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					YELAND GROUP CO., LTD

    Text of Annual Report (2005)
                                                                     Text of Annual Report (2005)




Important Notes:

    It is hereby guaranteed by the Board of Directors (hereinafter referred to as BOD) of

YELAND GROUP CO., LTD (hereinafter referred to as “the Company) and its Supervisory

Committee, directors, supervisors and senior management that this Annual Report is free of

any false record, any misleading statement or any material omission and that they will bear

joint and several liability for the truthfulness, accuracy and completeness of the content of

this Annual Report.

     The BOD of the Company has 11 members and 9 attended the board meeting.Directors

Tian Yuan and Zhou Haibing were on business trip, so they did not attend this board

meeting.

     It is hereby undertaken by Gong Xiaodong (Board Chairman), Liu Yunfei (Deputy

General Manager of Accounting) and Hou Gang (Chief Financial Officer) to guarantee the

truthfulness and completeness of the financial statements of this Annual Report.




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                            Table of Contents




         I. Brief Introduction of the Company                            Page 3

         II. Abstracts of Accounting Data and Business Data              Page 5

         III. Changes in share capital and shareholders                  Page 7

         IV. Directors, Supervisors, Senior Management and Staff         Page 12

         V. Corporate Governance Structure                               Page 22

         VI. Brief Information of Shareholder’s General Meetings         Page 26

         VII. BOD Report                                                 Page 28

         VIII. Supervisory Committee Report                              Page 48

         IX. Important Issues                                            Page 52

         X. Financial Statement                                          Page 59

         References:                                                     Page 114




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I. Brief Introduction of the Company

    1. Legal Chinese name of the Company:           亿城集团股份有限公司
           Short form of Chinese name:               亿城股份
           Legal English name of the Company: YELAND GROUP CO., LTD.
           Short form of English name:              YELAND
    2. Legal representative of the Company:         Mr. Gong Xiaodong
    3. BOD secretary:                   Mr. Chen Zhiyan
          Securities affairs representative:     Mr. Sun Fujun
          Contact address: 17th Floor, Block A, Wanliu Yeland Plaza, No.11 of
           Changchunqiao Road, Haidian District, Beijing
          Tel:                          (010)58816885
          Fax:                          (010)58816666
           Email:                       yeland@yeland.com.cn
     4. Registered address: No.124, Zhongshan Road, Zhongshan District, Dalian City,
         Liaoning Province
           Office address: 17th Floor, Block A, Wanliu Yeland Plaza, No.11 of
           Changchunqiao Road, Haidian District, Beijing
           Postal code:                 100089
           Website:       www.yeland.com.cn
           Email:                       yeland@yeland.com.cn
     5. Newspapers selectd by the Company for disclosing information: China Securities
         Journal and Securities Times
         The Annual Report of the Company is also available on        http://www.cninfo.com.cn
           This Annual Report is placed at:        BOD Office
     6. The stock exchange on which the Company is listed: Shenzhen Stock Exchange
           Short form of the Company’s stock:          亿城股份
           Stock code:                  000616
     7. Date of modifying registration:                May 8th 2005
           Registered address: No.124, Zhongshan Road, Zhongshan District, Dalian City,

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         Liaoning Province
     8. Registration No. of enterprise legal-person business license: DGSQFZ:
         2102001100258
     9. Tax registration No.:    210202241278804
     10. Name of accounting firm hired by the Company: Dalian Hualian Certified Public
     Accountants
         Office address:   24th Floor, Vanke Post & Telecom Mansion, No.67, Tongxing
         Street, Zhongshan District, Dalian, Liaoning Province




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II. Abstracts of Accounting Data and Business Data

(I) Main accounting data of this year


     Total profit                                                      RMB45,414,670.42 Yuan
     Net profit                                                        RMB32,188,731.86 Yuan
     Net profit after noncurrent profit & loss                          RMB1,766,891.43 Yuan
     Primary operating profit                                        RMB144,254,046.44 Yuan
     Operating profit                                                  RMB29,387,016.65 Yuan
     Investment income                                                 RMB17,028,665.46 Yuan
     Net non-operating income/expenditure                              RMB-1,001,011.69 Yuan
     Net cash flow from operating activities                           RMB-4,769,195.93 Yuan
     Net increase of cash and its equivalents                         RMB-65,367,113.03 Yuan


     Note:    Less total noncurrent profit and loss RMB 30,308,663.53 Yuan, involving the
following items and amounts:
         1. Gain from sales of equity: RMB31,278,819.82 Yuan
         2. Net non-operating income/expenditure: RMB-970,156.29 Yuan


     (II) Main accounting data and financial indicators of the Company for the previous three
years (ended by the end of the report period)
                  Indicator                  Y2005              Y2004                Y2003
    Primary       operating   income      680,599,783.18   2,397,782,350.52        560,309,004.00
    (Yuan)
    Net profit: (Yuan)                     32,188,731.86    162,038,865.42          37,895,473.09
    Total assets (Yuan)                 2,458,921,405.86   2,064,316,470.25      2,653,136,868.39
    Equity interests (Yuan)               689,502,903.88    676,163,347.89         517,794,640.64
    Earning per share (Yuan) (fully                 0.11             0.572                     0.201
    diluted)
    Earning per share (Yuan)                        0.11             0.572                     0.201
    (weighted average)
    Net assets per share (Yuan)                     2.43               2.39                     2.74


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            Net assets per share (Yuan)                              2.41                     2.35                      2.67
            after adjustment
            Net cash flow generated per                             -0.02                     0.47                      0.17
            share during operating activities
            Yield of net assets (%)                                  4.67                   23.96                       7.32
            Weighted aveage yield of net                             4.70                   27.06                       7.61
            assets (%)
            Weighted average yield of net
            assets (%) after deduction of
            non-current profit and loss                              0.26                   22.78                       6.22




            (III) Changes in equity interests during the report period
                                                                                                          Unit:       Yuan
                                                                                                      Unconfirmed
                                                                    Legal public    Undistributed
  Item         Share capital    Capital reserve   Surplus reserve                                      investment            Total
                                                                    welfare fund    profit
                                                                                                         losses
Beginning
               283,413,000.00   102,289,214.35     57,550,506.22    18,503,493.71    232,910,627.32                    676,163,347.89
  balance
 Increase                                           4,028,513.79     1,342,837.93     32,188,731.86   -4,678,525.87     31,538,719.78
 Decrease                                                                             18,199,163.79                     18,199,163.79
  Ending
               283,413,000.00   102,289,214.35     61,579,020.01    19,846,331.64    246,900,195.39   -4,678,525.87    689,502,903.88
  balance

    Note: ① Net profit of this period is RMB32,188,731.86 Yuan. The total amount of withdrawn legal
                 surplus reserve and legal public welfare fund is RMB4,028,513.79 Yuan.
               ② After withdrawal of the legal surplus reserve and the legal public welfare fund from the
                 net profit of this year and the year-end profit distribution, the distributable profit is
                 RMB246,900,195.39Yuan.
               ③ In this report, the Company implemented the proposal for distribution of profit of 2004
                 and the undistributed profit was reduced by RMB14,170,650.00 Yuan.




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III. Changes in share capital and shareholders
        (I) Changes in share capital
        1. Table of changes in shares                                               Unit: Share
                                                     Increase/decrese (+/-) due to this
                            Before this change                                                 After this change
                                                                 change
                                                          Bon Capital
                                                  New      us     reserve
                                         Ratio                               Oth Subt                         Ratio
                             Quantity             issue issu Convert                           Quantity
                                          (%)                                ers     otal                      (%)
                                                    s      ed       ed to
                                                                   shares
 I. Non-circulating
                           151,828,388    53.57                                             151,828,388        53.57
 shares
 1. Promoters' shares       22,034,579     7.77                                               22,034,579        7.77
 Including:
    State-owned shares      16,195,028     5.71                                               16,195,028        5.71
    Shares held by           5,839,551     2.06                                                5,839,551        2.06
 domestic legal persons
    Shares held by
 overseas legal persons
    Others
 2. Allocated              129,793,809    45.80                                              129,793,809       45.80
 legal-person shares
 3. Shares held by
 employees
 4. Preference shares or
 others

 II. Circulating shares    131,584,612    46.43                                              131,584,612       46.43
 1. Domestic listed RMB    131,584,612    46.43                                              131,584,612       46.43
 ordinary shares
 2. Domestic listed
 foreign shares
 3. Overseas listed
 foreign shares
 Others

 III. Total number of      283,413,000   100.00                                              283,413,000     100.00
 shares
Note:     During the report period, Dalian State-owned Assets Supervision and Administration
Bureau and Tianjin Bainian Investment Co., Ltd signed an agreement, under which the
16,195,031 state-owned shares under the name of Dalian State-owned Assets Supervision aand
Administration Bureau will be 100% consigned to Tianjin Bainian Investment Co., Ltd. This
agreement has already been approved by State-owned Assets Supervision and Administration
Commission of the State Council and other bodies with approving authority. Equity transfer
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formalities are being handled.


2. New issues and listings
     ①Within the three years prior to the end of this report period, the Company did not issue any
     shares.
     ②There are no changes in the share capital during the report period.




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(II) Shareholders
1. Shares held by shareholders (as of Dec.31st 2005)
   Total number of shareholders                                        15,591
   Shares held by top 10 shareholders
                                                                                                  Number of
                                                                                 Number of
                                                              Total number                          shares
         Name of shareholder         Nature       Ratio (%)                     noncirculatin
                                                              of shares held                      pledged or
                                                                                g shares held
                                                                                                    frozen
 Beijing Qiantong Investment
                                    Others            29.76        84,353,867     84,353,867       60,200,000
 Co., Ltd
 Tianjin Huibang Trade Co., Ltd     Others            16.03        45,439,942     45,439,942       40,700,000
 Dalian State-owned Assets
                                    State-own
 Supervision and Administration                        5.71        16,195,028     16,195,028
                                    ed
 Bureau
 Dalian Rixing Industrial Co.,
                                    Others             2.06         5,839,551       5,839,551
 Ltd
 CITIC      Classic   Allocation
                                    Others             0.39         1,109,739
 Securities Investment Fund
 Li Riding                          Others             0.28          790,395
 Wang Zhiqiang                      Others             0.24          693,315
 Zhejiang    Nade    Property
                                    Others             0.22          637,400
 Management Co., Ltd
 LV Xiuhua                          Others             0.22          636,500
 Ye Xinlin                          Others             0.21          600,000
 Top 10 holders of circulating shares
                                        Number of noncirculating
         Name of shareholder                                                         Category
                                             shares held
 CITIC      Classic   Allocation
                                                         1,109,739              RMB ordinary shares
 Securities Investment Fund
 Li Riding                                                 790,395              RMB ordinary shares
 Wang Zhiqiang                                             693,315              RMB ordinary shares
 Zhejiang    Nade    Property
                                                           637,400              RMB ordinary shares
 Management Co., Ltd
 LV Xiuhua                                                 636,500              RMB ordinary shares
 Ye Xinlin                                                 600,000              RMB ordinary shares
 Zhong Jianxiong                                           533,321              RMB ordinary shares
 Zhu Xiulan                                                528,027              RMB ordinary shares
 Liu Xiujian                                               505,310              RMB ordinary shares
 Chen Zhihua                                               499,700              RMB ordinary shares
 Related-party     relations   or        In the above shareholders, the four holders of non-circulating shares
 actions in concert                 do not have related-party relations or are the persons acting in concert as
                                    defined in Measures for Administration of Disclosure of Shareholder
                                    Equity Changes of Listed Companies. It is not clear if other shareholders
                                    have any related-party relations or belong to the persons acting in concert
                                    as defined in Measures for Administration of Disclosure of Shareholder
                                    Equity Changes of Listed Companies.




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     2. Controlling shareholders of the Company:
     At the beginning of the report period, Beijing Qiantong Investment Co., Ltd held 84,353,867
shares, accounting for 29.76% of the total share capital of the Company. It is the biggest
shareholder of the Company.Within the report period, there are no changes in the shares held by
Beijing Qiantong Investment Co., Ltd.
     Brief information about Beijing Qiantong Investment Co., Ltd:
     Legal representative:       Lin Youxiong
     Nature of enterprise: Limited liability company
     Registered capital: RMB80,000,000 Yuan
     Date of establishement: Dec.6, 1999
     Scope of business: Project investment management and investment consulting
     Investors Relations: see ―Equity and control relations between the Company and actual
controllers‖.
     3. Actual controllers of the Company
     Gong Xiaodong and Hou Ying are the actual controllers of the Company:
                                      Has the right of
          Name     Nationality     residence in any other      Occupations and titles in recent five years
                                     country or region?
          Gong     P. R. China              NO               Beijing    Qiantong    Investment    Co.,   Ltd
     Xiaodong                                               Director

      Hou Ying     P. R. China              NO               Hainan Yaobo Industrial Investment Co., Ltd
                                                            Director

     Equity and control relations between the Company and actual controllers:
            Gong Xiaodong (50%)         Hou Ying (50%)



     Hainan Yaobo Industrial Investment Co., LTD (80%) Gong Xiaodong (10%) Houying (10%)



                                    Beijing Qiantong Investment Co., Ltd 29.76%



                                        YELAND GROUP CO., LTD
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     4. Brief information about other legal-person shareholders each holding ≥10% of the equity
of the Company:
     Tianjin Huibang Trade Co., Ltd holds 45,439,942 shares, accounting for 16.03% of the total
share capital of the Company. It is the 2nd biggest shareholder of the Company.Within the report
period, the number of shares held by it did not change. Tianjin Bainian Investment Co., Ltd, a
related-party of Tianjin Huibang Trade Co., Ltd, has through agreement acquired 16,195,028
shares of the Company held by Dalian State-owned Assets Supervision and Administration
Bureau, accounting for 5.71% of the total share capital of the Company. Now, the equity transfer
formalities are being handled.After completion of this equity transfer, the total number of shares
held by Tianjin Huibang Trade Co., Ltd and Tianjin Bainian Investment Co., Ltd will account for
21.71% of the total capital share of the Company, still the 2nd biggest shareholder of the
Company.
     Basic information about Tianjin Huibang Trade Co., Ltd:
     Legal representative:   Wu Zhuang
     Date of establishement: October 13th 2000
     Scope of business: Automobiles (excluding cars), automobile parts (excluding five
                  assemblies), retails and wholesales of automobile decoration materials
     Registered capital: RMB20,000,000 Yuan




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IV. Directors, Supervisors, Senior Management and Staff
     (I) Directors, supervisors and senior management
     1. Basic information
                                                                   Number of shares held
            Se   Month                                                   (share)
 Name                        Term (year)                Title:
            x    of birth                                        Beginni    +-     Ending
                                                                   ng
 Gong      M     1969.11    2006.3-2009.3 Board Chairman:              0        0        0
Xiaodon    ale
    g
  Tian     M      1954.8    2006.3-2009.3 Independent director          0          0           0
  Yuan     ale
  Xian     M      1954.9    2006.3-2009.3 Independent director          0          0           0
Guoming    ale
 Jiang     M      1965.2    2006.3-2009.3 Independent director          0          0           0
Dianchu    ale
    n
  Hao      M      1962.7    2006.3-2009.3 Independent director          0          0           0
Shengge    ale
    n
  Zhou     M      1971.6    2006.3-2009.3 Director                      0          0           0
Haibing    ale
Li Qiang   M      1954.6    2006.3-2009.3 Director                16739            0     16739
           ale
E Junyu    M      1970.9    2006.3-2009.3 Director        and           0          0           0
           ale                            General Manager
  Sun      M      1970.2    2006.3-2009.3 Director        and           0          0           0
  Yong     ale                            Executive    Deputy
                                          General Manager
 Zhang     Fe    1968.10    2006.3-2009.3 Director and Deputy           0          0           0
 Liping    ma                             General Manager
            le
  Liu      M      1971.8    2006.3-2009.3 Director and Deputy           0          0           0
 Yunfei    ale                            General Manager
 Zheng     M      1971.3    2006.3-2009.3 Supervisory                   0          0           0
  Liqi     ale                            Committee meeting
                                          caller
  Wang     Fe     1970.8    2006.3-2009.3 Supervisor                    0          0           0
  Heng     ma
            le
Li Xinyi   Fe     1972.3    2006.3-2009.3 Supervisor                    -           -     3800
           ma
            le
  Lin      M      1974.4    2006.3-2009.3 Supervisor                    0          0           0
 Qiang     ale

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 Ma Yin     M        1974.4   2006.3-2009.3 Deputy             General                0          0           0
            ale                             Manager
  Liu       M       1973.10   2006.3-2009.3 Deputy             General                0          0           0
 Meng       ale                             Manager
 Hou        Fe       1972.2   2006.3-2009.3 Chief             Financial               0          0           0
 Gang       ma                              Officer
             le
  Chen      M        1970.3   2006.3-2009.3 BOD secretary                             0          0           0
 Zhiyan     ale
Note:
    (1) Li Xinyi is newly selected as a supervisor in 2006.
    ① Job titles:
    Name      Title at the      Name of shareholder unit        Title at shareholder            Duration
               Company                                                    unit
    Zhou          Director    Beijing Qiantong Investment        Chief Investment            Since 2003
 Haibing                      Co., Ltd                                Officer
    Gong          Director    Beijing Qiantong Investment            Director                Since 2003
Xiaodong                      Co., Ltd

    2. Main work experiences and posts or concurrent posts at other units than the shareholder
units

    Mr. Gong Xiaodong (Board Chairman):
    Born in Nov. 1969, Ph.D. of Economics.From Feb. 2000 to Dec. 2003, Board Chairman of
Beijing Yeland Real Esate Development Co., Ltd, a subsidiary controlled by the Company; from
April 2000 to August 2002, Deputy General Manager of Dalian Bohai Grand Hotel (Group) Co.,
Ltd; from March 2006 to now, Board Chairman of the Company.
    Mr. Gong Xiaodong has been working at the Company since 2000.

    Mr. Tian Yuan (Independent director):
    Born in August 1954, Ph.D. of Economics. From January 1985 to Dec.1991, CPC Committee
Member, Executive Dircector and Director General of Development Research Center of State
Council, P. R. China; from Dec.1991 to Dec.1992, Director of Department of Foreign Economic
Cooperation, Ministry of Materials Supplies; from July 1997 to October 2002, Board Chairman of
China Chengtong Group; from Dec.1992 to now, Board Chairman of China Internaitonal Futures
Co., Ltd.

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    Since September 2002, Mr. Tian Yuan has been an independent director of the Company.

    Mr. Xian Guoming (Independent director):
    Born in September 1954, Ph.D. of Economics and doctoral supervisor. From Dec.1993 to
March 2002, Deputy Director/Director of Institute of Internaitonal Economics, Nankai University;
from September 1996 to August 2000, Vice President of Graduate School of Nankai University;
Dec. 1999 to now, Director of Center for Transnationals’ Studies (awarded as one of the key bases
of humanities and social sciences of the institution of higher education by Ministry of Education),
Nankai University; August 2000 to now, President of TEDA College, Nankai University; Dec.
2005 to now, Assistant to President of Nankai University.Current posts: Assistant to President of
Nankai University; President of TEDA College, Nankai University; Director of Center for
Transnationals’ Studies, Nankai University.
    Since August 2002, Mr. Tian Yuan has been an independent director of the Company.

    Mr. Jiang Dianchun (Independent director):
    Born in Feb. 1965, Ph. D. of Economics, professor, doctoral supervisor; post doctoral
researcher, Graduate School of Economics, Kyoto University of Japan (Oct.1998 –
Oct.2000).From Oct.2000 to now, Professor and Deputy Director of Institute of International
Economics, School of Economics, Nankai University; from Oct.2000 to now, researcher of Center
for Transnationals’ Studies, Nankai University; from July 2001 to now, Deputy Director of Center
of Securities and Corporate Financ Studies, Nankai University.
    Since March 2006, Mr. Jiang Dianchun has been an independent director of the Company.

    Mr. Hao Shenggen (Independent director):
    Born in July 1962, Master, certified public accountant, assets appraiser, lawyer.From April
2000 to Nov. 2003, Deputy General Manager of Guangdong Kaowick Certified Public
Accountants; from Nov. 2003 to now, Deputy Chief Accountant of Guangzhou Hengyun Certified
Public Accountants.
    Since March 2006, Mr. Jiang Dianchun has been an independent director of the Company.

    Mr. Li Qiang (Director):
    Born in June 1954, Ph.D. of Economics. From March 1993 to August 2000, Assistant to

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President of Dongbei University of Finance and Economics; from August 2000 to August 2002,
Executive President of China International Futures Co., Ltd; from August 2002 to March 2006,
Board Chairman and General Manager of Dalian Yeland Group Co., Ltd and Board Chairman of
Dalian Yeland Education Investment Co., Ltd.
    Since May 1999, Mr. Li Qiang has been an independent director of the Company.

    Mr. Zhou Haibing (Director):
    Born in June 1971, Ph.D. of Economics. From Dec.1999 to Dec. 2003, Board Chairman of
Beijing Xingbiao Investment Co., Ltd; from Dec. 2003 to now, Chief Investment Officer of
Beijing Qiantong Investment Co., Ltd.
    Since May 2000, Mr. Zhou Haibing has been an independent director of the Company.

    Mr. E Junyu (Director and General Manager):

    Born in September 1970, EMBA. From January 1998 to July 2002, Deputy General Manager

of Everbright Real Estate; from August 2002 to March 2006, Deputy General Manager of Yeland

Group Co., Ltd; from September 2002 to now, General Manager of Beijing Vanland Real Estate

Development Co., Ltd; from 2003 to March 2005, General Manager of Beijing Sanlitun Xintiandi

Real Estate Development Co., Ltd; from 2004 to March 2005, General Manager of Yeland

(Beijing) Co., Ltd; March 2006 to now, Director and General Manager of Yeland Group Co., Ltd.
    Mr. E Junyu has been working at the Company since 2002.

    Mr. Sun Yong (Director and Executive Deputy General Manager):
    Born in Feb. 1970, Master of Economics. From May 2000 to April 2001, Associate Director
of Brokerage Business Headquarters of Guotai Junan Securities; from March 2001 to August
2001, General Manager of Institutional Client Trading Department, Guotai Junan Securities; from
August 2001 to September 2003, Assistant to President of Bohai Securities Co., Ltd; from Oct.
2003 to Feb. 2004, Vice President of Jingang Trust and Investment Co., Ltd; from Feb. 2004 to
June 2004, President of Hong Kong Shangzhan Investment Co., Ltd; from Feb. 2005 to now,
Director and Executive Deputy General Manager of Yeland Group Co., Ltd.
    Mr. Sun Yong has been working at the Company since 2005.



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    Ms. Zhang Liping (Director and Deputy General Manager):
    Born in Oct. 1968, Bachelor of Accounting. From June 2000 to March 2001, Manager of
Finance Department, Beijing Xingbiao Investment Co., Ltd; from March 2001 to March 2006,
Financial Manager and Chief Financial Officer of Yeland Group Co., Ltd; from March 2006 to
now, Director and Deputy General Manager of Yeland Group Co., Ltd, and President of Yeland
(Beijing) Co., Ltd.
    Ms. Zhang Liping has been working at the Company since 2001.

    Mr. Liu Yunfei (Director and Deputy General Manager):
    Born in August 1971, Master. From 1992 to 1999, Project Manager of Zhonghe Real Estate
Development Company of CNNC; from 1999 to 2001, Director of Early-stage Development
Department, Guangxi Super Shine Co., Ltd; joined the Company in 2001, General Manager of
Beijing Yeland Real Estate Development Co., Ltd, General Manager of Tianjin Yeland Real Estate
Development Co., Ltd, General Manager of Yeland (Tianjin) Co., Ltd, Assistant to General
Manager of Yeland Group Co., Ltd, etc; now Director and Deputy General Manager of Yeland
Group Co., Ltd, General Manager of Yeland (Tianjin) Co., Ltd, General Manager of Tianjin
Yeland Real Estate Development Co., Ltd.
    Mr. Liu Yunfei has been working at the Company since 2001.

    Mr. Zheng Liqi (Supervisory Committee Meeting Caller):
    Born in March 1971, Master of Economics. From June 2000 to now, BOD secretary, Deputy
General Manager of Yeland Group Co., Ltd. Now Deputy General Manager of Yeland (Beijing)
Co., Ltd and Board Chairman of Yeland (Dalian) Co., Ltd.
    Mr. Zheng Liqi has been working at the Company since 2000.

    Ms. Wang Heng (Supervisor):
    Born in August 1970, individual member of Chinese Institute of Certified Public Accountants,
International Certified Internal Auditor (CIA), Master. From March 1995 to March 1996,
Manager of Clearing Department, Suntime Futures Brokerage Co., Ltd; from March 1996 to July
2001, Instructor of College of Economics and Management, Xinjiang University; from July 2001
to now, Manager and Deputy General Manager of Auditing Department, Yeland Group Co.,

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Ltd.Now, Deputy General Manager of Auditing Department of Yeland Group Co., Ltd.
    Ms. Wang Heng has been working at the Company since 2001.

    Ms. Li Xinyi (Supervisor):
    Born in March 1972, Master of Economics. From Nov. 2001 to Nov. 2003, Budgetting
Executive of Beijing Founder Broadband Network Technology Co., Ltd; from Nov. 2003 to now,
Financial Manager, Manager of Financial Department of Beijing Sunlight Seasons Garden Real
Estate Development Co., Ltd.Now, Manager of Financial Department of Beijing Sunlight Seasons
Garden Real Estate Development Co., Ltd
    Ms. Li Xinyi has been working at the Company since 2003.

    Mr. Lin Qiang (Deputy General Manager):
    Born in April 1974, Master of law. From Feb. 2000 to August 2002, Assistant to Board
Chairman of Haikou Meilan International Airport Co., Ltd; from August 2002 to now, Deputy
General Manager of Yeland Group Co., Ltd.
    Mr. Lin Qiang has been working at the Company since 2002.

    Mr. Ma Yin (Deputy General Manager):
    Born in April 1974, Beijing International MBA, Peking University.From 2002 to 2003,
Assistant to President of Sunco (China) Group Co., Ltd; from 2003 to 2004, General Manager of
Sunco (East China) Group Co., Ltd; from 2004 to 2005, Deputy Managing Director of Tianjin
Yeland Real Estate Development Co., Ltd; from 2005 to now, Assistant to General Manager of
Yeland Group Co., Ltd, Vice President of Yeland (Beijing) Co., Ltd, General Manager of Yeland
(Jiangsu) Co., Ltd, and Deputy General Manager of Yeland Group Co., Ltd. Now, Deputy General
Manager of Yeland Group Co., Ltd.
    Mr. Ma Yin has been working at the Company since 2004.

    Mr. Liu Meng (Deputy General Manager):
    Born in Oct. 1973, Bachelor. From 2001 to Nov. 2003, Deputy General Manager and
Executive Deputy General Manager of Tianjin Sunco Development Co., Ltd; from Nov. 2003 to
March 2005, Deputy General Manager of Sunco (East China) Group Co., Ltd and General
Manager of Sunco (Suzhou) Company; from March 2005 to Oct. 2005, Executive Deputy General
Manager of Tianjin Yeland Real Estate Development Co., Ltd; from Oct. 2005 to March 2006,
Assistant to General Manager of Yeland Group Co., Ltd, Vice President of Yeland (Beijing) Co.,
Page 17                                                                         Respect Creates Value
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Ltd; from March 2006 to now, Deputy General Manager of Yeland Group Co., Ltd. Now, Deputy
General Manager of Yeland Group Co., Ltd.
    Mr. Liu Meng has been working at the Company since 2005.

    Ms. Hou Gang (Chief Financial Officer):
    Born in Feb. 1972, Master. From April 2003 to Dec. 2004, Manager of Financial Department
of Beijing Sunlight Seasons Garden Real Estate Development Co., Ltd; from 2004 to now,
Manager of Financial Department of Beijing Vanland Real Estate Development Co., Ltd, Chief
Financial Officer of Yeland (Beijing) Co., Ltd, and Chief Financial Officer of Yeland Group Co.,
Ltd. Now, Chief Financial Officer of the Company.
    Ms. Hou Gang has been working at the Company since 2003.

    Mr. Chen Zhiyan (BOD Secretary):
    Born in March 1970, Master in Finance, Nankai University. From 1999 to 2001, Assistant to
General Manager of Securities Department of Shenzhen Hongli Savings and Remittance; from
2001 to 2005, Deputy General Manager of Shenzhencang Warehouse Building Materials Co., Ltd;
from 2006 to now, BOD Secretary of Yeland Group Co., Ltd. Now, BOD Secretary of Yeland
Group Co., Ltd.
    Mr. Chen Zhiyan has been working at the Company since 2006.


     3. Annual remunerations
    Currently, subsidies are provided for independent directors only, not for other directors or
supervisors. Remunerations for senior management staff are determined by BOD on basis of
performance assessment results as per the performance assessment program.The term of the 4th
BOD, Supervisory Committee and senior management staff starts from March 2006, so the
Company hereby discloses the remunerations for the members of the 3rd BOD, Supervisory
Committee and senior management for 2005.
    Remnuerations for members of the 3rd BOD and Supervisory Committee and senior
management for 2005:




Page 18                                                                          Respect Creates Value
                                                                        Text of Annual Report (2005)


 S/N             Name              Title:          Shares      Shares      Annual remuneration
                                                   held at   held at end   (RMB10,000 Yuan)
                                                 beginning     of the
                                                   of the      period
                                                   period
   1            Li Qiang     Board      Chairman 16739       16739                  40.32
                             and         General
                             Manager
   2           Tian Yuan     Independent         0           0                       5.00
                             director
   3      Xian Guoming       Independent         0           0                       5.00
                             director
   4           Wan Shouyi    Independent         0           0                       5.00
                             director
   5       Zhou Haibing      Director            0           0                        0
   6      Gong Xiaodong      Director            0           0                        0
   7            Sun Yong     Director     and 0              0                      50.00
                             Executive Deputy
                             General Manager
   8            E Junyu      Director     and 0              0                      50.00
                             Deputy    General
                             Manager
   9           Zheng Yang    Director          0             0                      20.00
  10           Zheng Liqi    BOD      Secretary 0            0                      20.00
                             and        Deputy
                             General Manager
  11           Zhou Yanlu    Chairman        of 1974         1974                    6.88
                             Supervisory
                             Committee
  12           Wang Dong     Supervisor         0            0                      10.00
  13           Zhu Liang     Supervisor          0           0                      12.00
  14       Zhang Liping      Chief   Financial 0             0                      22.00
                             Officer
  15           Lin Qiang     Deputy   General 0              0                       6.48
                             Manager
  16           Zhou Jiduo    Deputy   General 0              0                       6.88
                             Manager
                 Total                         18713         18713                 259.56

       Note:    Director Zheng Yang was also the General Manager of the Auditing Department of
the Company; Supervisory Committee Chairman Zhou Yanlu was also the Chairman of Workers’
Union of Yeland (Dalian) Co., Ltd; Supervisor Zhu Liang was also the General Manager of
Early-stage Development Center of Yeland (Beijing) Co., Ltd; Supervisor Wang Dong was also
the Deputy Manager of Market Department of Yeland (Beijing) Co., Ltd.
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          Director(s), supervisor(s) and/or senior management who did not receive remunerations from
the Company in 2005:
          Zhou Haibing (director, whose salary was paid by Beijing Qiantong Investment Co., Ltd),
and Gong Xiaodong (Board Chairman, whose salary was paid by Beijing Qiantong Investment
Co., Ltd)


          II. Elections or resignations of directors/supervisors and hirings or dismissals of senior
management staff during the report period
          1. January 2005, Mr. Zheng Liqi, Director, Deputy General Manager and BOD Secretary,
resigned the post as Director due to work reasons, and Mr. Meng Qingjie resigned the post as
Deputy General Manager due to personal reasons.
          2. On Feb. 2nd 2005, the 3rd BOD held the 21st (interim) meeting, at which the following
resolutions were made:        Hire Mr. Sun Yong as the Executive General Manager of the Company;
nominated Mr. Sun Yong as the candidate director of the 3rd BOD of the Company. On March 7th
2005, the Company held the 2nd interim shareholders’ general meeting of 2005, at which Mr. Sun
Yong was officially elected as a director of the 3rd BOD and his term would end upon the
expiration of the 3rd BOD.
          The above issues were announced on China Securities Journal and Securities Journal on Feb.
 th
4 2005 and March 8th 2005.
          3. Changes in director(s), supervisor(s) and/or senior management after the report period
          After the report period, the Company completed a general election. For more information
about the members of the 4th BOD, Supervisory Committee and senior management, please see
the ―Directors, Supervisors and Senior Management‖ of this report.Changes in the members of
the 3rd BOD, Supervisory Committee and senior management as a result of this general election:


  S/N             Name              Original Title          Incumbent Title                Reason
      1          Li Qiang     Board Chairman and        Director                      General election
                              General Manager
      2        Wan Shouyi     Independent director                                    General election

      3        Zheng Yang     Director                                                General election

      4         Zheng Liqi    BOD Secretary and         Supervisory Committee         General election
                              Deputy General Manager    meeting caller
      5         Zhou Yanlu    Chairman of Supervisory                                 General election
                              Committee
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   6         Wang Dong         Supervisor                                             General election

   7          Zhu Liang        Supervisor                                             General election

   8         Zhang Liping      Chief Financial Officer   Director and    Deputy       General election
                                                         General Manager
   9          Zhou Jiduo       Deputy General Manager                                 General election



       (III) Corporate staff
       The total number of incumbent staff of the Company is 458, including:            29 management
staff, 75 administration staff, 40 financial staff, 219 production and technical staff, 65
salespersons and 30 R&D staff. Of the 458 staff, 258 are engaged in the real estate industry,
including:     15 management staff, 41 administration staff, 30 financial staff, 77 engineering
technology and cost control staff, 65 salespersons and 30 R&D staff.
       The Company needs to bear the costs of 264 retired people.
       Education: Master or higher: 32 persons; bachelor: 135 persons; 2-to-3-year higher education:
139 persons; senior high school education: 152 persons.




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V. Corporate Governance Structure
     (I) Status of corporate governance
     The Company continuously perfects the corporate governance structure to establish a
modern enterprise system and standardize operation in strict accordance with the requirements of
the Company Law of the People’s Republic of China, the Securities Law of the People’s Republic
of China and other relevant laws and regulations.The Company has formulated the Articles of
Association, Rules and Procedures for Shareholders’ General Meetings, Rules and Procedures for
Board Meetings, Rules and Procedures for Supervisory Committee Meetings, System for the
Administration of Disclosure of Information, Measures for the Administration of Investors
Relations, Measures for the Administration of Branches/Subsidiaries, etc. All these form the
corporate governance system of the Company, effectively guide the standard operations and
comply with the requirements of the Code of Corporate Governance for Listed Companies
co-published by China Securities Regulatory Commission and State Economic & Trade
Commission, P. R. China.
     Through the rapid development in recent years, the Company has been successfully
transformed into a professional real estate group. On basis of this, the Company has set new
stage-specific strategic goals. The rapid growth of the Company has led to higher requirements for
continuous improvement of corporate governance.So, the Company took a series of measures in
2005.
     1. Laid the theoretical basis for coordinated development and continuous improvement of
corporate governance and comprehensive strength of the Company.
     In 2005, through holding a series of meetings with ―Organizational Reform and Innovation‖
as the theme, the Company systematically and objectively examined the current status, future and
path of development, defined in time the core notions and specific forms suitable for the
Company’s stage-specific strategic goal, e.g. organizational structure, corporate culture, resources
allocation, etc. Guided by this, the Company started to adjuste the organizational structure and
amended the management system, trying to fundamentally guarantee the standardization of
corporate operation, improve the level of corporate governance and enable the company to

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develop in a steady manner.
     2. Optimization of managerial structure and improvement of managerial capability
     During the report period, in accordance with the need for building a real estate group that can
develop continuously, the corporate management mode was systematically adjusted into a
three-level structure consisting of the headquarters, regional companies and project companies.
The headquarters focuses on strategic management, organizational shaping, risk control and
resources allocation, emphasizes on allocating real estate projects through the investment
portfolio principle, thus balancing the four important indicators at the corporate level, i.g. risk,
profit, turnover and scale. Regional companies and project companies focus on improving real
estate operational capabilities and realization of project goals, and emphasize cost control and
profit realization.Each of the three levels performs its own responsibilities, thus forming an
organic entity and laying a solid foundation for the long-term development of the Company.
     The Company, on the existing basis, will continuously improve the level of corporate
governance and gradually realize the strategic goal of becoming a professional real estate group
and establish a sustainable growth mode to guarantee the interests of all shareholders and all
parties.


     (II) During the report period, the Company has three independent directors. Their
responsibility performances are as follows:
     During the report period, the Company has held fifteen (18) board meetings. Attendances of
independent directors at BOD meetings:




                                         Number of
                                           BOD
             Name of       Number of                   Authorized
                                          meetings                     Absence
            independent       BOD                      attendance                     Remarks
                                         attended in                    (time)
             directors      meetings                     (time)
                                           person
                                           (time)
            Tian Yuan         18              15           0              3
           Xian Guoming       18              14           1              3
            Wan Shouyi        18              17           0              1
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     Through reading meeting materials and communicating with the Company, independent
directors understand the contents of each meeting and fully express their own opinions, thus
optimizing part of the contents.
     In 2005, no independent director opposed the resolutions of BOD meetings.
     In daily work, the Company, in accordance with the requirements of the Internal Information
Communication System, notifies in time independent directors of the execution of resolutions of
board meetings and shareholders' general meetings, progress of important ssues and main
information about routine operation.In addition, independent directors have for several times
reviewed the development projects of the Company to fully understand and care for the operation
and development of the Company. For several times, they have provided valuable opinions.
     Pursuant to the requirements of Guiding Opinions on the Establishment of the Independent
Director System in Listed Companies, Code of Corporate Governance for Listed Companies,
Articles of Association and other laws, regulations and standardizing opinions, independent
directors of the Company have conducted careful surveys and provided independent opinions
regarding the adjustment of directors and senior management and other issues that require the
independent opinions of independent directors in 2005.
     All in all, in year 2005, the three independent directors of the Company have made full use
of their strengths in their respective specialities, showed objective fairness compliant with
independentness, represented the interests of shareholders, especially small/medium shareholders,
and have for several times expressed their independent opinions during the process of board
meetings examining proposals, thus actually performing their responsibilities.
     (III) The staff, assets and finance of the Company are separated from those of Beijing
Qiantong Investment Co., Ltd, the controlling shareholder. The Company has independent
organizations and operations, and has independent and complete operating capabilities.
     (IV) Incentive and restrictive mechanisms for senior management
     For senior management, the Company adopts the annual salary system which floats within a
certain range. The actual annual salary for each senior management staff is determined on basis of
his/her performance.
     The Company signs a contract with the operator of each of the main branches/subsidiaries to
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determine the business objective, define the managerial responsibilities, thus connecting personal
remunerations with the completion of the objective and the development of the Company.




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VI. Brief Information of Shareholder’s General Meetings
     In 2005 the Company held four shareholders’ meetings.

     1. On Feb. 22nd 2005, the Company held the 1st interim shareholders’ general meeting of
2005. This meeting examined and unanimously passed the Proposal for Acquiring 40% of the
Equity of Vanland Real Estate Development Co., Ltd and Modification of Major Contracts,
Proposal for Winning the Bid for Tianjin Hongqi Road Project, and Amendment to Articles of
Association.
     The resolutions of this meeting were announced on China Securities Journal and Securities
Journal on Feb.23rd 2005.
     2 On March 7th 2005, the Company held the 2nd interim shareholders’ general meeting, at
which the Proposal for Adjusting the Members of the 3rd BOD of the Company was examined and
unanimously passed.
     The resolution of this meeting was announced on China Securities Journal and Securities
Journal on March 8th 2005.
     3. On April 19th 2005, the Company held the Annaul Shareholers’ General Meeting of 2004.
This meeting examined and unanimously passed the Annual Report (2004) and Abstract, BOD
Work Report (2004), Supervisory Committee Work Report (2004), Final Statement (2004),
Program for Profit Distribution (2004), Proposal for Renewed Hiring of Accounting Firm for
Annual Audit, Proposal Regarding the Conditions of the Company Issuing Additional Public
Shares, Proposal for Applying for Issuing Additional Public Shares (A Share), Proposal Regarding
New and Old Shareholders Sharing Accumulated Profit of the Company after Completion of
Issuing Additonal Public Shares (A Share), Explanations on the Use of Funds Raised Last Time,
Proposal Regarding Feasibility of Planned Investment Projects for Funds Raised from Additional
Issuance of Public Shares (A Share), Amendment to Articles of Association, Proposal for Revising
Part of Management Systems of the Company.
     The resolutions of this meeting were announced on China Securities Journal and Securities
Journal on April 20th 2005.
     4. On Nov. 25th 2005, the Company held the 3rd interim shareholders’ general meeting of
2005, at which the Proposal for Participating in the Auction of the Land Use Right of Residential
Area of Suzhou Industrial Park was examined and unanimously passed.
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                                                                    Text of Annual Report (2005)



     The resolution of this meeting was announced on China Securities Journal and Securities
Journal on Nov. 26th 2005.




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VII. BOD Report
(I) Review of operating results in the report period
1. Undestanding of the environment

    In 2005, with the macro economy maintaining steady and relatively rapid development, the
real estate industry saw a decrease in the growth rate, but still maintaining steady growth. In 2005,
the production value of the real estate industry in China was RMB1,575.9 billion Yuan, increasing
by 19.8% over the previous year, but the growth rate was 8.3% lower than that of 2004; the floor
area of completed commercial housing was 487,930,000m2, increasing by 14.9% over the
previous year; the sales amount of commercial housing was RMB1,808 billion Yuan, of which
35.5% came from sales of completed housing and 64.5% from uncompleted housing.(Source:
National Bureau of Statistics of China).

     Looking back at the course of the real estate industry in the past years, the Company’s
understanding of this industry is as follows:

     1) A real estate product has a dual attribute as both an investment product and a consumer
product. As an enterprise providing investment products and consumer products at the same time,
an excellent real estate company must have the investment management capability as a financial
institution and at the same time the production management capability as a manufacturing
enterprise. On basis of attaching importance to the return on investment and risk control, a real
estate company shall build its core competitive advantages through intension-mode development
and attract support from external resources through good brand image and product manufacturing
capability.

     2) The real estate industry in China is still developing at a high speed and the long-term
prospect of this industry is good.China is an emerging market. With the continuous improvement
of economic development, with the continuous accumulation of the wealth of the people and with
the accelerated internationalization, the consumer needs for improving residential housing
conditions and investment needs for more wealth at various hierarchies of the society constitute
the fundamental power that drives the real estate industry in an upgoing direction in the long term.

     3) The industry entry barrier has been quickly raised, thus intensifying market differentiation
and gradually increasing market concentration.The supply of land, the most important production
factor of the real estate industry, has undergone fundamental changes. The standard market-based
land supply system has become the main mode of supply in the current land market.The change in
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the land supply mode has greatly increased the costs of acquiring production elements for real
estate enterprises. The competition for land acquisition has become fiercer and the entry barrier
has been quickly raised. At the same time, the professional capability and brand image have
become the important prerequisite that determines whether a real estate enterprise can
continuously acquire resources. Strong enterprises with standard corporate governance structures,
good brand images and unique competitive advantages will become even stronger, thus pooling
more and more key resources and intensifying differentiation.

     4) Developments in different regions of China are unbalanced. Demands in different
regional markets are structurally different, so highlighting cross-region development will help
grasping opportunities and preventing risks.The macro regulatory policies of the Central
Government have different effects in different regions. In addition, the cycles of different regional
markets are not completely consistent. Reasonable cross-region development will help a company
reduce the costs of land acquisitions, control market risks and maintain steady performances
between different periods.

2. Self-undestanding of the Company
     Since entering the real estate industry in the year 2000, Yeland Group Co., Ltd has grasped
market opportunities and overcome many difficulties, maintained a high growth rate, formed a
certain scale of capital, accumulated many successful development experiences, and preliminarily
won recognition in the industry and attention in the market. However, in order to realize the
strategic goal of building a ―sustainable real estate group‖, Yeland Group Co., Ltd still has to
improve in many aspects, mainly including: The scale of capital is still not big; the capital
structure is still not very reasonable; there are still some differences between leading real estate
enterprises in terms of overall project operation and professional accumulation.In the future, the
Company needs to conduct long-term and relentless forward-looking studies on the industry,
continuously optimize stage-specific strategic goals and tactics, actively adjust the direction of
industry development, and continuously improve strengths in respect of capital, talents,
professional experiences, etc.

3. Overall operating results in 2005

     On basis of the understanding of the environment and the Company itself, in 2005, the
Company set and implemented the stage-specific goal of becoming a ―professional real estate
company with a nationwide image, outstanding local advantages and core competitive
capabilities‖. The Company has made preliminary achievements in strategic management,

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organizational structure, corporate culture, team building, acquisition of key resources, adjustment
of capital structure and strategic layout, etc, thus further consolidating the foundation for
sustainable development.

     1). Emphasis on continuous improvement of strategic management capability

     Strategies determine the direction and path of the development of an enterprise.In this era of
rapid development, an enterprise shall use outstanding strategic management capability to
continuously optimize strategic goals and assure that it develop in the correct way and toward the
correct direction.During the report period, the Company, according to its strengths and changes in
the environment, continuously optimized strategies, thus having tested and improved strategic
management capabilities.In 2005, the Company further defined the strategic goal of building itself
into a professional real estate company. After obtaining agreement and approval from the
governing authority, the Company terminated the plan for investing in Sichuan International Trust
and Investment Company. The Company also explored the commercial real estate operation mode
for its existing hotel operations.In order to further improve the strategic management capability,
the Company adjusted the organizational structure and strengthened the R&D force of the team.

     2) Substantial improvement of the ability to acquire key resources

     In financing, in this report period, the Proposal for Applying for Issuing Additional Public
Shares (A Share) passed at the Annual Shareholders’ General Meeting of 2004 was not
implemented due to external factors.The multi-channel financing initiated in 2004 produced good
effects, thus providing great support for the expansion of the Company. On strength of the
continuous and steady carrying out of real estate operations, the Company slightly improved its
financing capability in terms of bank loans. The balance of bank loans increased from RMB501
million Yuan at the beginning of this report period to RMB580 million Yuan at the end of this
report period. In this report period, the Company executed two credit fiducial financing plans
involving a total amount of RMB166 million Yuan. After the report period, the Company
completed another fiducial financing plan with a total amount of RMB50 million Yuan.On
January 20th 2006, the Company signed the Framework Agreement on Bank-enterprise
Cooperation with the Agricultural Bank of China. Under this agreement, the Company has a
comprehensive credit line of RMB1 billion and an intent credit line of RMB2 billion for mortgage
loans, thus raising the bank-enterprise cooperation to a new level.

     The above financing activities changed the structures of short-term/long-term liabilities of
the Company. The amount of long-term liabilities increased from the RMB291 million Yuan at the

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                                                                         Text of Annual Report (2005)


beginning to RMB369 million Yuan, thus improving the ability of the Company to resist
short-term risks. At the same time, the liabilities/assets ratio of the Company increased from the
64% at the beginning of the year to 71%. In order to lower operational risks and realize steady
development, the Company transformed laws and regulations regarding the equity separation
reform and financing on capital markets into opportunities and actively explored financing on the
capital markets.

     In the aspect of acquiring land resources, in 2005, the Company successively acquired
Beijing Yeland Tianzhu, Beijing Xibeiwang and Suzhou projects. The total area of projects in
progress and in reserve has broken through 1,000,000m2 and matched the improvement of the
financing capability and the enhancement of the professional strength in real estate industry, thus
realizing balance at a higher level.

     3) Strategic layout and capital structure further optimized

     The Company has preliminarily completed the nationwide strategic layout.Currently, the
total area of the projects in progress and in reserve is 1,031,600m2, of which 574,600m2 is in
Beijing, 111,000 m2 is in Tianjin and 346,000 m2 is in the Yangtz River Delta.

     The assets of the Company further concentrated on residential housing development.The
successful sale of the Sanlitun commercial real estate project not only generated a certain income
for the Company, but also provided the Company with financial support for inceasing land
reserves, thus enabling the corporate resources to further concentrate on residential housing
development at the current specific stage of development.The current strategic layout and capital
structure of the Company basically meets the project portfolio requirements of ―risk, profit,
turnover and scale‖ and can support the steady and healthy development of the Company.

     4). Optimization of managerial structure and improvement of managerial capability

     In the report period, through holding a series of meetings with ―Organizational Reform and
Innovation‖ as the theme, the Company systematically and objectively examined the current
status, future and path of development.In accordance with the need for building a real estate group
that can develop continuously, the Company has established a three-level organizational structure
consisting the headquarters, regional companies and project companies. Regional companies are
under the leadership of the headquarters and focus on operational management, while project
companies are under the leadership of the concerned regional company and focus on project
operation and finally realizing project income.Reasonable organizational guarantees and resources
are provided for key capabilities, including strategic management and execution, organizational
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shaping and building of corporate culture, acquisition and integration of resources, risk control,
professional manufacturing, cost control, etc.Each of the three levels performs its own
responsibilities, thus forming an organic entity, creating favorable conditions for the expansion of
the corporate management, and laying a solid foundation for the long-term development of the
Company.

     5) Achievements in building corporate culture

     With the mission of ―Adapt to the progress of the times and share the fruits with
stakeholders‖, the Company advocates the core value of ―Respect creates value‖, and emphasizes
―Respect the need of shareholders for sharing the increased wealth brought about be economic
growth, respect the need of customers for upgrading consumptions, respect the need of employees
for pursuing happiness and professional promotions, and reach an agreement at various levels
within the Company and work together toward the goal.‖During the report period, the Company,
in order to truly build a corporate culture with this as the intension, relentlessly promoted and
implemented the policy by establishing information sharing platforms for employees (including
the internal publication YELAND, the intranet and external network), the transparent and
scientific performance assessment system, the reasonable and fair post competition system, and
carrying out a series of cultural activities that promoted team collaboration and enhanced
interaction among all the members of the Company.

     6) Preliminary formation of professional team meeting the strategic needs of the Company

     For the purpose of everlasting development, on basis of the existing relatively complete
employee training mechanism, the employee incentive and restrictive mechanism and the talents
introduction mechanism, the Company attached importance to the continuous improvement of the
overall quality of the team.The real estate operations, the main business of the Company, have a
total of 258 staff, averaging 30.1 years of age. The constitution of their specialties is relatively
reasonable. 93.28% of the employees engaged in real estate operations have received 2-to-3-year
higher education or above. At the same time, under the leadership of and with the support from
Dalian Municipal Government, the Company has successfully changed the identity of the
employees of the state-owned hotels in Dalian.

     7) Continuous improvement of brand image

     The growth of the Company has won public recognition:       In the report period, the Company
won such honors as ―China’s Top 100 Real Estate Development Enterprises with the Most
Powerful Growth Strengths (2004)‖, ―China’s Top 100 Real Estate Developmetn Enterprises
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                                                                            Text of Annual Report (2005)


(2005) – Growth-based TOP 10‖, ―China’s Blue-chip Real Estate Enterprises (2005)‖, etc. As per
the analysis and evaluation performed by China Securities Journal and the Center for Chinese
Enterprise Studies of Tsinghua University on the financial performances (including profitability,
solvency, growth and operational improvement results) of domestic listed companies in 2004,
Yeland Group Co., Ltd received a comprehensive rank of NO.32 and a growth rank of NO.11.

     While the sustainable development capability gained tremendous progress, the short-term
performance of the Company dropped significantly.In the report period, several projects of the
Company were at the stage of early development and moved on smoothly (for details, see the
―List of Main Real Estate Development Projects of the Company in 2005‖ of this report).
Affected by the cycle of project development, project sales progress, accounting methods, smaller
floor area settled in this year than in previous year and other factors, the performance of the
Company of 2005 dropped significantly from that of the previous year. Details are as follows:


                                             Increase/decrease over
     Item                Amount                                                      Reason
                                               previous year (%)
    Primary
                                                                       Only Phase I of Vanland Mansion was
   operating               680,599,783.18                    -71.62%
                                                                          completed in this report period
    income
    Primary
                           144,254,046.44                    -48.71%   Same as above
operating profit
Net profit                  32,188,731.86                    -80.14%   Same as above

      1. Main business operations and operating results
      In this report period, the comprehensive strength of the real estate operations was further
enhanced. The volume of land reserves increased significantly; the radius of management was
effectively expanded; projects in progress moved on smoothly.The constitution of main business
operations of the Company did not change. Operating income from the real estate industry still
accounted for over 90% of the primary operating income.As per the corporate strategy, in 2006,
the Company will continue to have real estate operations as its core operations and actively
explore the way of better incorporating the hotel and tourism operations into the Company in the
mode of commercial real estate, thus promoting the steady improvement of corporate
competitiveness and and performance.

      (1) Distribution of primary operations (by industry and product)




Page 33                                                                                 Respect Creates Value
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                                                                         Increase/de    Increase/dec
                                                                                                        Increase/decr
                                                                          crease of        rease of
                                                                                                           ease of
                     Primary                               Primary         primary         primary
 By industry or                           Primary                                                          primary
                    operating                             operating       operating       operating
    product                             operating cost                                                    operating
                     income                               profit (%)    income over       cost over
                                                                                                         profit over
                                                                          previous        previous
                                                                                                        previous year
                                                                          year (%)        year (%)
Real      estate
                    646,038,750.35       491,555,746.20       23.91%        -72.50%           -75.10%            7.93%
development
Hotel       and
                     25,389,037.75         4,984,238.40       80.37%         -6.56%           -23.57%            4.37%
tourism
Education             9,171,995.08         2,993,620.37       67.36%        -56.90%           -44.10%            -7.47%


Real estate         632,202,128.27       475,657,026.30       24.76%        -72.97%           -75.78%            8.76%

Property
                     13,836,622.08        15,898,719.90      -14.90%         28.67%           63.73%             -24.6%
management
Education
                      9,171,995.08         2,993,620.37       67.36%        -56.90%           -44.10%            -7.47%
services
Guest room            8,839,206.67                          100.00%          -0.43%                                      0
Dining     &
                      5,428,520.38         3,463,527.74       36.20%          1.89%            3.41%             -0.93%
drinking
Trade                 9,428,528.00                          100.00%           0.37%                                      0
Tourism               1,692,782.70         1,520,710.66       10.17%        -52.63%           -52.06%            -1.07%


     (2) Distribution of primary operations (by geographic region)
                                                            Increase/decrease of primary operating income over
    Region           Primary operating income
                                                                            previous year (%)
Beijing                  646,038,750.35                                            -72.50%
Dalian                   25,389,037.75                                             -6.56%
Yunnan                   9,171,995.08                                              -56.90%




    (3) Top five suppliers and top five customers                                          Unit:    RMB10,000
Yuan
Aggregate      amount      of    2,830.41      Ratio of total                                             24.85 %
procurements from top five                                       procurement
suppliers                                                              amount
Aggregate amount of sales to                  6,995.92           Ratio of total                            10.28%
top five customers                                               sales amount


      2. Financial position during the report period
      (1) Constitution of assets

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                                                                                        Text of Annual Report (2005)




                                                            Increase/
                                            Ratio of
                                                           decrease in
      Item             Amount (Yuan)      total assets                                        Reason
                                                          ratio of total
                                              (%)
                                                           assets (%)
Accounts                 18,324,922.09         0.75%               -2.5%   Mainly due to collection of accounts
receivable                                                                 receivable from real estate projects in this
                                                                           period
Other accounts          145,669,581.61         5.92%             2.87%     Mainly due to change in the scope of the
receivable                                                                 consolidated financial statements and increase
                                                                           in prepaid money
Inventory              1,443,462,881.73        58.7%            -6.23%     Mainly due to the increase in total assets
                                                                           resulting from change in the scope of the
                                                                           consolidated financial statement and
                                                                           expansion of the scale of business
Long-term               120,523,580.64          4.9%            -0.28%     Same as above
equity
investment
Fixed assets            177,616,778.91         7.22%            -1.05%     Same as above
Projects in               3,551,350.57         0.14%            -0.18%     Same as above
progress
Short-term              210,630,000.00         8.57%            -1.62%     Same as above
borrowings
Long-term               369,350,000.00        15.02%             0.91%     Mainly due to increase in long-term
borrowings                                                                 borrowings for real estate projects in this
                                                                           period
Pre-collected           843,488,014.46         34.3%            21.53%     Mainly due to increase in amount of pre-sales
accounts                                                                   of housing from real estate projects in this
                                                                           period
Prepayments             355,235,582.45        14.45%             9.17%     Mainly due to increase in pre-paid land prices
                                                                           for real estate projects in this period

      (2) Expenses and income tax accrued in this period
                                                              Increase
                                                                  /
          Item               Y2005             Y2004                                          Reason
                                                              decrease
                                                                (%)
  Operating               40,681,906.56      39,396,654.85       3.26%     Input in advertisements for projects in
  expense                                                                  progress
  Financial                9,185,394.98      12,864,394.96       -28.6%    Capitalized interest for projects in progress
  expenses
  Management fee          64,999,728.25      56,675,683.29       14.69%    Addition of new development projects
  Income tax              19,963,672.74       33,271,690.8      -40.00%    Decrease in income from newly completed
                                                                           and settled projects

      3. Cash flows
                                                                 Increase /
       Item                  Y2005                Y2004           decrease                        Reason
                                                                    (%)
Net cash flow                                                                  Mainly due          to     increase in
from       operating                                                           development costs and prepaid
                          -4,769,195.93      133,327,425.81       -103.58%
activities                                                                     accounts resulting from addition of
                                                                               real estate projects in this period

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                                                                                              Text of Annual Report (2005)


  Net cash flow                                                                         Mainly due to increase in investment
  from investment              -61,082,673.01      -52,242,976.99        16.92%         in this period
  activities
  Net cash flow                                                                         Mainly due to increase in bank loans
  from       financing          484,755.91         -83,069,793.46       100.58%         in this period
  activities



       4. Operating conditions of main companies of which the Company holds shares/controlling
  shares
                                                                    Unit: RMB10,000 Yuan
                                     Equity
                                                                               Y2005
                            Regis   ratio (%)
                            tered                   Primary       Primary
           Name                            In                                                                     Remarks
                            capit   Dire           Operation       operati      Net          Total
                                           dir
                              al     ct                            ng          profit        assets
                                           ect
                                                                   income
                                                                                                        Developed Bishuiyuntian
Beijing Yeland Real                                                                                   and Waliu Yeland Plaza,
Estate     Development      10000     79     21     Real estate               -1,372.22    102,142.42 developing      Yeland
                                                                  1,642.88
Co., Ltd                                                                                                Tianzhu         and    Beijing
                                                                                                        Xibeiwang projects
Beijing Sunlight Seasons     5000     60     40     Real estate               -1,022.04      8,298.84 Developed Townhouse

Garden     Real    Estate                                         3,902.79

Development Co., Ltd
Beijing Vanland Real        10000     60     40     Real estate   57,674.     6,020.98     147,855.83 Developed Phase I of

Estate     Development                                                 54                               Vanland               Mansion,
Co., Ltd                                                                                                developing Phase II and
                                                                                                        Phase     III    of   Vanland
                                                                                                        Mansion
Tianjin Yeland Real         19000       18.4        Real estate                -389.40       8,333.56 Developing                Yeland
Estate Co., Ltd                            2                                                          Shanshui Yiyuan
Jiangsu Yeland Real          2000     60 40         Real estate                   -7.82      7,068.68 Developing      Suzhou
Estate Co., Ltd                                                                                         Project
Shenzhen          Daoqin     4000            90 Education                     1,948.15      17,371.16

Investment Co., Ltd                              investment
Yunnan             Kexin     5000            71       Education                   31.93      5,050.30

Education Investment                                 investment     917,.20

Co., Ltd
Beijing           Yeland      300     70     30       Property                 -579.73         781.40

Property Management                                management     1,383.66

Co., Ltd

           Note:       Pursuant to the agreement on increasing capital investment in Tianjin Yeland Real
  Estate Co., Ltd and credit financing, when the credit plan expires in July 2006, the Company or

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the party designated thereby will accept all the RMB140,000,000 Yuan in equity held by Zhongtai
Trust and Investment Co., Ltd of Tianjin Yeland Real Estate Co., Ltd. Relevant information was
announced on China Securities Journal and Securities Journal on June 21st 2005 and July 20th
2005.
       5. List of Main Real Estate Development Projects of the Company in 2005 (ended Dec. 31 st
2005)
  Project        Location     Planned       Realized       Amount        Ratio       Time of
  Name                       floor area   sales amount      carried        of       completion
                            (10,000m2)    (RMB10,000       forward       floor
                                              Yuan)      (RMB10,000      area
                                                            Yuan)        sold
 Sanlitun        Beijing          2.98      29,500.00       29,500.00   100%          Y2005
 3.3
 Phase I of      Beijing                    61,384.54    57,674.54      76.13%        Y2005
 Vanland                          6.26
 Mansion
 Phase      II   Beijing          9.52      76,509.17                   47.99%        Y2006
 of                                                                                (estimated)
 Vanland
 Mansion
 Phase III       Beijing          6.82      19,434.51                   20.39%        Y2006
 of                                                                                (estimated)
 Vanland
 Mansion
 Yeland          Tianjin          11.1        7,786.12                  14.22%        Y2007
 Shanshui                                                                          (estimated)
 Yiyuan
 Yeland          Beijing          8.36                                                Y2007
 Tianzhu                                                                           (estimated)
 Suzhou          Suzhou           34.6                                                Y2008
 Project                                                                           (estimated)
 (interim
 name)




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 Xibeiwang     Beijing                                                                   Y2008 –
 Project                                                                                  Y2009
                                 32.76
 (interim
                                                                                       (estimated)
 name)

    Note:
    1. The above planned times of completion may change as a result of force majeure, e.g.
macro economic factors, social factors, policies, natural factors, etc.
    2. The Sanlitun 3.3 Project was executed by transferring the equity the Company held of
Huadun International Investment Co., Ltd, so the transfer price is not included in the operating
income.

(II) Future prospect of the Company

1. Industry development trend and market layout of the Company

    Since 2003, the Central Government has implemented a serires of policies that will continue
affecting the real estate industry in 2006.It is estimated by the Company that the government will
continue to strictly control the total land supply and, at the same time, adjust the structure of land
supply, control the land for high-end residential housing, and further strengthening specific and
effective macro control of the real estate market. In 2006 the prospect of land supply is not
encouraging. However, the regulatory policies do not fundamentally unsteady the factors that
affect the real estate price, e.g. economic growth, urbanization process, consumption upgrading,
RMB appreciation, etc.At the same time, as the effect of the regulation is becoming clearer and
clearer, the wait-and-see attitude of consumers has changed to some extent and their demands for
housing are gradually rising.The overall growth rate in real estate price will be keep even with
that of last year. Obvious regional market characteristics will appear.

    The existing real estate projects of the Company mainly concentrate in Beijing, Tianjin and
Suzhou, within the most active economic circles, i.e. Bohai Sea and Yangtz River Delta.In the
opinion of the Company, in the coming 2-3 years, the overall real estate industry in the above
regions will continue to go up.The existing real estate projects of the Company will also share the
gains from this.

2. Future development opportunities and challenges of the Company

    1). Opportunities

    (1) Significance of the continuous and steady development of real estate market for long-term
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development of the CompanyAs the urbanization process continuously moves on, in the coming
years, it is estimated that each year over 20,000,000 city residents will be added and the potential
demand for residential housing will reach about 350,000,000m2. So, the residential housing
market has a very promising future.Currently, the real estate projects of the Company mainly
concentrate in Beijing, Tianjin and Suzhou, currently the most active economic circles in China.
The demand for real estate is strong, thus laying a solid foundation for the long-term development
of the Company.

    (2) The smooth execution of the equity separation reform in the securities market in China
has created a good market environment for listed companies.

     Up to now, over 60% of listed companies have completed the equity separation reform or are
in the process of equity separation reform.It can be estimated that, in 2006, most listed companies
will complete the reform, thus fundamentally solving the ―same shares different rights‖ problem,
the system defect that has obsessed the market for many years, and creating substantial
development opportunities for the capital market. The expansion of the market scale, the financial
product innovations and the enhancement of the value investment concept, etc, has provided a
good external environment for excellent listed companies.

    2). Challenges

    (1) Acquisition of new land reserves. At present, the land supply in Beijing, the main region
in which the real estate operations of the Company are concentrated, is not sufficient. Land is
acquired mainly by means of ―bid, auction and hook‖, so compeitition for land resources is very
fierce.All the recent auctions of several representative lots have been concluded at high prices.So,
how to solve the problem of acquiring land reserves in the future is the major issue facing the
Company.

    (2) Capital needed for development. Real estate is a capital-intensive industry. As a listed
company with real estate development as the main operation, the Company must input huge
amounts of capital to complete the construction of existing projects and acquire new land
reserves.The self-owned capital and bank loans cannot solve all the problems. How to effectively
finance through the capital market and through other low-cost channels is a strategic problem the
Company needs to solve.

    (3) Operation and management. 2006 is an extremely critical year for the Company. In this
year, the Company will activate part of the land reserves, so the scale of development will further
expand.This has imposed higher requirements for many aspects of the Company, e.g. the
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professional manufacturing capability, risk control capability, HR, etc.The management level and
professional capability of the Company to a large degree determine the success and profit of a
project.

    (4) Balancing of steady growth of short-term performance and long-term development.
Currently, the scale of capital of the Company is small. The absolute quantities of projects in
progress and in reserve are not big.So, the Company shall try to improve the professional
capabilities of acquiring land, planned management, etc, and, while pursuing the long-term
development, lower the performance fluctuations between different years.

3) Business plan for the new fiscal year

    Considering the opportunities and challenges, the Company will carry out the following tasks
in 2006:

    (1) According to the market characteristics of different markets in China, the Company will
focus on development in major regions and use several modes of cooperation to acquire land
reserves with investment value at reasonable prices so as to lay a solid foundation for the
long-term development of the Company.

    (2) Further enhance R&D effort in respect of commercial real estate and special estate.While
maintaining the steady expansion of the scale of the residential housing development, the
Company will gradually enhance the development and scale of commercial real estate and special
real estate so as to ensure steady rental income.

    (3) Enhance management of operating capital. The Company will solve the problem of
capital needed for the development by means of fiducial financing, introducing cooperation
partners, re-financing on financial markets, etc.

    (4) Enhance operational management. In 2005, the Company’s radius of management was
effectively expanded and cross-region management was successfully achieved. On basis of this,
the Company will continue to improve the 3-level management structure, further define the
objectives and jobs of managerial functions at various levels, enhance fine management over
projects, and improve the professional manufacturing capability.

    (5) Try to complete the equity separation reform as soon as possible. Due to historical reasons,
the cost of holding shares by top shareholders of the Company is high and the ratio of shares held
by the biggest shareholder is low. So the Company has some difficulties in carrying out the equity
separation reform.However, from the perspective of protecting the interests of the shareholders of

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the listed company and circulating shares, the Company’s main holders of noncirculating shares
have expressed the intention to try to complete the equity separation reform within 2006 and,
through implementation of the equity incentive plan and other meawsures, try to optimize the
structure of corporate governance and improve the incentive and restrictive mechanism so as to
actually improve the competitiveness of the Company.


(III) Investmetns by the Company

    In the report period, the net long-term investment of the Company was RMB120,520,000
Yuan, increasing by RMB13,660,000 Yuan over the RMB106,860,000 Yuan of the previous
year.Details are as follows:
    Main equity acquisitions by the Company and its subsidiaries include:    Acquired 40% of the
equity of Vanland Real Estate Development Co., Ltd; invested in establishing Tianjin Yeland Real
Estate Co., Ltd and increased investment and carried out financing within the same year; invested
in establishing Jiangsu Yeland Real Estate Co., Ltd. Equity sales include:    Successfully sold of
Sanlitun 3.3 Project by means of transferring the equity the Company held of Huadun
International Investment Co., Ltd; transferred Chenfeng Jiayuan Project by means of consigning
the equity the Company held of Beijing Chenfeng Real Estate Development Co., Ltd.
     Main reasons for the increase in long-term investment in the consolidated statement:     In this
year, the Company increased RMB35,000,000 Yuan in long-term equity investment in Tianjin
Yeland Real Estate Co., Ltd; the Company increased the differene in equity investment in Beijing
Vanland Real Estate Co., Ltd by RMB11,970,000 Yuan; the Company sold the difference
(RMB4,700,000 Yuan) in equity investment in Huadun International Investment Co., Ltd; the
Company sold the difference (RMB14,670,000 Yuan) in equity investment in Beijing Chenfeng
Real Estate Development Co, Ltd; the amortized differences in other equity investments was
RMB9,980,000 Yuan; the confirmed investment income from the companies in which the Company
participated by equity investment was RMB-3,960,000 Yuan.
     For the names of invested companies, main operating activities, equity ratios held of invested
companies, etc, please see Note IV ―Controlled Subsidiaries and Joint Ventures‖ of the financial
report; for changes in the equities held of invested companies, please see No.8 ―Long-term
Investments‖ of Note V ―Notes to Consolidated Financial Statements‖.

     1. Use of raised funds
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                                                                          Text of Annual Report (2005)


     In the report period, the Company did not raise new funds or used any funds raised in
previous years.

     2. Other major investment projects

     In the report period, except the real estate projects in progress and in reserve, the Company
did not carry out any other major investment projects.



(IV) Relevant information about financial statements

     1. Dalian Hualian Certified Public Accountants has issued a standard audit report for the
2005 financial statements of the Company without any qualified opinion.

     2. In this fisical year, the Company did not have any changes in the accounting policies or
accounting estimates or corrections of major accounting errors.



(V) Work of BOD

     1. Contents of BOD meetings and resolutions during the report period

     During the report period, the Company has held fifteen (18) board meetings.

     (1) On January 17th 2005, the 20th meeting of the 3rd BOD of the Company was held by
means of communications. This meeting examined and unanimously passed the following
proposals: Proposal for Acquiring 40% of the Equity of Vanland Real Estate Development Co.,
Ltd and Modification of Major Contracts, Amendment to Articles of Association, and Proposal for
Holding the 1st Interim Shareholders’ General Meeting of 2005.

     The resolutions of this meeting were announced on China Securities Journal and Securities
Journal on January. 19, 2005.

     (2) On Feb. 2nd 2005, the 21st (interim) meeting of the 3rd BOD of the Company was held.
This meeting examined and unanimously passed the following proposals: Proposal for Adjusting
the Members of the 3rd BOD of the Company, Proposal for Adjusting Senior Management Staff of
the Company, Proposal for Establishing Tianjin Yeland Real Estate Development Co., Ltd,
Proposal for Enhancing and Improving Management of Real Estate Operations, Proposal for
Holding the 2nd Interim Shareholders’ General Meeting of 2005.

     The resolutions of this meeting were announced on China Securities Journal and Securities
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                                                                        Text of Annual Report (2005)


Journal on Feb. 4, 2005.

     (3) On March 16th 2005, the 22nd meeting of the 3rd BOD of the Company was held. This
meeting examined and unanimously passed the following proposals: Annual Report (2004) and
Abstract, General Manager’s Work Report (2004), Final Statement (2004) and Financial Budget
(2005), Proposal for Profit Distribution (2004), Proposal for Renewed Hiring of Accounting Firm
for Annual Audit, Proposal Regarding the Conditions of the Company Issuing Additional Public
Shares, Proposal for Applying for Issuing Additional Public Shares (A Share), Proposal Regarding
New and Old Shareholders Sharing Accumulated Profit of the Company after Completion of
Issuing Additional Public Shares (A Share), Proposal Regarding Feasibility of Planned Investment
Projects for Funds Raised from Additional Issurance of Public Shares (A Share), Amendment to
Articles of Association, Proposal for Revising Part of Management Systems of the Company,
Proposal for Increasing 10% Equity Investment in Shenzhen Daoqin, Proposal for Modifying
Accounting Estimates, Report on Scrapped Assets, and Proposal for Holding the Annual
Shareholders’ General Meeting of 2004.

     The resolutions of this meeting were announced on China Securities Journal and Securities
Journal on March 18, 2005.

     (4) On March 28th 2005, the 23rd (interim) meeting of the 3rd BOD of the Company was held,
at which the Proposal for Disposal of the Sanlitun Project was examined and passed.

     The resolution of this meeting was announced on China Securities Journal and Securities
Journal on March 30th 2005.

     (5) On April 3rd 2005, the 24th (interim) meeting of the 3rd BOD of the Company was held, at
which the following proposal was examined and passed:     Amendment to Articles of Association.

     The resolution of this meeting was announced on China Securities Journal and Securities
Journal on April 5, 2005.

     (6) On April15th 2005, the 3rd BOD held an interim meeting by means of communications, at
which the Proposal Regarding Yeland Real Estate Signing the Huaxiang Baipenjiao Project was
examined and passed.

     The resolution of this meeting was announced on China Securities Journal and Securities
Journal on April 19, 2005.

     (7) On April 18th 2005, the 25th meeting of the 3rd BOD of the Company was held. This
meeting examined and unanimously passed the following proposals: 1st – quarter Report of 2005
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                                                                        Text of Annual Report (2005)


and Proposal for Providing Guarantee for the 1-year Bank Loan of RMB26,000,000 Yuan of
Yeland Real Estate.

     The resolutions of this meeting were announced on China Securities Journal and Securities
Journal on April 20, 2005.

     (8) On May 11th 2005, the 26th meeting of the 3rd BOD of the Company was held. This
meeting examined and unanimously passed the following proposals: Proposal Regarding Vanland
Real Estate Development Co., Ltd Applying for 2-year Bank Loan of RMB150,000,000 Yuan and
the Proposal for Establishing Jiangsu Yeland Real Estate Development Co., Ltd.

     The resolutions of this meeting were announced on China Securities Journal and Securities
Journal on May 13, 2005.

     (9) On June 20th 2005, the 3rd BOD of the Company held an interim meeting. This meeting
examined and unanimously passed the following proposal: Proposal for Increasing Investment in
Tianjin Yeland Real Estate Co., Ltd and Arranging for Fiducial Financing.

     The resolution of this meeting was announced on China Securities Journal and Securities
Journal on June 21, 2005.

     (10) On June 23rd, the 27th meeting of the 3rd BOD of the Company was held and 8 of the 9
directors of the Company attended this meeting. At this meeting, the following proposals were
examined and passed:    Proposal Regarding Vanland Real Estate Development Co., Ltd Applying
for 2-year Bank Loan of RMB200,000,000 Yuan, Proposal Regarding Yeland Real Estate
Applying for Short-term Bank Loan of RMB55,000,000 Yuan, and Proposal Regarding Means of
Using Funds Raised from Issuing Additional Shares.

     Informaiton about bank loans was announced on China Securities Journal and Securities
Journal on July 20th 2005.

     (11) On July 18th 2005, the 3rd BOD of the Company held an interim meeting by means of
communications. This meeting examined and unanimously passed the following proposal:
Confirmation of the Progresses of Fiducial Financing and Increasing Investment in Tianjin Yeland,
and Proposal Regarding Increasing Registered Capital of Chenfeng to RMB50,000,000 Yuan.

     The resolutions of this meeting were announced on China Securities Journal and Securities
Journal on July 20th 2005.

     (12) On August 2nd 2005, the 28th meeting of the 3rd BOD of the Company was held, at

Page 44                                                                           Respect Creates Value
                                                                      Text of Annual Report (2005)


which the Report on Corrections after Inspection by Dalian Securities Regulatory Bureau of
China Securities Regulatory Commission.

     The resolution of this meeting was announced on China Securities Journal and Securities
Journal on August 3, 2005.

     (13) On August 18th 2005, the 29th meeting of the 3rd BOD of the Company was held. This
meeting examined and passed the Half-year Report (2005) and Abstract and Half-year Final
Statement (2005).

     The resolutions of this meeting were announced on China Securities Journal and Securities
Journal on August 20, 2005.

     (14) On September 14th 2005, the 30th meeting of the 3rd BOD of the Company was held, at
which the Proposal Regarding Beijing Yeland Real Estate Signing Zhuyuan Project was examined
and passed.

     The resolution of this meeting was announced on China Securities Journal and Securities
Journal on September 15th 2005.

     (15) On September 27th, the 3rd BOD of the Company held an interim meeting by meas of
communications and 9 of the 9 directors of the Company attended this meeting.At this meeting
the Proposal for Establishing Yeland Dalian Co., Ltd was examined and unanimously passed.

     (16) On Oct. 17th 2005, the 3rd BOD of the Company held an interim meeting by means of
communications, at which the Proposal for Participating in the Auction of the Land Use Right of
Residential Area of Suzhou Industrial Park was examined and unanimously passed.

     The resolution of this meeting was announced on China Securities Journal and Securities
Journal on Oct. 20th 2005.

     (17) On Oct. 23rd 2005, the 31st meeting of the 3rd BOD of the Company was held. This
meeting examined and unanimously passed the following proposals: 3rd – quarter Report of 2005,
Proposal for Adjusting Real Estate Project Reserves, and Proposal for Holding the 3rd Interim
Shareholders’ General Meeting of 2005.

     The resolutions of this meeting were announced on China Securities Journal and Securities
Journal on Oct. 25, 2005.

     (18) On Nov. 25th, the 3rd BOD of the Company held an interim meeting and 8 of the 9
directors of the Company attended this meeting.This meeting examined and unanimously passed
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                                                                         Text of Annual Report (2005)


the Proposal for Applying for 1-year Bank Loan of RMB4,500,000 Yuan from Dalian Branch of
Guangdong Development Bank.



     2. Execution by BOD of shareholder’s general meeting resolutions

     In this year the Company held four shareholders’ general meetings.As per the requirements
of the Company Law, Articles of Association and other laws and regulations, the BOD has fully
exercised the powers granted by the shareholders’ general meetings and strictly executed the
resolutions made thereby.

     (1) As per the resolution of the 1st interim shareholders’ general meeting of 2005, the
Company in time acquired the 40% of the equity of Vanland Real Estate Development Co., Ltd
and modified major contracts, thus ensuring the smooth operation of the development of the
Vanland Mansion Project.

     (2) As per the resolutions of 2nd interim shareholders’ general meeting of 2005, the BOD
required in time the newly elected directors to sign the Declaration and Commitment and other
documents, and signed contracts of hiring with new directors, thus assuring that the newly elected
directors could play their roles as soon as possible.

     (3) Implementation of the program for distributing the profit of 2004:   As per the Program
for Profit Distribution (2004) examined and passed at the Annual Shareholders’ General Meeting
of 2004:    Used the total 283,413,000 shares at the end of 2004 as the base and allocated
RMB0.50 Yuan (including tax) in cash for each 10 shares, so a total of RMB14,170,650 Yuan was
allocated in cash.On June 13th 2005, the Ministry of Finance and the State Administration of
Taxation co-issued the Notice on Fefunding Tax Payers of Personal Income Tax on Dividend and
Bonus Stock (CS[2005] NO.102) (hereinafter referred to as "the Notice‖), which stipulates that
―Of the dividend and bonus stock obtained by any individual investor from listed companies, only
50% will be included into the total taxable amount for calculating personal income tax‖. As per
the Notice, the Company adjusted the income tax for dividends payable to holders of public
shares by adjusting the dividends for each 10 shares from the original RMB0.40 Yuan to
RMB0.50 Yuan after deducting tax for individual holders of public shares and investment
funds.For this profit distribution, the date of record was June 16th 2005, the ex-dividend date was
June 17th 2005 and the dividend payment date was June 17th 2005.

     (4) As per the resolution of the Annual Shareholders’ General Meeting of 2004, the Company
prepared for issuing additional public shares (A Share). However, due to the equity separation
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                                                                          Text of Annual Report (2005)


reform and other reasons, at present the preparatory work is suspended.



(XI) Proposal for distributing profit of this year and conversion of surplus reserve to share
capital

     As per the audit conducted by the certified public accountants of Dalian Hualian Certified
Public Accounts, the net profit realized by the Company in 2005 was RMB32,188,731.86 Yuan.
After less the the statutory surplus reserve and statutory public welfare fund in accordance with
the provision of the Articles of Association, plus the undistributed profit of RMB232,910,627.32
Yuan at the end of the previous year, less the profit of RMB14,170,650 distributed according to
the Program for Profit Distribution (2004) implemented in 2005, the total distributable profit of
this year was RMB246,900,195.39 Yuan.

     The proposal determined by the BOD for profit distribution for 2005:             Use the total
283,413,000 shares at the end of 2005 as the base and distribute RMB0.30 Yuan (including tax)
for each 10 shares as the dividend.



(XII) Within the report period, the Company selected China Securities Journal and
Securities Times for disclosing information.




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VIII. Supervisory Committee Report
      In 2004, the Supervisory Committee has fully exercised the rights and powers granted by
the Company Law and legally and effectively supervised the board members and senior
management staff of the Company over executing their jobs, legally and carefully checked the
financial work of the Company, and supervised over the overall operation of the Company in
accordance with the regulations and corporate governance rules.

(I) Supervisory Committee meetings during the report period
    This year, the Supervisory Committee held 16 meetings. Detailes are as follows:
    1. On January 17th 2005, the 3rd Supervisory Committee held the 18th meeting, which
examined and passed the Proposal for Acquiring 40% of the Equity of Vanland Real Estate
Development Co., Ltd and Modification of Major Contracts, Amendment to Articles of
Association, and Proposal for holding the 1st Interim Shareholders’ General Meeting of 2005.
    2. On Feb. 2nd 2005, the 3rd Supervisory Committee held the 19th meeting, which examined
and passed the following proposals:   Proposal for Adjusting the Members of the 3rd BOD of the
Company, Proposal for Adjusting Senior Management Staff of the Company, Proposal for
Establishing Tianjin Yeland Real Estate Development Co., Ltd, Proposal for Enhancing and
Improving Management of Real Estate Operations, Proposal for Holding the 2nd Interim
Shareholders’ General Meeting of 2005.
    3. On March 16th 2005, the 3rd Supervisory Committee held the 20th meeting, which
examined and passed the following proposals:      Annual Report (2004) and Abstract, General
Manager’s Work Report (2004), Supervisory Committee Work Report (2004), Final Statement
(2004) and Financial Budget (2005), Proposal for Profit Distribution (2004), Proposal for
Renewed Hiring of Accounting Firm for Annual Audit, Proposal Regarding the Conditions of the
Company Issuing Additional Public Shares, Proposal for Applying for Issuing Additional Public
Shares (A Share), Proposal Regarding New and Old Shareholders Sharing Accumulated Profit of
the Company after Completion of Issuing Additional Public Shares (A Share), Proposal Regarding
Feasibility of Planned Investment Projects for Funds Raised from Additional Issurance of Public
Shares (A Share), Amendment to Articles of Association, Proposal for Revising Part of

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Management Systems of the Company, Proposal for Increasing 10% Equity Investment in
Shenzhen Daoqin, Proposal for Modifying Accounting Estimates, Report on Scrapped Assets, and
Proposal for Holding the Annual Shareholders’ General Meeting of 2004.
    4. On March 28th 2005, the 3rd Supervisory Committee held the 21st meeting, which examined
and passed the Proposal for Disposal of the Sanlitun Project.
    5. On April 15th 2005, the 3rd Supervisory Committee held the 22nd meeting, which examined
and passed the Proposal Regarding Yeland Real Estate Signing the Huaxiang Baipenjiao Project .
    6. On April 18th 2005, the 3rd Supervisory Committee held the 23rd meeting, which examined
and passed the 1st – quarter Report of 2005 and the Proposal Proposal for Porividing Gurantee for
the 1-year Bank Loan of RMB26,000,000 Yuan of Yeland Real Estate.
    7. On May 11th 2005, the 3rd Supervisory Committee held the 24th meeting, which examined
and passed the Proposal Regarding Vanland Real Estate Development Co., Ltd Applying for
2-year Bank Loan of RMB150,000,000 Yuan and the Proposal for Establishing Jiangsu Yeland
Real Estate Development Co., Ltd.
    8. On June 20th 2005, the 3rd Supervisory Committee held an interim meeting, which
examined and passed the Proposal for Increasing Investment in Tianjin Yeland Real Estate Co.,
Ltd and Arranging for Fiducial Financing.
    9. On June 23rd 2005, the 3rd Supervisory Committee held the 25th meeting, which examined
and passed the following proposals:   Proposal Regarding Vanland Real Estate Development Co.,
Ltd Applying for 2-year Bank Loan of RMB200,000,000 Yuan, Proposal Regarding Yeland Real
Estate Applying for Short-term Bank Loan of RMB55,000,000 Yuan, and Proposal Regarding
Means of Using Funds Raised from Issuing Additional Shares.
    10. On July 18th 2005, the 3rd Supervisory Committee held an interim meeting, which
examined and passed the following proposals:        Confirmation of the Progresses of Fiducial
Financing and Increasing Investment in Tianjin Yeland, and Proposal Regarding Increasing
Registered Capital of Chenfeng to RMB50,000,000 Yuan.
    (11) On August 2nd 2005, the 26th meeting of the 3rd Supervisory Committee was held, at
which the Report on Corrections after Inspection by Dalian Securities Regulatory Bureau of
China Securities Regulatory Commission.

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    (12) On August 18th 2005, the 27th meeting of the 3rd Supervisory Committee was held. This
meeting examined and passed the Half-year Report (2005) and Abstract and Half-year Final
Statement (2005).
    13. On September 14th 2005, the 3rd Supervisory Committee held the 28st meeting, which
examined and passed the Proposal Regarding Beijing Yeland Real Estate Signing Zhuyuan
Project.
    14. On September 27th 2005, the 3rd Supervisory Committee held an interim meeting, which
examined and passed the Proposal for Establishing Yeland Dalian Co., Ltd.
    15 On Oct. 19th 2005, the 3rd Supervisory Committee held an interim meeting, at which the
Proposal for Participating in the Auction of the Land Use Right of Residential Area of Suzhou
Industrial Park was examined and unanimously passed.
    16. On Oct. 23rd 2005, the 3rd Supervisory Committee held the 29th meeting, which examined
and passed the following proposals:    3rd – quarter Report of 2005, Proposal for Adjusting Real
Estate Project Reserves, and Proposal for Holding the 3rd Interim Shareholders’ General Meeting
of 2005.



(II) Independent opinions of the Supervisory Committee
    1. The Company attaches importance to the building of the ―3-meetings-one-level‖ corporate
governance structure that enables each meeting to perform its responsibilities in strict compliance
with the rights granted by the Company Law. The procedures by which the shareholders’ general
meetings and BOD meetings are called and held comply with relevant laws and regulations.
    The Company attaches importance to the building of the modern enterprise system and all
rules. By now, the Company has established a complete internal control system.
    2. The board members and senior management staff of the Company can legally exercise
their rights, manage corporate affairs in accordance with relevant rules systems, discuss issues in
compliance with relevant rules, make decisions cautiously, work diligently and perform their
responsibilities loyally.The Supervisory Committee has not discovered any behavior that violates
rules or damages the interests of the Company or shareholders.
    3. The Company strictly executes relevant accounting policies, systems and rules in its

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financial work, and completes accounting in time and accurately in accordance with relevant
accounting standards.The annual financial statements truly reflect the financial position and
operating results of the Company. The standard audit report, issued by Dalian Hualian Certified
Public Accountants without any qualified opinion, also recognizes this fact.
    4. In this report period, the Company acquired and sold assets at reasonable prices. No insider
trading is discovered. The related-party transactions comply with the principle of openness,
fairness and justness and actually protect the interests of the Company.
    5. In this report period, the Company did not use raised funds.




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IX. Important Issues
     (I) In this year, the Company had no major lawsuits or arbitrations.
     (II) Acquisitions and sales of assets
     In the report period, the Company, in accordance with the requirements of the development
strategy, executed a series of measures to optimize the allocation of resources. This has greatly
increased the land reserves of the Company, effectively improved the professional capability of the
Company as a real estate company, and preliminarily formed the nationawide strategic layout.These
acquisitions and sales of assets did not affect the stability of the management level of the Company.
This is good for the Company to steadily improve the sustainable development capability and will
produce positive effect on the financial position and operating results of the Company in the future.

    1. As per the approval of the 21st (interim) meeting of the 3rd BOD held on Feb. 2nd 2005, the
Company and Tianjin Yongcheng Investment Co., Ltd and Hainan Yangpu Taibang Agricultural
Development Co., Ltd co-invested in establishing Tianjin Yeland Real Estate Co., Ltd. Tianjin
Yeland Real Estate Co., Ltd is responsible for the real estate operations of the Company in Tianjin.
The current Yeland Shanshui Yiyuan Project of the Company is operated by Tianjin Yeland Real
Estate Co., Ltd.The registered capital of Tianjin Yeland is RMB20,000,000 Yuan, including the
RMB14,000,000 Yuan (70%) contributed by the Company, the RMB4,000,000 Yuan (20%) by
Tianjin Yongcheng Investment Co., Ltd and the RMB2,000,000 Yuan (10%) by Hainan Yangpu
Taibang Agricultural Development Co., Ltd.The registration formalities of Tianjin Yeland Real
Estate Co., Ltd were completed within the report period.The resolutions of this meeting were
announced on China Securities Journal and Securities Journal on Feb. 4, 2005.
    As per the approval of the interim meeting held by the 3rd BOD on June 20th 2005, the
Company executed the Program for Increasing Investment in Tianjin Yeland Real Estate Co., Ltd
and Arranging for Fiducial Financing.The Collective Investment Trust Fund Plan for Tianjin
Yeland Real Estate Co., Ltd was executed by Zhongtai Trust and Investment Co., Ltd on July 11 th
2005. The amount of actually raised funds was RMB140,000,000 Yuan, all of which were
invested in Tianjin Yeland Real Estate Co., Ltd. The capital increase was carried out in two steps:
On June 24th 2005, the capital of Tianjin Yeland Real Estate Co., Ltd was increased to
RMB50,000,000 Yuan and the capital contributed by the Company increased to RMB35,000,000
Yuan. On July 18th 2005, the capital of Tianjin Yeland Real Estate Co., Ltd was increased to

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RMB190,000,000 Yuan and the capital contributed by the Company was still RMB35,000,000
Yuan.Upon the expiration of this Trust Fund Plan, the Company and related parties will buy back
all the equity Zhongtai Trust and Investment Co., Ltd holds of Tianjin Yeland Real Estate Co.,
Ltd.Relevant information was announced on China Securities Journal and Securities Journal on
June 21st 2005 and July 20th 2005.
    In the report period, the impact of Tianjin Real Estate Co., Ltd on the profit of the Company
is RMB-3,960,000 Yuan, accounting for -8.72% of the total profit of the Company. The
establishment of Tianjin Yeland Real Estate Co., Ltd is helpful for the Company to carry out
operations in Tianjin, while the execution of the fiducial financing plan has provided the capital
necessary for the smooth development of the Yeland Shanshui Yiyuan Project.
     2. As per the approval of the 1st interim shareholders’ general meeting of 2005 held on Feb.
22nd 2005, Shenzhen Daoqin Investment Co., Ltd, a controlled subsidiary of the Company,
acquired 40% of the equity of Beijing Vanland Real Estate Development Co., Ltd at a price of
RMB40,000,000 Yuan; at the same time, Beijing Vanland Real Estate Development Co., Ltd
adjusted the land compensation fee under the Agreement on Cooperative Development for the
Vanland Mansion Project:     Increase the land compensation fee for Haidian Town Government by
RMB137,000,000 Yuan and the total compensation fee was changed to RMB697,000,000 Yuan.
The long-term investment difference of RMB11,968,500 Yuan resulting from equity acquisitions
needs to be amortized over a period of ten years. The impact of this on the total profit of this year
is RMB-770,000 Yuan; Phase I of Vanland Mansion developed by Beijing Vanland Real Estate
Development Co., Ltd started settlement in August 2005. The impact of the change resulting from
this transaction in the equity ratio held by the Company of Beijing Vanland Real Estate
Development Co., Ltd on the total profit of the Company for this year is RMB25, 930,000
Yuan.The aggregate impact of the above two items on the total profit of the Company for this year
is RMB25,160,000 Yuan, accounting for 55.41% of the total profit.As Phase II and Phase III of
Vanland Mansion move on smoothly, this project will become the main source of income for the
Company in 2006.The formalities relating to this transaction were completed within the report
period.
    Relevant information was announced on China Securities Journal and Securities Journal on
January 19th 2005 and Feb. 23rd 2005.
    3. As per the approval of the 23rd meeting of the 3rd BOD held on March 28th 2005, the
Company sold the Sanlitun 3.3 Project by means of transferring the equity held of Huadun
International Investment Co., Ltd.In the report period, six parties, including Beijing New Season
Investment Co., Ltd, paid RMB232,000,000 Yuan for the equity and creditor’s rights transferred
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by the Company and the remaining RMB36,000,000 Yuan was paid in January 2006.The
registration formalities for transferring the equity held by the Company of Huadun International
Investment Co., Ltd have been completed.
    This transaction realized RMB41,790,000 Yuan in earnings, including the RMB25,590,000
Yuan realized in 2005, accounting for 56.35% of the total profit of the year.
        Relevant informaiton was announced on China Securities Journal and Securities Journal on
March 30th 2005.
        4. As per the approval of the interim meeting held by the 3rd BOD on April 15th 2005,
Beijing Yeland Real Estate Development Co., Ltd, a subsidiary controlled by the Company, by
means of an agreement acquired the right for developing the Yeland Tianzhu Project. The
preparatory work of this project is underway. It is estimated to open this project in the second half
of 2006.
        The resolution of this meeting was announced on China Securities Journal and Securities
Journal on April 19, 2005.
    5. As per the approval of the 26th meeting of the 3rd BOD held on May 11th 2005, the
Company established Jiangsu Yeland Real Estate Co., Ltd. The registered capital of Jiangsu
Yeland Real Estate Co., Ltd is RMB20,000,000 Yuan, including the RMB12,000,000 Yuan
contributed by the Company and the RMB8,000,000 Yuan by Beijing Yeland Real Estate
Development Co., Ltd, a controlled subsidiary of the Company.Relevant registration formalities
have been completed. On Oct. 19th 2005, the Company, through auction, acquired the use right of
the residential land in Suzhou Industrial Park. The floor area of the buildings to be built on this lot
is RMB346,000m2. In the report period, the impact of Jiangsu Yeland on the profit of the
Company is RMB-78,000 Yuan, accounting for -0.17% of the total profit of the Company for this
year.
        The resolutions of this meeting were announced on China Securities Journal and Securities
Journal on March 13, 2005.The land acquisition was announced on China Securities Journal and
Securities Journal on Oct. 19th 2003.
        6. As per the approval of the interim meeting of the 3rd BOD held on July 18th 2005, the
Company participated in the capital increase of Beijing Chenfeng Real Estate Development Co.,
Ltd. After completion of the capital increase, the registered capital of Beijing Chenfeng Real
Estate Development Co., Ltd increased from RMB10,000,000 Yuan to RMB50,000,000 Yuan and
the capital contributed by the Company increased from RMB7,000,000 Yuan to RMB35,000,000
Yuan.The preparatory work of the Chenfeng Jiayuan Project under the name of Beijing Chenfeng
Real Estate Development Co., Ltd progressed slowly, so, in accordance with the need of the
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Company for optimizing the project portfolio, maintaining steady development and promoting the
formation of the strategic nationwide layout, and as per the approval of the 31st meeting of the 3rd
BOD held on Oct. 23rd 2005, the Company, at the same time when the Suzhou Project was
obtained, transferred all the equity it held of Beijing Chenfeng Real Estate Development Co.,
Ltd.The total profit and loss from this transaction was RMB5,380,000 Yuan, accounting for
11.85% of the total profit of the Company for the year.
     The resolutions of this meeting were announced on China Securities Journal and Securities
Journal on Oct. 25, 2005.
     7. As per the approval of the 30th meeting of the 3rd BOD was held on Sept. 14th 2005,
Beijing Yeland, a subsidiary controlled by the Company, acquired the Beijing Xibeiwang Project
(interim name) by means of an agreement.The preparatory work of this project is under way.
     Relevant informaiton was announced on China Securities Journal and Securities Journal on
Sept. 15th 2005.


     (III) Major related-party transactions
     In the report period, the Company did not undertake any major related-party transactions.


    (IV) Major contracts and their execution
    1. Major guarantees
    In the report period, the total amount of external guarantees provided by the Company and its
controlled subsidiaries was RMB43,230,000 Yuan (including guarantees provided for controlled
subsidiaries), accounting for 6.27% of the net assets of the Company.All the guarantees were
provided by the Company for the subsidiaries controlled by the Company.Details are as follows:
    1) As per the approval of the 25th meeting of the 3rd BOD held on April 18th 2005, the Company
provided joint and several guarantee for the 1-year bank loan of RMB26,000,000 Yuan of Beijing
Yeland Real Estate Development Co., Ltd. The ending balance was RMB23,230,000 Yuan.
    2) As per the resolution of the interim meeting of the 3rd BOD held on Sept. 5th 2004, the
Company provided joint and several guarantee for the bank loan of RMB20,000,000 Yuan of
Yunnan Kexin Education Investment Co., Ltd, a subsidiary indirectly controlled by the Company.
At the end of the report period, the ending balance was RMB20,000,000 Yuan.
    At the time when this guarantee was undertaken, the liabilities/assets of Beijing Yeland Real

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Estate Development Co., Ltd exceeded 70% and the liabilities/assets of Yunnan Kexin Education
Investment Co., Ltd did not exceed 70%.
       2. In the report period, except the guarantee contracts, contracts for acquisitions and sales of
assets and borrowings already disclosed in this report, the Company did not have any other major
contracts that should be disclosed.


       (V) Commitments
       1. In the report period, Tianjin Yeland Real Estate Co., Ltd executed the fiducial financing
plan.Details are as follows:      Zhongtai Trust and Investment Co., Ltd executed the Collective
Investment Trust Fund Plan and raised RMB140,000,000 Yuan. This money was invested in
Tianjin Yeland. The period of validity of this plan is 12 months. It is undertaken by the Company
that     , when the fiducial financing plan expires, the Company or/and the party designated by the
Company will accept all the equity held by Zhongtai Trust and Investment Co., Ltd of Tianjin
Yeland Real Estate Co., Ltd. The RMB80,000,000 Yuan of preference acceptance right in the
fiducial financing plan will be accepted at a premium of 9% over the original value.
       The purpose of this financing is to provide fund for the development of the Yeland Shanshui
Yiyuan Project.This capital increase not only ensures the smooth development of the Yeland
Shanshui Yiyuan Project, but also expands the financing channels. So it is helpful for the
Company to improve the capability of acquiring resources and realize the goal of everlasting
development.Upon the expiration of this fiducial financing plan, if the Company fails to accept
the equity held by Zhongtai Trust and Investment Co., Ltd of Tianjin Yeland Real Estate Co., Ltd,
the Company will lose the right of control over Tianjin Yeland Real Estate Development Co.,
Ltd.The Company will enhance the development of existing projects, maintain good cash flows
and take other measures to effectively control this risk.
       Relevant information was announced on China Securities Journal and Securities Journal on
June 21st 2005.
       2. Equity separation reform
       Since the equity separation reform was piloted in China in May 2005, the Company and main
holders of noncirculating shares have been paying close attention to the progress of the reform

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and have completed a lot of research work on basis of the condition of the Company. It is learned
by the Company that the main holders of noncirculating shares of the Company are willing to
actively promote the equity separation reform and hope that the reform can move the Company
forward into a new stage of development and that all the holders of noncirculating shares, holders
of circulating shares and the Company can benefit from this reform.The holders of noncirculating
shares and the Company are now working on the specific program for the equity separation
reform. It is estimated that the equity separation reform procedure will be initiated in June 2006.
    Within this report period, the Company or shareholders that hold 5% or more equity of the
Company did not make any commitment that could have major any impact on the operating
results and financial position of the Company nor did they make any such commitments during
the previous report period whose effect continued into this report period.
    (VI) This year the accounting firm hired by the Company is Dalian Hualian Certified Public
Accountants. The compensation is RMB300,000 Yuan.This accounting firm has provided the
Company with auditing services for consecutive nine years. It is the first time for Zang Desheng,
a certified public accountant, to sign the audit report for the annual report of the Company, and it
is the fifth year for Zhang Yaolin, a certified public accountant, to sign the audit report for the
annual report of the Company.
    (VII) During the report period, neither the Company nor directors nor superviors nor senior
management staff was punished by the regulatory body.
    (VIII) As per the resolution of the 20th meeting of the 3rd BOD and as per the approval of the
1st interim shareholders’ general meeting of 2005, the Chinese name of the Company was changed
from ―大连亿城集团股份有限公司‖ to ―亿城集团股份有限公司‖ and the English name of the
Company was changed to ―Yeland Group Co., Ltd‖.The registration formalities were completed
within the report period.
    (IX) As per the approval of the Annual Shareholders’ General Meeting of 2004, the Company
decided to appy for issuing additional public shares (A Share).Due to the equity separation reform
and other reasons, the application is now suspended.
    (X) According to the Measures for the Inspection of Listed Companies issued by China
Securities Regulatory Commission, from April 4th 2005 to April 20th 2005, Dalian Securities
Regulatory Bureau of China Securities Regulatory Commission conducted routine inspection of
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the Company and on July 4th 2005 issued the Notice for Correction Within Limited Time (DZJH
[2005] NO. 18, hereinafter referred to as ―the Notice‖). The Company attached great importance
to the Notice.In combination with the long-term development objective and with continuous and
standard operation as the goal, the Company worked out the correction program and specific
measures and quickly completed the corrections.Relevant information was announced on China
Securities Journal and Securities Journal on August 23rd 2005.

     XI. Other Important Issues

     1. As per the resolution of the interim meeting of the 3rd BOD held on April 15th 2004, four
new investors, including the Company, signed with Sichuan International Trust and Investment
Company (hereinafter referred to as ―SCITIC‖) the Agreement on investing in Sichuan
International Trust and Investment Co., Ltd (hereinafter referred to as ―the New SCITIC‖).
According to the Agreement, the Company participated in the restructuring of SCITIC and, after
successful completion of the restructuring and re-registration with China Banking Regulatory
Commission, invested RMB120,000,000 Yuan in the New SCITIC.Relevant information was
announced on China Securities Journal and Securities Journal on April 16th 2004.

     Through the efforts on all parties participating in the restructuring, SCITIC basically met the
requirements for re-registration. However, due to policy changes, the re-registration was not
completed according to the original plan. In 2005, China Banking Regulatory Commission
expressly announced the action to fully liquidate all trust companies that had not completed
re-registration formalities, so the main purpose of the above Agreement could not be realized and
the Agreement could no longer performed.Through negotiation and agreement between/among all
parties participating in this restructuring and after consent by Sichuan Provincial Government, the
Agreement was terminated.This transaction did not result in material losses or contingent
liabilities for the Company.

     2. Execution of the Proposal for Increasing 10% Equity Investment in Shenzhen Daoqin
approved at the 22nd meeting of the 3rd BOD held on March 16th 2005 was terminated.

     (XII) Except the above-mentioned major events, within this report period, the company did not
have any other major events as listed in Article 67 of the Securities Law of the People’s Republic of
China or in Article 17 of Implementation Rules (Provisional) on Disclosure of Information of
Companies Publicly Issuing Stocks or any issues judged by the BOD as major events.


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X. Financial Statement

 (I) Audit Report    NSZ [2006]81

TO: All shareholders’ of Yeland Group Co., Ltd



     We, entrusted by you, have audited your Parent-company and Consolidated Balance Sheet as
of Dec.31st 2005, Parent-company and Consolidated Profit and Profit Distribution Statement of
2005 and Parent-company and Consolidated Cash Flow Statement of 2005. It is the
responsibilit y of your management to compile these financial statements and our
responsibilit y is to express our opinion on these financial statements on basis of
the audit.
     We planned and executed the audit in accordance with the Independent
Auditing Standards of Chinese Certified Public Accountants so as to determine if
there are any major errors in the financial statements. This audit included
checking the evidences supporting the amounts and disclosures of financial
statements on basis of s ampling, evaluating the accounting policies adopted and
the major accounting estimates made by the management in compiling financial
statements, and evaluating the overall financial statements. We believe that our
audit has provided a reasonable basis for our opinion.
     In our opinion, the above financial statements compl y with the provisions of
the Accounting Standard s for Business Enterprises and China Accounting S ystem
for Business Enterprises, and in all material aspects full y present your financial
position as of Dec.31 s t 2005 and the operating results and cash flows of 2005.

Dalian Hualian Certified Public                China Certified Public Accountant:
Accountants                                    Zang Desheng
Dalian P. R. China                             China Certified Public Accountant:
                                                Zhang Yaolin
                                                                       March 27 t h 2006
 (II) Financial statements
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                                                       Balance Sheet
                                                         Dec. 31 st 2005

Compiled by: YELAND GROUP CO., LTD                                                                            Unit:     Yuan
                                     Not             Consolidated                                 Parent Company
Assets
                                      e    Ending Balance          Beginning Balance      Ending Balance      Beginning Balance
Current assets
Cash and cash equivalents            1            130,239,526.07        195,606,639.10        19,951,464.93            40,698,598.80
Short-term investment                2             60,000,000.00                              60,000,000.00
Notes receivable
Dividends receivable
Interest receivable
Accounts receivable                  3             18,324,922.09         66,953,813.09           996,110.17             2,957,749.47
Other accounts receivable            4            145,669,581.61         62,885,174.27        54,759,009.51            74,532,285.40
Prepayments                          5            355,235,582.45        108,993,717.00                                 10,000,000.00
Subsidies receivable
Inventory                            6          1,443,462,881.73       1,340,443,801.08        1,515,777.10             1,495,345.07
Prepaid expenses              7                      445,203.35             421,740.33           258,908.40              213,921.00
Long-term investment on bonds
due within one year
Other current assets
      Total current assets:                     2,153,377,697.30       1,775,304,884.87      137,481,270.11           129,897,872.74
Short-term investment
Long-term equity investment          8            120,523,580.64        106,859,686.85       539,707,291.30           498,581,718.34
Long-term investment on bonds                                                                100,000,000.00           240,000,000.00
      Total              long-term
                                                  120,523,580.64        106,859,686.85       639,707,291.30           738,581,718.34
investment
Fixed assets
Original cost of fixed assets        9-1          249,568,822.65        228,588,651.89       152,250,640.35           153,266,163.17
Less:                  Accumulated
                                     9-2           71,952,043.74         57,789,767.19        60,757,582.48            51,377,305.57
depreciation
      Fixed assets - net value       9-3          177,616,778.91        170,798,884.70        91,493,058.87           101,888,857.60
Less: Fixed assets depreciation
reserve
                                9-4
      Fixed assets - net value  9-5              177,616,778.91,        170,798,884.70        91,493,058.87           101,888,857.60
Project goods and materials
Projects in progress                 10             3,551,350.57           6,625,216.00        3,283,550.57
Liquidation of fixed assets
                                                                           177,424,100
      Total fixed assets:                         181,168,129.48                              94,776,609.44           101,888,857.60

Intangible and other assets
Intangible assets              11                   2,607,831.40           2,827,454.83        2,220,328.39             2,472,676.47
Long-term deferred and prepaid
expenses
                               12                   1,244,167.04           1,900,343.00          104,167.04              380,343.00

Other long-term assets
Total intangible and deferred
                                                    3,851,998.44           4,727,797.33        2,324,495.43             2,853,019.47
assets
Deferred tax
Deferred assets debits                          2,458,921,405.86       2,064,316,470.25      847,289,666.28           973,221,468.15

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     Total assets

Leg rep: Gong Xiaodong   CFO: Liu Yunfei   Head of Accounting Dept: Hou Gang




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                                                                                                        Text of Annual Report (2005)


                                                               Balance Sheet
                                                                   Dec. 31 st 2005
   Compiled by: YELAND GROUP CO., LTD                                                                                 Unit:    Yuan
Liabilities        and        equity Not                 Consolidated                                  Parent Company
interests                             e     Ending Balance           Beginning Balance        Ending Balance        Beginning Balance
Current liabilities
Short-term borrowings                  13        210,630,000.00             210,400,.000.00        132,400,000.00         80,400,000.00
Notes payable
Accounts payable                       14        129,190,942.45             342,760,170.67           2,588,414.02           2,529,815.40
Pre-collected accounts                 15        843,488,014.46             263,536,140.02           1,951,959.00           2,566,484.00
Wages payable                                         52,544.87                  16,445.93              29,168.26
Welfare payable                                     3,844,684.79               2,092,628.57             21,916.81             -65,003.33
Unpaid dividends                       16           3,734,591.01               4,362,590.28          3,734,591.01           4,362,590.28
Tax payable                            17         -13,658,486.33             24,962,961.73            178,440.39              159,319.31
Other accounts payable                 18          -1,068,607.83                147,699.37               2,973.28               3,376.48
Other payables                         19        157,714,108.71             110,890,668.55          34,682,602.51        198,556,393.56
Accrued expenses                 20                 1,305,000.00                269,999.99           1,305,000.00
Long-term liabilities due within
                                 21               40,000,000.00              70,340,000.00
one year
Other current liabilities
        Total current liabilities:              1,375,232,792.13           1,029,779,605.02        176,895,065.28        288,512,975.70
Long-term liabilities:
Long-term borrowings                   22        369,350,000.00             291,300,000.00                      -
Bonds payable
Long-term payables                                             -
Specific payables
Other long-term liabilities
        Total long-term liabilities:             369,350,000.00             291,300,000.00                      -                       -
Deferred tax
Deferred tax credit
        Total liabilities                       1,744,582,792.13           1,321,079,305.02        176,895,065.28        288,512,975.70
Minority interests                     23         24,835,709.85              67,073,817.35
Equity inerests
Share capital                          24        283,413,000.00             283,413,000.00         283,413,000.00        283,413,000.00
Less:    Investment returned
        Share capital - net                      283,413,000.00             283,413,000.00         283,413,000.00        283,413,000.00
Capital reserve                        25        102,289,214.35             102,289,214.35         102,289,214.35        102,289,214.35
Surplus reserve                 26                61,579,020.01              57,550,506.22          61,579,020.01         57,550,506.22
Including: Legal public welfare
fund
Unconfirmed investment losses 27                   -4,678,525,87
Undistributed profit                   28        246,900,195.38             232,910,627.32         250,113,366.64        241,455,771.28
Including: cash dividends                           8,502,390.00             14,170,650.00           8,502,390.00         14,170,650.00
       Total equity interests                    689,502,903.88             676,163,347.89         697,394,601.00        684,708.492.43
       Total liabilities and equity
                                                2,458,921,405.86           2,064,316,470.25        874,289,666.28        973,221,468.15
interests

   Leg rep: Gong Xiaodong                   CFO: Liu Yunfei                Head of Accounting Dept: Hou Gang



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                                         Profit and Profit Distribution Statement
                                                                   Y2005
   Compiled by: YELAND GROUP CO., LTD                                                                            Unit:     Yuan
                                                                     Consolidated                         Parent Company
                       Item                          Note
                                                            This Year         Previous Year         This Year        Previous Year
I. Primary operating income                          29     680,599,783.18    2,397,782,350.52       25,389,037.75       27,172,102.97
         Less:     Primary operating cost            30     499,533,604.97    1,985,834,624.04        4,984,238.40        6,521,278.72
                 Tax and associate charge            31      36,812,313.77      130,686,468.57        1,317,240.02        1,275,150.95
II. Primary operating profit                                144,254,046.44      381,261,257.91       19,087,559.33       19,375,673.30
       Plus:            Profit    from       other
operations
         Less:     Operating expense                         40,681,906.56          39,396,654.85    17,996,542.23       17,020,790.43
                 Management fee                              64,999,728.25          56,675,683.29    12,859,725.80       26,606,971.47
                 Financial expenses                  32       9,185,394.98          12,864,394.96     5,702,760.95        6,489,896,62
III. Operating profit                                        29,387,016.65      172,324,524.81      -17,471,469.65       -30,741,985.22
         Plus:     Investment income                 33      17,028,665.46          -7,653,172.29    44,125,572.96   201,521,547.64
                 Subsidy income                                          -          24,999,486.93
                 Non-operating income                34        503,694.83             535,816.17       500,000.00             5,880.00
         Less:     Non-operating expenditure 35               1,504,976.52            727,743.54       297,344.76           201,432.44
IV. Total profit                                             45,414,670.42      189,478,912.08       26,856,758.55   170,584,009.98
         Less:     Income tax                                19,963,672.74          33,271,690.80                -
                 Minority profit and loss                    -2,059,208.31          -5,831,644.44
         Plus:       Unconfirmed investment
                                                              4,678,502.87
losses
V. Net profit                                                32,188,731.86      162,038,865.42       26,856,758.55   170,584,009.98
        Plus:     Undistributed profit at
                                                            232,910,627.31      100,238,203.40      241,455,771.88   100,238,203.40
beginning of year
                  Other changeover in
VI. Distributable profit                                    265,099,359.18      262,277,068.82      268,312,530.43   270,822,213.38
          Less:      legal surplus reserve                    2,685,675.86          17,085,401.00     2,685,675.86       17,058,401.00
                  Legal public welfare fund                   1,342,837.93           8,529,200.50     1,342,837.93        8,529,200.50
                  Additional current capital
VII. Distributable profit for shareholders                  261,070.846.38      236,689,476.32      264,284,016.64   245,234,611.88
          Less:      Preferred stock dividends
payable
                  Other surplus reserves
                  Ordinary stock      dividends
                                                             14,170,650.00           3,778,840.00    14,170,650.00        3,778,840.00
payable
           Ordinary stock             dividends
converted to share capital
VIII. Undistributed profit                                  346,900,195.35      232,910,627.32      250,113,366.64   241,455,771.88

   Leg rep: Gong Xiaodong                                    CFO: Liu Yunfei                Head of Accounting Dept: Hou Gang




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                                                 Cash Flow Statement
                                                                 Y2005

Compiled by: YELAND GROUP CO., LTD                                                                        Unit:     Yuan
                                                                                                 Amount
                                   Item                                    Note
                                                                                  Consolidated            Parent Company
I. Cash flows from operating activities
     Cash received from sales of commodities and rendering of labor                 1,309,595,693.91           25,030,425.65
     Refund of taxes received
     Other cash received related to other operationing activities          36         375,773,054.86           51,304,220.26
          Subtotal of cash inflows                                                  1,685,368,748.77           76,334,645.91
     Cash paid for commodities and labor                                            1,399,467,581.81              5,087,370.33
     Cash paid to and for employees                                                    31,604,052.87              6,599,011.28
     Taxes paid                                                                       102,322,202.02              2,829,155.45
     Other cash paid related to other operationing activities              37         157,044,108.00          194,870,362.11
          Subtotal of cash outflows                                                 1,690,137,944.70          209,385,899.17
Net cash flow from operating activities                                                -4,769,195.93         -133,051,253.26
II. Cash flows from operating activities
     Cash received from recovery of investment                                         95,499,565.66          190.000,000.00
     Cash received from investment income                                                                                    -
     Cash received from inerest income from bonds
     Net cash recovered from disposal of fixed assets, intangible assets
                                                                                          599,500.00               204,000.00
and other long-term investments
     Other cash received related to other investment activities                                                              -
          Subtotal of cash inflows                                                     96,099,065.66          190,204,000.00
     Net cash paid for purchasing of fixed assets, intangible assets and
                                                                         38            21,814,267.72              3,697,544.75
other long-term investments
     Cash paid for investments                                                        135,000,000.00          107,000,000.00
     Including: Cash paid for purchasing of subsidiaries
     Other cash paid related to other investment activities                               367,470.95
          Subtotal of cash outflows                                                   157,181,738.67          110,697,544.75
Net cash flow from investment activities                                              -61,082,673.01           79,506,455.25
III. Cash flows from financing activities
     Cash received from attracting investment                                          12,000,000.00
     Cash received from borrowings                                                    546,500,000.00          170,500,000.00
     Other cash received related to other financing activities                                      -                        -
          Subtotal of cash inflows                                                    558,5000,00.00          170,500,000.00
     Cash paid for repayments of debts                                                498,560,000.00          118,500,000.00
     Cash paid for dividend or profit distribution or repayment of
                                                                                       59,455,244.09           19,202,335.86
interest
     Other cash paid related to other financing activities                                          -                        -
          Subtotal of cash outflows                                                   558,015,244.09          137,702,335.86
Net cash flow from financing activities                                                   484,755.91           32,797,664.14
IV. Effect of exchange rate change on cash                                                          -                        -
V. Net increase of cash and its equivalents                                           -65,367,113.03          -20,747,133.87
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Leg rep: Gong Xiaodong   CFO: Liu Yunfei   Head of Accounting Dept: Hou Gang




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Supplementary Informaiton:
                                                                             Not                         Amount
                                    Item
                                                                              e           Consolidated             Parent Company
1. Reconciliation of net income to cash flows of operating activities
   Net profit                                                                      32,188,731.86             26,856,758.55
   Plus:     Allocated assets deprecication reserve                                1,903,777.10              -1,087,637.27
         Minority profit and loss                                                  -2,059,208.31
           Depreciation of fixed assets                                            15,976,856.08             10,325,124.07
           Amortization of intangible assets                                       307,523.43                257,248.08
           Amortization of long-term deferred expenses                             656,175.96                276,157.96
           Decrease of deferred expenses (less:      Increase}                     -23,463.02                -44,987.40
        Increase of accrued expenses (less: decrease}                              1,035,000.10              1,305,000.00
        Loss (less gains) from disposal of fixed assets, intangible assets
                                                                                   414,736.61                269,594.76
and other long-term investments
        Loss from scrapping of fixed assets                                        257,250.31
         Financial expenses                                                        39,971,741.97             5,050,807.05
           Loss from investment (less gains)                                       -17,028,665.46            -44,125,572.96
           Deferred tax credit (less borrowings)                                   -                         -
           Decrease in inventories (less increase)                                 -106,232,251.89           -20,432.03
           Decrease in operating receivables (less increase)                       -341,327,880.83           32,822,527.46
         Increase in operating payables (less decrease)                            373,869,006.03            -164,935,857.53
           Unconfirmed investment losses                                           -4,678,525.87
           Others
   Net cash flow from operating activities                                         -4,769,195.93             -133,051,253.26


2. Investment and financing activities not involing cash receipts and
payments
        Debts converted to capital                                                                   -                            -
           Convertible corporate bonds due within one year                                           -                            -
         Fixes assests leased in through financing                                                   -                            -




3.. Net increase of cash and its equivalents


   Ending balance of cash                                                          130,239,526.07            19,951,464.93
   Less:     Beginning balance of cash                                             195,606,639.10            40,698,598.80
   Plus: Ending balance of cash equivalents
   Less:     Beginning balance of cash equivalents
   Net increase of cash and its equivalents                                        -65,367,113.03            -20,747,133.87



Leg rep: Gong Xiaodong                                      CFO: Liu Yunfei                Head of Accounting Dept: Hou Gang




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              Appendix to Profit and Profit Distribution Statement
Compiled by:       YELAND GROUP CO., LTD                          Y2005


                                                 Yield of net assets (%)          Earning per share (Yuan)
          Profit of report period
                                                                  Weighted          Fully          Weighted
                                              Fully diluted       average          diluted         average

 Primary operating profit                             20.92             21.05            0.51             0.51

 Operating profit                                      4.26               4.29           0.10             0.10

 Net profit                                            4.67               4.70           0.11             0.11
 Net profit after noncurrent profit
 & loss                                                0.26               0.26           0.01             0.01




                  Profit Statement (Supplementary Information)
Compiled by:       YELAND GROUP CO., LTD                          Y2005                      Unit:     Yuan

                                                       This period                Same period of previous year
                   Item
                                              Consolidated      Parent Company    Consolidated     Parent Company

  1. Gains from sales and disposal of
                                                30,968,487.26     20,168,478.12      838,050.44
      departments or invested units

  2. Losses from natural disasters
  3. Total Increase (or decrease) of profit
      due to changes in accounting
      policies
  4. Total Increase (or decrease) of profit
      due to changes in accounting                                                -13,732,775.84     -15,775,302.89
      estimates
  5. Losses from restructuring of debts

  6. Others




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(III) Notes to financial statements

1. Company profile

      Yeland Group Co., Ltd (hereinafter referred to as ―the Company‖), whose original name

was Dalian Bohai Hotel (Group) Co., Ltd and then Dalian Yeland Group Co., Ltd, was officially

registered and founded on May 27th 1993 by Dalian Bohai (Group) Co., Ltd, Dalian Huaxin Trust

and Investment Co., Ltd and Dalian Rixing Industrial Co., Ltd by means of raising money from

targeted sources as per the Doc. No.(1993)62 issued by Dalian System Reform Commission. In

1996, after approval by China Securities Regulatory Commission, the Company went public and

changed from a company raising money from targeted sources to a public company. Primary

operations include real estate development, sales of commercial housing, self-owned property

management, intelligence education development, basic education, vocational education, guest

house rental, dining and drinking, tourism, amusement, etc.

(II) Main accounting policies

     1. Accounting policies: Accounting Standard for Business Enterprises, Accounting System

for Business Enterprises and its supplementary provisions

     2. Fiscal year:      from January 1st to Dec.31st (Gregorian calendar).

     3. Recording currency: RMB

     4. Recording principle and valuation basis:     accrual basis as recording basis and actual cost

as valuation principle.

     5. Accounting method for short-term investments

     For acquisitions, use the actual investment cost for valuation. All the dividends, interests and

other gains and unconfirmed investment income received during the report period are used to

offset investment cost until disposal of short-term investments or investment income is confirmed

when investment is due and recovered.
      Allocation of provisions for impairment of short-term investments: At the end of year,
allocate the provision for impairment of a single short-term investment on basis of the difference
by which the market price is lower than the cost.
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      Entrusted borrowings shall be accounted as short-term investments.At the end of the period,

withdraw the accrued interest according to the interest rates specified for entrusted borrowings

and enter it as profit and loss statement. If the interest withdrawn by the Company on time cannot

be recovered, stop withdrawing interest and carry back the interest previously withdrawn.

      Allocation of provisions for impairment of entrusted borrowings:      At the end of year, if it is

indicated that the principal of the entrusted borrowings is higher than the amount recoverable,

allocate the provisions for impairment of entrusted borrowings on basis of the difference and enter

it as the profit and loss statement of that period.

      6. Accounting method of bad debts

      Standard for confirming bad debts: If the debtor goes bankrupt or dies and the debt still

cannot be recovered after liquidation of properties or estates or if the debtor fails to perform its

obligation of repaying debt for a period of 3 years after the due date and there is definite evidence

showing that the debt cannot be recovered or there is little possibility of recovering it, report it to

the BOD for approval as bad debt and write off the allocated provisions for bad debts.

      Use the allowance method to account losses on bad debts. Use the age analysis method to

allocate provisions for bad debts. The specified ratio of allocation is:   If the age of the accounts

is within the fisical year, allocate 3% of the balance of receivables (including accounts receivables

and other receivables) as the provisions; if the age of the accounts is within 1-2 years, allocate

10% of the balance of receivables; if the age is within 2-3 years, allocate 20% of the balance of

receivables; if the age is within 3-4 years, allocate 30% of the balance of receivables; if the age is

within 4-5 years, allocate 50% of the balance of receivables; if the age is 5 years or longer,

allocate 100% of the balance of receivables.

      7. Accounting method of inventories:

    (1) Classifiction of inventories:    Raw materials, materials and goods, low-value and easily

consumable goods, commodity stocks, completed products, products in development, leased

products, proposed developments, turnover houses, etc.

    (2) Valuation method of acquisitions and send-outs Valuation of inventories shall be made on

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the actual costs of acquiring them. Use the ―first in first out‖ method when dispatching materials,

goods and commodity stocks. When sending out a completed development product, use the

individual identification method to determine its actual cost. For inventory stocks acquired from

debtor for offsetting liabilities during debt restructuring, use the book value of creditor’s rights

receivable as the basis for determining its value in the account. For inventory stocks obtained

from nonmonetary transactions, use the book value of the exchanged-in assets as the basis for

determining its value in the account.

   (3) Accounting method of land for development:           For pure land development projects,

separately set the land development breakdowns in the item of development cost to account all the

expenses accrued during the process of land development, including direct or indirect expenses,

e.g. compensations for land acquisitions and removals, prices for acquiring land use rights,

payments for leased land use rights, transfer costs, early-stage engineering costs, etc, and

calculate the land development cost for each square meter of land and, on basis of the usage and

area of the land, calculate and carry them forward to development products – other projects. For

projects with real estate development: determine the entities responsible for the expenses, usually

amortize the commercial housing cost on basis of the actually occupied area.

   (4) Accounting method of expenses of matching public facilities: Matching public facilities

constructed together with the development of commercial residential communities, including

matching public facilities approved by the land and resources administration authorities, including

nonoperating cultural, eduction, health and administration facilities, e.g. roads in residential

communities, shops, banks, post offices, police stations, firefighting facilities, water towers, etc

within the residential communities, shall be accounted on basis of the development costs to

determine the construction expenses. Costs of public facilities developed concurrently with the

residential communities shall be entered as the development costs of the current period, while for

costs of public facilities not developed concurrently with the residential communities, the costs of

public facilities that have not acrrued shall be withdrawn in advance and entered in the

development cost item to be paid in future subsequent periods.

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   (5) Amortization of leased developed products and turnover houses: For a leased development

product, use the straight-line method to calculate the amortized amount per month on basis of the

actual cost of the land and the house used for leasing and on basis of the estimated life of the

fixed assets – house/building. The calculated amortized amount shall be entered as the operating

expense of the leased development product.If the usage of the leased develop product is changed

and used as commercial housing for sales, carry forward the cost on basis of the value of the

leased house after amortization. For a turnover house, amortize it on basis of the actual cost of the

house used for relocated residents and on basis of the estimated life of the fixed assets – the house.

If the usage of the turnover house is changed as commercial housing for sales, carry forward the

operating cost on basis of the value of the turnover house after amortization.

   (6) For low-value and easily consumable goods, use the 5-5 method of amortization.

   (7) Allocation of provisions for impairment of inventories:        After the ending of the year,

allocate the provisions for impairment of inventories on basis of the difference between the cost

and the net realizable value of inventories.If the value of inventories for which the provisions for

impairment is already allocated is restored, carry it back within the originally allocated

provisions.The net realizable value of a real estate development product means the value of the

estimated sales price of a single development product on the date of the balance sheet less the

estimated completed cost and the estimated necessary sales expenses.

     8. Cash equivalents: Short-term and liquid investments easy to convert into known amounts

of cash with little risk of appreciation or depreciation.

     9. Accounting method for long-term investments

    (1) Long-term equity investment:       The actual investment cost is the price actually paid when

investing or the determined faire value less the due but not collected dividends in cash.For any

investment that accounts for less than 20% of the total voting capital of the invested unit and does

not have material impact, use the cost accounting method; for any investment that accounts for 20%

to 50% of the total voting capital of the invested unit or any invesetment that does not reach 20% of

the total voting capital of the invested unit but has material impact, use the equity method; for any

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investment that accounts for over 50% of the total voting capital of the invested unit or any

investment that does not exceed 50% of the total voting voting capital of the invested unit but has

the actual control over the invested unit, use the equity method for accounting and consolidating the

financial statement.When the equity method method is used, if the actual cost of a long-term equity

investment held by the Company is higher than its share of the equity interests of the invested unit,

the difference is listed as the long-term investment equity difference and is equally amortized within

the period specified in the contract or agreement and, where the contract or agreement does not

specify a period, within 10 years; if the actual cost of a long-term equity investment held by the

Company is lower than its share of the equity interests of the invested unit, the difference is entered

into the capital reserve.

    (2) Long-term investment on bonds:

    ① Bond investment Record the actual payments less the taxes, handling charges and other

additional charges and the due but not collected interest as the actual cost. The difference between

the actual cost and the face value of the bond as the premium or discount and use the straight-line

method to amortize it within the duration of the bond; interest shall be accrued on the bond. The

balance after deducting the amortized amount of the bond investment premium (or discount) from

the accrued interest is recorded as the investment income of the current period. When disposing a

bond investment, use the difference between the actual acquiring price and the book value as the

investment income of the current period.

    ②Other bond investments:       Account them as per the actually paid prices. Accrued interest

   shall be recorded in the profit and loss statement of the current period.

   (3) Provisions for impairment of long-term investments: If the amount recoverable by the

  Company is lower than the book value due to the fact that the market value of the invested unit

  continuously drops or the business of the invested unit worsens or to any othe reason and the

  lowered value cannot be restored within the foreseable future, the difference by which the

  recoverable amount is lower than the book value of the long-term investment shall be used as the

  provision for impairment of the long-term investment.The estimated loss on the impairment of the

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  long-term investment shall be recorded in the profit and loss statement of the current period.

     10. Fixed assets and depreciation A fixed asset means any asset with a service life of at least

one year and with a unit value of RMB2,000 Yuan or more, e.g. house, building, means of

transportation, electronic equipment and any other equipment, utensil, tool, etc.Fixed assets shall

be valued at actual costs.

      Use the average life method to calculate the depreciation of fixed assets. Withdraw 5% of

the original value as the residual value. The periods of depreciation for various kinds of fixed

assets are as follows:
      Category               Period of           Yearly depreciation
                             depreciation
      Operation-used         40 years           2.37%
      House
      Building                20 years            4.75%
      Heat & power           20 years            4.75%
      Supply equip.
      Kitchen ware           10 years           9.5%
      Electric equip.        5 years            19%
      Means of               8 years            11.875%
      transportation
      Dec. expense of 10 years                 10%
      operation-used
      houses
      Other equip.           5 years           19%

      At the end of the period, calculate as per which of the book value of a single fixed asset and

the recoverable amount is lower. For the difference by which the recoverable amount is lower

than the book value, allocate the provision for impairment of fixed assets and record it in the

profit and loss statement of the current period.

     11. Projects in progress:         For a project in progress, determine its cost by actual expenditure.

From the date on which it enters the preset usable status, estimate the value on basis of the project
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budget, construction price or actual cost and convert it into a fixed asset as per the estimated value.

After final settlement, reconcile the book value.

     At the end of the period, comprehensively check all the projects in progress. Allocate

provisions for impairment of projects in progress when:
     (1) C onst ruct i on of t he proj ect has b een suspended for a l ong t i m e and i t i s
not ex pect ed t o be r esum ed wi t hi n t he nex t t hree ye ars.
     (2) The project in construction is backward in respect of either performance or technology and

     the economic benefit is can generate for the Company is quite uncertain.

     (3) Any other condition that suffices to prove that the project in progress has already been

    impaired.

     12. Intangible assets

     (1) Valuation of intangible assets

     A. Purchased intangible assets shall be valuated at the actually paid price.

     B. Intangible assets input by investors shall be valuated as per the values confirmed by

investors.

     C. Intangible assets developed by and acquired the Company through legal procedures value

shall be valuated according to the registgration fees, lawyers’ fees and other fees for acquisition.

     (2) Amortization of intangible assets: An intangible asset shall be equally amortized within the

period of benefit or validity as specified in the contract or law or rules from the month it is acquired;

where the contract or law or rules does not expressly specify the period of benefit or validity, it shall

be equally amortized within a period not exceeding 10 years.

     (3) If the Company purchases the land use right or pays the land assignment price to acquire

the land use right, before the land is developed or used to build a self-used project, the land use

right shall be accounted as an intangible asset and be amortized in instalments as specified. When

the Company uses the land to build a self-used project, all the book alue of the land use right shall

be converted to the cost of a project in progress.

    (4) At the end of the period, calculate as per which of the book value of a single intangible asset

   and the recoverable amount is lower. For the difference by which the recoverable amount is

Page 74                                                                               Respect Creates Value
                                                                            Text of Annual Report (2005)



   lower than the book value, allocate the provision for impairment of the intangible asset and

   record it in the profit and loss statement of the current period.

    (5) Intangible assets of the Company include land use rights, residential house use rights, etc.

   Land use rights are amortized over a period of 20 years and house use rights over a period of 10

   years.

     13. Long-term deferred expenses and amortization:

     Long-term deferred expenses shall be accounted as per the actually accrued amounts and be

equally amortized over the period of benefit of the project.For expenses accrued during the

preparatory stage (excluding purchased fixed assets), first enter them in the long-term deferred

expenses and, in the month when the production begins, enter them in lump sum into the profit

and loss of the period when the production begins.

     14. Accounting method of borrowing costs

     14. For the borrowing cost accrued from borrowings specifically for purchasing /

construction of a fixed asset, if it is accrued before the purchased / constructed fixed asset reaches

the predetermined usable status, record it as the cost of the purchased / constructed fixed asset,

and, if it is accrued after the purchased / constructed fixed asset reaches the predetermined usable

status, record it as the financial expense.

     For the borrowing cost accrued for a real estate development project, the interest can be

capitalized before the real estate project is completed and capitalization of the interest shall be

stopped when the real estate project is completed. If the real estate project development is

abnormally interrupted and the interruption has lasted for a period over 3 months, stop

capitalization of the interest and determine it as the expense of the current period until the

development is re-started. Any other borrowing cost shall be record as a financial expense for the

period in which it is accrued.

     15. Accounting method of maintenance fund: According to relevant governmental rules, the

maintenance fund, charged at 2%-3% of the sales price of the apartment from the apartment buyer

for maintenance of pulic facilities of residential communities shall be recorded as ―collection‖

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when received and, when the property owner signs the contract and handles the transfer

formalities, be turned in to the real estate administration authority.

      16. Accounting method of quality warranty reserve:          Usually 5% of the project price is

allocated as the quality warranty reserve, which will be paid to the constructor ater the project is

accepted and qualified and does not have any quality problems within the agreed period of quality

warranty.

      17. Principle of income confirmation:

      When the economic benefits flow into the Company and relevant incomes and costs can be

reliably measured, determine incomes on basis of the following methods:

      (1) Income from sales of commodities:       Confirm the realization of confirmed sales income

when the main risks and rewards associated with the sold commodity have been transferred to the

buyer, the Company no longer exercises the right of management or control over the commodity,

the economic benefits associated with the transaction can flow into the Company, and the costs

associated with the sale of the commodity can be reliably measured.

      (2) Income from real estate sales:     Confirm the realization of sales income after the real

estate development is completed and accepted and the sales contract is signed, and the Company

has received the certificate of payment (usually received 20% or more of the sales contract price

as the earnest money or payment arrangement for the remaining apartment price already

confirmed) made by the buyer for the real estate delivered in accordance with the provisions of

the sales contract.

      (3) Sales income received in instalments:      Confirm the income as per the separate date of

collection as agreed in the contract.If the money is collected before the agreed date of collection,

confirm the realization of the income on the actual date of collection.

      (4) Rental income from leasing operations:      For leased property, confirm the realization of

house rental income according to the rental payment date and amount specified in the contract or

agreement signed by and between the Company and the lessee.

      (5) Income from property management:         Confirm the realization of property management

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income when the property management services have been provided, the economic benefits

relating to property management services can flow into the Company and the costs associated

with the property management services can be reliably measured.

       18. Income tax:         Use the accrued tax method to account the income tax.

       19. Distribution of dividends:             Cash dividends shall be recorded in the profit distribution

sheet on the date it is announced to distribute cash dividends.For cash dividends suggested or

approved between the period after the date of the balance sheet and the date on which the

financial statement is approved, list them in the balance sheet as the owners’ equity.

       20. Method of preparing consolidated financial statement: As per the provisions of the

―Interim Regulations on Consolidated Financial Statement‖ and the Reply for Request

Concerning Scope of Consolidation for Consolidated Financial Statement‖ and other relevant

regulations, the Company consolidates the financial statements of subsidiaries (the Company

holds over 50% of the equity capital of each of these subsidiaries). When consolidating the

financial statements, all the major internal transactions and captital transfers of the Company are

mutually offset. During the process of consolidation, the parent company and subsidiaries adopt

different accounting systems and whether or not the difference resulting therefrom shall be

reconciled shall be determined on basis of its materiality.

(III) Taxes:

      The main tax categories and tax rates applied to the Company are listed below:



              Tax                                Basis of taxation                                Tax rate

 Corporate income tax*          Taxable income                             15%—33%

 Sales tax                      Income from real estate sales, etc         5%

 Urban       maintenance   &    Sales tax                                  According to the tax rates specified by the local

 construction tax                                                          policies of the places where the Company and its

                                                                           subsidiaries are located




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 Additional      education      Sales tax                                          According to the tax rates specified by the local

 expenses                                                                          policies of the places where the Company and its

                                                                                   subsidiaries are located

 Land VAT                       Income from real estate sales – less project       30%-60% as per the progressive tax rate

                                amount

 Deed tax                       Sales/consignment price of land use right          3%—5%

      *The income tax rate of both Beijing Yeland Real Estate Development Co., Ltd and Beijing

Daoqin Cultural Development Co., Ltd (both are subsidiaries of the Company) is 33%. As per

approval by the taxation authorities, the taxable income of Beijing Yeland Real Estate Development

Co., Ltd is 10% of its sales income and the taxable income of Beijing Daoqin Culture Development

Co., Ltd is 11% of its income. The income tax rate of Shenzhen Daoqin Investment Co., Ltd, a

subsidiary of the Company, is 15%. The tax rate of the Company and other subsidiaries is 33%.

(IV) Controlled subsidiaries and joint ventures

          1. Controlled subsidiaries and scope of consolidation:

                                                                                         Unit:     RMB10,000 Yuan
                        Place of       Legal                        Equity owned                                          Consoli
   Name of invested                              Registered
                        registrati   represent                                               Scope of business            dated or
        unit                                      capital
                           on          ative                                                                                not
                                                                 Direct     Indirect
                                                                                        Real estate development,
 Beijing Yeland Real                                                                    sales     of commercial
 Estate Development      Beijing     E Junyu        10000         79%        21%        residential      housing,          YES
 Co., Ltd                                                                               management of self-owned
                                                                                        properties
 Dalian        Yeland
 Education Investment    Dalian      Li Qiang       6000        83.33%      16.67%      Education investment               YES
 Co., Ltd
                                                                                        Real estate development,
 Beijing Vanland Real                                                                   sales     of commercial
 Estate Development      Beijing     E Junyu        10000         60%        40%        residential      housing,          YES
 Co., Ltd                                                                               management of self-owned
                                                                                        properties
                                                                                        Investment in establishing
                                                                                        industrial     enterprises,
                                                                                        information & consulting
 Shenzhen     Daoqin    Shenzhe       Zheng
                                                    4000                     90%        services,         computer         YES
 Investment Co., Ltd       n          Yang
                                                                                        software,   hardware     &
                                                                                        network         technology
                                                                                        developments

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                                                                         Real estate development
 Beijing     Sunlight
                                                                         and sales, real estate
 Seasons Garden Real               Liu
                        Beijing              5000                100%    information   consulting,     YES
 Estate Development               Yunfei
                                                                         management of self-owned
 Co., Ltd
                                                                         properties
 Beijing      Yeland
 Property               Beijing   Jing Yan    300                100%    Property management           YES
 Management Co., Ltd
 Beijing      Daoqin
                                   Zheng
 Culture Development    Beijing               100                85%     Education investment          YES
                                    Liqi
 Co., Ltd
                                                                             Investment in basic
 Yunnan         Kexin
                                   Chen                                     education, continuing
 Education Investment   Kunming              5000                71%                                   YES
                                  Yunhai                                    education, vocational
 Co., Ltd
                                                                                education, etc
 Dalian      Sunlight                                                    Real estate development
 Seasons Real Estate               Liu                                   and sales, real estate
                         Dalian              1000                100%                                  YES
 Development     Co.,             Yunfei                                 information    consulting,
 Ltd                                                                     property management, etc.
                                                                         Real estate development
 Jiangsu Yeland Real              Zhang
                        Suzhou               2000      60%       40%     and operation, self-owned     YES
 Estate Co., Ltd                  Liping
                                                                         property management

          2. Changes in subsidiaries in the scope of consolidation for this period and the reasons:

     A. Jiangsu Yeland Real Estate Co., Ltd, a subsidiary of the Company, is newly included in

the consolidation of this period.

     In this period, pursuant to the resolution of the BOD, the Company and its subsidiary,

Beijing Yeland Real Estate Development Co., Ltd, co-invested in establishing Jiangsu Yeland

Real Estate Co., Ltd. The Company holds 60% of the total equity and Beijing Yeland Real Estate

Development Co., Ltd holds 40% of the total equity.

            B. Huadun International Investment Co., Ltd, Beijing Sanlitun Xintiandi Real Estate Co.,

Ltd and Beijing Chenfeng Real Estate Development Co., Ltd are excluded from the consolidation

of this period. Beijing Sanlitun Xintiandi Real Estate Co., Ltd is a controlled subsidiary of

Huadun International Investment Co., Ltd.

      As per the BOD meeting held on March 28th 2005, this period the Company and its

subsidiary, Beijing Yeland Real Estate Development Co., Ltd transferred the equity held by them

(80% by the former and 5% by the latter) of Huadun International Investment Co., Ltd to six

investors, including Beijing New Season Investment Co., Ltd. As of March 31st 2005, the

Company had collected over 50% of the equity transfer price. According to the materiality
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principle, this period used March 31st 2005 as the equity sales date and only consolidated the

profit statements and cash flow statements of Huadun International Investment Co., Ltd and

Beijing Sanlitun Xintiandi Real Estate Co., Ltd from January 2005 to March 2005.

     As per the BOD meeting held on Oct. 23rd 2005, this period the Company transferred the

70% of the equity held by Beijing Yeland Real Estate Development Co., Ltd, a subsidiary of the

Company, of Beijing Chenfeng Real Estate Development Co., Ltd to Tianjin Yitong Industrial

Investment Co., Ltd. As of Oct. 31st 2005, over 50% of the equity transfer price had been

collected. According to the materiality principle, this period used Oct. 31st 2005 as the equity

sales date and only consolidated the profit statements and cash flow statement of Beijing

Chenfeng Real Estate Development Co., Ltd from January to Oct. 2005.

          3. Subsidiaries in which the equities held by the Company changed and reasons:

     As per the approval of the 1st interim shareholders’ general meeting of 2005, Shenzhen

Daoqin Investment Co., Ltd, a subsidiary of the Company, acquired 40% of the equity of Beijing

Vanland Real Estate Development Co., Ltd, a subsidiary of Beijing Wanliu Real Estate (Group)

Co., Ltd, at a price of RMB40,000,000 Yuan. So, the equity held by the Company of Beijing

Vanland Real Estate Development Co., Ltd increased from the 60% (direct) to 60% (direct) plus

40% (indirect).

     For the accounting data disclosed below, except where specifically noted, ―beginning‖ means

January 1st 2005, ―ending‖ means Dec. 31st 2005, and ―this period‖ means from January 1st 2005

to Dec. 31st 2005.

(V) Notes to Consolidated Financial Statements:

          1. Cash and cash equivalents


                 Item                       Ending balance                Beginning balance
     Cash                                              431,875.34                          726,298.86
    Bank deposits                                  119,206,132.87                   184,475,174.65
    Other cash and            cash
                                                    10,601,517.86                     10,405,165.59
 equivalents
             Total                                 130,239,526.07                   195,606,639.10

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     Note:        Of "Other cash and cash equivalents‖, the earnest money is RMB10,000,000.00

Yuan and others are credit card deposits.

          2. Short-term investments


                                    Ending Balance                               Beginning Balance
           Item               Amount of      Provision for                 Amount of          Provision for
                              investment      impairment                   investment          impairment
 Stock investment
 Bond investment
 Other investments           60,000,000.00
       Total                 60,000,000.00
             Note:    This investment balance means the benefit right of sharing the remaining trust

     interests under the trust due to full subscription of the secondary benefit right of

     RMB60,000,000 Yuan in the collective investment trust fund plan executed by Zhongtai

     Trust and Investment Co., Ltd as per the Collective Investment Trust Fund Plan for Tianjin

     Real Estate Co., Ltd signed between the Company and Zhongtai Trust and and Investment

     Co., Ltd on June 22nd 2005.

          3. Accounts receivable



                                  Ending balance                                      Beginning balance

                                            Provison for bad debts                              Provison for bad debts
    Age                           Ratio                                                Ratio
                                                           Allocati     Amount                                 Allocati
                   Amount
                                                              on                                                  on
                                   (%)       Amount         ratio                      (%)       Amount         ratio
                                                             (%)                                                 (%)
 Within 1
                  11,117,498.26    46.17%     333,524.95        3%    63,595,651.91    88.69%   1,907,869.56        3%
   year

 1-2 years         5,355,381.42    22.24%     535,538.14       10%     3,047,724.00     4.25%     304,772.40       10%

 2-3 years         2,604,700.00    10.82%     520,940.00       20%      902,636.43      1.26%     180,527.29       20%

  Over 3
                   5,000,176.43    20.77%   4,362,830.93   30%-100%    4,162,298.00     5.80%   2,361,328.00   30%-100%
   years

   Total          24,077,756.11     100%    5,752,834.02              71,708,310.34     100%    4,754,497.25


     Note:        (1) No shareholder holding 5% or more of the shares of the Company has any

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arrears payable to the Company.

                (2) The ending balance of accounts receivable is 66.42% less than the beginning

     balance mainly due to the recovery of receivables from real estate operations in this period.

            As of Dec.31st 2005, the total amount of accounts receivable from the top five units

(individuals) is as follows:
                 Item                                  Ending                                   Beginning

               Amount                              12,206,278.00                           24,426,549.00

   Percentage of total amount
                                                       50.70%                                    34.06%
     of accounts receivable

          4. Other accounts receivable



                                 Ending balance                                       Beginning balance

                                           Provison for bad debts                                 Provison for bad debts
    Age                          Ratio                                                  Ratio
                  Amount                                   Ratio      Amount                                       Ratio
                                  (%)        Amount                                     (%)         Amount
                                                            (%)                                                     (%)

 Within 1
                126,706,154.85    78.09%    3,801,184.64        3%    42,347,128.81     53.16%     1,270,413.87         3%
   year

 1-2 years       16,467,957.47    10.15%    1,646,795.75      10%     12,476,382.80     15.66%     1,247,638.28       10%


 2-3 years        5,820,916.17    3.59%     1,164,183.23      20%      6,231,218.45      7.82%     1,246,243.69       20%


  Over 3
                 13,265,004.21    8.17%     9,978,287.47   30%-100%   18,604,266.97     23.36%    13,009,526.92   30%-100%
   years

   Total        162,260,032.70     100%    16,590,451.09              79,658,997.03      100%     16,773,822.76


     Note: (1) No shareholder holding 5% or more of the shares of the Company has any arrears

payable to the Company.

              (2) The ending balance of other accounts receivable increased by 104% over the

beginning balance mainly due to the change in the scope of consolidation for this period.

      As of Dec.31st 2005, the total amount of other accounts receivable from the top five units
Page 82                                                                                              Respect Creates Value
                                                                                 Text of Annual Report (2005)



(individuals) is as follows:
                   Item                            Ending                              Beginning

                  Amount                        116,148,483.58                        28,878,746.08

 Percentage of total amount of
                                                   71.58%                                36.25%
   other accounts receivable

          5. Prepayments

    Prepayments mainly include prepaid land prices, project prices, design fees, etc.
          Age              Ending Balance        Ratio (%)        Beginning Balance          Ratio (%)

   Within 1 year             354,641,582.45       99.84%              108,643,717.00          99.68%

     1-2 years                   294,000.00       0.08%                  350,000.00            0.32%

      2-3years                   300,000.00        0.08%

    Over 3 years

          Total              355,235,582.45       100%                108,993,717.00           100%

      Note:        (1) No prepayments were made to any shareholder holding 5% or more of the shares

of the Company.

                   (2) The ending balance of prepayments increased by 226% over the beginning

balance mainly due to increase in prepaid land prices for the real estate projects in this period.

          6. Inventories

                                      Ending balance                           Beginning balance

            Item                Amount            Provision for           Amount              Provision for

                                                   impairment                                  impairment

 Completed                     549,687,245.52                            494,690,605.20

 development

 projects

 Development                   840,538,692.52                            772,603,401.63

 projects in progress




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                                                                                  Text of Annual Report (2005)



 Proposed             land         50,550,000.00                         70,892,366.00

 developments

 Raw materials                        667,959.87                            449,811.20

 Commodities            in             40,176.22                                42,805.16

 stock

 Low-value            and            1,885,972.59                         1,632,593.81

 easily     consumable

 goods

 Materials                             92,835.01                            132,218.08

           Total                 1,443,462,881.73                     1,340,443,801.08

         Including:

          (1) Completed development projects



                                                                                                            Provi

                       Time of                                                                               sion
                                     Beginning
 Project Name         completio                      Increase        Decrease         Ending balance         for
                                      balance
                             n                                                                              impai

                                                                                                            rment

 Phase     I     of    2003.09       77,930,711.33                    1,255,721.42          76,674,989.91

 Bishuiyuntian

 Phase     II    of                 166,919,417.88                   20,413,047.31      146,506,370.57
                       2004.05
 Bishuiyuntian

 Townhouse             2004.03      114,608,309.76    1,257,468.39   44,286,161.83          71,579,616.32

 Wanliu    Yeland                   135,232,166.23                    2,519,672.35      132,712,493.88
                       2004.10
 Mansion




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                                                                                            Text of Annual Report (2005)



 Phase      I     of                                         545,694,440.00    423,480,665.16     122,213,774.84

 Vanland                2005.08

 Mansion

      Total                            494,690,605.20        546,951,908.39    491,955,268.07     549,687,245.52



         (2) Development projects in progress
                         In progress
                                                                                                                     Provi
                          at end of    Estimated        In progress at end
                                                                                                                      sion
                            period      time of              of period         Beginning
   Project Name                                                                                 Ending balance         for
                           (time of    completio         Estimated total        balance
                                                                                                                     impai
                         commence          n                investment
                                                                                                                     rment
                            ment)
                                        Transferr
 Sanlitun 3.3                                            300,000,000.00       230,338,500.01
                                         ed out
 Phase      I    of
                                       Complete
 Vanland                                                                      388,676,680.15
                                          d
 Mansion
 Phase II of
 Vanland                  2005.03       2006.09         1,000,000,000.00      153,588,221.47     682,828,301.65
 Mansion
 Phase III of
 Vanland                 2005.06       2006.10            710,000,000.00                          72,544,711.60
 Mansion
   Yeland Tianzhu
                         2006.04       2007.06            535,000,000.00                          85,165,679.27
       Project
          Total                                                               772,603,401.63     840,538,692.52

     (3) Proposed land developments
                                                                                                                   Provi
                        Estimated
                                         Estimated                                                                  sion
                          time of                           Estimated total     Beginning          Ending
 Project Name                             time of                                                                    for
                        commence                              investment         balance           balance
                                        completion                                                                 impai
                            ment
                                                                                                                   rment

 Suzhou Project          2006.11          2008.05         1,350,000,000.00                      50,550,000.00

 Phase     III    of    Commence                           710,000,000.00     21,631,313.00

 Vanland Mansion            d

 Chenfeng              Transferred                         700,000,000.00     49,261,053.00

 Jiayuan                   out

      Total                                                                   70,892,366.00     50,550,000.00

     Note 1:           The ―Estimated time of commencement‖, ―Estimated time of completion‖ and

―Estimated total investment‖ refer to the estimated time of commencement, estimated time of

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                                                                                               Text of Annual Report (2005)



completion and estimated total investment for real estate development projects.

      Note 2:       Part of the inventory stocks have been pledged with banks for borrowings totaling

RMB447,580,000.00 Yuan.Names of pledged assets and pledged areas are as follows:

                                                             Balance of pledged area as             Balance               of
                               Name
                                                             of Dec. 31st 2005 (m2)            borrowings

 Phase I of Vanland Mansion                                                       29,999.08                 57,000,000.00

 Phase II of Vanland Mansion                                                      82,274.11                120,000,000.00

 Phase III of Vanland Mansion                                                     61,772.49                192,350,000.00

 Restaurants, supermarkets, clubhouses, garage, etc for                           18,544.13                 55,000,000.00

 Phase I of Bishuiyuntian

 Garage for Wanliu Yeland Mansion                                                  8,363.68

 Stores, residential housing and parking lots for Phase II                         5,321.75                 23,230,000.00

 of Bishuiyuntian

 Total                                                                        206,275.24                   447,580,000.00

          7. Prepaid expenses

     Category               Beginning           Increase             Amount            Transfer-out for     Ending Balance

                             Balance                              amortized for          this period

                                                                    this period

 Insurance                    52,932.81          378,209.00             402,705.36                                 28,436.45

 premium

 House rental                                    237,500.00             155,000.00             82,500.00

 Others                      368,807.52          773,088.23             538,033.52            187,095.33          416,766.90

         Total               421,740.33        1,388,797.23         1,095,738.88              269,595.33          445,203.35

          8. Long-term investments

 Item                           Beginning                    Increase                Decrease             Ending Balance

                                  Balance



Page 86                                                                                                    Respect Creates Value
                                                                                                  Text of Annual Report (2005)



 Long-term equity                106,859,686.85              46,968,466.25            33,304,572.46               120,523,580.64

 investment

 Long-term

 investment           on

 bonds

          Total                  106,859,686.85              46,968,466.25            33,304,572.46               120,523,580.64

      Long-term equity investment

       ①Other equity investments
                                                                  % of                         Accumulati                      Provi
                                  Duration                                                                        Ending
                                                               registered     Increase in      ve increase                      sion
                                     of       Amount of                                                          balance of
    Name of invested unit                                      capital of      equity for       in equity                        for
                                  investme    investment                                                         long-term
                                                                invested      this period        for this                      impai
                                     nt                                                                         investments
                                                                  unit                            period                       rment
  Shenzhen Beida Fuzhong

  Education Investment Co.,       30 years    3,900,000.00       39%              -459.47      -88,948.54       3,811,051.46
             Ltd

 Dalian Prince Hotel Co., Ltd     10 years   10,421,625.00       19%                                           10,421,625.00

  Beijing Yangtai Mountain
                                    20
    Tourism Operation &                       5,000,000.00       50%              -138.11        -5,228.44      4,994,771.56
    Management Co., Ltd            years

  Tianjin Yeland Real Estate        20
                                             35,000,000.00      18.42%         -3,961,861.97   -3,961,861.97   31,038,138.03
           Co., Ltd
                                   years

            Total                            54,321,625.00                     -3,962,459.55   -4,056,038.95   50,265,586.05




       ②Equity investment difference



                                                               Perio

                                                               d for         Amount
  Name of invested              Beginning                                                       Transfer-out        Balance after
                                                Reason        amort      amortized for
          unit                   amount                                                        for this period      amortization
                                                              izatio        this period

                                                                n


Page 87                                                                                                        Respect Creates Value
                                                                                   Text of Annual Report (2005)


                                             Differenc
 Beijing Sunlight Seasons
                                               e from      10
 Garden Real Estate           7,552,950.65                          755,295.08                    5,984,059.86
                                             acquisitio   years
 Development Co., Ltd
                                                  n
                                             Differenc
 Shenzhen         Daoqin                       e from      10
                             10,769,269.16                        1,076,926.92                    7,179,512.76
 Investment Co., Ltd                         acquisitio   years
                                                  n
                                             Differenc
 Huadun International                          e from      10
                              5,368,541.24                          134,303.54   4,697,382.14
 Investment Co., Ltd                         acquisitio   years
                                                  n
                                             Differenc
 Beijing Yeland Real
                                               e from      10
 Estate Development Co.,     43,584,219.99                        4,358,422.08                   33,051,366.66
                                             replaceme    years
 Ltd
                                                  nt
                                             Differenc
 Beijing V anland Real
                                               e from      10
 Estate Development Co.,     25,999,454.14                        2,200,996.55                   22,979,983.29
                                             acquisitio   years
 Ltd
                                                  n
                                             Differenc
 Beijing Chenfeng Real
                                               e from      10
 Estate Development Co.,     16,000,667.48                        1,333,388.96   14,667,278.52
                                             acquisitio   years
 Ltd
                                                  n
                                             Differenc
 Beijing Yeland Property                     e     from    10
                              1,181,191.14                          118,119.12                    1,063,072.02
 Management Co., Ltd                         acquisitio   years
                                             n

          Total             110,456,293.80                        9,977,452.25   19,364,660.66   70,257,994.59

       Note:      1. The newly added difference (RMB11,968,466.25 Yuan) from equity investment in

Beijing Vanland Real Estate Development Co., Ltd is the difference between the price paid by

Shenzhen Daoqin Investment Co., Ltd for the 40% equity Shenzhen Daoqin Investment Co., Ltd

acquired of Beijing Vanland Real Estate Development Co., Ltd according to the equity transfer

agreement and the amount of owner’s equity due to Shenzhen Daoqin Investment Co., Ltd should

have of Beijing Vanland Real Estate Development Co., Ltd as calculated on basis of the 40%

equity on the date of equity acquisition.

       Note:      2. The deducted difference (RMB4,697,382.14 Yuan) from equity investment in

Huadun International Investment Co., Ltd is the equity investment difference transferred out due

to the selling of the 85% of the equity held by the Company and its subsidiary, Beijing Yeland

Real Estate Development Co., Ltd, of Huadun International Investment Co., Ltd in this period.

       Note:      3. The deducted difference (RMB14,667,278.52 Yuan) from equity investment in

Beijing Chenfeng Real Estate Development Co., Ltd is the equity investment difference
Page 88                                                                                      Respect Creates Value
                                                                                 Text of Annual Report (2005)



transferred out due to the selling of the 70% of the equity held by the Company and its subsidiary,

Beijing Yeland Real Estate Development Co., Ltd, of Beijing Chenfeng Real Estate Development

Co., Ltd in this period.

    9. Fixed assets

          (1) Original value

          Category             Beginning              Increase            Decrease         Ending balance

                                balance
 Operation-used                131,811,074.27         14,740,235.45                          146,551,309.72
 houses
 Buildings                          90,000.00           587,259.70                                677,259.70

 Heat      and     power         4,096,704.02            95,302.00                              4,192,006.02
 supply equipments
 Electronic                     17,740,934.27          3,858,153.88         1,333,581.00       20,265,507.15
 equipment
 Means                of        12,900,519.25          6,206,201.21         1,677,872.00       17,428,848.46
 transportation
 Kitchen ware                    1,493,004.82           644,228.00                             2,137,232.82

 Other equipments               13,376,507.81           447,313.00          2,055,159.48       11,768,661.33

 Decoration fees                47,079,907.45                                531,910.00        46,547,997.45

           Total               228,588,651.89         26,578,693.24         5,598,522.48     249,568,822.65

          (2) Accumulated depreciation

             Category                Beginning             Increase        Decrease        Ending balance

                                       balance
 Operation-used houses               20,704,255.86         3,116,099.19                        23,820,355.05

 Buildings                                 5,700.00          93,016.41                             98,716.41

 Heat and power supply                1,360,465.59          173,168.71                          1,533,634.30
 equipments
 Electronic equipment                 8,805,316.10         3,434,084.28      267,139.35        11,972,261.03

 Means of transportation              3,918,898.68         2,007,625.42      455,615.12         5,470,908.98


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 Kitchen ware                                           222,258.63          367,211.04                                    589,469.67

 Other equipments                                      4,892,031.15       2,069,227.11              978,613.23           5,982,645.03

 Decoration fees                                     17,880,841.18        4,877,871.78              274,659.69          22,484,053.27

                     Total                           57,789,767.19       16,138,303.94         1,976,027.39             71,952,043.74

       (3) Net value                                170,798,884.70                                                     177,616,778.91

       (4)           Fixed              assets
 depreciation reserve
       (5) Fixed assets - net                       170,798,884.70                                                     177,616,778.91
 value

        Note:            Used Bohai Grand Hotel (from Floor 1 underground to Floor 12 aboveground), a

building of the Company, as the object of pledge with banks and other financial institutions for

borrowings totaling RMB132,400,000.00 Yuan. The floor area of the above pledged building is

23,150.53m2 and it is valuated at RMB315,404,900.00 Yuan.

            10. Projects in progress
                                                                         Amount of fixed   Other                                    Source
                                        Beginning                                                                         Project
        Project name                                       Increase           assets       decrea     Ending balance                  of
                                         balance                                                                         progress
                                                                          transferred in    ses                                      fund

 Dormitory                     and                                                                                        100%      Self-ra
                                        6,625,216.00        36,000.00       6,661,216.00
 apartment project                                                                                                                   ised

 Renovation of Yunnan 2nd                                                                                                           Self-ra
                                                           267,800.00                                     267,800.00       80%
 DiningRoom                                                                                                                          ised

 Decoration         of     Bohai                                                                                           95%      Self-ra
                                                          1,503,155.17                                   1,503,155.17
 Grand Hotel                                                                                                                         ised

 Sporadic     renovations of                                                                                               60%      Self-ra
                                                           193,881.60                                     193,881.60
 Bohai Grand Hotel                                                                                                                   ised

 Renovation    of        firefighting                                                                                      70%
                                                                                                                                    Self-ra
 facilities of Bohai Grand Hotel                           400,000.00                                     400,000.00
                                                                                                                                     ised
 (PhaseI)




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 Renovation     of   firefighting                                                                                      60%
                                                                                                                                 Self-ra
 facilities of Bohai Grand Hotel                       400,000.00                                      400,000.00
                                                                                                                                   ised
 (PhaseiI)

                                                                                                                       95%       Self-ra
 Elevators                                             246,493.80                                      246,493.80
                                                                                                                                   ised

                                                                                                                       60%       Self-ra
 Others                                                573,840.00          33,820.00                   540,020.00
                                                                                                                                   ised


 Total                              6,625,216.00      3,621,170.57    6,695,036.00                 3,551,350.57


      The above projects in progress do not involve capitalized interest.

             11. Intangible assets
                                                                                                                             Remai
                                                                                            Amount
                            Amount                                           Transfer-o                                      ning life
                                             Beginning                                     amortized         Ending
    Category               originally                          Increase      ut for this                                        of
                                              balance                                       for this         balance
                            accrued                                           period                                         amortiz
                                                                                            period
                                                                                                                              ation

 Land use                4,854,882.50       2,428,412.97                                   242,744.16      2,185,668.81        115

 rights                                                                                                                       years

 Financial                   538,880.00       399,041.86       87,900.00                    64,779.27        422,162.59        2-5

 software                                                                                                                    years

       Total             5,393,762.50       2,827,454.83       87,900.00                   307,523.43      2,607,831.40

             12. Long-term deferred expenses

                                                                             Amount
                                        Beginning                                            Transfer-out for          Ending
             Category                                     Increase         amortized for
                                         Balance                                               this period             balance
                                                                            this period

 Golf club membership
                                     1,520,000.00                            380,000.00                             1,140,000.00
 cards

 Others                                  380,343.00                          276,175.96                                104,167.04

               Total                 1,900,343.00                            656,175.96                             1,244,167.04

             13. Short-term borrowings


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                  Category                       Ending Balance                    Beginning Balance

      Guaranteed borrowings

          Pledged borrowings                              210,630,000.00                      210,400,000.00

                   Total                                  210,630,000.00                      210,400,000.00

      Note:         Pledged the assets of Beijing Yeland Real Estate Development Co., Ltd, a

subsidiary of the Company for borrowing RMB78,230,000 Yuan and pledged the assets of the

Company for borrowing RMB132,400,000 Yuan.Of the pledged borrowing of RMB78,230,000

Yuan by Beijing Yeland Real Estate Development Co., Ltd, the Company provided guarantee for

an amount of RMB23,230,000 Yuan.

          14. The ending balance of accounts payable is RMB129,190,942.45 Yuan.

      The ending balance of accounts payable is 62.31% less than the beginning balance mainly

due to the settlement of real estate project prices in this period.

      Note:         No accounts payable to any shareholder holding 5% or more of the shares of the

Company.

          15. Pre-collected accounts
            Age              Ending Balance      Ratio (%)        Beginning Balance           Ratio (%)

   Within 1 year                843,319,495.76      99.98%            263,386,309.70           99.94%

     1-2 years                       68,518.70       0.01%                 149,830.32          0.06%

     2-3years                       100,000.00       0.01%

    Over 3 years

          Total                 843,488,014.46       100%             263,536,140.02            100%

      Note:        The ending balance of accounts receivable increased by 220% over the beginning

balance mainly due to the increase in housing pre-sales amount from Beijng Vanland Real Estate

Development Co., Ltd, a subsidiary of the Company.

      Including: Main housing pre-sales amounts are as follows:

           Project Name                 Ending balance            Estimated time of        Pre-sales ratio

                                                                     completion


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  Phase II of Vanland Mansion               647,363,610.00          2006.09                47.99%

  Phase III of Vanland Mansion              176,224,414.00          2006.10                20.39%

               Total                        823,588,024.00

     Note:       During this period, no accounts were pre-collected from shareholder holding 5% or

more of the shares of the Company.

             The ―pre-sales ratio‖ means the ratio of pre-sold floor area against the total sellable

floor area in the period.

          16. Unpaid dividends
                   Contents                        Ending Balance              Beginning Balance
          Unpaid dividends for state-owned
                                                             2,913,685.29                    2,103,933.74
 shares
          Unpaid dividends for legal person
                                                              819,838.23                     2,258,444.80
 shares
          Unpaid dividends for public shares                    1,067.49                            211.74

                     Total                                   3,734,591.01                    4,362,590.28

    As per the resolution of the Annual Shareholders’ General Meeting of 2004, use the total

283,413,000 shares at the end of 2004 as the base and the cash dividend for each 10 shares is

RMB0.50 Yuan (including tax) and the total cash dividend is RMB14,170,650.00 Yuan.The cash

dividend already paid in this period is RMB14,151,528.81 Yuan.

          17. Tax payable
                  Category                         Ending Balance                Beginning Balance

          Corporate income tax payable                       25,398,150.16                  18,378,897.92

          Sales tax payable                                  -35,819,361.93                  4,907,047.15
       Urban       construction       and
                                                              -1,561,882.14                  1,119,568.54
 maintenance tax payable
          Housing property tax payable                        2,378,303.59                   1,942,127.20

          Other taxes payable                                 -4,053,696.01                 -1,384,679.08

                    Total                                    -13,658,486.33                 24,962,961.73

     Note:       The ending balance of tax payable is 154.72% less than the beginning balance

mainly due to prepaid tax for the housing pre-sales amount from Beijng Vanland Real Estate

Development Co., Ltd, a subsidiary of the Company.
Page 93                                                                                 Respect Creates Value
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          18. Other accounts payable

              Item                Ending Balance          Beginning Balance              Remarks

 Additional           education        -1,074,937.16               146,908.68

 expenses

 Local additional education                 5,329.33                   790.69

 expenses

              Total                    -1,069,607.83               147,699.37

          19. The ending balance of other accounts payable is RMB157,715,108.71 Yuan.

     Note:      The ending balance of other accounts payable increased by 42.23% over the

beginning balance mainly due to the increase in amounts collected by Beijng Vanland Real

Estate Development Co., Ltd, a subsidiary of the Company.

           No accounts payable to any shareholder holding 5% or more of the shares of the

Company.

          20. Accrued expenses

              Item                Ending Balance          Beginning Balance         Reason for balance

   Interest on borrowings               1,305,000.00                                    Not settled

              Total                     1,305,000.00

    Note:      The ―ending balance‖ means the amount accrued and payable for the interest on the

money borrowed from Shanghai Zhongtai Trust and Investment Co., Ltd.

          21. The long-term liability of RMB40,000,000.00 Yuan due in one year is the long-term

     borrowing that will be due soon.

                Category                     Ending Balance                     Beginning Balance

           Pledged borrowings                                                             70,340,000.00

      Guaranteed borrowings                            40,000,000.00

                  Total                                40,000,000.00                      70,340,000.00

    Note:      Of guaranteed borrowings, the Company provided guarantee for the RMB20,000,000

Yuan borrowed by Yunnan Kexin Education Investment Co., Ltd, a subsidiary of the Company;

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Beijing Qiantong Investment Co., Ltd, a shareholder of the Company, used the 24,000,000 shares

it held of the Company as the pledge for the RMB20,000,000 Yuan borrowed by Yunnan Kexin

Education Investment Co., Ltd.

          22. Long-term borrowings

              Category                            Ending Balance                                Beginning Balance

          Credit borrowings

     Guaranteed borrowings                                                                                       50,000,000.00

          Pledged borrowings                                369,350,000.00                                      241,300,000.00

                Total                                       369,350,000.00                                      291,300,000.00

       Note:      Of pledged borrowings, the assets of Beijing Vanland Real Estate Development Co.,

Ltd, a subsidiary of the Company, was used as the pledge for borrowing RMB369,350,000 Yuan.

          23. Minority interests: RMB24,835,709.85 Yuan.

          24. The ending balance of share capital is RMB283,413,000.00 Yuan and the beginning

       balance of share capital is RMB283,413,000.00 Yuan.

       Shares of the Company:                                                               Unit:     10,000 shares
                                    Beginning                Increase/decrese (+/-) of this period              Ending Balance
                                     Balance
                                                                       Provident
                                                  Share     Bonus       reserve
                                                                                       Others        Subtotal
                                                  alloted   issued    converted to
                                                                         shares

 I. Non-circulating shares

 1. Promoters' shares                  2,203.46                                                                         2,203.46

 Including:

 State-owned shares                    1,619.51                                                                         1,619.51

 Shares held by domestic legal
                                        583.95                                                                            583.95
 persons

 Shares held by foreign-funded
 legal persons

 Others


 2. Allocated legal-person shares     12,979.38                                                                        12,979.38



 3. Shares held by employees

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 4. Preference shares or others


 Total number of non-circulating
                                           15,182.84                                                          15,182.84
 shares

 II. Circulating shares

 1. Domestic listed RMB                    13,158.46                                                          13,158.46
 ordinary shares

    Including shares held by senior
                                                1.87                                                               1.87
 management


 2. Domestic         listed   foreign
 shares

 3. Overseas         listed   foreign
 shares

 4. Others

 Total number of circulating
                                           13,158.46                                                          13,158.46
 shares

 III. Total number of shares               28,341.30                                                          28,341.30


          25. Capital reserve
          Item                Beginning balance          Increase            Decrease             Ending balance

 Share       capital
                                  101,627,312.50                                                     101,627,312.50
 premium
 Provision      for
                                        661,901.85                                                        661,901.85
 equity investment

 Total                            102,289,214.35                                                     102,289,214.35

          26. Surplus reserve consists of legal surplus reserve and public welfare fund

              Item                 Beginning balance         Increase        Decrease            Ending balance

 Surplus reserve                        57,550,506.22        4,028,513.79                              61,579,020.01

 Including:              Legal          39,047,012.51        2,685,675.86                              41,732,688.37

 provident reserve

          Legal         public          18,503,493.71        1,342,837.93                              19,846,331.64

 welfare fund

          27.        The       ending       balance     of    ―unconfirmed      losses      on    investment‖             is

         RMB-4,678,525.87 Yuan. The ending balance of ―unconfirmed losses on investment‖

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                                                                                 Text of Annual Report (2005)



     is the amount by which the part of the accumulative losses of subsidiaries the

     Company should bear exceeds the book value of long-term investments of the

     Company, as per the provisions of Doc. CKHZ (1999) No.10 issued by the Ministry

     of Finance.

          28. Undistributed profit
                     Item                                                  Amount

            Undistributed profit at beginning of year                                 232,910,627.32

            Plus: Net profit of this period                                            32,188,731.86

            Less: Allocation of surplus reserve                                         4,028,513.79

                 Ordinary stock dividends payable                                      14,170,650.00

            Undistributed profit at the end of year                                   246,900,195.39

      As per the BOD proposal for profit distribution of 2005, for this period, the legal surplus

reserve is 10% of net profit, the legal public welfare fund is 5% of net profit and the cash

dividend for each 10 shares is RMB0.30 Yuan (including tax).
          29. Primary operating income
                                              Region                                  Accrual of previous
             Operation                                  Accrual of this period
                                                                                             period

    Real estate development                   Beijing          646,038,750.35               2,349,330,681.93

             Education                     Shenzhen                                            15,629,565.62

             Education                     Kunming                9,171,995.08                  5,650,000.00

   Dining & drinking, tourism                 Dalian             25,389,037.75                 27,172,102.97

                Total                                          680,599,783.18               2,397,782,350.52

     Note (1): The total sales income from the top five customers is RMB69,959,151.00 Yuan,

     accounting for 10.28% of the primary operating income of the Company.

             (2): The amount accrued in this period is RMB1,717,182,567.34 Yuan less than that

accrued in the previous period, decreasing by 71.62%. The main reason is that, of Phase II of

Bishuiyuntian developed by Beijing Yeland Real Estate Development Co., Ltd and the

Townhouse Project developed by Beijing Sunlight Seasons Garden Real Estate Development Co.,

Ltd, most of the income was realized in the previous period and the income realized in this period


Page 97                                                                                    Respect Creates Value
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is relatively smaller.

          30. Primary operating cost
                                                                                        Accrual of previous
              Operation                 Region            Accrual of this period
                                                                                               period

    Real estate development             Beijing                  491,555,746.20               1,973,957,800.21

             Education                 Shenzhen                                                   3,336,774.97

             Education                 Kunming                       2,993,620.37                 2,018,770.14

   Dining & drinking, tourism           Dalian                       4,984,238.40                 6,521,278.72

                Total                                            499,533,604.97               1,985,834,624.04

    Note:       The amount accrued in this period is RMB1,486,301,019.07Yuan less than that

accrued in the previous period, decreasing by 74.85%. The main reason is that, of Phase II of

Bishuiyuntian developed by Beijing Yeland Real Estate Development Co., Ltd and the

Townhouse Project developed by Beijing Sunlight Seasons Garden Real Estate Development Co.,

Ltd, most of the income was realized in the previous period and the income realized in this period

is relatively smaller and the primary operating cost also decreased correspondingly.

          31. Sales taxes and associate charges
                Item                    Accrual of this period              Accrual of previous period

 Sales tax                                            33,454,786.12                             119,717,745.28

 Urban        construction     and
                                                       2,341,835.04                               7,370,307.08
 maintenance tax

 Additional education expenses                         1,003,643.61                               3,578,478.05

 Local      additional    education
                                                           11,867.00                                 19,938.16
 expenses
                Total                                 36,812,131.77                            130,686,468.57

          32. Financial expenses

                  Category                  Accrual of this period            Accrual of previous period

 Interest expenditure                                   18,106,556.28                            13,883,611.23

   Less:     Interest income                              9,230,527.92                            1,753,546.42

 Others                                                    309,366.62                               734,330.15
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                     Total                               9,185,394.98                       12,864,394.96

          33. Investment income

                             Item                   Accrual of this period     Accrual of previous period

 Stock investment gain

 Bond investment gain
 Net increase/decrease of owner’s equity of
 invested companies after reconciliation at the
                                                              -3,962,459.55                 -432,994.78
 end of period
 Net gain from sales of long-term equity
                                                             30,968,487.26                   838,050.44
 investments, etc.

 Amortized equity investment difference                       -9,977,362.25               -8,058,227.95

                         Total                               17,028,665.46                -7,653,172.29
          34. The non-operating income of RMB503,964.83 Yuan mainly consists of income from

      planning and design compensation fees, disposal of fixed assets, etc.

          35. The non-operating expenditure of RMB1,504,976.52 Yuan mainly consists of donations

      and net losses on disposal of fixed assets, etc.

          36. The amount of cash received relating to other operating activities is RMB375,773,054.86

      Yuan. It mainly consists of inter-company transfers and collects, etc. Of the

      RMB375,773,054.86 Yuan, the amount of inter-company transfers is RMB344,301,605.32

      Yuan, the amount of inter-company collections is RMB23,362,555.53 Yuan and the amount of

      others is RMB8,108,894.01 Yuan.

          37. The amount of cash paid relating to other operating activities is RMB157,044,108.00

      Yuan. It mainly consists of current advance payments, operating expenses and management

      expenses. Of the RMB157,044,108.00 Yuan, RMB72,788,383.70 Yuan is for advance

      payments for current transfers, RMB9,215,696.55 Yuan for auditing, evaluation and legal fees,

      RMB12,104,976.32 Yuan for travel and office expenses, RMB18,182,085.74 Yuan for

      payments made for others, RMB18,182,085.74Yuan for marketing and promotional expenses,

      RMB3,756,854.00 Yuan for water, electricity and maintenance fees, etc.

          38. The amount of cash paid relating to other investment activities is RMB367,470.95 Yuan.

Page 99                                                                                 Respect Creates Value
                                                                                             Text of Annual Report (2005)



      It mainly consists of the amount of monetary capital on the equity sales date of Beijing

      Chenfeng Real Estate Development Co., Ltd, Huadun International Investment Co., Ltd and

      Beijing Sanlitun Xintiandi Real Estate Co., Ltd that are excluded from the consolidation for

      this period.
(VI) Notes to main items of parent-company financial statement

    1. Accounts receivable
                               Ending Balance                                            Beginning Balance

                                          Provison for bad debts                                    Provison for bad debts
    Age
                               Ratio                       Allocati                                                 Allocati
               Amount
                               (%)                            on                          Ratio                        on
                                           Amount                        Amount                       Amount
                                                            Ratio                          (%)                       Ratio
                                                             (%)                                                      (%)
  Within 1
               133,841.90       2.48%         4,015.25       3%          444,124.05         8.06%      13,323.72      3%
    year

  1-2 years    254,375.58       4.72%        25,437.56       10%           4,300.00         0.08%         430.00      10%

  2-3 years                                                  20%         902,636.43        16.37%     180,527.29      20%

   Over 3
              5,000,176.43     92.80%     4,362,830.93     30-100%      4,162,298.00       75.49%    2,361,328.00   30-100%
   years

    Total     5,388,393.91      100%      4,392,283.74                  5,513,358.48        100%     2,555,609.01


    2. Other accounts receivable
                                Ending Balance                                           Beginning Balance

                                            Provison for bad debts                                  Provison for bad debts
    Age
                                Ratio                        Allocati                      Ratio                    Allocati
                Amount                                                     Amount
                                (%)                             on                         (%)                         on
                                             Amount                                                   Amount
                                                              Ratio                                                  Ratio
                                                               (%)                                                    (%)
  Within 1      9,273,925.82     14.03%                                  30,389,875.57     34.23%
                                              278,217.77                                              263,642.27
    year                                                        3%                                                    3%

  1-2 years    41,976,816.44     63.50%       814,734.13       10%       35,806,222.04     40.32%     198,889.49      10%

  2-3 years     1,944,803.24      2.94%       388,960.65       20%        4,048,690.62      4.56%     809,738.12      20%

   Over 3      12,905,946.81     19.53%                                  18,554,266.97     20.89%
                                            9,860,570.25      30-100%                               12,994,526.92   30-100%
   years



Page 100                                                                                                  Respect Creates Value
                                                                                                                  Text of Annual Report (2005)



     Total              66,101,492.31       100%        11,342,482.80                      88,799,055.20         100%   14,266,796.80

        When the parent company allocates provisions for bad debts, the allocation is made after the

current transfer of RMB33,829,475.16 between the Company and its subsidiaries – Dalian Yeland

Education Investment Co., Ltd and Dalian Sunlight Seasons Real Estate Devleopment Co., Ltd.

     3. Long-term investments
          Item                      Beginning                       Increase                      Decrease                 Ending Balance
                                     Balance
 Long-term equity                   498,581,718.34                     94,413,705.65              53,288,132.69                   539,707,291.30
 investment
 Long-term                          240,000,000.00                                               140,000,000.00                   100,000,000.00
 investment              on
 bonds

          Total                     738,581,718.34                     94,413,705.65             193,288,132.69                   639,707,291.30

        (1) Long-term equity investments

        ①Other equity investments

                                                             % of
                          Durati                                                              Accumulative                                          Provisi
                                                          registered      Increase in                            Transfer-out    Ending balance
 Name of invested          on of      Amount of                                              increase/decrea                                        on for
                                                          capital of     equity for this                           for this       of long-term
 unit                     invest      investment                                              se in equity for                                      impair
                                                           invested         period                                  period        investments
                          ment                                                                  this period                                          ment
                                                             unit
 Beijing Yeland
 Real        Estate      20 years
 Development                            75,573,844.38       79%           -10,164,985.36       169,513,504.87                      245,087,349.25
 Co., Ltd
 Dalian Prince
                         10 years       10,421,625.00       19%                                                                     10,421,625.00
 Hotel Co., Ltd
 Dalian Yeland
 Education               10 years
 Investment Co.,                        50,000,000.00      83.33%          11,287,811.45        78,071,084.45                      128,071,084.45
 Ltd
 Beijing V   anland
 Real          Estate    20 years
 Development Co.,                       58,969,012.11       60%            36,125,894.20        23,598,253.65                       82,567,265.76
 Ltd
 Huadun
 International                                                                                                   25,410,370.33
 Investment Co.,         50 years       34,947,255.30       80%            -5,279,638.87        -9,536,884.97
 Ltd


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                                                                                                    Text of Annual Report (2005)


 Jiangsu Yeland
 Real Estate Co., 50 years          12,000,000.00       60%          -46,945.46        -46,945.46                      11,953,054.54
 Ltd
 Tianjin Yeland
 Real Estate Co., 20 years          35,000,000.00      18.42%     -3,961,861.97     -3,961,861.97                      31,038,138.03
 Ltd

      Total                      276,911,736.79                   27,960,273.99    257,637,150.57   25,410,370.33     509,138,517.03

          ②Equity investment differences



                                                                  Period for        Amount             Transfer-out
 Name of invested            Beginning                                                                                      Balance after
                                                      Reason      amortizati      amortized for       for this period
            unit              amount                                                                                         amortization
                                                                      on           this period

                                                    Difference
 Huadun International
                             5,052,744.70              from       10 years           126,318.63        4,421,151.55
 Investment Co., Ltd
                                                    acquisition

 Beijing Yeland Real                                Difference

 Estate      Development 24,737,616.96                 from       10 years        2,473,761.72                              18,759,359.48

 Co., Ltd                                           replacement

 Beijing Vanland Real                               Difference

 Estate      Development 14,030,987.89                 from       10 years        1,403,098.80                              11,809,414.79

 Co., Ltd                                           acquisition

            Total        43,821,349.55                                            4,003,179.15         4,421,151.55         30,568,774.27

           (2) Long-term investment on bonds

              Other bond investments

                       Name of invested unit                                  Amount of investment                   Remarks

      Beijing Yeland Real Estate Development Co., Ltd                             100,000,000.00

                                Total                                             100,000,000.00

          4. Investment income


                             Item                                    Accrual of this period                 Accrual of previous
                                                                                                                  period

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 Bond investment gain                                                                                                       4,589,385.26

 Net increase/decrease of owner’s equity of
 invested companies after reconciliation at the end                                    27,960,273.99                      200,729,672.92
 of period

 Net gain from sales            of      long-term equity
                                                                                       20,168,478.12
 investments, etc.

 Amortized equity investment difference                                                -4,003,179.15                       -3,797,510.54

                            Total                                                      44,125,572.96                      201,521,547.64



(VII) Related parties and related-party transactions

      1. Related-party relations

       (1) Related-party enterprises with control relations
                                                                                             Relation       Economic            Legal
                                      Registered
    Name of enterprise                                     Scope of business                 with the       nature or         representa
                                       address
                                                                                             Company          type               tive
                                                               Project investment
 Beijing Qiantong Investment        Haidian District,                                          Parent         Limited             Lin
                                                                management and
           Co., Ltd                      Beijing                                             Company          liability
                                                          investment consulting                                                Youxiong
                                                         Real estate development,
                                                           sales of commercial
  Beijing Yeland Real Estate         Miyun County,                                                            Limited
                                                               residential housing,          Subsidiary                         E Junyu
    Development Co., Ltd                 Beijing                                                              liability
                                                                 management of
                                                          self-owned properties
   Dalian Yeland Education             Zhongshan                                                              Limited
                                                          Education investment               Subsidiary                        Li Qiang
     Investment Co., Ltd             District, Dalian                                                         liability
                                                        Real estate development
  Beijing Sunlight Seasons
                                     Miyun County,      and      sales,   real      estate                    Limited
     Garden Real Estate                                                                      Subsidiary                        Liu Yunfei
                                         Beijing        information        consulting,                        liability
    Development Co., Ltd
                                                        etc.
   Beijing Yeland Property          Haidian District,                                                         Limited
                                                          Property management                Subsidiary                         Jing Yan
    Management Co., Ltd                  Beijing                                                              liability
                                                               Investment in and
 Shenzhen Daoqin Investment         Nanshan District,   establishment of industrial                           Limited            Zheng
                                                                                             Subsidiary
           Co., Ltd                    Shenzhen          enterprises, information                             liability          Yang
                                                                 consulting, etc.
                                                        Intelligence education and
   Beijing Daoqin Culture            Miyun County,      development, establishing                             Limited
                                                                                             Subsidiary                        Zheng Liqi
    Development Co., Ltd                 Beijing        kindergartens, information                            liability
                                                                   consulting


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                                                             Investment in basic
   Yunnan Kexin Education                                   education, continuing                      Limited            Chen
                                       Kunming                                        Subsidiary
     Investment Co., Ltd                                    education, vocational                      liability         Yunhai
                                                               education, etc
                                                          Real estate development
   Dalian Sunlight Seasons
                                       Zhongshan            and sales, real estate                     Limited
  Real Estate Development                                                             Subsidiary                        Liu Yunfei
                                    District, Dalian       information consulting,                     liability
             Co., Ltd
                                                         property management, etc.
                                                          Real estate development,
                                                            sales of commercial
 Beijing Vanland Real Estate        Haidian District,                                                  Limited
                                                             residential housing,     Subsidiary                         E Junyu
    Development Co., Ltd                Beijing                                                        liability
                                                               management of
                                                            self-owned properties
                                                          Real estate development
  Jiangsu Yeland Real Estate       Suzhou Industrial                                                   Limited            Zhang
                                                          and operation, self-owned   Subsidiary
             Co., Ltd                       Park                                                       liability         Liping
                                                            property management

      (2) Registered capitals of related parties with control relations and changes in regisgered

      capitals

             Name of enterprise                Beginning Balance           Increase         Decrease           Ending Balance

 Beijing Qiantong Investment Co., Ltd               80,000,000.00                                                   80,000,000.00
 Beijing       Yeland     Real     Estate
 Development Co., Ltd                              100,000,000.00                                                  100,000,000.00
 Dalian Yeland Education Investment
 Co., Ltd                                           60,000,000.00                                                   60,000,000.00
 Beijing Sunlight Seasons Garden Real
 Estate Development Co., Ltd                        50,000,000.00                                                   50,000,000.00
 Beijing Yeland Property Management
 Co., Ltd                                            3,000,000.00                                                    3,000,000.00

 Shenzhen Daoqin Investment Co., Ltd                40,000,000.00                                                   40,000,000.00
 Beijing Daoqin Culture Development
 Co., Ltd                                            1,000,000.00                                                    1,000,000.00
 Yunnan Kexin Education Investment
 Co., Ltd                                           50,000,000.00                                                   50,000,000.00
 Dalian Sunlight Seasons Real Estate
 Development Co., Ltd                               10,000,000.00                                                   10,000,000.00
      Beijing Vanland Real Estate
            Development Co., Ltd
                                                   100,000,000.00                                                  100,000,000.00

 Jiangsu Yeland Real Estate Co., Ltd                                    20,000,000.00                               20,000,000.00

      (3) Shares or equities held by related parties with control relations and changes in shares or

      equities
Page 104                                                                                                      Respect Creates Value
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    Name of            Beginning Balance            Increase          Decrease               Ending Balance

   enterprise           Amount           %       Amount        %   Amount           %       Amount          %
  Beijing Qiantong
                       84,353,867.00     29.76                                             84,353,867.00    29.76
 Investment Co., Ltd

 Beijing Yeland Real
 Estate Development     100,000,000.00   100                                               100,000,000.00   100
      Co., Ltd

   Dalian Yeland
     Education           60,000,000.00   100                                                60,000,000.00   100
 Investment Co., Ltd

      Huadun
    International        42,500,000.00    85                       42,500,000.00     85
 Investment Co., Ltd

  Beijing Sanlitun
   Xintiandi Real
                          8,000,000.00    80                        8,000,000.00     80
 Estate Development
      Co., Ltd

  Beijing Sunlight
  Seasons Garden
     Real Estate         50,000,000.00   100                                                50,000,000.00   100
 Development Co.,
        Ltd

   Beijing Yeland
      Property
                          3,000,000.00   100                                                 3,000,000.00   100
  Management Co.,
        Ltd

  Shenzhen Daoqin
                         36,000,000.00    90                                                36,000,000.00    90
 Investment Co., Ltd

   Beijing Daoqin
      Culture
                            850,000.00    85                                                   850,000.00    85
 Development Co.,
        Ltd

   Yunnan Kexin
     Education           35,500,000.00    71                                                35,500,000.00    71
 Investment Co., Ltd

  Beijing Chenfeng
     Real Estate
                          7,000,000.00    70                        7,000,000.00     70
 Development Co.,
        Ltd

   Dalian Sunlight
 Seasons Real Estate
                         10,000,000.00   100                                                10,000,000.00   100
 Development Co.,
        Ltd



Page 105                                                                                      Respect Creates Value
                                                                                          Text of Annual Report (2005)


  Beijing Vanland
     Real Estate
                              60,000,000.00   60       40,000,000.00   40                         100,000,000.00   100
 Development Co.,
        Ltd

 Jiangsu Yeland Real
                                                       20,000,000.00   100                         20,000,000.00   100
   Estate Co., Ltd


       (4) Related-party enterprises without control relations

                        Name of enterprise                                     Relation with the Company

            Tianjin Yeland Real Estate Co., Ltd                          An associate company of the Company

        2. Related-party transactions

      (1) Receivables/payables
                                                                   Balance                       Relation with the
                       Item                         2005.12.31               2004.12.31             Company
                                                                                                         .
 Other receivables
 Tianjin Yeland Real Estate Co., Ltd               26,677,026.60                                Associate company
 Other payables
 Beijing Qiantong Investment Co.,                                                  1,071.47      Parent Company
 Ltd

       (2) Guarantee

      The 1-year long-term borrowing of RMB20,000,000 by Yuan Yunnan Kexin Education

Investment Co., Ltd, a subsidiary of the Company, is guaranteed by the 24,000,000 shares held of

the Company by Beijing Qiantong Investment Co., Ltd.

(VIII) Contingent Liabilities

      1. Accordign to the real estate operational practices, real estate subsidiaries of the Company

provided guarantees for mortgaged loans of commercial residential housing buyers. As of Dec.

31st 2005, the total guaranteed amount is RMB1,195,806,900 Yuan and the balance of guarantee is

RMB900,740,200 Yuan.All the guarantees provided by the Company are stage-specific

guarantees. The duration of a stage-specific guarantee begins on the date the guarantee contract

takes effect and ends on the date when the Real Estate Certificate for the housing purchased by

the commercial housing buyer is obtained and the pledge registration formalities are completed

and placed in the control of the bank.

        2. As of Dec. 31st 2005, the Company used its own assets as the object of pledge for
Page 106                                                                                             Respect Creates Value
                                                                        Text of Annual Report (2005)



short-term borrowings of RMB132,400,000 Yuan; used the assets of its subsidiary, Beijing Yeland

Real Estate Development Co., Ltd, as the object of pledge for short-term borrowings of

RMB78,230,000 Yuan (including RMB23,230,000 Yuan for which the Company provided

guarantee at the same time); used the assets of its subsidiary, Beijing Vanland Real Estate

Development Co., Ltd, as the object of pledge for long-term borrowings of RMB369,350,000

Yuan.

        The Company provided guarantee for the 1-year long-term borrowing of RMB20,000,000

Yuan by its controlled subsidiary, Yunnan Kexin Education Investment Co., Ltd.

        3. As of Dec. 31st 2005, the Company did not provide any other external guarantees than

those mentioned above.

(IX) Events Occuring after Balance Sheet Date

     No events occurred after the balance sheet date.

(X) Other Important Issues

     1. The BOD meeting held on March 28th 2005 passed the resolution to sell all the equity the

Company and its subsidiary, Beijing Yeland Real Estate Development Co., LTD, held of Huadun

International Investment Co., Ltd and its subsidiary, Beijing Sanlitun Xintiandi Real Estate Co.,

Ltd.The Company and its subsidiary, Beijing Yeland Real Estate Development Co., Ltd, sold the

total 85% equity they held of Huadun International Investment Co., Ltd at a price of

RMB53,125,000 Yuan to six investors (including Beijing New Season Investment Co., Ltd).For

the above transaction, the Framework Agreement on Cooperation in Sanlitun Project was signed.

By March 31st 2005, the Company had collected 50% of the equity transfer price. As per the

materiality principle, the Company used March 31st 2005 as the equity sales date for this

transaction.

     The assets and liabilities of Huadun International Investment Co., Ltd as of March 31st 2005

are as follows:

     Item                              Amount

     Current assets                252,514,945.84

Page 107                                                                           Respect Creates Value
                                                                          Text of Annual Report (2005)



     Current liabilities            220,751,982.93

     2. The BOD meeting held on Oct. 23rd 2005 passed the resolution to sell part of the equity

Beijing Yeland Real Estate Development Co., Ltd, a subsidiary of the Company, held of Beijing

Chenfeng Real Estate Development Co., Ltd.Beijing Yeland Real Estate Development Co., Ltd

sold the 70% of the equity it held of Beijing Chenfeng Real Estate Development Co., Ltd to

Tianjin Yitong Industrial Investment Co., Ltd at a price of RMB64,065,800 Yuan.For the above

transaction, both parties signed the Confirmation on Termination of Agreement. By Oct. 31st 2005,

the Company had collected over 50% of the equity transfer price. As per the materiality principle,

the Company used Oct. 31st 2005 as the equity sales date for this transaction.

     The assets and liabilities of Beijing Chenfeng Real Estate Development Co., Ltd as of Oct.

31st 2005 are as follows:

     Current assets                101,069,726.00

     Current liabilities            38,184,059.10

     3. The Company, Sichuan International Trust and Investment Company (hereinafter referred

to as ―SCITIC‖), Beijing Wanliu Real Estate Development Co., Ltd, Hainan Yangpu Yitong

Industrial Investment Co., Ltd and Beijing Huiguan Information Technology Co., Ltd signed the

Agreement on April 14th 2004. Under the Agreement, all the contracting parties should invest in

restructuring SCITIC. In this period, due to policy changes, through negotiation and agreement

between/among all participating parties and after the consent by Sichuan Provincial Government,

the Agreement was terminated.

     4. This period, as per the resolution of BOD meeting, the Company, Tianjin Yongcheng

Investment Co., Ltd and Hainan Yangpu Taibang Agricultural Development Co., Ltd co-invested

in establishing Tianjin Yeland Real Estate Co., Ltd (hereinafter referred to as ―Tianjin Yeland‖).

The Company holds 70% of the total equity, Tianjin Yongcheng Investment Co., Ltd holds 20%,

and Hainan Yangpu Taibang Agricultural Development Co., Ltd holds 10%.As per the approval

by the BOD meeting, the Company executed the Proposal for Increasing Investment in Tianjin

Real Estate Co., Ltd and Arranging for Fiducial Financing. The investment by the Company in

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                                                                                                Text of Annual Report (2005)



   Tianjin Yeland increased to RMB35,000,000 Yuan; the investment by Tianjin Yongcheng

   Investment Co., Ltd in Tianjin Yeland increased to RMB10,000,000 Yuan; the investment by

   Hainan Yangpu Bangtai Agricultural Development Co., Ltd increased to RMB5,000,000 Yuan;

   Zhongtai Trust and Investment Co., Ltd invested in Tianjin Yeland the RMB140,000,000 Yuan it

   raised from execution of the Collective Investment Trust Fund Plan for Tianjin Yeland Real Estate

   Co., Ltd.After the capital increase, the equity held by the Company of Tianjin Yeland decreased

   from the original 70% to 18.42%.The Company does not have control over Tianjin Yeland but can

   exercise major influence on it. So, the Company did not include Tianjin Yeland in the

   consolidation for this period and only used the equity method to account it.

   (XI) Noncurrent Profit and Loss Items

                    Item                                                                                      Amount

    Gain from disposal of long-term equity investments                                                            31,278,819.82

    Net amount of other non-operating incomes / expenditures after deduction of
                                                                                                                    -970,156.29
    provisions for impairment of assets in accordance with the Accounting System
    for Business Enterprises

    Impact of income tax                                                                                            113,176.90

                                           Total                                                                  30,421,840.43

   (XII) Statement of Provisions for impairment of Assets

         1. Consolidated Statement of Provisions for Impairment of Assets



                                                                               Decrease this yearr

                                                                Transfer-in
                               Beginning       Increase this                     Transfer-out
           Item                                                    due to                                          Ending balance
                                 balance            year                           for other          Total
                                                                appreciation
                                                                                    reasons
                                                                 of assets

I. Total provisions for bad    21,528,320.01       998,336.77                                        183,371.67      22,343,285.11

debts

   Page 109                                                                                                   Respect Creates Value
                                                                    Text of Annual Report (2005)



        Including:        Accounts      4,754,497.25   998,336.77                     5,752,834.02

receivable

                  Other                16,773,822.76                   183,371.67    16,590,451.09

receivables

II.     Total   provisions       for

impairment        of   short-term

investments

        Including:             Stock

investment

                  Bond

investment

III.    Total     provisions     for

impairment of inventories

        Including:

Commodities in stock

                  Raw materials

IV.     Total     provisions     for

impairment        of   long-term

investments

        Including:     Long-term

equity investment

                  Long-term

investment on bonds

V.      Total   provisions       for

impairement of fixed assets

        Including: Houses and

buildings


       Page 110                                                                Respect Creates Value
                                                                                                      Text of Annual Report (2005)



                  Heat          and

power supply equipments

                  Electronic

equipment

                  Means          of

transportation

                  Kitchen ware

                  Other

equipments

VI.      Total    provisions    for

impairement        of intangible

assets

         Including: Patent rights

                  Trade        mark

rights

VII. Total provisions for

impairment of projects in

progress

VIII. Total provisions for

impairment         of     entrusted

borrowings

IX. Grand total                       21,528,320.01     998,336.77                                         183,371.67     22,343,285.11

              2. Parent-company Statement of Provisions for Impairment of Assets
                                                                                     Decrease this yearr
                                                                      Transfer-in
                                      Beginning       Increase this                    Transfer-out
                 Item                                                    due to                                         Ending balance
                                        balance           year                           for other          Total
                                                                      appreciation
                                                                                          reasons
                                                                       of assets




      Page 111                                                                                                      Respect Creates Value
                                                                      Text of Annual Report (2005)



I. Total provisions for bad            16,822,405.81   1,836,674.73    2,924,314.00    15,734,766.54

debts

        Including:        Accounts      2,555,609.01   1,836,674.73                     4,392,283.74

receivable

                  Other                14,266,796.80                   2,924,314.00    11,342,482.80

receivables

II.     Total   provisions       for

impairment        of   short-term

investments

        Including:             Stock

investment

                  Bond

investment

III.    Total     provisions     for

impairment of inventories

        Including:

Commodities in stock

                  Raw materials

IV.     Total     provisions     for

impairment        of   long-term

investments

        Including:     Long-term

equity investment

                  Long-term

investment on bonds

V.      Total   provisions       for

impairement of fixed assets


       Page 112                                                                  Respect Creates Value
                                                                    Text of Annual Report (2005)



         Including: Houses and

buildings

                 Heat          and

power supply equipments

                 Electronic

equipment

                 Means          of

transportation

                 Kitchen ware

                 Other

equipments

VI.      Total   provisions    for

impairement       of intangible

assets

         Including: Patent rights

                 Trade        mark

rights

VII. Total provisions for

impairment of projects in

progress

VIII. Total provisions for

impairment        of     entrusted

borrowings

IX. Grand total                      16,822,405.81   1,836,674.73    2,924,314.00    15,734,766.54




      Page 113                                                                 Respect Creates Value
                                                                         Text of Annual Report (2005)




References:
      (I) Financial statements carrying the signatures and seals of the Legal Representative, Chief
Financial Officer and Head of Accounting Department
      (II) Original copy of Audit Report carrying the seal of Dalian Hualian Certified Public
Accountants and the signatures and seals of certified public accountants Zang Desheng and Zhang
Yaolin
      (III) The originals of all the corporate documents disclosed in China Securities Journal and
Securities Times within this report period and the originals of announcements
      (IV) Articles of Association




                                                           Board Chairman: Gong Xiaodong
                                                                YELAND GROUP CO., LTD
                                                                                March 27 th 2006




Page 114                                                                            Respect Creates Value

				
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