Greenheart Group Limited — Proxy Solicitation & Information Statement 2008

Jan 31, 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Skyfame Realty (Holdings) Limited , you should at once hand this circular to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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DISCLOSEABLE TRANSACTION

IN RELATION TO THE FORMATION OF A JOINT VENTURE COMPANY FOR THE ACQUISITION, HOLDING AND DEVELOPMENT OF THE LAND IN GUIYANG CITY, GUIZHOU PROVINCE, THE PRC

Financial adviser to Skyfame Realty (Holdings) Limited

1 February 2008

* For identification purposes only

CONTENTS

		Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Appendix	— General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10

— i —

DEFINITIONS

In this circular, the following expressions have the following meanings unless the context requires otherwise:

“2006 Warrants”	warrants issued by the Company on 3 August 2006 which
	are listed on the Stock Exchange (stock code: 584)
“associate(s)”	has the meaning as ascribed to it under the Listing Rules
“Board”	board of Directors
“BVI”	the British Virgin Islands
“Company”	Skyfame Realty (Holdings) Limited, a company incorporated
	in Bermuda with limited liability and whose issued Shares
	are listed on the main board of the Stock Exchange
“Confirmation Letter”	the letter dated 11 January 2008 entered into between the
	Joint Purchasers and the Vendor confirming the winning of
	the tender for the Land
“connected person(s)”	has the meaning as ascribed to it under the Listing Rules
“Directors”	the directors of the Company
“Grand Cosmos”	Grand Cosmos Holdings Limited, a company incorporated
	in the BVI with limited liability and wholly-owned by Sharp
	Bright
“Group”	the Company and its subsidiaries
“Guizhou Xiehui”	貴州協輝房地產開發有限公司(Guizhou Xiehui Property
	Development Company Limited#), a company incorporated
	in the PRC
“GYCC”	貴陽雲岩鄉村體育俱樂部有限公司(Guiyang Yunyang
	Country Club Company Limited#), a company incorporated
	in the PRC and an Independent Third Party
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC

— 1 —

DEFINITIONS

• “Independent Third Party(ies)” third party(ies) independent of the Company and connected person of the Company and are not connected persons of the Company

• “Joint Purchasers” Yu Jun and Guizhou Xiehui “JV Company” a joint-venture company established in the PRC pursuant to the terms and conditions of the JV M&A

• “JV M&A” the memorandum and articles of association of the JV Company entered into between Yu Jun and Guizhou Xiehui on 15 January 2008

• “Land” a piece of land located at Xiaoguan Maochong of Yunyan District, Guiyang City, Guizhou Province, the PRC（中國 貴州省貴陽市雲岩區小關貓沖）with a site area of approximately 156,208 sq.m., of which 136,447 sq.m. is the granted area designated for commercial and residential use and the remaining portion with an area of 19,761 sq.m. is designated for the use as public roads

• “Land Grant Contract” the contract dated 17 January 2008 entered into between the Vendor and the Joint Purchasers for the grant of the land use rights of the Land

• “Latest Practicable Date” 29 January 2008, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “Mr. YU” Mr. YU Pan, an executive Director, the chairman and controlling shareholder of the Company

• “Note Purchase Agreement” the note purchase agreement dated 2 March 2007 entered into between Fine Luck Group Limited, Great Elegant Investment Limited, Smartford Limited and Nicco Limited as chargors, the Company, Sharp Bright, Grand Cosmos and the Note Purchasers relating to the issue and purchase of the Notes, details of which were set out in the Company’s announcement dated 12 March 2007 and circular dated 4 April 2007

— 2 —

DEFINITIONS

“Note Purchaser(s)”	the purchaser(s) of the Notes under the Note Purchase
	Agreement
“Noteholder(s)”	holder(s) of the Notes
“Notes”	unlisted secured convertible notes with an aggregate
	principal amount of US$200 million due 2013 issued by the
	Company to the Note Purchasers or their nominee(s)
	pursuant to the Note Purchase Agreement
“PRC”	the People’s Republic of China
“Removal and	the contract dated 17 January 2008 (and as supplemented
Relocation Contract”	on 17 January 2008 and 18 January 2008) entered into
	between GYCC and the Joint Purchasers for the resettlement
	of the existing occupier, demolition of existing structures
	on the Land and the settlement of demolition cost
“RMB”	Renminbi, the lawful currency of the PRC
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“Share(s)”	fully paid ordinary share(s) of HK$0.01 each in the share
	capital of the Company
“Shareholder(s)”	holder(s) of the Shares of the Company
“Sharp Bright”	Sharp Bright International Limited, a company incorporated
	in the BVI with limited liability and wholly-owned by Mr.
	YU
“sq. m.”	square metre(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“substantial shareholder(s)”	has the meaning as ascribed to it under the Listing Rules
“Transaction”	the establishment of the JV Company and the transactions
	contemplated under the JV M&A
“Vendor”	貴陽市國土資源局(Bureau of Land Resources Guiyang#)

— 3 —

DEFINITIONS

“Yu Jun” 廣州譽浚諮詢服務有限公司 (Guangzhou Yu Jun Consulting Services Company Limited[#] ), a wholly-owned foreign enterprise established in the PRC and an indirect wholly-owned subsidiary of the Company “%” per cent.

# For reference purposes only, the Chinese names of the PRC entities, departments or facilities have been translated into English in this circular.

If there is any inconsistency between the Chinese names of the PRC entities, departments or facilities mentioned in this circular and their respective English translations, the Chinese version shall prevail.

Unless otherwise specified in this circular, translations of RMB into HK$ and US$ into HK$ are made in this circular, for illustration only, at the rate of RMB1.00 to HK$1.07 and US$1.00 to HK$7.8 respectively. No representation is made that any amount in RMB or US$ could have been or could be converted at those rates or any other rates.

— 4 —

LETTER FROM THE BOARD

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Executive Directors:

Mr. YU Pan Mr. LAU Yat Tung, Derrick Mr. WONG Lok Mr. WEN Xiao Bing

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Non-executive Director:

Mr. Jerry WU

Independent non-executive Directors:

Mr. CHOY Shu Kwan Mr. CHENG Wing Keung, Raymond Ms. CHUNG Lai Fong

Head office and principal place of business in Hong Kong: 2502B, Tower 1 Admiralty Centre 18 Harcourt Road Hong Kong

1 February 2008

To the Shareholders and, for information only, the holders of 2006 Warrants

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

IN RELATION TO THE FORMATION OF A JOINT VENTURE COMPANY FOR THE ACQUISITION, HOLDING AND DEVELOPMENT OF THE LAND IN GUIYANG CITY, GUIZHOU PROVINCE, THE PRC

INTRODUCTION

On 14 January 2008, the Board announced that a consortium formed between Yu Jun, an indirect wholly-owned subsidiary of the Company, and Guizhou Xiehui won an open tender on 11 January 2008 to acquire a piece of land located in Guiyang City, Guizhou Province, the PRC. On the same day, Yu Jun and Guizhou Xiehui signed the Confirmation Letter with 貴陽 市國土資源局 (Bureau of Land Resources Guiyang[#] ) confirming the winning of the tender for the Land.

The Transaction constitutes a discloseable transaction of the Company under the Listing Rules. The purpose of this circular is to give you details of the Transaction.

* For identification purposes only

— 5 —

LETTER FROM THE BOARD

THE CONFIRMATION LETTER

Date: 11 January 2008

• Parties: (i) 貴陽市國土資源局 (Bureau of Land Resources Guiyang[#] ) as the Vendor;

• (ii) Yu Jun as one of the Joint Purchasers; and

• (iii) Guizhou Xiehui as the other of the Joint Purchasers.

Guizhou Xiehui is a company with limited liability incorporated in the PRC principally engaged in property development business in Guiyang City, Guizhou Province, the PRC. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, each of the Vendor and Guizhou Xiehui and their respective ultimate beneficial owners is an Independent Third Party.

Land: a piece of land located at Xiaoguan Maochong of Yunyan District, Guiyang City, Guizhou Province, the PRC（中國貴州省貴陽市雲岩區小關貓沖） with a site area of approximately 156,208 sq.m., of which 136,447 sq.m. is the granted area designated for commercial and residential use and the remaining portion with an area of 19,761 sq.m. is designated for the use as public roads.

Land premium: RMB41 million (equivalent to approximately HK$43.9 million)

Further to the entering into of the Confirmation Letter, the Land Grant Contract and the Removal and Relocation Contract were entered into by Yu Jun and Guizhou Xiehui on 17 January 2008.

CONSIDERATION FOR THE ACQUISITION OF THE LAND

The total consideration for the acquisition of the Land is approximately RMB549.4 million (equivalent to approximately HK$587.9 million) which comprises:

• (i) the land premium of RMB41 million (equivalent to approximately HK$43.9 million), which has been paid within five days from the date of the Land Grant Contract;

• (ii) the demolition and resettlement cost of RMB495 million (equivalent to approximately HK$529.7 million), of which an initial amount of approximately RMB54.5 million (equivalent to approximately HK$58.3 million) has been paid with approximately RMB342.8 million (equivalent to approximately HK$366.8 million) paid and remaining balance payable respectively within ten days and six months from the date of the Removal and Relocation Contract; and

— 6 —

LETTER FROM THE BOARD

• (iii) a 2.5% commission on the land premium and demolition and resettlement cost of approximately RMB13.4 million (equivalent to approximately HK$14.3 million), which has been paid to the Exchange Centre of Land and Mineral Resources Guiyang*（貴陽 市土地礦產資源交易中心）.

The total consideration was arrived at a successful tender by a consortium formed between Yu Jun and Guizhou Xiehui after taking into account the location and potential value of the Land.

ESTABLISHMENT OF THE JV COMPANY

Following the successful tender of the Land, Yu Jun and Guizhou Xiehui has entered into the JV M&A on 15 January 2008 to establish the JV Company as the project company for the holding and development of the Land. The principal terms of the JV M&A are set out below:

• Parties: (i) Yu Jun; and (ii) Guizhou Xiehui.

• Business scope: the JV Company is established as a limited liability company and will be engaged in property development

• Capital structure: the registered capital of the JV Company is RMB10 million (equivalent to approximately HK$10.7 million) which is contributed in cash as to 55% (RMB5.5 million, equivalent to approximately HK$5.9 million) by Yu Jun through internal resources of the Group and as to 45% (RMB4.5 million, equivalent to approximately HK$4.8 million) by Guizhou Xiehui.

The JV Company is a 55% indirectly owned subsidiary of the Company and its results will be consolidated into the financial statements of the Company.

• Profit distribution: the profits available for distribution is distributed to Yu Jun and Guizhou Xiehui in proportion to their respective capital contribution to the registered capital of the JV Company.

• Board composition: the board of directors of the JV Company comprises five directors, three of which are nominated by Yu Jun and two of which are nominated by Guizhou Xiehui. The chairman of the board of directors of the JV Company is appointed by Yu Jun.

— 7 —

LETTER FROM THE BOARD

INFORMATION ON THE LAND

The Land is located at Xiaoguan Maochong of Yunyan District, Guiyang City, Guizhou Province, the PRC which is a central district of the city with a site area of approximately 156,208 sq.m., of which 136,447 sq.m. is the granted area designated for commercial and residential use and the remaining portion with an area of 19,761 sq.m. is designated for the use as public roads. The terms of the land use right for the commercial portion shall be 40 years and the residential portion shall be 70 years.

Based on the latest development plan, it is expected the Land be developed into blocks with premium residential apartments of approximately 468,000 sq. m., retail podium of approximately 48,000 sq. m. and carpark of approximately 179,000 sq. m.. The construction of the Land is expected to commence in the second quarter of 2008 and be completed by end of 2009. The launch of pre-sale of the residential apartments is expected to be in early 2009 and all units are expected to be sold out in two years by end of 2010. The expected total investment cost of the Land is approximately RMB1.7 billion (equivalent to approximately HK$1.8 billion) which consists of the land cost of approximately RMB549.4 million (equivalent to approximately HK$587.9 million) and the construction, development and interest costs of approximately RMB1.1 billion (equivalent to approximately HK$1.2 billion) which shall be financed as to RMB10 million (equivalent to approximately HK$10.7 million) by registered capital of the JV Company, RMB539.4 million (equivalent to approximately HK$577.2 million) by shareholders’ advances and the remaining balance by bank borrowings and proceeds from pre-sale of the residential units.

The amount borne by Yu Jun in respect of the capital contribution and shareholder’s advance to the JV Company shall as to US$30 million (equivalent to approximately HK$234 million) be satisfied by the net proceeds from the issue of the Notes held in the escrow account (the details of which are set out in the Company’s announcement dated 8 January 2008) and the balance from internal resources of the Group.

REASONS FOR AND BENEFITS OF THE TRANSACTION

The Company is an investment holding company and its principal subsidiaries are engaged in investment holding, property development, the provision of project management and related services in the PRC.

As stated in the Company’s interim report as at 30 June 2007, the robust economy and rapid urbanization in the PRC will continue to fuel demand for all segments of the property market. Although the PRC government has tightened austerity measures, the market is expected to continue to boom while industry consolidation may accelerate, which will in turn ensure its healthy development. Following the issue of the Notes, the Group has accelerated the momentum of its property development and investment business. Leveraging on the Company’s management expertise in the property development market and in view of the Company’s

— 8 —

LETTER FROM THE BOARD

optimism about the prospects of the PRC property market, the Group will continue its prudent land reserve strategy and explore more premium grade property projects with promising potentials in the PRC, especially but not exclusively in Guangzhou, which are expected to bring significant contribution to the Group’s profits and shareholders’ return in the future.

The JV Company will be engaged in the property development business in Guiyang City, the capital of Guizhou Province, the PRC. Through the formation of the JV Company, the Company may enhance its participation in property development business outside Guangzhou, which the Group considers has growth potential and is in line with the Group’s business strategy. The market prices of premium residential properties in Guiyang City are at a range of RMB5,000 per sq. m. to RMB10,000 per sq. m. with an average price of RMB7,000 per sq. m.. As estimated by the Company based on a research report of an independent property valuer, the fair value of the Land, based on a range of RMB1,700 to RMB2,100 per sq.m. of the aboveground gross floor area of the proposed development, is in the range of approximately RMB0.8 billion to approximately RMB1.0 billion. The Directors consider that property market in Guiyang City remains with satisfactory earning potential and the Transaction will further strengthen the Group’s land bank portfolio.

Based on the above, the Directors are of the view that the business to be conducted by the JV Company is in the ordinary and usual course of business of the Company, the terms of the Confirmation Letter and the Transaction are on normal commercial terms, which are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

GENERAL

Your attention is drawn to the additional information set out in the Appendix to this circular.

Yours faithfully, For and on behalf of the Board Skyfame Realty (Holdings) Limited YU Pan Chairman

# For reference purposes only, the Chinese names of the PRC entities, departments or facilities have been translated into English in this circular.

— 9 —

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other matters the omission of which would make any statement in this circular misleading.

2. DISCLOSURE OF DIRECTORS’ INTERESTS

(a) Directors’ interests in the securities of the Company and its associated corporation

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporation(s) (within the meaning of Part XV of the SFO) which were required (i) pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) to be notified to the Company and the Stock Exchange; or (ii) pursuant to Section 352 of the SFO to be entered in the register referred to therein; or (iii) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers of the Listing Rules (“Model Code”) to be notified to the Company and the Stock Exchange are as follows:

(i) Interests in the Shares or underlying Shares

			Number
	Company/		of Shares or	Approximate
Name of	Associated		underlying Shares	shareholding
Director	corporation	Capacity	(long position)	percentage
Mr. YU Pan	Company	Interest of	1,098,041,271	74.31%
		controlled	(note 1)	(note 2)
		corporation
		and/or
		beneficial	owner

— 10 —

GENERAL INFORMATION

APPENDIX

Notes:

1. These Shares comprise (i) 91,530,000 existing Shares and 42,732,000 underlying Shares which would be issued pursuant to the exercise of the subscription rights attaching to 42,732,000 2006 Warrants held directly by Mr. YU; and (ii) 963,776,271 existing Shares and 3,000 underlying Shares which would be issued pursuant to the exercise of the subscription rights attaching to 3,000 2006 Warrants held directly by Grand Cosmos. The entire issued share capital of Grand Cosmos is held by Sharp Bright, the entire issued share capital of which is held by Mr. YU. Item (ii) above representing 963,776,271 Shares (which does not include the underlying interest in 3,000 2006 Warrants) have been charged in favour of the security trustee by way of a share charge dated 4 May 2007.

2. For the purposes of this section, the shareholding percentage in the Company is calculated on the basis of 1,477,680,419 Shares in issue as at the Latest Practicable Date.

(ii) Interests in underlying Shares

As at the Latest Practicable Date, the following Directors had interests as beneficial owner in options to subscribe for Shares granted under the share option scheme adopted by the Company on 4 August 2005:

			Number of
			underlying
			Shares
			(under share	Approximate
	Exercise		options of the	shareholding
Name of Director	Price	Exercise Period	Company)	percentage
	(HK$)			(note 1)
Mr. WEN Xiao Bing	1.31	13 March 2007 to	5,000,000	0.34%
		31 July 2015
Mr. LAU Yat Tung,	1.31	13 March 2007 to	3,000,000	0.20%
Derrick		31 July 2015
Mr. CHOY Shu Kwan	1.31	13 March 2007 to	600,000	0.04%
		31 July 2015
Mr. CHENG Wing	1.31	13 March 2007 to	600,000	0.04%
Keung, Raymond		31 July 2015
Ms. CHUNG Lai Fong	1.31	13 March 2007 to	600,000	0.04%
		31 July 2015

Note:

1. For the purpose of this section, the shareholding percentage in the Company is calculated on the basis of 1,477,680,419 Shares in issue as at the Latest Practicable Date.

— 11 —

GENERAL INFORMATION

APPENDIX

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporation(s) (within the meaning of Part XV of the SFO) which were required (i) pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) to be notified to the Company and the Stock Exchange; or (ii) pursuant to Section 352 of the SFO to be entered in the register referred to therein, or (iii) pursuant to the Model Code to be notified to the Company and the Stock Exchange.

(b) Directors’ interests in service contracts

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with the Company or any member of the Group other than contracts expiring or determinable by the Company or the relevant member of the Group within one year without payment of compensation (other than statutory compensation).

3. SUBSTANTIAL SHAREHOLDERS’ INTERESTS

As at the Latest Practicable Date, so far as known to any Directors or chief executive of the Company, the following persons (other than a Director or chief executive of the Company) had, or were deemed or taken to have interests or short positions in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or, who were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group:

Interests in the Shares or underlying Shares

		Number of
		Shares	Approximate
Name of		or underlying	shareholding
Shareholder	Capacity	Shares	percentage
			(note 8)
Sharp Bright	Interest of controlled	963,779,271 (long)	65.22%
	corporation	(note 1)
Grand Cosmos	Beneficial owner	963,779,271 (long)	65.22%
		(note 1)

— 12 —

GENERAL INFORMATION

APPENDIX

		Number of
		Shares	Approximate
Name of		or underlying	shareholding
Shareholder	Capacity	Shares	percentage
			(note 8)
Merrill Lynch	Interests of controlled	1,517,855,271 (long)	102.72%
& Co., Inc.	corporation	(note 2)
Lehman Brothers	Interests of controlled	1,315,986,463 (long)	89.06%
Holdings Inc.	corporation and/or	(note 3)
	person having a
	security interest
	in shares
	Interests of controlled	5,400,000 (short)	0.37%
	corporation
DKR Capital Inc.	Interests of controlled	1,251,449,904 (long)	84.69%
	corporation and/or	(note 4)
	parties to an agreement
	under s.317(1)(b)
	and s.318 of the SFO
DKR Management	Interests of controlled	1,251,449,904 (long)	84.69%
Co, Inc.	corporation and/or	(note 4)
	parties to an agreement
	under s.317(1)(b) and
	s.318 of the SFO
DKR Capital	Interests of controlled	1,251,449,904 (long)	84.69%
Partners LP	corporation and/or	(note 4)
	parties to an agreement
	under s.317(1)(b) and
	s.318 of the SFO
DKR Oasis	Investment manager	1,251,449,904 (long)	84.69%
Management Co.	and/or parties to	(note 4)
LP	an agreement
	under s.317(1)(b) and
	s.318 of the SFO
DKR SoundShore	Beneficial owner	1,251,449,904 (long)	84.69%
Oasis Holding	and/or parties to	(note 4)
Fund Ltd.	an agreement under
	s.317(1)(b) and
	s.318 of the SFO

— 13 —

GENERAL INFORMATION

APPENDIX

		Number of
		Shares	Approximate
Name of		or underlying	shareholding
Shareholder	Capacity	Shares	percentage
			(note 8)
Oasis Management	Beneficial owner	1,251,449,904 (long)	84.69%
Holdings LLC	and/or parties to	(note 4)
	an agreement under
	s.317(1)(b) and
	s.318 of the SFO
Deutsche Bank	Person having a	162,921,606 (long)	11.03%
Aktiengesellschaft	security interest
	in shares
PMA Capital	Investment manager	1,177,909,221 (long)	79.71%
Management	and/or person	(note 5)
Limited	having a security
	interest in shares
PMA Asian	Beneficial owner	44,128,000 (long)	2.99%
Opportunities Fund		(note 5)
Mr. Luo Dong	Beneficial owner	88,262,000 (long)	5.97%
Liang		(note 6)
Dalton Greater China	Beneficial owner	1,080,251,771 (long)	73.10%
(Master) Fund	and/or persons	(note 7)
	having a security
	interest in shares
Dalton Investments LLC	Investment manager	1,031,651,771 (long)	69.82%
		(note 7)

Notes:

1. These Shares comprise 963,776,271 existing Shares and 3,000 underlying Shares which would be issued pursuant to the exercise of the subscription rights attaching to 3,000 2006 Warrants held directly by Grand Cosmos. As the entire issued share capital of Grand Cosmos is held by Sharp Bright, Sharp Bright is deemed to be interested in the Shares and underlying Shares in which Grand Cosmos is interested by virtue of the SFO. As the entire issued share capital of Sharp Bright is held by Mr. YU, Mr. YU is deemed to be interested in the Shares and underlying Shares in which Sharp Bright is interested by virtue of SFO. The above representing 963,776,271 Shares (which does not include the underlying interest in 3,000 2006 Warrants) have been charged in favour of the security trustee by way of share charge dated 4 May 2007.

— 14 —

GENERAL INFORMATION

APPENDIX

1. These Shares comprise (i) 7,246,000 existing Shares; (ii) 963,776,271 Shares charged in favour of the security trustee (who holds the benefit on trust for the Noteholders) by Grand Cosmos; and (iii) an aggregate of 546,833,000 underlying Shares which would be issued upon exercise of the conversion rights attaching to the Notes at the minimum reset reference price of HK$1.00 held directly or indirectly by Merrill Lynch Group, Inc, Merrill Lynch L.P., Indopark Holdings Ltd, Merrill Lynch International Incorporated, Merrill Lynch International Holdings Inc., Merrill Lynch Europe PLC, Merrill Lynch Europe Intermediate Holdings, Merrill Lynch Holdings Limited, ML UK Capital Holdings and Merrill Lynch International. All of these entities are controlled by Merrill Lynch & Co., Inc.

2. These Shares comprise (i) a long position of 8,486,592 existing Shares; (ii) 963,776,271 Shares charged in favour of the security trustee (who holds the benefit on trust for the Noteholders) by Grand Cosmos; and (iii) 343,723,600 underlying Shares which would be issued upon exercise of the conversion rights attaching to the Notes at the minimum reset reference price of HK$1.00 held directly or indirectly by Lehman Brothers Commercial Corporation Asia Limited, LBCCA Holdings I LLC. and LBCCA Holdings II LLC. All these entities are controlled by Lehman Brothers Holdings Inc.

3. These Shares comprise (i) 10,417,185 existing Shares; (ii) 963,776,271 Shares charged in favour of the security trustee (who holds the benefit on trust for the Noteholders) by Grand Cosmos; and (iii) 277,256,448 underlying Shares which would be issued upon exercise of the conversion rights attaching to the Notes at the initial conversion price of HK$1.35.

4. These Shares comprise (i) 963,776,271 Shares charged in favour of the security trustee (who holds the benefit on trust for the Noteholders) by Grand Cosmos; (ii) 77,416,000 existing Shares (44,128,000 Shares held by PMA Asian Opportunities Fund); (iii) 19,538,450 underlying Shares which would be issued upon exercise of the subscription rights attaching to 19,538,450 2006 Warrants; and (iv) 117,178,500 underlying Shares which would be issued upon exercise of the conversion rights attaching to the Notes at the minimum reset reference price of HK$1.00. All of these funds are controlled by PMA Capital Management Limited.

5. These Shares comprise 11,990,000 existing Shares and 76,272,000 underlying Shares which would be issued upon exercise of the subscription rights attaching to 76,272,000 2006 Warrants.

6. These Shares comprise (i) 963,776,271 Shares charged in favour of the security trustee (who holds the benefit on trust for the Noteholders) by Grand Cosmos; (ii) 77,416,000 existing Shares (28,816,000 Shares held by Dalton Greater China (Master) Fund); (iii) 39,059,500 underlying Shares which would be issued upon exercise of the conversion rights attaching to the Notes at the minimum reset reference price of HK$1.00 held directly or indirectly by Dalton Investment LLC and Dalton Greater China (Master) Fund, the latter is managed by Dalton Investment LLC.

7. For the purpose of this section, the shareholding percentage in the Company is calculated on the basis of 1,477,680,419 Shares in issue as at the Latest Practicable Date.

Save as disclosed above, as at the Latest Practicable Date and so far as known to the Directors or chief executive of the Company, no other person (not being a Director or chief executive of the Company) had any interests or short positions in Shares or underlying Shares of the Company which would fall to be disclosed to the Company and the Stock Exchange, under the provisions of Divisions 2 and 3 of Part XV of the

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GENERAL INFORMATION

APPENDIX

SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company or any other member of the Group.

Save that Mr. YU is the sole director of Sharp Bright and Grand Cosmos and that he is also the sole shareholder of Sharp Bright which in turn is the sole shareholder of Grand Cosmos as at the Latest Practicable Date, none of the Directors held any directorship or employment in a company which has an interest or short position in the Shares and 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.

4. COMPETING INTERESTS

As at the Latest Practicable Date, save for Mr. YU, the chairman of the Company, being a director and substantial shareholder of a company listed on the Shenzhen Stock Exchange (the “PRC Listco”) which is engaged in the mass market real estate development business, and Mr. YU and his associates have personal interest in certain properties including residential buildings and commercial buildings in the PRC, none of the Directors and his/her respective associates had any interests in any business, which competes or is likely to compete, either directly or indirectly, with the Company’s business (as would be required to be disclosed under rule 8.10 of the Listing Rules if each of them were a controlling shareholder of the Company).

Mr. YU has undertaken to the Company that for so long as he remains as Director or controlling shareholder of the Company, all enquiries and actual or potential business opportunities received by him (and/or his associates) in relation to property development project management and property investment in the PRC (the “Business Opportunities”) shall be referred by Mr. YU to the Company on a timely basis and the Business Opportunities must be first offered or made available to the Group.

In addition, Mr. YU entered into a deed of non-competition with the Note Purchasers on 4 May 2007 and agreed that he will not, and procure that none of his affiliates (other than the Group) will directly or indirectly, among other things, (i) be engaged or interested in any capacity in any business which is, or is about to be, the same as, or of a type similar to the business carried on by the Group from time to time or in competition with the Group; or (ii) vote in favour of any resolutions at a general meeting of the PRC Listco that may cause PRC Listco to engage in any business which is, or is about to be, the same as, or of a type similar to, the business carried on by the Group from time to time or in competition with the Group, in either case save and except in relation to business of the type currently carried out by the PRC Listco.

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5. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened by or against any member of the Group.

6. MISCELLANEOUS

• (a) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

• (b) The head office and principal place of business of the Company in Hong Kong is at 2502B, Tower 1, Admiralty Centre, 18 Harcourt Road, Hong Kong.

• (c) The company secretary and qualified accountant of the Company is Ms. CHEUNG Lin Shun, who is a fellow member of the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants.

• (d) The Hong Kong branch share registrars and transfer office of the Company is Abacus Share Registrars Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.

• (e) The English text of this circular shall prevail over the Chinese text.

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