On 30 Mar 2004, the company and Industrial and Commercial Bank of China (ICBC), Shenzhen Huaqiang sub-branch, signed an agreement to take a loan of RMB 9.5 mln from ICBC. Shenzhen Kondarl (Group) Co. Ltd and Guangzhou Borong Investment Co. Ltd provided a guarantee on the loan.

On 19 Jun 2004, the company and ICBC, Shenzhen Huaqiang sub-branch, signed an agreement to take a loan of RMB 17 mln form ICBC. Xinjiang Hongda Real Estate Co. Ltd provided a guarantee for the loan.

However, the company failed to repay the abovementioned loans within the time limit. On 12 Jul 2005, ICBC sold its credit rights to the two loans to China Oriental Asset Management Co. Ltd. On 23 Feb 2006 China Oriental Asset Management filed a lawsuit against the company with the Shenzhen Intermediate People’s Court regarding the two loans.

On 9 May 2008 the Court issued an initial ruling as follows:

1. The company must repay the principals of RMB 9.5 mln and RMB 17 mln, as well as related interest, within 10 days from 9 May 2008.
2. Shenzhen Kondarl and Guangzhou Borong must assume joint liability for the RMB 9.5 mln loan, and Xinjiang Hongda must assume joint liability for the RMB 17 mln loan.
3. Legal costs of RMB 350,000 and property maintenance costs of RMB 210,000 must be borne by the company and loan guarantors.

As of the date of this announcement, there was no other information regarding major lawsuits requiring disclosure. The company cannot estimate how the abovementioned judgment will exert an effect on the company’s financial performance, but anticipates that the judgment will have an adverse effect on negotiations between the company and China Oriental Asset Management.

Board of Directors
4 Jun 2008


Source: Securities Times

Date: 5 Jun 2008

CN01/LZ/MM/KM