided that all of these five standards are applied early at the same time.

The directors anticipate that these five standards will be adopted in the Group’s consolidated financial statements for the annual period beginning 1 January 2013. The application of these five standards may have an impact on amounts reported in the consolidated financial statements. However, the directors have not yet performed a detailed analysis of the impact of the application of these standards and hence have not yet quantified the extent of the impact.

IFRS 13 Fair Value Measurement IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The Standard defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The scope of IFRS 13 is broad; it applies to both financial instrument items and non-financial instrument items for which other IFRSs require or permit fair value measurements and disclosures about fair value measurements, except in specified circumstances. In general, the disclosure requirements in IFRS 13 are more extensive than those in the current standards. For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy currently required for financial instruments only under IFRS 7 Financial Instruments: Disclosures will be extended by IFRS 13 to cover all assets and liabilities within its scope.

IFRS 13 is effective for annual periods beginning on or after 1 January 2013, with earlier application permitted.

The directors anticipate that IFRS 13 will be adopted in the Group’s consolidated financial statements for the annual period beginning 1 January 2013 and that the application of the new Standard may affect the amounts reported in the consolidated financial statements and result in more extensive disclosures in the consolidated financial statements.

Amendments to IAS 1 Presentation of Items of Other Comprehensive Income The amendments to IAS 1 Presentation of Items of Other Comprehensive Income introduce new terminology for the statement of comprehensive income and income statement. Under the amendments to IAS 1, a ‘statement of comprehensive income’ is renamed as a ‘statement of profit or loss and other comprehensive income’ and an ‘income statement’ is renamed as a ‘statement of profit or loss’. The amendments to IAS 1 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to IAS 1 require items of other comprehensive income to be grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss; and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis – the amendments do not change the option to present items of other comprehensive income either before tax or net of tax.

The amendments to IAS 1 are effective for annual periods beginning on or after 1 July 2012. The presentation of items of other comprehensive income will be modified accordingly when the amendments are applied in future accounting periods.

Greentown China Holdings Limited Annual Report 2012 114

F-235 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

3. Principal Accounting Policies The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments and investment properties, which are measured at fair values, as explained in the accounting policies set out below.

Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

All significant intra-group transactions, balances, income and expenses are eliminated on consolidation.

Non-controlling interests in subsidiaries are presented separately from the Group’s equity therein.

Allocation of Total Comprehensive Income to Non-Controlling Interests Total comprehensive income and expense of a subsidiary is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

115 Greentown China Holdings Limited Annual Report 2012

F-236 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

3. Principal Accounting Policies (continued) Basis of Consolidation (continued) Changes in the Group’s Ownership Interests in Existing Subsidiaries (continued) When the Group loses control of a subsidiary, it (i) derecognises the assets (including any goodwill) and liabilities of the subsidiary at their carrying amounts at the date when control is lost, (ii) derecognises the carrying amount of any non-controlling interests in the former subsidiary at the date when control is lost (including any components of other comprehensive income attributable to them), and (iii) recognises the aggregate of the fair value of the consideration received and the fair value of any retained interest, with any resulting difference being recognised as a gain or loss in profit or loss attributable to the Group. When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognised in other comprehensive income and accumulated in equity, the amounts previously recognised in other comprehensive income and accumulated in equity are accounted for as if the Group had directly disposed of the related assets (i.e. reclassified to profit or loss or transferred directly to retained earnings as specified by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in a jointly controlled entity or an associate.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:

Greentown China Holdings Limited Annual Report 2012 116

F-237 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

3. Principal Accounting Policies (continued) Business Combinations (continued) Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at their fair value or, when applicable, on the basis specified in another Standard.

117 Greentown China Holdings Limited Annual Report 2012

F-238 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

3. Principal Accounting Policies (continued) Investments in Associates An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. The financial statements of associates used for equity accounting purposes are prepared using uniform accounting policies as those of the Group for like transactions and events in similar circumstances. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Group’s share of profit or loss and other comprehensive income of the associates, less any identified impairment loss. When the Group’s share of losses of an associate equals or exceeds its interest in that associate (which includes any long- term interests that, in substance, form part of the Group’s net investment in the associate), the Group discontinues recognising its share of further losses. An additional share of losses is provided for and a liability is recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of that associate.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of an associate recognised at the date of acquisition is recognised as goodwill, which is included within the carrying amount of the investment.

Upon disposal of an associate that results in the Group losing significant influence over that associate, any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset in accordance with IAS 39. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when it loses significant influence over that associate.

Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate.

Jointly Controlled Entities Joint venture arrangements that involve the establishment of a separate entity in which venturers have joint control over the economic activity of the entity are referred to as jointly controlled entities.

The results and assets and liabilities of jointly controlled entities are incorporated in the consolidated financial statements using the equity method of accounting. Under the equity method, investments in jointly controlled entities are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Group’s share of profit or loss and other comprehensive income of the jointly controlled entities, less any identified impairment loss. When the Group’s share of losses of a jointly controlled entity equals or exceeds its interest in that jointly controlled entity (which includes any long- term interests that, in substance, form part of the Group’s net investment in the jointly controlled entity), the Group discontinues recognising its share of further losses. An additional share of losses is provided for and a liability is recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of that jointly controlled entity.

Greentown China Holdings Limited Annual Report 2012 118

F-239 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

3. Principal Accounting Policies (continued) Jointly Controlled Entities (continued) The financial statements of jointly controlled entities used for equity accounting purposes are prepared using uniform accounting policies as those of the Group for like transactions and events in similar circumstances.

When a group entity transacts with a jointly controlled entity of the Group, profits or losses are eliminated to the extent of the Group’s interest in the jointly controlled entity.

Revenue Recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts received or receivable for goods sold and services provided in the normal course of business, net of discounts and sales-related taxes.

Revenue from sales of other goods is recognised when the goods are delivered and title has passed.

Service income is recognised when services are provided.

Brand usage fees are recognised on sales or pre-sales of properties by brand users at agreed fee rates.

Rental income, including rental invoiced in advance from properties let under operating leases, are recognised on a straight line basis over the period of the relevant leases.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the period in which they arise.

119 Greentown China Holdings Limited Annual Report 2012

F-240 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

3. Principal Accounting Policies (continued) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the year in which they are incurred.

Taxation Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘profit before tax’ as reported in the consolidated statement of comprehensive income because it excludes items of income and expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Greentown China Holdings Limited Annual Report 2012 120

F-241 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

3. Principal Accounting Policies (continued) Taxation (continued) For the purposes of measuring deferred tax liabilities or deferred tax assets for investment properties that are measured using the fair value model, the carrying amounts of such properties are presumed to be recovered entirely through sale, unless the presumption is rebutted. The presumption is rebutted when the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale. If the presumption is rebutted, deferred tax liabilities and deferred tax assets for such investment properties are measured in accordance with the above general principles set out in IAS 12 (i.e. based on the expected manner as to how the properties will be recovered).

Government Grants Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Government grants are recognised as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.

121 Greentown China Holdings Limited Annual Report 2012

F-242 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

3. Principal Accounting Policies (continued) Leasing (continued) Leasehold Land and Buildings When a lease includes both land and building elements, the Group assesses the classification of each element as a finance lease or an operating lease separately based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the Group. Specifically, the minimum lease payments (including any lump- sum upfront payments) are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of the lease.

To the extent the allocation of the lease payments can be made reliably, interest in leasehold land that is accounted for as an operating lease is presented as “prepaid lease payments” in the consolidated statement of financial position and is amortised over the lease term on a straight-line basis except for those that are classified and accounted for as investment properties under the fair value model. When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified as a finance lease and accounted for as property, plant and equipment, unless it is clear that both elements are operating leases, in which case the entire lease is classified as an operating lease.

Property, plant and equipment in the course of construction for production, supply or administrative purposes are carried at cost less any recognised impairment loss. Costs include professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Group’s accounting policy and, where appropriate, the amortisation of prepaid lease payments provided during the construction period. Such properties are classified to the appropriate category of property, plant and equipment when completed and ready for intended use (i.e. when they are in the location and condition necessary for them to be capable of operating in the manner intended by management). Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

Greentown China Holdings Limited Annual Report 2012 122

F-243 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

Construction costs incurred for investment properties under construction are capitalised as part of the carrying amount of the investment properties under construction.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.

Properties for Development Properties for development, representing leasehold land located in the PRC for development for future sale in the ordinary course of business, are stated at the lower of cost and net realisable value. Cost comprises the costs of land use rights and other directly attributable costs. Net realisable value represents the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale. Properties for development are transferred to properties under development upon commencement of development.

123 Greentown China Holdings Limited Annual Report 2012

F-244 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

3. Principal Accounting Policies (continued) Completed Properties for Sale Completed properties for sale are stated at the lower of cost and net realisable value. Cost comprises the costs of land use rights, construction costs, borrowing costs capitalised and other direct development expenditure. Net realisable value represents the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

Financial Assets The Group’s financial assets are classified into one of the two categories, including loans and receivables and available-for-sale financial assets. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Interest income is recognised on an effective interest basis.

Loans and Receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, loans and receivables (including trade and other receivables, amounts due from related parties, pledged bank deposits, bank balances and cash) are carried at amortised cost using the effective interest method, less any identified impairment losses (see accounting policy on impairment loss on financial assets below).

Greentown China Holdings Limited Annual Report 2012 124

F-245 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

3. Principal Accounting Policies (continued) Financial Instruments (continued) Financial Assets (continued) Available-for-sale Financial Assets Available-for-sale financial assets are non-derivatives that are either designated or not classified as financial assets at fair value through profit or loss, loans and receivables or held-to-maturity investments.

Dividends on available-for-sale equity instruments are recognised in profit or loss when the Group’s right to receive the dividends is established.

For an available-for-sale equity investment, a significant or prolonged decline in the fair value of that investment below cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or

• breach of contract, such as default or delinquency in interest or principal payments; or

• it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or

• the disappearance of an active market for that financial asset because of financial difficulties.

125 Greentown China Holdings Limited Annual Report 2012

F-246 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

3. Principal Accounting Policies (continued) Financial Instruments (continued) Financial Assets (continued) Impairment of Financial Assets (continued) For certain categories of financial assets, such as trade and other receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 90 days, observable changes in national or local economic conditions that correlate with default on receivables.

Financial Liabilities and Equity Financial liabilities and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs. The Group’s financial liabilities are generally classified into financial liabilities at fair value through profit or loss (“FVTPL”) and other financial liabilities.

Greentown China Holdings Limited Annual Report 2012 126

F-247 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

3. Principal Accounting Policies (continued) Financial Instruments (continued) Financial Liabilities and Equity (continued) Effective interest method The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Interest expense is recognised on an effective interest basis.

Financial Liabilities at Fair Value through Profit or Loss Financial liabilities at FVTPL include financial liabilities held for trading.

A financial liability is classified as held for trading if:

• it has been incurred principally for the purpose of repurchasing in the near future; or

• on initial recognition it is a part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

Financial liabilities at FVTPL are measured at fair value, with changes in fair value arising on remeasurement recognised directly in profit or loss in the period in which they arise.

Other Financial Liabilities Other financial liabilities including bank and other borrowings, trade and other payables, amounts due to related parties, liability portion of convertible bonds, liability portion of senior notes and dividend payable are subsequently measured at amortised cost, using the effective interest method.

Convertible Bonds Convertible bonds containing liability and equity components and closely-related early redemption options.

Convertible bonds were issued by the Group that contain liability, conversion option and early redemption options. The early redemption options are closely related to the host liability component and are therefore not separately accounted for. The liability and conversion option are classified separately into respective items on initial recognition. Conversion option that will be settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of the Company’s own equity instruments is classified as an equity instrument. At the date of issue, the fair value of the liability component is determined using the prevailing market interest rates of similar non-convertible debts. The difference between the gross proceeds of the issue of the convertible bonds and the fair value assigned to the liability component, representing the conversion option for the holder to convert the bonds into equity, is included in equity (conversion option reserve).

127 Greentown China Holdings Limited Annual Report 2012

F-248 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

3. Principal Accounting Policies (continued) Financial Instruments (continued) Financial Liabilities and Equity (continued) Convertible Bonds (continued) In subsequent periods, the liability component of the convertible bonds is carried at amortised cost using the effective interest method. The equity component, representing the option to convert the liability component into ordinary shares of the Company, will remain in conversion option reserve until the embedded conversion option is exercised (in which case the balance stated in conversion option reserve will be transferred to share premium). Where the conversion option remains unexercised at the expiry date, the balance stated in conversion option reserve will be released to the retained earnings. No gain or loss is recognised in profit or loss upon conversion or expiration of the conversion option.

Transaction costs that relate to the issue of the convertible bonds are allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are charged directly to equity. Transaction costs relating to the liability component are included in the carrying amount of the liability portion and amortised over the period of the convertible bonds using the effective interest method.

Equity Instruments Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Greentown China Holdings Limited Annual Report 2012 128

F-249 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

3. Principal Accounting Policies (continued) Financial Instruments (continued) Financial Guarantee Contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. A financial guarantee contract issued by the Group and not designated as at fair value through profit or loss is recognised initially at its fair value less transaction costs that are directly attributable to the issue of the financial guarantee contract. Subsequent to initial recognition, the Group measures the financial guarantee contract at the higher of: (i) the amount of obligation under the contract, as determined in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets; and (ii) the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with the revenue recognition policy.

Share-based Payment Transactions Equity-settled Share-based Payment Transactions Share Options Granted to Employees The fair value of services received determined by reference to the fair value of share options granted at the grant date is expensed on a straight-line basis over the vesting period, with a corresponding increase in equity (share options reserve). Share option premiums received or receivable from grantees are recognised in share options reserve.

129 Greentown China Holdings Limited Annual Report 2012

F-250 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

4. Key Sources of Estimation Uncertainty The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are disclosed below.

Net realisable value for properties for development and properties under development is determined by reference to management estimates of the selling price based on prevailing market conditions, less applicable variable selling expenses and the anticipated costs to completion. Net realisable value for completed properties for sale is determined by reference to management estimates of the selling price based on prevailing market conditions, less applicable variable selling expenses. During the course of their assessment, management will also make reference to property valuations conducted by independent qualified professional valuers based on comparable market prices. Management are required to revise these estimates if there is a change in market condition or demand. If actual market conditions are less favourable than those projected by management, additional adjustments to the value of properties for development, properties under development and completed properties for sale may be required. As at 31 December 2012, the carrying amounts of properties for development, properties under development and completed properties for sale are RMB6,020,524,000 (2011: RMB14,127,886,000), RMB43,136,154,000 (2011: RMB67,597,987,000) and RMB7,330,358,000 (2011: RMB2,956,620,000) respectively (net of accumulated impairment loss of RMB nil (2011: RMB62,187,000), RMB143,867,000 (2011: RMB143,867,000) and RMB nil (2011: RMB nil) respectively).

Fair Value of Investment Properties Investment properties are carried in the consolidated statement of financial position at 31 December 2012 at their fair value of approximately RMB1,730,600,000 (2011: RMB1,730,000,000). The fair value was based on valuation on these properties conducted by the independent qualified professional valuers using property valuation techniques which adopt the investment approach by capitalising the net rental income derived from the existing tenancies with due provision for the reversionary income potential of the property interests, or where appropriate, by direct comparison approach by making reference to comparable sales transactions as available in the relevant markets. Favourable or unfavourable changes to the assumptions such as rental yield and estimation of future rentals would result in changes in the fair value of the Group’s investment properties and corresponding adjustments to the amount of gain or loss reported in the consolidated statement of comprehensive income.

Estimated Impairment of Trade Receivable When there is objective evidence of impairment loss, the Group takes into consideration the estimation of future cash flows to determine impairment loss. The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). Where the actual future cash flows are less than expected, a material impairment loss may arise.

Land Appreciation Tax The provision for Land Appreciation Tax (“LAT”) amounting to RMB2,237,657,000 (2011: RMB1,443,486,000) (included in income taxes payable) is estimated and made according to the requirements set forth in the relevant PRC tax laws and regulations. The actual LAT liabilities are subject to the determination by the tax authorities upon completion of the property development projects and the tax authorities might disagree with the basis on which the provision for LAT is calculated.

Greentown China Holdings Limited Annual Report 2012 130

F-251 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

The capital structure of the Group consists of net debt, which includes the borrowings disclosed in Notes 26 to 29 and 40(ii) (net of cash and cash equivalents), and capital and reserves.

6. Financial Instruments (a) Categories of Financial Instruments

2012 2011 RMB’000 RMB’000 Financial assets Loans and receivables (including cash and cash equivalents) 32,939,725 24,845,916

Available-for-sale financial assets 346,545 538,020

Financial liabilities Fair value through profit or loss (FVTPL) Trust-related financial derivatives – 82,520

Amortised cost 44,192,216 59,027,777

(b) Financial Risk Management Objectives and Policies The Group’s major financial instruments include available-for-sale investments, trade and other receivables, amounts due from related parties, pledged bank deposits, bank balances and cash, trade and other payables, amounts due to related parties, dividend payable, bank and other borrowings, trust-related financial derivatives, convertible bonds and senior notes. Details of the financial instruments are disclosed in respective notes. The risks associated with these financial instruments include market risk (currency risk and interest rate risk), credit risk and liquidity risk. The policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner. There has been no significant change in the Group’s exposure to these risks or the manner in which it manages and measures risks.

131 Greentown China Holdings Limited Annual Report 2012

F-252 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

6. Financial Instruments (continued) (b) Financial Risk Management Objectives and Policies (continued) Market Risk (i) Currency Risk The Group has bank balances, other receivables, amounts due from related parties, bank and other borrowings, amounts due to related parties and senior notes denominated in foreign currencies, which expose the Group to foreign currency risk.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

Liabilities Assets 2012 2011 2012 2011 RMB’000 RMB’000 RMB’000 RMB’000 Hong Kong dollars (“HKD”) 818,959 2,068,499 456,264 105,899 United States dollars (“USD”) 1,710,876 2,553,392 83,678 48,180

The Group does not use any derivative contracts to hedge against its exposure to currency risk.

Sensitivity Analysis The Group is mainly exposed to the fluctuations in exchange rates between RMB and HKD/USD. The exposure in HKD/USD arises mainly from the Group’s bank balances and cash, other receivables, bank and other borrowings, senior notes and amounts due to related parties.

The following table details the Group’s sensitivity to a 5% (2011: 5%) increase and decrease in RMB against the relevant foreign currencies 5% represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and foreign currency forward contracts and adjusts their translation at the year end for a 5% change in foreign currency rates. A positive number below indicates an increase in post-tax profit where RMB strengthens 5% against the relevant currency. For a 5% weakening of RMB against the relevant currency, there would be an equal and opposite impact on post-tax profit.

HKD Impact USD Impact 2012 2011 2012 2011 RMB’000 RMB’000 RMB’000 RMB’000 Profit or loss 13,601 73,598 61,020 93,945

Greentown China Holdings Limited Annual Report 2012 132

F-253 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

6. Financial Instruments (continued) (b) Financial Risk Management Objectives and Policies (continued) Market Risk (continued) (ii) Interest Rate Risk The Group is exposed to fair value interest rate risk in relation to fixed-rate bank deposits, amounts due from/to related parties, bank and other borrowings, convertible bonds and senior notes (see Notes 24, 26, 27, 28, 29 and 40 for details).

The Group does not use any derivative contracts to hedge against its exposure to interest rate risk.

The Group’s exposures to interest rates on financial liabilities are detailed in the liquidity risk management section of this note.

Sensitivity Analysis The sensitivity analyses below have been determined based on the exposure to market deposit and lending interest rates for non-derivative instruments. For variable-rate bank deposits, bank and other borrowings and amounts due from/to related parties, the analysis is prepared assuming the balances outstanding at the end of the reporting period were outstanding for the whole year. A 5 basis point (2011: 5 basis point) increase or decrease in market deposit interest rates and a 50 basis point (2011: 50 basis point) increase or decrease in market lending interest rates represent management’s assessment of the reasonably possible change in interest rates.

If the market deposit interest rates had been 5 basis points higher/lower and all other variables were held constant, the Group’s post-tax profit for the year ended 31 December 2012 would have increased/decreased by RMB2,311,000 (2011: increased/decreased by RMB1,356,000). This is mainly attributable to the Group’s exposure to interest rates on its variable-rate bank deposits.

If the market lending interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group’s post-tax profit for the year ended 31 December 2012 would have decreased/increased by RMB62,522,000 (2011: decreased/increased by RMB109,742,000). This is mainly attributable to the Group’s exposure to interest rates on its variable-rate bank and other borrowings and amounts due from/to related parties.

133 Greentown China Holdings Limited Annual Report 2012

F-254 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

6. Financial Instruments (continued) (b) Financial Risk Management Objectives and Policies (continued) Credit Risk As at 31 December 2012, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties and financial guarantees provided by the Group arises from:

• the carrying amount of the respective recognised financial assets as stated in the consolidated statement of financial position; and

• the amount of contingent liabilities disclosed in Note 39.

In order to minimise the credit risk, the management of the Group has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue trade debts, other receivables and amounts due from related parties. In addition, the Group reviews the recoverable amount of each overdue debt at the end of the reporting period to ensure that adequate impairment losses are made for irrecoverable amounts. To minimise the credit risk arising from customer mortgage guarantees, the Group has reserved the right to collect the properties sold to customers should they default on their mortgage payments and demanded the application for building ownership certificates by customers since these guarantees provided by the Group to the banks will be released upon receiving such certificates. To minimise the credit risk arising from guarantees provided to banks and other parties in respect of credit facilities utilised by jointly controlled entities and associates, the Group has delegated a team responsible for assessing the credit standing of such entities and the limits to the guarantees to be provided. In this regard, the directors of the Company consider that the Group’s credit risk is significantly reduced.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies or with a good reputation.

Liquidity Risk In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. The management monitors the utilisation of bank borrowings and ensures compliance with loan covenants.

The Group relies on bank and other borrowings, trust loans, convertible bonds, senior notes and amounts due to related parties as a significant source of liquidity.

Greentown China Holdings Limited Annual Report 2012 134

F-255 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

6. Financial Instruments (continued) (b) Financial Risk Management Objectives and Policies (continued) Liquidity Risk (continued) The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. Specifically, bank loans with a repayment on demand clause are included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non- derivative financial liabilities are based on the agreed repayment dates. The table includes both interest and principal cash flows.

Liquidity and Interest Risk Tables

Weighted On Demand Total Carrying Average or Less Than Undiscounted Amount at Interest Rate 1 Year 1-5 Years >5 Years Cash Flows 31/12/2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 2012 Non-derivative financial liabilities Trade and other payables – 14,426,570 1,267,102 – 15,693,672 15,693,672 Bank and other borrowings – fixed-rate 13.71% 4,796,679 1,903,742 92,142 6,792,563 5,719,056 – variable-rate 7.08% 12,092,626 4,350,168 818,825 17,261,619 15,413,047 Amounts due to related parties – interest-free – 3,984,322 – – 3,984,322 3,984,322 – fixed-rate 4.94% 1,974,274 – – 1,974,274 1,881,247 – variable-rate 7.46% 1,353,515 – – 1,353,515 1,259,545 Senior notes 9% 260,210 – – 260,210 241,327 Financial guarantee contracts – 25,396,108 – – 25,396,108 – 64,284,304 7,521,012 910,967 72,716,283 44,192,216

135 Greentown China Holdings Limited Annual Report 2012

F-256 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

6. Financial Instruments (continued) (b) Financial Risk Management Objectives and Policies (continued) Liquidity Risk (continued) Liquidity and Interest Risk Tables (continued)

Weighted On Demand Total Carrying Average or Less Than Undiscounted Amount at Interest Rate 1 Year 1-5 Years >5 Years Cash Flows 31/12/2011 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 2011 Non-derivative financial liabilities Trade and other payables – 10,768,064 1,302,223 – 12,070,287 12,070,287 Dividend payable – 164,026 – – 164,026 164,026 Bank and other borrowings – fixed-rate 11.05% 3,063,588 2,294,781 8,357 5,366,726 4,551,565 – variable-rate 6.13% 14,984,259 14,048,372 963,879 29,996,510 27,132,128 Amounts due to related parties – interest-free – 4,708,789 – – 4,708,789 4,708,789 – fixed-rate 10.18% 8,258,527 – – 8,258,527 7,495,342 – variable-rate 7.27% 2,657,550 – – 2,657,550 2,477,456 2007 Convertible Bonds – 189,734 – – 189,734 186,466 Senior notes 9% 21,755 259,847 – 281,602 241,718 Financial guarantee contracts – 23,163,660 – – 23,163,660 – 67,979,952 17,905,223 972,236 86,857,411 59,027,777

Bank loans with a repayment on demand clause are included in the “less than 1 year” time band in the above maturity analysis. As at 31 December 2012, the aggregate undiscounted principal amounts of these bank loans amounted to RMB69,291,000 (2011: RMB80,455,000) respectively. Taking into account the Group’s financial position, the directors do not believe that it is probable that the banks will exercise their discretionary rights to demand immediate repayment. The directors believe that such bank loans will be repaid after the reporting date in accordance with the scheduled repayment dates set out in the loan agreements. At that time, the aggregate principal and interest cash outflows will amount to RMB86,263,000 (2011: RMB99,286,000).

Greentown China Holdings Limited Annual Report 2012 136

F-257 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

6. Financial Instruments (continued) (c) Fair Value The fair values of financial assets and financial liabilities (including derivative instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis or using prices or rates from observable current market transactions. For an option-based derivative, the fair value is estimated using option pricing model (for example, the binomial model).

Except as detailed in the following table, the directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the consolidated financial statements approximate their fair values:

2012 2011 Carrying Carrying Amount of Amount of Liability Liability Component Fair Value Component Fair Value RMB’000 RMB’000 RMB’000 RMB’000 Financial liabilities 2007 Convertible Bonds ––186,466 158,0481 1 1 Senior notes 241,327 248,200 241,718 169,365

1 Based on quoted price

Fair Value Measurements Recognised in the Statement of Financial Position The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active market for identical assets or liabilities.

• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

2012 2011 Level 3 Level 3 RMB’000 RMB’000 Financial liabilities at FVTPL Trust-related financial derivatives – 82,520

137 Greentown China Holdings Limited Annual Report 2012

F-258 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

6. Financial Instruments (continued) (c) Fair Value (continued) Reconciliation of Level 3 Fair Value Measurements of Financial Liabilities

Trust-related Financial Derivatives RMB’000 At 1 January 2011 251,480 Net gain in profit or loss (included in fair value changes on trust-related financial derivatives) (168,960) At 31 December 2011 82,520 Net gain in profit or loss (included in fair value changes on trust-related financial derivatives) (82,520) At 31 December 2012 – 7. Revenue and Segment Information An analysis of the Group’s revenue from its major products and services is as follows:

2012 2011 RMB’000 RMB’000 Property sales 34,214,430 21,071,067 Hotel operations 298,476 250,993 Project management 254,783 199,267 Property rental income 111,480 90,052 Design and decoration 324,800 302,995 Sales of construction materials 104,320 8,572 Other business 84,217 40,801 35,392,506 21,963,747

Greentown China Holdings Limited Annual Report 2012 138

F-259 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

7. Revenue and Segment Information (continued) The Group’s reportable and operating segments under IFRS 8 are as follows:

1 Property development

2 Hotel operations

3 Property investment

4 Others (including sales of construction materials, electronic engineering, design and decoration, project management, etc.)

The CODM assess the performance of the operating segments based on the post-tax profit of the group entities engaged in the respective segment activities, which includes share of results of jointly controlled entities and associates and related finance costs. Financial information provided to the CODM is measured in a manner consistent with the accounting policies adopted in the preparation of the consolidated financial statements as described in Note 3.

Sales between segments are carried out on terms agreed between the counterparties.

No customers account for 10% or more of the Group’s revenue.

139 Greentown China Holdings Limited Annual Report 2012

F-260 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

7. Revenue and Segment Information (continued) An analysis of the Group’s revenue and results by reportable and operating segment is as follows:

Segment revenue External revenue 21,071,067 250,993 90,052 551,635 21,963,747 – 21,963,747 Inter-segment revenue – 15,435 883 654,673 670,991 (670,991) – Total 21,071,067 266,428 90,935 1,206,308 22,634,738 (670,991) 21,963,747 Segment results 4,156,958 6,589 (17,761) 41,004 4,186,790 (16,317) 4,170,473 Unallocated administrative expenses (51,235) Unallocated other income 9,368 Unallocated finance costs (32,411) Fair value changes on trust-related financial derivatives 168,960 Unallocated taxation (147,213) Profit for the year 4,117,942

Greentown China Holdings Limited Annual Report 2012 140

F-261 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

7. Revenue and Segment Information (continued)

Segment Assets and Liabilities The following is an analysis of the Group’s assets and liabilities by reportable and operating segment:

Segment Assets

2012 2011 RMB’000 RMB’000 Property development 97,895,112 119,352,193 Hotel operations 2,951,674 2,469,622 Property investment 1,784,857 1,800,169 Others 2,721,404 2,579,308 Total segment assets 105,353,047 126,201,292 Unallocated 2,354,249 1,775,236 Consolidated assets 107,707,296 127,976,528

Segment Liabilities

2012 2011 RMB’000 RMB’000 Property development 73,911,205 102,423,173 Hotel operations 180,623 232,837 Property investment 1,091,446 1,229,673 Others 4,230,237 5,492,789 Total segment liabilities 79,413,511 109,378,472 Unallocated 805,710 954,742 Consolidated liabilities 80,219,221 110,333,214

For the purposes of monitoring segment performances and allocating resources between segments:

• all assets are allocated to operating segments other than bank balances and cash, property, plant and equipment, available-for-sale investments, trade and other receivables, deposits and prepayments, and deferred tax assets pertaining to non-operating group entities.

• all liabilities are allocated to operating segments other than senior notes, convertible bonds, trust-related financial derivatives, bank and other borrowings, other taxes payable and deferred tax liabilities pertaining to non-operating group entities.

141 Greentown China Holdings Limited Annual Report 2012

F-262 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

7. Revenue and Segment Information (continued) Other Segment Information For the year ended 31 December 2012

Reportable Property Hotel Property Segment Development Operations Investment Others Total Unallocated Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Amounts included in the measure of segment profit or loss or segment assets: Addition to non-current assets (Note) 2,896,640 92,718 147 21,081 3,010,586 – 3,010,586 Interests in associates 6,573,266–––6,573,266 – 6,573,266 Interests in jointly controlled entities 1,003,745–––1,003,745 – 1,003,745 Gain on disposal of associates (56,505) – – – (56,505) – (56,505) Net gain on disposal of jointly controlled entities (1,377) – – – (1,377) – (1,377) Net gain on disposal of subsidiaries (549,697) – – – (549,697) – (549,697) Gain on re-measurement of an associate to acquisition date fair value upon re-consolidation of a subsidiary (49,980) – – – (49,980) – (49,980) Gain on re-measurement of an associate to acquisition date fair value in business combination achieved in stages (3,399) – – – (3,399) – (3,399) Depreciation of property, plant and equipment 69,129 75,676 7,469 17,503 169,777 – 169,777 Impairment losses on property, plant and equipment – 81,485 – – 81,485 – 81,485 Gains on disposal of property, plant and equipment (580) (13) (17) (196) (806) – (806) Interest income (665,745) (10,134) (20,039) (3,078) (698,996) (1,486) (700,482) Finance costs 370,896 4,683 70,405 104,472 550,456 13,659 564,115 Share of results of associates (209,356) – – – (209,356) – (209,356) Share of results of jointly controlled entities (304,119) – – – (304,119) – (304,119) Taxation 4,061,183 (2,482) 277 11,720 4,070,698 133,451 4,204,149

Greentown China Holdings Limited Annual Report 2012 142

F-263 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

7. Revenue and Segment Information (continued) Other Segment Information (continued) For the year ended 31 December 2011

Reportable Property Hotel Property Segment Development Operations Investment Others Total Unallocated Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Amounts included in the measure of segment profit or loss or segment assets: Addition to non-current assets (Note) 2,769,975 496,407 704 40,747 3,307,833 407 3,308,240 Interests in associates 5,866,392 – – – 5,866,392 – 5,866,392 Interests in jointly controlled entities 1,061,033 – – – 1,061,033 – 1,061,033 Net gain on disposal of associates (104,507) – – – (104,507) – (104,507) Gain on partial disposal of an associate (1,573) – – – (1,573) – (1,573) (Gain) loss on disposal of subsidiaries (3,907) – – 268 (3,639) – (3,639) Gain on de-consolidation of a subsidiary (20,948) – – – (20,948) – (20,948) Depreciation of property, plant and equipment 41,960 89,031 7,452 13,118 151,561 508 152,069 Reversal of impairment losses on property, plant and equipment – (13,067) – – (13,067) – (13,067) Loss on disposal of property, plant and equipment 390 – 28 44 462 (344) 118 Interest income (368,482) (1,573) (69) (5,809) (375,933) (225) (376,158) Finance costs 285,569 5,165 53,512 39,041 383,287 32,411 415,698 Share of results of associates (777,498) – – – (777,498) – (777,498) Share of results of jointly controlled entities (55,669) – – – (55,669) – (55,669) Taxation 2,411,369 3,333 128 20,729 2,435,559 147,213 2,582,772

Note: Non-current assets included mainly property, plant and equipment, prepaid lease payment, interests in jointly controlled entities, interests in associates and rental paid in advance and excluded available-for-sale investments and deferred tax assets.

143 Greentown China Holdings Limited Annual Report 2012

F-264 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

8. Other Income

2012 2011 RMB’000 RMB’000 Interest income on bank balances 80,825 74,248 Interest income on amounts due from related parties 619,657 301,910 Trust income 130,769 17,469 Government grants 46,416 9,938 Net foreign exchange gains 26,126 196,459 Brand usage fees 50,198 46,334 Others 46,603 36,788 1,000,594 683,146 9. Finance Costs

2012 2011 RMB’000 RMB’000 Interest on: – bank borrowings wholly repayable within five years 1,601,308 2,228,791 – bank borrowings not wholly repayable within five years 52,181 118,714 – other borrowings wholly repayable within five years 1,460,947 543,471 Effective interest expense on trust-related amounts due to related parties (Note 27) 341,024 630,801 Effective interest expense on 2007 Convertible Bonds (Note 28) 3,259 8,356 Interest on senior notes (Note 29) 21,899 22,485 3,480,618 3,552,618 Less: Capitalised in properties under development (2,913,604) (3,100,671) Capitalised in construction in progress (2,899) (36,249) 564,115 415,698

Borrowing costs capitalised during the year arose on the specific loan and general borrowing pool and are calculated by applying a capitalisation rate of 8.80% (2011: 8.10%) per annum to expenditure on the development of properties for sale and for own use.

Greentown China Holdings Limited Annual Report 2012 144

F-265 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

10. Profit Before Taxation

2012 2011 RMB’000 RMB’000 Profit before taxation has been arrived at after charging (crediting):

Salaries and other benefits 900,970 888,688 Equity-settled share-based payments 1,203 11,907 Retirement benefits scheme contributions 38,564 32,379 Staff costs (including directors’ emoluments) 940,737 932,974 Less: Capitalised in properties under development (273,150) (262,013) 667,587 670,961 Depreciation of property, plant and equipment 169,777 152,069 Less: Capitalised in properties under development (9,490) (9,767) 160,287 142,302 Amortisation of prepaid lease payment (included in administrative expenses) 9,094 5,302 Auditors’ remuneration 18,101 14,087 Cost of properties and inventories recognised as an expense 24,522,092 14,437,377 (Gain) loss on disposal of property, plant and equipment (806) 118

145 Greentown China Holdings Limited Annual Report 2012

F-266 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

11. Directors’, Chief Executive’s and Employees’ Emoluments The emoluments paid or payable to each of the 13 (2011: 11) directors and the chief executive of the Company were as follows:

SZE SONG SHOU LUO GUO CAO NG TSUI JIA Tsai ping, TANG JIANG KE HUI 2012 Weiping Bainian Zhaoming Jiafeng Zhounan# Tin Hoi^ Yiu Cheung* Shenghua Michael Shiding Wei Huanzhang Wan Fai+ Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Fees – – – – – 141 108 225 236 225 236 225 195 1,591 Other emoluments: Salaries and other benefits 2,000 2,000 1,200 1,000 1,200 – – – – – – – – 7,400 Contributions to retirement benefits/pension schemes 83 83 68 91 16 – – – – – – – – 341 Performance related incentive payments (Note) 2,058 2,058 380 598 360 – – – – – – – – 5,454 Equity-settled share-based payments – – – – 1,203 – – – – – – – – 1,203 Total emoluments 4,141 4,141 1,648 1,689 2,779 141 108 225 236 225 236 225 195 15,989

SZE SONG SHOU LUO GUO CAO JIA Tsai ping, TANG JIANG KE XIAO 2011 Weiping Bainian Zhaoming Jiafeng Zhounan# Shenghua Michael Shiding Wei Huanzhang Zhiyue~ Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Fees –––––120166120166120166858 Other emoluments: Salaries and other benefits 2,000 2,000 1,200 1,000 1,200 – –––––7,400 Contributions to retirement benefits/ pension schemes 7878648648––––––354 Performance related incentive payments (Note) 450450360359925––––––2,544 Equity-settled share-based payments 9 8 3,738 1 5,162 – – –––– 8,918 Total emoluments 2,537 2,536 5,362 1,446 7,335 120 166 120 166 120 166 20,074

Greentown China Holdings Limited Annual Report 2012 146

F-267 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

11. Directors’, Chief Executive’s and Employees’ Emoluments (continued) ^ Mr Ng Tin Hoi was appointed as a non-executive director of the Company with effect from 15 June 2012. He was also appointed as a member of the Remuneration Committee with effect from 16 July 2012.

* Mr TSUI Yiu Cheung was appointed as a non-executive director of the Company, a member of the Audit Committee and Nomination Committee with effect from 2 August 2012.

+ Mr. Hui Wan Fai was appointed as an independent non-executive director of the Company, a member of the Audit Committee and Nomination Committee with effect from 1 April 2012.

~ Mr XIAO Zhiyue resigned as an independent non-executive director of the Company with effect from 1 January 2012.

# Mr CAO Zhounan was appointed as an executive director of the Company with effect from 1 July 2011. The emoluments disclosed above include those in the capacity of an employee and a director.

Mr SHOU Bainian is also the Chief Executive of the Company and his emoluments disclosed above include those for services rendered by him as the Chief Executive.

Note: The performance related incentive payments is determined as a percentage of the results of the Group for both years.

No directors waived any emoluments in both years.

Of the five individuals with the highest emoluments in the Group, three (2011: four) were directors of the Company whose emoluments are included in the disclosure above. The emoluments of the remaining two (2011: one) individual(s) were as follows:

2012 2011 RMB’000 RMB’000 Salaries and other benefits 1,590 684 Contributions to retirement benefits/pension schemes 118 43 Performance related incentive payments 3,165 1,039 Equity-settled share-based payments – 1 4,873 1,767

The individuals’ emoluments were within the following bands:

2012 2011 No. of No. of employees employees HKD2,000,001 to HKD2,500,000 1 1 HKD3,500,001 to HKD4,000,000 1 –

147 Greentown China Holdings Limited Annual Report 2012

F-268 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

12. Taxation

2012 2011 RMB’000 RMB’000 Current tax: PRC enterprise income tax 2,192,930 1,653,519 LAT 2,066,294 1,020,354 4,259,224 2,673,873 Over-provision in prior years: PRC enterprise income tax (54,006) (2,954) Deferred tax (Note 21): Current year (1,069) (88,147) 4,204,149 2,582,772

No provision for income tax has been made for the Company and group entities incorporated in Hong Kong as they have no assessable profits derived from Hong Kong.

Under the Law of the People’s Republic of China on Enterprise Income Tax (the “EIT Law”) and Implementation Regulation of the EIT Law, the tax rate of the PRC subsidiaries is 25%.

Greentown China Holdings Limited Annual Report 2012 148

F-269 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

12. Taxation (continued) The tax charge for the year can be reconciled to the profit per the consolidated statement of comprehensive income as follows:

2012 2011 RMB’000 RMB’000 Profit before taxation 10,257,200 6,700,714 Tax at the applicable PRC enterprise income tax rate of 25% (2011: 25%) 2,564,300 1,675,179 Effect of different tax rates (17,164) (11,502) Tax effect of share of results of associates (52,339) (194,375) Tax effect of share of results of jointly controlled entities (76,030) (13,917) Tax effect of income not taxable for tax purposes (138,095) (11,780) Tax effect of expenses not deductible for tax purposes 191,671 226,761 Over-provision in respect of prior year (54,006) (2,954) Tax effect of tax losses not recognised 122,906 68,165 Tax effect of deductible temporary differences not recognised – 48,198 Recognition of deferred tax assets on tax losses previously not recognised (9,826) (20,201) Utilisation of tax losses previously not recognised (6,988) (18,549) Utilisation of deductible temporary differences previously not recognised – (13,675) LAT provision for the year 2,066,294 1,020,354 Tax effect of LAT (516,574) (248,932) Tax effect of undistributed profits 130,000 80,000 Tax charge for the year 4,204,149 2,582,772

Details of deferred taxation for the year ended 31 December 2012 are set out in Note 21.

PRC LAT According to the requirements of the Provisional Regulations of the PRC on LAT (中華人民共和國土地增值稅暫行條例) effective from 1 January 1994, and the Detailed Implementation Rules on the Provisional Regulations of the PRC on LAT (中華人民共和國土地增值稅暫行條例實施細則) effective from 27 January 1995, all income from the sale or transfer of state-owned land use rights, buildings and their attached facilities in the PRC is subject to LAT at progressive rates ranging from 30% to 60% of the appreciation value, with an exemption provided for property sales of ordinary residential properties (普通標準住宅) if their appreciation values do not exceed 20% of the sum of the total deductible items.

According to the Notices for the Strengthening of Administration on LAT (關於加強土地增值稅管理工作的通知), the Group is required to pre-pay LAT on pre-sale proceeds at 0.5%–3% for ordinary residential properties and 1%–6% for other properties.

For the year ended 31 December 2012, the Group estimated and made a provision for LAT in the amount of RMB2,066,294,000 (2011: RMB1,020,354,000), according to the requirements set forth in the relevant PRC tax laws and regulations. The actual LAT liabilities are subject to the determination by the tax authorities upon completion of the property development projects and the tax authorities might disagree with the basis on which the provision for LAT is calculated.

149 Greentown China Holdings Limited Annual Report 2012

F-270 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

13. Dividends On 17 June 2011, a final dividend for 2010 of RMB0.36 per ordinary share, or RMB589,036,000 in total, was paid to the shareholders.

On 19 March 2012, an interim dividend for 2011 of RMB0.10 per ordinary share, or RMB164,026,000 in total, was paid to the shareholders.

The directors did not declare any final dividend for the year end 31 December 2011 and did not declare any interim dividend for the six months ended 30 June 2012.

A final dividend of RMB0.5 per ordinary share for the year ended 31 December 2012 has been proposed by the directors and is subject to approval by the shareholders at the forthcoming annual general meeting.

14. Earnings Per Share The calculation of the basic and diluted earnings per share attributable to the owners of the Company is based on the following data:

Earnings

2012 2011 RMB’000 RMB’000 Earnings for the purpose of basic earnings per share 4,851,123 2,574,637 Effect of dilutive potential shares: Interest on the 2007 Convertible Bonds (as defined in Note 28) 3,259 8,356 Earnings for the purpose of diluted earnings per share 4,854,382 2,582,993

Number of Shares

2012 2011 Weighted average number of ordinary shares for the purpose of basic earnings per share 1,889,150,532 1,639,318,123 Effect of dilutive potential ordinary shares: Share options 15,782,728 16,718,289 The 2007 Convertible Bonds (as defined in Note 28) 3,091,716 8,297,621 Convertible Securities (as defined in Note 31) 143,502,407 – Weighted average number of ordinary shares for the purpose of diluted earnings per share 2,051,527,383 1,664,334,033

Greentown China Holdings Limited Annual Report 2012 150

F-271 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

15. Property, Plant and Equipment

Furniture, Hotel Land and Leasehold Fixtures and Transportation Construction Buildings Buildings Improvements Machinery Equipment Equipment in Progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 COST At 1 January 2011 2,102,916 57,564 62,341 11,592 185,165 232,528 173,050 2,825,156 Additions – 2,979 6,615 2,050 59,045 66,873 431,680 569,242 Disposals – (645) (670) (154) (8,444) (9,894) – (19,807) Disposal of subsidiaries (Note 33) – – – (2,949) (1,744) (6,865) – (11,558) De-consolidation of a subsidiary – – – – (799) (2,767) – (3,566) At 31 December 2011 2,102,916 59,898 68,286 10,539 233,223 279,875 604,730 3,359,467 Additions 1,634 4,573 10,002 4,894 25,097 30,087 1,001,377 1,077,664 Transfer 628,913 174,668 – – – – (803,581) – Disposals (8) – (2,878) (17) (2,221) (8,647) – (13,771) Disposal of subsidiaries (Note 33) – (3,068) (6,108) (1,286) (8,742) (15,954) – (35,158) Acquisition of a subsidiary which constitutes assets (Note 42) – – – 1,185 1,248 4,235 – 6,668 Acquisition of subsidiaries which constitute business (Note 32) – – 3,038 14 1,462 602 – 5,116 At 31 December 2012 2,733,455 236,071 72,340 15,329 250,067 290,198 802,526 4,399,986 DEPRECIATION AND IMPAIRMENT At 1 January 2011 (131,363) (17,502) (36,206) (1,636) (80,612) (109,577) – (376,896) Provided for the year (64,990) (4,608) (8,319) (1,178) (36,891) (36,083) – (152,069) Impairment loss reversed in profit or loss 13,067 – – – – – – 13,067 Eliminated on disposals – 94 350 112 6,442 6,303 – 13,301 Eliminated on disposal of subsidiaries (Note 33) – – – 1,349 728 2,079 – 4,156 De-consolidation of a subsidiary – – – – 67 48 – 115 At 31 December 2011 (183,286) (22,016) (44,175) (1,353) (110,266) (137,230) – (498,326) Provided for the year (55,499) (13,234) (11,730) (7,053) (41,207) (41,054) – (169,777) Impairment loss recognised in profit or loss (81,485) – – – – – – (81,485) Eliminated on disposals 5 – 1,772 16 1,493 6,525 – 9,811 Eliminated on disposal of subsidiaries (Note 33) – 667 3,538 88 3,193 7,561 – 15,047 At 31 December 2012 (320,265) (34,583) (50,595) (8,302) (146,787) (164,198) – (724,730) CARRYING VALUES At 31 December 2012 2,413,190 201,488 21,745 7,027 103,280 126,000 802,526 3,675,256 At 31 December 2011 1,919,630 37,882 24,111 9,186 122,957 142,645 604,730 2,861,141

151 Greentown China Holdings Limited Annual Report 2012

F-272 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

During 2008, the Group engaged DTZ Debenham Tie Leung Limited, independent qualified professional valuers not related to the Group, to conduct review of the Group’s hotel buildings. The professional valuers from DTZ Debenham Tie Leung Limited are members of the Hong Kong Institute of Surveyors. It was determined that one of those buildings was impaired due to the economic downturn and the performance of the hotel building being adversely affected. Accordingly, an impairment loss of RMB53,000,000 was recognised in 2008 in respect of hotel buildings. The recoverable amount of the relevant hotel building has been determined on the basis of its value in use. The discount rate adopted in measuring the amount of value in use of the relevant hotel building was 10%.

In view of the improving performance of the hotel operations, the Group engaged DTZ Debenham Tie Leung Limited to update their review of the Group’s hotel buildings as at 31 December 2010 and 31 December 2011 and as a result an impairment loss of RMB39,933,000 and RMB13,067,000 was reversed in 2010 and 2011 respectively in respect of hotel buildings based on their value in use.

During 2012, the Group engaged DTZ Debenham Tie Leung Limited to conduct review of the Group’s hotel buildings. It was determined that one of those buildings was impaired on the basis of its projected performance. Accordingly, an impairment loss of RMB81,485,000 was recognised in 2012 in respect of hotel buildings. The recoverable amount of the relevant hotel building has been determined on the basis of its value in use. The discount rate adopted in measuring the amount of value in use of the relevant hotel building was 10%.

The land and buildings and hotel buildings shown above are located on:

2012 2011 RMB’000 RMB’000 Land and Buildings Land in the PRC under: Medium-term lease 201,488 37,882 Hotel Buildings Land in the PRC under: Medium-term lease 2,413,190 1,919,630

Details of the hotel buildings, land and buildings and construction in progress pledged to secure banking facilities granted to the Group are disclosed in Note 37.

Greentown China Holdings Limited Annual Report 2012 152

F-273 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

16. Investment Properties

RMB’000 FAIR VALUE At 1 January 2011 1,725,000 Increase in fair value recognised in profit or loss 5,000 At 31 December 2011 1,730,000 Increase in fair value recognised in profit or loss 600 At 31 December 2012 1,730,600

The fair value of the Group’s investment property at 31 December 2012 and 2011 have been arrived at on the basis of a valuation carried out on that date by DTZ Debenham Tie Leung Limited, independent qualified professional valuers not related to the Group. The valuation was arrived at by the investment approach by capitalising the net rental income derived from the existing tenancies with due provision for the reversionary income potential of the property interests, or where appropriate, by the direct comparison approach by making reference to comparable sales transactions as available in the relevant market.

The investment property shown above is located on:

2012 2011 RMB’000 RMB’000 Land in the PRC under: Medium-term lease 1,730,600 1,730,000 17. Interests in Associates

2012 2011 RMB’000 RMB’000 Cost of unlisted investments in associates 6,051,578 4,887,483 Share of post-acquisition profits, net of dividends received 521,688 978,909 6,573,266 5,866,392

153 Greentown China Holdings Limited Annual Report 2012

F-274 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

17. Interests in Associates (continued)

As at 31 December 2011 and 2012, the Group had interests in the following principal associates established and operating in the PRC:

Attributable Equity Interest Name of Associate Registered Capital Held by the Group Principal Activities 2012 2011 杭州余杭綠城九洲房地產開發有限公司 RMB85,000,000 35% 35% Real estate development Hangzhou Yuhang Greentown Jiuzhou Real Estate Development Co., Ltd. (“Hangzhou Yuhang Greentown”)

杭州翡翠城房地產開發有限公司 RMB50,000,000 45% 45% Real estate development Hangzhou Hope Town Real Estate Development Co., Ltd. (“Hangzhou Hope Town”)

杭州濱綠房地產開發有限公司 RMB1,389,140,188 50% 50% Real estate development Hangzhou Binlv Real Estate (iii) (iii) Development Co., Ltd. (“Hangzhou Binlv”)

浙江中青旅綠城投資置業有限公司 RMB200,000,000 49% 49% Investment and Zhejiang Zhongqinglv Greentown Real (i) (i) consulting Estate Investment Co., Ltd. (“Zhejiang Zhongqinglv”)

紹興金綠泉置業有限公司 RMB580,000,000 35% 35% Real estate development Shaoxing Jinlvquan Real Estate Co., Ltd. (“Shaoxing Jinlvquan”)

濟南海爾綠城置業有限公司 RMB200,000,000 45% 45% Real estate development Jinan Haier Greentown Real Estate Co., Ltd. (“Jinan Haier Greentown”)

無錫綠城房地產開發有限公司 RMB174,807,000 43% 85% Real estate development Wuxi Greentown Real Estate (ii, xi) (ii) Development Co., Ltd. (“Wuxi Greentown”)

Greentown China Holdings Limited Annual Report 2012 154

F-275 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

17. Interests in Associates (continued)

Attributable Equity Interest Name of Associate Registered Capital Held by the Group Principal Activities 2012 2011 慈溪綠城投資置業有限公司 RMB98,000,000 49% 49% Real estate development Cixi Greentown Real Estate Investment (i) (i) Co., Ltd. (“Cixi Greentown”)

台州浙能綠城置業有限公司 RMB300,000,000 49% 49% Real estate development Taizhou Zheneng Greentown Real Estate Co., Ltd. (“Taizhou Zheneng”)

杭州浙能綠城置業有限公司 RMB300,000,000 49% 49% Real estate development Hangzhou Zheneng Greentown Real Estate Co., Ltd. (“Hangzhou Zheneng”)

台州浙信綠城房地產開發有限公司 RMB20,000,000 40% 40% Real estate development Taizhou Zhexin Greentown Real Estate Development Co., Ltd. (“Taizhou Zhexin”)

台州綠城房地產有限公司 RMB100,000,000 – 45% Real estate development Taizhou Greentown Real Estate Co., Ltd. (iv) (“Taizhou Greentown”)

台州綠城能源房地產有限公司 RMB100,000,000 – 49% Real estate development Taizhou Greentown Nengyuan Real (iv) Estate Co., Ltd. (“Taizhou Greentown Nengyuan”)

浙江鐵建綠城房地產開發有限公司 RMB100,000,000 38% 38% Real estate development Zhejiang Tiejian Greentown Real Estate Development Co., Ltd. (“Zhejiang Tiejian Greentown”)

杭州百大置業有限公司 RMB530,000,000 30% 30% Real estate development Hangzhou Baida Real Estate Co., Ltd. (“Hangzhou Baida”)

杭州新綠西置業有限公司 RMB10,000,000 42% 42% Real estate development Hangzhou Xinlvxi Real Estate Co., Ltd. (“Hangzhou Xinlvxi”)

155 Greentown China Holdings Limited Annual Report 2012

F-276 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

17. Interests in Associates (continued)

Attributable Equity Interest Name of Associate Registered Capital Held by the Group Principal Activities 2012 2011 杭州賽麗綠城申花置業有限公司 RMB100,000,000 25% 25% Real estate development Hangzhou Saili Greentown Shenhua Real Estate Co., Ltd. (“Saili Greentown”)

寧波都市房產開發有限公司 USD200,000,000 45% 45% Real estate development Ningbo Dushi Real Estate Development Co., Ltd. (“Ningbo Dushi”)

杭州紫元綠西房地產有限公司 RMB100,000,000 33% 33% Real estate development Hangzhou Ziyuan Lvxi Real Estate Co., Ltd. (“Ziyuan Lvxi”)

北京東部綠城置業有限公司 RMB50,000,000 49% 49% Real estate development Beijing Eastern Greentown Real Estate Co., Ltd. (“Beijing Eastern Greentown”)

杭州海航綠城置業有限公司 RMB1,860,180,000 40% 40% Real estate development Hangzhou Haihang Greentown Real Estate Co., Ltd. (“Haihang Greentown“)

杭州綠城錦玉置業有限公司 RMB250,000,000 35% 35% Real estate development Hangzhou Greentown Jinyu Real Estate Co., Ltd. (“Greentown Jinyu”)

杭州綠城金久房地產開發有限公司 RMB100,000,000 40% 40% Real estate development Hangzhou Greentown Jinjiu Real Estate Development Co., Ltd. (“Greentown Jinjiu”)

上海綠恒房地產開發有限公司 RMB100,000,000 40% 40% Real estate development Shanghai Lvheng Real Estate Development Co., Ltd. (“Shanghai Lvheng”)

上海青蓮房地產開發有限公司 RMB50,000,000 20% 20% Real estate development Shanghai Qinglian Real Estate Development Co., Ltd. (“Shanghai Qinglian”)

Greentown China Holdings Limited Annual Report 2012 156

F-277 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

17. Interests in Associates (continued)

Attributable Equity Interest Name of Associate Registered Capital Held by the Group Principal Activities 2012 2011 溫州綠城發展房地產開發有限公司 RMB200,000,000 40% 25% Real estate development Wenzhou Greentown Development Real Estate Development Co., Ltd. (“Wenzhou Greentown”)

大冶有色綠城房地產開發有限公司 RMB160,000,000 30% 30% Real estate development Daye Youse Greentown Real Estate Development Co., Ltd. (“Daye Youse Greentown”)

中投發展有限責任公司 RMB2,000,000,000 24% 24% Infrastructure China Investment Development Co., construction and Ltd. (“China Investment Development”) investment holding

台州綠城泰業房地產開發有限公司 RMB130,000,000 – 41% Real estate development Taizhou Greentown Taiye Real Estate (vi) Development Co., Ltd. (“Taizhou Taiye”)

慈溪綠城房地產發展有限公司 RMB98,000,000 30% 30% Real estate development Cixi Greentown Property Development Co., Ltd. (“Cixi Greentown Property”)

上海浙鐵綠城房地產開發有限公司 RMB50,000,000 32% 32% Real estate development Shanghai Zhetie Greentown Real Estate Development Co., Ltd. (“Zhetie Greentown”)

山東高速綠城萊蕪雪野湖開發有限公司 RMB50,000,000 49% 49% Real estate development Shandong Gaosu Greentown Laiwu Xueyehu Development Co., Ltd. (“Greentown Gaosu Xueyehu”)

山東財富縱橫置業有限公司 RMB50,000,000 39% 39% Real estate development Shandong Caifu Zongheng Real Estate Co., Ltd. (“Shandong Caifu Zongheng”)

盛聯管理有限公司 USD50,000 25% 25% Investment holding Poly Link Management Limited (“Poly (vii) (vii) Link Management”)

157 Greentown China Holdings Limited Annual Report 2012

F-278 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

17. Interests in Associates (continued)

Attributable Equity Interest Name of Associate Registered Capital Held by the Group Principal Activities 2012 2011 信陽市萬恒置業有限公司 RMB50,000,000 20% 20% Real estate development Xinyang Wanheng Real Estate Co., Ltd. (“Xinyang Wanheng”)

杭州遠洋天祺置業有限公司 USD147,760,000 25% 25% Real estate development Hangzhou Sino-Ocean Tian Qi (vii) (vii) Properties Limited (“Sino-Ocean Tian Qi”)

杭州遠洋運河商務區開發有限公司 USD143,210,000 25% 25% Real estate development Hangzhou Sino-Ocean Canal Business (vii) (vii) District Development Co., Ltd. (“Sino- Ocean Canal Business District”)

杭州遠洋新河酒店置業有限公司 USD83,620,000 25% 25% Real estate development Hangzhou Sino-Ocean New River Hotel (vii) (vii) Properties Limited (“Sino-Ocean New River Hotel”)

德發國際有限公司 HKD10,000 25% 25% Investment holding Moral Wealth International Limited (vii) (vii) (“Moral Wealth”)

天澤發展有限公司 HKD1,000,000 25% 25% Investment holding Sky Charter Development Limited (“Sky (vii) (vii) Charter”)

穎澤投資有限公司 HKD10,000 40% – Investment holding Green Magic Investments Limited (xiii) (“Green Magic”)

上海融創綠城房地產開發有限公司 RMB2,000,000,000 50% – Investment holding Shanghai Sunac Greentown (ix) Real Estate Development Co., Ltd. (“Sunac Greentown“)

無錫融創綠城湖濱置業有限公司 RMB100,000,000 49% – Real estate development Wuxi Sunac Greentown Hubin Real (viii) Estate Co., Ltd. (“Sunac Greentown Hubin”)

Greentown China Holdings Limited Annual Report 2012 158

F-279 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

17. Interests in Associates (continued)

Attributable Equity Interest Name of Associate Registered Capital Held by the Group Principal Activities 2012 2011 浙江報業綠城投資有限公司 RMB80,000,000 49% – Investment holding Zhejiang Newspapering Greentown (x) Investment Co., Ltd. (“Zhejiang Newspapering Greentown“)

上海華浙外灘置業有限公司 RMB50,000,000 26% – Real estate development Shanghai Huazhe Bund Real Estate Co., (xi) Ltd. (“Huazhe Bund“)

上海綠順房地產開發有限公司 RMB1,000,000,000 50% – Real estate development Shanghai Lvshun Real Estate (xi) Development Co., Ltd. (“Lvshun Real Estate”)

蘇州綠城玫瑰園房地產開發有限公司 RMB360,000,000 33% – Real estate development Suzhou Greentown Rose Garden Real (xi) Estate Development Co., Ltd. (“Suzhou Greentown Rose Garden”)

蘇州綠城御園房地產開發有限公司 RMB250,000,000 50% – Real estate development Suzhou Greentown Yuyuan Real (xi) Estate Development Co., Ltd. (“Suzhou Greentown Yuyuan”)

天津逸駿投資有限公司 RMB10,000,000 40% – Real estate development Tianjin Yijun Investment Co., Ltd. (xi) (“Tianjin Yijun”)

青島綠城華景置業有限公司 RMB380,000,000 40% – Real estate development Qingdao Greentown Huajing Real Estate (xii) Co., Ltd. (“Qingdao Greentown Huajing”)

唐山綠城房地產開發有限公司 RMB50,000,000 40% – Real estate development Tangshan Greentown Real Estate (v) Development Co., Ltd. (“Tangshan Greentown”)

159 Greentown China Holdings Limited Annual Report 2012

F-280 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

17. Interests in Associates (continued) Notes:

(i) Cixi Greentown is a subsidiary of Zhejiang Zhongqinglv.

(ii) Wuxi Greentown became an associate of the Group in 2009 as the Group lost control over Wuxi Greentown pursuant to the trust arrangements set out in Note 27(I)(C) while retaining in substance a present ownership interest of 85% in Wuxi Greentown. In January 2012, Wuxi Greentown became a subsidiary of the Company as the Group regained control over Wuxi Greentown upon the maturity of the Zhonghai Trust. In July 2012, the 85% equity interest in Wuxi Greentown was disposed of to Sunac Greentown, an associate of the Company. Please refer to note (xi) below and Note 33 for details.

(iii) Only two out of five directors of Hangzhou Binlv are appointed by the Group, while a valid board resolution requires half of the total votes. The Group does not have the power to control or jointly control the financial and operational policies of Hangzhou Binlv. Therefore, Hangzhou Binlv is accounted for as an associate of the Group.

(iv) In 2012, the Group disposed of its 35% equity interest in Taizhou Greentown and its 39% equity interest in Taizhou Greentown Nengyuan to independent third parties.

(v) Tangshan Greentown became an associate of the Group in 2012 as the Group disposed of its 60% equity interest in it. Please refer to Note 33 for details.

(vi) Taizhou Taiye became a subsidiary of the Company in 2012 after the Group had acquired additional 10% equity interest in it. Please refer to Note 32 for details.

(vii) Sino-Ocean Tian Qi, Sino-Ocean Canal Business District, Sino-Ocean New River Hotel, Moral Wealth and Sky Charter are subsidiaries of Poly Link Management.

(viii) Sunac Greentown Hubin became an associate of the Group in 2012 as the Group disposed of its 51% equity interest in Sunac Greentown Hubin. Please refer to Note 33 for details.

(ix) Sunac Greentown was newly established in 2012. Only two out of five directors of Sunac Greentown are appointed by the Group, while a valid board resolution requires half of the total votes. The Group does not have the power to control or jointly control the financial and operational policies of Sunac Greentown. Therefore, Sunac Greentown is accounted for as an associate of the Group.

(x) Zhejiang Newspapering Greentown was previously a jointly controlled entity of the Group. The Group disposed of 1% equity interest in Zhejiang Newspapering Greentown to an independent third party in 2012.

(xi) On 22 June 2012, Greentown Real Estate Group Co., Ltd. (“Greentown Real Estate”), a wholly-owned subsidiary of the Company, entered into a cooperative framework agreement with Tianjin Sunac Zhidi Co., Ltd. (“Sunac Zhidi”), a wholly-owned subsidiary of Sunac China Holdings Limited (“Sunac”), a company listed on the Stock Exchange and an independent third party, pursuant to which Sunac Zhidi acquired Greentown Real Estate’s equity interests in (i) seven subsidiaries, namely Huazhe Bund, Lvshun Real Estate, Suzhou Greentown Yuyuan and Suzhou Greentown Rose Garden, Wuxi Greentown, Changzhou Greentown Real Estate Co., Ltd. and Tianjin Yijun (please refer to Note 33 for details); (ii) one associate, namely Wuxi Taihu Greentown Real Estate Co., Ltd., by way of (a) the establishment of Sunac Greentown that is owned as to 50% by Greentown Real Estate and 50% by Sunac Zhidi; and (b) the acquisition of the equity interests in the seven subsidiaries and one associate by Sunac Greentown. Sunac Zhidi also directly acquired 50% equity interest in Shanghai Greentown Woods Golf Villas Development Co., Ltd. (“Greentown Woods”), a wholly owned subsidiary of the Company, as part of the cooperative framework agreement. Greentown Woods remains a subsidiary of the Company by virtue of its control over the board of directors of Greentown Woods. The aggregate consideration paid by Sunac Zhidi to Greentown Real Estate for the transfer of equity interests and shareholder’s loans in the seven subsidiaries and one associate to Sunac Greentown and the transfer of 50% equity interest and shareholder’s loan in Greentown Woods to Sunac Zhidi was approximately RMB3,357,936,000. The transactions was completed on 1 July 2012.

(xii) Qingdao Greentown Huajing became an associate of the Group in 2012 as the Group disposed of its 60% equity interest in it. Please refer to Note 33 for details.

(xiii) The Company subscribed for 400 new shares at HKD1.00 each in Green Magic in 2012. Please refer to Note 40(iii)(c) for details.

Greentown China Holdings Limited Annual Report 2012 160

F-281 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

17. Interests in Associates (continued) The summarised financial information in respect of the Group’s associates is set out below:

2012 2011 RMB’000 RMB’000 Total assets 131,687,887 81,374,228 Total liabilities (112,353,134) (64,391,603) Net assets 19,334,753 16,982,625 Group’s share of net assets of associates 6,573,266 5,866,392 Total revenue 7,202,157 9,535,330 Total profit for the year 400,107 1,645,639 Group’s share of results of associates for the year 209,356 777,498 18. Interests in Jointly Controlled Entities

2012 2011 RMB’000 RMB’000 Cost of unlisted investments in jointly controlled entities 829,559 917,589 Share of post-acquisition profits, net of dividends received 174,186 143,444 1,003,745 1,061,033

As at 31 December 2011 and 2012, the Group had interests in the following principal jointly controlled entities established and operating in the PRC:

Attributable Equity Interest Name of Jointly Controlled Entity Registered Capital Held by the Group Principal Activities 2012 2011 浙江報業綠城投資有限公司 RMB80,000,000 – 50% Investment holding Zhejiang Newspapering Greentown (v) Investment Co., Ltd. (“Zhejiang Newspapering Greentown”)

海寧綠城新湖房地產開發有限公司 RMB20,000,000 50% 50% Real estate development Haining Greentown Sinhoo Real Estate Development Co., Ltd. (“Haining Greentown”)

浙江綠西房地產集團有限公司 RMB100,000,000 50% 50% Investment holding, real Zhejiang Lvxi Real Estate Group Co., Ltd. (i) (i) estate development and (“Zhejiang Lvxi Group”) business consulting

161 Greentown China Holdings Limited Annual Report 2012

F-282 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

18. Interests in Jointly Controlled Entities (continued)

Attributable Equity Interest Name of Jointly Controlled Entity Registered Capital Held by the Group Principal Activities 2012 2011 臨安西子房地產開發有限公司 RMB80,000,000 50% 50% Real estate development Lin’an Xizi Real Estate Development (i) (i) Co., Ltd. (“Lin’an Xizi”)

南通嘉匯置業有限公司 RMB30,000,000 50% 50% Real estate development Nantong Jiahui Real Estate Co., Ltd. (i) (i) (“Nantong Jiahui”)

浙江西子置業有限公司 RMB80,000,000 50% 50% Real estate development Zhejiang Xizi Real Estate Co., Ltd. (i) (i) (“Zhejiang Xizi”)

浙江綠城新興置業有限公司 RMB80,000,000 35% 35% Real estate development Zhejiang Greentown Xinxing Real Estate (i) (i) Co., Ltd. (“Greentown Xinxing”)

紹興綠城寶業房地產開發有限公司 RMB100,000,000 51% 51% Real estate development Shaoxing Greentown Baoye Real Estate (ii) (ii) Co., Ltd. (“Shaoxing Greentown Baoye”)

杭州凱喜雅房地產開發有限公司 RMB100,000,000 50% 50% Real estate development Hangzhou Kaixiya Real Estate (i) (i) Development Co., Ltd. (“Hangzhou Kaixiya”)

浙江鐵投綠城投資有限公司 RMB80,000,000 50% 50% Investment holding Zhejiang Tietou Greentown Investment (iii) (iii) Co., Ltd. (“Zhejiang Tietou Greentown Investment”)

浙江鐵投綠城房地產開發有限公司 RMB80,000,000 50% 50% Real estate development Zhejiang Tietou Greentown Real Estate (iii) (iii) Development Co., Ltd. (“Zhejiang Tietou Greentown Real Estate”)

山東東城置業有限公司 RMB200,000,000 49% 49% Real estate development Shandong Dongcheng Real Estate Co., (iv) (iv) Ltd. (“Shandong Dongcheng”)

Greentown China Holdings Limited Annual Report 2012 162

F-283 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

18. Interests in Jointly Controlled Entities (continued)

Attributable Equity Interest Name of Jointly Controlled Entity Registered Capital Held by the Group Principal Activities 2012 2011 杭州綠城北秀置業有限公司 RMB50,000,000 50% 50% Real estate development Hangzhou Greentown Beixiu Real Estate Co., Ltd. (“Greentown Beixiu”)

杭州臨宜房地產開發有限公司 USD50,000,000 50% 50% Real estate development Hangzhou Linyi Real Estate Development Co., Ltd. (“Hangzhou Linyi”)

杭州綠城中勝置業有限公司 RMB100,000,000 55% 55% Real estate development Hangzhou Greentown Zhongsheng (vi) (vi) Real Estate Co., Ltd. (“Greentown Zhongsheng”)

瀋陽全運村建設發展有限公司 RMB300,000,000 50% 50% Real estate development Shenyang National Games Real Estate Co., Ltd. (“Shenyang National Games”)

The above table lists the jointly controlled entities of the Group which, in the opinion of the directors, principally affected the results or assets of the Group. To give details of other jointly controlled entities would, in the opinion of the directors, result in particulars of excessive length.

Notes:

(i) Lin’an Xizi, Nantong Jiahui, Zhejiang Xizi, Greentown Xinxing and Hangzhou Kaixiya are subsidiaries of Zhejiang Lvxi Group.

(ii) Three out of five directors of Shaoxing Greentown Baoye are appointed by the Group, while a valid board resolution requires unanimous approval from all directors. The Group does not have the power to control the financial and operational policies of Shaoxing Greentown Baoye. Therefore, Shaoxing Greentown Baoye is accounted for as a jointly controlled entity of the Group.

(iii) Zhejiang Tietou Greentown Investment holds 100% equity interest in Zhejiang Tietou Greentown Real Estate.

(iv) Two out of five directors of Shandong Dongcheng are appointed by the Group and the remaining three directors by the other equity holder, while a valid board resolution requires four-fifths of the total votes. Therefore, Shandong Dongcheng is accounted for as a jointly controlled entity of the Group.

(v) Zhejiang Newspapering Greentown became an associate of the Group in 2012 as the Group disposed of 1% equity interest in it to an independent third party.

(vi) Three out of five directors of Greentown Zhongsheng are appointed by the Group and the remaining two directors by the other equity holder, while a valid board resolution requires four-fifths approval from the directors. The Group does not have the power to control the financial and operational policies of Greentown Zhongsheng. Therefore, Greentown Zhongsheng is accounted for as a jointly controlled entity of the Group.

163 Greentown China Holdings Limited Annual Report 2012

F-284 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

18. Interests in Jointly Controlled Entities (continued) The summarised financial information in respect of the Group’s interests in the jointly controlled entities which are accounted for using the equity method is set out below:

2012 2011 RMB’000 RMB’000 Current assets 11,297,308 9,924,116 Non-current assets 361,274 47,039 Current liabilities (8,560,331) (6,367,105) Non-current liabilities (2,173,423) (2,529,087) Income 1,561,408 1,048,723 Expenses (1,275,135) (987,625)

The Group has discontinued recognition of its share of losses of certain jointly controlled entities as its share of losses of those jointly controlled entities equals or exceeds its interests in those jointly controlled entities. The amounts of unrecognised share of losses of these jointly controlled entities, both for the year and cumulatively, are as follows:

2012 2011 RMB’000 RMB’000 Unrecognised share of losses of jointly controlled entities for the year 17,846 44,279 Accumulated unrecognised share of losses of jointly controlled entities 78,917 61,071

Greentown China Holdings Limited Annual Report 2012 164

F-285 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

19. Available-for-Sale Investments Available-for-sale investments comprise:

2012 2011 RMB’000 RMB’000 Non-current portion: Unlisted equity securities 346,545 303,300 Current portion: Unlisted junior units in Zhonghai Trust (Note 27) – 110,970 Unlisted junior unites in Hwabao Trust (Note 27) – 23,750 Unlisted equity securities – 100,000 – 234,720 346,545 538,020

The above unlisted trust units and equity securities were issued by private entities established in the PRC. The available-for- sale investments are measured at cost less impairment at the end of the reporting period because the range of reasonable fair value estimates is so significant that the directors are of the opinion that their fair values cannot be measured reliably. Included in the current portion of unlisted equity securities in 2011 was the Group’s holding of 10% equity interest in Shanghai Haizhimen Property Management Co., Ltd. (“Shanghai Haizhimen”). On 29 December 2011, the Group had conditionally agreed to dispose of its 100% equity interest in Hangzhou Greentown Hesheng Investment Company (“Greentown Hesheng”) which holds the 10% equity interest in Shanghai Haizhimen to Shanghai Chang Ye Investment Management Consulting Co., Ltd. (“Shanghai Chang Ye”), an independent third party and a wholly-owned subsidiary of SOHO China Limited, a company listed on the Stock Exchange. The disposal was completed in 2012.

20. Prepaid Lease Payment

2012 2011 RMB’000 RMB’000 The Group’s prepaid lease payment comprises: Leasehold land in the PRC: Medium-term lease 264,525 201,377 Analysed for reporting purposes as: Current asset (included in trade and other receivables) 9,557 4,651 Non-current asset 254,968 196,726 264,525 201,377

165 Greentown China Holdings Limited Annual Report 2012

F-286 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

21. Deferred Taxation The following are the major deferred tax assets (liabilities) recognised and movements thereon during the current and prior years:

Temporary Differences on Revenue Recognition and Related Impairment Fair Value LAT Undistributed Cost of Sales Losses Tax Losses Adjustments Provision Profits Others Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 At 1 January 2011 12,862 8,912 339,395 (201,712) 203,144 (127,184) (25,385) 210,032 (Charge) credit to profit or loss (2,720) 43,978 64,736 (38,516) 95,141 (80,000) 5,528 88,147 De-consolidation of a subsidiary – – (4,551) – – – – (4,551) At 31 December 2011 10,142 52,890 399,580 (240,228) 298,285 (207,184) (19,857) 293,628 (Charge) credit to profit or loss 12,471 19,719 (223,475) 46,068 273,367 (130,000) 2,919 1,069 Disposal of subsidiaries (Note 33) 6,509 (15,546) (42,334) – – – – (51,371) At 31 December 2012 29,122 57,063 133,771 (194,160) 571,652 (337,184) (16,938) 243,326

Others represent mainly deferred tax liabilities recognised in respect of temporary differences arising from accelerated tax depreciation.

2012 2011 RMB’000 RMB’000 Deferred tax assets 782,241 728,165 Deferred tax liabilities (538,915) (434,537) 243,326 293,628

At the end of the reporting period, the Group had unutilised tax losses of RMB1,637,272,000 (2011: RMB2,471,047,000) available for offset against future profits. A deferred tax asset has been recognised in respect of RMB535,086,000 (2011: RMB1,602,020,000) of such losses. No deferred tax asset has been recognised in respect of the remaining RMB1,102,186,000 (2011: RMB869,027,000) due to the unpredictability of future profit streams. Pursuant to the relevant laws and regulations in the PRC, the unrecognised tax losses at the end of the reporting period will expire in the following years:

Greentown China Holdings Limited Annual Report 2012 166

F-287 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

21. Deferred Taxation (continued)

2012 2011 RMB’000 RMB’000 2012 – 84,874 2013 157,850 199,683 2014 149,582 168,472 2015 123,751 150,804 2016 232,334 265,194 2017 438,669 – 1,102,186 869,027

Based on the latest budgets, management believes that there will be sufficient future profits for the realisation of the deferred tax assets recognised in respect of these tax losses.

At the end of the reporting period, the Group has deductible temporary differences of RMB192,792,000 (2011: RMB192,792,000) in respect of which no deferred tax asset has been recognised as it is not probable that taxable profit will be available against which the deductible temporary differences can be utilised.

Under the EIT Law of PRC, withholding tax is imposed on dividends declared in respect of profits earned by PRC subsidiaries from 1 January 2008 onwards. Deferred taxation has not been provided for in the consolidated financial statements in respect of certain temporary differences attributable to accumulated profits of the PRC subsidiaries amounting to RMB7,600,973,000 (31 December 2011: RMB4,567,640,000) as the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

22. Properties for Development Included in properties for development as at 31 December 2012 is an amount of RMB1,857,329,000 (2011: RMB10,271,888,000) in respect of long-term leasehold land for which the Group was in the process of obtaining the land use rights certificates.

All properties for development are expected to be recovered after more than 12 months from the end of the reporting period.

23. Properties Under Development

2012 2011 RMB’000 RMB’000 Long-term leasehold land – at cost 22,615,786 40,728,038 Development costs 16,776,048 21,945,782 Finance costs capitalised 3,744,320 4,924,167 43,136,154 67,597,987

Properties under development for sale amounting to RMB26,233,022,000 (2011: RMB43,290,608,000) are expected to be recovered after more than 12 months from the end of the reporting period.

167 Greentown China Holdings Limited Annual Report 2012

F-288 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

24. Other Current Assets Trade and Other Receivables, Deposits and Prepayments

2012 2011 RMB’000 RMB’000 Trade receivables 459,907 402,958 Other receivables 2,828,812 2,858,368 Prepayments and deposits 1,100,461 1,142,132 Consideration receivable from disposal of a subsidiary and disposal/partial disposal of associates 323,606 777,015 4,712,786 5,180,473

2012 2011 RMB’000 RMB’000 0–30 days 80,382 117,337 31–90 days 26,816 87,885 91–180 days 130,170 49,955 181–365 days 67,118 45,672 Over 365 days 155,421 102,109 Trade receivables 459,907 402,958

Included in other receivables were advances to third parties of RMB1,749,824,000 (2011: RMB2,036,094,000) as at 31 December 2012. The advances are interest free, unsecured and expected to be recovered within one year except for RMB643,649,000 (2011: RMB1,467,158,000) which carries interest at 7% to 15% (2011: 8% to 12%) per annum, is unsecured and is expected to be recovered within one year. The advances comprise mainly earnest money for potential projects. The Group has concentration of credit risk as 50% (2011: 82%) of the total advances to third parties was due from the five largest counterparties. The Group does not notice any significant changes in the credit quality of its advances to third parties and the amounts are considered to be recoverable.

Greentown China Holdings Limited Annual Report 2012 168

F-289 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

24. Other Current Assets (continued) Trade and Other Receivables, Deposits and Prepayments (continued) The consideration receivable from disposal of a subsidiary and disposal/partial disposal of associates as at 31 December 2012 is unsecured, non-interest bearing and expected to be settled in 2013.

No allowance was made for trade and other receivables.

As at 31 December 2012, the Group had bank balances and cash (including pledged bank deposits) denominated in Renminbi amounting to RMB7,748,349,000 (2011: RMB5,853,788,000). Renminbi is not freely convertible into other currencies.

Bank balances and cash/pledged bank deposits that are denominated in currencies other than the functional currency of the respective group entities are set out below:

HKD USD RMB’000 RMB’000 As at 31 December 2012 97,370 52,250 As at 31 December 2011 13,328 16,675 25. Trade and Other Payables The aged analysis of trade payables is stated as follows:

2012 2011 RMB’000 RMB’000 0–30 days 6,107,937 5,606,464 31–90 days 1,933,377 378,790 91–180 days 1,304,746 727,779 181–365 days 870,156 611,788 Over 365 days 598,458 586,084 Trade payables 10,814,674 7,910,905 Other payables and accrued expenses 5,143,961 4,427,201 Deposit received on disposal of a subsidiary – 900,000 15,958,635 13,238,106

Trade payables and other payables principally comprise amounts outstanding for trade purposes and ongoing costs.

169 Greentown China Holdings Limited Annual Report 2012

F-290 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

26. Bank and Other Borrowings

2012 2011 RMB’000 RMB’000 Secured bank loans (Note 37) 14,725,150 22,871,749 Unsecured bank loans 1,311,938 4,354,311 16,037,088 27,226,060 Secured other loans (Note 37) 3,990,915 3,523,543 Unsecured other loans 1,104,100 934,090 5,095,015 4,457,633 21,132,103 31,683,693

2012 2011 RMB’000 RMB’000 Carrying amount repayable*: Within one year 14,944,997 15,796,880 More than one year, but not exceeding two years 3,274,835 13,310,259 More than two years, but not exceeding three years 1,043,516 956,151 More than three years, but not exceeding four years 589,840 314,214 More than four years, but not exceeding five years 363,890 315,964 More than five years 845,734 909,770 21,062,812 31,603,238 Carrying amount of loans that are not repayable within one year from the end of the reporting period but contain a repayment on demand clause (shown under current liabilities), which is originally repayable: More than one year, but not exceeding two years 12,766 11,164 More than two years, but not exceeding three years 13,300 12,766 More than three years, but not exceeding four years 13,300 13,300 More than four years, but not exceeding five years 13,300 13,300 More than five years 16,625 29,925 69,291 80,455 21,132,103 31,683,693 Less: Amounts due within one year shown under current liabilities (15,014,288) (15,877,335) Amounts shown under non-current liabilities 6,117,815 15,806,358

* The amounts due are based on scheduled repayment dates set out in the loan agreements.

Greentown China Holdings Limited Annual Report 2012 170

F-291 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

26. Bank and Other Borrowings (continued) Bank and other borrowings can be further analysed as follows:

2012 2011 RMB’000 RMB’000 Fixed-rate 5,719,056 4,551,565 Variable-rate 15,413,047 27,132,128 21,132,103 31,683,693

Interest on variable-rate bank and other borrowings is based on:

2012 2011 RMB’000 RMB’000 The People’s Bank of China benchmark rate 13,124,539 22,767,762 London Interbank Offered Rate 1,469,549 2,311,674 Hong Kong Interbank Offered Rate 818,959 2,052,692 15,413,047 27,132,128

The average interest rates were as follows:

2012 2011 Bank loans 7.19% 6.67% Other loans 12.39% 11.62%

Bank and other borrowings that are denominated in currencies other than the functional currency of the respective group entities are set out below:

HKD USD RMB’000 RMB’000 As at 31 December 2012 818,959 1,469,550 As at 31 December 2011 2,052,692 2,311,674

At the end of the reporting period, certain bank loans are guaranteed by the following companies:

2012 2011 RMB’000 RMB’000 Secured bank loans: Non-controlling shareholders of subsidiaries 446,800 432,000 Independent third parties 643,964 243,837 Unsecured bank loans: Non-controlling shareholders of subsidiaries 142,000 100,000 Independent third parties 1,000,000 –

171 Greentown China Holdings Limited Annual Report 2012

F-292 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

27. Trust (I) Cooperation with Zhonghai Trust Company Ltd. On 14 April 2009, a trust agreement was entered into between Greentown Real Estate, a wholly-owned subsidiary of the Company, and Zhonghai Trust Company Ltd, as trustee of the Zhonghai Greentown No. 1 Real Estate Investment Fund (the “Zhonghai Trust”). Pursuant to the terms of the Zhonghai Trust, a bank in the PRC subscribed for a total of 1,700,000,000 senior trust units of the Zhonghai Trust, comprising 100% of the total senior trust units and 85% of the total trust units available for subscription under the Zhonghai Trust, at a consideration of approximately RMB1,683,000,000. On 17 April 2009, Greentown Real Estate subscribed for a total of 180,000,000 junior trust units of the Zhonghai Trust, comprising 60% of the total junior trust units and 9% of the total trust units available for subscription under the Zhonghai Trust, at a consideration of RMB180,000,000. The remaining junior trust units of the Zhonghai Trust available for subscription under the Zhonghai Trust, comprising 40% of the total junior trust units and 6% of the total trust units available for subscription under the Zhonghai Trust, were subscribed by qualified investors in the PRC for a consideration of RMB120,000,000. The Zhonghai Trust was fully constituted on 20 April 2009 (the “Trust Establishment Date”) and the initial trust capital was approximately RMB1,983,000,000.

Pursuant to the terms of the Zhonghai Trust, the following agreements were entered into between Greentown Real Estate and Hangzhou Kangju Investment Management Company Limited (“Hangzhou Kangju”), a wholly-owned subsidiary of the Company, and the trustee:

(a) On 14 April 2009 and 17 April 2009, Greentown Real Estate and Hangzhou Kangju entered into separate equity sale and purchase agreements with the trustee for the sale of 45% equity interest in Wuxi Greentown and 25% equity interest in Hangzhou Greentown Haiqi Real Estate Development Co. Ltd. (“Hangzhou Greentown Haiqi”) for a consideration of RMB45,900,000 and RMB250,000,000, respectively (collectively, the “Equity Sale”). The sale by Greentown Real Estate of its 45% equity interest in Wuxi Greentown was completed on 15 April 2009. The sale by Hangzhou Kangju of its 25% equity interest in Hangzhou Greentown Haiqi was completed on 17 April 2009.

(b) On 20 April 2009, the trustee entered into separate loan agreements with each of Wuxi Greentown and Hangzhou Greentown Haiqi pursuant to which the Zhonghai Trust provided a loan in the principal amount of RMB437,100,000 to Wuxi Greentown and a loan in the principal amount of RMB1,250,000,000 to Hangzhou Greentown Haiqi (collectively, the “Trust Loans”). The Trust Loans bear an interest rate of 14% per annum, and are repayable in full in the 33rd month after the Trust Establishment Date save and except that if 40% of the total above-ground gross floor area (“GFA”) of phase one of the Qianjiang Project (undertaken by Hangzhou Greentown Haiqi) and the Taihu Project (undertaken by Wuxi Greentown) (as the case may be) is sold, the relevant project company shall repay half of the principal sum of the relevant Trust Loan; and if 80% of the total above-ground GFA of phase one of the Qianjiang Project and the Taihu Project (as the case may be) is sold, the relevant project company shall repay all of the principal sum of the Trust Loan. Under other circumstances, Hangzhou Greentown Haiqi or Wuxi Greentown (as the case may be) may request early repayment by multiple instalments if all of the following conditions are satisfied:

(i) the Zhonghai Trust has been established for more than six months;

(ii) the relevant Trust Loan has been drawn for more than six months;

(iii) a one-month prior written notice for early repayment has been given to the trustee;

Greentown China Holdings Limited Annual Report 2012 172

F-293 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

27. Trust (continued) (I) Cooperation with Zhonghai Trust Company Ltd. (continued) (b) (continued) (iv) each repayment of the principal sum of the relevant Trust Loan(s) shall not be less than one-third of the principal sum of the relevant Trust Loan(s) as stipulated in the loan agreements or RMB250.0 million, whichever is lower; and

(v) Greentown Real Estate or its nominees have acquired the equity interest in Hangzhou Greentown Haiqi or Wuxi Greentown (as the case may be) held by the Zhonghai Trust in such proportion equivalent to the percentage of the principal sum of the relevant Trust Loan repaid by Hangzhou Greentown Haiqi or Wuxi Greentown (as the case may be).

(c) In connection with the Equity Sale and the Trust Loans, Greentown Real Estate and Hangzhou Kangju entered into various additional agreements with the trustee in respect of:

(i) The equity interests sold in the Equity Sale, pursuant to which the Zhonghai Trust shall be obliged (the “Equity Put”) to require Greentown Real Estate or its nominees to repurchase the equity interests sold in the Equity Sale at a pre-agreed purchase price (the “Equity Put Price”) upon (a) the expiry of the 33rd month after the Trust Establishment Date; (b) the occurrence of certain material adverse events affecting Wuxi Greentown, Hangzhou Greentown Haiqi or Greentown Real Estate; or (c) early repayment of the Trust Loans. The Equity Put Price is based on a fixed rate of 40% per annum with reference to the number of investment days in Wuxi Greentown and/or Hangzhou Greentown Haiqi less any cumulative dividend paid by Wuxi Greentown and/or Hangzhou Greentown Haiqi;

(ii) The outstanding equity interests in Wuxi Greentown and Hangzhou Greentown Haiqi held by Greentown Real Estate and Hangzhou Kangju immediately after the Equity Sale (the “Remaining Equity Interests”), pursuant to which the trustee has the right to acquire the Remaining Equity Interests for a consideration of RMB1 if certain material adverse events occur. However, each of Greentown Real Estate and Hangzhou Kangju has been granted a call option to repurchase the relevant Remaining Equity Interests from the Zhonghai Trust for a consideration of RMB1 if the Trust Loans have been repaid and if the realization value of the Equity Put is not less than the Equity Put Price (the “RMB1 Options”); and

(iii) Trust units held by beneficiaries of the Zhonghai Trust (other than Greentown Real Estate), pursuant to which such beneficiaries of the Zhonghai Trust have been granted a put option (the “Trust Put”) to procure Greentown Real Estate to purchase all outstanding Trust units not then held by Greentown Real Estate at a pre-agreed purchase price (the “Trust Put Price”) in the event that (a) certain material adverse events occur; and (b) the Zhonghai Trust is unable to obtain certain agreed minimum returns on equity upon the exercise of Equity Put. The Trust Put Price is based on a fixed rate of 11.5% per annum in the case of senior trust units and 45% per annum in the case of junior trust units with reference to the number of investment days of the Zhonghai Trust less any cumulative trust income distributed to the beneficiaries of the senior trust units or the junior trust units (as the case may be).

(d) Under the terms of the Zhonghai Trust, Greentown Real Estate also provided (i) a guarantee to the trustee in respect of all of the obligations of Wuxi Greentown, Hangzhou Greentown Haiqi and other parties related to Greentown Real Estate under, among other things, the Trust Loans (the “Trust Guarantee”); and (ii) a surety of RMB10,000,000 to the trustee as security for the obligations of Wuxi Greentown, Hangzhou Greentown Haiqi, Greentown Real Estate and other parties related to Greentown Real Estate under, among other things, the Trust Loans and Equity Put (the “Surety”). Furthermore, as security for, among other things, obligations of Wuxi Greentown and Hangzhou Greentown Haiqi under the Trust Loans, Greentown Real Estate and Hangzhou Kangju pledged all of their respective Remaining Equity Interests in Wuxi Greentown and Hangzhou Greentown Haiqi to the trustee.

173 Greentown China Holdings Limited Annual Report 2012

F-294 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

27. Trust (continued) (I) Cooperation with Zhonghai Trust Company Ltd. (continued) The accounting treatment for the junior trust units subscribed for by Greentown Real Estate and the various agreements entered into between the trustee, Greentown Real Estate and Hangzhou Kangju (described above) is as follows:

(A) The 180,000,000 junior units of the Zhonghai Trust subscribed for by the Group at a consideration of RMB180,000,000 are accounted for as an available-for-sale investment. Beneficiaries of junior units are subordinate to those of senior units in receiving trust income. They are entitled to a floating income only, which is based on a maximum floating rate of 45% per annum with reference to the number of investment days of the Zhonghai Trust and less any cumulative trust income distributed to the beneficiaries of each junior unit, (i) upon early repayment of the Trust Loans and exercise of the Equity Put; (ii) prior to exercise of the Trust Put; and (iii) upon termination of the Zhonghai Trust.

(B) The Surety of RMB10,000,000 provided by the Group to the trustee as security for certain obligations of the Group under the Zhonghai Trust is accounted for as an amount due from related party. The Surety shall be refunded upon termination of the Zhonghai Trust.

(C) For accounting purposes, the Equity Sale and the Equity Put together are considered to be sale and repurchase arrangements. The sale and repurchase arrangements between the Zhonghai Trust and the Group in relation to the 25% equity interest in Hangzhou Greentown Haiqi and the 45% equity interest in Wuxi Greentown are accounted for as a financing arrangement rather than a disposal of equity interests in Hangzhou Greentown Haiqi and Wuxi Greentown.

On the Trust Establishment Date, as the Group is entitled to appoint the majority of the composition of the board of directors of Hangzhou Greentown Haiqi, Hangzhou Greentown Haiqi remains a subsidiary of the Company. Furthermore, the Group still has in substance a present ownership interest of 100% in Hangzhou Greentown Haiqi by virtue of its investment in the junior units of the Zhonghai Trust and the sale and repurchase arrangements in place.

On the Trust Establishment Date, Wuxi Greentown became an associate of the Group as the Group has lost control over Wuxi Greentown, but it is able to exercise significant influence over Wuxi Greentown by appointing one director on the board of directors of Wuxi Greentown. The assets and liabilities of Wuxi Greentown were de-consolidated and the 85% equity interest which is considered to be held by the Group in Wuxi Greentown is accounted for as an associate using the equity method.

Greentown China Holdings Limited Annual Report 2012 174

F-295 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

27. Trust (continued) (I) Cooperation with Zhonghai Trust Company Ltd. (continued) (D) The net proceeds received from the Zhonghai Trust under the sale and repurchase arrangements in relation to the 25% equity interest in Hangzhou Greentown Haiqi and the 45% equity interest in Wuxi Greentown and the Trust Loans have been split into a liability component and a number of derivatives as follows:

The interest charged for the year is calculated by applying an effective interest rate of approximately 22% per annum to the liability component since the Trust Establishment Date.

The cash receipts of RMB45,900,000 and RMB250,000,000 are accounted for as borrowings of the Group for a term of 33 months as a result of the sale and repurchase arrangements in relation to the 45% equity interest in Wuxi Greentown and the 25% equity interest in Hangzhou Greentown Haiqi respectively.

The cash receipts from the Trust Loans granted by the Zhonghai Trust to Hangzhou Greentown Haiqi and Wuxi Greentown are accounted for as borrowings of the Group and associate respectively in the principal amount of RMB1,250,000,000 and RMB437,100,000 respectively.

The liability component is classified as an amount due to non-controlling shareholder by virtue of the Zhonghai Trust’s representation on the board of directors of Hangzhou Greentown Haiqi.

(ii) The Trust Put, the Trust Guarantee and the RMB1 Options (together, the “trust-related financial derivatives”) are accounted for as separate derivatives at fair value.

The binomial model is used in the valuation of the trust-related financial derivatives. Inputs into the model at the respective valuation dates are as follows:

20 April 31 December 31 December 31 December 2009 2009 2010 2011 Risk-free rate of interest 1.582% 1.908% 2.962% 2.877% Dividend yield –––– Time to expiration 2.75 years 2.05 years 1.05 years 0.05 year Volatility 35% – 48% 37% – 48% 26% – 58% 19% – 46%

The variables and assumptions used in computing the fair value of the trust-related financial derivatives are based on the directors’ best estimates. The value of the trust-related financial derivatives varies with different variables of certain subjective assumptions.

175 Greentown China Holdings Limited Annual Report 2012

F-296 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

27. Trust (continued) (I) Cooperation with Zhonghai Trust Company Ltd. (continued) The movements of the liability component and trust-related financial derivatives for the year are set out below:

Liability RMB1 Component Trust Put Guarantee* Options Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 At 1 January 2011 781,338 239,620 8,180 3,680 1,032,818 Interest charged during the year 255,097 – – – 255,097 Interest paid during the year (88,715) – – – (88,715) Changes in fair value – (157,800) (8,180) (2,980) (168,960) At 31 December 2011 947,720 81,820 – 700 1,030,240 Interest charged during the year 31,141 – – – 31,141 Principal repaid during the year (795,900) – – – (795,900) Interest paid during the year (182,961) – – – (182,961) Changes in fair value – (81,820) – (700) (82,520) At 31 December 2012 –––––

* The Guarantee relates to the loan in the amount of RMB437,100,000 provided by the Zhonghai Trust to Wuxi Greentown plus accrued interest.

In August 2010, Hangzhou Greentown Haiqi repaid half of the principal sum of its Trust Loan and Hangzhou Kangju repurchased 12.5% equity interest in Hangzhou Greentown Haiqi at the Equity Put Price. Furthermore, the Zhonghai Trust made a distribution in September 2010 and Greentown Real Estate, as a beneficiary of the junior trust units, received RMB101,622,000 representing a partial refund of trust principal of RMB69,030,000 plus trust income.

There was no repayment of principal in 2011.

Upon the maturity of the Zhonghai Trust in January 2012, Hangzhou Greentown Haiqi repaid the remaining half of the principal sum of its Trust Loan and Hangzhou Kangju repurchased the remaining 12.5% equity interest in Hangzhou Greentown Haiqi at the Equity Put Price; Greentown Real Estate repurchased the 45% equity interest in Wuxi Greentown at the Equity Put Price. Wuxi Greentown became a subsidiary of the Company as the Group has regained control over Wuxi Greentown. The assets and liabilities of Wuxi Greentown were re-consolidated accordingly. Please refer to Note 32 for details.

Greentown China Holdings Limited Annual Report 2012 176

F-297 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

27. Trust (continued) (II) Cooperation with Hwabao Trust Co., Ltd. On 25 March 2011, Greentown Real Estate, Suzhou Greentown Yuyuan, a wholly-owned subsidiary of Greentown Real Estate, and Hwabao Trust Co., Ltd., as trustee, entered into an investment agreement. Pursuant to the investment agreement, (i) the trustee shall establish a trust with a capital of not less than RMB723,750,000 and not more than RMB823,750,000 for the purposes of the acquisition of 9.5% equity interest in Suzhou Greentown Yuyuan and the provision of the remaining trust capital to Suzhou Greentown Yuyuan as a trust loan; (ii) the trustee shall acquire from Greentown Real estate 9.5% equity interest in Suzhou Greentown Yuyuan for a consideration of RMB23,750,000 and Greentown Real Estate shall be entitled to any distributions paid on such 9.5% equity interest in Suzhou Greentown Yuyuan during the term of the trust; (iii) Greentown Real Estate shall subscribe for the junior units of the trust; (iv) the trustee shall provide the remaining trust capital to Suzhou Greentown Yuyuan as a trust loan; (v) Greentown Real Estate shall pledge its 90.5% equity interest in Suzhou Greentown Yuyuan to the trustee as security and provide a guarantee to the Trustee for the obligations of Suzhou Greentown Yuyuan; and (vi) Suzhou Greentown Yuyuan shall pledge its project land use rights to the trustee as security.

Before the equity sale, Greentown Real Estate held all of the equity interest in Suzhou Greentown Yuyuan. After the equity sale, as Greentown Real Estate is entitled to appoint the majority of the composition of the board of directors of Suzhou Greentown Yuyuan, Suzhou Greentown Yuyuan remains a subsidiary of the Company after the disposal. Furthermore, Greentown Real Estate still has in substance a present ownership interest of 100% in Suzhou Greentown Yuyuan by virtue of its investment in the junior units of the trust.

The trust (the “Hwabao Trust”) was established on 15 April 2011 and the aforementioned transactions were completed on 15 April 2011. The unit price for each trust unit is RMB1.00. The duration of the Hwabao Trust shall be 18 months from the trust establishment date.

The 23,750,000 junior units of the Hwabao Trust subscribed for by the Group at a consideration of RMB23,750,000 are accounted for as an available-for-sale investment. The Group as beneficiary of junior units is subordinate to those of senior units in receiving trust income. The trust income shall be paid (a) in cash on the senior units and (b) in cash, in equity or in other kind on the junior units, upon the expiry or the termination of the relevant trust units.

The trust financing arrangements set out above are considered to be a sale and repurchase arrangement. This sale and repurchase arrangement is accounted for as a financing arrangement rather than a disposal of equity interest in Suzhou Greentown Yuyuan.

The net proceeds received from the equity sale and trust loan are considered to be a liability and classified as a current amount due to non-controlling shareholder by virtue of the Hwabao Trust’s representation on the board of directors of Suzhou Greentown Yuyuan. The contractual interest rate on the trust loan of RMB800 million is 9.8% per annum. The interest charged for the period is calculated by applying an effective interest rate of approximately 9.8% per annum to the liability since the trust establishment date.

On 1 July 2012, after having obtained consent from Hwabao Trust Co., Ltd., the Group disposed of the entire equity interest in Suzhou Greentown Yuyuan to an associate. Please refer to Note 33 for details.

Hwabao Trust was liquidated upon its maturity in October 2012.

177 Greentown China Holdings Limited Annual Report 2012

F-298 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

27. Trust (continued) (II) Cooperation with Hwabao Trust Co., Ltd. (continued) The movements of the liability for the year are set out below:

RMB’000 At 15 April 2011 823,750 Interest charged during the year 55,533 At 31 December 2011 879,283 Interest charged during the year 41,026 Interest paid during the year (81,532) Principal repaid during the year (23,750) Disposal of a subsidiary (815,027) At 31 December 2012 –

(III) Cooperation with Beijing International Trust Co., Ltd. Pursuant to a cooperation agreement dated 25 March 2011, supplementary agreements dated 25 March 2011 and 26 April 2011 and a memorandum of understanding entered into between Greentown Real Estate and Beijing International Trust Co., Ltd., as trustee, (i) Greentown Real Estate shall establish a wholly-owned subsidiary called Hangzhou Lvhua Investment Management Co., Ltd. (“Hangzhou Lvhua”) and transferred its 90% equity interest in Qingdao Greentown Huajing to Hangzhou Lvhua; (ii) the trustee shall establish a trust with a capital of approximately RMB4 billion for the purposes of (a) the acquisition of 100% equity interest in Hangzhou Lvhua and 10% equity interest in Qingdao Greentown Huajing from Greentown Real Estate for consideration of RMB342,000,000 and RMB38,000,000 respectively; and (b) the advance of approximately RMB3,620 million to Qingdao Greentown Huajing; (iii) Greentown Real Estate shall have the right to acquire all of the 100% equity interest in Hangzhou Lvhua and 10% equity interest in Qingdao Greentown Huajing from the trust and repay the advance to the trust during the period from 12 to 18 months after the trust establishment date for an aggregate consideration of RMB4 billion; (iv) the trust shall be entitled to dispose of any of its remaining equity interests in Hangzhou Lvhua and Qingdao Greentown Huajing to any parties at any price upon the expiry of 18 months from the trust establishment date; and (v) Greentown Real Estate shall have the obligation to fund the trust’s cash shortfalls at specific points during the life of the trust when the trust’s cash assets are less than that as stipulated in the agreements so as to allow the trust to pay the trust expenses and trust return.

Pursuant to a project management agreement dated 25 March 2011 entered into between Beijing International Trust Co., Ltd., Greentown Real Estate, Qingdao Greentown Huajing and Hangzhou Lvhua, Qingdao Greentown Huajing and Hangzhou Lvhua shall be managed by the directors, supervisors and senior management personnel assigned by Greentown Real Estate under the supervision of the trustee.

The trust (the “Beijing Trust”) was established on 31 March 2011. A total of 4,000 million trust units have been subscribed, comprising 2,500 million senior units subscribed by qualified investors and 1,500 million junior units subscribed by Greentown Real Estate. The unit price for each trust unit is RMB1.00. The duration of the Beijing Trust shall be 18 months from 31 March 2011.

Senior units carry an expected fixed trust income of 7% to 7.8% per annum. Junior units are not entitled to any fixed trust income and are subordinate to the senior units in receiving trust distributions.

Greentown China Holdings Limited Annual Report 2012 178

F-299 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

27. Trust (continued) (III) Cooperation with Beijing International Trust Co., Ltd. (continued) In the opinion of the directors, the Beijing Trust is in substance a special purpose entity controlled by the Group because (i) the Beijing Trust is created to provide a source of funding to the Group; and (ii) the Group has rights to obtain the majority benefits and remains exposed to risk in the Beijing Trust by virtue of its investment in the junior units. As a result, (i) the Beijing Trust has been consolidated into the Group; and (ii) no disposal of the equity interests in Qingdao Greentown Huajing and Hangzhou Lvhua has been recognized and both Qingdao Greentown Huajing and Hangzhou Lvhua continue to be accounted for as subsidiaries of the Company.

The Group’s RMB1,500 million investment in the junior units has been offset against its subscription to junior units in the Beijing Trust. The remaining proceeds of RMB2,500 million received by the Beijing Trust from the senior unit holders are considered to be a liability and classified as a current amount due to non-controlling shareholder. The interest charged for the period is calculated by applying an effective interest rate of approximately 13.3% per annum to the liability since the trust establishment date.

On 12 September 2012, Hangzhou Lvhua acquired the 10% equity interest in Qingdao Greentown Huajing from the Beijing Trust for a consideration of RMB38,000,000. On 25 September 2012, after having obtained consent from Beijing International Trust Co., Ltd., Hangzhou Lvhua disposed of its 60% equity interest in Qingdao Greentown Huajing to an independent third party and retained the remaining 40% interest in Qingdao Greentown Huajing as an associate. Please refer to Note 33 for details. Subsequently the Beijing Trust was early terminated on 27 September 2012 upon repayment of the trust capital.

The movements of the liability for the year are set out below:

RMB’000 At 31 March 2011 2,500,000 Interest charged during the year 224,669 Interest paid during the year (140,008) At 31 December 2011 2,584,661 Interest charged during the year 268,857 Interest paid during the year (194,268) Disposal of a subsidiary (2,659,250) At 31 December 2012 –

179 Greentown China Holdings Limited Annual Report 2012

F-300 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

27. Trust (continued) (IV) Summary The movements of the liability components and trust-related financial derivatives of the various trust financing arrangements for the year are set out below:

Liability Trust-related Component Derivatives Total RMB’000 RMB’000 RMB’000 At 1 January 2011 4,088,127 251,480 4,339,607 Trust loans raised during the year 3,323,750 – 3,323,750 Interest charged during the year 630,801 – 630,801 Principal repaid during the year (3,150,000) – (3,150,000) Interest paid during the year (481,014) – (481,014) Changes in fair value – (168,960) (168,960) At 31 December 2011 4,411,664 82,520 4,494,184 Trust loans raised during the year Interest charged during the year 341,024 – 341,024 Principal repaid during the year (819,650) – (819,650) Interest paid during the year (458,761) – (458,761) Disposal of subsidiaries (3,474,277) – (3,474,277) Changes in fair value – (82,520) (82,520) At 31 December 2012 – – – 28. Convertible Bonds On 18 May 2007, the Company issued at par USD settled zero coupon convertible bonds (the “2007 Convertible Bonds”) in an aggregate principal amount of RMB2,310,000,000 due 2012. The 2007 Convertible Bonds are also listed on the Singapore Exchange Securities Trading Limited. The net proceeds from the issue of the 2007 Convertible Bonds are mainly used to finance the development of the Group’s existing projects and new projects (including land acquisition costs), with the remainder being applied to the Group’s general working capital requirement.

The 2007 Convertible Bonds constitute direct, unsubordinated, unconditional and unsecured obligations of the Company, and shall at all times rank pari passu and without any preference or priority among themselves.

Please refer to the 2011 consolidated financial statements for the principal terms of the 2007 Convertible Bonds.

Greentown China Holdings Limited Annual Report 2012 180

F-301 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

28. Convertible Bonds (continued) The net proceeds received from the issue of the 2007 Convertible Bonds have been split between a liability component and an equity component as follows:

(a) Liability component represents the present value of the contractually determined stream of future cash flows discounted at the prevailing market interest rate at that time applicable to instruments of comparable credit status and providing substantially the same cash flows, on the same terms, with the issuer and bondholder early redemption options but without the conversion option. The early redemption options are not separately accounted for because they are considered to be closely related to the host liability component.

The interest charged for the period is calculated by applying an effective interest rate of approximately 4.69% to the liability component since the convertible bonds were issued.

(b) Equity component represents the option of the bondholders to convert the convertible bonds into equity of the Company, which is equal to the difference between the net proceeds received and the fair value of the liability component.

The movements of the liability component and equity component of the 2007 Convertible Bonds for the year are set out below:

Liability Equity Component Component Total RMB’000 RMB’000 RMB’000 As at 1 January 2011 178,110 27,275 205,385 Interest charged during the year 8,356 – 8,356 As at 31 December 2011 186,466 27,275 213,741 Interest charged during the year 3,259 – 3,259 Redemption (189,725) (27,275) (217,000) As at 31 December 2012 – – –

On 16 April 2010, the deadline for the submission of the put exercise notice in respect of the 2007 Convertible Bonds, the Company received from certain bondholders put exercise notices requiring the Company to redeem part of the 2007 Convertible Bonds with an aggregate principal amount of RMB2,128,700,000, representing 92.15% of the total principal amount of the 2007 Convertible Bonds outstanding as at 31 December 2009. Such portion of the 2007 Convertible Bonds were redeemed for RMB2,199,926,000 on 18 May 2010. A loss of RMB148,158,000 was recognized in profit or loss for the year ended 31 December 2010 as a result of a revision in estimates of the expected payments over the expected life of the 2007 Convertible Bonds.

In addition, certain holders of the 2007 Convertible Bonds with an aggregate principal amount of RMB1,700,000 opted to convert their holdings into 78,540 shares in the Company at a conversion price of HK$21.99 per share. Such conversion shares were issued on 16 April 2010.

On 18 May 2012, the remaining 2007 Convertible Bonds with an aggregate principal amount of RMB179,600,000 were redeemed for a cash consideration of RMB189,725,000 upon maturity.

181 Greentown China Holdings Limited Annual Report 2012

F-302 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

29. Senior Notes On 10 November 2006, the Company issued at par senior notes in an aggregate principal amount of USD400,000,000. The senior notes are designated for trading in the National Association of Securities Dealer Inc.’s PORTAL market and are listed on the Singapore Exchange Securities Trading Limited. The senior notes carry interest at the rate of 9% per annum, payable semi- annually in arrears, and will mature on 8 November 2013, unless redeemed earlier.

The principal terms of the senior notes are as follows:

The senior notes are:

(i) general obligations of the Company;

(ii) guaranteed by the Subsidiary Guarantors, subsidiaries other than those organised under the laws of the PRC, on a senior basis, subject to certain limitations (the “Subsidiary Guarantees”);

(iii) senior in right of payment to any existing and future obligations of the Company expressly subordinated in right of payment to the senior notes;

(iv) at least pari passu in right of payment with all other unsecured, unsubordinated indebtedness of the Company (subject to any priority rights of such unsubordinated indebtedness pursuant to applicable law); and

(v) effectively subordinated to all existing and future obligations of the Non-Guarantor Subsidiaries, subsidiaries organised under the laws of the PRC.

After the charge of the Collateral (as defined below) by the Company and the Subsidiary Guarantor Chargor (as defined below) and subject to certain limitations, the senior notes will:

(i) be entitled to a first priority lien on the Collateral charged by the Company and the Subsidiary Guarantor Chargor (subject to any permitted liens);

(ii) rank effectively senior in right of payment to unsecured obligations of the Company with respect to the value of the Collateral charged by the Company securing the senior notes; and

(iii) rank effectively senior in right of payment to unsecured obligations of the Subsidiary Guarantor Chargors with respect to the value of the Collateral charged by each Subsidiary Guarantor Chargor securing the senior notes (subject to priority rights of such unsecured obligations pursuant to applicable law).

The Company has agreed, for the benefit of the holders of the senior notes, to charge, or cause the initial Subsidiary Guarantor Chargor to charge, as the case maybe, the capital stock of each initial Subsidiary Guarantor (collectively, the “Collateral”) in order to secure the obligations of the Company under the senior notes and the indenture and of the Subsidiary Guarantor Chargor under its Subsidiary Guarantee. The initial Subsidiary Guarantor Chargor will be Richwise. The Collateral securing the senior notes and the Subsidiary Guarantees may be released or reduced in the event of certain asset sales and certain other circumstances.

Greentown China Holdings Limited Annual Report 2012 182

F-303 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

29. Senior Notes (continued) At any time and from time to time on or after 8 November 2010, the Company may redeem the senior notes, in whole or in part, at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest to the redemption date if redeemed during the twelve-month period beginning on 8 November of each of the years indicated below.

Period Redemption Price 2010 104.50% 2011 102.25% 2012 and thereafter 100.00%

At any time prior to 8 November 2010, the Company may at its option redeem the senior notes, in whole but not in part, at a redemption price equal to 100% of the principal amount of the senior notes plus the Applicable Premium (as defined below) as of, and accrued and unpaid interest, if any, to the redemption date.

“Applicable Premium” means with respect to the senior notes at any redemption date, the greater of (1) 1.00% of the principal amount of such senior notes and (2) the excess of (A) the present value at such redemption date of (i) the redemption price of such senior notes on 8 November 2010 plus (ii) all required remaining scheduled interest payments due on such senior notes through 8 November 2010 (but excluding accrued and unpaid interest to such redemption date), computed using a discount rate equal to the Adjusted Treasury Rate, the rate per annum equal to the semi-annual equivalent yield in maturity of the comparable US Treasury security, plus 100 basis points, over (B) the principal amount of such senior notes on such redemption date.

At any time and from time to time prior to 8 November 2009, the Company may redeem up to 35% of the aggregate principal amount of the senior notes at a redemption price of 109% of the principal amount of the senior notes, plus accrued and unpaid interest, if any, with the proceeds from sales of certain kinds of its capital stock, subject to certain conditions.

The senior notes contain a liability component and an early redemption option:

The interest charged for the year is calculated by applying an effective interest rate of approximately 9% per annum to the liability component since the senior notes were issued.

On 21 April 2009, the Company commenced a tender offer (the “Tender Offer”) to purchase for cash any and all of its outstanding US$400,000,000 9.00% Senior Notes due 2013 (the “Notes”). In conjunction with the Tender Offer, the Company also solicited (the “Consent Solicitation”, and together with the Tender Offer, the “Offer”) from the holders of the Notes consents (the “Consents”) to proposed amendments and waivers (the “Proposed Amendments and Waivers”) of the provisions of the indenture governing the Notes (the “Indenture”), dated as of 10 November 2006. The Offer expired at 5:00 p.m., New York City time, on 19 May 2009 (the “Expiration Date”).

183 Greentown China Holdings Limited Annual Report 2012

F-304 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

29. Senior Notes (continued) Holders who validly tendered and did not withdraw their Notes on or prior to 5:00 p.m., New York City Time, on 4 May 2009 (the “Consent Date”) were eligible to receive the total consideration of US$850 for each US$1,000 principal amount of the Notes tendered (the “Total Consideration”), which consists of (i) an amount of US$775 (the “Purchase Price”), (ii) an amount of US$59, which constitutes an early tender payment (the “Early Tender Payment”), and (iii) a consent payment of US$16 (the “Consent Payment”), plus accrued and unpaid interest thereon up to, but not including, the date of payment (the “Settlement Date”). Holders who validly tendered after the Consent Date but on or before the Expiration Date were eligible to receive the Purchase Price only, plus accrued and unpaid interest thereon up to, but not including, the Settlement Date. Holders who did not tender their Notes but validly deliver Consents on or prior to the Consent Date, and did not validly revoke their Consents on or prior to the Consent Date, were eligible to receive the Consent Payment only.

As of the Expiration Date:

(i) US$361,334,000 of the principal amount of the Notes, representing approximately 90.3% of the total aggregate principal amount of Notes outstanding, had been validly tendered and not been withdrawn; and

(ii) Consents (including Consents deemed to have been delivered) from holders holding US$370,003,000 of the principal amount of the Notes, representing approximately 92.5% of the total aggregate principal amount of Notes outstanding, had been validly delivered and not been revoked.

The Company accepted all the tendered Notes for payment. Following the settlement of the Offer, US$38,666,000 of the principal amount of the Notes remains outstanding.

On 5 May 2009, the Company executed with the Subsidiary Guarantors and the trustee a supplement to the Indenture containing the Proposed Amendments and Waivers which became effective upon execution but does not become operative until the settlement date on 22 May 2009. The Proposed Amendments and Waivers, among other things,

(a) eliminated substantially all of the restrictive covenants contained in the Indenture including the limitations on (i) incurrence of indebtedness and preferred stock, (ii) restricted payments, (iii) liens other than liens over the Collateral, (iv) dividends and other payment restrictions affecting subsidiaries, (v) sales and issuances of capital stock in restricted subsidiaries, (vi) issuances of guarantees by restricted subsidiaries, (vii) sale and leaseback transactions, (viii) transactions with shareholders and affiliates, (ix) business activities, (x) designation of restricted and unrestricted subsidiaries and (xi) anti-layering, and compliance with certain financial requirements in the mergers, consolidations or sales of assets covenants;

(b) eliminated certain Events of Default with respect to the Notes; and

(c) waived any and all actual defaults or Events of Default that have occurred and are continuing as well as any and all potential defaults or Events of Default that may have occurred or are continuing under the Indenture directly or indirectly, from or in connection with, any non-compliance or potential non-compliance with the Indenture.

The aggregate amount paid by the Company to the holders for the purchase of the Notes tendered pursuant to the Tender Offer and the payment for the Consents delivered pursuant to the Consent Solicitation is approximately US$311,026,000 (equivalent to RMB2,122,427,000) (which includes accrued interest thereon and fees paid). Payment was made on 22 May 2009 for all tendered Notes and delivered Consents.

Greentown China Holdings Limited Annual Report 2012 184

F-305 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

29. Senior Notes (continued) The movements of the senior notes during the year are set out below:

RMB’000 At 1 January 2011 253,854 Exchange realignment (12,136) Interest charged during the year 22,485 Interest paid/payable during the year (22,485) At 31 December 2011 241,718 Exchange realignment (391) Interest charged during the year 21,899 Interest paid/payable during the year (21,899) At 31 December 2012 241,327

As at 31 December 2012, the senior notes were classified as current liabilities as they will mature within one year.

30. Share Capital

Number of Share Shares Capital HKD’000 Authorised Ordinary shares of HKD0.10 each At 31 December 2011 and 2012 10,000,000,000 1,000,000 Issued and fully paid Ordinary shares of HKD0.10 each At 1 January 2011 1,637,653,647 163,765 Exercise of share options 2,369,250 237 At 31 December 2011 1,640,022,897 164,002 Exercise of share options 13,189,000 1,319 Issuance of new shares (Note a) 327,849,579 32,785 Issuance of new shares (Note b) 162,113,714 16,211 At 31 December 2012 2,143,175,190 214,317

185 Greentown China Holdings Limited Annual Report 2012

F-306 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

30. Share Capital (continued)

RMB’000 Shown on the consolidated statement of financial position As at 31 December 2012 207,422 As at 31 December 2011 166,441

Notes:

(a) On 15 June 2012, the Company issued and allotted 327,849,579 shares of HKD0.10 each to Target Smart Investments Limited (“Target Smart”), a wholly-owned subsidiary of The Wharf (Holdings) Limited (“Wharf”), a company listed on the Stock Exchange, at HKD5.20 per share pursuant to a subscription agreement dated 8 June 2012. The total consideration received amounted to approximately HKD1,704,818,000 (equivalent to approximately RMB1,386,221,000).

(b) On 2 August 2012, the Company further allotted and issued 162,113,714 shares of HKD0.10 each to Target Smart at HKD5.20 per share pursuant to an investment agreement dated 8 June 2012. The total consideration received amounted to approximately HKD842,991,000 (equivalent to approximately RMB689,095,000).

All shares issued during the year rank pari passu with other shares in issue in all respects.

Greentown China Holdings Limited Annual Report 2012 186

F-307 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

31. Convertible Securities Active Way Development Limited (“Active Way”), a wholly-owned subsidiary of the Company, issued the Hong Kong dollar denominated perpetual subordinated convertible callable securities (“Convertible Securities”) with an aggregate principal amount of HKD2,550,000,000 on 2 August 2012 to Enzio Investments Limited, a wholly-owned subsidiary of Wharf, pursuant to an investment agreement dated 8 June 2012. The Company has agreed to guarantee on a subordinated basis the due payment of all sums expressed to be payable by Active Way under the Convertible Securities. The Convertible Securities are convertible into a maximum of 344,594,594 new shares of the Company at an initial conversion price of HK$7.4 per share, subject to conversion price adjustments. The Convertible Securities are convertible at any time after the expiry of three years from the issue date, except if an offer is made to shareholders for all the outstanding shares of the Company or if a breach event occurs, in which case, the Convertible Securities may be converted at any time on or after the offer is formally announced in compliance with applicable rules and regulations or for so long as the breach event is continuing, as the case may be.

187 Greentown China Holdings Limited Annual Report 2012

F-308 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

32. Acquisition of Subsidiaries Particulars of the subsidiary acquired during 2011 were as follows:

Effective Equity Interest Acquired Company Principal Activity Acquisition Date Acquired Consideration RMB’000 綠城投資管理有限公司 Investment holding 4 January 2011 100% 20,000 Greentown Investment Management Co., Ltd. (“Greentown Investment”) (Note (a)) 20,000

Notes:

(a) Greentown Investment was acquired from a Shareholder’s Company (as defined in Note 40).

Particulars of the subsidiary acquired during 2012 were as follows:

Effective Equity Interest Acquired Company Principal Activity Acquisition Date Acquired Consideration RMB’000 無錫綠城房地產開發有限公司 Real estate 11 January 2012 85% – Wuxi Greentown (Note (i)) development

台州綠城泰業房地產開發有限公司 Real estate 27 September 2012 51% 13,000 Taizhou Taiye (Note (ii)) development

杭州合仁装飾有限公司 Design and 14 September 2012 32% 1,500 Hangzhou Heren Decoration Co., Ltd. decoration (“Hangzhou Heren”) (Note (iii)) 14,500

Notes:

(i) Wuxi Greentown was previously accounted for as an associate of the Group under the Zhonghai Trust arrangement. During the year, upon the maturity of the Zhonghai Tust, Wuxi Greentown became a subsidiary of the Company. Please refer to Note 27(I) for details. The entire equity interest in Wuxi Greentown was subsequently disposed of to an associate of the Group on 1 July 2012. Please refer to Note 33 for details.

(iii) Hangzhou Heren was previously a 15%-owned available-for-sale investment of Greentown Construction Management Co., Ltd., (“Greentown Construction Management”), a 35%-owned subsidiary of the Group. Greentown Construction Management is a subsidiary of the Group because the Group has the right to appoint the majority of directors of Greentown Construction Management and hence the power to direct the financial and operational policies of Greentown Construction Management. Greentown Construction Management acquired additional 75% equity interest in Hangzhou Heren during the year. Therefore, Hangzhou Heren being a 90%-owned subsidiary of Greentown Property is also accounted for as a subsidiary of the Group. Hangzhou Heren is engaged in design and decoration business. It was acquired so as to provide design and decoration services to the Group’s property development companies.

Greentown China Holdings Limited Annual Report 2012 188

F-309 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

32. Acquisition of Subsidiaries (continued) The acquisition of Wuxi Greentown, Taizhou Taiye and Hangzhou Heren were accounted for using the acquisition method.

A summary of the effects of the acquisition of these subsidiaries is as follows:

2012 2011 RMB’000 RMB’000 Net assets acquired: Property, plant and equipment 5,116 – Properties under development 1,764,835 – Completed properties for sale 270,678 – Trade and other receivables, deposits and prepayments 56,538 20,027 Amounts due from related parties 282,399 – Prepaid income tax 23,504 – Prepaid other taxes 18,239 – Bank balances and cash 74,811 2 Trade and other payables (131,239) (29) Pre-sale deposits (400,476) – Amounts due to related parties (925,829) – Income taxes payable (33,159) – Other taxes payable (25) – Bank and other borrowings (613,650) – 391,742 20,000 Non-controlling interests (102,857) – 288,885 20,000 Less: Transferred from interests previously held and classified as associates/available-for-sale investments (221,006) – Gain on re-measurement of an associate to acquisition date fair value in business combination achieved in stages (Note i) (3,399) – Gain on re-measurement of an associate to acquisition date fair value upon re-consolidation of a subsidiary (Note ii) (49,980) – 14,500 20,000 Total consideration, satisfied by: Cash 14,500 20,000 14,500 20,000 Net cash flow arising on acquisition Cash paid (14,500) (20,000) Bank balances and cash acquired 74,811 2 60,311 (19,998)

Note:

i. The Group’s 41% equity interest in Taizhou Taiye, which was previously accounted for as an associate, was remeasured to its fair value upon acquisition, resulting in a gain of RMB3,399,000.

ii. The Group’s 85% equity interest in Wuxi Greentown, which was previously accounted for as an associate, was remeasured to its fair value upon the maturity of the Zhonghai Trust, resulting in a gain of RMB49,980,000.

189 Greentown China Holdings Limited Annual Report 2012

F-310 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

32. Acquisition of Subsidiaries (continued) The receivables acquired (which principally comprised amounts due from related parties) with a fair value of RMB338,937,000 at the date of acquisition had gross contractual amounts of RMB338,937,000, which were expected to be fully collected.

The non-controlling interest recognised at the acquisition date was measured by reference to the proportionate share of the recognised amounts of net assets of Wuxi Greentown, Taizhou Taiye and Hangzhou Heren and amounted to RMB102,857,000.

Revenue for the year includes RMB92,248,000 which is attributable to Wuxi Greentown between the date of acquisition and the end of the year. Taizhou Taiye and Hangzhou Heren did not contribute any revenue to the Group between the date of acquisition and the end of the year.

The profit attributable to Wuxi Greentown amounted to RMB16,858,000, which have been recognised in the Group’s profit for the year between the date of acquisition and the end of the year. The loss attributable to Taizhou Taiye amounted to RMB5,354,000 and gain attributable to Hangzhou Heren amounted to RMB1,000 have been recognised in the Group’s profit for the year between the date of acquisition and the end of the year.

Had the acquisition of Wuxi Greentown, Taizhou Taiye and Hangzhou Heren been effected at 1 January 2012, the effect on the Group’s revenue and profit for the year ended 31 December 2012 would have been insignificant.

33. Disposal of Subsidiaries On 29 August 2011, the Group disposed of its entire 57% equity interest in Xinjiang Sunshine Greentown Property Management Co., Ltd. to Greentown Property Management Service Group Co., Ltd, a Shareholders’ Company, for nil consideration.

On 5 September 2011, the Group conditionally disposed of its entire 60% equity interest in Xinjiang Hongyuan Investment Co., Ltd. (“Xinjiang Hongyuan”) to Shanghai Jiechen Investment Consulting Service Co., Ltd. (“Jiechen”), an independent third party, for a cash consideration of RMB25,500,000.

On 13 January 2012, the Group disposed of its 51% equity interest in Sunac Greentown Hubin, a wholly-owned subsidiary, to Sunac Zhidi, a wholly-owned subsidiary of Sunac, a company listed on the Stock Exchange and an independent third party, for a cash consideration of RMB51,000,000. The remaining 49% equity interest in Sunac Greentown Hubin is accounted for as an associate.

On 27 February 2012, the Group disposed of its 81% equity interest in Zhejiang Greentown Electronic Engineering Co., Ltd. (“Zhejiang Greentown Electronic Engineering”) to an independent third party, for a cash consideration of approximately RMB7,096,000. The Group has retained the remaining 9% equity interest in Zhejiang Greentown Electronic Engineering and classified the retained investments as an available-for-sale investment measured at cost.

On 21 May 2012, the Group disposed of its 100% equity interest in Greentown Hesheng to Shanghai Chang Sheng for a cash consideration of RMB130,330,000.

Greentown China Holdings Limited Annual Report 2012 190

F-311 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

33. Disposal of Subsidiaries (continued) On 18 June 2012, the Group disposed of its entire 70% equity interest in Shanghai Greentown Plaza Development Co., Ltd. to SOHO (Shanghai) Investment Co., Ltd., a wholly-owned subsidiary of SOHO China Limited, for a cash consideration of approximately RMB1,289,736,000.

On 1 July 2012, Greentown Real Estate disposed of its equity interests in seven subsidiaries, namely Huazhe Bund, Lvshun Real Estate, Suzhou Greentown Yuyuan, Suzhou Greentown Rose Garden, Wuxi Greentown, Changzhou Greentown Real Estate Co., Ltd. and Tianjin Yijun, to Sunac Greentown. Please refer to Note 17 for details. The aggregate consideration for the disposal of the seven subsidiaries was RMB2,311,290,000.

On 27 August 2012, Greentown Construction Management disposed of its entire equity interest in Hangzhou Lvcheng Landscape Architectural Co., Ltd. to independent third parties, for a cash consideration of approximately RMB1,000,000.

On 15 September 2012, the Group disposed of its entire 60% equity interest in Qingdao Lvcheng Miaomu Co., Ltd. to independent third parties for a cash consideration of approximately RMB1,200,000.

On 25 September 2012, the Group disposed of its 60% equity interest in Qingdao Huajing to an independent third party, for a cash consideration of approximately RMB228,000,000. The remaining 40% equity interest in Qingdao Huajing is accounted for as an associate. Please refer to Note 27(III) for details.

On 10 October 2012, the Group disposed of its 60% equity interest in Tangshan Greentown Real Estate Development Co., Ltd. (“Tangshan Greentown”) to a subsidiary of a 24%-owned associate of the Group, for a cash consideration of approximately RMB30,000,000. The Group has retained the remaining 40% equity interest in Tangshan Greentown and classified the retained investment as an associate.

On 13 November 2012, the Group disposed of its 60% equity interest in Zhejiang Greentown United Decoration Development Co., Ltd. (“Greentown United Decoration”) to independent third parties for a cash consideration of approximately RMB12,000,000. The Group has retained the remaining 40% equity interest in Greentown United Decoration and classified the retained investment as an associate.

191 Greentown China Holdings Limited Annual Report 2012

F-312 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

33. Disposal of Subsidiaries (continued) A summary of the effects of the disposal of these subsidiaries are as follows:

2012 2011 RMB’000 RMB’000 Net assets disposed of: Property, plant and equipment 20,111 7,402 Properties for development 9,984,796 – Properties under development 17,493,065 555,306 Completed properties for sale 907,680 – Inventories 16,154 – Available-for-sale investments 100,000 – Interests in jointly controlled entities 5,000 – Rental paid in advance 1,927 – Trade and other receivables, deposits and prepayments 1,186,899 126,706 Amounts due from related parties 691,845 – Prepaid income taxes 80,268 116 Prepaid other taxes 107,377 – Bank balances and cash 445,913 15,685 Deferred tax assets 94,705 – Deferred tax liabilities (43,334) – Trade and other payables (2,490,403) (33,130) Pre-sale deposits (3,162,907) – Amounts due to related parties (15,294,162) (415,242) Income taxes payable (298,489) – Other taxes payable (3,806) (5) Bank borrowings (4,671,980) (200,000) Non-controlling interests (1,407,985) (34,977) 3,762,674 21,861 Net gain on disposal of subsidiaries 549,697 3,639 Total consideration 4,312,371 25,500 Satisfied by: Cash received, net (Note) 2,898,912 – Cash receivable 7,123 25,500 Transfer to interest in associates 1,381,798 – Transfer to available-for-sale investments 24,538 – 4,312,371 25,500 Net cash inflow (outflow) arising on disposal Cash received 2,898,912 – Bank balances and cash disposed of (445,913) (15,685) 2,452,999 (15,685)

Note: The cash received on disposal of subsidiaries is presented net of the Group’s fund injection into Sunac Greentown pursuant to the cooperative framework agreement dated 22 June 2012.

Greentown China Holdings Limited Annual Report 2012 192

F-313 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

34. Operating Leases The Group as Lessee

2012 2011 RMB’000 RMB’000 Minimum lease payments made under operating leases in respect of buildings during the year 78,905 70,514

At the end of the reporting period, the Group had commitments for future minimum lease payments under non-cancellable operating leases which fall due as follows:

2012 2011 RMB’000 RMB’000 Within one year 42,914 50,571 In the second to fifth year inclusive 26,434 56,640 After five years 431 796 69,779 108,007

Operating lease payments represent rentals payable by the Group for certain office premises. Leases are negotiated for a term ranging from 1 to 6 years with fixed rentals.

The Group as Lessor

2012 2011 RMB’000 RMB’000 Property rental income, net of negligible outgoings 122,604 99,710

At the end of the reporting period, the Group had contracted with tenants for the following future minimum lease payments:

2012 2011 RMB’000 RMB’000 Within one year 26,612 32,016 In the second to fifth year inclusive 15,076 18,090 After five years 12,274 17,596 53,962 67,702

Property rental income represents rentals receivable by the Group. Leases are negotiated for a term ranging from three months to 15 years with fixed rentals.

193 Greentown China Holdings Limited Annual Report 2012

F-314 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

35. Commitments

2012 2011 RMB’000 RMB’000 Commitments contracted for but not provided in the consolidated financial statements in respect of: Properties for development and properties under development 15,079,597 19,184,459 Construction in progress 196,766 142,190 15,276,363 19,326,649

In addition to the above, the Group’s share of the commitments of its jointly controlled entities are as follows:

2012 2011 RMB’000 RMB’000 Contracted for but not provided in respect of properties for development and properties under development 2,283,607 1,757,029 36. Share-based Payment Transactions The Company’s share option scheme (the “Scheme”) was adopted pursuant to the shareholders’ resolution passed on 22 June 2006 for the primary purpose of providing incentives and/or reward to directors and employees of the Group and will expire on 21 June 2016. Under the Scheme, the Board of Directors of the Company may grant options to eligible employees, including directors of the Company and its subsidiaries, to subscribe for shares in the Company.

Options may be exercised at any time from the date of grant of the share option to the expiry of the Scheme, unless otherwise specified in the Scheme. The exercise price is determined by the directors of the Company, and will not be less than the higher of (i) the closing price of the Company’s shares on the date of grant; (ii) the average closing price of the share for the five business dates immediately preceding the date of grant; and (iii) the nominal value of the Company’s shares.

Greentown China Holdings Limited Annual Report 2012 194

F-315 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

36. Share-based Payment Transactions (continued) Details of specific categories of options granted in 2009 are as follows:

Exercise Date of Grant Vesting Period Exercise Period Price Fair Value 2009A 22/1/2009 22/1/2009-21/1/2011 22/1/2009-21/1/2019 HK$2.89 HK$1.19 2009B 13/5/2009 13/5/2009-12/5/2012 13/5/2009-12/5/2019 HK$7.16 HK$3.41 2009C 22/6/2009 22/6/2009-21/6/2011 22/6/2009-21/6/2019 HK$11.00 HK$4.71 2009D 17/7/2009 17/7/2009-16/7/2011 17/7/2009-16/7/2019 HK$11.59 HK$4.17

The closing prices of the Company’s shares on 22 January, 13 May, 22 June and 17 July 2009, the dates of grant, were HK$2.75, HK$7.16, HK$11.00 and HK$11.52 respectively.

The share options are exercisable during the following periods:

195 Greentown China Holdings Limited Annual Report 2012

F-316 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

36. Share-based Payment Transactions (continued) The following table discloses movements of the Company’s share options held by directors and employees during the year:

Outstanding at Granted Exercised Forfeited Option Type 1/1/2012 During Year During Year During Year 31/12/2012 2009A 27,199,000 – (8,295,500) – 18,903,500 2009B 10,000,000 – (4,783,500) – 5,216,500 2009C 37,382,000 – (110,000) (835,000) 36,437,000 2009D 15,000,000––– 15,000,000 89,581,000 – (13,189,000) (835,000) 75,557,000 Exercisable at the end of the year 75,557,000 Weighted average exercise price HK$8.21 – HK$4.51 HK$11.00 HK$8.82

Outstanding at Granted Exercised Forfeited Option Type 1/1/2011 During Year During Year During Year 31/12/2011 2009A 29,568,250 – (2,369,250) – 27,199,000 2009B 10,000,000–––10,000,000 2009C 38,930,000 – – (1,548,000) 37,382,000 2009D 15,000,000––– 15,000,000 93,498,250 – (2,369,250) (1,548,000) 89,581,000 Exercisable at the end of the year 86,281,000 Weighted average exercise price HK$8.12 – HK$2.89 HK$11.00 HK$8.21

In respect of the share options exercised during the year, the weighted average share price at the dates of exercise is HK$10.84 (2011: HK$7.88).

HK$1.00 is payable for each acceptance of grant of share options. In addition, (i) in respect of the 2009A share options, certain grantees were required to pay an option premium of HK$1.00 per share option up front; and (ii) in respect of the 2009C share options, certain grantees were required to pay an option premium of HK$3.50 per share option in three annual instalments. As at 31 December 2012, share option premiums receivable amounting to RMB89,448,000 (2011: RMB92,570,000) were included in current other receivables according to the payment terms of the share option premiums.

The estimated fair values of the 2009A, 2009B, 2009C and 2009D share options at their respective dates of grant are RMB39,173,000, RMB30,023,000, RMB168,173,000 and RMB55,132,000 respectively.

The following assumptions were used to calculate the fair values of the share options:

Greentown China Holdings Limited Annual Report 2012 196

F-317 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

36. Share-based Payment Transactions (continued) The Binomial model has been used to estimate the fair value of the 2009A, 2009B and 2009C share options. The Black-Scholes pricing model has been used to estimate the fair value of the 2009D share options. The variables and assumptions used in computing the fair value of the share options are based on the directors’ best estimate. Changes in variables and assumptions may result in changes in the fair value of the share options.

Expected volatility was determined by using the historical volatility of the share price of comparable listed companies over the most recent period. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non transferability, exercise restrictions and behavioural considerations.

The Group recognised the total expense of RMB1,203,000 for the year ended 31 December 2012 (2011: RMB11,907,000) in relation to share options granted by the Company.

At the end of each reporting period, the Group revises its estimates of the number of share options that are expected to ultimately vest. The impact of the revision of the estimates, if any, is recognised in profit and loss, with a corresponding adjustment to the share options reserve.

37. Pledge of Assets Other than those security arrangements disclosed in Notes 27 and 29, at the end of the reporting period, the following assets were pledged to banks and other parties to secure credit facilities granted to the Group:

2012 2011 RMB’000 RMB’000 Land and buildings 32,807 35,033 Hotel buildings 1,964,841 1,623,052 Construction in progress 262,565 – Prepaid lease payment 229,419 139,037 Properties for development 261,497 448,657 Properties under development 17,540,720 29,212,935 Completed properties for sale 900,363 237,290 Investment properties 1,700,000 1,700,000 Pledged bank deposits 1,734,337 2,268,642 Interests in associates 177,232 108,479 Interests in jointly controlled entities 44,552 – 24,848,333 35,773,125 38. Retirement Benefits Plans The employees of the Group’s subsidiaries in the PRC are members of the state-managed retirement benefits schemes operated by the PRC government. The PRC subsidiaries are required to contribute a certain percentage of payroll costs to the retirement benefits schemes to fund the benefits. The only obligation of the Group with respect to the retirement benefits schemes is to make the specified contributions.

197 Greentown China Holdings Limited Annual Report 2012

F-318 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

39. Contingent Liabilities (i) Guarantees The Group provided guarantees of RMB17,144,296,000 (2011: RMB18,886,018,000) at 31 December 2012 to banks in favour of its customers in respect of the mortgage loans provided by the banks to those customers for the purchase of the Group’s developed properties. These guarantees provided by the Group to the banks will be released upon receiving the building ownership certificate of the respective properties by the banks from the customers as a pledge for security to the mortgage loans granted.

Other than those disclosed in Note 27, the Group also provided guarantees to banks and other parties in respect of credit facilities utilised by the following companies:

2012 2011 RMB’000 RMB’000 Associates 3,821,076 2,173,280 Jointly controlled entities 4,230,736 1,904,362 Independent third parties 200,000 200,000 8,251,812 4,277,642

Contingent liabilities arising from interests in associates at the end of the reporting period:

2012 2011 RMB’000 RMB’000 Share of mortgage loan guarantees provided by associates to banks in favour of its customers 3,773,850 2,984,971

Contingent liabilities arising from interests in jointly controlled entities at the end of the reporting period:

2012 2011 RMB’000 RMB’000 Share of mortgage loan guarantees provided by jointly controlled entities to banks in favour of its customers 1,333,389 1,394,135

The directors consider that the fair value of the above guarantees is insignificant on initial recognition and it is not probable that an outflow in settlement will be required.

Greentown China Holdings Limited Annual Report 2012 198

F-319 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

39. Contingent Liabilities (continued) (ii) Litigation against Zhejiang Fosun Commerce Development Limited (“Zhejiang Fosun”) On 29 December 2011, Zhejiang Jiahe Industrial Co., Ltd. (“Greentown Jiahe”), a wholly-owned subsidiary of the Company, Shanghai Zendai Land Company Limited (“Shanghai Zendai Land”), a wholly-owned subsidiary of Shanghai Zendai Property Limited, a company listed on the Stock Exchange and an independent third party, and Shanghai Chang Ye, a wholly-owned subsidiary of SOHO China Limited, entered into an agreement pursuant to which Shanghai Chang Ye had conditionally agreed to acquire, and (i) Greentown Jiahe had conditionally agreed to sell its 100% equity interest in Greentown Hesheng and its loan granted to Greentown Hesheng; and (ii) Shanghai Zendai Land had conditionally agreed to sell its 100% equity interest in Shanghai Zendai Wudaokou Property Company Limited (“Shanghai Zendai Wudaokou”) and its loan granted to Shanghai Zendai Wudaokou. Pursuant to a supplementary agreement dated 9 January 2012, the relevant parties agreed that Shanghai Chang Sheng should assume all rights, obligations and liabilities of Shanghai Chang Ye under the equity transfers and loan assignments. Greentown Hesheng and Shanghai Zendai Wudaokou owned 10% and 40% equity interests respectively in Shanghai Haizhimen, while Zhejiang Fosun, a wholly-owned subsidiary of Fosun International Limited, a company listed on the Stock Exchange, owned the remaining 50% equity interest in Shanghai Haizhimen. Shanghai Haizhimen indirectly owns 100% interest in a land parcel in Shanghai. The disposal of the 100% equity interest in Greentown Hesheng resulted in a gain of RMB115,330,000 to the Group in 2012.

On 4 June 2012, the Group was served with a document of summons issued by the Court in relation to the civil action, pursuant to which Greentown Jiahe, among others, is named as a defendant.

On 29 November 2012, a preliminary trial was held at the Court. As of the date of these financial statements, the Court had not reconvened and passed any preliminary judgement.

Having consulted with its legal advisers, the Company believes that the transactions did not constitute a breach of the pre-emptive rights by Greentown Jiahe as alleged by Zhejiang Fosun in the document of summons because Zhejiang Fosun was not an equity holder of Greentown Hesheng and therefore not entitled to any pre-emptive rights in the transfer of equity interest in Greentown Hesheng. The Company considers that the civil action does not have any material adverse effect on the operation or financial position of the Group.

199 Greentown China Holdings Limited Annual Report 2012

F-320 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

39. Contingent Liabilities (continued) (iii) Litigation against Ms Zhao Xingru (“Ms Zhao”) On 26 and 27 July 2010, Greentown Real Estate entered into a cooperation agreement and a supplementary agreement (collectively the “Cooperation Agreements”) with Ms Zhao and Mr Zhou Dingwen (“Mr Zhou”), pursuant to which Greentown Real Estate acquired 60% of equity interest in Xinjiang Hongyuan at a consideration of RMB25,500,000. The acquisition was completed on 29 July 2010. The acquisition was accounted for as an acquisition of assets and liabilities.

On 5 September 2011, the Group conditionally disposed of its entire 60% equity interest in Xinjiang Hongyuan to Jiechen.

Pursuant to a termination agreement dated 11 June 2012, the agreement dated 5 September 2011 in respect of the conditional disposal by the Group and the entrusting management of the Group’s entire 60% equity interest in Xinjiang Hongyuan to Jiechen was terminated.

On 5 November 2012, Ms Zhao filed a civil suit to Xinjiang Uygur Autonomous Region Urumqi Intermediate People’s Court (the “Urumqi Court”) and received a notification of acceptance from the Urumqi Court, pursuant to which Ms Zhao requested that (i) the Cooperative Agreements be revoked; (ii) Greentown Real Estate pay Ms Zhao damages of RMB11,000,000; and (iii) Greentown Real Estate bear the litigation costs.

As of the date of these financial statements, no preliminary trial has been convened.

Having consulted with its legal advisors, the Company believes that (i) Ms Zhao’s claim for damages is not well-founded; and (ii) regardless of the legal status of the Cooperative Agreements, there will be no material impact on the Group’s interests in Xinjiang Hongyuan. The Company considers that the civil action does not have any material adverse effect on the operation or financial position of the Group.

Greentown China Holdings Limited Annual Report 2012 200

F-321 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

40. Related Party Disclosures (i) During the year, in addition to those disclosed in other notes to the consolidated financial statements, the Group entered into the following transactions with related parties:

2012 2011 RMB’000 RMB’000 Sale of properties to a non-controlling Shareholder 1,737 – Sale of properties to officers – 16,162 Sale of materials to jointly controlled entities and associates (Note) 81,050 49,691 Construction service income from associates (Note) 1,308 7,386 Construction service income from jointly controlled entities (Note) 1,479 1,367 Construction service income from Shareholders’ Companies – 208 Construction consulting service income from jointly controlled entities and associates (Note) 25,669 1,398 Rental income from Shareholders’ Companies – 377 Real estate service income from non-controlling shareholders 223 3,125 Rental expenses paid/payable to: – Shareholders’ Companies 8,623 7,556 – non-controlling shareholders 500 – Purchases from Shareholders’ Companies (Note) 9,839 5,849 Interior decoration service fees paid/payable to Shareholders’ Companies – 3,132 Property management fees paid/payable to Shareholders’ Companies 97,931 69,605 Interest income arising from amounts due from: – associates (Note) 1,200,668 373,852 – jointly controlled entities (Note) 116,119 136,568 – non-controlling shareholders 12,375 7,122 Interest expense arising from amounts due to: – associates (Note) 227,524 140,458 – jointly controlled entities (Note) 4,544 53,193 – non-controlling shareholders 599,803 727,482 Advertising expenses paid/payable to Shareholders’ Companies 70,000 70,000 Other service fees to Shareholders’ Companies 357 2,806 Other service fees to non-controlling shareholders – 128 Brand usage fees from jointly controlled entities and associates (Note) 54,148 52,121 Hotel management fees paid/payable to Shareholders’ Companies 7,414 4,016 Hotel service income from associates (Note) 662 261 Hotel service income from jointly controlled entities (Note) 66 56 Hotel service income from Shareholders’ Companies 641 349 Interior decoration service income from – jointly controlled entities and associates (Note) 107,273 5,833 – non-controlling shareholders 70 – Sales commission to Shareholder’s Companies – 305 Health management service fee to Shareholders’ Companies 1,280 1,210 Healthcare service fee to Shareholders’ Companies 1,224 868 Educational service fee to Shareholders’ Companies 529 433 Marketing service income from jointly controlled entities and associates (Note) 14,902 20,747 Advertising income from jointly controlled entities and associates (Note) 4,830 – Landscape construction fee to associates (Note) 45,812 – Other income from Shareholder’s company 198 –

Note: Purchases from Shareholders’ Companies represent raw materials purchased for use by construction contractors, the costs of which are included in the overall construction contracts. The transactions with jointly controlled and associates entities are presented gross before elimination of unrealised profits or losses attributable to the Group.

201 Greentown China Holdings Limited Annual Report 2012

F-322 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

40. Related Party Disclosures (continued) (i) During the year, in addition to those disclosed in other notes to the consolidated financial statements, the Group entered into the following transactions with related parties: (continued)

The directors considered that the transactions above were carried out in accordance with the terms agreed with the counterparties.

(ii) As at the end of the reporting period, the Group had balances with related parties, which are all unsecured except for those trust-related balances, as follows:

2012 Project-related Non-project Related Total Non- Non- Non- Interest interest Interest interest Interest interest Bearing Bearing Bearing Bearing Bearing Bearing RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Due from Shareholder – 14,439 – – – 14,439 Shareholders’ Companies – – – 4,485 – 4,485 Non-controlling shareholders 2,651,153 3,752,412 453,186 34,694 3,104,339 3,787,106 Associates 8,574,686 4,561,830 – – 8,574,686 4,561,830 Jointly controlled entities 1,322,714 177,299 – 1,668 1,322,714 178,967 Officers – 60,519 – 10,000 – 70,519 12,548,553 8,566,499 453,186 50,847 13,001,739 8,617,346 Due to Shareholder – 13,160 – – – 13,160 Shareholders’ Companies – 16,538 – 18,850 – 35,388 Non-controlling shareholders 322,276 1,023,312 – 1,894 322,276 1,025,206 Associates 1,677,069 2,655,171 – 311 1,677,069 2,655,482 Jointly controlled entities 1,141,447 243,691 – – 1,141,447 243,691 Officers – 11,395 – – – 11,395 3,140,792 3,963,267 – 21,055 3,140,792 3,984,322

Greentown China Holdings Limited Annual Report 2012 202

F-323 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

40. Related Party Disclosures (continued) (ii) As at the end of the reporting period, the Group had balances with related parties, which are all unsecured except for those trust-related balances, as follows: (continued)

2011 Project-related Non-project Related Total Non- Non- Non- Interest interest Interest interest Interest interest Bearing Bearing Bearing Bearing Bearing Bearing RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Due from Shareholder – 14,439 – – – 14,439 Shareholders’ Companies – – – 46,232 – 46,232 Non-controlling shareholders 2,782,025 3,363,817 473,751 88,185 3,255,776 3,452,002 Associates 5,876,353 745,702 – 17 5,876,353 745,719 Jointly controlled entities 1,372,703 254,251 – 3,984 1,372,703 258,235 Officers – 92,555 – 17,606 – 110,161 10,031,081 4,470,764 473,751 156,024 10,504,832 4,626,788 Due to Shareholder – 13,160 – – – 13,160 Shareholders’ Companies – 8,970 – 43,806 – 52,776 Non-controlling shareholders 5,890,121 1,464,554 – 229,728 5,890,121 1,694,282 (including: Trust-related (Note 27)) 4,411,664–––4,411,664 – Associates 2,855,152 2,282,973 – 1,719 2,855,152 2,284,692 Jointly controlled entities 1,227,525 642,055 – – 1,227,525 642,055 Officers – 21,074 – 750 – 21,824 9,972,798 4,432,786 – 276,003 9,972,798 4,708,789

In respect of project-related balances with related parties:

(a) The trade balances due from officers arise mainly from property sales and are with a normal credit term of two months.

(b) The trade balances due from Shareholders’ Companies are mainly construction prepayments and trade receivables.

Construction prepayments are billed according to the construction contracts and are settled within one to two months after the construction cost incurred are verified and agreed.

Trade receivables arise mainly from materials sales and are with a normal credit terms of two months.

203 Greentown China Holdings Limited Annual Report 2012

F-324 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

(c) The project-related balances due from non-controlling shareholders are mainly prepaid distributions. The project- related balances due from jointly controlled entities/associates are mainly project advances to these jointly controlled entities/associates and are tied to the project development cycle. In the opinion of the directors, these balances are expected to be settled when the projects concerned commence pre-sales.

(d) The trade balances due to Shareholders and officers are mainly pre-sale deposits.

(f) The project-related balances due to non-controlling shareholders are mainly project advances from these minority shareholders and are tied to the project development cycle. In the opinion of the directors, these balances are repayable on demand and are expected to be settled when the projects concerned commence pre-sales.

(g) The project-related balances due to jointly controlled entities/associates are mainly prepaid distributions.

The non-project related balances with related parties are mainly unsecured advances and repayable on demand.

The non-interest bearing balances due from (to) related parties are unsecured and repayable on demand. The key terms of the interest bearing balances due from (to) related parties are as follows:

(a) The project-related amounts due from non-controlling shareholders of RMB2,651,153,000 (2011: RMB2,782,025,000) at 31 December 2012 carried interest at fixed rates ranging from 7.31% to 7.82% (2011: 7.31% to 7.82%) per annum.

(b) The project-related amounts due from associates of RMB8,574,686,000 (2011: RMB5,876,353,000) at 31 December 2012 carried interest at fixed rates ranging from 5.40% to 12.00% (2011: 5.40% to 7.34%) per annum.

(c) The project-related amounts due from jointly controlled entities of RMB1,322,714,000 (2011: RMB1,229,354,000) at 31 December 2012 carried interest at a fixed rate of 6.67% (2011: 7.34%) per annum.

The project-related amount due from jointly controlled entities of RMB143,349,000 at 31 December 2011 carried interest at a variable rate of 8.39% per annum.

(d) The project-related amounts due to non-controlling shareholders of RMB322,276,000 (2011: RMB5,890,121,000) at 31 December 2012 carried interest at fixed rates ranging from 7.34% to 8.00% (2011: 7.34% to 22.00%) per annum.

Greentown China Holdings Limited Annual Report 2012 204

F-325 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

(e) The project-related amounts due to jointly controlled entities of RMB1,141,447,000 (2011: RMB279,269,000) at 31 December 2012 carried interest at a fixed rate of 0.50% to 10.00% (2011: 7.34%) per annum.

The project-related amounts due to jointly controlled entities of RMB948,256,000 at 31 December 2011 carried interest at a variable rate of 6.33% per annum.

(f) The non-project related amounts due from non-controlling shareholders of RMB453,186,000 (2011: RMB473,751,000) at 31 December 2012 carried interest at a variable rate of 0.5% to 6.56% (2011: 0.5% to 6.56%) per annum.

(g) The project related amounts due to associates of RMB417,524,000 (2011: RMB1,325,952,000) at 31 December 2012 carried interest at fixed rates ranging from 0.5% to 7.02% (2011: 5.67% to 7.02%) per annum.

The project related amounts due to associates of RMB1,259,545,000 (2011: RMB1,529,200,000) at 31 December 2012 carried interest at variable rates ranging from 6.67% to 8.21% (2011: 7.85% to 8.50%) per annum.

(iii) (a) During the year, in addition to those disclosed in notes 32, the Group made acquisitions from related parties as follows:

2012 2011 RMB’000 RMB’000 Purchase of additional interests in subsidiaries from non-controlling shareholders – 105,754

On 25 April 2011, the Group entered into an agreement to acquire 18% equity interest held by Beijing Qiantian Real Estate Co., Ltd. in Beijing Greentown Yinshi Real Estate Co., Ltd. for a consideration of RMB105,754,000.

(b) During the year, in addition to those disclosed in note 33, the Group made disposals to related parties as follows:

2012 2011 RMB’000 RMB’000 Disposal of interests in subsidiaries to non-controlling shareholders – 5,120

On 12 May 2011, the Group entered into an agreement to dispose of its 5% equity interest in Taizhou Jili Jiayuan Real Estate Development Co., Ltd. for a consideration of RMB1,920,000 to a third party.

On 2 June 2011, the Group entered into an agreement to dispose of its 1.6% equity interest in Greentown Property Construction Management Co., Ltd. for a consideration of RMB3,200,000 to a third party.

205 Greentown China Holdings Limited Annual Report 2012

F-326 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

40. Related Party Disclosures (continued) (iii) (continued)

(c) On 15 November 2012, the Group entered into a framework agreement with Wharf, a non-controlling shareholder of the Company, pursuant to which the Company subscribed for 400 new shares at HKD1.00 each in Green Magic, an indirect wholly-owned subsidiary of Wharf, for HKD400 (equivalent to RMB324). The Group also advanced a shareholder’s loan of HKD332,300,000 (equivalent to RMB269,462,000) to Green Magic. After the subscription, the Group and Wharf holds 40% and 60% equity interest respectively in Green Magic. The Group accounts for Green Magic as an associate.

(iv) Compensation of Key Management Personnel The remuneration of directors and other members of key management during the year was as follows:

2012 2011 RMB’000 RMB’000 Short-term benefits 23,366 21,365 Post-employment benefits 245 260 Share-based payments 1,203 8,947 24,814 30,572

The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends.

Greentown China Holdings Limited Annual Report 2012 206

F-327 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

41. Statement of Financial Position of the Company

2012 2011 RMB’000 RMB’000 ASSETS Property, plant and equipment 771 1,062 Investment in a subsidiary and amounts due from subsidiaries and related parties 10,345,082 8,545,378 Other receivables 121,186 124,423 Bank balances and cash 48,276 9,922 10,515,315 8,680,785 LIABILITIES Other payables 110,087 489,411 Amounts due to related parties 5,179,904 4,614,559 Dividend payable – 164,026 Other taxes payable 6,630 8,108 Convertible bonds – 186,466 Senior notes 241,327 241,718 5,537,948 5,704,288 ASSETS LESS LIABILITIES 4,977,367 2,976,497 CAPITAL AND RESERVES Share capital 207,422 166,441 Reserves (Note) 4,769,945 2,810,056 4,977,367 2,976,497

Note: The movement of the reserves of the Company is as follows:

RMB’000 At 1 January 2011 3,770,965 Loss for the year (225,294) Dividends recognised as distributions (753,062) Recognition of equity-settled share-based payments 11,907 Exercise of share options 5,540 At 31 December 2011 2,810,056 Loss for the year (123,911) Shares issued 2,035,406 Recognition of equity-settled share-based payments 1,203 Exercise of share options 47,191 At 31 December 2012 4,769,945

207 Greentown China Holdings Limited Annual Report 2012

F-328 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

42. Other Matter Pursuant to a termination agreement dated 11 June 2012, the agreement dated 5 September 2011 in respect of the conditional disposal by the Group and the entrusting management of the Group’s entire 60% equity interest in Xinjiang Hongyuan to Jiechen was terminated. As a result, the Group resumes control over Xinjiang Hongyuan. The effect of the re-acquisition in 2012 is as follows:

2012 RMB’000 Net assets acquired: Property, plant and equipment 6,668 Properties under development 750,452 Trade and other receivables, deposits and prepayments 174,362 Bank balances and cash 61,621 Trade and other payables (40,856) Amounts due to related parties (380,740) Other taxes payable (7) Bank and other borrowings (due after one year) (529,000) 42,500 Non-controlling interests (17,000) 25,500 Total consideration, satisfied by: Reversal of consideration receivable 25,500 25,500 Net cash outflow arising on acquisition Cash paid – Bank balances and cash acquired 61,621 61,621 43. Events After the End of the Reporting Period The following significant events took place subsequent to 31 December 2012:

(i) On 28 January 2013, the Company entered into a purchase agreement with, among others, certain joint lead managers and bookrunners in relation to the issue of the 8.50% senior notes due 2018 in the aggregate principal amount of USD400,000,000 (“2013 Notes”). The listing of and permission to deal in the 2013 Notes was approved by the Stock Exchange. The net proceeds of the 2013 Notes of approximately USD394,000,000 was intended for the purpose of refinancing certain existing short term debts and the remainder for general corporate purposes.

(ii) On 16 March 2013, the Company and Sunac (both as the purchasers) entered into a framework agreement with China Gold Associates Limited (as the vendor) in relation to the conditional acquisition of the entire equity interest in three PRC project companies at an aggregate consideration of RMB9,019 million (subject to adjustment). The Company and Sunac will acquire the aforesaid interest in the PRC project companies through a 50:50 offshore joint venture. These three PRC project companies have several property development projects located in Huangpu District, Shanghai. The acquisition is not yet completed as at the date of these financial statements.

Greentown China Holdings Limited Annual Report 2012 208

F-329 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

44. Particulars of Principal Subsidiaries Particulars of the principal subsidiaries as at 31 December 2011 and 2012 are set out below:

Place and Date of Principal Name of Subsidiary Registration Registered Capital Attributable Equity Interest Activities Legal Form Direct Indirect 2012 2011 2012 2011 綠城房地產集團有限公司 The PRC RMB895,000,000 – – 100% 100% Real estate Wholly foreign- Greentown Real Estate Group Co., Ltd. 6 January 1995 development owned enterprise

上海綠城森林高爾夫別墅開發有限公司 The PRC RMB196,080,000 – – 50% 100% Real estate Limited liability Shanghai Greentown Woods Golf 19 June 2002 (Note ii) development company Villas Development Co., Ltd.

北京陽光綠城房地產開發有限公司 The PRC RMB50,000,000 – – 80% 80% Real estate Limited liability Beijing Sunshine Greentown Real 15 January 2001 development company Estate Development Co., Ltd.

北京興業萬發房地產開發有限公司 The PRC RMB50,000,000 – – 100% 100% Real estate Limited liability Beijing Xingye Wanfa Real Estate 26 October 2000 development company Development Co., Ltd.

湖南青竹湖國際商務社區開發 The PRC RMB50,600,000 – – 49% 49% Real estate Limited liability 有限公司 26 September 2003 (Note i) (Note i) development company Hunan Bamboo Lake International Business Community Development Co., Ltd.

上海華浙外灘置業有限公司 The PRC RMB50,000,000 – – – 51% Real estate Limited liability Shanghai Huazhe Bund Real Estate 26 September 2002 (Note iii) development company Co., Ltd.

杭州余杭綠城房地產開發有限公司 The PRC RMB30,000,000 – – 64% 64% Real estate Limited liability Hangzhou Yuhang Greentown Real 12 November 1999 development company Estate Development Co., Ltd. (Hangzhou Yuhang Greentown”) (Note i)

寧波高新區研發園綠城建設有限公司 The PRC RMB50,000,000 – – 60% 60% Real estate Sino-foreign equity Ningbo Gaoxinqu Yanfayuan 21 August 2003 development joint venture Greentown Construction Co., Ltd.

209 Greentown China Holdings Limited Annual Report 2012

F-330 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

44. Particulars of Principal Subsidiaries (continued)

Place and Date of Principal Name of Subsidiary Registration Registered Capital Attributable Equity Interest Activities Legal Form Direct Indirect 2012 2011 2012 2011 杭州余杭金騰房地產開發有限公司 The PRC RMB50,000,000 – – 85% 85% Real estate Limited liability Hangzhou Yuhang Jinteng Real Estate 25 December 2001 development company Development Co., Ltd.

浙江嘉和實業有限公司 The PRC RMB50,000,000 – – 100% 100% Real estate Limited liability Zhejiang Jiahe Industrial Co., Ltd. 25 April 1995 development company

杭州玫瑰園度假村有限公司 The PRC RMB184,410,000 – – 100% 100% Real estate Limited liability Hangzhou Rose Garden Resort 15 August 2006 development company Co., Ltd.

杭州千島湖綠城投資置業有限公司 The PRC RMB30,000,000 – – 80% 80% Real estate Limited liability Hangzhou Qiandaohu Real Estate 15 June 2005 development company Investment Co., Ltd.

南京天浦置業有限公司 The PRC RMB50,000,000 – – 70% 70% Real estate Limited liability Nanjing Tianpu Real Estate Co., Ltd. 12 November 2002 development company

新昌綠城置業有限公司 The PRC RMB77,600,000 – – 80% 80% Real estate Limited liability Xinchang Greentown Real Estate 12 December 2006 development company Co., Ltd.

溫州綠城家景房地產開發有限公司 The PRC RMB386,000,000 – – 60% 60% Real estate Sino-foreign equity Wenzhou Greentown Jiajing Real 21 May 2007 development joint venture Estate Development Co., Ltd.

南通綠城房地產開發有限公司 The PRC RMB50,000,000 – – 77% 77% Real estate Limited liability Nantong Greentown Real Estate 23 August 2007 development company Development Co., Ltd.

青島綠城華川置業有限公司 The PRC RMB517,764,600 – – 80% 80% Real estate Sino-foreign equity Qingdao Greentown Huachuan 21 August 2007 development joint venture Real Estate Co., Ltd.

舟山綠城聯海置業有限公司 The PRC RMB250,000,000 – – 100% 100% Real estate Limited liability Zhoushan Greentown Lianhai 5 June 2007 development company Real Estate Co., Ltd.

Greentown China Holdings Limited Annual Report 2012 210

F-331 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

44. Particulars of Principal Subsidiaries (continued)

Place and Date of Principal Name of Subsidiary Registration Registered Capital Attributable Equity Interest Activities Legal Form Direct Indirect 2012 2011 2012 2011 寧波太平洋實業有限公司 The PRC RMB177,000,000 – – 60% 60% Real estate Foreign equity joint Ningbo Pacific Real Estate Co., Ltd. 11 July 2003 development venture

養生堂浙江千島湖房地產開發 The PRC RMB200,000,000 – – 51% 51% Real estate Limited liability 有限公司 24 January 2005 development company Yangshengtang Zhejiang Qiandaohu Real Estate Development Co., Ltd.

湖州新錦江房地產開發有限公司 The PRC RMB50,000,000 – – 70% 70% Real estate Limited liability Huzhou Xinjinjiang Real Estate 3 February 2004 development company Development Co., Ltd.

長興綠城房地產開發有限公司 The PRC RMB100,000,000 – – 51% 51% Real estate Limited liability Changxing Greentown Real Estate 30 January 2008 development company Development Co., Ltd.

新疆俊發綠城房地產開發有限公司 The PRC RMB211,079,000 – – 50% 50% Real estate Limited liability Xinjiang Junfa Greentown Real Estate 16 January 2008 (Note ii) (Note ii) development company Development Co., Ltd.

北京亞奥綠城房地產開發有限公司 The PRC RMB50,000,000 – – 50% 50% Real estate Limited liability Beijing Ya’ao Greentown Real Estate 19 August 2008 (Note ii) (Note ii) development company Development Co., Ltd.

杭州金馬房地產有限公司 The PRC USD50,000,000 – – 51% 51% Real estate Sino-foreign joint Hangzhou Golden Horse Real Estate 22 October 1992 development venture Development Co., Ltd.

杭州休博園湖畔綠景休閒開發 The PRC RMB120,000,000 – – 50% 50% Real estate Limited liability 有限公司 2 April 2008 (Note ii) (Note ii) development company Hangzhou Xiuboyuan Hupan Lvjing Xiuxian Development Co., Ltd.

211 Greentown China Holdings Limited Annual Report 2012

F-332 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

44. Particulars of Principal Subsidiaries (continued)

Place and Date of Principal Name of Subsidiary Registration Registered Capital Attributable Equity Interest Activities Legal Form Direct Indirect 2012 2011 2012 2011 浙江報業綠城房地產開發有限公司 The PRC RMB1,200,000,000 – – 100% 100% Real estate Sino-foreign equity Zhejiang Newspapering Greentown 7 July 2008 development joint venture Real Estate Development Co., Ltd.

北京萊福世紀置業有限公司 The PRC RMB30,000,000 – – 100% 100% Real estate Limited liability Beijing Laifu Century Property 24 April 2007 development company Co., Ltd.

諸暨市越都置業有限公司 The PRC RMB300,000,000 – – 60% 60% Real estate Limited liability Zhuji Yuedu Real Estate Co., Ltd. 31 October 2008 development company

杭州綠城北盛置業有限公司 The PRC RMB50,000,000 – – 100% 100% Real estate Limited liability Hangzhou Greentown Beisheng Real 1 December 2009 development company Estate Co., Ltd.

寧波象山綠城房地產開發有限公司 The PRC RMB100,000,000 – – 50% 50% Real estate Limited liability Ningbo Xiangshan Greentown 19 February 2008 (Note ii) (Note ii) development company Real Estate Development Co., Ltd.

唐山綠城房地產開發有限公司 The PRC RMB50,000,000 – – – 100% Real estate Limited liability Tangshan Greentown Real Estate 3 November 2009 (Note iii) development company Development Co., Ltd.

溫州景楊置業有限公司 The PRC RMB340,000,000 – – 60% 60% Real estate Sino-foreign equity Wenzhou Jingyang Real Estate 19 July 2010 development joint venture Co., Ltd.

溫州綠城置業有限公司 The PRC RMB386,000,000 – – 60% 60% Real estate Sino-foreign equity Wenzhou Greentown Real Estate 21 May 2007 development joint venture Co., Ltd.

溫州綠景置業有限公司 The PRC RMB375,000,000 – – 60% 60% Real estate Sino-foreign equity Wenzhou Lvjing Real Estate Co., Ltd. 26 November 2007 development joint venture

蘇州綠城玫瑰園房地產開發有限公司 The PRC RMB360,000,000 – – – 67% Real estate Limited liability Suzhou Greentown Rose Garden 7 December 2009 (Note iii) development company Real Estate Development Co., Ltd.

蘇州綠城御園房地產開發有限公司 The PRC RMB250,000,000 – – – 100% Real estate Limited liability Suzhou Greentown Yuyuan 22 December 2009 (Note iii) development company Real Estate Development Co., Ltd.

Greentown China Holdings Limited Annual Report 2012 212

F-333 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

44. Particulars of Principal Subsidiaries (continued)

Place and Date of Principal Name of Subsidiary Registration Registered Capital Attributable Equity Interest Activities Legal Form Direct Indirect 2012 2011 2012 2011 安徽綠城玫瑰園房地產開發有限公司 The PRC RMB200,000,000 – – 100% 100% Real estate Limited liability Anhui Greentown Rose Garden Real 23 December 2009 development company Estate Development Co., Ltd.

舟山綠城蔚藍海岸房地產開發 The PRC RMB50,000,000 – – 60% 60% Real estate Limited liability 有限公司 6 May 2008 development company Zhoushan Greentown Weilanhai’an Real Estate Development Co., Ltd.

舟山市普陀綠城房地產開發有限公司 The PRC RMB50,000,000 – – 90% 90% Real estate Limited liability Zhoushan Putuo Greentown 5 November 2009 development company Real Estate Co., Ltd.

舟山市瑞豐房地產開發有限公司 The PRC RMB10,000,000 – – 60% 60% Real estate Limited liability Zhoushan Ruifeng Real Estate 12 April 2005 development company Development Co., Ltd.

舟山市明程房地產開發有限公司 The PRC RMB10,000,000 – – 97% 97% Real estate Limited liability Zhoushan Mingcheng Real Estate 31 October 2005 development company Development Co., Ltd.

舟山市乾源房地產開發有限公司 The PRC RMB10,000,000 – – 97% 97% Real estate Limited liability Zhoushan Qianyuan Real Estate 31 October 2005 development company Development Co., Ltd.

河南錦江置業有限公司 The PRC RMB80,000,000 – – 100% 100% Real estate Limited liability Henan Jinjiang Real Estate Co., Ltd. 8 August 2002 development company

無錫綠城湖濱置業有限公司 The PRC RMB100,000,000 – – – 100% Real estate Limited liability Wuxi Greentown Hubin Real Estate 15 December 2009 (Note iii) development company Co., Ltd.

海南綠城高地投資有限公司 The PRC RMB60,000,000 – – 51% 51% Real estate Limited liability Hainan Greentown Gaodi Investment 15 November 2007 development company Co., Ltd.

213 Greentown China Holdings Limited Annual Report 2012

F-334 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

44. Particulars of Principal Subsidiaries (continued)

Place and Date of Principal Name of Subsidiary Registration Registered Capital Attributable Equity Interest Activities Legal Form Direct Indirect 2012 2011 2012 2011 慈溪綠城房地產開發有限公司 The PRC RMB98,000,000 – – 60% 60% Real estate Limited liability Cixi Greentown Real Estate 27 July 2009 development company Development Co., Ltd.

杭州綠城玉園房地產開發有限公司 The PRC RMB50,000,000 – – 100% 100% Real estate Limited liability Hangzhou Greentown Yuyuan 11 November 2009 development company Real Estate Development Co., Ltd.

大連綠城房地產開發有限公司 The PRC RMB120,000,000 – – 80% 80% Real estate Limited liability Dalian Greentown Real Estate 11 November 2008 development company Development Co., Ltd.

青島綠城華景置業有限公司 The PRC RMB380,000,000 – – – 100% Real estate Limited liability Qingdao Greentown Huajing 30 April 2007 (Note iii) development company Real Estate Co., Ltd.

青島綠城膠州灣房地產開發 The PRC USD33,333,000 – – 100% 100% Real estate Sino-foreign equity 有限公司 25 November 2009 development joint venture Qingdao Jiaozhouwan Real Estate Development Co., Ltd.

臨安綠城置業有限公司 The PRC RMB50,000,000 – – 65% 65% Real estate Limited liability Lin’an Greentown Real Estate Co., Ltd. 2 July 2009 development company

新泰綠城置業有限公司 The PRC RMB98,000,000 – – 70% 70% Real estate Limited liability Xintai Greentown Real Estate Co., Ltd. 12 January 2010 development company

上海綠順房地產開發有限公司 The PRC RMB1,000,000,000 – – – 100% Real estate Limited liability Shanghai Lvshun Real Estate 29 January 2010 (Note iii) development company Development Co., Ltd.

天津逸駿投資有限公司 The PRC RMB10,000,000 – – – 80% Real estate Limited liability Tianjin Yijun Investment Co., Ltd. 11 January 2008 (Note iii) development company

大連綠城置業有限公司 The PRC RMB100,000,000 – – 90% 100% Real estate Limited liability Dalian Greentown Real Estate Co., Ltd. 15 March 2010 development company

德清綠城房地產開發有限公司 The PRC RMB100,000,000 – – 100% 100% Real estate Limited liability Deqing Greentown Real Estate 1 February 2010 development company Development Co., Ltd.

紹興綠城金昌置業有限公司 The PRC RMB100,000,000 – – 51% 51% Real estate Limited liability Shaoxing Greentown Jinchang 6 November 2009 development company Real Estate Co., Ltd.

Greentown China Holdings Limited Annual Report 2012 214

F-335 Notes to the Consolidated Financial Statements For the year ended 31 December 2012

44. Particulars of Principal Subsidiaries (continued)

Place and Date of Principal Name of Subsidiary Registration Registered Capital Attributable Equity Interest Activities Legal Form Direct Indirect 2012 2011 2012 2011 蘇州太湖綠城房地產開發有限公司 The PRC RMB8,000,000 – – 70% 70% Real estate Limited liability Suzhou Taihu Greentown Real Estate 2 September 2010 development company Development Co., Ltd.

綠城房產建設管理有限公司 The PRC RMB200,000,000 – – 35% 35% Project Limited liability Greentown Property Construction 8 September 2010 (Note ii) (Note ii) management company Management Co., Ltd.

常州綠城置業有限公司 The PRC RMB837,500,000 – – – 55% Real estate Limited liability Changzhou Greentown Real Estate 1 November 2010 (Note iii) development company Co., Ltd.

啟東綠城香格置業有限公司 The PRC RMB65,000,000 – – 51% 51% Real estate Limited liability Qidong Greentown Xiangge 27 October 2009 development company Real Estate Co., Ltd.

北京雲溪綠城房地產開發有限公司 The PRC RMB10,000,000 – – 99% 99% Real estate Limited liability Beijing Yunxi Greentown Real Estate 20 October 2009 development company Development Co., Ltd.

北京綠城銀石置業有限公司 The PRC RMB50,000,000 – – 100% 100% Real estate Limited liability Beijing Greentown Yinshi Real Estate 20 February 2008 development company Co., Ltd.

杭州銀嘉房地產開發有限公司 The PRC RMB100,000,000 – – 56% 56% Real estate Limited liability Hangzhou Yinjia Real Estate 17 September 2003 development company Development Co., Ltd.

台州綠城泰業房地產開發有限公司 The PRC RMB130,000,000 – – 51% – Real estate Limited liability Taizhou Greentown Taiye Real Estate 18 February 2011 development company Development Co., Ltd

Notes:

(i) These entities are subsidiaries of non-wholly owned subsidiaries of the Group.

(ii) The Group has the right to appoint a majority of directors to the board of directors and hence has the power to direct the financial and operational policies of these entities. Therefore, these entities are accounted for as subsidiaries of the Group.

(iii) These entities were disposed of during the year. Please refer to Note 33 for details.

215 Greentown China Holdings Limited Annual Report 2012

F-336 REGISTERED OFFICES

Registered Office Place of Business in the PRC Place of Business in Hong Kong

Maples Corporate Services Limited, 10th Floor, Block A, Room 1406–8, 14th Floor, PO Box 309, Ugland House, Huanglong Century New World Tower, South Church Street, Plaza, No. 1 Hangda Road, Queen’s Road Central, George Town, Hangzhou 310007, Hong Kong Grand Cayman, KY1-1104, Zhejiang Province, Cayman Islands The People’s Republic of China JOINT LEAD MANAGERS

Credit Suisse The Hongkong and UBS AG, Hong Kong BOCI Asia Limited Securities (Europe) Shanghai Banking Branch Limited Corporation Limited

One Cabot Square Level 17, HSBC Main 52/F 26/F London E14 4QJ Building Two International Bank of China Tower United Kingdom 1 Queen’s Road Finance Centre 1 Garden Road Central 8 Finance Street Hong Kong Hong Kong Central Hong Kong TRUSTEE PRINCIPAL PAYING AND REGISTRAR TRANSFER AGENT

DB Trustees Deutsche Bank AG, Deutsche Bank (Hong Kong) Limited Hong Kong Branch Luxembourg S.A.

52/F, International 52/F, International 2, Boulevard Commerce Centre, Commerce Centre, Konrad Adenauer 1 Austin Road West, 1 Austin Road West, L-1115 Luxembourg Kowloon, Hong Kong Kowloon, Hong Kong Luxembourg

LEGAL ADVISERS TO THE COMPANY as to U.S. and Hong Kong law

White & Case Pte. Ltd. White & Case

Asia Square Tower 1, 9th Floor, Central Tower 8 Marina View #27-01, 28 Queen’s Road Central Singapore 018960 Hong Kong

as to PRC law as to Cayman Islands and British Virgin Islands law

T&C Law Firm Maples & Calder

8/F, Block A, Huanglong Century Square, 53/F, The Center, No.1 Hangda Road, Hangzhou, 99 Queen’s Road Central 310007 Zhejiang, China Hong Kong

LEGAL ADVISERS TO THE JOINT BOOKRUNNERS AND THE JOINT LEAD MANAGERS as to U.S. law as to PRC law

Davis Polk & Wardwell Jingtian & Gongcheng

18/F, The Hongkong Club Building 34/F, Tower 3, China Central Place 3A Chater Road 77 Jianguo Road, Chaoyang District Central Beijing 100025, China Hong Kong

INDEPENDENT ACCOUNTANTS

Deloitte Touche Tohmatsu

35/F One Pacific Place, 88 Queensway, Hong Kong