Zhong An Group Limited — Proxy Solicitation & Information Statement 2010

Dec 10, 2010

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 Zhong An Real Estate Limited , you should at once hand this circular to the purchaser or the transferee or to the bank, the licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.

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ZHONG AN REAL ESTATE LIMITED

眾安房產有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock code: 672)

MAJOR TRANSACTION

10 December 2010

CONTENTS

			Page
Definitions . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			5
Appendix I	–	Financial information of the Group . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II	–	Valuation report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
Appendix III	–	General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1

– i –

DEFINITIONS

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

• “2009 Acquired Land”

• the land situated at the north of Shenggui Hill, west of Xingjian North Road and south of Beihuan West Road, Yuyao, Zhejiang Province, the PRC（中國浙江省余姚市勝歸 山北側，新建北路西側，北環西路南側） acquired by Zhong An Group through an open tender auction held on 29 October 2009, which acquisition was disclosed in the Company’s announcement dated 30 October 2009

• “Bid Confirmations” six land use right bid confirmations （掛牌成交確認書）in respect of the six respective lots which constitute the Land, all dated 3 November 2010 and each being entered into between Zhong An Group and Yuyao LAR Bureau

• “Board” the board of Directors

• “Company” Zhong An Real Estate Limited （眾安房產有限公司）, an exempted company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the Stock Exchange

• “connected person(s)” has the same meaning ascribed to it under the Listing Rules

• “Director(s)” the director(s) of the Company

• “GDP” gross domestic product

• “Group” the Company and its subsidiaries

• “HK$” Hong Kong dollar(s), the lawful currency of Hong Kong

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC

• “km” kilometer

“Land” a piece of land situated at the north of Shenggui Hill, west of Xingjian North Road, south of Beihuan West Road, east of Liang Zhougong Road, Yuyao, Zhejiang Province, the PRC.（中國浙江省余姚市，勝歸山北側，新建北 路西側，北環西路南側，梁周公路東側）consisting of Lot A, Lot B, Lot C, Lot D, Lot E and Lot F

“Land Transaction”

the transactions contemplated under the Bid Confirmations

– 1 –

DEFINITIONS

• “Land Transfer Price” RMB1,410,168,284 (equivalent to approximately HK$1,639,730,000), being the aggregate price for the transfer of land use right in respect of the Land under the Bid Confirmations

• “Latest Practicable Date” 6 December 2010, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular

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

• “Lot A” a site which forms part of the Land located at the east to Xinjian North Road, south to Jinxing Road, west to Zhongjiang and north to the 2009 Acquired Land, Yuyao, Zhejiang Province, the PRC （中國浙江省余姚市，東至新建 北路，南至金型路，西至中江，北至二零零九年已購土地） with a site area of approximately 71,519 sq. m.

• “Lot B”

• a site which forms part of the Land located at the north of Shenggui Hill, west of Xinjian North Road, south of Beihuan West Road and east of 2 hills at Liang Zhougong Road (the “Reserved Hills”), Yuyao, Zhejiang Province, the PRC（中國浙江省余姚市，勝歸山北側，新建北路西側，北 環西路南側，梁周公路東側之兩座保留山體「保留山體」）with a site area of approximately 37,658 sq. m.

• “Lot C”

• a site which forms part of the Land located at east to the 2009 Acquired Land, south to Lot D, west to Lot E and Lot B and north to Beihuan West Road, Yuyao, Zhejiang Province, the PRC. （中國浙江省余姚市,東至二零零九年已購 土地，南至地塊D，西至地塊E及B，北至北環西路）with a site area of approximately 58,691 sq. m.

• “Lot D”

• a site which forms part of the Land located at east to the Reserved Hills and the 2009 Acquired Land, south to a planned sub-road, west to Lot F, north to Lot C and the Reserved Hills, Yuyao, Zhejiang Province, the PRC（中國 浙江省余姚市，東至保留山體和二零零九年已購土地，南至規劃 支路，西至地塊F，北至地塊C和保留山體）with a site area of approximately 63,529 sq. m.

• “Lot E”

a site which forms part of the Land located at east to Lot C and the Reserved Hills, south to Lot F, west to a planned road and north to Beihuan West Road, Yuyao, Zhejiang Province, the PRC（中國浙江省余姚市，東至地塊C 和保留山體，南至地塊F，西至規劃道路，北至北環西路） with a site area of approximately 64,328 sq. m.

– 2 –

DEFINITIONS

“Lot F”	a site which forms part of the Land located at east to
	Lot D, south to a planned sub-road, west to a planned
	road and north to Lot E, Yuyao, Zhejiang Province, the
	PRC（中國浙江省余姚市，東至地塊D，南至規劃支路，西至規
	劃道路，北至地塊E）with a site area of approximately
	48,615 sq. m.
“Model Code”	Model Code for Securities Transactions by Directors of
	Listed Companies, being Appendix 10 to the Listing Rules
“Percentage Ratios”	the applicable percentage ratios under Rule 14.07 of the
	Listing Rules
“PRC”	the People’s Republic of China which, for the purposes of
	this circular, excludes Hong Kong, the Macau Special
	Administrative Region of the PRC and Taiwan
“RMB”	Renminbi Yuan, the lawful currency of the PRC
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“Share(s)”	ordinary share(s) of HK$0.01 each in the share capital of
	the Company
“Shareholder(s)”	holder(s) of the Shares
“sq. m.”	square metre(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Yuci”	Yuyao and Cixi of Zhejiang Province, the PRC（中國浙江
	省余姚市及慈溪市）
“Yuyao”	Yuyao, Zhejiang Province, the PRC（中國浙江省余姚市）
“Yuyao Land Exchange	Yuyao Land Transactions and Reserve Exchange Centre
Centre”	（余姚市土地交易儲備中心）, an institutional unit（事業單位）
	under the Yuyao LAR Bureau
“Yuyao LAR Bureau”	Yuyao Land and Resources Bureau, Zhejiang Province,
	the PRC*（中華人民共和國浙江省余姚市國土資源局）

– 3 –

DEFINITIONS

“Zhong An Group” Zhong An Group Co., Ltd. (formerly known as Zhejiang Zhong’an Property Development Co., Ltd. （眾安集團 有限公司（原稱為浙江眾安房地產開發有限公司））), a limited liability company incorporated in the PRC and is a non-wholly owned subsidiary of the Company “%” percentage

* denotes English translation of the name of a Chinese company or entity, or vice versa, and is provided for identification purposes only.

In this circular, for the purpose of illustration only, amounts quoted in RMB have been converted into HK$ at the rate of RMB0.86 to HK$1. Such exchange rate has been used, where applicable, for purposes of illustration only and does not constitute a representation that any amounts were or may have been exchanged at these or any other rates or at all.

– 4 –

LETTER FROM THE BOARD

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ZHONG AN REAL ESTATE LIMITED 眾安房產有限公司

(incorporated in the Cayman Islands with limited liability) (Stock code: 672)

Executive Directors:

Mr. Shi Kancheng (alias Shi Zhongan) Mr. Lou Yifei Ms. Shen Tiaojuan Mr. Zhang Jiangang

Registered office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Independent non-executive Directors:

Professor Pei Ker Wei Professor Wang Shu Guang Dr. Loke Yu

Principal place of

business in Hong Kong: Room 4006, 40/F China Resources Building 26 Harbour Road Wanchai Hong Kong

10 December 2010

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION

1. Background

On 3 November 2010, the Board announced that Zhong An Group, a non-wholly owned subsidiary of the Company, made a successful bid for the State-owned land use right in respect of the Land through an open tender auction organized and held in Yuyao on 3 November 2010. Consequently and on the same date, Zhong An Group entered into the Bid Confirmations with Yuyao LAR Bureau pursuant to which Zhong An Group has agreed to purchase the State-owned land use right in respect of the Land at the Land Transfer Price.

The Land is constituted by Lot A, Lot B, Lot C, Lot D, Lot E and Lot F. It is situated at the north of Shenggui Hill, west of Xingjian North Road, south of Beihuan West Road and east of Liang Zhougong Road. Its aggregate site area is approximately 344,340 sq.m.

– 5 –

LETTER FROM THE BOARD

Given that one of the applicable Percentage Ratios in respect of the Land Transaction is greater than 25% but less than 100% for the purpose of Rule 14.07 of the Listing Rules, the Land Transaction constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is therefore subject to approval by the Shareholders. The Company has obtained a written approval of the Land Transaction from Whole Good Management Limited, the controlling shareholder of the Company, which is beneficially interested in approximately 69.87% of the issued share capital of the Company. By reason of such written approval, an extraordinary general meeting of the Company to approve the Land Transaction is not necessary pursuant to Rule 14.44 of the Listing Rules and will not be convened.

The purpose of this circular is to provide you with further information regarding the Land Transaction.

2. Principal terms of the Bid Confirmation

Date : 3 November 2010 Parties : (1) Zhong An Group (2) Yuyao LAR Bureau To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, Yuyao LAR Bureau is a government department and is a third party independent of, and not connected with the Company and its connected persons. Land for transfer : The Land, which is constituted by Lot A, Lot B, Lot C, Lot D, Lot E and Lot F. Term of land use : 40 years for commercial usage and 70 years for right residential usage. Lot A is designated for commercial and residential purposes while Lot B, Lot C, Lot D, Lot E and Lot F are all designated for residential purpose. Surety（競買保証金） : A sum of RMB300 million was deposited with Yuyao paid in order to Land Exchange Centre as surety, which is refundable if become a Zhong An Group performs its obligations to enter into qualified bidder formal grant contracts and performs its payment obligations thereunder.

– 6 –

LETTER FROM THE BOARD

• Land Transfer Price : Approximately RMB1,410 million (equivalent to approximately HK$1,640 million).

Under the Bid Confirmations, Zhong An Group shall pay the Land Transfer Price by 2 installments:

1. about RMB705 million (equivalent to approximately HK$820 million) on or before 3 December 2010; and

2. about RMB705 million (equivalent to approximately HK$820 million) on or before 6 May 2011.

Other terms : The construction and completion of the development on the Land are required to comply with certain prescribed conditions which include the following:

• (a) the construction of the plots of land designated for commercial purpose and those plots of land designated for residential purpose should be commenced concurrently;

• (b) the prime class office blocks, the boutique shopping streets and budget hotel totalling approximately 100,000 sq. m. (excluding the floor area for car parking spaces) should not be carved out for sale within eight years after completion of the construction; and

• (c) the construction work should commence within six months from the signing of the Bid Confirmations. Such construction work should be completed (and business commenced) within three years from the date of commencement of the construction work and if the construction work has not been completed as so, it will be treated as idle land.

3. Land Transfer Price

The Land Transfer Price will be funded by the Group’s internal resources.

The Land Transfer Price was arrived at as a result of a successful bid by Zhong An Group at an open auction, which price was determined having taken into account the prevailing property market conditions of Yuyao and the development potential of the Land.

– 7 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, the Group had paid the first installment of the Land Transfer Price which was about RMB705 million and the Group had not entered into a formal grant contract in relation to the Land. Such formal grant contract is expected to be entered into upon the payment of the remaining balance of the Land Transfer Price on or before 6 May 2011.

4. Reasons for the Land Transaction

The Group is principally engaged in property development, leasing and hotel operation.

The Land is located at northern part of Yuyao, close to Beihuan West Road, Xinjian North Road and other main roads, and in close proximity to the 2009 Acquired Land where a property development project of the Group under progress. It is located in the core district of Yuyao with commerce and trade exhibition centres and there are specialized commodity market, exhibition centre in the perimeter. The Land has good scenery resources, Shenggui Shan and the Zhongjiang River. The project on the Land will be positioned by the Group as high-end residential, commercial and business centre with business, commerce, catering, shopping, leisure, entertainment and residence as a community. This project is planned with low density of residential units and high rise apartments, and boutique shopping streets, business hotels and other multifunctional facilities. This is expected to be one of the locations in Yuyao with great development potential. The Company plans to combine the project of the 2009 Acquired Land with the project of development of the Land into a large urban complex project in Yuyao.

Yuyao is the top 10 county city（縣級市）among the top 100 county cities（縣級市）in the PRC in 2009. It is the top 4 city of Zhejiang Province in terms of GDP in 2009. The overall economy of Yuyao is managed well. Its GDP growth rate is maintained at a high level in recent years. The average growth rate is above 14% on annual basis. The residents of Yuyao have good standard of living and high purchasing power. The high-end low density property is at a preliminary stage in Yuyao. The Group plans to build an urban complex with a high-end five star hotel and large property complex with commercial and high quality residual units. This project is expected to bring considerable income and profits to the Group.

The Directors believe that the acquisition of the Land together with the adjacent 2009 Acquired Land will generate synergy effect and plan to develop, design and build as a high-end urban complex project in Yuci area. This will enrich the Group’s landbank and bring forth development and opportunity for the Group.

The Directors are of the view that the Land Transaction is in line with the business expansion strategy of the Group. The Directors (including the independent non-executive Directors) consider that the Land Transaction is in the ordinary and usual course of business of the Group, the terms of the Land Transaction are on normal commercial terms which are fair and reasonable, and the Land Transaction is in the interests of the Company and the Shareholders as a whole.

– 8 –

LETTER FROM THE BOARD

5. Financial Effect of the Land Transaction

As disclosed in Appendix II to this circular, CB Richard Ellis Limited ascribed no commercial value to the Land as at 17 November 2010. Had the Group paid all the land premium and obtained all the State-owned land use right certificates of the Land, the capital value of the Land as at 17 November 2010 was in the sum of RMB 1,800,000,000.

There will not be any significant impact on the net assets of the Group following the completion of the Land Transaction as the increase in the value of the Land will be offset by the decrease in bank balances and cash of the Group. There will also be no material impact on the income statement or reserves of the Group. It is also expected that the Land Transaction would increase the Group’s revenue in the long run.

6. Implication under the Listing Rules

The Land Transaction constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is conditional on approval by the Shareholders pursuant to Rule 14.40 of the Listing Rules.

Under Rule 14.44 of the Listing Rules, Shareholders’ approval for the Land Transaction may be obtained by written Shareholders’ approval without the need of convening a general meeting if (a) no Shareholder is required to abstain from voting if the Company were to convene a general meeting for the approval of the Land Transaction; and (b) written approval has been obtained from a Shareholder or a closely allied group of Shareholders who together hold more than 50% in nominal value of the issued share capital of the Company giving the right to attend and vote at general meetings to approve the Land Transaction.

So far as the Directors are aware after making reasonable enquiries, no Shareholder would have been required to abstain from voting if the Company were to convene a general meeting for the approval of the Land Transaction. Therefore, the Land Transaction would be approved by way of written Shareholders’ approval from a Shareholder or a closely allied group of Shareholders pursuant to Rule 14.44 of the Listing Rules.

As the Directors consider that the Land Transaction is fair and reasonable and is in the interests of the Company and the Shareholders as a whole, the Directors would recommend the Shareholders to approve the Land Transaction, if an extraordinary general meeting were to be convened.

On 3 November 2010, written approval for the Land Transaction was given by Whole Good Management Limited, a controlling Shareholder holding 1,628,760,000 Shares, representing about 69.87% of the issued share capital of the Company as at the date of such approval. Accordingly, no extraordinary general meeting of the Company would be convened for the purposes of approving the Land Transaction.

– 9 –

LETTER FROM THE BOARD

7. Additional information

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

Yours faithfully, By order of the Board of Zhong An Real Estate Limited Shi Kancheng Chairman

– 10 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP

The Company is required to set out in this circular the information for the last three financial years with respect to the profits and losses, financial record and position, set out as a comparative table and the latest published audited statement of financial position together with the notes on the annual accounts for the last financial year for the Group.

The audited consolidated financial statements of the Group for the year ended 31 December 2009 have been set out in the Annual Report 2009 of the Company which was posted on 30 April 2010 on the Stock Exchange’s website (http://www.hkexnews.hk). Please also see below quick link to the Annual Report 2009:

http://www.hkexnews.hk/listedco/listconews/sehk/20100430/LTN20100430415.pdf

The audited consolidated financial statements of the Group for the year ended 31 December 2008 have been set out in the Annual Report 2008 of the Company which was posted on 14 April 2009 on the Stock Exchange’s website (http://www.hkexnews.hk). Please also see below quick link to the Annual Report 2008:

http://www.hkexnews.hk/listedco/listconews/sehk/20090414/LTN20090414452.pdf

The audited consolidated financial statements of the Group for the year ended 31 December 2007 have also been set out in the comparative column of the Annual Report 2008 of the Company. Please refer to quick link to the Annual Report 2008 as above for more details.

2. UNAUDITED INTERIM FINANCIAL INFORMATION OF THE GROUP

The unaudited interim consolidated financial statements of the Group for the six months ended 30 June 2010 have been set out in the Interim Report 2010 of the Company which was post on 21 September 2010 on the Stock Exchange’s website (http:// www.hkexnews.hk). Please also see below quick link to the Interim Report 2010:

http://www.hkexnews.hk/listedco/listconews/sehk/20100921/LTN20100921116.pdf

– I-1 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. INDEBTEDNESS, LIQUIDITY AND FINANCIAL RESOURCES

At the close of business on 31 October 2010 (being the latest practicable date for the purpose of this indebtedness statement):

• (1) the Group had bank and other borrowings of approximately RMB684,615,760, which would be due within one year, and the long term bank and other borrowings of approximately RMB1,201,884,240; and

• (2) the Group had aggregate contingent liabilities of approximate RMB674,333,000 regarding guarantees provided by the Group in respect of the mortgage facilities granted by certain banks and Housing Fund Management Authorities*（住房公積金 管理機構）to the purchasers of the Group’s properties.

Save as disclosed above and otherwise mentioned herein, and apart from intra-group liabilities, none of the members of the Group had, at the close of business on 31 October 2010, any outstanding mortgages, charges, debenture, loan capital issued and outstanding or agreed to be issued, bank loan and overdraft or other similar indebtedness, finance leases or hire purchase commitments, liabilities under acceptances or acceptance credits or any guarantee or other material contingent liabilities.

4. WORKING CAPITAL

The Directors, after due and careful consideration, are of the opinion that, in the absence of unforeseen circumstances and based on the present available banking facilities and the internal resources of the Group, the Group will have sufficient working capital for its present requirements for the next 12 months from the date of this circular.

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2009, being the date to which the latest audited financial statements of the Group were made up.

6. FINANCIAL AND TRADING PROSPECTS

For the six months ended 30 June 2010, the Group had achieved unaudited revenue and net profit attributable to owners of the parent of RMB207,898,000 and RMB82,870,000 respectively, as compared to those of corresponding period in 2009 of RMB330,640,000 and RMB194,157,000 respectively. The reduction is because the Group had smaller area of properties sold and delivered as a result of adverse effect of the regulatory measures imposed by the central government. The earnings per share for the six months ended 30 June 2010 was RMB0.04, as compared to that of corresponding period in 2009 of RMB0.08.

– I-2 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Group’s balance sheet as at 30 June 2010 is liquid with cash and cash equivalent of RMB751,720,000 (31 December 2009: RMB891,787,000). As at 30 June 2010, the ratio of total liabilities to total assets of the Group was 50.0% (31 December 2009: 39.1%) and the ratio of bank and other borrowings to shareholder’s funds of the Group was 44.0% (31 December 2009: 24.9%).

In view of the regulatory measures imposed by the central government, the property market will be expected to stabilize by the end of of 2010. The scale of the construction has not been reduced.

The Group will continue to adopt the low cost strategy and to keep the pace of the existing projects such that we can achieve a quick asset turnover and higher profits. The Group has maintained sufficient low cost land bank on hand and primarily focuses on the Yangtze River Delta which is the most developed region in China. We will continue to take a prudent and forward looking approach in consolidating the already established competitive advantages, and expand high-quality and low-cost land bank in selected developed cities.

With the satisfactory presale results of newly launched projects, we will continue to enhance our corporate branding in our focused area. We intend to increase investment properties, which we believe would bring a stable financial operation and capital equilibrium for the Group in the long-run.

– I-3 –

APPENDIX II

VALUATION REPORT

The following is the text of a letter with the valuation certificate received from CB Richard Ellis Limited, an independent property valuer, prepared for the purpose of incorporation in the circular in connection with its valuation as at 17 November 2010 of the Land.

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10 December 2010

The Board of Directors

Zhong An Real Estate Limited 996 Xiaoshan Road, Xiaoshan District, Hangzhou, Zhejiang Province, the PRC

Dear Sirs,

In accordance with your instructions for us to value the Land, we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the capital value of such property interests as at 17 November 2010 (the “date of valuation”).

Our valuation is our opinion of Market Value which is defined as “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.”

Unless otherwise stated, our valuation is prepared in accordance with the “First Edition of The HKIS Valuation Standards on Properties” published by The Hong Kong Institute of Surveyors (the “HKIS”). We have also complied with all the requirements contained in Paragraph 34(2), (3) of Schedule 3 of the Companies Ordinance (Cap. 32), Chapter 5, Practice Note 12 and Practice Note 16 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

– II-1 –

VALUATION REPORT

APPENDIX II

Our valuation has been made on the assumption that the owner sells the properties on the open market without the benefit or burden of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which would serve to affect the values of the property interests.

Unless otherwise stated, all the property interests are valued by the direct comparison method on the assumption that each property can be sold with the benefit of vacant possession. Comparison is based on prices realized on actual transactions or asking prices of comparable properties. Comparable properties with similar sizes, characters and locations are analyzed, and carefully weighted against all respective advantages and disadvantages of each property in order to arrive at a fair comparison of value.

We have valued the property interests on the basis that the property will be or can be developed and completed in accordance with the Group’s latest development schemes provided to us. We have assumed that approvals from relevant authorities for such schemes have been obtained. In arriving at our opinion of value, we have adopted the direct comparison approach by making reference to comparable sales evidence as available in the relevant market to arrive at the capital value of the property as if the property were completed at the date of valuation and have also taken into account of the development costs to be spent to reflect the quality of the completed development. The “capital value of the property as if completed” represents our opinion of the aggregate selling prices of the property assuming that it would have been completed at the date of valuation.

In the course of our valuation for the property interests in the PRC, we have relied on the legal opinion provided by the Group’s PRC legal adviser, Zhejiang Fajun Law Firm (the “PRC Legal Opinion”).We have been provided with extracts from title documents relating to such property interests. We have not, however, searched for the original documents to verify ownership or existence of any amendment which do not appear on the copies handed to us. All documents have been used for reference only.

We have relied to a considerable extent on information given by the Group, in particular, but not limited to, planning approvals, statutory notices, easements, tenancies and floor areas. No on-site measurement has been taken. Dimensions, measurements and areas included in the valuation certificate are only approximations. We have taken every reasonable care in both inspecting the information provided to us and making relevant enquiries. We have no reason to doubt the truth and accuracy of the information provided to us by the Group, which is material to the valuation. We were also advised by the Group that no material facts have been omitted from the information provided to us.

We have inspected the properties to such extent as for the purpose of this valuation. In the course of our inspection, we did not notice any serious defects. However, we have not carried out any structural survey nor any tests were made on the building services. Therefore, we are not able to report whether the properties are free of rot, infestation or any other structural defects. We have not carried out investigations on the site to determine the suitability of the ground conditions and the services etc. for any future development.

– II-2 –

VALUATION REPORT

APPENDIX II

No allowance has been made in our valuation neither for any charges, mortgages or amounts owing on the property interests nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property interests are free from encumbrances, restrictions and outgoing of an onerous nature which could affect their values.

Unless otherwise stated, all monetary amounts are stated in Renminbi (“RMB”).

We enclose herewith our valuation certificate.

Yours faithfully, For and on behalf of CB Richard Ellis Limited Leo MY LO MHKIS MRICS

Director Valuation & Advisory Services Greater China

Note: Mr. Lo is a member of Royal Institution of Chartered Surveyors and a member of the Hong Kong Institute of Surveyors. He has over 7 years’ valuation experience in Hong Kong, the PRC and Asia Pacific Region.

– II-3 –

VALUATION REPORT

APPENDIX II

VALUATION CERTIFICATE

Property interests contracted to be held by the Group for future development

Property Description and tenure

Capital value in Details of existing state as at occupancy 17 November 2010

The property comprises six parcels of land with a total site area of approximately 344,340 sq.m..

Six parcels of land, The property comprises six parcels of North of Shenggui Hill, land with a total site area of West of Xinjian North approximately 344,340 sq.m.. Road, South of Beihuan West As advised by the Group, the total Road, expected gross floor area of the and East of Liang buildings and structures to be Zhougong Road, constructed on the property is Yuyao, approximately 515,203 sq.m., which Zhejiang Province, includes various townhouses with a total the People’s Republic of gross floor area of approximately China 128,458 sq.m., various duplex terrace with a total gross floor area of approximately 36,232 sq.m., various high-rise residential units with a total gross floor area of approximately 85,823 sq.m., various SOHO– office units with a total gross floor area of approximately 28,734 sq.m., various office units with a total gross floor area of approximately 40,000 sq.m., a budget hotel with a total gross floor area of approximately 10,000 sq.m., a retail facility with a total gross floor area of approximately 50,000 sq.m. a clubhouse with a total gross floor area of approximately 10,000 sq.m. and various car parking lots with a total gross floor area of approximately 135,956 sq.m. under the ground.

The property is No Commercial Value currently vacant.

As advised, the proposed development, subject to the approval from relevant PRC authorities, will be completed in 2014.

The land use rights of the property has hold for a State-owned Land Use Rights Listing Notice with various terms of 40 and 70 years respectively for commercial and residential uses.

– II-4 –

VALUATION REPORT

APPENDIX II

Notes:

1. Pursuant to the following the Bid Confirmations dated 3 November 2010 entered into between Yuyao Land and Resources Bureau（余姚市國土資源局）and the Group, the Group shall purchase the land use rights in respect of the Land at a total consideration of RMB1,410,168,284.

No. Land 1 Lot A located at the east to Xinjian North Road, south to Jing Xin Road 2 Lot B located at south of Beihuan West Road, North of Shenggui Hill 3 Lot C located at south to Lot D, west to Lot E and B 4 Lot D located at south to a planned sub-road, west to Lot F 5 Lot E located at south to Lot F, west to a planned road 6 Lot F located at south to a planned road, east to Lot D Total:	Land Area Land Use/Term (sq.m.) 71,519 Commercial: 40 years Residential: 70 years 37,658 Ancillary 58,691 Residential: 70 years 63,529 Residential: 70 years 64,328 Residential: 70 years 48,615 Residential: 70 years 344,340	Consideration (RMB) 322,909,790 25,493,034 264,991,370 286,834,940 290,440,920 219,498,230
		1,410,168,284

1. As advised by the Group, the Group has not obtained any State-owned Land Use Rights Certificate of the property as at the valuation date.

2. Pursuant to the Land Planning Instruction of the State-owned Land Use Rights（國有建設用地使用權出讓規劃 設計條件書）for the property issued by Yuyao Urban Planning Bureau （余姚市規劃局）dated 28 September 2010, the proposed development of the property with a site area of approximately 344,340 sq.m. is limited to the following parameters:

					Building	Green
**Lot **	No.	Land Area	Usage	Plot Ratio	Density	Space Ratio	Remarks
		(sq.m.)			(%)	(%)
A		71,519	Commercial	2.7-3.0	�40	�10	The gross floor area of
			and				residential development
			residential				should be less than 40% of
							the total gross floor area;
							1.2 car parking lot per 100
							sq.m. for retail portion and
							1 car parking lot per 100
							sq.m. for residential
							portion.
B		37,658	Ancillary	N/A	N/A	N/A	Total permitted gross floor
							area is 10,000 sq.m. and
							building site area should
							be less than 20% of the
							total site area.
C		58,691	Residential	0.6-0.7	�35	�30	The site is planned for
							high-end residential
							development.

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APPENDIX II

VALUATION REPORT

Lot No. D E F Total	Land Area Usage (sq.m.) 63,529 Residential 64,328 Residential 48,615 Residential 344,340	Plot Ratio 0.6-0.7 0.6-0.7 0.6-0.7 1.0-1.13	Building Density (%) �35 �35 �35 �35	Green Space Ratio Remarks (%) �30 The site is planned for high-end residential development. �30 The site is planned for high-end residential development. �30 The site is planned for high-end residential development. �35

1. Pursuant to the State-owned Land Use Right Grant Notice issued by Yuyao Land and Resources Bureau, the development of the property is limited to the following conditions:

2. i) The construction of the plots of land designated for commercial purpose and those plots of land designated for residential purpose should be commenced concurrently;

3. ii) The prime class office blocks, the boutique shopping streets and budget hotel totaling approximately 100,000 sq. m. (excluding the floor area for car parking spaces) should not be carved out for sale within eight years after completion of the construction; and

4. iii) The construction work should commence within six months from the signing of the Bid Confirmations. Such construction work should be completed (and business commenced) within three years from the date of commencement of the construction work and if the construction work has not been completed as so, it will be treated as idle land.

5. As advised by the Group, the Group has not obtained any State-owned Land Use Rights Certificate of the property as at 17 November 2010. For the purpose of this valuation report, we have ascribed no commercial value to the property. Had the Group paid all of the land premium and obtained all the relevant State-owned Land Use Rights Certificate(s) of the property, the capital value of the property as at 17 November 2010 was in the sum of RMB1,800,000,000 (100% interests attributable to the Group: RMB1,800,000,000).

6. We have been provided with a legal opinion on the property prepared by the Group’s legal adviser which contains, inter alia, the following information:

7. i. According to the relevant laws and regulations of the PRC, the Bid Confirmations are lawful and legally binding on the parties thereto including Zhong An Group and Yuyao LAR Bureau.

8. ii. As at the date of the legal opinion, Zhong An Group has not been vested the legal title of the Land. After settlement of the entire land premium according to the Bid Confirmations mentioned above, the legal title of the Land shall vest in Zhong An Group or the designated project company by the Group (as the case may be) and the Group shall not have any impediment to obtain the State-owned Land Use Rights Certificate of the Land.

– II-6 –

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DIRECTORS’ AND CHIEF EXECUTIVES’ INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES

As at the Latest Practicable Date, the interests and short positions of the Directors or chief executive of the Company in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be: (i) notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO; (ii) recorded in the register required to be kept by the Company under Section 352 of the SFO; or (iii) notified to the Company and the Stock Exchange pursuant to the Model Code were as follows:

Long positions in Shares of the Company:

			Approximate
			percentage of
			the Company’s
	Capacity and	Number of	issued share
Name	nature of interest	Shares	capital
Shi Kancheng	Interest of controlled	1,628,760,000	69.87
	corporation (Note)

Note: These Shares are held by Whole Good Management Limited, which is wholly and beneficially owned by Mr. Shi Kancheng. Mr. Shi Kancheng is the sole director of Whole Good Management Limited.

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GENERAL INFORMATION

APPENDIX III

Long positions in underlying Shares of the Company

			Approximate
		Number of	percentage of
		underlying	the Company’s
	Capacity and	Shares held	issued share
Name	nature of interest	(Note)	capital
Shi Kancheng	Beneficial owner	2,880,000	0.12
Shen Tiaojuan	Beneficial owner	1,440,000	0.06
Zhang Jiangang	Beneficial owner	1,320,000	0.06
Lou Yifei	Beneficial owner	1,320,000	0.06
Loke Yu	Beneficial owner	360,000	0.02
Pei Ker Wei	Beneficial owner	360,000	0.02
Wang Shu Guang	Beneficial owner	360,000	0.02

Note: These represent the number of Shares which will be allotted and issued to the respective Directors upon the exercise of the share options granted to each of them pursuant to the share option schemes adopted by the Company.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and chief executive of the Company had any interests or short positions in the Shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or were required, pursuant to the Model Code to be notified to the Company and the Stock Exchange.

3. SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS WITH INTERESTS IN THE COMPANY WHICH ARE DISCLOSEABLE UNDER SECTION 336 OF PART XV OF THE SFO

As at the Latest Practicable Date, so far as is known to the Directors and chief executive of the Company, the following persons (other than a Director or chief executive of the Company) had or was deemed or taken to have an interest or short position in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital

– III-2 –

GENERAL INFORMATION

APPENDIX III

carrying rights to vote in all circumstances at general meetings of the Company, or were required, pursuant to Section 336 of the SFO, to be entered in the register referred to therein:

Long positions in Shares of the Company:

			Approximate
			percentage of
			the Company’s
		Number of	issued share
Name of Shareholder	Capacity	Shares	capital
Whole Good	Beneficial owner	1,628,760,000	69.87
Management Limited
(Note)
Atlantis Investment	Investment manager	187,200,000	8.03
Management Limited

Note: The entire issued share capital of Whole Good Management Limited which is wholly and beneficially owned by Mr. Shi Kancheng. Mr. Shi Kancheng is the sole director of Whole Good Management Limited.

Save as disclosed above, as at the Latest Practicable Date, so far as is known to the Directors and chief executive of the Company, there was no other person (other than the Director or chief executive of the Company) who had interests or short positions in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO; or, had a direct or indirect interests amounting to 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 and/ or any subsidiaries of the Company, or are required, pursuant to Section 336 of the SFO, to be entered in the register referred to therein.

4. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries 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 the Company or any of its subsidiaries.

5. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had a service contract with the Company which was not determinable by the Company within one year without payment of compensation other than statutory compensation.

– III-3 –

GENERAL INFORMATION

APPENDIX III

6. DIRECTORS’ INTEREST IN ASSETS

None of the Directors has since 31 December 2009, being the date to which the latest published audited accounts of the Company were made up, any direct or indirect interest in any assets which have been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

7. DIRECTORS’ INTEREST IN CONTRACTS

None of the Directors was materially interested in any contract or arrangement subsisting at the Latest Practicable Date, and which was significant in relation to the business of the Group as a whole.

8. COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors has any business or interest which competes or may compete with the business of the Group and any other conflict of interest which any such person has or may have with the Group.

9. PROFESSIONAL QUALIFICATIONS

The company secretary of the Company is Mr. Lam Yau Yiu. He is a fellow Certified Public Accountant in Hong Kong and a fellow member of the Association of Chartered Certified Accountants.

10. MATERIAL CONTRACTS

Saved as disclosed below, no other contract (not being contracts in the ordinary course of business) had been entered into by any member of the Group within two years immediately preceding the date of this circular and up to the Latest Practicable Date which are or may be material:

• (a) the Bid Confirmations;

• (b) the contract for the transfer of the land use right of State-owned land dated 15 October 2009 and entered into between Zhong An Group and Yuhang District Bureau, Hangzhou Land and Resources Bureau, Zhejiang Province, the PRC

• （中華人民共和國浙江省杭州市國土資源局余杭區分局）, pursuant to which the Group acquired a piece of land situated at Xiaoheshan area, western part of Hangzhou, Zhejiang Province, the PRC at a consideration of RMB550,000,000;

• (c) the contract for the transfer of the land use right of State-owned land dated 29 October 2009 and entered into between Zhong An Group and Yuyao Land and Resources Bureau, Zhejiang Province, the PRC（中華人民共和國浙江省余姚市國土資 源局）, pursuant to which the Group acquired a piece of land situated at northern part of Yuyao, close to Beihuan West Road, to Xinjian North Road and other main roads, Zhejiang Province, the PRC at a consideration of RMB 2,075,290,000; and

– III-4 –

GENERAL INFORMATION

APPENDIX III

• (d) the contract for the transfer of the land use right of State-owned land dated 11 June 2010 and entered into between Zhong An Group and Yuhang Bureau, Hangzhou Land and Resources Bureau, Hangzhou, Zhejiang Province, the PRC（ 中華人民共和國浙江省杭州市國土資源局余杭分局）, pursuant to which the Group acquired 51% interest in a piece of land situated at southeast to the junction of Xinzhou Road and Xinghe Road, east to Shunfeng Road (as planned), south to the green zone of 320 State Road, west to Xinghe Road and north to Xinzhou Road (as planned) in the Yuhang Economic Development Zone （余杭經濟開發區） of Hangzhou, Zhejiang Province, the PRC at a consideration of RMB425,340,000.

11. EXPERT AND CONSENT

• (a) CB Richard Ellis Limited is a corporation of professional surveyors and property valuers.

• (b) CB Richard Ellis Limited has given and has not withdrawn its written consent to the issue of this circular with the reference to its name and its letter and references to its name in the form and context in which it appears.

• (c) As at the Latest Practicable Date, CB Richard Ellis Limited did not have any shareholding, directly or indirectly, in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for shares in any member of the Group.

• (d) As at the Latest Practicable Date, CB Richard Ellis Limited did not have any interest, direct or indirect, in any assets which since 31 December 2009, the date to which the latest published audited financial statements of the Group were made up, have been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

12. MISCELLANEOUS

• (a) The registered office of the Company is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands.

• (b) The head office and principal place of business of the Company in Hong Kong is at Room 4006, 40/F, China Resources Building, 26 Harbour Road, Wanchai, Hong Kong.

• (c) The Hong Kong share registrar and transfer office of the Company is Tricor Investor Services Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.

• (d) In the event of inconsistency, the English text of this circular shall prevail over the Chinese text.

– III-5 –

GENERAL INFORMATION

APPENDIX III

13. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours from 9:00 a.m. to 5:00 p.m. (except Saturdays and public holidays) at the head office and principal place of business of the Company in Hong Kong at Room 4006, 40/F, China Resources Building, 26 Harbour Road, Wanchai, Hong Kong from the date of this circular up to and including 24 December 2010:

• (a) the memorandum of association and the articles of association of the Company;

• (b) the annual reports of the Company for the two year ended 31 December 2009;

• (c) the letter, valuation certificates and valuation reports relating to the Land, prepared by CB Richard Ellis, the text of which is set out in Appendix II to this circular;

• (d) the letter of consent from CB Richard Ellis referred to in the paragraph headed “Expert and Consent” in this appendix; and

• (e) a copy of each of the material contracts referred to in the paragraph headed “Material contracts” in this appendix.

– III-6 –