E Cir 20131117

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
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 licensed securities 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 the accompanying form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom 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 the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever 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

(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 set out 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 of this circular. A notice convening the extraordinary general meeting of Lippo China Resources Limited to 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. or any adjourned meeting thereof to approve matters referred to in this circular is set out on pages 95 and 96 of this circular. A form of proxy for use at the extraordinary general meeting is accompanied herewith. Whether or not you are able or intend to attend the extraordinary general meeting, you are requested to complete and return the accompanying form of proxy in accordance 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 hours before the time appointed for the holding of the extraordinary general meeting or any adjourned meeting thereof. Completion and return of the form of proxy shall not preclude shareholders from attending and voting in person at the extraordinary general meeting or any adjourned meeting thereof should they so desire.
18th November, 2013
CONTENTS
Page Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appendix I Appendix II Appendix III Appendix IV Appendix V Letter from the Independent Board Committee . . . . . . . . . . . . . . . Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . Financial information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial information of the Tecwell Group . . . . . . . . . . . . . . . . . . Unaudited pro forma financial information of the Remaining Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property valuation report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5 17 19 37 52
61 74 80 95
Appendix VI Appendix VII
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DEFINITIONS
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; has the same meaning as defined in the Listing Rules; the board of Directors; 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; Lippo China Resources Limited , 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 of the Disposal subject to and pursuant to the terms and conditions of the Disposal Agreement; the date of Completion, which shall be the Listing Date; 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; the conditions precedent to the completion of the Disposal Agreement; has the meaning ascribed to such term under the Listing Rules; the consideration for the sale and purchase of the Sale Shares; directors of the Company; the disposal of the Sale Shares, representing the entire issued share capital of Tecwell, pursuant to the Disposal Agreement; the agreement dated 16th October, 2013 entered into by the Company and the Purchaser in respect of the Disposal; 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;
associates Board Business Day
Company
Completion
Completion Date Conditional Special Dividend
Conditions Precedent
connected person(s) Consideration Directors Disposal
Disposal Agreement
EGM
DEFINITIONS
Extended Long Stop Date Group HKC
a date no later than 30th June, 2014 or such later date as the parties may mutually agree in writing; the Company and its subsidiaries; Hongkong Chinese Limited ( *), 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; the Hong Kong Financial Reporting Standards; the Hong Kong Special Administrative Region of the PRC; 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; 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; Shareholders other than Lippo and its associates;
HKFRS Hong Kong Independent Board Committee
Independent Financial Adviser or Messis Capital
Independent Shareholders 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 Limited; 15th November, 2013, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular; Lippo Limited , a company incorporated in Hong Kong with limited liability whose shares are listed on the Main Board of the Stock Exchange; Lippo Capital Limited; the date on which the units of OUE Commercial Trust are listed and commence trading on the SGX-ST;
Lanius Latest Practicable Date
Lippo
Lippo Capital Listing Date
DEFINITIONS
Listing Rules or Rule Long Stop Date LRSL
the Rules Governing the Listing of Securities on the Stock Exchange; 28th February, 2014; (Lippo Realty (Shanghai) Limited), a company established under the laws of the PRC which is wholly owned by Tecwell, an indirect wholly-owned subsidiary of the Company; Model Code for Securities Transactions by Directors of Listed Issuers, as set out in Appendix 10 to the Listing Rules; net asset value, computed based on total assets less total liabilities, which shall exclude any amount due from/to the shareholders; OUE Limited (formerly known as Overseas Union Enterprise Limited), a company incorporated in the Republic of Singapore with limited liability and listed on the Main Board of the SGX-ST, which is a joint venture of HKC; OUE Commercial Trust constituted under the laws of the Republic of Singapore which shall invest mainly in commercial properties and which units are proposed to be listed on the SGX-ST; the Peoples Republic of China; collectively, the 36-storey commercial building named as Lippo Plaza located at No. 222 Huaihai Zhong Road, Huangpu District, Shanghai, the PRC, excluding Unit 2 on Basement 1, 12th, 13th, 15th and 16th Floors and 4 car parking spaces Nos. 15, 16, 17 and 26, with a total gross floor area of approximately 58,521.54 square metres; OUE Eastern Limited, a company incorporated in the British Virgin Islands with limited liability, which is a wholly-owned subsidiary of OUE Commercial Trust; Shareholder(s) whose name(s) appear(s) on the register of members of the Company at the close of business on the Record Date; the record date for determining the entitlements of the Qualifying Shareholders to the Conditional Special Dividend; the Group other than the Tecwell Group immediately after Completion; RHL Appraisal Limited, an independent valuer;
Model Code
NAV
OUE
OUE Commercial Trust
PRC Property
Purchaser
Qualifying Shareholder(s)
Record Date
Remaining Group
RHL
DEFINITIONS
Sale Shares 100 ordinary shares of US$1.00 each in, representing the entire issued share capital of, Tecwell; Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong; Singapore Exchange Securities Trading Limited; ordinary share(s) of HK$0.10 each in the issued share capital of the Company; holder(s) of the Share(s); The Stock Exchange of Hong Kong Limited; Tecwell Limited, a company incorporated in the British Virgin Islands with limited liability and an indirect wholly-owned subsidiary of the Company; Tecwell and its subsidiary, namely, LRSL; Australian dollars, the lawful currency of Australia; Canadian dollars, the lawful currency of Canada; Hong Kong dollars, the lawful currency of Hong Kong; Renminbi, the lawful currency of the PRC; Indonesian rupiahs, the lawful currency of the Republic of Indonesia; Singapore dollars, the lawful currency of the Republic of Singapore; Thai Baht, the lawful currency of Thailand; United States dollars, the lawful currency of the United States of America; and per cent.
SFO
SGX-ST Share(s)
Shareholder(s) Stock Exchange Tecwell
Tecwell Group A$ C$ HK$ RMB Rp
S$
THB US$
%
* 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. 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.
(2)
LETTER FROM THE BOARD

(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 PROPOSED DISPOSAL OF THE ENTIRE ISSUED SHARE CAPITAL OF TECWELL LIMITED, CONDITIONAL SPECIAL DIVIDEND AND NOTICE OF EXTRAORDINARY GENERAL MEETING
INTRODUCTION Reference is made to (i) the Announcement; and (ii) the announcement of the Company dated 4th November, 2013 in relation to the declaration of the Conditional Special 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 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.

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.

THE DISPOSAL AGREEMENT Date: Parties: 16th October, 2013 (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.

The Consideration was determined after arms 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

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.

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 HK$000 Net profit before taxation Net profit after taxation Net profit after taxation (excluding net fair value gain on investment property) 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. 179,275 133,674 For the twelve months ended 31st December, 2012 HK$000 429,391 311,255 For the fifteen months ended 31st March, 2013 HK$000 474,672 340,298
70,458
32,625
31,956
10

The Board undertakes a strategic review of the Groups 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 Groups 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 Companys 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 Groups 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 Groups 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 Groups 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 Companys 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 Groups total assets would decrease from approximately HK$7,781 million to HK$5,590 million, and the Groups 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 Groups 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 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 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 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. 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 Exchanges website at www.hkexnews.hk and the Companys 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 Committees recommendation to the Independent Shareholders and the Independent Financial Advisers 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 LIPPO CHINA RESOURCES LIMITED John Luen Wai Lee Chief Executive Officer
16
APPENDIX I
LETTER FROM THE INDEPENDENT BOARD COMMITTEE
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 PROPOSED DISPOSAL OF THE 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
17
APPENDIX I
LETTER FROM THE INDEPENDENT BOARD COMMITTEE
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 LIPPO CHINA RESOURCES LIMITED Edwin Neo King Fai Tsui Victor Ha Kuk Yung Independent non-executive Directors
18
APPENDIX II
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
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. 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 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 interested in up to 50% of the issued units of OUE Commercial Trust upon the listing of
19
APPENDIX II
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 Committees 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
APPENDIX II
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
APPENDIX II
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 Companys 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 fifteen months ended 31st March, 2013 HK$000
For the year ended 31st December, 2010 2011 HK$000 HK$000 (Restated) (Restated) Turnover Property investment Property development Treasury investment Securities investment Other Total Profit attributable to equity holders of the Company
202,591 2,501 15,763 64,081 284,936
221,521 3,096 2,392 17,363 244,372
280,392 77,713 5,720 8,940 23,337 396,102
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 Groups 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 Groups total revenue for the fifteen months ended 31st March, 2013.
22
APPENDIX II
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 Groups 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
APPENDIX II
(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 fifteen months ended 31st March, 2013 HK$000 For the three months ended 30th June, 2013 HK$000
For the year ended 31st December, 2010 2011 HK$000 HK$000 Fair value gain/(loss) on investment properties Net profit/(loss) before taxation Net profit/(loss) after taxation
423,358 479,579 358,613
97,671 179,275 133,674
429,553 474,672 340,298 As at 31st March, 2013 HK$000 1,076,225
(355,538) (341,232) (257,858) As at 30th June, 2013 HK$000 849,879
As at 31st December, 2010 2011 HK$000 HK$000 NAV 1,363,435 1,442,904
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 Groups 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 Companys 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
APPENDIX II
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 Groups 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
APPENDIX II
(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 Companys 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
APPENDIX II
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 Groups major properties held for development:
Approximate gross floor area (sq. m) 245,391 Estimated completion date Stage development as at as 31st March, 2013
Location
Use
West of Xiangyu Avenue Qinghe District Huai An Jiangsu Province the PRC East of Taizhou Avenue and north of Yaocheng Avenue China Medical City ( ) Taizhou Jiangsu Province the PRC
Multi-use
2016
In planning stage
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 Groups 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 Groups 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
APPENDIX II
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
APPENDIX II
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 arms 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
APPENDIX II
(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 Valuers 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
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being generated from property investment; (iii) have market capitalisation of less than HK$10,000 million; and (iv) shares are listed on the main board of the Stock Exchange. To the best of our knowledge and endeavor, we identified 3 companies (the Comparables) which met the said criteria and we consider such Comparables to be exhaustive based on the criteria. It should be noted that the businesses, operations and prospects of the Tecwell Group are not exactly the same as the Comparables, and we have not conducted any in-depth investigation into the businesses and operations of the Comparables. Set out below are the PBRs and PERs of the Comparables based on their closing prices as at 16th October, 2013, being the date of the Disposal Agreement:
Stock Code Market Capitalisation (HK$ million)
Company Name
PBR (times) (Note 1)
PER (times) (Note 2)
Dynamic Holdings Limited Zhong Hua International Holdings Limited Wang On Group Limited Average Maximum Minimum The Tecwell Group
29 1064 1222
541 101 900
0.30 0.04 2.20 0.85 2.20 0.04 0.99 (Note 3)
4.31 1.66 0.25 2.08 4.31 0.25 2.5 (Note 4)
Source: Notes: 1.
the website of the Stock Exchange
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. 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. 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. 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.
2.
3.
4.
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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.
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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.
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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
APPENDIX II
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 Groups 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 Groups 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;
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APPENDIX II
. .
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 Groups 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
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APPENDIX III
1.
FINANCIAL INFORMATION OF THE GROUP
Details of the published financial information of the Group for each of the three years/period ended 31st December, 2010, 31st December, 2011 and 31st March, 2013 are disclosed 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 financial statements have been published on the websites of the Stock Exchange at www.hkexnews.hk and the Company at www.lcr.com.hk: . . . 2. annual report of the Company for the year ended 31st December, 2010 (pages 38 to 127); annual report of the Company for the year ended 31st December, 2011 (pages 38 to 124); and annual report of the Company for the fifteen months ended 31st March, 2013 (pages 40 to 136).
INDEBTEDNESS STATEMENT As at 30th September, 2013, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Group had outstanding indebtedness of approximately HK$1,903 million, comprising secured bank loans of approximately HK$1,819 million, unsecured bank loans of approximately HK$39 million, secured obligations under finance leases for certain plant and equipment of approximately HK$1 million, secured bankers guarantees of approximately HK$37 million and unsecured bankers guarantees of approximately HK$7 million. The bank loans were secured by first legal mortgages over certain investment properties, leasehold land and buildings and properties under development, and certain bank deposits of the Group. The obligation under finance leases are secured by the rights to the leased plant and equipment. The bankers guarantees are secured by certain bank deposits of the Group. Save as aforesaid and apart from intra-group liabilities, the Group did not, as at 30th September, 2013, have any outstanding debt securities, whether issued and outstanding, authorised or otherwise created but unissued, term loans, whether guaranteed, unguaranteed, secured (whether the security is provided by the issuer or by third parties) or unsecured, other borrowings or indebtedness in the nature of borrowing including bank overdrafts and liabilities under acceptances (other than normal trade bills) or acceptance credits or hire purchase commitments, whether guaranteed, 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 changes in the indebtedness and contingent liabilities of the Group since 30th September, 2013. It should be noted that following the adoption of HKFRS 10 Consolidated Financial Statements from 1st April, 2013 onwards, Auric and some other associates are treated as subsidiaries of the Group since 1st April, 2013, and the indebtedness statement is prepared on the basis to include any indebtedness of those new subsidiaries.
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APPENDIX III
3. WORKING CAPITAL
The Directors are of the opinion that, after taking into account (i) the internal resources 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 unforeseeable circumstances, the Remaining Group will have sufficient working capital for its present requirement 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 adverse change in the financial or trading position of the Group since 31st March, 2013, being the date 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 still overshadowed by a considerable number of unknown factors. The Group is seeking to streamline and strengthen its existing business to meet the challenges ahead as stated in the annual report for the fifteen months ended 31st March, 2013. The Disposal will enable the Group to realise the value of its investment at an opportune time and partly share the rewards of this investment with the Shareholders. The remaining proceeds will partly be used to finance the investment and capital expenditure required by the Groups existing principal businesses, including property investment, property development and securities and treasury investments. Following the Disposal, the properties at Lippo Centre in Hong Kong will form a major part of the Groups current investment property portfolio and continue to provide the stable and recurring revenue to the Group. The Group has started its property development projects in Huai An and Taizhou City, both located in Jiangsu Province, mainland China. The Huai An project will be developed into an integrated residential, commercial and retail complex with a total gross floor area of approximately 245,391 square metres whereas the Taizhou City project will be developed into townhouses and 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 the increase in working capital after the Disposal, the Group will continue to cautiously manage its investment portfolio in view of the market conditions and its business needs with a 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 Companys financial year end date was changed from 31st December to 31st March. The financial period under review covered a fifteen-month period from 1st January, 2012 to 31st March, 2013. For the fifteen months ended 31st March, 2013, the revenue of the Remaining Group was approximately HK$216 million. The significant increase as compared to the revenue of the Remaining Group of approximately HK$107 million in 2011 was mainly due to the disposal of a held-for-sale property in Singapore at HK$78 million in 2012/13.
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APPENDIX III
For the fifteen months ended 31st March, 2013, the Remaining Group recorded a loss attributable to shareholders of approximately HK$47 million, which was mainly due to provisions made for various investments during the period resulted from uncertainties of market acceptance and competitions from other competitors in such businesses. Business review For the fifteen months ended 31st March, 2013, 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; and (v) other businesses including mineral exploration, extraction and processing, food business, money lending and the provision of property management services. The performance analysis of these business segments is shown as follows: (i) Property investment Property investment business continued to provide stable and recurring rental income to the Remaining Group. Total revenue from the property investment business for the fifteen months ended 31st March, 2013 amounted to approximately HK$104 million, an increase of approximately 18% as compared to approximately HK$88 million in 2011. Lippo Centre in Hong Kong, being the landmark of the Remaining Group in Hong Kong, continued to contribute significant results to the Remaining Group. 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$105 million for the period as compared to HK$287 million in 2011. For the fifteen months ended 31st March, 2013, the Remaining Group completed the disposal of a number of residential units in Hong Kong at an aggregate consideration of approximately HK$622 million and recognised a gain of approximately HK$68 million. The disposals represented an opportunity for the Remaining Group to realise a good profit at appropriate time. As a result of such disposal as well as the above mentioned revaluation gains, the Remaining Groups investment properties as at 31st March, 2013 was reduced from HK$2.2 billion as at 31st December, 2011 to approximately HK$1.7 billion as at 31st March, 2013. (ii) Property development The Remaining Group primarily focused on property development projects in mainland China and participated in development projects in Huai An City (the Huai An Project) and Taizhou City (the Taizhou Project), both in Jiangsu Province. Huai An Project will be developed into an integrated residential, commercial and retail complex whereas Taizhou
39
APPENDIX III
Project is a residential project comprising townhouses and residential apartments. 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 fifteen months ended 31st March, 2013 amounted to approximately HK$78 million due to the sale of a held-for-sale property in Singapore and a gain of approximately HK$16 million was recognised. (iii) Treasury investment and securities investment The investment market continued to be challenging and full of uncertainties. The Remaining Group cautiously managed its investment portfolio and looked for opportunities to realise its profit. For the fifteen months ended 31st March, 2013 : (a) revenue for treasury investment of approximately HK$5 million was recorded, representing an increase of approximately 86% as compared 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 to approximately HK$2 million in 2011, was recorded from the disposal of the Remaining Groups financial assets held for trading and dividend income received from the investment portfolio. At the same time, the Remaining Group recognised a total net gain of approximately HK$90 million (as compared to nil in 2011) from the realisation of available-for-sale financial assets through the sale of a subsidiary which owned the financial assets and direct disposal in the market. In the highly volatile investment markets, the performance of the securities investments was diverse and an unrealised fair value loss was recorded. The treasury and securities investments business attained a net profit of approximately HK$38 million for the fifteen months ended 31st March, 2013, (as compared to a net loss of approximately HK$3 million in 2011) after including the provision of approximately HK$23 million made for some investments. (iv) Other businesses Other businesses mainly comprise mineral exploration, extraction and processing, food business, money lending and the provision of property management services. The growth and recovery of the Remaining Groups various investments was hindered by the external uncertainties of the developed economies. Moreover, some of the investments concentrate on new products which are at the early development stage. Total revenue from other businesses for the fifteen months ended 31st March, 2013 was approximately HK$20 million, representing an increase of approximately 47% from approximately HK$14 million in 2011.
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APPENDIX III
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 Groups 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
APPENDIX III
related to the property development projects held by the Remaining Group. The investments or capital assets will be financed by the Remaining Groups 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 ETFs 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.
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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 Aurics 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
APPENDIX III
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 Groups 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
APPENDIX III
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: (i) Property investment 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. (ii) Property development 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. (iii) Treasury investment and securities investment 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
APPENDIX III
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. (iv) Other businesses 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 The Remaining Group financed its liquidity requirements through a combination of cash flow generated from operations and bank borrowings. As 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). Capital Structure and foreign exchange risk During the year ended 31st December, 2011, there was no change in the Remaining Groups 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
APPENDIX III
Contingent liabilities and capital commitment As at 31st December, 2011, the Remaining Group did not have any material contingent liabilities. As at 31st December, 2011, the Remaining Groups 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 Groups internal resources and/or external bank financing, as appropriate. Significant investments, material acquisitions and disposals 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
APPENDIX III
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. Employee and remuneration policies 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. 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 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: (i) Property investment 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
APPENDIX III
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. (ii) Property development 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. (iii) Treasury investment and securities investment 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. (iv) Other businesses 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 Multipolars 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
APPENDIX III
Liquidity, financial resources and charge of assets The Remaining Group financed its liquidity requirements through a combination of cash flow generated from operations and bank borrowings. As 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%. Capital Structure and foreign exchange risk During the year ended 31st December, 2010, there was no change in the Remaining Groups 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. Contingent liabilities and capital commitment As at 31st December, 2010, the Remaining Group did not have any material contingent liabilities. As at 31st December, 2010, the Remaining Groups 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 Groups internal resources and/or external bank financing, as appropriate. Significant investments, material acquisitions and disposals 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
APPENDIX III
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. Employee and remuneration policies 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. 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 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) Additions Changes with valuation Exchange realignment Valuation as at 30th September, 2013 (as extracted from Appendix VI to this circular)
2,548,482 15,573 (15,573) 11,835
2,560,317
51
APPENDIX IV
FINANCIAL INFORMATION OF THE TECWELL GROUP
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.
52
APPENDIX IV
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 For the For the fifteen year ended year ended months ended 31st December, 31st December, 31st March, 2010 2011 2013 HK$000 HK$000 HK$000 Revenue Cost of sales Gross profit Administrative expenses Other operating expenses Fair value gain/(loss) on investment properties Net fair value gain/(loss) on financial instruments at fair value through profit or loss Finance costs Profit/(loss) before tax Income tax Profit/(loss) for the year/period Attributable to: Equity holders of the Company Non-controlling interests 107,818 (3,897) 103,921 (3,786) (21,970) 423,358 137,264 (3,110) 134,154 (3,853) (25,284) 97,671 180,050 (4,830) 175,220 (4,956) (36,371) 429,553 For the three months ended 30th June, 2013 HK$000 37,952 (1,640) 36,312 (1,017) (4,447) (355,538)
(21,944) 479,579 (120,966)
(23,413) 179,275 (45,601)
(33,020) (55,754) 474,672 (134,374)
2,520 (19,062) (341,232) 83,374
358,613
133,674
340,298
(257,858)
340,590 18,023 358,613
131,182 2,492 133,674
340,298 340,298
(257,858) (257,858)
53
APPENDIX IV
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 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 For the For the fifteen year ended year ended months ended 31st December, 31st December, 31st March, 2010 2011 2013 HK$000 HK$000 HK$000 Profit/(loss) for the year/period Other comprehensive income Exchange differences on translation of foreign operations Other comprehensive income for the year/period, net of tax Total comprehensive income/(loss) for the year/period Attributable to: Equity holders of the Company Non-controlling interests For the three months ended 30th June, 2013 HK$000
358,613
133,674
340,298
(257,858)
38,107
74,089
8,623
24,061
38,107
74,089
8,623
24,061
396,720
207,763
348,921
(233,797)
378,970 17,750 396,720
204,627 3,136 207,763
348,921 348,921
(233,797) (233,797)
54
APPENDIX IV
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As at 31st December, 2010 and 2011, 31st March, 2013 and 30th June, 2013 31st December, 31st December, 31st March, 2010 2011 2013 HK$000 HK$000 HK$000 NON-CURRENT ASSETS Fixed assets Prepayments Investment properties Other financial asset Total non-current assets CURRENT ASSETS Debtors, prepayments and deposits Amount due from the immediate holding company Restricted cash Cash and bank balances Total current assets CURRENT LIABILITIES Amounts due to fellow subsidiaries Amount due to a shareholder Other payables, accruals and deposits received Bank loans Tax payable Total current liabilities NET CURRENT ASSETS/ (LIABILITIES) TOTAL ASSETS LESS CURRENT LIABILITIES 30th June, 2013 HK$000
635 2,196,430 2,197,065
626 2,421,361 2,421,987
690 5,001 2,864,142 2,869,833
689 4,750 2,548,482 2,432 2,556,353
2,898 58,680 61,578
2,767 25,010 27,777
5,626 226,981 32,989 45,346 310,942
6,348 219,530 33,639 82,075 341,592
29 21,747 89,924 47,008 19,135 177,843
73,395 21,982 94,850 49,340 22,076 261,643
46,438 94,618 8,668 15,872 165,596
47,080 94,686 8,788 16,395 166,949
(116,265)
(233,866)
145,346
174,643
2,080,800
2,188,121
3,015,179
2,730,996
55
APPENDIX IV
31st December, 31st December, 31st March, 2010 2011 2013 HK$000 HK$000 HK$000 NON-CURRENT LIABILITIES Amounts due to shareholders Bank loans Other financial liabilities Deferred tax liabilities Total non-current liabilities NET ASSETS CAPITAL AND RESERVES Share capital Reserves
30th June, 2013 HK$000
467,130 333,737 405,375 1,206,242 874,558
466,637 300,956 466,243 1,233,836 954,285
1,088,772 32,440 590,761 1,711,973 1,303,206
1,115,415 32,023 514,149 1,661,587 1,069,409
1 805,302 805,303 69,255 874,558
1 954,284 954,285 954,285
1 1,303,205 1,303,206 1,303,206
1 1,069,408 1,069,409 1,069,409
Non-controlling interests TOTAL EQUITY
56
APPENDIX IV
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY 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
Attributable to equity holders of the Company Exchanges Issued equalisation Retained capital reserve profits Total HK$000 HK$000 HK$000 HK$000 At 1st January, 2010 Profit for the year Other comprehensive income for the year: Exchange differences on translation of foreign operations Total comprehensive income for the year At 31st December, 2010 and at 1st January, 2011 Profit for the year Other comprehensive income for the year: Exchange differences on translation of foreign operations Total comprehensive income for the year Changes in non-controlling interest without change in control Dividend paid to non-controlling shareholder of the Company At 31st December, 2011 and at 1st January, 2012 Profit for the period Other comprehensive income for the period: Exchange differences on translation of foreign operations Total comprehensive income for the period At 31st March, 2013 and at 1st April, 2013 Loss for the period Other comprehensive income for the period: Exchange differences on translation of foreign operations Total comprehensive income/(loss) for the period At 30th June, 2013 1 98,561 327,771 340,590 426,333 340,590
Noncontrolling interests HK$000 51,505 18,023
Total equity HK$000 477,838 358,613
38,380 38,380
340,590
38,380 378,970
(273) 17,750
38,107 396,720
136,941
668,361 131,182
805,303 131,182
69,255 2,492
874,558 133,674
73,445 73,445
131,182
73,445 204,627
644 3,136
74,089 207,763
(55,645)
(55,645)
(69,757) (2,634)
(125,402) (2,634)
210,386
743,898 340,298
954,285 340,298
954,285 340,298
8,623 8,623 219,009
340,298
8,623 348,921
8,623 348,921 1,303,206 (257,858)
1,084,196 1,303,206 (257,858) (257,858)
24,061
24,061
24,061
24,061 243,070
(257,858) 826,338
(233,797) 1,069,409
(233,797) 1,069,409
57
APPENDIX IV
UNAUDITED 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 For the For the fifteen For the three For the year ended months ended months ended year ended 30th June, 31st December, 31st December, 31st March, 2013 2013 2011 2010 HK$000 HK$000 HK$000 HK$000 Cash flows from operating activities Profit/(loss) before tax Adjustments for: Loss on disposal of fixed assets Net fair value (gain)/loss on investment properties Net fair value (gain)/loss on financial instruments at fair value through profit or loss Finance costs Interest income Depreciation Decrease/(increase) in debtors, prepayments and deposits Increase/(decrease) in other payables, accruals and deposits received Cash generated from operations Interest received Overseas tax paid Net cash flows from operating activities Cash flows from investing activities Additions to investment properties Payments to acquire fixed assets Net cash flows used in investing activities
479,579 (423,358)
179,275 (97,671)
474,672 61 (429,553)
(341,232) 355,538
21,944 (832) 321 77,654 (1,812) 14,235 90,077 832 (7,413) 83,496
23,413 (502) 39 104,554 131 11,670 116,355 502 (10,470) 106,387
33,020 55,754 (906) 49 133,097 (7,860) (2,308) 122,929 906 (19,453) 104,382
(2,520) 19,062 (83) 11 30,776 (728) (2,422) 27,626 83 (2,840) 24,869
(40,086) (22)
(16,475)
(172)
(40,108)
(16,475)
(172)
58
APPENDIX IV

For the For the fifteen For the three For the year ended months ended months ended year ended 30th June, 31st December, 31st December, 31st March, 2013 2013 2011 2010 HK$000 HK$000 HK$000 HK$000
Cash flows from financing activities Drawdown of bank loans Repayments of bank loans Finance costs paid Movements of balances between the Tecwell Group and the Remaining Group Payment relating to change in non-controlling interests Dividends paid to non-controlling shareholder of the subsidiary Increase in restricted cash Net cash flows from/ (used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year/period Exchange realignments Cash and cash equivalents at end of year/period ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances
(45,908) (21,997)
(48,211) (23,355)
1,128,842 (353,820) (83,446)
21,034 (2,197) (15,964)
1,423
73,109 (125,402)
(742,558)
8,805
(2,634)
(32,989)
(445)
(66,482) (23,094) 79,030 2,744 58,680
(126,493) (36,581) 58,680 2,911 25,010
(83,971) 20,239 25,010 97 45,346
11,233 36,102 45,346 627 82,075
58,680
25,010
45,346
82,075
59
APPENDIX IV
NOTES TO THE FINANCIAL INFORMATION OF THE TECWELL GROUP 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 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
APPENDIX V
UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP
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.
61
APPENDIX V
(b) Unaudited pro forma consolidated statement of financial position

Consolidated statement of financial position of the Group as at 31st March, 2013 HK$000 HK$000 (Note i) (Note ii(a)) NON-CURRENT ASSETS Fixed assets Investment properties Interests in associates Interests in jointed controlled entities Available-for-sale financial assets Other financial asset Unaudited pro forma of the Remaining Group HK$000
Pro forma adjustments HK$000 HK$000 (Note iii) (Note iv(a))
HK$000 (Note v(a))
116,627 4,599,855 859,315 4,899 236,628 17,639 5,834,963
(689) (2,548,482)
(315,660)
115,938 1,735,713 859,315 4,899 236,628 15,207 2,967,700
(2,432)
CURRENT ASSETS Properties held for sale Properties under development Debtors, prepayments and deposits Financial assets at fair value through profit or loss Other financial asset Restricted cash Cash and bank balances
13,248 314,274 85,873 290,519 7,275 32,989 1,202,355 1,946,533
35,982
13,248 314,274 121,855 290,519 7,275 1,874,892 2,622,063
(33,639) (82,075)
650 (650)
755,262
CURRENT LIABILITIES Bank loans Other payables, accruals and deposits received Amount due to the Tecwell Group Other financial liabilities Tax payable
80,668 188,004 35,713 46,213 350,598
(8,788) (94,686) 219,530 (16,395)
71,880 93,318 35,713 29,818 230,729 2,391,334
(219,530)
NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON CURRENT LIABILITIES Bank loans Other financial liabilities Deferred tax liabilities
1,595,935
7,430,898
5,359,034
1,920,772 32,440 661,732 2,614,944
(1,115,415) (32,023) (514,149)
(76,612)
805,357 417 70,971 876,745 4,482,289
NET ASSETS CAPITAL AND RESERVES Share capital Reserves
4,815,954
918,691 3,835,629 4,754,320 61,634 4,815,954
(243,070)
(239,048)
148,453
918,691 3,501,964 4,420,655 61,634 4,482,289
Non-controlling interests TOTAL EQUITY
62
APPENDIX V
(c)
Unaudited pro forma consolidated income statement

Consolidated income statement of the Group for the fifteen months ended 31st March, 2013 HK$000 (Note i) Revenue Cost of sales Gross profit Administrative expenses Other operating expenses Fair value gain on investment properties Gain on disposal of investment properties Gain on disposal of subsidiaries Gain on disposal of available-for-sale financial assets Loss on derecognition of an associate Net fair value loss on financial instruments at fair value through profit or loss Provision for impairment losses: Associates Available for sales financial assets Finance costs Share of results of associates Share of result of jointly controlled entities Profit/(Loss) before tax Income tax Profit/(Loss) for the period Attributable to: Equity holders of the Company Non-controlling interests 396,102 (88,870) 307,232 (127,950) (158,513) 534,077 68,282 69,491 21,179 (61,365) (58,437) (36,771) (23,161) (90,179) 6,956 177 451,018 (149,443) 301,575 33,020
Pro forma adjustments HK$000 HK$000 (Note ii(b)) (Note iv(b)) (180,050) 4,830
Unaudited pro forma of the Remaining Group HK$000
216,052 (84,040) 132,012 (122,994) (122,142) 104,524 68,282 80,854 21,179 (61,365) (25,417) (36,771) (23,161) (34,425) 6,956 177 (12,291) (15,069) (27,360)
4,956 36,371 (429,553) 11,363
55,754
134,374
293,364 8,211 301,575
(340,298)
11,363
(35,571) 8,211 (27,360)
63
APPENDIX V
(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 HK$000 (Note i) Profit/(Loss) for the period Other comprehensive income/(loss) Available-for-sale financial assets: Changes in fair value Reclassification adjustment for disposal Reclassification adjustment relating to disposal of a subsidiary 301,575
Pro forma adjustments HK$000 HK$000 (Note ii(b)) (Note iv(b)) (340,298) 11,363
(27,360)
81,893 (16,525) (78,020) (12,652)
81,893 (16,525) (78,020) (12,652) (3,514) (8,623) 30,966 61,365 (210,386) (210,386)
Share of other comprehensive loss of associates Exchange differences on translation of foreign operations Reclassification adjustment relating to derecognition of a foreign associate Reclassification adjustment relating to disposal of foreign operations Other comprehensive income/(loss) for the period, net of tax Total comprehensive income/(loss) for the period Attributable to: Equity holders of the Company Non-controlling interests
(3,514) 39,589 61,365
84,788
(134,221)
386,363
(161,581)
366,767 19,596 386,363
(348,921)
(199,023)
(181,177) 19,596 (161,581)
64
APPENDIX V
(e)
Unaudited pro forma consolidated statement of cash flows

Consolidated statement of cash flow of the Group for the fifteen months ended 31st March, 2013 Pro forma adjustments 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 Adjustments for: Share of results of associates Share of results of jointly controlled entities Loss/(Gain) on disposal of: Fixed assets Investment properties Subsidiaries A jointly controlled entity Available-for-sale financial assets Loss on derecognition of an associate Provisions for impairment losses: Associates Available-for-sale financial assets Fair value gains on investment properties Net fair value loss on financial instruments at fair value through profit or loss Finance costs Interest income Dividend income Depreciation Unaudited pro forma of the Remaining Group HK$000
451,018 (6,956) (177) 96 (68,282) (69,491) (310) (21,179) 61,365 36,771 23,161 (534,077) 58,437 90,179 (6,074) (1,782) 5,518 18,217 61,915 (121,650) (180,675) 5,100 (23,711) (43,253) (284,057) 5,888 11,522 1,557 (1,842) (23,513) (290,445)
(474,672)
11,363
(12,291) (6,956) (177)
(61) (11,363)
35 (68,282) (80,854) (310) (21,179) 61,365 36,771 23,161 (104,524) 25,417 34,425 (5,168) (1,782) 5,469 (114,880) 61,915 (121,650) (180,675) 5,100
429,553 (33,020) (55,754) 906 (49)
Decrease in properties held for sale Increase in deposits paid for properties under development Increase in financial instruments at fair value through profit or loss Decrease in loans and advances Increase in debtors, prepayments and deposits Decrease in other payables, accruals and deposits received Cash used in operations Interest received Dividends received from: An associate Listed investments Tax paid: Hong Kong Overseas Net cash flows used in operating activities
7,860 2,308
(15,851) (40,945) (406,986) 4,982 11,522 1,557 (1,842) (4,060) (394,827)
(906)
19,453
65
APPENDIX V
Consolidated statement of cash flow of the Group for the fifteen months ended 31st March, 2013 Pro forma adjustments 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 Investment properties Available-for-sale financial assets Payments to acquire: Fixed assets Available-for-sale financial assets Increase in interests in associates Advance to associates Decrease in interests in a jointly controlled entity Disposal of subsidiaries, net of cash and cash equivalents disposed of Net cash flows from investing activities Cash flows from financing activities Interest paid Drawdown of bank loans Repayments of bank loans Movement of balances between the Tecwell Group and the Remaining Group Repurchases of shares Issuance of shares upon exercise of share options Dividends paid to shareholders of the Company Increase in restricted cash Net cash flows from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Exchange realignments Cash and cash equivalents at end of period Analysis of balances of cash and cash equivalents: Cash and bank balances
97 617,816 36,605 (7,954) (92,030) (49,816) (17,094) 2,400 173,976 664,000 755,262 172
97 617,816 36,605 (7,782) (92,030) (49,816) (17,094) 2,400 929,238 1,419,434
(110,411) 1,128,842 (504,487) (1,204) 389 (211,379) (32,989) 268,761 642,316 558,233 1,806 1,202,355
83,446 (1,128,842) 353,820 742,558 (226,981)
(26,965) (150,667) 515,577 (1,204) 389 (211,379) 125,751 1,150,358
32,989
(25,010) (97)
533,223 1,709 1,685,290
1,202,355
(45,346)
755,262
(226,981)
1,685,290
66
APPENDIX V
(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.
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APPENDIX V
(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 Estimated professional fees, other expenses and taxes in relation to the Disposal (Note 1) Net assets of the Tecwell Group disposed of as at 30th June, 2013 (Note 2) Release of cumulative exchange differences on translation of foreign operations as at 30th June, 2013 (Note 3) Gain on the Disposal
Note 1 :
843,537 (88,275) (849,879)
243,070 148,453
These professional fees, expenses and taxes are estimates only and are expected to be incurred as a result of the Disposal. 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. 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.
Note 2 :
Note 3 :
68
APPENDIX V
(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 Cash consideration Estimated professional fees, other expenses and taxes in relation to the Disposal (Note 1) Net assets of the Tecwell Group disposed of as at 1st January, 2012 (Note 2) Release of cumulative exchange differences on translation of foreign operations as at 1st January, 2012 (Note 3) Gain on the Disposal
Note 1 :
843,537 (88,275) (954,285)
210,386 11,363
These professional fees, expenses and taxes are estimates only and are expected to be incurred as a result of the Disposal. 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. 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.
Note 2 :
Note 3 :
69
APPENDIX V

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 Cash consideration Less: Estimated professional fees, other expenses and taxes in relation to the Disposal (Note 1) Net proceeds from the Disposal
Note 1 :
(c)
843,537 (88,275) 755,262
These professional fees, expenses and taxes are estimates only and are expected to be incurred as a result of the Disposal.
(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
APPENDIX V
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 ACCOUNTANTS 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 Groups financial position as at 31st March, 2013 as if the transaction had taken place at 31st March, 2013, and of the Groups 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 Groups financial position, financial performance and cash flows has been extracted by the Directors from the Groups consolidated financial statements for the fifteen months ended 31st March, 2013, on which an audit report has been published.
71
APPENDIX V
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 ACCOUNTANTS 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
APPENDIX V
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 accountants judgment, having regard to the reporting accountants 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
APPENDIX VI
PROPERTY VALUATION REPORT
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.
Corporate Valuation & Advisory
RHL Appraisal Limited

T +852 2730 6212 F +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 () (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 Peoples 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.
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APPENDIX VI
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 arms-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; 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;
b.
75
APPENDIX VI
c.
no deleterious or hazardous materials or techniques have been used in the construction of the Property; the Property is connected to main services and sewers which are available on normal terms; and 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.
d.
e.
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 Groups 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
APPENDIX VI
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
APPENDIX VI

VALUATION CERTIFICATE
Property held by the Group as investment property

Market Value in existing state as at 30 September 2013
Property Lippo Plaza (excluding Unit 2 on basement level 1, levels 12, 13, 15 & 16 and Carparking 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)
Description and tenure Lippo Plaza (the Development) is a 36 -storey commercial development with 3 basement levels completed in about 1999. 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 carparking 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 carparking 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.
Particulars of occupancy
RMB2,030,000,000 As advised, portion of the Property with a (RENMINBI TWO floor area of BILLION AND approximately 31,000 THIRTY square meters (333,684 MILLION) square feet) are subject to various tenancy HKD2,560,317,200 agreements at a total (HONG KONG monthly rental of DOLLARS TWO approximately BILLION FIVE RMB9,900,000 with HUNDRED AND various terms of which SIXTY MILLION the latest one expiring THREE on 27th April, 2018 HUNDRED whilst the remaining SEVENTEEN portions are vacant or occupied by the owner THOUSAND AND with a total floor area TWO HUNDRED) of approximately 7,000.00 square meters and 1,100.00 square meters respectively.
Notes: 1. Pursuant to a Shanghai Certificate of Real Estate Ownership - Hu Fang Di Lu Zi (2011) Di No. 001727 ( 2011 001727 ) 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. 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.
2.
78
APPENDIX VI
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. We have been provided with a legal opinion by the Groups 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; the Property is legally held by LRSL; 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; the Property can be freely transferred, leased and mortgaged; all land premium of the Property has been fully settled by LRSL; and LRSL has obtained all the necessary permits/approvals for the construction works of the Property from relevant urban planning authorities.
4.
ii. iii.
iv. v. vi.
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APPENDIX VII
1. RESPONSIBILITY STATEMENT
GENERAL INFORMATION
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 executives interests and short positions in shares and underlying shares of the Company and associated corporations
Personal interests (held as beneficial owner) Approximate percentage of total interests in the issued share capital
Name of Director
Family interests (interest of spouse)
Other interests
Total interests
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 John Luen Wai Lee 1,031,250 319,322,219 Note (i) 319,322,219 1,031,250 64.75 0.21
Number of ordinary shares of HK$1.00 each in HKC Stephen Riady John Luen Wai Lee King Fai Tsui 2,000,270 600,000 270 75,000 1,121,517,842 Notes (i) and (iii) 1,121,517,842 2,000,540 675,000 56.12 0.10 0.03
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APPENDIX VII
Note: (i)
GENERAL INFORMATION
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. 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. 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.
(ii)
(iii)
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: Approximate percentage of interest in the issued share capital 100 100 100 100 100 100 100 100 100 100 100 100 100 100
Name of associated corporation Abital Trading Pte. Limited Blue Regent Limited Boudry Limited
Class of shares Ordinary shares Ordinary shares Ordinary shares Non-voting deferred shares Ordinary shares Ordinary shares Ordinary shares Ordinary shares Ordinary shares Ordinary shares Ordinary shares Ordinary shares Ordinary shares Non-voting deferred shares
Number of shares interested 2 100 10 1,000 1 1 2 1 1 1 1 1 1 15,999,999
Broadwell Overseas Holdings Limited First Tower Corporation Grand Peak Investment Limited Great Honor Investments Limited Greenorth Holdings Limited Honix Holdings Limited J & S Company Limited Kingaroy Limited Lippo Assets (International) Limited
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APPENDIX VII
GENERAL INFORMATION
Name of associated corporation Lippo Finance Limited Lippo Investments Limited Lippo Realty Limited Multi-World Builders & Development Corporation Skyscraper Realty Limited The HCB General Investment (Singapore) Pte Ltd. Times Grand Limited Valencia Development Limited
Class of shares Ordinary Ordinary Ordinary Ordinary shares shares shares shares
Number of shares interested 6,176,470 2 2 4,080 10 100,000 1 800,000 200,000 1
Approximate percentage of interest in the issued share capital 82.35 100 100 51 100 100 100 100 100 100
Ordinary shares Ordinary shares Ordinary shares Ordinary shares Non-voting deferred shares Ordinary shares
Winroot Holdings Limited
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.
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APPENDIX VII
GENERAL INFORMATION
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.
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APPENDIX VII
3.
GENERAL INFORMATION
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 Approximate percentage 71.24 71.24 71.24 71.24 71.24
Name Lippo Lippo Capital Lanius Dr. Mochtar Riady Madam Lidya Suryawaty
Note (a): 1.
Number of Shares 6,544,696,389 6,544,696,389 6,544,696,389 6,544,696,389 6,544,696,389
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. 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. Lippos 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 executives interests and short positions in shares and underlying shares of the Company and associated corporations in this appendix.
2.
3.
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APPENDIX VII
(b) Jeremiah Holdings Limited (Jeremiah)
GENERAL INFORMATION
Name Dragon Board Holdings Limited (Dragon Board) Mrs. Endang Utari Mokodompit
Note (b):
Number of ordinary shares of S$1.00 each 779,187 519,458
Percentage 60 40
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) Number of ordinary shares of S$1.00 each 800,000 200,000
Name Jeremiah SouthQuay Capital Asia Limited

Note(c):
Percentage 80 20
See also (b) above in respect of the substantial shareholders of Jeremiah.
(d) Proton Power Asia Limited Number of ordinary shares of HK$1.00 each 60 30 Approximate percentage 66.66 33.33
Name Apex Tier Limited (Apex Tier) Proton Power, Inc.

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 Approximate percentage 81
Name World Grand Holding Limited (World Grand)

Note (e):
Number of units 1,841,500
World Grand is a wholly-owned subsidiary of the Company. See also (a) above in respect of the substantial shareholders of the Company.
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APPENDIX VII
(f) Auric
GENERAL INFORMATION
Name Jeremiah Nine Heritage Pantogon Holdings Pte Ltd. (Pantogon) Goldstream Capital Limited
Note(f):
Number of ordinary shares of S$0.50 each 4,999,283 20,004,000 36,165,052 27,493,311
Approximate percentage 3.98 15.92 28.78 21.88
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. Number of ordinary shares of S$1.00 each 392,000 408,000
Name Delifrance Asia Ltd. (Delifrance Asia) Delifrance S.A.

Note (g):
Percentage 49 51
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 Number of ordinary shares of US$1.00 each 6 4
Name Charm Fit Pte Ltd (Charm Fit) Aaron Group Limited
Note (h):
Percentage 60 40
Charm Fit is a wholly-owned subsidiary of Auric. See also (f) above in respect of the substantial shareholders of Auric.
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APPENDIX VII
(i) Foshan Ausoon Dairy Co., Ltd
GENERAL INFORMATION
Name Auric Pacific Dairy (Foshan) Limited (Auric Foshan) (Foshan XinYing Science Technology Venture Capital Co., Ltd.)
Note (i):
Amount of paid up registered capital US$4,464,000 US$1,488,000
Percentage 75 25
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 Number of ordinary shares of THB100.00 each 25,500 preference shares 24,495 5 Approximate percentage 51 48.9 0.1
Name K. Somchai Krunthong Delifrance Asia Edmontor Investments Pte Ltd (Edmontor)
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 Number of ordinary shares of HK$1.00 each 8,100,000
Name All Around Limited (All Around)

Note (k):
Percentage 90
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) Approximate percentage 49.93
Name China Gold Pte. Limited (China Gold)

Note (l):
Number of ordinary shares 55,429,908
China Gold is a wholly-owned subsidiary of the Company. See also (a) above in respect of the substantial shareholders of the Company.
87
APPENDIX VII
GENERAL INFORMATION
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 executives 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 Companys articles of association and the Listing Rules whenever a Director has any conflict of interest in the transaction(s) with the Company.
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APPENDIX VII
GENERAL INFORMATION
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
APPENDIX VII
GENERAL INFORMATION
(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 had any direct or indirect interest in any assets which had 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 since 31st March, 2013, being the date to which the latest 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 any litigation or arbitration of material importance and no litigation or arbitration of material importance was pending or threatened against any member of the Group as at the Latest Practicable Date. 8. MATERIAL CONTRACTS
The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by the members of the Group within the two years immediately preceding the Latest Practicable Date and which are, or may be, material to the Group: (a) the agreement dated 25th November, 2011 entered into between Tamsett Holdings Limited (a wholly-owned subsidiary of the Company) as vendor, and Vantro Investment 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) for the consideration of Rp240,000,000,000. 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;
90
APPENDIX VII
GENERAL INFORMATION
(b) the membership unit purchase agreement dated 27th February, 2012 (the February 2012 Purchase Agreement) entered into among Skye Mineral Investors, LLC (Skye Mineral) and Clarity Copper, LLC (Clarity Copper) as sellers, and PacNet Capital (U.S.) Limited (PacNet) (an indirect wholly-owned subsidiary of the Company) as buyer, relating to the sale and purchase of a total of 3,600 Class A units (Class A Units) in Skye Mineral Partners, LLC (the Project Company) for a total consideration of US$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
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APPENDIX VII
GENERAL INFORMATION
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 Fits 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 Messis Capital Qualification 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 Certified Public Accountants Property valuer
Messrs. Ernst & Young RHL
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.
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APPENDIX VII
10. MISCELLANEOUS
GENERAL INFORMATION
(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 Queens 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; the property valuation report prepared by RHL, the text of which is set out in Appendix VI to this circular;
(f)
(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) (j) the Disposal Agreement; and this circular.
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APPENDIX VII
12. LANGUAGE
GENERAL INFORMATION
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
NOTICE OF EXTRAORDINARY GENERAL MEETING

(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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NOTICE OF EXTRAORDINARY GENERAL MEETING

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 LIPPO CHINA RESOURCES LIMITED 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. 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 Companys 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. 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 Companys registrars, Tricor Tengis Limited, 26th Floor, Tesbury Centre, 28 Queens Road East, Wanchai, Hong Kong not later than 4 : 30 p.m. on Monday, 2nd December, 2013. 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. Should there be any discrepancies between the English and the Chinese versions, the English version shall prevail.
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THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

LIPPO CHINA RESOURCES LIMITED

(Stock Code: 156)

18th November, 2013

Appendix VI Appendix VII

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

associates Board Business Day

Completion Date Conditional Special Dividend

connected person(s) Consideration Directors Disposal

Extended Long Stop Date Group HKC

HKFRS Hong Kong Independent Board Committee

Independent Financial Adviser or Messis Capital

Independent Shareholders Joint Venture

Lanius Latest Practicable Date

Lippo Capital Listing Date

Listing Rules or Rule Long Stop Date LRSL

OUE Commercial Trust

Shareholder(s) Stock Exchange Tecwell

Tecwell Group A$ C$ HK$ RMB Rp

LETTER FROM THE BOARD

LIPPO CHINA RESOURCES LIMITED

(Stock Code: 156)

18th November, 2013 To the Shareholders Dear Sir or Madam,

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

LIPPO CHINA RESOURCES LIMITED

(Stock Code: 156)

18th November, 2013 To the Independent Shareholders, Dear Sir or Madam,

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTION

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

202,591 2,501 15,763 64,081 284,936

221,521 3,096 2,392 17,363 244,372

280,392 77,713 5,720 8,940 23,337 396,102

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

423,358 479,579 358,613

97,671 179,275 133,674

429,553 474,672 340,298 As at 31st March, 2013 HK$000 1,076,225

(355,538) (341,232) (257,858) As at 30th June, 2013 HK$000 849,879

As at 31st December, 2010 2011 HK$000 HK$000 NAV 1,363,435 1,442,904

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PBR (times) (Note 1)

PER (times) (Note 2)