# PRC GOVERNMENTAL AUSTERITY MEASURES IN THE PROPERTY MARKET

The PRC government has recently introduced certain new policies which are intended to control the substantial increases in property prices in the PRC. These policies can be classified into four categories: (i) restrictions on speculation activities of real estate developers; (ii) limitations on financing land grant consideration payment; (iii) restrictions on speculation activities of residential property buyers; and (iv) encouragement of the PRC government in the purchase of small-size units and construction of affordable housing. For details of the aforesaid regulations, please refer to the section headed “Regulation — Impact of the PRC Governmental Austerity Measures” in this prospectus.

Our Directors are of the view that these policies did not and would not have any material adverse impact on our business operations on the basis that (i) there was no adverse impact on the average contract prices for the pre-sale of our residential properties at Golden Wheel Star City and our commercial properties at Golden Wheel Time Square during the year ended 31 December 2011 and the six months ended 30 June 2012; (ii) we had not encountered any difficulty in obtaining bank loans during the year ended 31 December 2011 and the six months ended 30 June 2012; and (iii) the residential units within our integrated commercial projects are positioned for mass market home buyers in Jiangsu and Hunan provinces. As of 30 September 2012, approximately 29,347 sq.m., or 81%, of the total GFA available for sale of our residential properties (completed and under development) were categorized as small to medium-sized ordinary commodity houses under the relevant PRC laws and regulations, which will remain as our focus for residential property development. We believe this particular residential market segment has more stable and consistent demand, higher affordability attributable to a lower purchase price in our target markets as compared to luxury residential developments which target higher income households and property investors in these markets.

However, it is difficult to ascertain the full extent of the impact of these measures on the performance of our Group or to accurately estimate the sales volume and turnover of our Group as if such measures had not been introduced. Our Directors confirm that we had not experienced any material cancellation of sales during the Track Record Period and up to the Latest Practicable Date. As advised by our PRC legal advisors, Jun He Law Offices, there has been no material changes in the PRC laws and regulations, regardless at state level or in Nanjing, Yangzhou and Zhuzhou, in the recent months to increase regulation over pre-sale activities of property developers, or to tighten measures to limit bank financing including buying-off plan pre-financing.

# HISTORICAL NON-COMPLIANCE INCIDENTS

We failed to fully comply with certain applicable PRC laws and regulations, which had resulted in certain non-compliance incidents during the Track Record Period, including (i) late completion of Nanjing Jade Garden and Golden Wheel Star Plaza, (ii) delivery of certain property units of Golden Wheel Time Square before passing the construction completion examination, (iii) failure to complete lease registration for certain leased properties of Golden Wheel Time Square, (iv) failure to make housing fund contributions for certain employees, and (v) granting loans to Nanjing Golden Wheel Real Estate, our then related company (which became our wholly-owned subsidiary on 18 June 2012). We had rectified all the other non-compliance incidents as of the Latest Practicable Date, except for the late completion of Nanjing Jade Garden and Golden Wheel Star Plaza. As a result, we may be subject to a maximum fine of approximately RMB22.4 million and the relevant authorities may forfeit part of the land on which the constructions has not been completed by their respective deadlines without any payment to us. For details of the reasons for these non-compliance incidents and the corresponding remedial and preventive measures, please refer to the sections headed “Risk Factors — We may not be able to meet our project development schedules and complete our projects on time, or at all” and “Business — Regulatory Compliance” in this prospectus.

# SUMMARY FINANCIAL INFORMATION

We maintained a profitable operation during the Track Record Period. In 2011, our net profit was RMB513.2 million, representing an increase of 74.9% from RMB293.4 million in 2010. We also had a prudent net debt to equity ratio of 15.0% as of 30 June 2012 as a result of our strict financial disciplines over all aspects of our operations from land acquisition to construction. We intend to continue maintaining a disciplined financial strategy.

The fair value gains of investment properties accounted for a substantial portion of our net profit during the Track Record Period, which may, however, fluctuate from time to time. For details, please refer to the section headed “Risk Factors — Fair value gains on our investment properties represented a substantial portion of our net profit during the Track Record Period, and 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” in this prospectus.

# Selected Consolidated Statements of Comprehensive Income and Statements of Financial Position Line Items

<table><tr><td rowspan="4"></td><td colspan="3">Year ended 31 December</td><td colspan="2"> Six months ended 30 June</td></tr><tr><td>2009</td><td>2010</td><td>2011</td><td>2011</td><td>2012</td></tr><tr><td>RMB’000</td><td> RMB’000</td><td> RMB’000</td><td> RMB’000</td><td> RMB’000</td></tr><tr><td></td><td></td><td></td><td>(unaudited)</td><td></td></tr><tr><td>Revenue</td><td>493,800</td><td>483,524</td><td>524,495</td><td>167,230</td><td>662,351</td></tr><tr><td>Gross profit</td><td>206,154</td><td>140,992</td><td>241,061</td><td>70,068</td><td>321,781</td></tr><tr><td>Changes in fair value of investment properties</td><td>250,183</td><td>306,900</td><td>539,919</td><td>229,579</td><td>75,000</td></tr><tr><td>Profit and total comprehensive income attributable to:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Owners of the Company</td><td>263,403</td><td>280,744</td><td>498,488</td><td>187,892</td><td>198,767</td></tr><tr><td>Non-controlling interests</td><td>15,033</td><td>12,632</td><td>14,705</td><td>8,134</td><td>7,916</td></tr><tr><td></td><td>278,436</td><td>293,376</td><td>513,193</td><td>196,026</td><td>206,683</td></tr><tr><td>Profit and total comprehensive income (excluding fair value gains
and the relevant deferred taxes) attributable to:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Owners of the Company</td><td>83,274</td><td>58,894</td><td>103,446</td><td>22,554</td><td>145,443</td></tr><tr><td>Non-controlling interests</td><td>7,525</td><td>4,307</td><td>4,808</td><td>1,288</td><td>4,990</td></tr><tr><td></td><td>90,799</td><td>63,201</td><td>108,254</td><td>23,842</td><td>150,433</td></tr></table>

<table><tr><td rowspan="3"></td><td colspan="3">As of 31 December</td><td> As of 30 June</td></tr><tr><td>2009</td><td>2010</td><td>2011</td><td>2012</td></tr><tr><td>RMB’000</td><td> RMB’000</td><td> RMB’000</td><td> RMB’000</td></tr><tr><td>Current assets</td><td>1,058,443</td><td>1,421,378</td><td>1,175,695</td><td>1,125,256</td></tr><tr><td>Current liabilities</td><td>975,153</td><td>1,249,910</td><td>1,178,662</td><td>756,582</td></tr><tr><td>Net current assets (liabilities)</td><td>83,290</td><td>171,468</td><td>(2,967)</td><td>368,674</td></tr><tr><td>Net assets</td><td>1,354,631</td><td>1,635,894</td><td>2,077,334</td><td>2,640,968</td></tr><tr><td>Total assets</td><td>3,039,726</td><td>3,800,116</td><td>4,254,543</td><td>4,477,322</td></tr></table>

# Selected Consolidated Statements of Cash Flows Line Items

<table><tr><td rowspan="4"></td><td colspan="3">Year ended 31 December</td><td colspan="2"> Six months ended 30 June</td></tr><tr><td>2009</td><td>2010</td><td>2011</td><td>2011</td><td>2012</td></tr><tr><td>RMB’000</td><td> RMB’000</td><td> RMB’000</td><td> RMB’000</td><td> RMB’000</td></tr><tr><td></td><td></td><td></td><td>(unaudited)</td><td></td></tr><tr><td>Net cash from (used in) operating activities</td><td>26,684</td><td>261,480</td><td>134,012</td><td>118,520</td><td>(75,434)</td></tr><tr><td>Net cash (used in) from investing activities</td><td>(10,793)</td><td>(158,269)</td><td>(99,997)</td><td>(94,034)</td><td>16,586</td></tr><tr><td>Net cash from (used in) financing activities</td><td>158,503</td><td>75,693</td><td>(225,540)</td><td>(108,518)</td><td>(45,404)</td></tr><tr><td>Net increase (decrease) in cash and cash equivalents</td><td>174,394</td><td>178,904</td><td>(191,525)</td><td>(84,032)</td><td>(104,252)</td></tr><tr><td>Cash and cash equivalents at beginning of year/period</td><td>34,868</td><td>209,262</td><td>388,166</td><td>388,166</td><td>196,641</td></tr><tr><td>Cash and cash equivalents at end of year/period</td><td>209,262</td><td>388,166</td><td>196,641</td><td>304,134</td><td>92,389</td></tr></table>