On 30 Apr 1998, the company signed an agreement with Jilin Hongshi Forestry Bureau related to the lease of rights to forest timber resources. Under the agreement, 26% of the total log sales per annum will be used as rent, also called Cultivation Funds. On 10 Oct 2008, the two parties signed a supplementary agreement to revise the rent, under which RMB 100 will be paid for 1 cubic meter of logged timber, while the cultivation fund will be paid separately in compliance with relevant state regulations from 1 Jan 2008 to 31 Dec 2008.

As Jilin Hongshi Forestry Bureau is a wholly-owned subsidiary of the company's controlling shareholder, the matter constitutes a related-party transaction.

To reduce related-party transactions, the two companies decided not to renew certain expired related-party transaction agreements related to service.

Board of Directors
27 Oct 2008


Source: Shanghai Stock Exchange

Date: 27 Oct 2008

CN01/TW/SW/JE/KM