Pan Hong Property Group Limited

Climate Impact & Sustainability Data (2003 to 2006)

Received the “Huzhou City Outstanding Property Development Award” in June 2003
Received the “Huzhou City Foreign Capital Enterprise — Modern Unit Award” in October 2004
Received the “China IACE International Habitat Award” in November 2005

Negative operating cash flow in FY2003, FY2005 and FP2006
Revenue and profit volatility due to revenue recognition policy and fair value adjustments on investment properties
Substantial capital outlay required for property development projects
Potential failure to acquire land use rights for future developments
Risk of land use rights forfeiture due to breach of land grant contract terms
Impact of unsold property development units on financial performance
Potential inability to obtain relevant approvals, permits, or certificates
Property development risks (delays, cost overruns, etc.)
Dependence on ability to identify and complete profitable projects
Operating in a competitive environment
Reliance on key personnel
Guarantee of mortgage repayments for purchasers
Limited reliance on property valuations
Lack of insurance cover for property damages
Potential for excessive land value added tax (LVAT)
Need for additional financing
Potential legal and other proceedings
Reliance on independent contractors
Dependence on PRC property market climate
Cyclical nature of the PRC property market
Susceptibility to PRC policies and regulations
Price fluctuations of key construction materials
Adverse effects of changes in PRC social, political, and economic conditions
Compliance with PRC environmental laws and regulations
Potential changes in PRC laws and regulations
Potential changes in PRC tax laws and regulations
PRC foreign exchange control limitations
Potential impact of infectious diseases outbreaks

Accumulated significant land reserve for future development
Obtained financing support in the past
Actively sourcing and acquiring appropriate land
Implementing good project management practices
Adopting competitive pricing and innovative strategies
Encouraging continuous professional development of staff
Close monitoring of outstanding accounts receivable
Entering into arrangements with domestic banks for purchaser financing
Annual review of insurance cover
Implementing internal procedures to ensure compliance with governmental regulations
Assessing hedging need on a case-by-case basis for foreign exchange exposure