E_Cir_20131117

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensedsecurities dealer, other licensed corporation, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Lippo China Resources Limited, you should at once hand this circular and theaccompanying form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or other agent throughwhom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for thecontents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liabilitywhatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

This circular is being provided to you solely for the purpose of considering the resolutions to be voted upon at the extraordinary

general meeting of Lippo China Resources Limited. This circular is for information purposes only and does not constitute and is

not an offer to sell or the solicitation of an offer to buy any securities in the United States or elsewhere. The securities have not

been and will not be registered under the U.S. Securities Act of 1933, as amended (the ‘‘U.S. Securities Act’’) and may not be

offered or sold in the United States absent registration under the U.S. Securities Act or an exemption from registration. There will

be no public offering of any of these securities in the United States.

LIPPO CHINA RESOURCES LIMITED

力寶華潤有限公司(Incorporated in Hong Kong with limited liability)

(Stock Code: 156)

VERY SUBSTANTIAL DISPOSAL AND

CONNECTED TRANSACTION

PROPOSED DISPOSAL OF THE

ENTIRE ISSUED SHARE CAPITAL OF TECWELL LIMITED,

CONDITIONAL SPECIAL DIVIDEND AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

Independent Financial Adviser to

the Independent Board Committee and the Independent Shareholders

A letter from the Board is set out on pages 5 to 16 of this circular and a letter from the Independent Board Committee is setout on pages 17 and 18 of this circular, respectively. A letter from Messis Capital Limited, the independent financial adviser,containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 19 to 36 ofthis circular.

A notice convening the extraordinary general meeting of Lippo China Resources Limited to be held at Harcourt Room, LowerLobby, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Tuesday, 3rd December, 2013 at10 : 45 a.m. or any adjourned meeting thereof to approve matters referred to in this circular is set out on pages 95 and 96of this circular.

A form of proxy for use at the extraordinary general meeting is accompanied herewith. Whether or not you are able or intendto attend the extraordinary general meeting, you are requested to complete and return the accompanying form of proxy inaccordance with the instructions printed thereon to the registered office of Lippo China Resources Limited at Room 2301,23rd Floor, Tower One, Lippo Centre, 89 Queensway, Hong Kong as soon as possible but in any event not less than 48 hoursbefore the time appointed for the holding of the extraordinary general meeting or any adjourned meeting thereof. Completionand return of the form of proxy shall not preclude shareholders from attending and voting in person at the extraordinarygeneral meeting or any adjourned meeting thereof should they so desire.

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

18th November, 2013

Page

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Appendix I — Letter from the Independent Board Committee . . . . . . . . . . . . . . . 17

Appendix II — Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . 19

Appendix III — Financial information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Appendix IV — Financial information of the Tecwell Group . . . . . . . . . . . . . . . . . . 52

Appendix V — Unaudited pro forma financial information

of the Remaining Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Appendix VI — Property valuation report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

Appendix VII — General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

CONTENTS

In this circular, unless the context requires otherwise, the following terms and

expressions shall have the following meanings:

‘‘Announcement’’ the joint announcement of Lippo and the Company dated

16th October, 2013 in relation to the Disposal;

‘‘associates’’ has the same meaning as defined in the Listing Rules;

‘‘Board’’ the board of Directors;

‘‘Business Day’’ a day (other than Saturday, Sunday or any day during which

typhoon no. 8 signal (or above) or black rainstorm warning is

hoisted and not lowered by 12 : 00 noon on that day) on which

commercial banks in Hong Kong and Singapore are open for the

transaction of general banking business by members of the

public;

‘‘Company’’ Lippo China Resources Limited 力寶華潤有限公司, a company

incorporated in Hong Kong with limited liability whose shares

are listed on the Main Board of the Stock Exchange and an

approximately 71.24% indirect subsidiary of Lippo;

‘‘Completion’’ completion of the Disposal subject to and pursuant to the terms

and conditions of the Disposal Agreement;

‘‘Completion Date’’ the date of Completion, which shall be the Listing Date;

‘‘Conditional Special

Dividend’’

subject to, among others, Completion, the cash dividend of

HK3.5 cents per Share to be approved and paid by the Company

to the Qualifying Shareholders following Completion;

‘‘Conditions Precedent’’ the conditions precedent to the completion of the Disposal

Agreement;

‘‘connected person(s)’’ has the meaning ascribed to such term under the Listing Rules;

‘‘Consideration’’ the consideration for the sale and purchase of the Sale Shares;

‘‘Directors’’ directors of the Company;

‘‘Disposal’’ the disposal of the Sale Shares, representing the entire issued

share capital of Tecwell, pursuant to the Disposal Agreement;

‘‘Disposal Agreement’’ the agreement dated 16th October, 2013 entered into by the

Company and the Purchaser in respect of the Disposal;

‘‘EGM’’ an extraordinary general meeting of the Company to be

convened on Tuesday, 3rd December, 2013 to consider and, if

thought fit, to approve (i) the Disposal Agreement and the

Disposal; and (ii) the Conditional Special Dividend;

DEFINITIONS

– 1 –

‘‘Extended Long Stop

Date’’

a date no later than 30th June, 2014 or such later date as the

parties may mutually agree in writing;

‘‘Group’’ the Company and its subsidiaries;

‘‘HKC’’ Hongkong Chinese Limited (香港華人有限公司*), a company

incorporated in Bermuda with limited liability whose shares are

listed on the Main Board of the Stock Exchange and an

approximately 56.12% subsidiary of Lippo;

‘‘HKFRS’’ the Hong Kong Financial Reporting Standards;

‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC;

‘‘Independent Board

Committee’’

the committee of the Board, comprising Messrs. Edwin Neo,

King Fai Tsui and Victor Ha Kuk Yung, all being independent

non-executive Directors, formed to advise the Independent

Shareholders in respect of the terms of the Disposal Agreement

and the Disposal;

‘‘Independent Financial

Adviser’’ or

‘‘Messis Capital’’

Messis Capital Limited, a licensed corporation under the SFO to

carry out Type 1 (dealing in securities) and Type 6 (advising on

corporate finance) regulated activities under the SFO, and the

independent financial adviser to the Independent Board

Committee and the Independent Shareholders in respect of the

terms of the Disposal Agreement and the Disposal;

‘‘Independent

Shareholders’’

Shareholders other than Lippo and its associates;

‘‘Joint Venture’’ Lippo ASM Asia Property Limited, which is jointly controlled by

an indirect wholly-owned subsidiary of HKC and Admiralty

Station Management Limited;

‘‘Lanius’’ Lanius Limited;

‘‘Latest Practicable

Date’’

15th November, 2013, being the latest practicable date prior to

the printing of this circular for ascertaining certain information

contained in this circular;

‘‘Lippo’’ Lippo Limited 力寶有限公司, a company incorporated in Hong

Kong with limited liability whose shares are listed on the Main

Board of the Stock Exchange;

‘‘Lippo Capital’’ Lippo Capital Limited;

‘‘Listing Date’’ the date on which the units of OUE Commercial Trust are listed

and commence trading on the SGX-ST;

DEFINITIONS

– 2 –

‘‘Listing Rules’’ or

‘‘Rule’’

the Rules Governing the Listing of Securities on the Stock

Exchange;

‘‘Long Stop Date’’ 28th February, 2014;

‘‘LRSL’’ 力寶置業（上海）有限公司 (Lippo Realty (Shanghai) Limited), acompany established under the laws of the PRC which is whollyowned by Tecwell, an indirect wholly-owned subsidiary of theCompany;

‘‘Model Code’’ Model Code for Securities Transactions by Directors of ListedIssuers, as set out in Appendix 10 to the Listing Rules;

‘‘NAV’’ net asset value, computed based on total assets less totalliabilities, which shall exclude any amount due from/to theshareholders;

‘‘OUE’’ OUE Limited (formerly known as Overseas Union EnterpriseLimited), a company incorporated in the Republic of Singaporewith limited liability and listed on the Main Board of theSGX-ST, which is a joint venture of HKC;

‘‘OUE CommercialTrust’’

OUE Commercial Trust constituted under the laws of theRepublic of Singapore which shall invest mainly in commercialproperties and which units are proposed to be listed on theSGX-ST;

‘‘PRC’’ the People’s Republic of China;

‘‘Property’’ collectively, the 36-storey commercial building named as ‘‘LippoPlaza’’ located at No. 222 Huaihai Zhong Road, HuangpuDistrict, Shanghai, the PRC, excluding Unit 2 on Basement 1,12th, 13th, 15th and 16th Floors and 4 car parking spacesNos. 15, 16, 17 and 26, with a total gross floor area ofapproximately 58,521.54 square metres;

‘‘Purchaser’’ OUE Eastern Limited, a company incorporated in the BritishVirgin Islands with limited liability, which is a wholly-ownedsubsidiary of OUE Commercial Trust;

‘‘QualifyingShareholder(s)’’

Shareholder(s) whose name(s) appear(s) on the register ofmembers of the Company at the close of business on theRecord Date;

‘‘Record Date’’ the record date for determining the entitlements of theQualifying Shareholders to the Conditional Special Dividend;

‘‘Remaining Group’’ the Group other than the Tecwell Group immediately afterCompletion;

‘‘RHL’’ RHL Appraisal Limited, an independent valuer;

DEFINITIONS

– 3 –

‘‘Sale Shares’’ 100 ordinary shares of US$1.00 each in, representing the entireissued share capital of, Tecwell;

‘‘SFO’’ Securities and Futures Ordinance, Chapter 571 of the Laws ofHong Kong;

‘‘SGX-ST’’ Singapore Exchange Securities Trading Limited;

‘‘Share(s)’’ ordinary share(s) of HK$0.10 each in the issued share capital ofthe Company;

‘‘Shareholder(s)’’ holder(s) of the Share(s);

‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited;

‘‘Tecwell’’ Tecwell Limited, a company incorporated in the British VirginIslands with limited liability and an indirect wholly-ownedsubsidiary of the Company;

‘‘Tecwell Group’’ Tecwell and its subsidiary, namely, LRSL;

‘‘A$’’ Australian dollars, the lawful currency of Australia;

‘‘C$’’ Canadian dollars, the lawful currency of Canada;

‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong;

‘‘RMB’’ Renminbi, the lawful currency of the PRC;

‘‘Rp’’ Indonesian rupiahs, the lawful currency of the Republic ofIndonesia;

‘‘S$’’ Singapore dollars, the lawful currency of the Republic ofSingapore;

‘‘THB’’ Thai Baht, the lawful currency of Thailand;

‘‘US$’’ United States dollars, the lawful currency of the United States ofAmerica; and

‘‘%’’ per cent.

* for identification purpose

Note: (1) For use in this circular and for illustration purposes only, conversion of RMB into HK$ is based on

an approximate exchange rate of RMB1.00 to HK$1.26124. No representation is made that any

amount in RMB to HK$ could be converted at such rate or any other rates.

(2) If there is any inconsistency between the Chinese name of the PRC entities mentioned in this circular

and its English translation, the Chinese version shall prevail.

DEFINITIONS

– 4 –



(Stock Code: 156)

Executive Directors:Mr. Stephen Riady (Chairman)Mr. John Luen Wai Lee, BBS, JP

(Chief Executive Officer)

Non-executive Director:

Mr. Leon Nim Leung Chan

Independent Non-executive Directors:

Mr. Edwin Neo

Mr. Victor Ha Kuk Yung

Mr. King Fai Tsui

Registered Office:

Room 2301, 23rd Floor

Tower One

Lippo Centre

89 Queensway

Hong Kong

18th November, 2013

To the Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL DISPOSAL AND

CONNECTED TRANSACTION


ENTIRE ISSUED SHARE CAPITAL OF TECWELL LIMITED,

CONDITIONAL SPECIAL DIVIDEND AND


INTRODUCTION

Reference is made to (i) the Announcement; and (ii) the announcement of theCompany dated 4th November, 2013 in relation to the declaration of the ConditionalSpecial Dividend and the change in use of proceeds from the Disposal. On 16th October,2013, the Company announced that the Company and the Purchaser entered into theDisposal Agreement, pursuant to which, the Company conditionally agreed to procure thesale of, and the Purchaser conditionally agreed to purchase, the Sale Shares, representingthe entire issued share capital of Tecwell, for the Consideration of approximatelyHK$843.5 million (subject to adjustment, if any), which shall be satisfied in cash on theCompletion Date.

LETTER FROM THE BOARD

– 5 –

Tecwell is an indirect wholly-owned subsidiary of the Company. LRSL, being the

owner of the Property, is a wholly-owned subsidiary of Tecwell.

As one or more of the applicable percentage ratios in respect of the Disposal as

calculated under Rule 14.07 of the Listing Rules exceeds 75%, the Disposal constitutes a

very substantial disposal for the Company under the Listing Rules which is subject to the

reporting, announcement and shareholders’ approval requirements.

The Disposal also constitutes a connected transaction for the Company under Rule

14A.13(1)(a) which is subject to the approval of the Independent Shareholders at the EGM.

Lippo and its associates shall abstain from voting in respect of the resolution approving the

Disposal and the Disposal Agreement.

On 4th November, 2013, the Company announced that the Company intends to apply

the net proceeds from the Disposal partly for general corporate purposes of the Group,

including investments and capital expenditure and partly for the payment of the

Conditional Special Dividend. The Board proposes that, subject to the approval of the

Shareholders at the EGM and Completion, the Conditional Special Dividend of

HK3.5 cents per Share be paid to the Qualifying Shareholders. Based on 9,186,912,716

Shares in issue as at the Latest Practicable Date, the Conditional Special Dividend will

amount to approximately HK$321.5 million.

An independent board committee, comprising all of the independent non-executive

Directors, has been established to consider the terms of the Disposal Agreement and advise

the Independent Shareholders as to whether the Disposal was entered into in the ordinary

and usual course of business, and the terms of the Disposal Agreement were agreed on

normal commercial terms and are fair and reasonable and in the interests of the Company

and the Shareholders as a whole.

Messis Capital, an independent financial adviser, has been appointed to advise the

Independent Board Committee and the Independent Shareholders as to whether the

Disposal was entered into in the ordinary and usual course of business, and the terms of the

Disposal Agreement were agreed on normal commercial terms and are fair and reasonable

and in the interests of the Company and the Shareholders as a whole.

The purpose of this circular is to provide, among other things, (i) the details of the

Disposal; (ii) the details of the Conditional Special Dividend; (iii) the letter of

recommendation of the Independent Board Committee to the Independent Shareholders;

(iv) a letter of advice from the Independent Financial Adviser to both the Independent

Board Committee and the Independent Shareholders; (v) financial information of the

Group; (vi) financial information of the Tecwell Group; (vii) unaudited pro forma financial

information of the Remaining Group; (viii) the valuation report of the Property; and

(ix) the notice of the EGM.


– 6 –

THE DISPOSAL AGREEMENT

Date: 16th October, 2013

Parties: (1) The Company (as vendor)

(2) The Purchaser (as purchaser)

The Purchaser is a wholly-owned subsidiary of OUE Commercial Trust. As at the

Latest Practicable Date, OUE is the sponsor of OUE Commercial Trust and currently holds

the only unit in OUE Commercial Trust. It is currently anticipated that OUE will be

interested in up to 50% of the issued units of OUE Commercial Trust upon the listing of

OUE Commercial Trust. The Joint Venture, being a principal joint venture of HKC, is

interested in approximately 68.02% of the issued share capital of OUE (excluding treasury

shares) as at the Latest Practicable Date. As OUE, being a joint venture of HKC, is

regarded as an associate (as defined in the Listing Rules) of Lippo (being the substantial

shareholder of the Company), the Purchaser is therefore deemed to be a connected person

of the Company under the Listing Rules.

The Disposal

Subject to the terms and conditions of the Disposal Agreement, the Company has

conditionally agreed to procure the sale of, and the Purchaser has conditionally agreed to

acquire, the Sale Shares (representing the entire issued share capital of Tecwell), free from

all liens, charges, encumbrances and third party rights and together with all rights attaching

thereto as at the Completion Date.

Tecwell is an indirect wholly-owned subsidiary of the Company. LRSL, being the

owner of the Property, is a wholly-owned subsidiary of Tecwell.

Consideration

The consideration for the Sale Shares shall be the Consideration of approximately

HK$843.5 million (subject to adjustment, if any) and is payable in full by the Purchaser in

cash at Completion. The Consideration may be adjusted upwards or downwards based on

the increase or decrease in NAV of the Tecwell Group (other than the movement of the

value of the Property as it was agreed between the parties as a commercial decision to

include an agreed valuation for the Property to limit exposure to market risks so that any

changes in the value of the Property will not be adjusted) as of the Completion Date when

compared to that of 30th June, 2013. Any adjustment in the Consideration upwards or

downwards post-Completion shall be settled by the Purchaser or the Company (as the case

may be) in cash within 5 Business Days after agreement of such adjustment. For the purpose

of calculating the adjustment amount, the NAV (excluding the value of the Property) based

on the unaudited consolidated management accounts of the Tecwell Group prepared in

accordance with HKFRS as of the Completion Date will be compared against the NAV

(excluding the value of the Property) based on the unaudited consolidated management

accounts of the Tecwell Group prepared in accordance with HKFRS as of 30th June, 2013,

any increase or decrease in the NAV will form the basis of the adjustment amount.


– 7 –

The Consideration was determined after arm’s length negotiations between the

Company and the Purchaser by reference to:

(i) the unaudited NAV of the Tecwell Group in the amount of approximately

HK$849.9 million as at 30th June, 2013;

(ii) a valuation of the Property by RHL of approximately RMB2,030 million

(equivalent to approximately HK$2,560.3 million) as at 30th September, 2013;

and

(iii) the book value of the Property as at 30th June, 2013 of approximately

HK$2,548.5 million.

Based on the unaudited accounts of the Tecwell Group as of 30th June, 2013, the book

value of the Property amounted to approximately HK$2,548.5 million, which is comparable

to the valuation made by RHL of approximately HK$2,560.3 million as at 30th September,

2013. The NAV of approximately HK$849.9 million was arrived at based on the above book

value of the Property of approximately HK$2,548.5 million, the other assets of

approximately HK$129.9 million and other liabilities of HK$1,828.5 million of the

Tecwell Group as of 30th June, 2013 with details set out in the unaudited consolidated

statement of financial position of the Tecwell Group on pages 55 and 56 of this circular.

These assets and liabilities will be disposed of under the Disposal. Accordingly, the

Directors are of the view that there is no significant premium in the value of the Property

when compared with the Consideration, which was derived from the NAV.

The valuation in item (ii) above refers to the valuation of the Property in its existing

state as at 30th September, 2013 prepared by RHL using the direct comparison approach.

Given the Disposal is a disposal of the entire issued share capital of Tecwell, the

consideration for the Disposal also takes into consideration other assets and liabilities on

the books of the Tecwell Group which include cash balances, rental deposits received, bank

loans and tax liabilities.

Conditions Precedent of the Disposal Agreement

Completion of the Disposal Agreement shall be conditional upon:

(i) the approvals of the Independent Shareholders and the shareholders of Lippo for

the entering into by the Company of the Disposal Agreement and the Disposal

having been obtained in accordance with the requirements of the Listing Rules or

any other applicable laws or regulations, if so required;

(ii) the obligations of the underwriters under the underwriting agreement to be

entered into between, among others, OUE Commercial Trust and the underwriters

in respect of the offering and listing on the SGX-ST of the units of

OUE Commercial Trust becoming unconditional in all respects (including, if

relevant, as a result of the waiver of any condition(s) by or on behalf of the


– 8 –

underwriters) and the underwriting agreement not being terminated in accordance

with its terms or otherwise, on or before the dates and times to be specified

therein;

(iii) all necessary consents as required by the Company, the Purchaser and/or their

respective holding companies to complete the Disposal Agreement and the

Disposal being obtained; and

(iv) no event or circumstance shall have occurred in respect of or in connection with

the affairs of Tecwell, LRSL and/or the Property which has or will have a material

adverse effect.

If the Conditions Precedent were not fulfilled on or before the Long Stop Date, the

Company may serve a written notice to extend the Long Stop Date to the Extended Long

Stop Date. If the Conditions Precedent are still not fulfilled by the Extended Long Stop

Date, the Disposal Agreement will be terminated and cease to be of effect and none of the

parties shall have any rights against any other party except for (where applicable) liability

for any antecedent breach of its obligations under the Disposal Agreement.

Completion

Subject to the satisfaction of the Conditions Precedent and other terms and conditions

of the Disposal Agreement, the Completion of the Disposal Agreement shall take place on

the Listing Date. At the request of the Purchaser, the Company has agreed to the Condition

Precedent that Completion is conditional on the underwriting agreement in respect of the

offering and listing of the units of OUE Commercial Trust on the SGX-ST becoming

unconditional and for the Completion to take place on the Listing Date as a commercial

decision as the Purchaser will be utilising the proceeds from the initial public offering of the

units of OUE Commercial Trust to, amongst other things, pay the Consideration in cash.

Upon Completion, the Tecwell Group will cease to be subsidiaries of the Company and

the results, assets and liabilities of the Tecwell Group will cease to be consolidated into the

accounts of the Company.

At Completion, the Purchaser will deliver a deed of undertakings to be entered on the

Completion Date duly executed by the Purchaser and LRSL in favour of the Company

(‘‘Deed of Undertakings’’) pursuant to which each of the Purchaser and LRSL undertakes

that it shall, and shall procure its successors and permitted assigns, to use its best

endeavours and exercise all rights within its power to prevent the change of name of Lippo

Plaza, and not to exercise, or take any action to change the name of Lippo Plaza, without

the prior written consent of the Company or its assignee.

It is currently anticipated that the Company will not subscribe for any units in

OUE Commercial Trust upon its listing on the SGX-ST.


– 9 –

INFORMATION ON THE TECWELL GROUP

Tecwell, an indirect wholly-owned subsidiary of the Company, is a limited liability

company incorporated in the British Virgin Islands. It is an investment holding company

which wholly owns LRSL. The Property was developed by LRSL and has been held for

rental purpose since its completion in 1999. The principal activities of the Tecwell Group

are property investment and leasing.

Set out below is the audited consolidated financial information of the Tecwell Group

for the twelve months ended 31st December, 2011 and 31st December, 2012, and the

unaudited consolidated financial information of the Tecwell Group for the fifteen months

ended 31st March, 2013, respectively, prepared under the HKFRS:

For the twelve

months ended

31st December,

2011

For the twelve

months ended

31st December,

2012

For the fifteen

months ended

31st March,

2013

HK$’000 HK$’000 HK$’000

Net profit before taxation 179,275 429,391 474,672

Net profit after taxation 133,674 311,255 340,298

Net profit after taxation

(excluding net fair value gain

on investment property) 70,458 32,625 31,956

INFORMATION ON THE PURCHASER

The Purchaser is a company incorporated in the British Virgin Islands as an investment

holding company. It is a wholly-owned subsidiary of OUE Commercial Trust.

As disclosed in the announcements of OUE dated 25th September, 2013 and

16th October, 2013, OUE Commercial Trust, which units are proposed to be listed on

the SGX-ST shall invest mainly in commercial properties with the expected initial portfolio

to include OUE Bayfront, being an 18-storey office building located at 50 Collyer Quay,

Singapore 049321, together with its ancillary properties comprising a conserved tower

building used for a food and beverage outlet and a link bridge with retail shops as well as

the Property. As such, it is expected that the Property will not be the only asset or property

in the initial portfolio of OUE Commercial Trust.

REASONS FOR THE DISPOSAL

The principal business activity of the Company is investment holding. The principal

activities of the subsidiaries and associated companies of the Company include investment

holding, property investment, property development, food business, property management,

mineral exploration, extraction and processing, securities investment, treasury investment

and money lending.


– 10 –

The Board undertakes a strategic review of the Group’s assets from time to time with a

view to maximizing returns to the Shareholders, which may include a possible sale of certain

properties held for investment purposes. The Disposal will enable the Group to unlock the

value of the Property which is held by the Group for investment purposes and the proceeds

can be used by the Group to (i) pursue other growth opportunities, (ii) fund its future

business plans and capital expenditure, and/or (iii) enable it to reduce its existing

borrowings. As at the Latest Practicable Date, the Group did not have any plan nor has

entered into any agreement on any acquisition and/or investment in new business and/or

material assets. However, the Group will be in a stronger cash position after the Disposal

and will be well prepared and readily able to take on any new investment opportunities with

a long term growth potential should such opportunities arise in the near future. In addition,

the Group can focus its resources on its existing property development projects which have

started and would take years to complete. Moreover, the excess cash could be applied to

reduce the Group’s borrowings in order to save some finance costs.

The Property was developed by the Group and has been held by the Group since

completion of the development in 1999. The Property is a mature asset, which whilst

providing stable rental income, does not have the growth in terms of earnings expected by

the Board. The Company wishes to realize full value of the Property. The Disposal enables

the Group to recycle capital into future investment opportunities. The Disposal is also in

line with the Company’s policy of realising profit at appropriate time as the Company also

disposed of a number of investment properties during the previous accounting period for an

aggregate consideration of HK$622 million. In light of pronouncements from the

government of the PRC, the Board foresees relatively stable and moderate growth in the

PRC economy in the short to medium term, as the country enters into a more mature

growth phase.

While it is noted from the unaudited pro forma financial information that the results of

the Group for the fifteen months ended 31st March, 2013 would change from a profit to a

loss assuming the Disposal had taken place on 1st January, 2012, the Directors are of the

view that the terms of the Disposal Agreement are fair and reasonable and in the interests of

the Shareholders as a whole due to the following reasons:

(a) the pro forma financial information was prepared for illustrative purposes only.

As such, given its nature, it may not give a true picture of the Group’s financial

position or results. For example, such pro forma financial results have not taken

into account the income derived from the proceeds of the Disposal; and

(b) the Directors also considered a number of factors, including but not limited to,

financial impact, business prospects, market factors, etc., as a whole when

undertaking the strategic review of the Group’s assets/business from time to time

in order to make any business decision.


– 11 –

In view of the above, the basis of determination of the Consideration (including NAV

of the Tecwell Group and the valuation of the Property) and the expected gain from the

Disposal as stated below, the Directors (including the independent non-executive Directors

who have expressed their view in the ‘‘Letter from the Independent Board Committee’’ in

this circular after receiving advice from the Independent Financial Adviser, but excluding

Mr. Stephen Riady who has abstained from voting on the relevant Board resolution due to

his deemed interest in the Disposal Agreement) are of the view that the terms of the

Disposal Agreement (including the Consideration) are fair and reasonable and the Disposal

is in the interests of the Company and the Shareholders as a whole.

As at the Latest Practicable Date, the Group did not have any plan nor has entered

into any agreement, arrangement, understanding, intention or negotiation on (i) any

disposal, termination and/or scaling-down of the existing business (including the Group’s

property investments) and major assets; and/or (ii) any acquisition and/or investment in

new business and/or material assets. The Company will comply with the relevant

requirements under the Listing Rules in the event of any of such transactions are entered

into.

CONDITIONAL SPECIAL DIVIDEND

The Board proposes that, subject to the approval by the Shareholders at the EGM and

the Completion, a special dividend of HK3.5 cents per Share be paid to the Qualifying

Shareholders to distribute the excess cash as a return to the Shareholders. However, the

Disposal is not conditional on the Conditional Special Dividend being approved by the

Shareholders at the EGM. Based on 9,186,912,716 Shares in issue as at the Latest

Practicable Date, the Conditional Special Dividend will amount to approximately

HK$321.5 million, which is approximately 40% of the net proceeds from the Disposal.

The Conditional Special Dividend will be paid in cash to the Qualifying Shareholders out of

the Company’s distributable reserves and contributed by the net proceeds from the

Disposal. An ordinary resolution will be put forward at the EGM for approving the

Conditional Special Dividend. As all interests of the Shareholders are aligned in respect of

the Conditional Special Dividend, to the best of the Directors’ knowledge and belief, no

Shareholders are required to abstain from voting at the ordinary resolution approving the

Conditional Special Dividend at the EGM.

Further announcement will be made by the Company when Completion has taken

place and the details of the Record Date and closure of the register of members of the

Company in determining the Qualifying Shareholders’ entitlement to the Conditional

Special Dividend will be announced therein in compliance with the Listing Rules.


– 12 –

USE OF PROCEEDS

With reference to the announcement of the Company dated 4th November, 2013,

having analysed the cash requirements of the Group and distributable reserve position of

the Company after the Disposal Agreement was entered into and the Announcement was

published, the Board proposed to change the use of proceeds as disclosed in the

Announcement and approved the payment of the Conditional Special Dividend on

4th November, 2013 to distribute the excess cash as a return to the Shareholders. The net

proceeds from the Disposal, after deducting expenses and related taxes attributable to the

Disposal, are estimated to be approximately HK$755.3 million (subject to adjustment and

audit), which are currently expected to be applied by the Company as to (i) approximately

HK$433.8 million for general corporate purposes of the Group, including investments (such

as new or additional existing investments which may include short term and long term

investments, capital or trading in nature, property-related or financial investments) and

capital expenditure (such as expenditure which is capital in nature including but not limited

to development costs, renovation costs and capital injection); and (ii) subject to, among

others, the Completion, approximately HK$321.5 million for payment of the Conditional

Special Dividend to distribute the excess cash as a return to the Shareholders.

FINANCIAL EFFECTS OF THE DISPOSAL ON THE REMAINING GROUP AND

CONDITIONAL SPECIAL DIVIDEND

According to the unaudited accounts of the Tecwell Group, the NAV of the Tecwell

Group was approximately HK$849.9 million as at 30th June, 2013.

The Disposal is expected to give rise to a net gain attributable to the Group of

approximately HK$148.5 million (subject to adjustment and audit), calculated based on the

difference between the Consideration and the NAV of the Tecwell Group as of 30th June,

2013, net of relevant tax and expenses and release of exchange equalisation reserve.

Shareholders should note that the exact amount of the gain on the Disposal to the

Group would be calculated by reference to the NAV of the Tecwell Group as at Completion

and therefore may be different from the amount mentioned above.

Based on the unaudited pro forma financial information of the Remaining Group as

set out in the Appendix V to this circular, the financial effects of the Disposal on the Group

are summarised as follows:

(i) the Group’s total assets would decrease from approximately HK$7,781 million to

HK$5,590 million, and the Group’s total liabilities would decrease from

approximately HK$2,966 million to approximately HK$1,107 million assuming

the Disposal had been completed on 31st March, 2013; and

(ii) the Group’s results would change from a profit attributable to equity holders of

the Company for the fifteen months ended 31st March, 2013 of approximately

HK$293.4 million to a loss of approximately HK$35.6 million, which is calculated

based on the assumption that the Disposal had been completed on 1st January,

2012.


– 13 –

It should be noted that the aforementioned estimations are for illustrative purpose

only and do not purport to represent how the financial position and performance of the

Remaining Group will be upon Completion.

According to the audited accounts of the Company for the fifteen months ended

31st March, 2013, the Company has distributable reserves of approximately

HK$743.6 million, which included an amount of the final dividend for the period then

ended of HK$68.9 million approved and paid after the end of such reporting period.

Shareholders and potential investors should note that (i) the Disposal; and (ii) the

Conditional Special Dividend may or may not proceed, as they are subject to a number of

conditions, which may or may not be fulfilled. Shareholders and potential investors are

reminded to exercise caution when dealing in the Shares.

IMPLICATION OF THE LISTING RULES





The Purchaser is a wholly-owned subsidiary of OUE Commercial Trust. Subject to,

inter alia, the authorisation of OUE Commercial Trust and the registration of the

prospectus in relation to the establishment and listing of OUE Commercial Trust by the

Monetary Authority of Singapore, and such terms and conditions which may be imposed by

the SGX-ST for such listing, units in OUE Commercial Trust will be listed on the SGX-ST.

As at the Latest Practicable Date, OUE is the sponsor of OUE Commercial Trust and

holds the only unit in OUE Commercial Trust. It is currently anticipated that OUE will be


OUE Commercial Trust. The Joint Venture, being a principal joint venture of HKC, is

interested in approximately 68.02% of the issued share capital of OUE (excluding treasury

shares) as at the Latest Practicable Date. Accordingly, OUE is a joint venture of HKC. As

at the Latest Practicable Date, HKC is a subsidiary owned as to approximately 56.12% by

Lippo. Lippo is a controlling shareholder of the Company and is interested in

approximately 71.24% of the issued share capital of the Company. Accordingly, the

Purchaser is regarded as a connected person of the Company under the Listing Rules.

In view of the above, the Disposal also constitutes a connected transaction for the

Company under Rule 14A.13(1)(a) of the Listing Rules which is subject to the approval of

the Independent Shareholders at the EGM. Lippo and its associates who in aggregate are

interested in approximately 71.24% of the issued share capital of the Company shall abstain

from voting in respect of the resolution approving the Disposal Agreement and the Disposal

at the EGM. Save for Lippo and its associates, to the best of the Directors’ knowledge and

belief, no other Shareholders are required to abstain from voting in respect of the resolution

approving the Disposal Agreement and the Disposal at the EGM.


– 14 –

None of the Directors has a material interest in the Disposal Agreement and the

Disposal save for Mr. Stephen Riady who has a deemed interest in Lippo Capital. As at the

Latest Practicable Date, Lippo is owned as to approximately 64.75% by Lippo Capital

which in turn is wholly owned by Lanius. Lanius is a trustee of a discretionary trust, of

which the beneficiaries include, inter alia, Mr. Stephen Riady and other members of his

family. Accordingly, Mr. Stephen Riady is deemed to have a material interest in the

Disposal Agreement due to his deemed interests in the Company through Lippo Capital,

and had abstained from voting on the relevant Board resolution in respect of the resolution

approving the Disposal Agreement and the Disposal.

In addition, in order to save transaction and registration costs incurred by the

Shareholders of the Company, the Board is considering to change the board lot size for

trading of the Shares after the EGM. Further announcement will be made by the Company

in relation to, among others, details of the proposed change in board lot size, the effective

date and expected timetable of the proposed change in board lot size as soon as practicable

in compliance with Rule 13.52B of the Listing Rules.

EGM

The EGM will be convened and held at Harcourt Room, Lower Lobby, Conrad Hong

Kong, Pacific Place, 88 Queensway, Hong Kong on Tuesday, 3rd December, 2013 at

10 : 45 a.m. for the Independent Shareholders (in respect of item (i) below) and the

Shareholders (in respect of item (ii) below) to consider and, if thought fit, approve:

(i) the Disposal Agreement and the Disposal; and

(ii) the Conditional Special Dividend.

The notice convening the EGM is set out on pages 95 and 96 of this circular.

A form of proxy for use at the EGM is enclosed. Whether or not you are able or intend

to attend the EGM, you are requested to complete and return the accompanying form of

proxy in accordance with the instructions printed thereon to the registered office of the

Company at Room 2301, 23rd Floor, Tower One, Lippo Centre, 89 Queensway, Hong Kong

as soon as possible but in any event not less than 48 hours before the time appointed for the

holding of the EGM or any adjourned meeting thereof. Completion and return of the form

of proxy shall not preclude you from attending and voting in person at the EGM or any

adjourned meeting (as the case may be) should you so wish.

VOTING BY POLL AT GENERAL MEETINGS

Pursuant to the requirements under the Listing Rules, any votes of shareholders at a

general meeting must be taken by poll. Therefore, the chairman of the EGM will exercise his

power under the articles of association of the Company to demand a poll for the relevant

resolution put forward at the EGM. The Company will appoint scrutineers to handle

vote-taking procedures at the EGM. The results of the poll will be published on the Stock

Exchange’s website at www.hkexnews.hk and the Company’s website at www.lcr.com.hk as

soon as possible after the conclusion of the EGM.


– 15 –

RECOMMENDATION

The Directors (including the independent non-executive Directors after considering the

advice from Messis Capital but excluding Mr. Stephen Riady who has abstained from

voting on the relevant Board resolution due to his deemed interest in the Disposal

Agreement) believe that the terms of the Disposal Agreement are on normal commercial

terms, in the ordinary and usual course of business and are fair and reasonable and are in

the interests of the Company and the Shareholders as a whole and that the Conditional

Special Dividend is in the interests of the Company and the Shareholders as a whole.

Accordingly, the Directors recommend (i) the Independent Shareholders to vote in favour

of the ordinary resolution approving the Disposal Agreement and the Disposal; and (ii) the

Shareholders to vote in favour of the ordinary resolution approving the Conditional Special

Dividend, at the EGM.

ADDITIONAL INFORMATION

Your attention is drawn to the letter from the Independent Board Committee and the

letter from the Independent Financial Adviser as set out in Appendix I and Appendix II to

this circular, respectively, which contain, amongst other matters, the Independent Board

Committee’s recommendation to the Independent Shareholders and the Independent

Financial Adviser’s advice to the Independent Board Committee and the Independent

Shareholders in relation to the Disposal Agreement and the Disposal, and additional

information set out in the appendices to this circular.

Yours faithfully,

By Order of the Board


John Luen Wai Lee

Chief Executive Officer


– 16 –

The following is the full text of a letter to the Independent Shareholders from the

Independent Board Committee prepared for the purpose of incorporation into this circular:



(Stock Code: 156)

18th November, 2013

To the Independent Shareholders,

Dear Sir or Madam,

VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTION


ENTIRE ISSUED SHARE CAPITAL OF TECWELL LIMITED

We refer to the circular of the Company to the Shareholders dated 18th November,

2013 (the ‘‘Circular’’), of which this letter forms a part. The terms used in this letter shall

have the same meanings as defined in the Circular unless the context otherwise requires.

As independent non-executive Directors who are independent of the parties to the

Disposal Agreement, we have been appointed to form this Independent Board Committee

to advise you as to whether, in our opinion, the terms of the Disposal Agreement and the

Disposal are fair and reasonable so far as the Company and Shareholders as a whole are

concerned.

Messis Capital has been appointed as the Independent Financial Adviser to advise this

Independent Board Committee and the Independent Shareholders on the fairness and

reasonableness of the terms of the Disposal Agreement and the Disposal.

We wish to draw your attention to the letter from the Board, as set out on pages 5 to 16

of the Circular, and the letter of advice from the Independent Financial Adviser, as set out

in Appendix II to the Circular, both of which provide details of the Disposal Agreement.

Having considered the advice rendered by the Independent Financial Adviser and the

principal factors and reasons taken into consideration by it in arriving at its advice, we are

of the opinion that the terms of the Disposal Agreement and the Disposal are in the

interests of the Company and the Independent Shareholders as a whole and the terms of the

Disposal Agreement and the Disposal are on normal commercial terms, in the ordinary

course of business, and fair and reasonable so far as the Independent Shareholders are

APPENDIX I LETTER FROM THE INDEPENDENT BOARD COMMITTEE

– 17 –

concerned. Accordingly, we recommend the Independent Shareholders to vote in favour of

the ordinary resolution which will be proposed at the EGM to approve the Disposal

Agreement and the Disposal.

Yours faithfully,

The Independent Board Committee of


Edwin Neo

King Fai Tsui

Victor Ha Kuk Yung

Independent non-executive Directors

APPENDIX I LETTER FROM THE INDEPENDENT BOARD COMMITTEE

– 18 –

The following is the full text of the letter from the Independent Financial Adviser

which sets out its advice to the Independent Board Committee and the Independent

Shareholders for inclusion in this circular.

18th November, 2013

To: The Independent Board Committee and the Independent Shareholders

of Lippo China Resources Limited

Dear Sir/Madam,

VERY SUBSTANTIAL DISPOSAL

AND CONNECTED TRANSACTION

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent

Board Committee and the Independent Shareholders in connection with the Disposal,

details of which are set out in the letter from the Board (the ‘‘Letter from the Board’’)

contained in the circular of the Company to the Shareholders dated 18th November, 2013

(the ‘‘Circular’’), of which this letter forms part. Capitalised terms used in this letter shall

have the same meanings as defined in the Circular unless the context otherwise requires.

On 16th October, 2013, the Company and the Purchaser entered into the Disposal

Agreement, pursuant to which, the Company conditionally agreed to procure the sale of,

and the Purchaser conditionally agreed to purchase the Sale Shares, representing the entire

issued share capital of Tecwell, for the Consideration of approximately HK$843.5 million

(subject to adjustment, if any), which shall be satisfied in cash on the Completion Date.





The Purchaser is a wholly-owned subsidiary of OUE Commercial Trust. Subject to,

inter alia, the authorisation of OUE Commercial Trust and the registration of the

prospectus in relation to the establishment and listing of OUE Commercial Trust by the

Monetary Authority of Singapore, and such terms and conditions which may be imposed by

the SGX-ST for such listing, units in OUE Commercial Trust will be listed on the SGX-ST.

As at the Latest Practicable Date, OUE is the sponsor of OUE Commercial Trust and

holds the only unit in OUE Commercial Trust. It is currently anticipated that OUE will be


APPENDIX II LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

– 19 –

OUE Commercial Trust. A principal joint venture of HKC is interested in approximately

68.02% of the issued share capital of OUE (excluding treasury shares) as at the Latest

Practicable Date. Accordingly, OUE is a joint venture of HKC. As at the Latest Practicable

Date, HKC is a subsidiary owned as to approximately 56.12% by Lippo. Lippo is a

controlling shareholder of the Company and is interested in approximately 71.24% of the

issued share capital of the Company. Accordingly, the Purchaser is regarded as a connected

person of the Company under the Listing Rules. Therefore, the Disposal also constitutes a

connected transaction for the Company under Rule 14A.13(1)(a) of the Listing Rules,

which is subject to the approval of the Independent Shareholders at the EGM by way of

poll. Lippo and its associates who in aggregate are interested in approximately 71.24% of

the issued share capital of the Company shall abstain from voting in respect of the

resolution approving the Disposal Agreement and the Disposal at the EGM. Save for Lippo

and its associates, to the best of the Directors’ knowledge and belief, no other Shareholders

are required to abstain from voting in respect of the resolution approving the Disposal

Agreement and the Disposal at the EGM.

None of the Directors has a material interest in the Disposal Agreement and the

Disposal save for Mr. Stephen Riady who has deemed interest in Lippo Capital. As at the

Latest Practicable Date, Lippo is owned as to approximately 64.75% by Lippo Capital

which in turn is wholly owned by Lanius. Lanius is a trustee of a discretionary trust, of

which the beneficiaries include, inter alia, Mr. Stephen Riady and other members of the

family. Accordingly, Mr. Stephen Riady is deemed to have a material interest in the

Disposal Agreement due to his deemed interests in the Company and Lippo through Lippo

Capital, and would be required to abstain from voting on the relevant Board resolution of

the Company in respect of the resolution approving the Disposal Agreement and the

Disposal.

The Independent Board Committee comprising all the independent non-executive

Directors, namely Messrs. Edwin Neo, King Fai Tsui and Victor Ha Kuk Yung has been

established to advise the Independent Shareholders as to whether the terms of the Disposal

Agreement are on normal commercial terms and the Disposal is fair and reasonable so far

as the Independent Shareholders are concerned and in the interests of the Company and the

Shareholders as a whole. We, Messis Capital, have been appointed as the Independent

Financial Adviser to advise the Independent Board Committee and the Independent

Shareholders in these regards and to give our opinion in relation to the Disposal for the

Independent Board Committee’s consideration when making their recommendation to the

Independent Shareholders.

BASIS OF OUR OPINION AND RECOMMENDATION

In arriving at our recommendation, we have relied on the statements, information and

representations contained in the Circular and the information and representations provided

to us by the Directors and the management of the Company. We have assumed that all

information and representations contained or referred to in the Circular and all information

and representations which have been provided by the Directors and the management of the

Company are true and accurate at the time they were made and will continue to be accurate


– 20 –

as at the date of the despatch of the Circular. We have no reason to doubt the truth,

accuracy and completeness of the information and representations provided to us by the

Directors and the management of the Company.

The Directors jointly and severally accept full responsibility for the accuracy of the

information contained in the Circular and confirm, having made all reasonable enquiries,

that to the best of their knowledge and belief, opinions expressed by them in the Circular

have been arrived at after due and careful consideration and there are no other material

facts not contained in the Circular; the omission of which would make any such statement

made by them that contained in the Circular misleading in all material respects. We

consider that we have been provided with sufficient information on which to form a

reasonable basis for our opinion. We have no reason to suspect that any relevant

information has been withheld, nor are we aware of any material facts or circumstances

which would render the information provided and representations made to us untrue,

inaccurate or misleading. We consider that we have performed all the necessary steps to

enable us to reach an informed view and to justify our reliance on the information provided

so as to provide a reasonable basis for our opinion. We have not, however, carried out any

independent verification of the information provided by the Directors and the management

of the Company, nor have we conducted an independent investigation into the business and

affairs of the Group, the Purchaser and their respective associates.

This letter is issued for the information of the Independent Board Committee and the

Independent Shareholders solely in connection with their consideration of the Disposal

Agreement, except for its inclusion in the Circular, is not to be quoted or referred to, in

whole or in part, nor shall this letter be used for any other purposes, without our prior

written consent.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation to the Independent Board Committee

and the Independent Shareholders, we have considered the following principal factors and

reasons:

1. Background and financial information of the Group

The principal activity of the Company is investment holding. Its subsidiaries and

associates are principally engaged in investment holding, property investment,

property development, food beverage business, property management, mineral

exploration, extraction and processing, securities investment, treasury investment

and money lending.


– 21 –

Set out below is a summary of the consolidated financial results of the Group for

the fifteen months ended 31st March, 2013 and the years ended 31st December, 2011

and 31st December, 2010 as extracted from the Company’s annual report for the fifteen

months ended 31st March, 2013 (‘‘2012/2013 Annual Report’’) and for the year ended

31st December, 2011 (‘‘2011 Annual Report’’), with results for the years ended 31st

December, 2011 and 31st December, 2010 restated to align with the implementation of

the new accounting standards effective for the fifteen months ended 31st March, 2013 :

For the year ended

31st December,

For the fifteen

months ended

31st March,

2010 2011 2013

HK$’000 HK$’000 HK$’000

(Restated) (Restated)

Turnover

Property investment 202,591 221,521 280,392

Property development — — 77,713

Treasury investment 2,501 3,096 5,720

Securities investment 15,763 2,392 8,940

Other 64,081 17,363 23,337

Total 284,936 244,372 396,102

Profit attributable to equity holders

of the Company 758,940 316,735 293,364

As shown in the above table, the Group recorded total revenue of approximately

HK$396.1 million for the fifteen months ended 31st March, 2013, representing an

increase of approximately 62.1% from approximately HK$244.4 million in the

previous financial year. Property investment and property development were the

principal sources of revenue of the Group.

The increase in the Group’s total revenue for the fifteen months ended

31st March, 2013 was mainly attributable to the longer financial period that was

covered and the growth of revenue from the property development and property

investment segments which increased from approximately HK$221.5 million for the

year ended 31st December, 2011 to approximately HK$358.1 million for the fifteen

months ended 31st March, 2013. Moreover, the Group recorded a fair value gain on

investment properties of approximately HK$534.1 million for the fifteen months ended

31st March, 2013 as compared to that of approximately HK$384.3 million in the

previous financial year. Revenue from the property development and property

investment businesses represented approximately 90.4% of the Group’s total revenue

for the fifteen months ended 31st March, 2013.


– 22 –

The Group recorded a profit attributable to equity holders of the Company for

the fifteen months ended 31st March, 2013 of approximately HK$293.4 million,

representing a slight decrease of approximately 7.4% as compared to that of the

previous financial year.

For the year ended 31st December, 2011, the Group recorded a total revenue of

approximately HK$244.4 million, representing a decrease of approximately 14.2% as

compared to the year ended 31st December, 2010. The Group’s profit attributable to

the equity holders of the Company for the year ended 31st December, 2011 was

approximately HK$316.7 million, representing a significantly decrease of

approximately 58.3% from approximately HK$758.9 million for the year ended 31st

December, 2010. As stated in the 2011 Annual Report, the reduction in profit

attributable to the equity holders of the Company was primarily attributable to lower

fair value gain of investment properties as compared with the previous financial year.

2. Background of the Tecwell Group

(i) Information on the Tecwell Group and the Property

As stated in the Letter from the Board, Tecwell, an indirect wholly-owned

subsidiary of the Company, is a limited liability company incorporated in the

British Virgin Islands. It is an investment holding company which wholly owns

LRSL. LRSL owns the Property.

The Property is a 36-storey commercial building for office and retail

purposes as well as a 3-storey basement for car parking and commercial purposes.

It is located at No. 222, Huaihai Zhong Road, Huangpu District, Shanghai, the

PRC. The Property was developed by LRSL and has been held for rental purpose

since its completion in 1999. The principal activities of the Tecwell Group are

property investment and leasing.


– 23 –

(ii) Financial information of the Tecwell Group

Set out below is a summary of the unaudited consolidated financial

information of the Tecwell Group for the twelve months ended 31st December,

2010, 31st December, 2011 and the fifteen months ended 31st March, 2013 and the

three months ended 30th June, 2013, respectively, as extracted from Appendix IV

to this circular, prepared in accordance with the HKFRS:

For the year ended

31st December,

For the fifteen

months ended

31st March,

For the three

months ended

30th June,

2010 2011 2013 2013

HK$’000 HK$’000 HK$’000 HK$’000

Fair value gain/(loss) on

investment properties 423,358 97,671 429,553 (355,538)

Net profit/(loss) before

taxation 479,579 179,275 474,672 (341,232)

Net profit/(loss) after

taxation 358,613 133,674 340,298 (257,858)

As at

31st December,

As at

31st March,

As at

30th June,

2010 2011 2013 2013

HK$’000 HK$’000 HK$’000 HK$’000

NAV 1,363,435 1,442,904 1,076,225 849,879

For the fifteen months ended 31st March, 2013, the net profit before and

after taxation of the Tecwell Group was approximately HK$474.7 million and

HK$340.3 million respectively. The profit attributable to the Tecwell Group for

the two years ended 31st December, 2011 and the fifteen months ended

31st March, 2013 was mainly due to the gain on fair value of investment

properties. The unaudited NAV of the Tecwell Group was approximately

HK$849.9 million as at 30th June, 2013.

3. Reasons for and benefit of the Disposal

(i) Shanghai property market

With reference to the 2012/2013 Annual Report, we noted that it was the

Group’s strategy to streamline and strengthen its existing business and operations

due to the tightening liquidity conditions in the PRC which might impede its

economic growth. As stated in the Letter from the Board, the Board undertakes

strategic reviews of the Company’s assets from time to time with a view to

maximizing returns to the Shareholders, which may include a possible sale of

certain properties held for investment purposes.


– 24 –

According to the statistics announced by the Shanghai Municipal Statistics

Bureau on 25th July, 2013, the value of the gross domestic product in Shanghai in

the first half of 2013 reached approximately RMB1,016.9 billion, representing an

increase of approximately 7.7% year-on-year. Investment in the office sector

increased from approximately RMB9.5 billion in the first half of 2013 to

approximately RMB18.0 billion, representing a significant increase of

approximately 88.9% year-on-year.

Despite the Shanghai economy continuing to prove resilient, the Shanghai

office market was largely flat in the second quarter of 2013. As disclosed in

reports titled ‘‘China Property Market Quarterly Review Q1 2013’’ and ‘‘China

Property Market Quarterly Review Q2 2013’’ issued by Vigers (an international

real estate adviser) in May and August 2013 respectively, there were in aggregate

6,536 and 5,526 office units sold in Shanghai in the first quarter of 2013 (‘‘Q1

2013’’) and the second quarter of 2013 (‘‘Q2 2013’’) respectively. However, the

total transacted area has demonstrated a downward trend of 502,801 square

meters in Q1 2013 and 459,517 square meters in Q2 2013, representing a decrease

of approximately 21.2% quarter on quarter in Q1 2013 and 8.6% quarter on

quarter in Q2 2013. The overall Grade-A office stock has reached approximately

6,100,000 square meters following the new supply of approximately 210,000

square meters entered into the market in Q2 2013. It is anticipated that over

800,000 square meters of new supply will be completed between 2013 and early

2014.

Given the ample supply of office space coming to the market in the coming

years, the short-term market yield for Grade-A offices and the vacancy rate are

expected to maintain a slow pace of growth. However, the Independent

Shareholders should note that the above analysis is based on historical

information and therefore the market yield that the Group would benefit may

be different from the aforementioned.

Based on the above, in particular, due to the increase in supply of office space

in the coming years and the fact that the Shanghai office market was largely flat in

Q2 of 2013, we believe that the Disposal would be an opportunity to the Group to

realize profit from its investment at the current market environment. Accordingly,

we concur with the Directors’ view that the Disposal is in line with the Group’s

business strategy to realize profit of its investment properties at appropriate time

as the Company also disposed of a number of investment properties in the past.


– 25 –

(ii) The Disposal and the remaining business of the Group

Based on the financial information of the Tecwell Group as set out in

Appendix IV to the circular, the Tecwell Group recorded revenue of

approximately HK$137.3 million and HK$180.1 million for the year ended 31st

December, 2011 and for the fifteen months ended 31st March, 2013 respectively.

The Property was completed in 1999 and exceeds 14 years of age. As advised

by the management, the Property is currently under renovation. Based on the

building contractor estimation, the maintenance cost of the Property is

approximately HK$40.0 million, of which approximately HK$4.8 million had

been incurred by the Tecwell Group as at 30th June, 2013. In view of that (i) the

relatively high maintenance cost of the Property; (ii) the Disposal will enable the

Company to eliminate such maintenance costs; (iii) the Disposal can provide the

Company with an opportunity to realize its investment in Tecwell Group and it is

expected that the Company will gain approximately HK$148.5 million from the

Disposal; (iv) the Disposal also allow the Group to reallocate its resources

effectively on its existing business and/or other new opportunities that may arise

in the future; and (v) part of the net proceeds from the Disposal will be applied as

to fund the Company’s future business and capital expenditure as further

discussed below and the payout of the Conditional Special Dividend, we consider

that the Disposal is in the interest of the Company and the Independent

Shareholders as whole.

(iii) Future business plans and capital expenditure

According to the statistics published by the Bureau of Statistics of the

Jiangsu Province, the GDP of the Jiangsu Province increased steadily from

approximately RMB5,675.4 billion in 2005 to approximately RMB15,742.1 billion

in 2011, representing a CAGR of approximately 18.53%. Besides, the total

property investment in the Jiangsu Province increased from approximately

RMB152.7 billion in 2005 to approximately RMB620.6 billion in 2012, with a

CAGR of approximately 22.18%. In particular, the property investment in the

Jiangsu Province for non-residential use has reached RMB185.1 billion in 2012,

representing an increase of 26.2% year-on-year. Also, the property investment in

the Jiangsu Province for residential use has reached RMB435.5 billion in 2012,

representing an increase of 6.4% year-on-year. It is anticipated that the property

development market will continue to trend upward with the solid economic

growth of the Jiangsu Province.


– 26 –

As noted from the 2012/2013 Annual Report, the business activities of the

Group are diversified. After the Completion, the Remaining Group will continue

to engage in the development, investment and management in respect of

properties in the Asia region including the PRC. Based on the 2012/2013

Annual Report and discussion with the management, we summarize below details

of the Group’s major properties held for development:

Location Use

Approximate

gross floor

area

Estimated

completion

date

Stage development

as at as

31st March, 2013

(sq. m)

West of Xiangyu Avenue

Qinghe District

Huai An

Jiangsu Province

the PRC

Multi-use 245,391 2016 In planning stage

East of Taizhou Avenue

and north of Yaocheng

Avenue China Medical

City (中國醫藥城)

Taizhou

Jiangsu Province

the PRC

Residential 217,146 2015/2016 In planning stage

As advised by the management, the Group has contemplated two major

development projects in the Jiangsu Province, the PRC. The project situated in

Huai An City (the ‘‘Huai An Project’’) will be developed into an integrated

residential, commercial and retail complex with a total permissible gross floor

area of approximately 245,391 square meters on a site of approximately 41,087

square meters. The Huai An Project is well-located in the central business district

of Qing He District which itself is the political, commercial, business, financial

and cultural centre of Huai An City. Another project is located in China Medical

City, Taizhou City (the ‘‘Taizhou Project’’) with a site of approximately 80,615

square meters and a total gross floor area of approximately 217,146 square

meters. The Taizhou Project is a residential development comprising townhouses

and residential apartments. China Medical City is the only national level

development zone focused on high-tech medical related industries in the PRC.

As advised by the management, it is anticipated that foundation works for the

Huai An Project and the Taizhou Project will commence later this year and the

above two projects support the Group’s strategic growth in property development

business.

As discussed with the management of the Company, we are given to

understand that the above developments require a substantial amount of capital

expenditure, and part of the net proceeds will be applied to fund the Group’s

investment and capital expenditure, including existing and new project.

Notwithstanding that the Group does not have any concrete new business plan/

potential acquisition, we are of the view that the Group will be in a stronger cash


– 27 –

position after the Disposal which will provide the flexibility for the Company to

finance existing development projects and/or new investment opportunities in a

timely manner as and when it arise. We therefore concur with the Directors’ view

that by disposing of the Tecwell Group, the Company will be able to recycle

capital into future investment opportunities and allocate its resources more

effectively, such as, to focus on its existing projects, such as the development

projects in the Jiangsu Province and/or other new investment projects to achieve

long term sustainable growth of its business.

Taking into account that (i) the outlook of the Shanghai property market

remains essentially flat on the back of increasing supply of office spaces; (ii) the

Property is a mature asset which does not have the growth in terms of earnings as

expected by the Board; (iii) the Disposal would be an opportunity to the Group to

realize profit from its investment which not only allows the Company to unlock

the cash and the management bandwidth, but also will bring cash inflow to the

Group and hence allow the Directors to focus and effectively allocate its resources

to its existing businesses and/or any new investment opportunity that may arise in

the future; (iv) the sound prospect of the property market in the Jiangsu Province

may provide a solid platform for the Group to develop its operation in the Jiangsu

Province in the absence of the unforeseeable circumstances; and (v) the Group will

be in a stronger cash position after the Disposal which will provide the flexibility

for the Company to finance its existing business and/or new investment

opportunities in a timely manner as and when it arise, we consider that the

reasons for the Disposal are justifiable and the Disposal in the interest of the

Company and its Independent Shareholders as a whole.

4. Principal terms of the Agreement

Pursuant to the Disposal Agreement, the Company has conditionally agreed to

procure the sale of, and the Purchaser has conditionally agreed to acquire the Sales

Shares at the Consideration of approximately HK$843.5 million (subject to

adjustment) which shall be satisfied in cash as at the Completion.

The Consideration may be adjusted upwards or downwards based on the increase

or decrease in NAV of Tecwell Group (other than the movement of the value of the

investment property) as of the Completion Date when compared to that of 30th June,

2013. Any adjustment in the Consideration upwards or downwards post-Completion

shall be settled by the Purchaser or the Company (as the case may be) in cash within 5

Business Days after agreement of such adjustment. As stated in the Letter from the

Board, an agreed valuation of the Property between the Company and the Purchaser

would limit their respective exposure to market risks. Accordingly, if there is increase

or decrease in value of the Property as compared to that of 30th June, 2013, there is no

relevant adjustment to the Consideration. For the purpose of calculating the

adjustment amount, the NAV (excluding the value of the Property) based on the

unaudited consolidated management accounts of the Tecwell Group as of the

Completion Date will be compared against the NAV (excluding the value of the

Property) based on the unaudited consolidated management accounts of the Tecwell


– 28 –

Group as of 30th June, 2013, any increase or decrease in the NAV will form the basis of

the adjustment amount. Given that any changes in the market value of the Property

would not affect the Consideration, the Company could limit its exposure to market

risk, we concur with the Directors view that the basis for the Consideration is fair and

reasonable and in the interest of the Independent Shareholders as a whole.

(a) Basis of Consideration

According to the Letter from the Board, the Consideration was determined

after arm’s length negotiations between the Company and the Purchaser by

reference to:

(i) the unaudited NAV of the Tecwell Group in the amount of

approximately HK$849.9 million as at 30th June, 2013;

(ii) a valuation of the Property by RHL of approximately RMB2,030.0 million

(equivalent to approximately HK$2,560.3 million) as at 30th September,

2013; and

(iii) the book value of the Property as at 30th June, 2013 of approximately

HK$2,548.5 million.

The valuation in item (ii) above refers to the valuation of the Property in its

existing state as at 30th September, 2013 prepared by RHL using the direct

comparison approach. Given the Disposal is a disposal of the entire issued share

capital of Tecwell, the consideration for the Disposal also takes into consideration

other assets and liabilities on the books of the Tecwell Group which include cash

balances, rental deposits received, bank loans and tax liabilities.

(b) Valuation of the Property

The Group engaged RHL (the ‘‘Valuer’’), an independent professional valuer

to assess the market value of the Property (the ‘‘Valuation’’). Regarding the

valuation report (the ‘‘Valuation Report’’) as set out in Appendix VI to the

Circular, we have taken all reasonable steps pursuant to note 1(d) to Rule 13.80 of

the Listing Rules and we are not aware of any issues that shall be brought to the

Independent Shareholders’ attention. The steps taken by us include the

followings:

(i) interviewing the Valuer including as to its expertise and any current or

prior relationships with the Company, other parties to the Disposal

Agreement and connected persons of either the Company or other

parties to the Disposal Agreement;


– 29 –

(ii) reviewing the terms of the engagement (having particular regard to the

scope of work, whether the scope of work is appropriate to the opinion

required to be given and any limitations on the scope of work which

might adversely impact on the degree of assurance given by the Valuer’s

reports); and

(iii) save for the information as disclosed in the Circular, in particular, the

background and financial information of Tecwell Group, we are not

aware that the Company or other parties to the Disposal Agreement has

made formal or informal representations to the Valuer.

According to the Valuation Report as set out in Appendix VI to the Circular,

the Property has a market value of approximately RMB2,030.0 million

(equivalent to approximately HK$2,560.3 million) as at 30th September, 2013.

In assessing the fairness and reasonableness of the Valuation, we have

reviewed the Valuation Report and discussed with the Valuer on the methodology

adopted and assumptions made in arriving at the Valuation. We note that the

Valuer has applied the direct comparison approach where comparison based on

actual sales and/or asking prices of comparable properties is made. As advised by

the Valuer, the direct comparison approach is the most common method in the

determination of the value of the properties. Comparable properties with similar

sizes, scales, natures, characters and locations are analyzed and carefully weighed

against all respective advantages and disadvantages of each properties in order to

arrive at a fair comparison of market value. Upon our enquiry, we are given to

understand that the Valuer carried out a site visit in mid October 2013 to research

information to determine the market value of the Property. We also note that the

Valuation is prepared in accordance with Chapter 5 and Practice Note 12 to the

Listing Rules and The HKIS Valuation Standards (2012 Edition) published by

The Hong Kong Institute of Surveyors. Based on our discussion with the Valuer

and the review of the Valuation Report, we consider that the methodology applied

is consistent with the market practice and we have not identified any substantial

factors which cause us to doubt the fairness and reasonableness of the

methodology adopted and the basis used in arriving at the Valuation.

(c) Trading multiples analysis

In order to assess the fairness and reasonableness of the Consideration, we

have performed a trading multiples analysis which includes the price to book ratio

(‘‘PBR’’) analysis. Given that the Tecwell Group is principally engaged in

property investment, it is common in the investment community to value a

company principally engaged in the real estate industry by its net asset value

primarily. However, we have also include the price to earnings ratio (‘‘PER’’) as

an additional reference.

For comparison purposes, we have searched for companies listed on the

Stock Exchange which (i) are principally engaged in the business of property

investment in the PRC; (ii) have approximately or over 50% of total revenue


– 30 –

being generated from property investment; (iii) have market capitalisation of less

than HK$10,000 million; and (iv) shares are listed on the main board of the Stock

Exchange. To the best of our knowledge and endeavor, we identified 3 companies

(the ‘‘Comparables’’) which met the said criteria and we consider such

Comparables to be exhaustive based on the criteria. It should be noted that the

businesses, operations and prospects of the Tecwell Group are not exactly the

same as the Comparables, and we have not conducted any in-depth investigation

into the businesses and operations of the Comparables.

Set out below are the PBRs and PERs of the Comparables based on their

closing prices as at 16th October, 2013, being the date of the Disposal Agreement:

Company Name

Stock

Code

Market

Capitalisation PBR PER

(HK$ million) (times) (times)

(Note 1) (Note 2)

Dynamic Holdings Limited 29 541 0.30 4.31

Zhong Hua International

Holdings Limited

1064 101 0.04 1.66

Wang On Group Limited 1222 900 2.20 0.25

Average 0.85 2.08

Maximum 2.20 4.31

Minimum 0.04 0.25

The Tecwell Group 0.99

(Note 3)

2.5

(Note 4)

Source: the website of the Stock Exchange

Notes:

1. It represents the closing prices of the Comparables as at the date of the Disposal

Agreement, being 16th October, 2013, over their respective audited/unaudited

consolidated net asset value per share based on the latest published financial reports

of the Comparables.

2. It represents the closing prices of the Comparables as at the date of the Disposal

Agreement, being 16th October, 2013, over their respective audited earnings per share

based on the latest published financial reports of the Comparables.

3. The calculation is based on the Consideration of approximately HK$843.5 million and

the unaudited NAV of the Tecwell Group in the amount of approximately

HK$849.9 million as at 30th June, 2013.

4. The calculation is based on the Consideration of approximately HK$843.5 million and

the net profits after tax of the Tecwell Group for the fifteen months ended 31st March,

2013, being approximately HK$340.3 million as set out in Appendix IV to the Circular.


– 31 –

As shown in the above, the PBRs of the Comparables range from

approximately 0.04 times to approximately 2.20 times with the average PBR

being approximately 0.85 times. The implied PBR of the Tecwell Group

represented by the Consideration, being approximately 0.99 times, which is

above the average and falls within the range of the PBRs of the Comparables.

The implied PER of the Tecwell Group represented by the Consideration,

being approximately 2.5 times, which is above the average and falls within the

range of the PERs of the Comparables.

According to the financial information of the Tecwell Group as set out in

Appendix IV to the Circular, the unaudited NAV of the Tecwell Group (excluding

the amount due from an immediate holding company of approximately HK$219.5

million) was approximately HK$849.9 million as at 30th June, 2013 and apart

from the book value of the Property of approximately HK$2,548.5 million, the

Tecwell Group had other assets of approximately HK$129.9 million and other

liabilities of approximately HK$1,828.5 million as at 30th June, 2013. These assets

and liabilities which include cash balances, rental deposits received, bank loans

and tax liabilities, being part of the Disposal, will, upon Completion, be disposed

of by the Group. Details of such Disposal are set out in the unaudited pro forma

financial information of the Remaining Group as contained in Appendix V to the

Circular.

We consider that the Consideration should not solely be based on the

valuation of the Property but also the unaudited NAV of the Tecwell Group as at

30th June, 2013 by taking into account both the book value of the Property and

the other assets and liabilities of the Tecwell Group, which would provide a

meaningful and prudent basis in determining the Consideration.

In light of the above and taking into account that (i) the Consideration was

determined with reference to the unaudited NAV of the Tecwell Group as at 30th

June, 2013 by taking into account not only the market value of the Property as at

30th September, 2013, but also, among other things, other assets of the Tecwell

Group such as trade receivables and cash and bank balances; (ii) the

Consideration will be subject to upward or downward adjustment based on the

change in NAV of the Tecwell Group (other than the movement of the value of the

investment property) as at the Completion; and (iii) the implied PBR and PER of

the Tecwell Group are above the average and fall within the range of the PBRs

and PERs of the Comparables respectively, we are of the view that the

Consideration is fair and reasonable and in the interest of the Company and

the Independent Shareholders as a whole.

(d) Conditions precedent

For details of conditions precedent of the Disposal Agreement, please refer

to pages 8 and 9 as set out in the Letter from the Board.


– 32 –

As set out in the Letter from the Board, if the Conditions Precedent were not

fulfilled on or before the Long Stop Date, the Company may serve a written notice

to extend the Long Stop Date to the Extended Long Stop Date. If the Conditions

Precedent are still not fulfilled by the Extended Long Stop Date, the Disposal

Agreement will be terminated and will cease to be of effect. None of the parties

shall then have any rights against any other party except for (where applicable)

liability for any antecedent breach of its obligations under the Disposal

Agreement.

In light of (i) the fact that the Company is able to evaluate the progress of

fulfillment of the Conditions Precedent and assess the feasibility of the Disposal

so as to consider to extend the Long Stop Date in the event that the Conditions

Precedent were not fulfilled on or before the Long Stop Date; and (ii) if the

Conditions Precedent are still not fulfilled by the Extended Long Stop Date, the

Disposal Agreement will be terminated, to which the Company is allowed to avoid

any potential costs to be incurred on the prolonged delay of the Disposal, we are

of the view the abovementioned arrangement is in the interest of the Company

and the Independent Shareholders as a whole.

5. Possible financial effects of the Disposal

Upon Completion, the Tecwell Group will cease to be subsidiary of the Company

and the financial results of the Tecwell Group will not be consolidated into the

financial statements of the Remaining Group.

Net asset value

As mentioned above, the Tecwell Group will cease to be a subsidiary of the

Company after Completion. Therefore, the assets and liabilities of the Tecwell

Group will no longer be consolidated into the financial statements of the Group

after Completion.

Based on the 2012/2013 Annual Report, the consolidated net assets of the

Group were approximately HK$4,816.0 million. Pursuant to the Disposal

Agreement, the Consideration was determined with reference to, including but

not limited to the valuation of the Property of approximately RMB2,030.0 million

(equivalent to approximately HK$2,560.3 million). Assuming that the Disposal

has taken place on 31st March, 2013, it is expected that, as shown in the unaudited

consolidated pro forma financial information of the Remaining Group as set out

in Appendix V to the Circular, the unaudited pro forma net assets of the

Remaining Group would have a slight decrease from approximately HK$4,816.0

million to approximately HK$4,482.3 million upon Completion, which was

mainly due to the fair value loss on the Property incurred prior to the Disposal.


– 33 –

Earnings

In terms of profit and loss, the Remaining Group will need to deduct the

value of the Property including its fair value gains from the books of the

Remaining Group and record it as a realised gain on the Disposal. For illustrative

purposes only, according to the unaudited pro forma financial information of the

Remaining Group as set out in Appendix V to the Circular, assuming the Disposal

has taken place on 1st January, 2012, it is expected that, as shown in Appendix V

to the Circular, the Remaining Group will record a gain on the Disposal of

approximately HK$11.4 million for the fifteen months ended

31st March, 2013 as a result of the Disposal, which represents the

Consideration of HK$843.5 million less (i) the unaudited net assets of the

Tecwell Group disposed of approximately HK$954.3 million as at 31st January,

2012; (ii) the estimated transaction costs and related taxes in relation to the

Disposal of approximately HK$88.3 million; and plus (iii) the realisation of

foreign exchange reserve upon the Disposal of approximately HK$210.4 million.

However, the resulting consolidated income statement of the Remaining

Group would have reported a loss attributable to equity holders of the Company

of approximately HK$46.9 million according to the pro forma consolidated

income statement of the Remaining Group for the fifteen months ended

31st March, 2013 against a profit of approximately HK$293.4 million without

the Disposal. Such change was mainly attributable to the exclusion of (i) the value

of the Property including its fair value gains from the books of the Remaining

Group; and (ii) the revenue generated by the Tecwell Group, which was partly

offset by the amounts due by the Tecwell Group to the Remaining Group.

Shareholders should note that the exact amount of gain or loss of the

Disposal to the Remaining Group would be calculated based on net asset value of

the Tecwell Group as at the Completion and therefore may be different from the

amount mentioned above.

Cashflow

According to the 2012/2013 Annual Report, the cash and bank balances of

the Group as at 31st March, 2013 amounted to approximately HK$1,202.4 million.

Pursuant to the Disposal Agreement, the Consideration will be satisfied in full by

way of cash upon Completion. Assuming the Disposal has taken place on 1st

January, 2012 and excluding the cash inflow to the Remaining Group in relation to

the amount due to the Tecwell Group during the fifteen months ended 31st March,

2013, it is expected that, as shown in Appendix V to the Circular, the cash and

bank balances of the Remaining Group will increase to HK$1,685.3 million upon

Completion before taking into account any Conditional Special Dividend.


– 34 –

Working capital

As at 31st March, 2013, the Group had current assets, current liabilities and

working capital (i.e. current assets less current liabilities) of approximately

HK$1,946.5 million, HK$350.6 million and HK$1,595.9 million respectively.

Based on the unaudited pro forma consolidated statement of financial position of

the Remaining Group as set out in Appendix V to the Circular, which is prepared

on the assumptions that the Disposal has taken place on 31st March, 2013 and

without taking into account any Conditional Special Dividend, the current assets

and working capital of the Remaining Group would increase to approximately

HK$2,622.1 million and HK$2,391.3 million respectively whist the current

liabilities of the Remaining Group would decrease to approximately HK$230.7

million.

It should be noted that the aforesaid figures are subject to a final audit and

that the aforesaid analyses and calculations are for illustrative purposes only and

does not purport to represent how the financial position of the Remaining Group

will be upon Completion.

Notwithstanding the Remaining Group would record a loss and decrease in

its net assets value, having considered that (i) the Disposal would have a positive

effect to the Remaining Group’s cashflow and liabilities position upon the

Completion; (ii) the benefit arising from the Disposal, details of which are set out

in the paragraph headed ‘‘Reasons for and benefits of the Disposal’’ above; and

(iii) the proceeds will be applied by the Group to funds its future business plans

and the Conditional Special Dividend, we consider that the Disposal is in the

interests of the Company and the Independent Shareholders as a whole.

RECOMMENDATION

Having taken into account the above-mentioned principal factors and reasons, in

particular:

. the outlook of the Shanghai property market remains essentially flat on the back

of increasing supply of office spaces;

. the Disposal is in line with the Group’s business strategy to realise profit of its

investment properties at appropriate time;

. the Disposal gives the Group an opportunity to realize profit from its investments

which not only allows the Company to unlock the cash and the management

bandwidth, but also will bring cash inflow to the Group and hence allow the

Directors to focus and effectively allocate its resources to its existing businesses

and/or new investment opportunity that may arise in the future;

. the Disposal can provide additional funding to the Group for the property

development projects in the PRC and additional working capital for the Group;


– 35 –

. the Consideration of the Disposal is with reference to the net asset value of the

Tecwell Group and the independent valuation of the Property;

. the Disposal would have a positive effect to the Group’s cashflow and current

liabilities position upon the Completion but a minimal negative effect to its net

asset value and earnings; and

. the shareholders may benefit from the Disposal in the form of Conditional Special

Dividend if the Disposal was completed,

we consider that the terms of the Disposal Agreement are on normal commercial terms and

fair and reasonable so far as the Independent Shareholders are concerned, and that the

Disposal is in the ordinary and usual course of business of the Company and are in the

interests of the Company and the Shareholders as a whole. Accordingly, we recommend the

Independent Shareholders, as well as the Independent Board Committee to recommend the

Independent Shareholders, to vote in favour of the resolutions to be proposed at the EGM

to approve the Disposal Agreement and the Disposal.

Yours faithfully,

For and on behalf of

Messis Capital Limited

Kinson Li

Managing Director


– 36 –

1. FINANCIAL INFORMATION OF THE GROUP

Details of the published financial information of the Group for each of the threeyears/period ended 31st December, 2010, 31st December, 2011 and 31st March, 2013 aredisclosed in the annual reports of the Company for the year/period ended 31st December,2010, 31st December, 2011 and 31st March, 2013 respectively. Details of these financialstatements have been published on the websites of the Stock Exchange at www.hkexnews.hkand the Company at www.lcr.com.hk:

. annual report of the Company for the year ended 31st December, 2010 (pages 38to 127);

. annual report of the Company for the year ended 31st December, 2011 (pages 38to 124); and

. annual report of the Company for the fifteen months ended 31st March, 2013(pages 40 to 136).

2. INDEBTEDNESS STATEMENT

As at 30th September, 2013, being the latest practicable date for the purpose ofthis indebtedness statement prior to the printing of this circular, the Group hadoutstanding indebtedness of approximately HK$1,903 million, comprising securedbank loans of approximately HK$1,819 million, unsecured bank loans ofapproximately HK$39 million, secured obligations under finance leases for certainplant and equipment of approximately HK$1 million, secured bankers’ guarantees ofapproximately HK$37 million and unsecured bankers’ guarantees of approximatelyHK$7 million.

The bank loans were secured by first legal mortgages over certain investmentproperties, leasehold land and buildings and properties under development, andcertain bank deposits of the Group. The obligation under finance leases are secured bythe rights to the leased plant and equipment. The bankers’ guarantees are secured bycertain bank deposits of the Group.

Save as aforesaid and apart from intra-group liabilities, the Group did not, as at30th September, 2013, have any outstanding debt securities, whether issued andoutstanding, authorised or otherwise created but unissued, term loans, whetherguaranteed, unguaranteed, secured (whether the security is provided by the issuer or bythird parties) or unsecured, other borrowings or indebtedness in the nature ofborrowing including bank overdrafts and liabilities under acceptances (other thannormal trade bills) or acceptance credits or hire purchase commitments, whetherguaranteed, unguaranteed, secured or unsecured borrowings or debt, mortgages,charges, guarantees or other material contingent liabilities.

The Directors confirm that, save as disclosed above, there are no material changesin the indebtedness and contingent liabilities of the Group since30th September, 2013.

It should be noted that following the adoption of HKFRS 10 ‘‘ConsolidatedFinancial Statements’’ from 1st April, 2013 onwards, Auric and some other associatesare treated as subsidiaries of the Group since 1st April, 2013, and the indebtednessstatement is prepared on the basis to include any indebtedness of those newsubsidiaries.

APPENDIX III FINANCIAL INFORMATION OF THE GROUP

– 37 –

3. WORKING CAPITAL

The Directors are of the opinion that, after taking into account (i) the internalresources available to the Remaining Group; (ii) the presently available banking facilities;and (iii) the estimated net proceeds from the Disposal, and in the absence of unforeseeablecircumstances, the Remaining Group will have sufficient working capital for its presentrequirement for at least the next twelve months from the date of this circular.

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adversechange in the financial or trading position of the Group since 31st March, 2013, being thedate to which the latest published audited financial statements of the Group were made up.

5. FINANCIAL AND TRADING PROSPECTS OF THE REMAINING GROUP

The global economic environment has stabilised since last year but it is stillovershadowed by a considerable number of unknown factors. The Group is seeking tostreamline and strengthen its existing business to meet the challenges ahead as stated in theannual report for the fifteen months ended 31st March, 2013. The Disposal will enable theGroup to realise the value of its investment at an opportune time and partly share therewards of this investment with the Shareholders. The remaining proceeds will partly beused to finance the investment and capital expenditure required by the Group’s existingprincipal businesses, including property investment, property development and securitiesand treasury investments. Following the Disposal, the properties at Lippo Centre in HongKong will form a major part of the Group’s current investment property portfolio andcontinue to provide the stable and recurring revenue to the Group. The Group has startedits property development projects in Huai An and Taizhou City, both located in JiangsuProvince, mainland China. The Huai An project will be developed into an integratedresidential, commercial and retail complex with a total gross floor area of approximately245,391 square metres whereas the Taizhou City project will be developed into townhousesand residential towers with a total gross floor area of approximately 217,146 square metres.In addition, in relation to the ‘‘securities and treasury investment’’ segment, with theincrease in working capital after the Disposal, the Group will continue to cautiouslymanage its investment portfolio in view of the market conditions and its business needs witha view to maximizing returns to the Shareholders.

6. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

(a) Business review for the fifteen months ended 31st March, 2013

Operating results

The Company’s financial year end date was changed from 31st December to31st March. The financial period under review covered a fifteen-month periodfrom 1st January, 2012 to 31st March, 2013. For the fifteen months ended31st March, 2013, the revenue of the Remaining Group was approximatelyHK$216 million. The significant increase as compared to the revenue of theRemaining Group of approximately HK$107 million in 2011 was mainly due tothe disposal of a held-for-sale property in Singapore at HK$78 million in 2012/13.


– 38 –

For the fifteen months ended 31st March, 2013, the Remaining Grouprecorded a loss attributable to shareholders of approximately HK$47 million,which was mainly due to provisions made for various investments during theperiod resulted from uncertainties of market acceptance and competitions fromother competitors in such businesses.

Business review

For the fifteen months ended 31st March, 2013, the Remaining Group wasprincipally engaged in (i) property investment including letting and resale ofproperties; (ii) property development including development and sale ofproperties; (iii) treasury investment including investments in cash and bondmarkets; (iv) securities investment including dealings in securities and disposals ofinvestments; and (v) other businesses including mineral exploration, extractionand processing, food business, money lending and the provision of propertymanagement services. The performance analysis of these business segments isshown as follows:

(i) Property investment

Property investment business continued to provide stable and recurringrental income to the Remaining Group. Total revenue from the propertyinvestment business for the fifteen months ended 31st March, 2013 amountedto approximately HK$104 million, an increase of approximately 18% ascompared to approximately HK$88 million in 2011. Lippo Centre in HongKong, being the landmark of the Remaining Group in Hong Kong,continued to contribute significant results to the Remaining Group. Giventhe quality and strategic location of the investment properties, the RemainingGroup recorded revaluation gains on its investment properties of a total ofapproximately HK$105 million for the period as compared toHK$287 million in 2011.

For the fifteen months ended 31st March, 2013, the Remaining Groupcompleted the disposal of a number of residential units in Hong Kong at anaggregate consideration of approximately HK$622 million and recognised again of approximately HK$68 million. The disposals represented anopportunity for the Remaining Group to realise a good profit atappropriate time. As a result of such disposal as well as the abovementioned revaluation gains, the Remaining Group’s investment propertiesas at 31st March, 2013 was reduced from HK$2.2 billion as at 31stDecember, 2011 to approximately HK$1.7 billion as at 31st March, 2013.

(ii) Property development

The Remaining Group primarily focused on property developmentprojects in mainland China and participated in development projects in HuaiAn City (the ‘‘Huai An Project’’) and Taizhou City (the ‘‘Taizhou Project’’),both in Jiangsu Province. Huai An Project will be developed into anintegrated residential, commercial and retail complex whereas Taizhou


– 39 –

Project is a residential project comprising townhouses and residentialapartments. Both projects were under planning and design stage.Constructions were expected to be commenced later this year.

Total revenue from the property development business for the fifteenmonths ended 31st March, 2013 amounted to approximatelyHK$78 million due to the sale of a held-for-sale property in Singapore anda gain of approximately HK$16 million was recognised.

(iii) Treasury investment and securities investment

The investment market continued to be challenging and full ofuncertainties. The Remaining Group cautiously managed its investmentportfolio and looked for opportunities to realise its profit. For the fifteenmonths ended 31st March, 2013 :

(a) revenue for treasury investment of approximately HK$5 millionwas recorded, representing an increase of approximately 86% ascompared to approximately HK$3 million in 2011; and

(b) revenue for securities investment of approximately HK$9 million,or an increase of approximately 274% as compared toapproximately HK$2 million in 2011, was recorded from thedisposal of the Remaining Group’s financial assets held for tradingand dividend income received from the investment portfolio. At thesame time, the Remaining Group recognised a total net gain ofapproximately HK$90 million (as compared to nil in 2011) from therealisation of available-for-sale financial assets through the sale ofa subsidiary which owned the financial assets and direct disposal inthe market.

In the highly volatile investment markets, the performance of thesecurities investments was diverse and an unrealised fair value loss wasrecorded. The treasury and securities investments business attained a netprofit of approximately HK$38 million for the fifteen months ended31st March, 2013, (as compared to a net loss of approximatelyHK$3 million in 2011) after including the provision of approximatelyHK$23 million made for some investments.

(iv) Other businesses

Other businesses mainly comprise mineral exploration, extraction andprocessing, food business, money lending and the provision of propertymanagement services. The growth and recovery of the Remaining Group’svarious investments was hindered by the external uncertainties of thedeveloped economies. Moreover, some of the investments concentrate onnew products which are at the early development stage.

Total revenue from other businesses for the fifteen months ended31st March, 2013 was approximately HK$20 million, representing anincrease of approximately 47% from approximately HK$14 million in 2011.


– 40 –

However, market acceptance and competitions from other competitors

were uncertain and provision of approximately HK$37 million was made for

the fifteen months ended 31st March, 2013 (as compared to approximately

HK$0.4 million in 2011). As a result, the other businesses segment recorded a

loss of approximately HK$32 million (as compared to approximately

HK$14 million in 2011).

Liquidity, financial resources and charge on assets

The Remaining Group financed its liquidity requirements through a

combination of cash flow generated from operations and bank borrowings. As

at 31st March, 2013, the Remaining Group had cash and bank balances of

approximately HK$1,157 million (as compared to approximately HK$533 million

in 2011). As at 31st March, 2013, the bank loans of the Remaining Group

amounted to approximately HK$904 million (as compared to approximately

HK$1,046 million in 2011). The bank loans were denominated in Hong Kong

dollars and were secured by certain properties of the Remaining Group. As at 31st

March, 2013, the bank loans carried interest at floating rates and approximately

8% (as compared to approximately 7% in 2011) of the bank loans were repayable

within one year. As at 31st March, 2013 the gearing ratio (measured as total

borrowings to shareholders’ funds of the Remaining Group) was 26.2% (as

compared to 28.7% in 2011).

Capital Structure and foreign exchange risk

During the fifteen months ended 31st March, 2013, the Company

repurchased 6,640,000 Shares at a total consideration of approximately

HK$1.2 million. Besides, 2,300,000 Shares were issued by the Company upon

the exercise of the share option by an option holder in 2012 at a cash

consideration of approximately HK$0.4 million.

The Remaining Group monitored the relative foreign exchange position of its

assets and liabilities to minimise foreign currency risk. During the fifteen months

ended 31st March, 2013, the Remaining Group had entered into forward contract

to manage exposures to fluctuations of foreign exchange rates. When appropriate,

additional hedging instruments including forward contracts, swap and currency

loans would be used to manage the foreign exchange exposure.

Contingent liabilities and capital commitment

As at 31st March, 2013, the Company provided guarantees in respect of

banking facilities granted to the Tecwell Group that amounted to approximately

HK$1,168 million, which were utilized to an extent of approximately

HK$1,127 million as at 31st March, 2013. Save as above, the Remaining Group

did not have any material contingent liabilities as at 31st March, 2013.

As at 31st March, 2013, the Remaining Group’s total commitment amounted

to approximately HK$99 million, a decrease of approximately 56% from

approximately HK$224 million as at 31st December, 2011, which was mainly


– 41 –

related to the property development projects held by the Remaining Group. The

investments or capital assets will be financed by the Remaining Group’s internal

resources and/or external bank financing, as appropriate.

Significant investments, material acquisitions and disposals

Apart from the abovementioned disposals of properties under the ‘‘Business

review’’ section, the Remaining Group had the following significant investments,

material acquisitions and disposals.

During the fifteen months ended 31st March, 2013, the Remaining Group

further increased its interest in Skye Mineral Partners, LLC (‘‘Skye’’) for a total

consideration of approximately US$11.2 million. As a result, the Remaining

Group had an effective interest of 8,649 Class A units in Skye, representing

approximately 17.3% of the total issued and outstanding Class A units in Skye

and approximately 16.5% of the total issued and outstanding units in Skye.

Through CS Mining, LLC (‘‘CS Mining’’), its majority owned subsidiary, Skye

owns and controls a number of copper ore deposits located in the Milford Mineral

Belt in Beaver County, State of Utah in the U.S., and is engaged in the business of

mining and processing primarily copper, with additional recoveries of silver, gold

and iron ore. CS Mining obtained all its required operating permits for mining

and flotation processing and had started commercial operation. In order to

maximise the recovery of its copper resource, CS Mining plans to set up a leaching

facility.

In March 2012, the Remaining Group entered into a subscription agreement

with Haranga Resources Limited (‘‘Haranga’’) for the subscription of 15,000,000

new ordinary shares in Haranga at an aggregate subscription price of A$6 million.

Together with additional shares acquired by the Remaining Group from the

market, the Remaining Group is interested in a total of 32,470,000 shares in,

representing approximately 13.43% of, the existing issued share capital of

Haranga. Haranga had reported that its drilling programmes have identified a

significant increase in JORC Code (Code for Reporting of Exploration Results,

Mineral Resources and Ore Reserves) compliant resource in its Selenge iron ore

project in Mongolia. Haranga expected that further drilling can expand the

resource base in the above project, and is currently in the process of applying for a

mining licence. Haranga is listed on the Australian Securities Exchange and is

primarily engaged in the acquisition, exploration and development of iron ore

projects in Mongolia, and owns a controlling interest in four separate iron ore

projects in Mongolia.

In September 2012, the Remaining Group acquired units in Lippo Select HK

& Mainland Property ETF (the ‘‘ETF’’), an exchange traded fund listed on the

Stock Exchange for a total consideration of approximately HK$78 million. The

ETF’s investment objective is to provide investment results that closely

correspond to the performance of the Lippo Select HK & Mainland Property

Index which comprises property related securities listed on the Main Board of the

Stock Exchange, including property stocks and real estate investment trusts from

Hong Kong and mainland China region.


– 42 –

In February 2013, the Remaining Group entered into a conditional

subscription agreement in relation to the subscription of 184,653,669 new shares

in GSH Corporation Limited (‘‘GSH’’) for an aggregate subscription price of

approximately S$17.5 million under a private placement. GSH is listed on the

Main Board of the SGX-ST, and is primarily engaged in the business of

distribution of IT, photographic and timepiece products and is looking to

diversify into the real estate business.

In June 2013, Auric Pacific Group Limited (‘‘Auric’’, together with its

subsidiaries, the ‘‘APG Group’’), a listed company in Singapore in which the

Remaining Group is interested in approximately 49.3% of its issued share capital,

announced that its wholly-owned subsidiary would make a voluntary

unconditional cash offer to acquire all the issued and paid up ordinary shares

in the capital of Food Junction Holdings Limited (‘‘Food Junction’’), a listed

company in Singapore, other than treasury shares and those already owned,

controlled or agreed to be acquired by Auric and its subsidiaries, at an offer price

of S$0.255 in cash for each share (the ‘‘Offer’’). Immediately before the offer, the

APG Group was interested in approximately 61.4% of the issued share capital of

Food Junction (excluding treasury shares). Auric was of the view that the Offer

represented an opportunity for Auric to acquire an increased stake in Food

Junction as part of its strategic investments. Auric believed that there were

synergistic benefits to be obtained by increasing its stake in Food Junction, whose

current portfolio of food courts and restaurants would complement Auric’s

existing portfolio, and the increase in the sharing of resources relating to

marketing and operations between both Auric and Food Junction would

contribute to the growth of both companies. The Offer was closed on 14th

August, 2013 and APG Group held 93.13% of all the shares in Food Junction

immediately after the offer. Following which, Food Junction had applied to the

SGX-ST for its delisting from the SGX-ST and SGX-ST had on 18th September,

2013 stated, inter alia, that it had no objection to the proposed delisting of Food

Junction.

The Remaining Group also owns interests in Asia Now Resources Corp.

(‘‘Asia Now’’), a company listed in Canada and is primarily engaged in the

business of exploration of mineral deposits in Yunnan Province, mainland China.

During the fifteen months ended 31st March, 2013, Asia Now reviewed the results

of its exploration activities on each of the exploration site. Due to a lack of

exploration prospects, Asia Now decided to discontinue further exploration

activities on the exploration of the site at Beiya and write-down of approximately

C$3.4 million was made. For the site at Habo, an impairment of approximately

C$3.5 million was made. Asia Now is currently focusing on the exploration of the

site at Ma Touwan in Beiya.

Auric, Food Junction and Asia Now were regarded as associates of the

Remaining Group before 1st April, 2013. Following the adoption of HKFRS 10

‘‘Consolidated Financial Statements’’ from 1st April, 2013 onwards, Auric, Food

Junction and Asia Now are treated as subsidiaries of the Remaining Group and

retrospective adjustments are required.


– 43 –

The Remaining Group made an initial investment in Export and Industry

Bank, Inc. (‘‘EIB’’), a commercial bank incorporated in the Philippines, in 1996

but over the years the investment in EIB was fully written down. During the

fifteen months ended 31st March, 2013, the Bangko Sentral ng Pilipinas issued a

resolution placing EIB under receivership and Philippine Deposit Insurance

Corporation took over EIB to implement this. As such, all the investments in EIB

are derecognised and a loss on derecognition of associate of HK$61 million was

recorded, which represented the related cumulative foreign exchange translation

loss reclassified from the equity to the income statement.

Employee and remuneration policies

The Remaining Group had 192 employees as at 31st March, 2013, as

compared to 168 employees as at 31st December, 2011. Staff costs (including

directors’ emoluments) charged to the income statement during the period

amounted to approximately HK$108 million, as compared to approximately

HK$68 million in 2011. The Remaining Group ensured that its employees were

offered competitive remuneration packages. Certain employees of the Remaining

Group were granted options in prior years under share option scheme of the

Company. All outstanding options which remained unexercised by the expiry date

in December 2012 lapsed accordingly.

Future plans for material investments and acquisition of capital assets

There was no specific plan for material investments and acquisition of capital

assets as at 31st March, 2013.

(b) Business review for the year ended 31st December, 2011

Operating Results

For the year ended 31st December, 2011, the revenue of the Remaining

Group was approximately HK$107 million, which was decreased by 40% as

compared with revenue in 2010 of approximately HK$177 million due to the

absence of revenue generated by a Chinese restaurant in Hong Kong which was

disposed of in 2010 and the gain on disposal of investment securities held for

trading during the period under review.

Benefited from the fair value gain on investment properties under the

Remaining Group’s subsidiaries during the year ended 31st December, 2011, the

Remaining Group recorded a profit attributable to shareholders of approximately

HK$186 million (as compared to approximately HK$170 million in 2010 when

profit from discontinued operation was excluded).

Business review

For the year ended 31st December, 2011, the Remaining Group was

principally engaged in (i) property investment including letting and resale of

properties; (ii) property development including development and sale of

properties; (iii) treasury investment including investments in cash and bond


– 44 –

markets; (iv) securities investment including dealings in securities and disposals of

investments; and (v) other businesses including food business, the provision of

commercial and retail banking services, money lending and the provision of

property management services. The performance analysis of these business

segments is shown as follows:


Property investment business continued to provide stable and recurring

revenue to the Remaining Group. Total revenue from the property

investment business for the year ended 31st December, 2011 amounted to

approximately HK$88 million (as compared to approximately HK$96 million

in 2010).

Given the quality and strategic location of the investment properties, the

Remaining Group recorded revaluation gains on its investment properties of

a total of approximately HK$287 million during the year ended 31st

December, 2011 as compared to approximately HK$250 million in 2010. The

Remaining Group continues to look for opportunities to realise the increase

in value of its property assets. During the year ended 31st December, 2011,

the Remaining Group completed the disposal of several office units in Beijing

and a residential unit in Hong Kong at an aggregate consideration of

approximately HK$157 million. The disposals represented a good

opportunity for the Remaining Group to realise the profits.


In June 2011, the Remaining Group successfully won the bid for the

land use right of a piece of land with a site area of approximately 80,615

square metres in Taizhou City, Jiangsu Province, mainland China for a

consideration of approximately RMB145 million, which is a residential

development project comprising townhouses and residential towers. The

Remaining Group also participated in another development project in Huai

An, Jiangsu Province with a site area of approximately 41,087 square metres,

which will be developed into an integrated residential, commercial and retail

complex and is currently in planning and design stage. The Remaining Group

remained cautious in light of the changing market conditions and would

timely adjust its development strategies accordingly.

As these development projects were only in planning stage during the

year ended 31st December, 2011, there was no revenue recorded for the year.


For the year ended 31st December, 2011, treasury and securities

investments business recorded a total revenue of approximately

HK$5 million (as compared to approximately HK$17 million in 2010),

with a net loss of approximately HK$3 million (as compared to a net profit of

approximately HK$4 million in 2010). The drop was mainly attributable to


– 45 –

the fair value loss on security investments. The global investment market is

challenging and full of uncertainties. Anticipating future volatility, the

Remaining Group cautiously managed its investment portfolio with a

continuing focus on improving the overall asset quality.


Total revenue from other businesses for the year ended 31st December,

2011 was approximately HK$14 million, representing a decrease of

approximately 78% from approximately HK$63 million in 2010. The

decrease was mainly attributable to the disposal of a Chinese restaurant in

Hong Kong to an associate in November 2010.

In January 2011, the Remaining Group acquired the interest of

Pantogon Holdings Pte Ltd from Jeremiah Holdings Limited, a 60%

subsidiary of the Company. Following the completion of the transaction,

the Remaining Group increased its effective interest in Auric, a listed

company in Singapore, from approximately 27.9% to approximately 39.4%.

Auric is mainly engaged in food manufacturing, wholesale and distribution,

food retail and food court operation as well as property and securities

investment. The Remaining Group recorded a share of profit of

approximately HK$26 million during the year ended 31st December, 2011,

as compared to approximately HK$18 million in 2010.

Liquidity, financial resources and charges of assets



at 31st December, 2011, the Remaining Group had cash and bank balances of

approximately HK$533 million (as compared to approximately HK$401 million in

2010). As at 31st December, 2011, bank loans of the Remaining Group increased

to approximately HK$1,046 million, as compared to approximately

HK$983 million in 2010. The bank loans were secured by certain properties of

the Remaining Group and denominated in Hong Kong dollars. All the bank loans

carried interest at floating rates. Approximately 7% (as compared to 6% in 2010)

of the bank loans were repayable within one year. As at 31st December, 2011, the

gearing ratio (measured as total borrowings to shareholders’ funds of the

Remaining Group) was 28.7% (as compared to 28.0% in 2010).


During the year ended 31st December, 2011, there was no change in the

Remaining Group’s capital structure.

During the year ended 31st December, 2011, the Remaining Group

monitored the relative foreign exchange position of its assets and liabilities to

minimise foreign currency risk. When appropriate, hedging instruments including

forward contracts, swap and currency loans would be used to manage foreign

exchange exposure.


– 46 –


As at 31st December, 2011, the Remaining Group did not have any material

contingent liabilities.

As at 31st December, 2011, the Remaining Group’s total capital commitment

increased to approximately HK$224 million from approximately HK$126 million

in 2010, mainly attributable to the property development projects held by the

Remaining Group. The investments or capital assets will be financed by the

Remaining Group’s internal resources and/or external bank financing, as

appropriate.


Apart from the abovementioned significant transactions under the ‘‘Business

review’’ section, the Remaining Group had the following significant investments,

material acquisitions and disposals for the year ended 31st December, 2011.

The Remaining Group also owns approximately 49.9% interest in Asia Now,

a company whose shares are listed on the TSX Venture Exchange of Canada and

is primarily engaged in the business of exploration of mineral deposits in

mainland China. Asia Now was focus on the exploration of the site at Beiya in

Yunnan Province and an independent technical report prepared in accordance

with the National Instrument 43-101 and the Canadian Institute of Mining,

Metallurgy and Petroleum Standard Definitions for Mineral Projects on the initial

mineral resource estimate for the deposit was released in January 2012.

In November 2011, the Remaining Group entered into an agreement for the

disposal of the entire issued share capital of Winnery Limited (‘‘Winnery’’) for a

consideration of Rp240 billion. An initial payment of Rp24 billion had been

received by the Remaining Group and the balance of the consideration was

received in the final completion date in late 2012. Winnery held 480 million shares

in PT Lippo Karawaci Tbk, a company incorporated in Indonesia and whose

shares are listed on the Indonesia Stock Exchange. The above disposal represented

a good opportunity for the Remaining Group to realise a gain from its

investments and enable the Company to have additional capital and to, in the

future, consider suitable investment opportunities if and when presented to it.

In December 2011, the Remaining Group had acquired 14,470,000 ordinary

shares in, representing approximately 7.35% of the then issued share capital of,

Haranga for an aggregate consideration of approximately A$4 million. Haranga is

listed on the Australian Securities Exchange and is primarily engaged in the

acquisition, exploration and development of iron ore projects in Mongolia and

owns a controlling interest in four separate iron ore projects in Mongolia. In

addition, the Remaining Group acquired in November 2011 an attributable

interest of 8% of the total issued and outstanding Class A units in Skye for a

consideration of US$4.88 million. Skye, through its majority owned subsidiary,

CS Mining, owns and controls a few copper ore deposits located in the Milford

Mineral Belt in Beaver County, State of Utah in the United States of America,


– 47 –

and is expected to engage in the business of mining and processing copper and

possibly other minerals following receipt of the appropriate permits. The above

acquisitions had provided another opportunity for the Remaining Group to invest

in the promising mineral resource industry.


The Remaining Group had 168 employees as at 31st December, 2011, as

compared to 127 employees as at 31st December, 2010. The increase in the number

of employees was mainly due to the expansion of the property development team

in mainland China. Staff costs (including directors’ emoluments) charged to the

income statement during the year ended 31st December, 2011 amounted to

approximately HK$68 million, as compared to approximately HK$126 million in

2010. The Remaining Group ensured that its employees were offered competitive

remuneration packages. Certain employees of the Remaining Group were granted

options under the share option scheme of the Company.



assets as at 31st December, 2011.

(c) Business review for the year ended 31st December, 2010

Operating Results

For the year ended 31st December, 2010, the revenue of the Remaining

Group was approximately HK$177 million and the Remaining Group recorded a

profit attributable to shareholders of approximately HK$418 million, mainly

contributed by the property valuation gain and the disposal of the retail business.

Business review

For the year ended 31st December, 2010, the Remaining Group was

principally engaged in (i) property investment including letting and resale of

properties; (ii) property development including development and sale of

properties; (iii) treasury investment including investments in cash and bond

markets; (iv) securities investment including dealings in securities and disposals of

investments; (v) other businesses including food business, the provision of

commercial and retail banking services, money lending and the provision of

property management services; and (vi) retail business engaged in the operation of

department stores. The performance analysis of these business segments is shown

as follows:


Property investment business generated revenue of approximately

HK$96 million for the year ended 31st December, 2010. Lippo Centre in

Hong Kong, being the landmark of the Remaining Group in Hong Kong,

continued to achieve satisfactory occupancy rates and registered an increase


– 48 –

of rental income in 2010. Given the quality and strategic location of the

investment properties, the Remaining Group recorded a total revaluation

gain on investment properties of HK$250 million. As a result, the profit

generated from the property investment sector increased to approximately

HK$370 million in 2010.


The Remaining Group had participated in various property

development projects in mainland China. In August 2010, the Remaining

Group had successfully won the bid for a piece of land in Huai An City in

mainland China for the development of an integrated residential, commercial

and retail complex. These property development projects held by the

Remaining Group were still in planning stage. Accordingly, there was no

revenue or profit recorded for this segment in 2010.


For the year ended 31st December, 2010, treasury and securities

investments business recorded a total revenue of approximately

HK$17 million, with a net profit of approximately HK$4 million.


Total revenue from other businesses for the year ended 31st December,

2010 was approximately HK$64 million, mainly contributed from a Chinese

restaurant in Hong Kong which was disposed in November 2010 and income

from the provision of property management services.

(v) Retail business

In August 2010, the Remaining Group entered into an agreement to sell

the retail business in mainland China under the trade name of ‘‘Robbinz’’,

comprising the existing two stores in Tianjin and Chengdu as well as a new

store in Yangzhou, to a subsidiary of PT Multipolar Tbk (‘‘Multipolar’’) for

an aggregate cash consideration of HK$345 million and an option for three

years to buy back 20% interest therein (the ‘‘Sale’’), resulting in a gain on

disposal of HK$341 million. The retail business had been loss making,

contributing turnover of approximately HK$126 million to the Remaining

Group with net operating loss of approximately HK$92 million for the year

ended 31st December, 2010. The Sale could facilitate Robbinz to leverage on

Multipolar’s significant interests and expertise in the retail sector to achieve

necessary economies of scale and improve its performance where the

Remaining Group held an option to buy back 20% interest therein. The

Sale was completed on 15th October, 2010. Following the Sale, the

Remaining Group ceased to engage in the retail business. The turnover and

the results of the retail business up to the date of completion are presented

separately as discontinued operation in the financial statements.


– 49 –

Liquidity, financial resources and charge of assets



at 31st December, 2010, the Remaining Group had cash and bank balances of

approximately HK$401 million. As at 31st December, 2010, bank loans of the

Remaining Group amounted to approximately HK$983 million. All the bank

loans were denominated in Hong Kong dollars, carried interest at floating rates

and were secured by certain properties of the Remaining Group. Approximately

6% of the bank loans were repayable within one year. As at 31st December, 2010,

gearing ratio (measured as total borrowings to shareholders’ funds of the

Remaining Group) was approximately 28.0%.


During the year ended 31st December, 2010, there was no change in the

Remaining Group’s capital structure.

During the year ended 31st December, 2010, the Remaining Group

monitored the relative foreign exchange position of its assets and liabilities to

minimise foreign currency risk. When appropriate, hedging instruments including

forward contracts, swap and currency loans would be used to manage foreign

exchange exposure.


As at 31st December, 2010, the Remaining Group did not have any material

contingent liabilities.

As at 31st December, 2010, the Remaining Group’s total capital commitment

was approximately HK$126 million as a result of the property development

projects held by the Remaining Group. The investments or capital assets will be

financed by the Remaining Group’s internal resources and/or external bank

financing, as appropriate.


Apart from the abovementioned disposal of the retail business under the

‘‘Business review’’ section, the Remaining Group had the following significant

investments, material acquisitions and disposals for the year ended 31st

December, 2010.

In September 2010, the Remaining Group entered into a conditional

agreement with a wholly-owned subsidiary of Food Junction for the disposal of

its entire interest in All Around Limited for a cash consideration of approximately

HK$31 million. The material assets of All Around Limited were 90% interest in

the share capital of LCR Catering Services Limited which was engaged in the

operation of a Chinese restaurant in Hong Kong. The above disposal was

completed in November 2010.


– 50 –

The Remaining Group entered into a conditional subscription agreement in

September 2010 with Asia Now, a company listed on the TSX Venture Exchange

of Canada for the subscription by the Remaining Group of 42,400,000 new

common shares in Asia Now (the ‘‘Asia Now Shares’’) for an aggregate

consideration of approximately C$12.7 million (the ‘‘Subscription’’). The

Subscription was completed in November 2010, after which the Remaining

Group was interested in an aggregate of 55,429,908 Asia Now Shares,

representing approximately 49.9%, on a non-diluted basis (and approximately

47.5%, on a fully diluted basis) of the issued and outstanding Asia Now Shares.

Asia Now is a company primarily engaged in the business of exploration of

mineral deposits in mainland China. The Subscription represented a strategic

investment of the Remaining Group in the promising mineral resource industry.


The Remaining Group had 127 employees as at 31st December, 2010. Total

staff costs (including directors’ emoluments) charged to the income statement

during the year ended 31st December, 2010 amounted to approximately

HK$126 million. The Remaining Group ensured that its employees were offered

competitive remuneration packages. Certain employees of the Remaining Group

were granted options under share option scheme of the Company.



assets as at 31st December, 2010.

7. RECONCILIATION OF VALUATION OF THE PROPERTY

RHL Appraisal Limited, an independent property valuer, has valued the Property as at

30th September, 2013. Details of the valuation report are set out in Appendix VI to this

circular. As required under Rule 5.07 of the Listing Rules, the reconciliation between

valuation of the Property as at 30th September, 2013 and the book value of the Property as

at 30th June, 2013 is as follows:

HK$’000

Book value as at 30th June, 2013

(as extracted from Appendix IV to this circular) 2,548,482

Additions 15,573

Changes with valuation (15,573)

Exchange realignment 11,835

Valuation as at 30th September, 2013

(as extracted from Appendix VI to this circular) 2,560,317


– 51 –

Set out below are the unaudited consolidated statement of financial position of the

Tecwell Group as at 31st December, 2010, 31st December, 2011, 31st March, 2013 and

30th June, 2013 and the unaudited consolidated income statements, consolidated statements

of comprehensive income, consolidated statements of changes in equity and consolidated

statements of cash flows for each of the years ended 31st December, 2010 and

31st December, 2011, the fifteen months ended 31st March, 2013 and the three months

ended 30th June, 2013 (collectively, the ‘‘Unaudited Consolidated Financial Information of

the Tecwell Group’’), which have been prepared in accordance with Rule 14.68(2)(a)(i)(A)

of the Listing Rules.

The auditors of the Company, Messrs. Ernst & Young, have reviewed the Unaudited

Consolidated Financial Information of the Tecwell Group in accordance with Hong Kong

Standard on Review Engagements 2410, ‘‘Review of Interim Financial Information

Performed by the Independent Auditor of the Entity’’ issued by the Hong Kong Institute

of Certified Public Accountants and concluded that nothing has come to their attention that

causes them to believe that the Unaudited Consolidated Financial Information of the

Tecwell Group is not prepared, in all material respects, in accordance with the basis of

preparation set out in note 2 to the Unaudited Consolidated Financial Information of the

Tecwell Group.

APPENDIX IV FINANCIAL INFORMATION OF THE TECWELL GROUP

– 52 –

UNAUDITED CONSOLIDATED INCOME STATEMENTS

For each of the years ended 31st December, 2010 and 31st December, 2011, the fifteen months

ended 31st March, 2013 and the three months ended 30th June, 2013

For the

year ended

31st December,

2010

For the

year ended

31st December,

2011

For the fifteen

months ended

31st March,

2013

For the three

months ended

30th June,

2013

HK$’000 HK$’000 HK$’000 HK$’000

Revenue 107,818 137,264 180,050 37,952

Cost of sales (3,897) (3,110) (4,830) (1,640)

Gross profit 103,921 134,154 175,220 36,312

Administrative expenses (3,786) (3,853) (4,956) (1,017)

Other operating expenses (21,970) (25,284) (36,371) (4,447)

Fair value gain/(loss) on

investment properties 423,358 97,671 429,553 (355,538)

Net fair value gain/(loss)

on financial instruments

at fair value through

profit or loss — — (33,020) 2,520

Finance costs (21,944) (23,413) (55,754) (19,062)

Profit/(loss) before tax 479,579 179,275 474,672 (341,232)

Income tax (120,966) (45,601) (134,374) 83,374

Profit/(loss) for the

year/period 358,613 133,674 340,298 (257,858)

Attributable to:

Equity holders of the

Company 340,590 131,182 340,298 (257,858)

Non-controlling interests 18,023 2,492 — —

358,613 133,674 340,298 (257,858)


– 53 –

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



For the

year ended

31st December,

2010

For the

year ended

31st December,

2011

For the fifteen

months ended

31st March,

2013

For the three

months ended

30th June,

2013

HK$’000 HK$’000 HK$’000 HK$’000

Profit/(loss) for the

year/period 358,613 133,674 340,298 (257,858)

Other comprehensive

income

Exchange differences on

translation of foreign

operations 38,107 74,089 8,623 24,061

Other comprehensive

income for the

year/period, net of tax 38,107 74,089 8,623 24,061

Total comprehensive

income/(loss) for the

year/period 396,720 207,763 348,921 (233,797)

Attributable to:

Equity holders of the

Company 378,970 204,627 348,921 (233,797)

Non-controlling interests 17,750 3,136 — —

396,720 207,763 348,921 (233,797)


– 54 –

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at 31st December, 2010 and 2011, 31st March, 2013 and 30th June, 2013

31st December,

2010

31st December,

2011

31st March,

2013

30th June,

2013

HK$’000 HK$’000 HK$’000 HK$’000

NON-CURRENT ASSETS

Fixed assets 635 626 690 689

Prepayments — — 5,001 4,750

Investment properties 2,196,430 2,421,361 2,864,142 2,548,482

Other financial asset — — — 2,432

Total non-current assets 2,197,065 2,421,987 2,869,833 2,556,353

CURRENT ASSETS

Debtors, prepayments and

deposits 2,898 2,767 5,626 6,348

Amount due from the immediate

holding company — — 226,981 219,530

Restricted cash — — 32,989 33,639

Cash and bank balances 58,680 25,010 45,346 82,075

Total current assets 61,578 27,777 310,942 341,592

CURRENT LIABILITIES

Amounts due to fellow

subsidiaries 29 73,395 46,438 47,080

Amount due to a shareholder 21,747 21,982 — —

Other payables, accruals and

deposits received 89,924 94,850 94,618 94,686

Bank loans 47,008 49,340 8,668 8,788

Tax payable 19,135 22,076 15,872 16,395

Total current liabilities 177,843 261,643 165,596 166,949

NET CURRENT ASSETS/

(LIABILITIES) (116,265) (233,866) 145,346 174,643

TOTAL ASSETS LESS

CURRENT LIABILITIES 2,080,800 2,188,121 3,015,179 2,730,996


– 55 –

31st December,

2010

31st December,

2011

31st March,

2013

30th June,

2013

HK$’000 HK$’000 HK$’000 HK$’000

NON-CURRENT LIABILITIES

Amounts due to shareholders 467,130 466,637 — —

Bank loans 333,737 300,956 1,088,772 1,115,415

Other financial liabilities — — 32,440 32,023

Deferred tax liabilities 405,375 466,243 590,761 514,149

Total non-current liabilities 1,206,242 1,233,836 1,711,973 1,661,587

NET ASSETS 874,558 954,285 1,303,206 1,069,409

CAPITAL AND RESERVES

Share capital 1 1 1 1

Reserves 805,302 954,284 1,303,205 1,069,408

805,303 954,285 1,303,206 1,069,409

Non-controlling interests 69,255 — — —

TOTAL EQUITY 874,558 954,285 1,303,206 1,069,409


– 56 –

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY



Attributable to equity holders of the Company

Issued

capital

Exchanges

equalisation

reserve

Retained

profits Total

Non-

controlling

interests

Total

equity

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1st January, 2010 1 98,561 327,771 426,333 51,505 477,838

Profit for the year — — 340,590 340,590 18,023 358,613

Other comprehensive income for the year:

Exchange differences on translation of

foreign operations — 38,380 — 38,380 (273) 38,107

Total comprehensive income for the year — 38,380 340,590 378,970 17,750 396,720

At 31st December, 2010 and

at 1st January, 2011 1 136,941 668,361 805,303 69,255 874,558

Profit for the year — — 131,182 131,182 2,492 133,674

Other comprehensive income for the year:


foreign operations — 73,445 — 73,445 644 74,089

Total comprehensive income for the year — 73,445 131,182 204,627 3,136 207,763

Changes in non-controlling interest without

change in control — — (55,645) (55,645) (69,757) (125,402)

Dividend paid to non-controlling

shareholder of the Company — — — — (2,634) (2,634)

At 31st December, 2011 and

at 1st January, 2012 1 210,386 743,898 954,285 — 954,285

Profit for the period — — 340,298 340,298 — 340,298

Other comprehensive income for the period:


foreign operations — 8,623 — 8,623 — 8,623

Total comprehensive income for the period — 8,623 340,298 348,921 — 348,921

At 31st March, 2013 and at 1st April, 2013 1 219,009 1,084,196 1,303,206 — 1,303,206

Loss for the period — — (257,858) (257,858) — (257,858)

Other comprehensive income for the period:


foreign operations — 24,061 — 24,061 — 24,061

Total comprehensive income/(loss)

for the period — 24,061 (257,858) (233,797) — (233,797)

At 30th June, 2013 1 243,070 826,338 1,069,409 — 1,069,409


– 57 –

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS



For theyear ended

31st December,2010

For theyear ended

31st December,2011

For the fifteenmonths ended31st March,

2013

For the threemonths ended

30th June,2013

HK$’000 HK$’000 HK$’000 HK$’000

Cash flows from operatingactivities

Profit/(loss) before tax 479,579 179,275 474,672 (341,232)Adjustments for:Loss on disposal of fixedassets — — 61 —

Net fair value (gain)/losson investment properties (423,358) (97,671) (429,553) 355,538

Net fair value (gain)/losson financial instrumentsat fair value throughprofit or loss — — 33,020 (2,520)

Finance costs 21,944 23,413 55,754 19,062Interest income (832) (502) (906) (83)Depreciation 321 39 49 11

77,654 104,554 133,097 30,776Decrease/(increase) indebtors, prepayments anddeposits (1,812) 131 (7,860) (728)

Increase/(decrease) in otherpayables, accruals anddeposits received 14,235 11,670 (2,308) (2,422)

Cash generated fromoperations 90,077 116,355 122,929 27,626

Interest received 832 502 906 83Overseas tax paid (7,413) (10,470) (19,453) (2,840)

Net cash flows fromoperating activities 83,496 106,387 104,382 24,869

Cash flows from investingactivities

Additions to investmentproperties (40,086) (16,475) — —

Payments to acquirefixed assets (22) — (172) —

Net cash flows used ininvesting activities (40,108) (16,475) (172) —


– 58 –

For theyear ended

31st December,2010

For theyear ended

31st December,2011

For the fifteenmonths ended31st March,

2013

For the threemonths ended

30th June,2013

HK$’000 HK$’000 HK$’000 HK$’000

Cash flows from financingactivities

Drawdown of bank loans — — 1,128,842 21,034Repayments of bank loans (45,908) (48,211) (353,820) (2,197)Finance costs paid (21,997) (23,355) (83,446) (15,964)Movements of balancesbetween theTecwell Group andthe Remaining Group 1,423 73,109 (742,558) 8,805

Payment relating to changein non-controllinginterests — (125,402) — —

Dividends paid tonon-controllingshareholderof the subsidiary — (2,634) — —

Increase in restricted cash — — (32,989) (445)

Net cash flows from/(used in) financingactivities (66,482) (126,493) (83,971) 11,233

Net increase/(decrease) incash and cash equivalents (23,094) (36,581) 20,239 36,102

Cash and cash equivalents atbeginning of year/period 79,030 58,680 25,010 45,346

Exchange realignments 2,744 2,911 97 627

Cash and cash equivalents atend of year/period 58,680 25,010 45,346 82,075

ANALYSIS OFBALANCES OFCASH AND CASHEQUIVALENTS

Cash and bank balances 58,680 25,010 45,346 82,075


– 59 –

NOTES TO THE FINANCIAL INFORMATION OF THE TECWELL GROUP



1. GENERAL INFORMATION

On 16th October, 2013, the Company and the Purchaser entered into the Disposal

Agreement, pursuant to which, the Company conditionally agreed to procure the sale of,

and the Purchaser conditionally agreed to purchase the Sale Shares, representing the entire

issued share capital of Tecwell, for the Consideration of approximately HK$843.5 million

(subject to adjustment, if any), which shall be satisfied in cash on the Completion Date.

Upon Completion, the Tecwell Group will cease to be the subsidiaries of the Company.

2. BASIS OF PREPARATION

The Unaudited Consolidated Financial Information of the Tecwell Group has been

prepared in accordance with Rule 14.68(2)(a)(i) of the Listing Rules, and solely for the

purposes of inclusion in the circular in connection with the proposed transaction.

The Unaudited Financial Information of the Tecwell Group has been prepared on the

historical cost basis, except for investment properties and certain financial instruments

which have been measured at fair value. The Unaudited Financial Information of the

Tecwell Group has been prepared using the same accounting policies as those adopted by

the Group in the preparation of the consolidated financial statements of the Group for the

fifteen months ended 31st March, 2013, which conform with HKFRSs (which include all

Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (‘‘HKASs’’)

and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants

(‘‘HKICPA’’).

The Unaudited Financial Information of the Tecwell Group does not contain sufficient

information to constitute a complete set of financial statements as defined in Hong Kong

Accounting Standard 1 (Revised) ‘‘Presentation of Financial Statements’’ issued by the

HKICPA or a set of condensed financial statements as defined in Hong Kong Accounting

Standard 34 ‘‘Interim Financial Reporting’’.


– 60 –

1. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING

GROUP

(a) Basis of preparation of the unaudited pro forma financial information of the

Remaining Group

The unaudited pro forma financial information of the Remaining Group (the

‘‘Unaudited Pro Forma Financial Information’’) which has been prepared on the basis

of the notes set out below is presented to illustrate the effect of the Disposal on (a) the

financial position of the Remaining Group as if it had taken place on 31st March,

2013; and (b) the financial performance and cash flows of the Remaining Group for the

fifteen months ended 31st March, 2013 as if it had taken place on 1st January, 2012.

This Unaudited Pro Forma Financial Information has been prepared by the

Directors of the Company in accordance with paragraph 4.29 of the Listing Rules for

illustrative purposes only, based on their judgments, estimations and assumptions, and

because of its hypothetical nature, it may not give a true picture of the financial

position of the Remaining Group as at 31st March, 2013 or at any future date or of the

financial performance and cash flows of the Remaining Group for the fifteen months

ended 31st March, 2013 or for any future period.

The Unaudited Pro Forma Financial Information should be read in conjunction

with the audited consolidated financial statements of the Group for the fifteen months

ended 31st March, 2013 as set out in the annual report of the Company for the fifteen

months ended 31st March, 2013 and other financial information included elsewhere in

this circular.

The Unaudited Pro Forma Financial Information is prepared based on the

audited consolidated statement of financial position of the Group as at 31st March,

2013, and the audited consolidated income statement, the audited consolidated

statement of comprehensive income and the audited consolidated statement of cash

flows of the Group for the fifteen months ended 31st March, 2013 extracted from the

audited consolidated financial statements of the Group for the fifteen months ended

31st March, 2013 as set out in the annual report of the Company for the fifteen months

ended 31st March, 2013, after making pro forma adjustments relating to the Disposal

as described in the notes set out below that are (i) directly attributable to the Disposal

and not relating to any future events or decisions; (ii) factually supportable; and

(iii) considered to be integral to the Disposal.

APPENDIX V UNAUDITED PRO FORMA FINANCIAL INFORMATIONOF THE REMAINING GROUP

– 61 –

(b) Unaudited pro forma consolidated statement of financial position

Consolidated

statement of

financial position of

the Group as at

31st March, 2013 Pro forma adjustments

Unaudited

pro forma

of the

Remaining

Group

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000(Note i) (Note ii(a)) (Note iii) (Note iv(a)) (Note v(a))

NON-CURRENT ASSETS

Fixed assets 116,627 (689) 115,938Investment properties 4,599,855 (2,548,482) (315,660) 1,735,713Interests in associates 859,315 859,315Interests in jointed controlled

entities 4,899 4,899Available-for-sale financial assets 236,628 236,628Other financial asset 17,639 (2,432) 15,207

5,834,963 2,967,700

CURRENT ASSETS

Properties held for sale 13,248 13,248Properties under development 314,274 314,274Debtors, prepayments and deposits 85,873 35,982 121,855Financial assets at fair value through

profit or loss 290,519 290,519Other financial asset 7,275 7,275Restricted cash 32,989 (33,639) 650 —Cash and bank balances 1,202,355 (82,075) (650) 755,262 1,874,892

1,946,533 2,622,063

CURRENT LIABILITIES

Bank loans 80,668 (8,788) 71,880Other payables, accruals and

deposits received 188,004 (94,686) 93,318Amount due to the Tecwell Group — 219,530 (219,530) —Other financial liabilities 35,713 35,713Tax payable 46,213 (16,395) 29,818

350,598 230,729

NET CURRENT ASSETS 1,595,935 2,391,334

TOTAL ASSETS LESS

CURRENT LIABILITIES 7,430,898 5,359,034

NON CURRENT LIABILITIES

Bank loans 1,920,772 (1,115,415) 805,357Other financial liabilities 32,440 (32,023) 417Deferred tax liabilities 661,732 (514,149) (76,612) 70,971

2,614,944 876,745

NET ASSETS 4,815,954 4,482,289

CAPITAL AND RESERVES

Share capital 918,691 918,691Reserves 3,835,629 (243,070) (239,048) 148,453 3,501,964

4,754,320 4,420,655Non-controlling interests 61,634 61,634

TOTAL EQUITY 4,815,954 4,482,289


– 62 –

(c) Unaudited pro forma consolidated income statement

Consolidated

income statement

of the Group

for the fifteen

months ended

31st March,

2013 Pro forma adjustments

Unaudited

pro forma

of the

Remaining

Group

HK$’000 HK$’000 HK$’000 HK$’000

(Note i) (Note ii(b)) (Note iv(b))

Revenue 396,102 (180,050) 216,052

Cost of sales (88,870) 4,830 (84,040)

Gross profit 307,232 132,012

Administrative expenses (127,950) 4,956 (122,994)

Other operating expenses (158,513) 36,371 (122,142)

Fair value gain on investment properties 534,077 (429,553) 104,524

Gain on disposal of investment properties 68,282 68,282

Gain on disposal of subsidiaries 69,491 11,363 80,854

Gain on disposal of available-for-sale

financial assets 21,179 21,179

Loss on derecognition of an associate (61,365) (61,365)

Net fair value loss on financial instruments at

fair value through profit or loss (58,437) 33,020 (25,417)

Provision for impairment losses:

Associates (36,771) (36,771)

Available for sales financial assets (23,161) (23,161)

Finance costs (90,179) 55,754 (34,425)

Share of results of associates 6,956 6,956

Share of result of jointly

controlled entities 177 177

Profit/(Loss) before tax 451,018 (12,291)

Income tax (149,443) 134,374 (15,069)

Profit/(Loss) for the period 301,575 (27,360)

Attributable to:

Equity holders of the Company 293,364 (340,298) 11,363 (35,571)

Non-controlling interests 8,211 8,211

301,575 (27,360)


– 63 –

(d) Unaudited pro forma consolidated statement of comprehensive income

Consolidated

statement of

comprehensive

income of

the Group for the

fifteen months

ended 31st

March, 2013 Pro forma adjustments

Unaudited

pro forma

of the

Remaining

Group

HK$’000 HK$’000 HK$’000 HK$’000

(Note i) (Note ii(b)) (Note iv(b))

Profit/(Loss) for the period 301,575 (340,298) 11,363 (27,360)

Other comprehensive income/(loss)

Available-for-sale financial assets:

Changes in fair value 81,893 81,893

Reclassification adjustment for disposal (16,525) (16,525)

Reclassification adjustment relating to

disposal of a subsidiary (78,020) (78,020)

(12,652) (12,652)

Share of other comprehensive loss of

associates (3,514) (3,514)


foreign operations 39,589 (8,623) 30,966


derecognition of a foreign associate 61,365 61,365


disposal of foreign operations — (210,386) (210,386)

Other comprehensive income/(loss)

for the period, net of tax 84,788 (134,221)

Total comprehensive income/(loss)

for the period 386,363 (161,581)

Attributable to:

Equity holders of the Company 366,767 (348,921) (199,023) (181,177)

Non-controlling interests 19,596 19,596

386,363 (161,581)


– 64 –

(e) Unaudited pro forma consolidated statement of cash flows

Consolidated

statement of cash

flow of the Group

for the fifteen

months ended


Unaudited

pro forma

of the

Remaining

Group

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

(Note i) (Note ii(c)) (Note iv(b), (c)) (Note v(b))

Cash flows from operating activities

Profit/(Loss) before tax 451,018 (474,672) 11,363 (12,291)

Adjustments for:

Share of results of associates (6,956) (6,956)

Share of results of jointly controlled

entities (177) (177)

Loss/(Gain) on disposal of:

Fixed assets 96 (61) 35

Investment properties (68,282) (68,282)

Subsidiaries (69,491) (11,363) (80,854)

A jointly controlled entity (310) (310)

Available-for-sale financial assets (21,179) (21,179)

Loss on derecognition of an associate 61,365 61,365

Provisions for impairment losses:

Associates 36,771 36,771

Available-for-sale financial assets 23,161 23,161

Fair value gains on investment properties (534,077) 429,553 (104,524)

Net fair value loss on financial instruments

at fair value through profit or loss 58,437 (33,020) 25,417

Finance costs 90,179 (55,754) 34,425

Interest income (6,074) 906 (5,168)

Dividend income (1,782) (1,782)

Depreciation 5,518 (49) 5,469

18,217 (114,880)

Decrease in properties held for sale 61,915 61,915

Increase in deposits paid for properties under

development (121,650) (121,650)

Increase in financial instruments at fair value

through profit or loss (180,675) (180,675)

Decrease in loans and advances 5,100 5,100

Increase in debtors, prepayments and

deposits (23,711) 7,860 (15,851)

Decrease in other payables, accruals and

deposits received (43,253) 2,308 (40,945)

Cash used in operations (284,057) (406,986)

Interest received 5,888 (906) 4,982

Dividends received from:

An associate 11,522 11,522

Listed investments 1,557 1,557

Tax paid:

Hong Kong (1,842) (1,842)

Overseas (23,513) 19,453 (4,060)

Net cash flows used in operating activities (290,445) (394,827)


– 65 –

Consolidated

statement of cash

flow of the Group

for the fifteen

months ended


Unaudited

pro forma

of the

Remaining

Group

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

(Note i) (Note ii(c)) (Note iv(b), (c)) (Note v(b))

Cash flows from investing activities

Proceeds from disposal of:

Fixed assets 97 97

Investment properties 617,816 617,816

Available-for-sale financial assets 36,605 36,605

Payments to acquire:

Fixed assets (7,954) 172 (7,782)

Available-for-sale financial assets (92,030) (92,030)

Increase in interests in associates (49,816) (49,816)

Advance to associates (17,094) (17,094)

Decrease in interests in a jointly controlled

entity 2,400 2,400

Disposal of subsidiaries, net of cash and cash

equivalents disposed of 173,976 755,262 929,238

Net cash flows from investing activities 664,000 1,419,434

Cash flows from financing activities

Interest paid (110,411) 83,446 (26,965)

Drawdown of bank loans 1,128,842 (1,128,842) —

Repayments of bank loans (504,487) 353,820 (150,667)

Movement of balances between the Tecwell

Group and the Remaining Group — 742,558 (226,981) 515,577

Repurchases of shares (1,204) (1,204)

Issuance of shares upon exercise of share

options 389 389

Dividends paid to shareholders of the

Company (211,379) (211,379)

Increase in restricted cash (32,989) 32,989 —

Net cash flows from financing activities 268,761 125,751

Net increase in cash and cash equivalents 642,316 1,150,358

Cash and cash equivalents at beginning of

period 558,233 (25,010) 533,223

Exchange realignments 1,806 (97) 1,709

Cash and cash equivalents at end of period 1,202,355 1,685,290

Analysis of balances of cash and cash

equivalents:

Cash and bank balances 1,202,355 (45,346) 755,262 (226,981) 1,685,290


– 66 –

(f) Notes to the Unaudited Pro Forma Financial Information

(i) The figures are extracted from the audited consolidated financial statements

of the Group for the fifteen months ended 31st March, 2013 as set out in

annual report of the Company for the fifteen months ended 31st March,

2013.

(ii) The adjustments represent:

(a) the exclusion of the assets, liabilities and exchange equalisation reserve

of the Tecwell Group as at 30th June, 2013, as extracted from the

unaudited consolidated statement of financial position of the Tecwell

Group as at 30th June, 2013 as set out in Appendix IV of this circular, as

if the Disposal had taken place on 31st March, 2013.

(b) the exclusion of the results and other comprehensive income of the

Tecwell Group for the fifteen months ended 31st March, 2013, as

extracted from the unaudited consolidated income statement and the

unaudited consolidated statement of comprehensive income of the

Tecwell Group for the fifteen months ended 31st March, 2013 as set out

in Appendix IV of this circular, as if the Disposal had taken place on

1st January, 2012.

(c) the exclusion of cash flows of the Tecwell Group for the fifteen months

ended 31st March, 2013, as extracted from the unaudited consolidated

statement of cash flows of the Tecwell Group for the fifteen months

ended 31st March, 2013 as set out in Appendix IV of this circular, as if

the Disposal had taken place on 1st January, 2012.

(iii) To better reflect the position of the Company, the gain on the Disposal for

the purpose of unaudited pro forma consolidated statement of financial

position as explained in note (iv)(a) below is arrived at by reference to the net

asset value of the Tecwell Group as at 30th June, 2013. Hence, the

adjustments were made to reflect the movement of the key items,

comprising the fair value change in investment properties held by the

Tecwell Group of approximately HK$315,660,000 for the period from 1st

April, 2013 to 30th June, 2013, as well as the related deferred tax and changes

in restricted cash balance over the period.


– 67 –

(iv) The adjustments reflect the recognition of the net cash consideration and the

gain on the Disposal. The gain on the Disposal is subject to change upon

Completion of the Disposal depending on the then net assets value of the

Tecwell Group.

(a) For the purpose of the unaudited pro forma consolidated statement of

financial position, the gain on Disposal is arrived at as if the Disposal

had taken place on 31st March, 2013 and is calculated as follows:

HK$’000

Cash consideration 843,537

Estimated professional fees, other expenses and taxes

in relation to the Disposal (Note 1) (88,275)

Net assets of the Tecwell Group disposed of

as at 30th June, 2013 (Note 2) (849,879)

Release of cumulative exchange differences on

translation of foreign operations as at 30th June,

2013 (Note 3) 243,070

Gain on the Disposal 148,453

Note 1 : These professional fees, expenses and taxes are estimates only and are expected

to be incurred as a result of the Disposal.

Note 2 : The amount represents net asset value of the Tecwell Group excluding the

amount due from Reiley Inc., the immediate holding company of Tecwell of

HK$219,530,000 as at 30th June, 2013, as extracted from the unaudited

consolidated statement of financial position of the Tecwell Group as at 30th

June, 2013 as set out in Appendix IV of this circular. The amount due from

the immediate holding company will be settled or eliminated before the

Completion Date.

Note 3 : The amount represents the carrying amount of exchange equalisation reserve

as at 30th June, 2013, as extracted from the unaudited consolidated statement

of changes of equity of the Tecwell Group as at 30th June, 2013 as set out in

Appendix IV of this circular.


– 68 –

(b) For the purposes of unaudited pro forma consolidated income

statement, unaudited pro forma consolidated statement of

comprehensive income and unaudited pro forma consolidated

statement of cash flows, the gain on Disposal is arrived at as if the

Disposal had taken place on 1st January, 2012 and is calculated as

follows:

HK$’000


Estimated professional fees, other expenses and taxes

in relation to the Disposal (Note 1) (88,275)

Net assets of the Tecwell Group disposed of

as at 1st January, 2012 (Note 2) (954,285)

Release of cumulative exchange differences on

translation of foreign operations as at 1st January,

2012 (Note 3) 210,386

Gain on the Disposal 11,363



Note 2 : The amount represents net asset value of the Tecwell Group as at 1st January,

2012, as extracted from the unaudited consolidated statement of financial

position of the Tecwell Group as at 31st December, 2011 as set out in

Appendix IV of this circular.

Note 3 : The amount represents the carrying amount of exchange equalisation reserve

as at 1st January, 2012, as extracted from the unaudited consolidated

statement of changes of equity of the Tecwell Group as at 31st December,

2011 as set out in Appendix IV of this circular.


– 69 –

(c) For the purpose of the unaudited pro forma consolidated statement of

cash flows, the net proceeds from the Disposal is arrived at as if the

Disposal had taken place on 1st January, 2012 and is calculated as

follows:

HK$’000


Less: Estimated professional fees, other expenses and

taxes in relation to the Disposal (Note 1) (88,275)

Net proceeds from the Disposal 755,262



(v) The adjustment represents:

(a) the reinstatement of the amount due from the Remaining Group to the

Tecwell Group. The amount will be settled or eliminated before the

Completion Date.

(b) the exclusion of cash inflow to the Remaining Group in relation to the

amount due to the Tecwell Group during the fifteen months ended

31st March, 2013 assuming that no funding would have occurred had

the Completion Date taken place on 1st January, 2012.

(vi) All the above pro forma adjustments are not expected to have a continuing

effect on the Remaining Group.


– 70 –

2. REPORT OF THE UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of a report, prepared for the sole purpose of incorporation in

this circular, received from Messrs. Ernst & Young, Certified Public Accountants, Hong

Kong.

INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON

THE COMPILATION OF PRO FORMA FINANCIAL INFORMATION INCLUDED

IN AN INVESTMENT CIRCULAR

To the Directors of Lippo China Resources Limited

We have completed our assurance engagement to report on the compilation of pro

forma financial information of Lippo China Resources Limited (the ‘‘Company’’) and its

subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) by the directors of the

Company (the ‘‘Directors’’) for illustrative purposes only. The pro forma financial

information consists of the pro forma consolidated statement of financial position as at

31st March, 2013, and the pro forma consolidated income statement, the pro forma

statement of comprehensive income and the pro forma statement of cash flows for the

fifteen months ended 31st March, 2013, and related notes (the ‘‘Pro Forma Financial

Information’’) as set out on pages 61 to 70 of a circular dated 18th November, 2013 (the

‘‘Circular’’) issued by the Company. The applicable criteria on the basis of which the

Directors have compiled the Pro Forma Financial Information are described in page 61 of

the Circular.

The Pro Forma Financial Information has been compiled by the Directors to illustrate

the impact of the very substantial disposal (the ‘‘Disposal’’) of the Tecwell Group (as

defined in the Circular) on the Group’s financial position as at 31st March, 2013 as if the

transaction had taken place at 31st March, 2013, and of the Group’s financial performance

and cash flows for the fifteen months ended 31st March, 2013 as if the transaction had

taken place at 1st January, 2012. As part of this process, information about the Group’s

financial position, financial performance and cash flows has been extracted by the Directors

from the Group’s consolidated financial statements for the fifteen months ended

31st March, 2013, on which an audit report has been published.


– 71 –

DIRECTORS’ RESPONSIBILITY FOR THE PRO FORMA FINANCIAL INFORMATION

The Directors are responsible for compiling the Pro Forma Financial Information in

accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The

Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and with reference to

Accounting Guideline 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in

Investment Circulars’’ issued by the Hong Kong Institute of Certified Public Accountants

(the ‘‘HKICPA’’).

REPORTING ACCOUNTANT’S RESPONSIBILITIES

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the

Listing Rules, on the Pro Forma Financial Information and to report our opinion to you.

We do not accept any responsibility for any reports previously given by us on any financial

information used in the compilation of the Pro Forma Financial Information beyond that

owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance

Engagements 3420 ‘‘Assurance Engagements to Report on the Compilation of Pro Forma

Financial Information Included in a Prospectus’’ issued by the HKICPA. This standard

requires that the reporting accountant comply with ethical requirements and plan and

perform procedures to obtain reasonable assurance about whether the Directors have

compiled the Pro Forma Financial Information, in accordance with paragraph 4.29 of the

Listing Rules and with reference to AG7 ‘‘Preparation of Pro Forma Financial Information

for Inclusion in Investment Circulars’’ issued by HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any

reports or opinions on any historical financial information used in compiling the Pro Forma

Financial Information, nor have we, in the course of this engagement, performed an audit

or review of the financial information used in compiling the Pro Forma Financial

Information.

The purpose of Pro Forma Financial Information included in the Circular is solely to

illustrate the impact of the effect of the Disposal on the unadjusted financial information of

the Remaining Group (as defined in the Circular) as if the transaction had been undertaken

at an earlier date selected for purposes of the illustration. Accordingly, we do not provide

any assurance that the actual outcome of the transaction would have been as presented.


– 72 –

A reasonable assurance engagement to report on whether the Pro Forma Financial

Information has been properly compiled on the basis of the applicable criteria involves

performing procedures to assess whether the applicable criteria used by the Directors in the

compilation of the Pro Forma Financial Information provide a reasonable basis for

presenting the significant effects directly attributable to the transaction, and to obtain

sufficient appropriate evidence about whether:

. The related pro forma adjustments give appropriate effect to those criteria; and

. The Pro Forma Financial Information reflects the proper application of those

adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountant’s judgment, having regard

to the reporting accountant’s understanding of the nature of the Group, the transaction in

respect of which the Pro Forma Financial Information has been compiled, and other

relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the Pro Forma

Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide

a basis for our opinion.

OPINION

In our opinion:

(a) the Pro Forma Financial Information has been properly compiled on the basis

stated;

(b) such basis is consistent with the accounting policies of the Group; and

(c) the adjustments are appropriate for the purpose of the Pro Forma Financial

Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Ernst & Young

Certified Public Accountants

22/F CITIC Tower

1 Tim Mei Avenue

Central, Hong Kong

18th November, 2013


– 73 –

The following is the text of a letter and valuation certificate, prepared for the purpose

of incorporation in this circular received from RHL Appraisal Limited, an independent

valuer, in connection with its valuation as at 30th September, 2013 of the Property held by

LRSL.

永利行評值顧問有限公司RHL Appraisal Limited

Corporate Valuation & Advisory

T +852 2730 6212F +852 2736 9284

Room 1010, 10/F, Star House,Tsimshatsui, Hong Kong

18th November, 2013

The Board of Directors

Lippo China Resources Limited

Room 2301, 23rd Floor,

Tower One,

Lippo Centre,

89 Queensway,

Hong Kong

Dear Sirs/Madam,

INSTRUCTIONS

We refer to your instruction for us to value the property held by 力寶置業(上海)有限公司

(Lippo Realty (Shanghai) Limited) (‘‘LRSL’’), a subsidiary of Lippo China Resources

Limited (the ‘‘Company’’) (the Company and its subsidiaries are referred to as the ‘‘Group’’)

located in the People’s Republic of China (the ‘‘PRC’’). We confirm that we have carried out

property inspection, made relevant enquiries and obtained such further information as we

consider necessary for the purpose of providing you with our opinion of the market value of

the property interest as at 30th September, 2013 (the ‘‘Valuation Date’’).

This letter which forms part of our valuation report explains the basis and

methodologies of valuation, clarifying assumptions, valuation considerations, title

investigations and limiting conditions of this valuation.

APPENDIX VI PROPERTY VALUATION REPORT

– 74 –

BASIS OF VALUATION

The valuation is our opinion of the market value (‘‘Market Value’’) which we would

define as intended to mean the estimated amount for which an asset or liability should

exchange on the valuation date between a willing buyer and a willing seller in an

arm’s-length transaction after proper marketing wherein the parties had each acted

knowledgeably prudently and without compulsion.

Market Value is understood as the value of an asset or liability estimated without

regard to costs of sale or purchase and without offset for any associated taxes or potential

taxes.

The market value is the best price reasonably obtainable in the market by the seller and

the most advantageous price reasonably obtainable in the market by the buyer. This

estimate specifically excludes an estimated price inflated or deflated by special terms or

circumstances such as atypical financing, sale and leaseback arrangements, joint ventures,

management agreements, special considerations or concessions granted by anyone

associated with the sale, or any element of special value.

VALUATION METHODOLOGY

We have valued the property interest by using the Direct Comparison Approach based

on the principle of substitution, where comparison based on prices realized on actual sales

and/or asking prices of comparable properties is made. Comparable properties of similar

sizes, scales, natures, characters and locations are analyzed and carefully weighed against

all the respective advantages and disadvantages of each property in order to arrive at fair

comparisons of market value.

VALUATION CONSIDERATIONS

In valuing the property interest, we have complied with all the requirements contained

in Chapter 5 and Practice Note 12 to the Rules Governing the Listing of Securities issued by

The Stock Exchange of Hong Kong Limited and the HKIS Valuation Standards 2012

Edition.

VALUATION ASSUMPTION

In our valuation, unless otherwise stated, we have assumed that:

a. transferable land use rights in respect of the Property for specific terms at nominal

annual land use fees have been granted and that any premium payable has already

been fully paid;

b. the owner of the Property have enforceable title to the Property and has free and

uninterrupted right to use, occupy or assign the Property for the whole of the

respective unexpired terms as granted;


– 75 –

c. no deleterious or hazardous materials or techniques have been used in the

construction of the Property;

d. the Property is connected to main services and sewers which are available on

normal terms; and

e. the owner sells the Property on the open market without the benefit of a deferred

terms contract, leaseback, joint venture, management agreement or any similar

arrangement which would serve to affect the property value.

TITLE INVESTIGATION

We have been shown copies of various documents relating to the property interest.

However, we have not examined the original documents to verify the existing titles to the

property interest or any amendment which does not appear on the copies handed to us. We

have relied considerably on the information given by the Group’s PRC legal advisers,

AllBright Law Offices, concerning the validity of the titles to the property interest.

LIMITING CONDITIONS

We have inspected the Property. During the course of our inspection, we did not note

any serious defects. However, no structural survey has been made and we are therefore

unable to report whether the Property is free from rot infestation or any other defects. No

tests were carried out on any of the services.

We have not carried out detailed on-site measurement to verify the correctness of the

areas in respect of the property but have assumed that the areas shown on the documents

handed to us are correct. All dimensions, measurements and areas are approximate.

We have relied to a considerable extent on information provided by the Group and

accepted advices given to us on such matters, in particular, but not limited to tenure,

planning approvals, statutory notices, easements, particulars of occupancy, size and floor

areas and all other relevant matters in the identification of the Property.

We have had no reason to doubt the truth and accuracy of the information provided to

us by the Group. We have also been advised by the Group that no material fact has been

omitted from the information supplied. We consider that we have been provided with

sufficient information to reach an informed view, and we have no reason to suspect that any

material information has been withheld.

No allowance has been made in our report for any charges, mortgages or amounts

owing on the property interest valued nor for any expenses or taxation which may be

incurred in effecting a sale. Unless otherwise stated, it is assumed that the property interest

is free from encumbrances, restrictions and outgoings of an onerous nature, which could

affect its value.


– 76 –

REMARKS

We have valued the property in Renminbi (RMB) and in Hong Kong Dollars (HKD)

at the exchange rate of RMB1.00 to HK$1.26124.

We have conducted on-site inspection to the property in October 2013 by our

Ms. Michelle X. L. Zhang (MRICS, Msc, BA).

Our valuation certificate is herewith attached.

Yours faithfully,

For and on behalf of

RHL Appraisal Limited

Peggy Y. Y. Lai

MHKIS, MRICS, RPS(GP), BSC

Senior Associate Director

Ms. Peggy Y.Y. Lai is a Registered Professional Surveyor (GP) with over 18 years’

experience in valuation of properties in HKSAR, Macau SAR, United Kingdom, Canada,

mainland China and the Asia Pacific Region. Ms. Lai is a Professional Member of The Royal

Institution of Chartered Surveyors, a Member of The Hong Kong Institute of Surveyors as

well as a Member of China Institute of Real Estate Appraisers and Agents in the PRC.


– 77 –

VALUATION CERTIFICATE

Property held by the Group as investment property

Property Description and tenure

Particulars of

occupancy

Market Value in

existing state as at

30 September 2013

Lippo Plaza

(excluding Unit 2

on basement level

1, levels 12, 13, 15

& 16 and Car-

parking Space

Nos. 15, 16, 17

and 26 on

basement level 2

which have been

sold),

No. 222 Huai Hai

Zhong Road,

Huangpu District,

Shanghai,

the PRC (the

‘‘Property’’)

Lippo Plaza (the ‘‘Development’’) is a 36

-storey commercial development with 3

basement levels completed in about 1999.

As advised, portion of

the Property with a

floor area of

approximately 31,000

square meters (333,684

square feet) are subject

to various tenancy

agreements at a total

monthly rental of

approximately

RMB9,900,000 with

various terms of which

the latest one expiring

on 27th April, 2018

whilst the remaining

portions are vacant or

occupied by the owner

with a total floor area

of approximately

7,000.00 square meters

and 1,100.00 square

meters respectively.

RMB2,030,000,000

(RENMINBI TWO

BILLION AND

THIRTY

MILLION)

HKD2,560,317,200

(HONG KONG

DOLLARS TWO

BILLION FIVE

HUNDRED AND

SIXTY MILLION

THREE

HUNDRED

SEVENTEEN

THOUSAND AND

TWO HUNDRED)

The Development consists of a 4-storey

retail podium from levels 1 to 3 and

basement level 1, a 30-storey office tower

from levels 5 to 39 (levels 14, 24 and 34

omitted, levels 20 and 35 are designated for

refuge floors whilst level 4, penthouse 1 and

penthouse 2 are designated for E&M

Floors) and 2 basement levels for car-

parking uses with a total of 172 car-parking

spaces.

The Property comprises approximately 29

retail units on basement level 1, levels 1-3

and approximately 269 office units on levels

5-19, levels 21-33 and levels 36-39 with a

total gross floor area of approximately

42,775.80 square meters (460,439 square

feet).

The Property also comprises 168 car-

parking spaces on basement levels 2 to 3 of

the Development with a total gross floor

area of approximately 8,552.88 square

meters (92,063 square feet)

The land use rights of the Property were

granted for a term expiring on 1st July, 2044

for composite uses.

Notes:

1. Pursuant to a Shanghai Certificate of Real Estate Ownership - Hu Fang Di Lu Zi (2011) Di No. 001727

(滬房地盧字（2011）第001727號) dated 23rd August, 2011, the building ownership of the Property with a

total gross floor area of approximately 58,521.54 square meters is vested in LRSL. The land use rights of

the Property were granted to LRSL for a term expiring on 1st July, 2044 for composite uses.

2. As advised, as at the Valuation Date, the Property is subject to a mortgage in favour of Standard

Chartered Bank (China) Limited, Shanghai Branch to secure the due and punctual payment of the secured

obligations under the loan in the original aggregate principal amount of up to RMB320,000,000 since 19th

September, 2012 and until the full repayment of such loan. However, in the course of our valuation, we

have not taken into account of such mortgage.


– 78 –

3. The Property is situated at No. 222 Huai Hai Zhong Road. This locality is a composite area predominated

by high rise commercial development and residential development. Public means of transportation

available for the subject property and its vicinity includes buses, metro and taxies.

4. We have been provided with a legal opinion by the Group’s PRC legal adviser, AllBright Law Offices,

regarding the legal title of the Property, which contains, inter alia, the following:

i. Land Use Right Grant Contract shall take effect upon its execution and is legally binding and

enforceable;

ii. the Property is legally held by LRSL;

iii. the Property is subject to a mortgage in favour of Standard Chartered Bank, (China) Limited,

Shanghai Branch and is free from any other mortgage or third parties’ encumbrance;

iv. the Property can be freely transferred, leased and mortgaged;

v. all land premium of the Property has been fully settled by LRSL; and

vi. LRSL has obtained all the necessary permits/approvals for the construction works of the Property

from relevant urban planning authorities.


– 79 –

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full

responsibility, includes particulars given in compliance with the Listing Rules for the

purpose of giving information with regard to the Company. The Directors, having made all

reasonable enquiries, confirm that to the best of their knowledge and belief, the information

contained in this circular is accurate and complete in all material respects and not

misleading or deceptive, and there are no other matters the omission of which would make

any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests or short positions of the Directors and

chief executive of the Company in the shares, underlying shares and debentures of the

Company or any of its associated corporations (within the meaning of Part XV of the SFO)

which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8

of Part XV of the SFO (including interests and short positions which they were taken or

deemed to have under such provisions of the SFO), or which were required, pursuant to

Section 352 of the SFO, to be entered in the register referred to therein, or which were

required, pursuant to the Model Code, to be notified to the Company and the Stock

Exchange, were as follows:

Directors’ and chief executive’s interests and short positions in shares and underlying

shares of the Company and associated corporations

Name of Director

Personal

interests

(held as

beneficial

owner)

Family

interests

(interest of

spouse) Other interests Total interests

Approximate

percentage of

total interests

in the issued

share capital

Number of ordinary shares of HK$0.10 each in the Company

Stephen Riady — — 6,544,696,389

Notes (i) and (ii)

6,544,696,389 71.24

Number of ordinary shares of HK$0.10 each in Lippo

Stephen Riady — — 319,322,219

Note (i)

319,322,219 64.75

John Luen Wai Lee 1,031,250 — — 1,031,250 0.21

Number of ordinary shares of HK$1.00 each in HKC

Stephen Riady — — 1,121,517,842

Notes (i) and (iii)

1,121,517,842 56.12

John Luen Wai Lee 2,000,270 270 — 2,000,540 0.10

King Fai Tsui 600,000 75,000 — 675,000 0.03

APPENDIX VII GENERAL INFORMATION

– 80 –

Note:

(i) As at the Latest Practicable Date, Lippo Capital, an associated corporation (within the meaning of

Part XV of the SFO) of the Company, and through its wholly-owned subsidiary, J & S Company

Limited, was directly and indirectly interested in an aggregate of 319,322,219 ordinary shares of

HK$0.10 each in, representing approximately 64.75% of the issued share capital of, Lippo. Lanius,

an associated corporation (within the meaning of Part XV of the SFO) of the Company, is the holder

of 705,690,001 ordinary shares of HK$1.00 each in, representing the entire issued share capital of,

Lippo Capital. Lanius is the trustee of a discretionary trust which was founded by

Dr. Mochtar Riady, who does not have any interest in the share capital of Lanius. The

beneficiaries of the trust included, inter alia, Mr. Stephen Riady and other members of the family.

Mr. Stephen Riady was taken to be interested in Lippo Capital under the provisions of the SFO.

(ii) As at the Latest Practicable Date, Lippo was indirectly interested in 6,544,696,389 Shares,

representing approximately 71.24% of the issued share capital of the Company.

(iii) As at the Latest Practicable Date, Lippo was indirectly interested in 1,121,517,842 ordinary shares

of HK$1.00 each in, representing approximately 56.12% of the issued share capital of, HKC.

As at the Latest Practicable Date, Mr. Stephen Riady, as a beneficiary of the aforesaid

discretionary trust, through his interest in Lippo Capital as mentioned in Note (i) above,

was also taken to be interested in the share capital of the following associated corporations

(within the meaning of Part XV of the SFO) of the Company:

Name of associated corporation Class of shares

Number of

shares

interested

Approximate

percentage of

interest in the

issued share

capital

Abital Trading Pte. Limited Ordinary shares 2 100

Blue Regent Limited Ordinary shares 100 100

Boudry Limited Ordinary shares 10 100

Non-voting

deferred shares

1,000 100

Broadwell Overseas Holdings

Limited

Ordinary shares 1 100

First Tower Corporation Ordinary shares 1 100

Grand Peak Investment Limited Ordinary shares 2 100

Great Honor Investments Limited Ordinary shares 1 100

Greenorth Holdings Limited Ordinary shares 1 100

Honix Holdings Limited Ordinary shares 1 100

J & S Company Limited Ordinary shares 1 100

Kingaroy Limited Ordinary shares 1 100

Lippo Assets (International)

Limited

Ordinary shares 1 100

Non-voting

deferred shares

15,999,999 100


– 81 –

Name of associated corporation Class of shares

Number of

shares

interested

Approximate

percentage of

interest in the

issued share

capital

Lippo Finance Limited Ordinary shares 6,176,470 82.35

Lippo Investments Limited Ordinary shares 2 100

Lippo Realty Limited Ordinary shares 2 100

Multi-World Builders &

Development Corporation

Ordinary shares 4,080 51

Skyscraper Realty Limited Ordinary shares 10 100

The HCB General Investment

(Singapore) Pte Ltd.

Ordinary shares 100,000 100

Times Grand Limited Ordinary shares 1 100

Valencia Development Limited Ordinary shares 800,000 100

Non-voting

deferred shares

200,000 100

Winroot Holdings Limited Ordinary shares 1 100

As at the Latest Practicable Date, Mr. Stephen Riady, as beneficial owner and through

his nominee, was interested in 5 ordinary shares of HK$1.00 each in, representing

approximately 16.67% of the issued share capital of, Lanius, which is the holder of the

entire issued share capital of Lippo Capital. Lanius is the trustee of a discretionary trust

which was founded by Dr. Mochtar Riady (father of Mr. Stephen Riady), who does not

have any interest in the share capital of Lanius. The beneficiaries of the trust included, inter

alia, Mr. Stephen Riady and other members of the family.

As at the Latest Practicable Date, Mr. Stephen Riady was interested in 27,493,311

ordinary shares in Auric Pacific Group Limited (‘‘Auric’’), a subsidiary of the Company,

held by Goldstream Capital Limited, which in turn is a wholly-owned subsidiary of

Bravado International Ltd. (‘‘Bravado’’). Mr. Stephen Riady is the beneficial owner of the

entire issued capital of Bravado. For the reasons mentioned above, through his deemed

interest in Lippo Capital, Mr. Stephen Riady was also taken to be interested in 61,927,335

ordinary shares in Auric. Accordingly, Mr. Stephen Riady was interested and taken to be

interested in an aggregate of 89,420,646 ordinary shares in, representing approximately

71.16% of the issued share capital of, Auric.


– 82 –

As at the Latest Practicable Date, none of the Directors or chief executive of the

Company had any interests in the underlying shares in respect of physically settled, cash

settled or other equity derivatives of the Company or any of its associated corporations

(within the meaning of Part XV of the SFO).

All the interests stated above represent long positions. Save as disclosed herein, as at

the Latest Practicable Date, to the knowledge of the Company:

(1) none of the Directors and chief executive of the Company had or was deemed to

have any interests or short positions in the shares, underlying shares and

debentures of the Company or any of its associated corporations (within the

meaning of Part XV of the SFO) (a) which were required to be notified to the

Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the

SFO (including interests or short positions which the Directors and the chief

executive of the Company were taken or deemed to have under such provisions of

the SFO); or (b) which were required to be entered in the register kept by the

Company under Section 352 of the SFO; or (c) which were required to be notified

to the Company and the Stock Exchange pursuant to the Model Code; and

(2) none of the Directors and chief executive of the Company nor their spouses or

minor children (natural or adopted) were granted or had exercised any rights to

subscribe for any equity or debt securities of the Company or any of its associated

corporations (within the meaning of Part XV of the SFO).

Mr. Stephen Riady is also a director of each of Lanius, Lippo Capital, Lippo, First

Tower Corporation (‘‘First Tower’’) and Skyscraper Realty Limited (‘‘Skyscraper’’).

Mr. John Luen Wai Lee is also a director of both First Tower and Skyscraper. Messrs.

Leon Nim Leung Chan, Edwin Neo, Victor Ha Kuk Yung and King Fai Tsui are also

directors of Lippo. Save as disclosed herein, none of the Directors holds any directorship or

employment in a company which has an interest or short position in the Shares and

underlying Shares which would fall to be disclosed to the Company under the provisions of

Divisions 2 and 3 of Part XV of the SFO.


– 83 –

3. INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS

AND OTHER PERSONS

So far as is known to the Directors or chief executive of the Company, as at the Latest

Practicable Date, the persons (other than the Directors or chief executive of the Company)

who had interests or short positions in the Shares and underlying Shares which would fall to

be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the

SFO as recorded in the register required to be kept by the Company pursuant to Section 336

of the SFO or who were, directly or indirectly, interested in 10% or more of the nominal

value of any class of share capital carrying rights to vote in all circumstances at general

meetings of any other members of the Group were as follows:

(a) The Company

Name Number of Shares

Approximate

percentage

Lippo 6,544,696,389 71.24

Lippo Capital 6,544,696,389 71.24

Lanius 6,544,696,389 71.24

Dr. Mochtar Riady 6,544,696,389 71.24

Madam Lidya Suryawaty 6,544,696,389 71.24

Note (a):

1. 6,544,696,389 Shares were held by Skyscraper Realty Limited directly as beneficial owner

which in turn is a wholly-owned subsidiary of First Tower Corporation (‘‘First Tower’’). First

Tower is a wholly-owned subsidiary of Lippo. Lippo Capital, and through its wholly-owned

subsidiary, J & S Company Limited, was directly and indirectly interested in ordinary shares

representing approximately 64.75% of the issued share capital of Lippo.

2. Lanius is the holder of the entire issued share capital of Lippo Capital and is the trustee of a

discretionary trust which was founded by Dr. Mochtar Riady, who does not have any interest

in the share capital of Lanius. Dr. Mochtar Riady and his wife Madam Lidya Suryawaty were

taken to be interested in the Shares under the provisions of the SFO.

3. Lippo’s interests in the Shares were recorded as the interests of Lippo Capital, Lanius,

Dr. Mochtar Riady and Madam Lidya Suryawaty. The above 6,544,696,389 Shares related to

the same block of Shares that Mr. Stephen Riady was interested, details of which are disclosed

in the paragraph headed ‘‘Disclosure of Interests — Directors’ and chief executive’s interests

and short positions in shares and underlying shares of the Company and associated

corporations’’ in this appendix.


– 84 –

(b) Jeremiah Holdings Limited (‘‘Jeremiah’’)

Name

Number of ordinary shares

of S$1.00 each Percentage

Dragon Board Holdings Limited

(‘‘Dragon Board’’)

779,187 60

Mrs. Endang Utari Mokodompit 519,458 40

Note (b): Dragon Board is a wholly-owned subsidiary of the Company. See also (a) above in

respect of the substantial shareholders of the Company.

(c) Nine Heritage Pte Ltd (‘‘Nine Heritage’’)

Name



Jeremiah 800,000 80

SouthQuay Capital Asia Limited 200,000 20

Note(c): See also (b) above in respect of the substantial shareholders of Jeremiah.

(d) Proton Power Asia Limited

Name


of HK$1.00 each

Approximate

percentage

Apex Tier Limited (‘‘Apex Tier’’) 60 66.66Proton Power, Inc. 30 33.33

Note (d): Apex Tier is a wholly-owned subsidiary of the Company. See also (a) above in respect of

the substantial shareholders of the Company.

(e) Lippo Select HK & Mainland Property ETF

Name Number of units

Approximate

percentage

World Grand Holding Limited

(‘‘World Grand’’)

1,841,500 81

Note (e): World Grand is a wholly-owned subsidiary of the Company. See also (a) above in

respect of the substantial shareholders of the Company.


– 85 –

(f) Auric

Name


of S$0.50 each

Approximate

percentage

Jeremiah 4,999,283 3.98Nine Heritage 20,004,000 15.92Pantogon Holdings Pte Ltd.

(‘‘Pantogon’’)

36,165,052 28.78

Goldstream Capital Limited 27,493,311 21.88

Note(f): Nine Heritage is a subsidiary of Jeremiah and Pantogon is a wholly-owned subsidiary of

the Company. See also (b) above in respect of the substantial shareholders of Jeremiah

and (a) above in respect of the substantial shareholders of the Company.

(g) Delifrance Singapore Wholesale Pte. Ltd.

Name



Delifrance Asia Ltd.

(‘‘Delifrance Asia’’)

392,000 49

Delifrance S.A. 408,000 51

Note (g): Delifrance Asia is a wholly-owned subsidiary of Auric. See also (f) above in respect of

the substantial shareholders of Auric.

(h) Mequestic Investments Limited

Name


of US$1.00 each Percentage

Charm Fit Pte Ltd (‘‘Charm Fit’’) 6 60Aaron Group Limited 4 40

Note (h): Charm Fit is a wholly-owned subsidiary of Auric. See also (f) above in respect of the

substantial shareholders of Auric.


– 86 –

(i) Foshan Ausoon Dairy Co., Ltd

Name

Amount of paid up

registered capital Percentage

Auric Pacific Dairy (Foshan) Limited

(‘‘Auric Foshan’’)

US$4,464,000 75

廣東新盈科技創業投資有限公司

(Foshan XinYing Science Technology

Venture Capital Co., Ltd.)

US$1,488,000 25

Note (i): Auric Foshan is a wholly-owned subsidiary of Auric. See also (f) above in respect of the

substantial shareholders of Auric.

(j) DLF (Thailand) Ltd

Name


of THB100.00 each

Approximate

percentage

K. Somchai Krunthong 25,500 preference shares 51Delifrance Asia 24,495 48.9Edmontor Investments Pte Ltd

(‘‘Edmontor’’)

5 0.1

Note (j): Delifrance Asia and Edmontor are wholly-owned subsidiaries of Auric. See also (f)

above in respect of the substantial shareholders of Auric.

(k) LCR Catering Services Limited

Name


of HK$1.00 each Percentage

All Around Limited (‘‘All Around’’) 8,100,000 90

Note (k): All Around is a subsidiary of Auric. See also (f) above in respect of the substantial

shareholders of Auric.

(l) Asia Now Resources Corp. (‘‘Asia Now’’)

Name Number of ordinary shares

Approximate

percentage

China Gold Pte. Limited

(‘‘China Gold’’)

55,429,908 49.93

Note (l): China Gold is a wholly-owned subsidiary of the Company. See also (a) above in respect

of the substantial shareholders of the Company.


– 87 –

All the interests stated above represent long positions. Save as disclosed herein, as

at the Latest Practicable Date, none of the substantial shareholders (as defined under

the Listing Rules) or other persons (other than the Directors or chief executive of the

Company) had any interests or short positions in the Shares and underlying Shares as

recorded in the register required to be kept by the Company under Section 336 of the

SFO.

Save as disclosed herein, as at the Latest Practicable Date, so far as was known to

the Directors or chief executive of the Company, there was no person, other than a

Director or chief executive of the Company, who had an interest or short position in

the Shares and underlying Shares which would fall to be disclosed to the Company

under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who were, directly

or indirectly, interested in 10% or more of the nominal value of any class of share

capital carrying rights to vote in all circumstances at general meetings of any other

member of the Group.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered or was proposing

to enter into any service contract with the Company or any other member of the Group

(excluding contracts expiring or determinable by the employer within one year without

payment of compensation (other than statutory compensation)).

5. COMPETING INTERESTS OF DIRECTORS AND ASSOCIATES

The Lippo Group (a general reference to the companies in which Mr. Stephen Riady

and his family members have a direct or indirect interest) is not a legal entity and does not

operate as one. Each of the companies in the Lippo Group operates within its own legal,

corporate and financial framework. As at the Latest Practicable Date, the Lippo Group

might have had or developed interests in business in Hong Kong and other parts in Asia

similar to those of the Group and there was a chance that such businesses might have

competed with the businesses of the Group.

Other than the independent non-executive Directors, Messrs. Stephen Riady, John

Luen Wai Lee and Leon Nim Leung Chan are also directors of Lippo, an intermediate

holding company of the Company, and HKC, a fellow subsidiary of the Company. Further

details of the Directors’ interests in Lippo and HKC are disclosed in this appendix headed

‘‘Disclosure of Interests — Directors’ and chief executive’s interests and short positions in

shares and underlying shares of the Company and associated corporations’’. Subsidiaries of

Lippo and HKC are also engaged in property investment and property development.

The Directors are fully aware of, and have been discharging, their fiduciary duty to the

Company. The Company and the Directors would comply with the relevant requirements of

the Company’s articles of association and the Listing Rules whenever a Director has any

conflict of interest in the transaction(s) with the Company.


– 88 –

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and

their respective associates were considered to have interest in any business which competes

or is likely to compete, either directly or indirectly, with the businesses of the Group or have

or may have any other conflicts of interest with the Group pursuant to the Listing Rules.

6. DIRECTORS’ INTERESTS IN ASSETS/CONTRACTS AND OTHER INTERESTS

Save for Mr. Stephen Riady who is deemed to be interested in the Disposal Agreement

and the transactions stated below, none of the Directors was materially interested in any

contract or arrangement which was entered into by any member of the Group and

subsisting at the Latest Practicable Date which was significant in relation to the business of

the Group:

(a) (i) the restaurant management agreement dated 10th October, 2013 entered into

between OUE Restaurants Pte. Ltd. (‘‘OUE Restaurants’’), a wholly-owned

subsidiary of OUE, and Zutis Pte. Ltd., an indirect subsidiary of Auric, in respect

of the management of the business and operations of a high-end restaurant of

OUE Restaurants in Singapore serving French, Japanese and Chinese cuisine (the

‘‘Restaurant’’); (ii) the restaurant operator agreement dated 10th October, 2013

entered into between OUE Restaurants and LP-Tetsu Pte. Ltd. (‘‘LP-Tetsu’’), an

indirect subsidiary of Auric in respect of the operation of the French cuisine

segment in the Restaurant; and (iii) the restaurant operator agreement dated

10th October, 2013 entered into between OUE Restaurants and LP-Tetsu in

respect of the operation of the Japanese cuisine segment in the Restaurant, each

for a term of three years from 1st April, 2013 to 31st March, 2016; and

(b) the supply agreement dated 31st October, 2013 entered into between Auric Pacific

Marketing Pte. Ltd. (‘‘APM’’), a wholly-owned subsidiary of Auric, and OUE in

respect of the supply of food and beverage products by APM to OUE for a term of

three years from 31st October, 2013 to 30th October, 2016.

As at the Latest Practicable Date, the followings were particulars of assets acquired or

disposed of by or leased to members of the Group since 31st March, 2013, being the date to

which the latest published audited consolidated financial statements of the Company were

made up, in which Mr. Stephen Riady had a direct or indirect interest:

(a) (i) On 1st April, 2013, a tenancy agreement was entered into between West

Tower Holding Limited (‘‘WTHL’’), a wholly-owned subsidiary of the

Company, and LCR Catering Services Limited (‘‘LCR Catering’’), a

non-wholly owned subsidiary of Auric which in turn is a subsidiary of the

Company, pursuant to which LCR Catering agreed to lease from WTHL

Unit 4, Ground Floor, Lippo Centre, 89 Queensway, Hong Kong (‘‘Lippo

Centre’’) for a term of three years from 1st April, 2013 to 31st March, 2016,

both days inclusive, at a monthly rental of HK$364,550, exclusive of rates,

service charge and all other outgoings, for use as a restaurant. The service

charge of HK$65,040 per month (subject to adjustment) shall be payable by

LCR Catering to WTHL and such service charge shall not exceed HK$78,000

per month; and


– 89 –

(ii) On 1st April, 2013, a licence agreement was entered into between WTHL, as

licensor, and LCR Catering, as licensee, in respect of four night car parking

spaces in the first basement of Lippo Centre. A licence fee of HK$5,300 per

month (subject to adjustment) shall be payable by LCR Catering to WTHL.

The term of the licence agreement shall be three years from 1st April, 2013 to

31st March, 2016, both days inclusive;

(b) On 10th October, 2013, a lease agreement was entered into between Auric, a

subsidiary of the Company, and Clifford Development Pte. Ltd. (‘‘CDPL’’), a

wholly-owned subsidiary of OUE, which is a joint venture of HKC, which in turn

is a subsidiary of Lippo, pursuant to which Auric agreed to lease from CDPL

Unit #06-03, 50 Collyer Quay, Singapore for a term of three years from

15th July, 2013 to 14th July, 2016, both days inclusive, at a monthly rental of

(i) S$40,613.90 from 15th July, 2013 to 31 December, 2013 (both dates inclusive);

and (ii) S$46,057.00 from 1st January, 2014 to 14th July, 2016 (both dates

inclusive), exclusive of service charge, for use as an office. The service charge of

S$5,443.10 per month shall be payable by Auric to CDPL on a monthly basis; and

(c) the Disposal Agreement

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors hadany direct or indirect interest in any assets which had been acquired or disposed of by orleased to any member of the Group or were proposed to be acquired or disposed of by orleased to any member of the Group since 31st March, 2013, being the date to which thelatest published audited consolidated financial statements of the Company were made up.

7. LITIGATION

So far as the Directors are aware, no member of the Group was engaged in anylitigation or arbitration of material importance and no litigation or arbitration of materialimportance was pending or threatened against any member of the Group as at the LatestPracticable Date.

8. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course ofbusiness) have been entered into by the members of the Group within the two yearsimmediately preceding the Latest Practicable Date and which are, or may be, material to theGroup:

(a) the agreement dated 25th November, 2011 entered into between Tamsett HoldingsLimited (a wholly-owned subsidiary of the Company) as vendor, and VantroInvestment Ltd as purchaser, relating to the disposal of one share of US$1.00 in,representing the entire issued share capital of, Winnery Limited (‘‘Winnery’’) forthe consideration of Rp240,000,000,000. Winnery held 480 million shares inPT Lippo Karawaci Tbk, a company incorporated in Indonesia and whose sharesare listed on the Indonesia Stock Exchange;


– 90 –

(b) the membership unit purchase agreement dated 27th February, 2012 (the‘‘February 2012 Purchase Agreement’’) entered into among Skye MineralInvestors, LLC (‘‘Skye Mineral’’) and Clarity Copper, LLC (‘‘Clarity Copper’’)as sellers, and PacNet Capital (U.S.) Limited (‘‘PacNet’’) (an indirectwholly-owned subsidiary of the Company) as buyer, relating to the sale andpurchase of a total of 3,600 Class A units (‘‘Class A Units’’) in Skye MineralPartners, LLC (the ‘‘Project Company’’) for a total consideration ofUS$8,000,000.

On 3rd August, 2012, another membership unit purchase agreement was entered

into between PacNet, the Project Company and Skye Mineral for the subscription

of 1,674 Class A Units and 1,026 Class A Units by each of PacNet and Skye

Mineral, respectively, for a consideration of US$3,720,000 and US$2,280,000

respectively and on the same date, an amendment to the February 2012 Purchase

Agreement was entered into between PacNet, Skye Mineral and Clarity Copper

pursuant to which, PacNet agreed to reduce its purchase from Clarity Copper and

Clarity Copper agreed to reduce its sale to PacNet Capital from 1,700 Class A

Units to 782 Class A Units, with consideration payable by PacNet Capital at the

Second Closing (as defined in the February 2012 Purchase Agreement) reducing

from US$3,777,777.78 to US$1,737,777.78.

The Project Company, through its majority owned subsidiary, CS Mining LLC,

owns and controls a number of copper ore deposits located in the Milford Mineral

Belt in Beaver County, State of Utah in the United States of America;

(c) the subscription agreement dated 13th March, 2012 entered into between Golden

Rain Holdings Limited (‘‘Golden Rain’’) (a wholly-owned subsidiary of the

Company) and Haranga Resources Limited (‘‘Haranga’’), a public company listed

on the Australian Securities Exchange, relating to the subscription by Golden

Rain of 15,000,000 new ordinary shares in the capital of Haranga for the total

subscription price of A$6,000,000 under a private placement;

(d) the provisional agreements dated 30th April, 2012 entered into between Writring

Investments Limited (a wholly-owned subsidiary of the Company) as seller, and

(i) Great International Development Company Limited, as buyer, for the sale and

purchase of Unit B on the 19th Floor and car parking space no. L35 on the Lower

Ground Floor and car parking space no. G53 on the Ground Floor, Celestial

Garden, No. 5 Repulse Bay Road, Hong Kong at the consideration of

HK$62,000,000; and (ii) Oasis Management Limited, as buyer, for the sale and

purchase of Unit B on the 20th Floor, Celestial Garden, No. 5 Repulse Bay Road,

Hong Kong at the consideration of HK$60,000,000, respectively;

(e) the subscription agreement dated 20th February, 2013 entered into between

GSH Corporation Limited (‘‘GSH’’), a company listed on the SGX-ST and

Golden Super Holdings Limited (‘‘Golden Super’’) (a wholly-owned subsidiary of

the Company) for the subscription by Golden Super of 184,653,669 new ordinary

shares in the capital of GSH at an aggregate subscription price of S$17,542,098.56


– 91 –

and GSH is primarily engaged in the business of distribution of IT, photographic

and timepiece products with distribution networks spanning many emerging

markets in Asia, the Middle East and Central Asia;

(f) the share purchase agreement dated 1st March, 2013 entered into between Charm

Fit Pte. Ltd. (‘‘Charm Fit’’) (a wholly-owned subsidiary of Auric) and Asian Hotel

& Resort Group Limited (‘‘Asian Hotel’’) for the sale of all of Charm Fit’s

redeemable preference shares of S$0.10 each in the share capital of Auric Pacific

Real Estate Fund (the ‘‘Fund’’), representing 60% of the issued and outstanding

redeemable preference shares of the Fund. The sole ordinary share of the Fund

held by AP Fund Management Pte. Ltd (a wholly-owned subsidiary of Auric) was

also sold to Asian Hotel. The total consideration for the sale of the above shares

in the Fund amounted to HK$130,752,647.08; and

(g) the Disposal Agreement.

9. QUALIFICATIONS AND CONSENTS OF EXPERTS

The qualification of the experts, who have given opinion or advice contained in this

circular are set out as follows:

Name Qualification

Messis Capital a licensed corporation under the SFO to carry out Type 1

(dealing in securities) and Type 6 (advising on corporate

finance) regulated activities under the SFO, the independent

financial adviser to the Independent Board Committee and

the Independent Shareholders in respect of the terms of the

Disposal Agreement and the Disposal

Messrs. Ernst & Young Certified Public Accountants

RHL Property valuer

As at the Latest Practicable Date, none of the above experts had any shareholding in

any member of the Group or any right (whether legally enforceable or not) to subscribe for

or to nominate persons to subscribe for securities in any member of the Group, nor did it

has any interest, direct or indirect, in any assets which had, since 31st March, 2013, being

the date to which the latest published audited consolidated financial statements of the

Company were made up, been acquired or disposed of by or leased to any member of the

Group, or were proposed to be acquired or disposed of by or leased to any member of the

Group.

As at the date of this circular, each of the above experts has given and has not

withdrawn its written consent to the issue of this circular with the inclusion of its report(s),

letter(s) and reference(s) to its name(s) and opinion(s) in the form and context in which they

appear in this circular.


– 92 –

10. MISCELLANEOUS

(a) The Secretary of the Company is Ms. Millie Yuen Fun Luk, a fellow member of

each of the Institute of Chartered Secretaries and Administrators and the Hong

Kong Institute of Chartered Secretaries.

(b) The registered office of the Company is situated at Room 2301, 23rd Floor, Tower

One, Lippo Centre, 89 Queensway, Hong Kong.

(c) The transfer office of the Company is situated at the office of its registrars, Tricor

Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai,

Hong Kong.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal

business hours on any weekday (Saturday, Sunday and public holidays excluded) at the

registered office of the Company which is situate at Room 2301, 23rd Floor, Tower One,

Lippo Centre, 89 Queensway, Hong Kong from the date of this circular and up to the date

of the EGM:

(a) the memorandum and articles of association of the Company;

(b) copies of the material contracts referred to under the paragraph headed ‘‘Material

contracts’’ in this appendix;

(c) the letter from the Independent Board Committee, the text of which is set out in

Appendix I to this circular;

(d) the letter from the Independent Financial Adviser, the text of which is set out in

Appendix II to this circular;

(e) the report on the unaudited pro forma financial information of the Remaining

Group, the text of which is set out in Appendix V to this circular;

(f) the property valuation report prepared by RHL, the text of which is set out in

Appendix VI to this circular;

(g) the written consents from the experts referred to in paragraph headed

‘‘Qualification and consents of experts’’ in this appendix;

(h) the published audited consolidated financial statements of the Company for the

financial year ended 31st December, 2011 and the fifteen months ended

31st March, 2013;

(i) the Disposal Agreement; and

(j) this circular.


– 93 –

12. LANGUAGE

In the event of inconsistency, the English texts of this circular and form of proxy shall

prevail over the Chinese texts.

Note: Certain English translations of Chinese names or words used in this appendix are included for

information purpose only and should not be relied upon as the official translation of such Chinese

names or words.


– 94 –



(Stock Code: 156)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Lippo China

Resources Limited (the ‘‘Company’’) will be held at Harcourt Room, Lower Lobby,

Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Tuesday,

3rd December, 2013 at 10 : 45 a.m. for the purpose of considering and, if thought fit,

passing, with or without modifications, the following resolutions as ordinary resolutions of

the Company:

ORDINARY RESOLUTIONS

1. ‘‘THAT, the disposal by the Company of the entire issued share capital of Tecwell

Limited (the ‘‘Disposal’’) at a consideration of approximately HK$843.5 million

(subject to adjustment, if any) to OUE Eastern Limited (the ‘‘Purchaser’’)

pursuant to the sale and purchase agreement dated 16th October, 2013 between

the Company and the Purchaser (the ‘‘Disposal Agreement’’, a copy of which has

been produced to the meeting and marked ‘‘A’’ and signed by the chairman of the

meeting for identification purposes) and all transactions contemplated under the

Disposal Agreement (including, without limitation, the execution of the Deed of

Undertakings, as referred to in the Disposal Agreement, which is annexed in the

Disposal Agreement) be and are hereby approved; and the directors of the

Company be and are hereby authorised to do all such acts and/or things and/or

execute all such documents incidental to, ancillary to or in connection with

matters contemplated in or relating to the Disposal Agreement as they may in

their absolute discretion consider necessary, desirable or expedient to give effect

to the Disposal and the Disposal Agreement and the implementation of all

transactions contemplated thereby and thereunder (including, without limitation,

the execution of Deed of Undertakings as referred to in the Disposal Agreement)

and to agree to such variation, amendment or waiver as are, in the opinion of the

directors of the Company, in the interest of the Company.’’


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2. ‘‘THAT, conditional upon the completion of the Disposal Agreement (as defined

in the ordinary resolution No. 1 of the notice convening the meeting of which this

resolution forms part), the declaration and payment of a special dividend of

HK3.5 cents per share in cash to the registered holders of the ordinary shares of

HK$0.10 each in the issued share capital of the Company whose names appear in

the register of members of the Company at the close of business on a record date

to be determined by the directors of the Company be and are hereby approved,

and any directors of the Company be and are hereby authorised to sign, execute,

deliver, and do all such documents, deeds, acts, matters and things, as he may in

his opinion or discretion consider reasonable, necessary, desirable or expedient to

implement and/or give effect to the payment of such special dividend.’’

By Order of the Board


Millie Luk

Secretary

Hong Kong, 18th November, 2013

Registered Office:

Room 2301, 23rd Floor

Tower One

Lippo Centre

89 Queensway

Hong Kong

Note:

1. Any member entitled to attend and vote at the meeting is entitled to appoint more than one proxy to

attend and vote instead of him. A proxy need not be a member of the Company.

2. To be valid, a form of proxy together with the power of attorney or other authority (if any) under which it

is signed (or a notarially certified true copy thereof) must be deposited at the Company’s registered office

at Room 2301, 23rd Floor, Tower One, Lippo Centre, 89 Queensway, Hong Kong not less than 48 hours

before the time appointed for the holding of the meeting or any adjourned meeting thereof. Completion

and return of the form of proxy will not preclude members from attending and voting in person at the

meeting or any adjourned meeting thereof should they so desire.

3. The register of members of the Company will be closed on Tuesday, 3rd December, 2013 during which

no transfer of share will be registered. In order to be entitled to attend and vote at the meeting, all

transfers of shares accompanied by the relevant share certificates and transfer forms must be lodged with

the Company’s registrars, Tricor Tengis Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East,

Wanchai, Hong Kong not later than 4 : 30 p.m. on Monday, 2nd December, 2013.

4. At the meeting, the chairman of the meeting will exercise his power under article 86(i) of the articles of

association of the Company to put the above resolutions to the vote by way of a poll as required under the

Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

5. Should there be any discrepancies between the English and the Chinese versions, the English version shall

prevail.


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E_Cir_20131117

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Transcript of E_Cir_20131117