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, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your securities in GOME ELECTRICAL APPLIANCES HOLDING LIMITED, you should at once hand this circular and the accompanying form of proxy to the purchaser or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for the transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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GOME Electrical Appliances Holding Limited 國美電器控股有限公司[*]

(incorporated in Bermuda with limited liability)

(Stock Code: 493)

DISCLOSEABLE AND CONNECTED TRANSACTION

DISPOSAL OF INTERESTS IN ARTWAY DEVELOPMENT LIMITED AND BESTLY LEGEND LIMITED

Independent financial adviser to the Independent Board Committee and the Independent Shareholders of GOME Electrical Appliances Holding Limited

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A letter from the Board is set out on pages 5 to 17 of this circular. A letter from the Independent Board Committee is set out on page 18 of this circular. A letter from Platinum, the independent financial adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 19 to 32 of this circular.

A notice dated 28 November 2005 convening the Special General Meeting to be held at Harbour View Room 3, 3rd Floor, Excelsior Hotel, 281 Gloucester Road, Hong Kong, on Thursday, 15 December 2005 at 9:00 a.m. is set out on pages 46 to 47 of this circular. Whether or not you are able to or intend to attend and vote at the Special General Meeting, please complete and return the enclosed form of proxy in accordance with the instructions printed thereon and return it to the principal place of business of the Company in Hong Kong at Unit 6101, 61st Floor, The Center, 99 Queen’s Road, Central, Hong Kong, as soon as possible and in any event, not less than 48 hours before the time appointed for holding of the Special General Meeting or any adjourned meeting. Completion and return of the form or proxy will not preclude you from attending and voting in person at the Special General Meeting should you so wish.

28 November 2005

* For identification purpose only

SUMMARY OF THE TERMS OF THE DISPOSAL AND REASONS FOR THE DISPOSAL AND BENEFITS TO THE COMPANY

THE DISPOSAL

The Company announced that on 7 November 2005, the Company, the Purchaser and Mr. Wong entered into the Sale and Purchase Agreement pursuant to which (a) the Company agreed to sell, and the Purchaser agreed to purchase, the Sale Shares at a consideration of HK$533 million (subject to adjustment); (b) the Company agreed to sell, and the Purchaser agreed to purchase, the Sale Debts at their face value; and (c) Mr. Wong agreed to guarantee the performance of the Purchaser’s obligations under the Sale and Purchase Agreement. The Sale Debts amounted to approximately HK$228.4 million, which comprised the Artway Debt in the amount of approximately HK$7.3 million and the Bestly Debt in the amount of approximately HK$221.1 million.

The Total Consideration receivable by the Company will amount to approximately HK$761.4 million (subject to adjustment and excluding the Interest Payment). The Total Consideration together with the Interest Payment will be payable by the Purchaser to the Company in cash either on (i) the first anniversary date of the date of Completion; or (ii) such earlier date as may be notified by the Purchaser to the Company by giving not less than seven business days’ prior notice.

The Disposal constitutes a discloseable transaction of the Company under the Listing Rules. As Mr. Wong, Chairman, Director and substantial shareholder of the Company, is wholly and beneficially interested in the entire issued share capital of the Purchaser, the Disposal therefore also constitutes a connected transaction for the Company under the Listing Rules. As the Total Consideration exceeds HK$10,000,000 and certain of the percentage ratios (other than the profits ratio) exceed 2.5%, the Disposal is subject to reporting and announcement requirements set out in Rules 14A.45 and 14A.47 of the Listing Rules and the approval of Independent Shareholders by way of poll in accordance with Rule 14A.48 of the Listing Rules. As Mr. Wong has a material interest in the Disposal, Mr. Wong and his associates will abstain from voting on the resolution proposed at the Special General Meeting in respect of the Disposal.

REASONS FOR THE DISPOSAL AND BENEFITS TO THE COMPANY

The Company is principally engaged in the retailing of electrical appliances and electronic consumer products in the PRC.

It is expected that the Group will record an estimated gain of HK$0.7 million (not taking into account of the Interest Payment and the estimated expenses in connection with the Disposal) as a result of the Disposal by reference to the Total Consideration and the net assets value of the Property Group. As a result of the Disposal, the total assets and the total liabilities of the Group will be decreased. As the consideration for the Sale Shares is HK$533 million, which is slightly higher than the net assets value of Artway and Bestly as at 30 September 2005 of approximately HK$532.3 million, the Disposal will have a marginal enhancing effect on the Group’s net assets value. The financial effects of the Disposal will be disclosed in the accounts of the Company upon Completion.

SUMMARY OF THE TERMS OF THE DISPOSAL AND REASONS FOR THE DISPOSAL AND BENEFITS TO THE COMPANY

As announced in the circular of the Company dated 5 July 2004, the Directors believe that relative to the project relating to the Property, diversification into the retail of electrical appliances and electronic consumer products in the PRC will offer more promising growth potential to the Company. As announced in the said circular, the Directors have therefore decided that the Company should focus on the retailing of electrical appliances and electronic consumer products in the PRC and no further commitments will be made to such property investment beyond those contractually committed or necessary to preserve value, namely the balance of the purchase price (excluding land premium, initial development cost and construction cost). As such, there is no definitive plan for the development of the Property in so far as the Group is concerned. Should the PRC Company proceed with the development of the Property, it is currently expected that it will take approximately 5 years to complete.

The Company has been actively seeking a buyer in respect of its interest in the Property and has not been able to secure any offer in this respect. In addition, the Directors consider that it will not be in the interests of the Group to further utilize the financial resources of the Group for the purpose of the Property (such as payment of land premium of RMB470 million (equivalent to approximately HK$451.9 million)), and it will be beneficial to the Company to dispose of its interest in the Property as soon as possible in order to avoid deployment of financial resources of the Group for the purpose of the Property which could alternatively be utilized for the purpose of the core businesses of the Group.

The Company’s interest in the Property does not generate any income for the Group and thus produces a negative effect on the financial return of the Company. The Disposal will allow the Company to streamline its assets which do not relate to the core businesses of the Group. The Directors consider that the Disposal will provide an opportunity for the Company to dispose of its non-core assets (i.e. its interest in the Property), in particular, in view of the uncertainty relating to the property market in the PRC as evidenced by the recent series of administrative measures taken by the Central Government to dampen property speculation in general. The Disposal will further allow the Company to concentrate and redeploy its resources on the core businesses of the Group.

The Directors, for the reasons as set out above and having considered that it will not be in the interest of the Company to utilize future funding for the purpose of the Property, are of the view that the Company should dispose of its interest in the Property as soon as possible to avoid further exposure to increased risk in regulatory restrictions, cost of construction and property market fluctuation, despite the fact that the Total Consideration will only be payable one year after the date of Completion at the latest. In addition, the Company will also receive the Interest Payment which will be calculated at an interest rate which is above the current average interest rate for HK$ deposits in respect of the Company’s HK$ deposits.

The Directors, having considered that a guarantee in respect of the obligations of the Purchaser has been given by Mr. Wong, the controlling Shareholder who is beneficially interested in approximately 66.02% of the issued share capital of the Company with a market value of approximately HK$4.8 billion by reference to the closing price of the Shares as at 7 November 2005 of HK$4.47 per Share, are of the view that it will be acceptable for the Total Consideration to be received by the Company one year after the date of Completion at the latest.

ii -

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Letter from Platinum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Appendix I – Property Valuation Report on the Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	33
Appendix II – General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	40
Notice of the Special General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	46

iii -

DEFINITIONS

In this circular, the following expressions shall have the following meanings unless the context requires otherwise:

“Artway”	Artway Development Limited (藝偉發展有限公司*), a company
	incorporated in the British Virgin Islands with limited liability
	and is beneficially wholly owned by the Company
“Artway Debt”	the outstanding interest-free debt due from Artway to the Company
	and such debt amounted to approximately HK$7.3 million
“Artway Share”	the entire issued share capital of Artway
“associates”	shall have the meaning ascribed thereto in the Listing Rules
“Beijing Bus”	北京市長途汽車公司(Beijing Bus Company Limited*), a
	company established in the PRC
“Beijing GOME”	北京國美電器有限公司(Beijing GOME Electrical Appliance Co.,
	Ltd.*), a company incorporated in the PRC with limited liability
	and a member of the Parent Group
“Bestly”	Bestly Legend Limited (好聯有限公司*), a company incorporated
	in the British Virgin Islands with limited liability and is beneficially
	wholly owned by the Company
“Bestly Debt”	the outstanding interest-free debt due from Bestly to the Company
	and such debt amounted to approximately HK$221.1 million
“Bestly Share”	the entire issued share capital of Bestly
“Board”	the board of Directors
“Business Day”	a day (excluding Saturday) on which banks are generally open for
	business in Hong Kong
“Bye-laws”	the bye-laws of the Company
“Company”	GOME Electrical Appliances Holding Limited (國美電器控股有
	限公司*), an exempted company incorporated in Bermuda with
	limited liability and the securities of which are listed on the Main
	Board of the Stock Exchange
“Companies Act”	the Companies Act 1981 of Bermuda (as amended)
“Completion”	completion of the Sale and Purchase Agreement

DEFINITIONS

“Director(s)” director(s) of the Company “Disposal” the disposal of the Sale Shares and the Sale Debts by the Company to the Purchaser
“Group” the Company and its subsidiaries “HK$” Hong Kong dollar, the legal currency of Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China
“Independent Board Committee” the committee of the Directors comprising Mr. Sze Tsai Ping, Michael, Mr. Chan Yuk Sang and Mr. Mark C. Greaves formed to advise the Independent Shareholders in respect of the Sale and Purchase Agreement and the transactions contemplated thereunder
“Independent Shareholder(s)” Shareholders other than Mr. Wong and his associates “Independent Third Party” a person who, to the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, is independent of the Company and its subsidiaries, their directors, chief executives and substantial shareholders or their respective associates and who is not a connected person (as that term is defined in the Listing Rules) of the Company
“Interest Payment” interest payment on the Total Consideration payable by the Purchaser to the Company and calculated by reference to the interest rate of 4.5% per annum for the period from the Completion Date up to and including the date of payment of the balance of the Total Consideration
“Latest Practicable Date” 24 November 2005, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“Mr. Wong” Mr. Wong Kwong Yu, the Chairman, Director and a substantial shareholder of the Company
“Parent Group” the group of companies that are owned by Mr. Wong that are engaged in the retail sale of the Products under the “GOME Electrical Appliances” trade mark, all of which do not form part of the Group
2 -

	DEFINITIONS
“Platinum”	Platinum Securities Company Limited, a licensed corporation under
	the SFO permitted to carry out types 1 and 6 of the regulated
	activities and the independent financial adviser to the Independent
	Board Committee and the Independent Shareholders in respect of
	the Sale and Purchase Agreement and the transactions contemplated
	thereunder
“PRC”	the People’s Republic of China, which for the purpose of this
	circular, excludes Hong Kong, the Macau Special Administrative
	Region and Taiwan
“PRC Company”	北京金尊房地產開發有限公司(Beijing Jin Zun Property
	Development Limited*), a wholly foreign owned enterprise
	established in the PRC with limited liability
“PRC JV”	北京金尊科技發展有限公司(Beijing Jin Zun Technology
	Development Limited*), a Sino-foreign equity joint venture
	established under the laws of the PRC
“percentage ratio”	shall have the meaning ascribed thereto in the Listing Rules
“Property”	the parcel of land located at Area no. 7, Xi Ba He Bei Lane,
	Chaoyang District, Beijing, the PRC
“Property Group”	Artway, Bestly and their respective subsidiaries
“Purchaser”	Kashmac International Limited (嘉美國際有限公司*), a company
	incorporated in the British Virgin Islands and whose entire issued
	share capital is wholly and beneficially owned by Mr. Wong
“RMB”	Renminbi, the legal currency of the PRC
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“Sale and Purchase Agreement”	a conditional agreement dated 7 November 2005 entered into
	between the Company, the Purchaser and Mr. Wong relating to
	the Disposal
“Sale Debts”	the Artway Debt and the Bestly Debt
“Sale Shares”	the Artway Share and the Bestly Share
“Share(s)”	share(s) of HK$0.10 each in the share capital of the Company

DEFINITIONS

“Shareholder(s)”	holder(s) of the Shares
“Special General Meeting”	the special general meeting of the Company to be convened for
	the Shareholders to consider and, if thought fit, approve, amongst
	others, the Sale and Purchase Agreement and the transactions
	contemplated thereunder
“Stock Exchange”	the Stock Exchange of Hong Kong Limited
“subsidiary”	a subsidiary within the meaning of the Companies Ordinance
	(Chapter 32 of the Laws of Hong Kong)
“substantial shareholder”	shall have the meaning ascribed thereto in the Listing Rules
“Total Consideration”	the aggregate consideration for the Sale Shares and the Sale Debts
“Valuer”	B.I. Appraisals Limited, an independent professional property
	valuer appointed by the Company for the purpose of valuing the
	Property
“%”	per cent

For identification purpose only

For the purpose of this circular, conversion of Renminbi into Hong Kong dollar is calculated at the exchange rate of RMB 1.04 to HK$1.00. Such conversion has been included for the purpose of illustration only and does not constitutes a representation that any amounts have been, could have been, or may be, exchanged at this or any other rate.

LETTER FROM THE BOARD

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GOME Electrical Appliances Holding Limited 國美電器控股有限公司[*]

(incorporated in Bermuda with limited liability)

(Stock Code: 493)

Executive Directors: WONG Kwong Yu (Chairman) DU Juan LAM Pang NG Kin Wah

Registered office: Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

Independent Non-executive Directors: SZE Tsai Ping, Michael CHAN Yuk Sang GREAVES Mark C.

Principal place of business in Hong Kong: Unit 6101, 61st Floor The Center 99 Queen’s Road Central Hong Kong

28 November 2005

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION

DISPOSAL OF INTERESTS IN ARTWAY DEVELOPMENT LIMITED AND BESTLY LEGEND LIMITED

INTRODUCTION

For identification purpose only
5 -

LETTER FROM THE BOARD

The Total Consideration receivable by the Company will amount to approximately HK$761.4 million (subject to adjustment and excluding the Interest Payment). The Total Consideration together with the Interest Payment will be payable by the Purchaser to the Company in cash either (i) on the first anniversary date of the date of Completion; or (ii) such earlier date as may be notified by the Purchaser to the Company by giving not less than seven business days’ prior notice.

The Disposal constitutes a discloseable transaction of the Company under the Listing Rules. As Mr. Wong, Chairman, Director and substantial shareholder of the Company, is wholly and beneficially interested in the entire issued share capital of the Purchaser. The Disposal therefore also constitutes a connected transaction for the Company under the Listing Rules. As the Total Consideration exceeds HK$10,000,000 and certain of the percentage ratios (other than the profits ratio) exceed 2.5%, the Disposal is subject to reporting and announcement requirements set out in Rules 14A.45 and 14A.47 of the Listing Rules and the approval of Independent Shareholders by way of poll in accordance with Rule 14A.48 of the Listing Rules. As Mr. Wong has a material interest in the Disposal, Mr. Wong and his associates will abstain from voting on the resolution proposed at the Special General Meeting in respect of the Disposal.

An Independent Board Committee, comprising independent non-executive Directors, has been established to advise the Independent Shareholders in respect of the Disposal and Platinum has been appointed as an independent financial adviser for the purpose of giving independent advice to the Independent Board Committee in connection with the Disposal (including the interest rate of the Interest Payment).

The purpose of this circular is to provide you with, amongst other things, (i) further information regarding the Disposal; (ii) the advice of Platinum to the Independent Board Committee and the Independent Shareholders in relation to the Disposal; (iii) the recommendation of the Independent Board Committee to the Independent Shareholders in relation to the Disposal; (iv) the property valuation report on the Property; and (v) a notice convening the Special General Meeting.

THE SALE AND PURCHASE AGREEMENT

Date 7 November 2005

Parties

Vendor: The Company

Purchaser: The Purchaser, a company which is wholly and beneficially owned by Mr. Wong and principally engaged in investment holding.

Guarantor: Mr. Wong as the guarantor for the Purchaser’s obligations under the Sale and Purchase Agreement.

LETTER FROM THE BOARD

The Disposal

Pursuant to the Sale and Purchase Agreement, the Company agreed to sell and the Purchaser agreed to purchase:

(i) the Sale Shares, representing the entire issued share capital of each of Artway and Bestly; and
(ii) the Sale Debts, representing the outstanding debts due from each of Artway and Bestly to the Company, and such debts amounted to approximately HK$228.4 million.

Consideration

Subject to adjustment, the consideration for the Sale Shares is HK$533 million, representing HK$200 million as consideration for the Artway Share and HK$333 million as consideration for the Bestly Share. The consideration for the Sale Debts will be the face value of all outstanding debts due from each of Artway and Bestly to the Company. The Artway Debt amounted to approximately HK$7.3 million and the Bestly Debt amounted to HK$221.1 million.

The Total Consideration receivable by the Company will amount to approximately HK$761.4 million (subject to adjustment and excluding the Interest Payment payable by the Purchaser to the Company as referred to below).

The Total Consideration together with the Interest Payment will be payable by the Purchaser to the Company in cash either (i) on the first anniversary date of the date of Completion (where such date is not a business day, the next business day immediately following such date); or (ii) such earlier date as may be notified by the Purchaser to the Company by giving not less than seven business days’ prior notice.

Adjustment to the consideration for the Sale Shares will be made if (i) the market value of the Property as set out in such valuation report is different from the estimated market value of the Property of HK$760 million (equivalent to approximately RMB790.4 million) and (ii) the amount of such difference is equal to or greater than HK$300,000. In such case, the consideration for the Sale Shares will be adjusted accordingly on a dollar for dollar basis. Pursuant to the terms of the Sale and Purchase Agreement and as mentioned in paragraph (b) of the section headed “Conditions Precedent” of this letter, the Company has obtained a valuation report on the value of the Property as at 30 September 2005 prepared by the Valuer on the basis that the relocation and compensation fee of RMB250 million (equivalent to approximately HK$240.4 million) has been fully paid, and the letter and valuation certificate of the Valuer are set out in Appendix I to this circular. As the Property is valued by the Valuer at HK$760 million (equivalent to approximately RMB790.4 million) as at 30 September 2005, no adjustment will be made to the Total Consideration.

In arriving at the Total Consideration, based on arms’ length negotiations, the parties have agreed that reference has been made to the estimated market value of the Property in its existing state as at 30 September 2005 of approximately HK$760 million (equivalent to approximately RMB790.4 million) on the basis that the relocation and compensation fee of RMB250 million (equivalent to approximately HK$240.4 million) has been fully paid, having regard to a previous valuation report issued by an

LETTER FROM THE BOARD

independent property valuer prepared on the same basis as mentioned above for the purpose of the unaudited accounts of the Company for the six months ended 30 June 2005 valuing the Property at HK$755 million as at 30 June 2005 and the valuation report issued by the Valuer, the letter and the valuation certificate of the Valuer are set out in Appendix I to this circular. As at the Latest Practicable Date, (a) the estimated land premium of RMB470 million (equivalent to approximately HK$451.9 million) has not been paid and (b) out of the relocation and compensation fee of RMB250 million (equivalent to approximately HK$240.4 million), an amount of RMB113 million has been paid and the remaining balance in the amount of RMB137 million (equivalent to approximately HK$131.7 million) remains to be paid by the PRC Company, out of which RMB50 million (equivalent to approximately HK$48.1 million) is due and payable and the balance amount of RMB87 million (equivalent to approximately HK$83.6 million) has to be settled before 30 September 2006. The relocation and compensation fee was payable to Beijing Bus as fees payable in connection with the transfer of land use rights and the change of use of land, settlement fees for relocation of its employees, and compensation fees for suspension of its operations. The PRC Company is under negotiation with Beijing Bus as to the timing of the remaining sum to be paid. Out of RMB113 million of the relocation and compensation fee, an amount of RMB83 million has been reflected in Note 17 to the unaudited interim report of the Company for the period ended 30 June 2005.

The consideration of the Artway Share in the amount of HK$200 million represents (a) a discount of approximately 3.43% to the net assets value of Artway of HK$207.1 million as set out in the Company’s audited consolidated accounts for the year ended 31 March 2004 and (b) a premium of approximately 1.11% to the net assets value of Artway of HK$197.8 million as set out in the Company’s audited consolidated accounts for the nine months ended 31 December 2004 and a premium of approximately 0.05% to the net assets value of Artway of HK$199.9 million as set out in the unaudited consolidated accounts of the Company for the nine months ended 30 September 2005.

The consideration of the Bestly Share in the amount of HK$333 million represents (a) a premium of approximately 6.80% to the net assets value (excluding minority interest) of Bestly of HK$311.8 million as set out in the Company’s audited consolidated accounts for the year ended 31 March 2004 and (b) a premium of approximately 1.19% to the net assets value (excluding minority interest) of Bestly of HK$329.1 million as set out in the Company’s audited consolidated accounts for the nine months ended 31 December 2004 and a premium of approximately 0.18% to the net assets value (excluding minority interest) of Bestly of HK$332.4 million as set out in the unaudited consolidated accounts of the Company for the nine months ended 30 September 2005.

The interest rate of 4.5% per annum has been determined by reference to the prevailing HK$ deposit rate in Hong Kong of approximately 4%. In addition, the Company’s cash balances are deposited with local banks in Hong Kong earning interest of approximately 4%. The Company considers that the HK$ deposit rate is more appropriate as it is currently expected that funding received in respect of the Property will be placed on deposits.

The Total Consideration has been determined based on arm’s length negotiations between the Company and the Purchaser. Having considered the factors as set out in the section headed “Reasons for the Disposal and benefits to the Company” of this letter, the Directors consider that the terms of the Sale and Purchase Agreement are on normal commercial terms which are fair and reasonable so far as the Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.

LETTER FROM THE BOARD

Conditions Precedent

Completion of the Disposal is conditional upon:

(a) the approval of the Sale and Purchase Agreement and the transactions contemplated thereunder by the Independent Shareholders in a general meeting in accordance with the Listing Rules; and
(b) the receipt by the Company of a valuation report from a reputable firm of independent professional property valuer acceptable to the Company confirming the market value of the Property in its existing state as at 30 September 2005.

If the above conditions to the Sale and Purchase Agreement are not fulfilled or waived (in the case of the condition (b) referred to above) by 31 March 2006 (or such later date as the parties may agree in writing), the Sale and Purchase Agreement will lapse whereupon none of the parties thereto shall have any further liabilities towards the others save for antecedent breaches.

As at the Latest Practicable Date, condition (b) referred to above has already been fulfilled.

Completion

Completion of the Sale and Purchase Agreement will take place on the 2nd business day after satisfaction or (in the case of the condition (b) referred to in the section headed “Conditions Precedent” above) wavier (as the case may be) of all the conditions of the Sale and Purchase Agreement (or such other date as may be agreed between the parties in writing).

Upon Completion, each of Artway, Bestly and its subsidiaries will cease to be a subsidiary of the Company.

REASONS FOR THE DISPOSAL AND BENEFITS TO THE COMPANY

The Company is principally engaged in the retailing of electrical appliances and electronic consumer products in the PRC.

It is expected that the Group will record an estimated gain of HK$0.7 million (not taking into account of the Interest Payment and the estimated expenses in connection with the Disposal) as a result of the Disposal by reference to the Total Consideration and the net assets value of the Property Group. As a result of the Disposal, the total assets and the total liabilities of the Group will be decreased. However, as the consideration for the Sale Shares is HK$533 million, which is slightly higher than the net assets value of Artway and Bestly as at 30 September 2005 of approximately HK$532.3 million, the Disposal will have a marginal enhancing effect on the Group’s net assets value. The financial effects of the Disposal will be disclosed in the accounts of the Company upon Completion.

LETTER FROM THE BOARD

The Directors, having considered that a guarantee in respect of the obligations of the Purchaser has been given by Mr. Wong, the controlling shareholder of the Company who is beneficially interested in approximately 66.02% of the issued share capital of the Company with a market value of approximately HK$4.8 billion by reference to the closing price of the Shares as at 7 November 2005 of HK$4.47 per Share, are of the view that it will be acceptable for the Total Consideration to be received by the Company one year after the date of Completion at the latest.

10 -

LETTER FROM THE BOARD

SHAREHOLDING STRUCTURE OF THE PROPERTY GROUP

The following shows a simplified holding structure of the Property Group prior to Completion:

==> picture [288 x 404] intentionally omitted <==

----- Start of picture text -----

the Company
100% 100%
Artway Bestly
49% 100%
intermediate holding
companies
51%
the PRC JV
80%
20%
the PRC Company
Contract to acquire
the Property
----- End of picture text -----

Note: The PRC Company is interested in the Property pursuant to an agreement for transfer of land use right dated 1 February 2002 entered into between the PRC Company and Beijing Bus (as supplemented by two agreements dated 31 December 2003 and 1 March 2004, respectively, entered into between the parties thereto).

11 -

LETTER FROM THE BOARD

INFORMATION RELATING TO THE PROPERTY GROUP

Information relating to Artway

Artway was incorporated in the British Virgin Islands on 8 January 2002 with limited liability. The Company has acquired the entire issued share capital of Artway on 10 April 2002. Its main asset is a 49% interest in the PRC JV, which in turn owns an 80% interest in the PRC Company. Each of Artway and the PRC JV has no other business operation save for the aforesaid investment interests.

The unaudited consolidated net profit before and after taxation of Artway for the year ended 31 March 2003 was approximately HK$7.2 million. The unaudited consolidated net loss before and after taxation of Artway for the year ended 31 March 2004 was HK$4,590. The unaudited consolidated net loss before and after taxation of Artway for the nine months ended 31 December 2004 was approximately HK$2 million. Based on the unaudited management accounts of Artway as at 30 September 2005, the unaudited consolidated net assets value of Artway (after taking into account the Artway Debt) was approximately HK$199.9 million. As at 30 September 2005, the unaudited consolidated total liabilities of Artway amounted to HK$7.3 million which comprised solely the Artway Debt, and the unaudited consolidated cash balance of Artway amounted to HK$400.

Information relating to Bestly

Bestly was incorporated in the British Virgin Islands on 4 January 2002 with limited liability. The Company has acquired the entire issued share capital of Bestly on 31 March 2004. Its main asset is (i) a 51% indirect effective interest in the PRC JV, which in turn owns an 80% interest in the PRC Company; and (ii) a 20% indirect effective interest in the PRC Company. It has no other business operation save for the aforesaid investment interests.

The unaudited consolidated net loss before and after taxation of Bestly for the year ended 31 March 2003 was approximately HK$1,519. Bestly did not record any profit or loss (unaudited) on a consolidated basis for the year ended 31 March 2004. The unaudited consolidated net profit before and after taxation of Bestly for the nine months ended 31 December 2004 was approximately HK$15.3 million. Based on the unaudited management accounts of Bestly as at 30 September 2005, the unaudited consolidated net assets value (after taking into account the total outstanding amount due from Bestly to the Company of approximately HK$56.8 million as at 30 September 2005 but excluding minority interest) of Bestly was approximately HK$332.4 million. As at 30 September 2005, the unaudited consolidated total liabilities of Bestly amounted to HK$221.1 million, which comprised the total outstanding amount due from Bestly to the Company of approximately HK$56.8 million, amounts due to other parties in the amount of HK$164.4 million (as to approximately HK$131.7 million as amount due to Beijing Bus being balance of the compensation and relocation fee payable by the PRC Company, as to approximately HK$29.0 million as amount due to an associate of Mr. Wong who has financed the PRC Company in its payment obligation under the relocation and compensation fee of RMB30 million (equivalent to approximately HK$29.0 million) in September 2005, and as to approximately HK$3.7 million being amount due to an Independent Third Party) and the unaudited consolidated cash balance of Bestly amounted to approximately HK$453,000. Subsequent to 30 September 2005, the Bestly Debt had been

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increased from approximately HK$56.8 million to approximately HK$221.1 million for the purpose of financing the relocation and compensation fee of the Property payable by the PRC Company to Beijing Bus, out of which approximately HK$29 million had been repaid to an associate of Mr. Wong who has financed the PRC Company in its payment obligation under the relocation and compensation fee of RMB30 million (equivalent to approximately HK$29 million) in September 2005, approximately HK$3.7 million had been repaid to the above mentioned Independent Third Party and approximately HK$131.7 million had been placed on deposits pending negotiation with Beijing Bus as to the timing of the remaining sum to the paid.

Information relating to the PRC JV

The PRC JV is a Sino-foreign joint venture established in the PRC in February 2002 and is licensed to engage in the provision of real estate information exchange service, property management service and computer software development. The principal asset of the PRC JV is its 80% in the PRC Company. As at 30 September 2005, the unaudited total liabilities of the PRC JV amounted to HK$11,538.46 and the unaudited cash balance of the PRC JV amounted to approximately HK$2,515.

Information relating to the PRC Company

The PRC Company is licensed to engage in the development and sale of real estate properties as well as property management. Since its inception in February 2002, the PRC Company has entered into a contract with Beijing Bus, an Independent Third Party, on 1 February 2002 for the acquisition and development of the Property at a price of RMB250 million (equivalent to approximately HK$240.4 million) (representing the amount of relocation and compensation fee of the Property) and two supplemental agreements on 31 December 2003 and 1 March 2004 respectively. As at the Latest Practicable Date, out of the relocation and compensation fee of RMB250 million (equivalent to approximately HK$240.4 million), an amount of RMB137 million (equivalent to approximately HK$131.7 million) remains to be paid by the PRC Company, out of which RMB50 million (equivalent to approximately HK$48.1 million) is due and payable and the balance amount of RMB87 million (equivalent to approximately HK$83.6 million) has to be settled before 30 September 2006. The PRC Company is under negotiation with Beijing Bus as to the timing of the remaining sum to be paid. Apart from the above, the PRC Company has not been involved in any other property development and/or property management project in the PRC. As at 30 September 2005, the unaudited cash balance of the PRC Company amounted to approximately HK$214,000.

The Property comprises a parcel of land with a site area of approximately 35,300 square meters. The Property is currently vacant (except a vacant public bus factory is erected thereon with a temporary retail store operated by the Group and rental is payable to Beijing Bus). It is currently intended that the operations of the said retail store will cease prior to the payment of the compensation and relocation fee of RMB250 million (equivalent to approximately HK$240.4 million) in full by the PRC Company, whereupon the construction phase of the Property is expected to commence. It was the original intention of the PRC Company to construct a multi-purpose complex which comprises a residential apartment tower, an office tower as well as retail premises with car parking spaces for sale and lease. As announced in the circular of the Company dated 5 July 2004, the Directors have decided that the Company should

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focus on the retailing of electrical appliances and electronic consumer products in the PRC and no further commitments will be made to such property investment beyond those contractually committed or necessary to preserve value. If the Company were to proceed with the development of the Property, it is expected that the Group would require substantial funding, including land premium of RMB470 million (equivalent to approximately HK$451.9 million) and estimated development cost of RMB3,825 million (equivalent to approximately HK$3,677 million).

Prior to the construction phase of the Property, it is expected that the PRC Company will have to settle the land premium and initial development cost comprising payment of costs associated with site clearance, demolition, utilities connection, etc. out of which the PRC Company expects that not less than RMB500 million (equivalent to approximately HK$480.8 million) will have to be settled within one year from the date of Completion in order just to preserve value of its investment in the Property. If the PRC Company does not proceed with the payment of the land premium and the initial development cost, it will be exposed to increased risk in regulatory restrictions, cost of construction and property market fluctuation.

USE OF PROCEEDS

The Directors estimate that the net proceeds of the Disposal will amount to approximately HK$760.5 million. It is the present intention of the Company that such net proceeds will be applied for the Group’s general working capital. Pursuant to the Sale and Purchase Agreement, any stamp duty or other tax or duty payable in respect of the sale and purchase of the Sale Shares and the Sale Debts under the Disposal will be solely borne by the Purchaser. As at 30 June 2005, the consolidated total assets value of the Company amounted to approximately HK$6,912.4 million, the consolidated net asset value of the Company amounted to approximately HK$1,522.1 million and the consolidated cash balances of the Company amounted to approximately HK$2,163.2 million.

DISCLOSURE PURSUANT TO RULE 13.13 OF THE LISTING RULES

Upon Completion, the amount due from the Purchaser arising from the Disposal of approximately HK$761.4 million (pursuant to which the Interest Payment will be payable at Completion) will exceed 8% of the latest published consolidated net assets value of the Group. The Company therefore has the obligation to disclose such information pursuant to the requirements under Rule 13.13 of the Listing Rules. The Company will ensure that full disclosure will be made by way of announcement pursuant to Rule 13.15 of the Listing Rules in the event that the general disclosure obligation under Rule 13.13 of the Listing Rules has been triggered upon Completion.

As at the Latest Practicable Date, the amount due from Mr. Wong and his associates amounts to approximately RMB50 million (equivalent to approximately HK$48.1 million) arising from the continuing connected transactions between Mr. Wong’s associates and the Company as approved in the special general meeting of the Company held on 28 July 2004.

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GENERAL

The Disposal constitutes a discloseable transaction of the Company under the Listing Rules. As Mr. Wong, the Chairman, Director and substantial shareholder of the Company, is wholly and beneficially interested in the entire issued share capital of the Purchaser, the Disposal therefore also constitutes a connected transaction for the Company under the Listing Rules. As the Total Consideration exceeds HK$10,000,000 and certain of the percentage ratios (other than the profits ratio) exceed 2.5%, the Disposal is subject to reporting and announcement requirements set out in Rules 14A.45 and 14A.47 of the Listing Rules and the approval of Independent Shareholders by way of poll in accordance with Rule 14A.48 of the Listing Rules.

INDEPENDENT BOARD COMMITTEE

An Independent Board Committee comprising Mr. Sze Tsai Ping, Michael, Mr. Chan Yuk Sang and Mr. Mark C. Greaves, independent non-executive Directors, was formed to give advice to the Independent Shareholders on how they should vote in relation to the Disposal.

Shareholders should note that based on the advice of Platinum, the Independent Board Committee considers that the Disposal is on normal commercial terms, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

INDEPENDENT FINANCIAL ADVISER

Platinum has been appointed the independent financial adviser to give advise to the Independent Board Committee and the Independent Shareholders in respect of the Disposal.

SPECIAL GENERAL MEETING

A notice convening the Special General Meeting to be held at Harbour View Room 3, 3rd Floor, Excelsior Hotel, 281 Gloucester Road, Hong Kong on Thursday, 15 December 2005 at 9:00a.m. is set out on pages 46 to 47 of this circular for the purpose of considering and, if thought fit, passing, amongst others, the resolution in respect of the Disposal.

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A form of proxy for use by the Shareholders at the Special General Meeting is enclosed. Whether or not your are able to attend the meeting in person, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon to the principal place of business of the Company in Unit 6101, 61st Floor, The Center, 99 Queen’s Road Central, Hong Kong, as soon as possible and in any event, not later than 48 hours before the time appointed for holding such meeting or any adjourned meting (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the Special General Meeting or any adjourned meeting thereof (as the case may be) should you so wish.

Pursuant to Bye-law 70 of the Bye-laws, a resolution put to the vote of a general meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded by:

(i) the Chairman of the meeting; or
(ii) at least three Shareholders present in person, or in the case of a Shareholder being a corporation, by its duly authorised representative or by proxy for the time being entitled to vote at the meeting; or
(iii) any Shareholder or Shareholders present in person, or in the case of a Shareholder being a corporation, by its duly authorised representative or by proxy and representing not less than one-tenth of the total voting rights of all the Shareholders having the right to vote at the meeting; or
(iv) a Shareholder or Shareholders present in person, or in the case of a Shareholder being a corporation, by its duly authorised representative or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

As at the Latest Practicable Date, Mr. Wong and his associates were beneficially interested in 1,084,600,085 Shares, representing approximately 66.04% of the issued share capital of the Company and was the controlling Shareholder. No voting trust, other agreement, arrangement or understanding was entered into by or binding upon Mr. Wong in respect of his beneficial interests in the Company. As Mr. Wong has a material interest in the Disposal, the votes of the Shareholders at the Special General Meeting in respect of the Disposal will be taken by way of a poll at which Mr. Wong and his associates will abstain from voting.

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RECOMMENDATIONS

The Board considers that the proposed ordinary resolution to be put forward at the Special General Meeting is in the interests of the Company and Shareholders as a whole. Accordingly, the Board recommends all Shareholders to vote in favour of the ordinary resolution to be proposed at the Special General Meeting.

Your attention is drawn to the letter of advice from the Independent Board Committee and the letter from Platinum containing its recommendations to the Independent Board Committee and the Independent Shareholders in relation to the terms of the Disposal and the principal factors and reasons considered by Platinum in arriving at its advice.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendices to this circular and the notice of the Special General Meeting.

By Order of the Board GOME Electrical Appliances Holding Limited Ng Kin Wah Executive Director

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [64 x 36] intentionally omitted <==

GOME Electrical Appliances Holding Limited 國美電器控股有限公司[*]

(incorporated in Bermuda with limited liability)

(Stock Code: 493)

28 November 2005

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION

DISPOSAL OF INTERESTS IN ARTWAY DEVELOPMENT LIMITED AND BESTLY LEGEND LIMITED

CONNECTED TRANSACTION

We refer to the circular issued by the Company to the Shareholders dated 28 November 2005 (the “Circular”) of which this letter forms apart. Unless the context otherwise defines terms used in this letter will have the same meanings as defined in the Circular.

We have been appointed by the Board as members of the Independent Board Committee for the purpose of considering and advising the Independent Shareholders in relation to the Disposal.

We wish to draw your attention to the letter from the Board as set out on pages 5 to 17 and the letter from Platinum set out on pages 19 to 32 of the Circular respectively.

Having considered the principal factors and reasons considered by, and the advice of Platinum as set out in its letter of advice, we consider that the terms of the Disposal are on normal commercial terms, are fair and reasonable in so far as the Independent Shareholders are concerned and the Disposal is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution as set out in the notice of the Special General Meeting in respect of the Disposal on pages 46 to 47 of the Circular.

Yours faithfully,

For and on behalf of

the Independent Board Committee

MICHAEL SZE TSAI PING CHAN YUK SANG

MARK C. GREAVES

Independent non-executive directors

* For identification purpose only

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LETTER FROM PLATINUM

The following is the text of the letter of advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders for the purpose of incorporation into this circular.

==> picture [161 x 80] intentionally omitted <==

28 November 2005

To the Independent Board Committee and the Independent Shareholders

Dear Sirs,

DISCLOSABLE AND CONNECTED TRANSACTION

DISPOSAL OF INTERESTS IN ARTWAY DEVELOPMENT LIMITED AND BESTLY LEGEND LIMITED

INTRODUCTION

We refer to our engagement as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Disposal. Details of the Disposal are set out in the letter from the Board as set out in the circular of the Company dated 28 November 2005 (the “Circular”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

In our capacity as the independent financial adviser to the Independent Board Committee and the Independent Shareholders, our role is to give an independent opinion as to whether the Disposal is entered into in the ordinary and usual course of business of the Group, on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole and whether the Independent Shareholders should vote in favour of the Disposal.

In formulating our opinion, we have relied on the information and facts supplied to us by the Company. We have reviewed, among other things: (i) the Sale and Purchase Agreement; (ii) the valuation report of the Property dated 28 November 2005 (the “Valuation Report”); (iii) the annual report and accounts of the Company for the year ended 31 December 2004; and (iv) the interim report of the Company for the period ended 30 June 2005.

We have assumed that all information, facts, opinions and representations contained in the Circular are true, complete and accurate in all material respects and we have relied on the same. The Directors having collectively and individually accepted full responsibility for the accuracy of the information contained in the Circular, and have confirmed, having made all reasonable enquiries, which to their best

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knowledge and belief, that no material facts have been omitted from the information supplied to us. Further, we have no reason to suspect the reasonableness of the opinions expressed by the Company.

We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy or completeness of the information of all facts as set out in the Circular and of the information and representations provided to us by the Company. Furthermore, we have no reasons to suspect that the reasonableness of the opinions and representations expressed by the Company and/or the Directors which have been provided to us. In line with normal practice, we have not, however, conducted a verification process of the information supplied to us, nor have we conducted any independent in-depth investigation into the business and affairs of the Group. We consider that we have been supplied and reviewed sufficient information to enable us to reach an informed view and to provide a reasonable basis for our opinion regarding the Disposal.

We are independent from, and are not associated with, the Company nor the Purchaser, or their respective substantial shareholders or connected person(s), as defined under the Listing Rules and, accordingly, are considered eligible to give independent advice on the Disposal. We will receive a fee from the Company for our role as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Disposal. Apart from this normal professional fee payable to us in connection with this appointment, no arrangements exist whereby we will receive any fees or benefits from the Company and the Purchaser or their respective substantial shareholders or connected person(s), as defined under the Listing Rules.

The Independent Board Committee, comprising all the independent non-executive Directors, has been established to advise the Independent Shareholders in respect of the Disposal. As Mr. Wong has a material interest in the Disposal, Mr. Wong and his associates will abstain from voting on the resolution proposed at the Special General Meeting in respect of the Disposal.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion in relation to the Disposal and giving our independent financial advice to the Independent Board Committee and the Independent Shareholders, we have considered the following principal factors:

A. Reasons for and benefits of the Disposal:

1. Background of the Disposal

On 7 November 2005, the Company, the Purchaser and Mr. Wong entered into the Sale and Purchase Agreement, subject to, amongst other things, approval from the Independent Shareholders. Principal terms of the Sale and Purchase Agreement are as follows:

(i) the Company agreed to sell, and the Purchaser agreed to purchase, the Sale Shares, at a consideration of HK$533 million (subject to adjustment), representing HK$200 million as consideration for the Artway Share and HK$333 million as consideration for the Bestly Share;
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(ii) the Company agreed to sell, and the Purchaser agreed to purchase, the Sale Debts at their face value of approximately HK$228.4 million, which comprised the Artway Debt in the amount of approximately HK$7.3 million and the Bestly Debt in the amount of approximately 221.1 million;
(iii) Mr. Wong agreed to guarantee the performance of the Purchaser’s obligations under the Sale and Purchase Agreement;
(iv) the Total Consideration receivable by the Company will amount to approximately HK$761.4 million (subject to adjustment and excluding the Interest Payment payable by the Purchaser). The Total Consideration together with the Interest Payment will be payable by the Purchaser to the Company in cash either: (i) on the first anniversary date of the date of Completion; or (ii) such earlier date as may be notified by the Purchaser to the Company by giving not less than seven business days’ prior notice;
(v) the rate for the interest payment on the Total Consideration payable by the Purchaser to the Company is 4.5% per annum; and
(vi) adjustment to the consideration for the Sale Shares will be made if: (i) the market value of the Property as set out in the Valuation Report to be obtained is different from the estimated market value of the Property of HK$760 million (approximately RMB790.4 million); and (ii) the amount of such difference is equal to or greater than HK$300,000. In such case, the consideration for the Sale Shares will be adjusted accordingly on a dollar for dollar basis. Pursuant to the terms of the Sale and Purchase Agreement the Company has obtained a valuation report on the value of the Property as at 30 September 2005. As the Property is valued by the Valuer at HK$760 million as at 30 September 2005, no adjustment will be made to the Total Consideration.

2. Conditions Precedent

Completion of the Disposal is conditional upon:

(a) the approval of the Sale and Purchase Agreement and the transactions contemplated thereunder by the Independent Shareholders in a general meeting in accordance with the Listing Rules; and
(b) the receipt by the Company of a valuation report from a reputable firm of independent professional property valuer acceptable to the Company confirming the market value of the Property in its existing state as at 30 September 2005.

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As stated in the letter from the Board, as at the Latest Practicable Date, condition (b) referred to above has been fulfilled.

3. The Completion

The Completion will take place on the second business day after satisfaction or (in case of the condition (b) referred to in the section headed “Conditions Precedent” above) wavier (as the case may be) of all the conditions of the Sale and Purchase Agreement (or such other date as may be agreed between the parties in writing).

Upon Completion, each of Artway, Bestly and their respective subsidiaries will cease to be a subsidiary of the Company.

4. Use of proceeds

5. Business of the Company

The Company is incorporated in Bermuda with limited liability and the Shares of which are listed on the Stock Exchange. The Group is principally engaged in the retailing of the electrical appliances and consumer electronic products in the PRC. As stated in the 2004 annual report for the financial year ended 31 December 2004 and 2005 interim report of the Company for the six months ended 30 June 2005, the Group’s revenue were mainly derived from the retailing of electrical appliances and consumer electronic products, which is illustrated as below:

Table 1: Turnover of the Group by business segment

(1) Retailing of the electrical appliances and consumer electronic products (2) Others Total	For the nine months ended 31 December 2004 % of total turnover Turnover of the Group HK$’000 % 9,156,185 99.89 9,761 0.11 9,165,946 100.00	For the six months ended 30 June 2005 % of total turnover Turnover of the Group HK$’000 % 7,807,984 99.95 4,081 0.05 7,812,065 100.00	For the six months ended 30 June 2005 % of total turnover Turnover of the Group HK$’000 % 7,807,984 99.95 4,081 0.05 7,812,065 100.00
			100.00

Source: 2004 annual report and 2005 interim report of the Company.

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As illustrated in Table 1 above, over 90% of the Group’s revenue is mainly generated from retailing of electrical appliances and consumer electronic products. In addition, as stated in the letter from the Board, the Company’s interest in the Property does not generate any income for the Group and thus produces a negative effect on the financial return of the Company.

6. The Group’s long term strategy

As stated in the letter from the Board, the Directors have decided that the Company should focus on the retailing of electrical appliances and electronic consumer products in the PRC and no further commitments will be made to such property investment beyond those contractually committed. As such, there is no definitive plan for the development of the Property in so far as the Group is concerned.

As stated in 2005 interim report of the Company, the Group has operated in the PRC retail market of electrical appliances since its inception and will continue to focus its resources on this market in the future. At the beginning of 2005, the Group stated in the 2005 interim report of the Company an aggressive four-year expansion plan (the “Growth Initiative”). The main strategic thrust of the Growth Initiative is to increase the Group’s revenue base, improve market share, and consolidate the Group’s market leadership position. Together with the its parent company, the Group aims to increase their combined market share from approximately 5% in 2004 to 10% – 15% by the end of 2008. Under the Growth Initiative, the Group plans to open a total of about 130 traditional stores in 2005.

Based on 2005 interim report of the Company, in order to focus the Group’s resources on the retail business, the Group has disposed of all of its interest in the securities and futures brokerage operation of the Group in April 2005 (please refer to the announcement of the Company dated 14 April 2005) and this disposal was subsequently completed in July 2005. Additionally, the 2005 interim report of the Company stated that the Property is considered non-core and the Group will not commit any further capital to it. The management of the Group is actively looking for suitable opportunities to dispose of the Property. Based on our discussion with the management of the Company and the latest published 2005 interim report, as at 30 June 2005, the Company also owned a retail shop property in the PRC, which is related to the retailing of electrical appliances and consumer electronic products.

As stated in the letter from the Board, the Company had been actively seeking a buyer in respect of its interest in the Property and had not been able to secure any offer in this respect. In addition, the Directors consider that it will not be in the interests of the Group to further utilize the financial resources of the Group for the purpose of the Property, and it will be beneficial to the Company to dispose of its interest in the Property as soon as possible in order to avoid deployment of financial resources of the Group for the purpose of the Property which could alternatively be utilized for the purpose of the core businesses of the Group.

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As stated in the letter from the Board and the Valuation Report, if the Company were to proceed with the development of the Property, it is expected that the Group would require substantial funding, including land premium of RMB470 million (equivalent to approximately HK$451.9 million) and estimated development cost of RMB3,825 million (equivalent to approximately HK$3,677 million). Based on our discussion with the management of the Company, the potential costs incurred for the Property would be a drain on the Group’s financial resources, which is not in line with the long term strategy of the Group of focusing on the retailing of electrical appliances and electronic consumer products in the PRC.

Based on the above information, we are of the opinion that the Disposal is in line with the Group’s long-term strategy of focusing its resources on the retailing of electrical appliances and electronic consumer products in the PRC.

In light of:

(i) the Group’s business focus on the retailing of electrical appliances and consumer electronic products;
(ii) the current long term strategy of the Group is to increase its market share in the retail market of electrical appliances and consumer electronic products and consolidate its market leadership position; and
(iii) the Property which is situated in Beijing is considered non-core and the management of the Company has been actively looking for suitable opportunities to dispose of this asset,

we are of the opinion that although the Disposal is not in the usual and ordinary course of business of the Group, it is nevertheless in line with the long-term strategy of the Group.

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7. Overview of the property market in Beijing, the PRC

Based on our discussion with the management of the Company, the Property was planned to be developed into a mixed commercial and residential development. According to the China Real Estate Index System, an independent institution founded by the China Real Estate Association and the Development Research Center of the State Council of the PRC, which is specialized in the analysis of the development trend of the PRC property market through a series of property indices (the indices are determined by parameters, especially the market prices of the properties), we set out the China Real Estate Beijing General Index (the “Index”), which represents the overall (including both commercial and residential) property market trend in Beijing, as follow:

Chart 1: China Real Estate Beijing General Index

==> picture [350 x 139] intentionally omitted <==

----- Start of picture text -----

1,700
1,600
1,500
1,400
1,300
1,200
1,100
1,000
900
2000-12 2001-04 2001-08 2001-12 2002-04 2002-08 2002-12 2003-04 2003-08 2003-12 2004-04 2004-08 2004-12 2005-04 2005-08
----- End of picture text -----

Source: China Real Estate Index System

8. Based on the indices in Chart 1 above, we observed that the PRC property market has recorded consistent growth over the past few years and in general has been on an upward trend with the Index grew from 1,329 in December 2000 to 1,588 in April 2005, representing an increase of approximately 19.49%. It is also our observation that the Index is staying at the high range of the Index but has recently been lingering on plateau ranging narrowly from 1,565 to 1,587 from April 2005 to September 2005.

During 2004 and 2005, the PRC Government implemented a series of macro regulatory measures in an attempt to cool down the overheated industries, including the property market. Macro economic policies targeting the property market were aimed at two major aspects, i.e. property developers and property buyers. For property developer, we note that in April 2004, the PRC Government tightened the credit requirements for property developers thereby prohibiting the cost of land to be financed by bank loans. In addition, for those property developers who secured bank loans for property projects, the required ratio of capital to be paid for property projects has risen from 30% to 35%. These measures, to a certain extent, have imposed funding pressure on small to medium property developers in terms of fund and development risk.

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We note the view of the Directors that the Company should dispose of its interest in the Property as soon as possible to avoid further exposure to increased risk in regulatory restrictions, cost of construction and property market fluctuation. From our aforesaid observations, we are of the view that the overall property market in Beijing has been on an upward trend but it should be noted recent PRC governmental measures on the property market in the PRC might cast a shadow and give rise to market fluctuation in the property market in the foreseeable future.

B. Basis of the Total Consideration

1. The Total Consideration

As stated in the letter from the Board, the Total Consideration has been determined based on arm’s length negotiations between the Company and the Purchaser.

As stated in the letter from the Board, in arriving at the Total Consideration, reference has been made to the estimated market value of the Property in its existing state as at 30 September 2005 of approximately HK$760 million (equivalent to approximately RMB790.4 million) on the basis that the relocation and compensation fee of RMB250 million (equivalent to approximately HK$240.4 million) has been fully paid, having regard to a previous valuation report issued by an independent property valuer prepared on the same basis as mentioned above for the purpose of the unaudited accounts of the Company for the six months ended 30 June 2005 valuing the Property at HK$755 million as at 30 June 2005.

According to the Valuation Report, the Property has been valued at approximately HK$760 million (equivalent to approximately RMB790.4 million) as at 30 September 2005 by a reputable independent professional property valuer (the “Valuer”). Based on our discussion with the management of the Company, the Company has prepared this Valuation Report for the preparation of the Company’s unaudited financial results for the nine months ended 30 September 2005. Furthermore, based on our discussion with the management of the Company, as this Valuation Report is considered sufficiently up-to-date, reference has been made to such Valuation Report in arriving at the Total Consideration by the Company and the Purchaser after arm’s length negotiation. According to our discussions with the Valuer, we understand that the Property has been valued on an open market value basis using the direct comparison approach by making reference to comparable sales evidence or offerings as available in the relevant market and by taking into account the permitted development and/or development proposal provided to them. Based on our review on the Valuation Report as well as discussions with the Valuer, we consider that the direct comparison approach adopted by the Valuer in valuing the Property, which is a common valuation methodology for valuing properties, is appropriate.

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Given that the Total Consideration of approximately HK$761.4 million represents a premium of approximately 0.09% to the sum of the total NAV of Artway and Bestly and their total outstanding debts (please refer to Table 3 below), we are of the view that the Total Consideration of approximately HK$761.4 million is fair and reasonable, and the Disposal is entered into on normal commercial terms and in the interests of the Company and the Shareholders as a whole.

2. Adjustment to the Total Consideration

As stated in the letter from the Board, an adjustment to the consideration for the Sale Shares will be made if: (i) the market value of the Property as set out in the Valuation Report is different from the estimated market value of the Property of HK$760 million (equivalent to approximately RMB790.4 million); and (ii) the amount of such difference is equal to or greater than HK$300,000. In such case, the consideration for the Sale Shares will be adjusted accordingly on a dollar-for-dollar basis.

In light of (i) the terms of adjustment to the Total Consideration above which adjusts the Total Consideration in accordance with the valuation given by the Valuation Report on a dollar-for-dollar basis; and (ii) the adjustment threshold of HK$300,000, which represents less than 0.04% of the Total Consideration which we consider immaterial to the Total Consideration, we are of the view that such adjustment mechanism to the Total Consideration is acceptable.

As stated in the letter from the Board, the Property was valued by the Valuer at HK$760 million as at 30 September 2005, therefore, no adjustment will be made to the Total Consideration.

C. Basis of the Interest Payment

As stated in the letter from the Board, the Interest Payment on the Total Consideration payable by the Purchaser to the Company is calculated by reference to the interest rate of 4.5% per annum for the period from the date of the Completion up to and including the date of payment of the Total Consideration.

As stated in the letter from the Board, the interest rate of 4.5% per annum (the “Interest Rate”) has been determined by reference to the prevailing HK$ deposit rate in Hong Kong of approximately 4%. In addition, the Company’s cash balances are deposited with local banks in Hong Kong earning interest of approximately 4%. The Company considers that the HK$ deposit rate is more appropriate as it is currently expected that funding received in respect of the Property will be placed on deposits.

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LETTER FROM PLATINUM

We have reviewed the interest rates of time deposits publicly offered by certain banks in Hong Kong on the Latest Practicable Date, the results of which are shown in Table 2 below:

Table 2: Interest rate of time deposit publicly offered by certain banks in Hong Kong

					Premium/
					(discount)
					of interest rate
					based on the
					interest rate
			Deposit	Interest rate	of certain
	Term	Currency	amount	per annum	banks in HK
	Year		HK$	%	%
HSBC Holdings plc1	1	HK$	1,000,000	3.20	40.63
			or above
BOC Hong Kong	1	HK$	1,000,000	3.10	45.16
(Holdings) Limited1			or above
Hang Seng Bank Limited	1	HK$	1,000,000	3.20	40.63
			or above
China Construction Bank	1	HK$	1,000,000	3.21	40.19
Corporation			or above
Standard Chartered plc1	1	HK$	500,000	3.20	40.63
			or above
Minimum				3.10	45.16
Maximum				3.21	40.19
Average				3.18	41.42

Note 1: Principal bankers of the Company as stated in 2005 interim report of the Company.
Note 2: Interest rates based on the Latest Practicable Date.
Note 3: Deposit amounts stated above refer to the highest threshold deposit amounts offered and published by the respective banks on their respective websites.
Source: Published interest rates on corresponding banks’ websites.

As illustrated in Table 2 above, for a one-year time deposit of HK$1,000,000 or above, the interest rate publicly offered by certain banks in Hong Kong ranged from 3.10% to 3.21% on the Latest Practicable Date with an average of approximately 3.18%. The Interest Rate also represents a premium of approximately 45.16%, approximately 40.19% and approximately 41.42% over the lowest, highest and average one-year time deposit interest rates offered by the aforesaid banks respectively.

In light of above, we are of the view that the Interest Rate, as compared to the time deposit interest rates publicly offered by certain banks in Hong Kong, is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM PLATINUM

D. Payment terms of the Total Consideration and the Interest Payment

As stated in the letter from the Board, the Total Consideration together with the Interest Payment will be payable by the Purchaser to the Company in cash either: (i) on the first anniversary date of the date of Completion (where such date is not a business day, the next business day immediately following such date); or (ii) such earlier date as may be notified by the Purchaser to the Company by giving not less than seven business days’ prior notice. In addition, Mr. Wong has agreed to guarantee the performance of the Purchaser’s obligations under the Sale and Purchase Agreement. Therefore, upon Completion, the Total Consideration of approximately HK$761.4 million will be payable by the Purchaser to the Company. As stated in the letter from the Board, the Directors are of the view that it will be acceptable for the Total Consideration to be received by the Company one year after the date of Completion at the latest.

We note that the payment by the Purchaser is guaranteed by Mr. Wong and would be paid on the first anniversary date of the date of Completion at the latest, which are terms agreed on an arm’s length basis between the Purchaser and the Company. In our review of the payment terms for the Total Consideration and Interest Payment due from the Purchaser, we note the following:

(i) the Disposal is in line with the long term strategy of the Group as mentioned above;
(ii) the Total Consideration is interest bearing at a rate which is higher than the current average interest rate for the prevailing HK$ deposit rate in Hong Kong and also higher than the time deposit interest rates publicly offered by certain banks in Hong Kong as mentioned above;
(iii) the Purchaser is wholly and beneficially owned by Mr. Wong;
(iv) Mr. Wong has agreed to guarantee the performance of the Purchaser’s obligations under the Sale and Purchase Agreement;
(v) Mr. Wong is the Chairman, Director and the controlling Shareholder of the Company. He has been the Chairman and Director of the Group since April 2002;
(vi) Mr. Wong is beneficially interested in approximately 66.02% of the issued share capital of the Company with a market value of approximately HK$4.8 billion by reference to the closing price of the Shares as at 7 November 2005 (the date of Sale and Purchase Agreement) of HK$4.47 per Share and we have also confirmed with the management of the Company that the Shares held by Mr. Wong are free of any liens as at the Latest Practicable Date;
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LETTER FROM PLATINUM

(vii) According to the 14 November 2005 issue of Forbes Asia, an international business magazine, Mr. Wong’s net worth amounts to an estimation of approximately US$1.25 billion and is ranked the 4th richest man in the PRC in 2005;

In light of the above, we are therefore of the view that the payment terms for the Total Consideration and Interest Payment on balance are acceptable.

In light of the above, although the Company might subject to possible credit risks in the absence of security provided by the Purchaser, we are of the view that Mr. Wong is financially capable of serving the payment terms and the outstanding receivables by the Company with respect to the Total Consideration and Interest Payment and are acceptable to the Company and Shareholders as a whole.

Financial impact of the Disposal

1. Effect on net asset value (the “NAV”)

According to 2005 interim report of the Company, as at 30 June 2005, the unaudited NAV of the Group (representing the sum of the issued capital, reserves and proposed dividend) is approximately HK$1,256.53 million. The Total Consideration receivable by the Company will amount to approximately HK$761.4 million (subject to adjustment and excluding the Interest Payment), which represents the consideration of the Sale Shares of HK$533 million and the consideration to the Sale Debts of approximately HK$228.4 million.

The Disposal would decrease the total assets and total liabilities of the Group. However, as the consideration for the Sale Shares is HK$533 million, which is slightly higher that the net asset value of Artway and Bestly as at 30 September 2005 of approximately HK$532.3 million (as stated in the letter from the Board, the net assets value of Artway and Bestly amounted to approximately HK$199.9 million and approximately HK$332.4 million, respectively, as at 30 September 2005). Therefore, the Disposal will have a marginal enhancing effect on the Group’s net asset value.

In light of the above, there will be an enhancement on the NAV as a result of the Disposal, we are of the opinion that the Disposal, based on its effect on the NAV of the Group, is in the interests of the Company and the Shareholders as a whole.

2. Effect on earnings

As mentioned above, upon the Completion, the Group is expected to record a gain of approximately HK$0.7 million (not taking into account of the Interest Payment and the estimated expenses in connection with the Disposal). In addition, upon Completion, the Company will be entitled to the Interest Payment on the balance of the Total Consideration by reference to the interest rate of 4.5% per annum up to and including the date of payment of the balance of the Total Consideration.

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LETTER FROM PLATINUM

Given the above positive effect on the earnings of the Group as a result of the Disposal, we are of the opinion that the Disposal is in the interests of Company and the Shareholders as a whole.

3. Effect on working capital

As stated in the letter from the Board, the Directors estimate that the net proceeds of the Disposal will amount to approximately HK$760.5 million. It is the present intention of the Company that such net proceeds will be applied as the Group’s general working capital. As a result, the Group’s cash position and working capital level will be improved. In light of this, we are of the view that this Disposal is in the interests of the Company and the Shareholders as a whole.

In light of the above, in particular:

(i) positive effect on the net asset value of the Group as a result of the Disposal;
(ii) positive effect on the earnings of the Group as a result of the Disposal; and
(iii) the improvement of the Group’s cash position and working capital,

we are of the opinion that the financial effects of the Disposal are positive and in the interest of the Company and the Shareholders as a whole.

RECOMMENDATION

We have considered the above principal factors and reasons and, in particular, have taken into account the following factors in arriving at our opinion:

(i) the Disposal is not entered into in the usual and ordinary course of business of the Group but nevertheless is in line with the long term strategy of the Group, i.e. focus on the retailing of electrical appliances and consumer electronic products;
(ii) the overall property market in Beijing has been on an upward trend but recent PRC governmental measures on the property market in the PRC might cast a shadow and give rise to market fluctuation in the property market in the foreseeable future;
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LETTER FROM PLATINUM

(iii) the basis of valuation of the Disposal is fair and reasonable;
(iv) the Consideration is fair and reasonable;
(v) the Interest Payment is fair and reasonable;
(vi) the payment terms of the Total Consideration and the Interest Payment on balance are acceptable; and
(vii) the financial effects of the Disposal are positive.

Having considered the above, we are of the view that the Disposal is: (i) not entered into in the usual and ordinary course of business of the Group but nevertheless in line with the long term strategy of the Group; (ii) on normal commercial terms; and (iii) fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders and we recommend the Independent Shareholders to vote in favour of the ordinary resolution in relation to the Disposal at the Special General Meeting.

Yours faithfully, Yours faithfully, For and on behalf of For and on behalf of Platinum Securities Company Limited Platinum Securities Company Limited Alvin Lai Ross Cheung Director Director – Corporate Finance

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PROPERTY VALUATION REPORT ON THE PROPERTY

APPENDIX I

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==> picture [199 x 71] intentionally omitted <==

28 November 2005

The Directors GOME Electrical Appliances Holding Limited Unit 6101, 61st Floor The Center 99 Queen’s Road Central Hong Kong

Dear Sirs,

Re: A parcel of land located at No. 7 Xi Ba He Bei Lane (i.e. No. A7 Bei San Huan East Road), Chaoyang District, Beijing, the People’s Republic of China (the “PRC”)

In accordance with the instructions from GOME Electrical Appliances Holding Limited (hereinafter referred to as the “Company”) for us to value the property interest in the captioned property (hereinafter referred to as the “Property”), which is held by the Company and/or its subsidiaries (hereinafter together referred to as the “Group”), we confirm that we have carried out 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 such property interest as at 30 September 2005 (hereinafter referred to as the “Date of Valuation”).

It is our understanding that this valuation document is to be used for reference purpose regarding a proposed disposal of the property interest in the Property.

This letter, forming part of our valuation report, identifies the properties being valued, explains the basis and methodology of our valuation, and lists out the assumptions and the title investigation we have made in the course of our valuation, as well as the limiting conditions.

BASIS OF VALUATION

Our valuation of the property interest is our opinion of its market value which we would define as intended to mean “an estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.”

We have valued the Property on the basis that such property will be developed and completed in accordance with the development proposal provided to us by the Company.

Our valuation has been carried out in accordance with The HKIS Valuation Standards on Properties (1st Edition 2005) issued by the Hong Kong Institute of Surveyors and under generally accepted valuation procedures and practices, which are in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

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PROPERTY VALUATION REPORT ON THE PROPERTY

APPENDIX I

VALUATION METHODOLOGY

In arriving at the value of the property interest in the Property, we have adopted the Direct Comparison Approach assuming such property interest is capable of being sold in its existing state with the benefit of vacant possession and by making reference to comparable sales evidence or offerings as available in the relevant market and by taking into account the permitted development and/or development proposal provided to us. In addition, we have also taken into consideration the construction costs that will be expended to complete the proposed development to reflect the development potential of the Property and the quality of the completed development. In forming our opinion of value, we have also made reference to comparable site transactions and land prices as available in the relevant market.

VALUATION ASSUMPTIONS

Our valuation has been made on the assumption that the property interest is sold in the open market without the benefit of a deferred terms contract, leaseback, joint venture, management agreement or any similar arrangement that would serve to affect the value of such property interest. In addition, no account has been taken of any option or right of pre-emption concerning or effecting sales of the property interest and no forced sale situation in any manner is assumed in valuation.

No allowance has been made in our valuation 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 that could affect its value.

TITLE INVESTIGATION

Due to the nature of the land registration system in the PRC, we are not able to investigate the title to or any liabilities against the property interest. However, we have been provided by the Company with copies of documents relating to the title of the property interest. We have not examined the original documents to verify the ownership and to ascertain the existence of any amendments that may not appear on the copies handed to us. All documents have been used for reference only.

We have been provided with copies of legal opinions issued on 4 February 2004 and 5 July 2004 and a supplementary opinion issued on 5 July 2004 by Jingtian & Gongcheng Attorneys at Law, the Group’s legal adviser as to PRC law (hereinafter referred to as the “PRC Legal Adviser”) regarding the title to the Group’s interest in the Property. In the course of our valuation, we have relied on the advice given by the Group and the PRC Legal Adviser regarding the title to the interest in the Property.

LIMITING CONDITIONS

We have inspected the exterior, and where possible, the interior of the Property. However, no structural survey has been made nor have any tests been carried out on any of the building services provided in the Property. We are, therefore, not able to report that the Property is free from rot, infestation or any other structural defects. Yet, in the course of our inspection, we did not note any serious defects.

We have not conducted any on-site measurement to verify the correctness of the site area of the Property but have assumed that the site area shown on the documents and official site plan furnished to us are correct. Dimensions, measurements and areas included in the valuation certificate attached are based on information contained in the documents provided to us by the Group and are therefore approximations only.

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PROPERTY VALUATION REPORT ON THE PROPERTY

APPENDIX I

Moreover, we have not carried out any site investigations to determine or otherwise the suitability of the ground conditions, the presence or otherwise of contamination and the provision of or otherwise suitability for services etc. for any future development. Our valuation is prepared on the assumption that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred in the event of any development.

In the course of our valuation, we have neither verified nor taken into account any PRC tax liabilities. We have been advised by the Company that potential tax liabilities arising from the disposal of the Property may include business tax (營業稅 ), additional town and city construction and maintenance fee (附加城鎮建設維護費 ), additional education fee (教育費附加 ) and land appreciation tax (土地增值稅 ); and that the Company has not made an assessment of such potential tax liabilities. In fact, the amount of such PRC tax liabilities would not be crystallized or easily quantified before completion of the disposal of the Property.

We have relied to a considerable extent on the information provided by the Group and the advice given to us on such matters as planning approvals, statutory notices, easements, tenure, particulars of occupancy, development proposal, site and floor areas and all other relevant matters in the identification of the Property. We have not seen original planning consents and have assumed that the Property will be erected, occupied and used in accordance with such consents.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Group. We were also advised by the Group that no material facts have been omitted from the information provided. We consider that we have been provided with sufficient information to reach an informed view, and have no reason to suspect that any material information has been withheld.

REMARKS

Unless otherwise stated, all monetary amounts stated in our valuation report are in Hong Kong dollars (HK$). The exchange rates adopted in our valuation are HK$1 = RMB1.04 and USD1.00 = HK$7.80, which were approximately the prevailing exchange rates as at the Date of Valuation.

We hereby confirm that we have neither present nor prospective interests in the Group, the Property or the value reported herein.

Our valuation certificate is attached.

Yours faithfully, For and behalf of

B.I. APPRAISALS LIMITED

William C. K. Sham Registered Professional Surveyor (G.P.) China Real Estate Appraiser MHKIS, MCIREA Executive Director

Note:

Mr. William C. K. Sham is a qualified valuer on the approved List of Property Valuers for Undertaking Valuation for Incorporation or Reference in Listing Particulars and Circulars and Valuations in Connection with Takeovers and Mergers published by the Hong Kong Institute of Surveyors. Mr. Sham has 25 years’ experience in the valuation of properties in Hong Kong and has over 10 years’ experience in the valuation of properties in the People’s Republic of China and the Asia Pacific regions.

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PROPERTY VALUATION REPORT ON THE PROPERTY

APPENDIX I

VALUATION CERTIFICATE

Property

Description and tenure

Particulars of occupancy

Market value in existing state as at 30 September 2005

A parcel of land located at No. 7 Xi Ba He Bei Lane (i.e. No. 7A Bei San Huan East Road), Chaoyang District, Beijing, the PRC

The Property comprises a parcel of land with a site area of approximately 35,300 sq.m. (379,969 sq.ft.).

The Property is planned to be developed into a mixed commercial and residential development with a total gross floor area of approximately 350,000 sq.m. (3,767,400 sq.ft.). Details of usage and gross floor areas of the proposed development are as follows:

The Property is currently occupied by the Group for the operation of a temporary retail store.

$760,000,000

	Approximate	Approximate
Usage	Gross	Floor Area
	(sq.m.)	(sq.ft.)
Residential	50,000	538,200
Retail	40,000	430,560
Office	220,000	2,368,080
Car park	40,000	430,560
Total:	350,000	3,767,400

Notes:

(1) Pursuant to the Certificate for State-owned Land Use 京朝國用 (地 )字第 000224號 (Jing Chao Guo Yung (Di) Zi No. 000224) issued by 北京市朝陽區房屋土地管理局 (Beijing Municipal Chaoyang District Housing and Land Administration Bureau) on 9 July 1997, the land use rights of a site having a site area of approximately 50,063.956 sq.m. have been granted to 北京市長途汽車公司 (hereinafter referred to as “Beijing Bus”) by way of administrative appropriation for industrial use.

(2) Pursuant to the Agreement for Transfer of Land use Rights (hereinafter referred to as the “Transfer Agreement”) entered into between Beijing Bus and 北京金尊房地產開發有限公司 (Beijing Jin Zun Property Development Limited, hereinafter referred to as “Beijing Jin Zun Property”), which is a wholly owned subsidiary of the Company, on 1 February 2002 (as supplemented by two agreements dated 31 December 2003 and 1 March 2004 respectively entered into between the parties thereto), Beijing Bus agreed to sell and Beijing Jin Zun Property agreed to purchase the subject site having a site area of approximately 35,300 sq.m. for a relocation and compensation fee of RMB250,000,000.

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PROPERTY VALUATION REPORT ON THE PROPERTY

APPENDIX I

(3) Pursuant to the information given to us by the Company, we understand that portion of the above-mentioned relocation and compensation fee has been paid and that an amount of RMB137,000,000 remains outstanding at the Date of Valuation.
(4) We have been advised by Beijing Jin Zun Property that the development proposal (which is equivalent to the feasibility study) of the Property has been submitted to 北京市發展改革委員會 (Beijing Municipal Development Reform Commission) and 北京市規劃委員會 (Beijing Municipal Planning Commission) on 31 January 2003 for approval.
(5) Pursuant to the Planning Opinion 2005 規意選字 0253號 (2005 Gui Yi Xuan Zi No. 0253) issued by Beijing Municipal Planning Commission on 2 August 2005 (hereinafter referred to the “Planning Opinion”), the subject development project is in compliance with the urban planning requirements and is approved to proceed with the preliminary works regarding land and planning design. Major conditions stated in the Planning Opinion include, inter alias, the following:
(a) Land Planning Requirement:
- Proposed land use nature : Public facilities
- – Total land area : 54,273 sq.m. – Total developable land area : 32,364 sq.m. for commercial and financial uses – Total land area for public facilities : 21,909 sq.m. for road and landscaping uses. – Plot ratio : ≤ 4.5 – Development density : ≤ 30%
(b) Development Planning Requirement:
- Development scale control : ≤ 225,288 sq.m. (for superstructure only and subject to the final control as calculated based on the land area stated in the Certificate of State-owned Land Use and the plot ratio)
- – Development height control : 80 to 100 metres Landscaping Planning Requirement: – Green land ratio : ≥ 30%
(c) Landscaping Planning Requirement:
(6) It is our understanding that the proposed total gross floor area for the subject development project appears to be in excess of the development scale control stated in the Planning Opinion. However, it is stated in the Planning Opinion that the conditions stated in the Planning Opinion may be modified upon obtaining the approval from Beijing Municipal Planning Commission. We have been further advised by the Group that negotiation with the relevant authority regarding modification of the development scale control will be continued.
(7) In the course of our valuation, we have taken into account and made allowance to the estimated cost of development of approximately RMB3,825,000,000 and the estimated land premium of approximately RMB470,000,000.
(8) Regarding the estimated land premium as described in Note 6 above, we have considered in our valuation the change of land use as well as the development proposal provided to us by the Company.
(9) Pursuant to the information provided by the Company, we understand that 39.2% interest in the Property was acquired by the Company on 10 April 2002 whilst the remaining 60.8% interest was acquired on 31 March 2004; and that total cost of acquisitions and the total costs expended on the Property as of the Date of Valuation were HK$495,000,000 and RMB113,000,000 respectively.
37 -

APPENDIX I

PROPERTY VALUATION REPORT ON THE PROPERTY

(10) As at the Date of Valuation, a Certificate for State-owned Land Use of the Property has been issued to Beijing Bus (See Note 1 above) ; and there is no Certificate for State-owned Land Use issued in the name of Beijing Jin Zun Property since the land premium has not been settled by Beijing Jin Zun Property. However, according to the opinion of the PRC Legal Adviser, Beijing Jin Zun Property will be granted the land use rights of the Property upon settling the land premium in full (See Note 11(i) below) .
(11) The opinion of the PRC Legal Adviser on the Property is summarized as below:
(a) Beijing Bus is the legal owner of the land use rights of the Property and its land use rights are protected under law. Beijing Bus is entitled to develop the Property and to transfer the state-owned land use rights and development rights of the Property to third parties. However, Beijing Bus and Beijing Jin Zun Property will have to be in compliance with the relevant regulations in town planning and transfer of state-owned land of Beijing Municipal Government.
(b) It is confirmed by Beijing Jin Zun Property that the pertinent procedures for planning and land use rights of the land are being processed.
(c) Beijing Jin Zun Property is duly incorporated in the PRC and has a right to develop real estate and a right to sign the Transfer Agreement with Beijing Bus. Beijing Jin Zun Property shall have the right to engage in real estate development of the subject site upon obtaining approvals from the relevant government authorities and settling the land premium in full.
(d) The Transfer Agreement is legally valid and legally binding on both parties. Upon fulfillment of its obligations stated in the Transfer Agreement, Beijing Jin Zun Property shall obtain the right to develop the subject site and the legal status as a project developer in applying to the relevant government authorities for project recognition, planning, use of land, etc.
(e) Upon completion of the necessary application procedures for project recognition, planning and land use and having been granted with the relevant approvals from the relevant government authorities, Beijing Jin Zun Property will have the right to engage in the development and the sale of the Property and to obtain the relevant interest thereof.
(f) There is no legal impediment in obtaining the approvals from the relevant government authorities in respect of application for project recognition (including the change from administrative appropriation to by way of grant in obtaining the land and the modification of the permitted land use from factory to commercial development purpose), planning, use of land, sale and etc. Upon obtaining approvals from the relevant government authorities, Beijing Jin Zun Property will have the legal right to develop the Property.
(g) It is confirmed by Beijing Jin Zun Property that there are no substantial changes in the conditions stated in the Transfer Agreement and in the legal title to the Property; and that both Beijing Jin Zun Property and Beijing Bus have performed their respective obligations stated in the Transfer Agreement. It is further confirmed by Beijing Jin Zun Property that there is no dispute arising from the performance of the Transfer Agreement and that both parties consider that no breach of contract has been committed by the counterpart.
(h) According to 《中華人民共和國城鎮國有土地使用權出讓和轉讓暫行條例》 (Provisional Regulations for Grant and Transfer of State-owned Land Use Rights in Cities and Towns in the PRC), the permitted land use right term of the Property is 70 years for residential use, 40 years for commercial/entertainment uses and 50 years for composite use.
(i) According to the existing laws and regulations of the PRC, Beijing Jin Zun Property shall obtain and shall be entitled to transfer the land use rights of the Property upon settling the land premium in full.
(j) The planned total gross floor area of 350,000 sq.m. (comprising 50,000 sq.m. for apartment, 40,000 sq.m. for retail, 220,000 sq.m. for office and 40,000 sq.m. for car park) for the proposed development is formulated in accordance with various regulating documents issued by 國家技術監督局 (National Technical Supervision Bureau) and 建設部 (Construction Bureau).
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PROPERTY VALUATION REPORT ON THE PROPERTY

APPENDIX I

(12) We have relied on the information provided by the Company and the aforesaid legal opinion and prepared our valuation on the following assumptions:
(a) The relocation and compensation fee payable to Beijing Jin Jun Property to Beijing Bus has been settled in full.
(b) Upon settling in full all requisite land premium and the relocation and compensation fee, Beijing Jin Zun Property will be in possession of a proper legal title to the Property and will be entitled to transfer the Property with the residual terms of its land use rights at no extra land premium or other onerous payment payable to the government.
(c) The land use rights of the Property will be granted for commercial, residential and composite uses for terms of 40 years, 70 years and 50 years from the issuance date of the Certificate for State-owned Land Use respectively.
(d) The Property will be developed in accordance with the development proposal provided to us, i.e. a mixed commercial and residential complex with a proposed total gross floor area of approximately 350,000 sq.m. comprising 50,000 sq.m. for residential use, 40,000 sq.m. for retail use, 220,000 sq.m. for office use and 40,000 sq.m. for car park use.
(e) The development proposal of the Property will be approved by the relevant government authorities.
(f) The design and construction of the Property will be in compliance with the local planning regulations and will have been approved by relevant government authorities.
(g) All consents, approvals and licences from relevant government authorities for the development of the Property will be granted without any onerous conditions or undue delay that might affect its value.
(h) The proposed development, whether as a whole or on a strata-titled basis, may be disposed of freely to local and overseas purchasers.
(13) The status of title and grant of major approvals, consents or licences in accordance with the information provided by the Company and the opinion of the PRC Legal Adviser are as fo1lows:

Agreement for Transfer of Land Use Rights Yes Certificate for State-owned Land Use No

39 -

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquires, that to the best of their knowledge and belief, opinions expressed in this circular have been arrived at after due and careful consideration and there are no other facts not contained in this circular the omission of which would make any statement herein misleading.

2. SHARE CAPITAL

As at the Latest Practicable Date, the authorised and issued share capital of the Company were as follows:

Authorised share capital 50,000,000,000 Shares of HK$0.10 each Issued and fully paid 1,642,447,585 Shares	HK$’000 5,000,000

	164,245

3. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the Shares, underlying Shares and debentures of the Company and its associated corporation (within the meaning of Part XV of the SFO) which (a) 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 and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) were required, pursuant to Section 352 of the SFO, to be entered in the register of the Company; or (c) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers of the Listing Rules, to be notified to the Company and the Stock Exchange were as follows:

(a) Interests in the Shares

				Approximate
		Number	Number	percentage of
		of Shares	of Shares	existing issued
		Long	Short	share capital of
Directors	Nature of interest	position	position	the Company
Mr. Wong	Personal	900,087	Nil	0.05%
	Corporate_(Note 1)_	1,083,419,998	Nil	65.97%
	Family_(Note 2)_	280,000	Nil	0.02%
Ms. Du Juan	Corporate_(Note 3)_	280,000	Nil	0.02%
	Family_(Note 4)_	1,084,320,085	Nil	66.02%

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GENERAL INFORMATION

APPENDIX II

Notes:

The interest in 1,083,419,998 Shares was held as to 897,382,604 Shares by Shinning Crown Holdings Inc., a company incorporated in the British Virgin Islands and wholly-owned by Mr. Wong and as to 186,037,394 Shares by Shine Group Limited, a company incorporated in the British Virgin Islands and wholly-owned by Mr. Wong.
Mr. Wong is the spouse of Ms. Du Juan. Accordingly, he has a family interest under the SFO in the Shares in which Ms. Du Juan is interested.
The interest in 280,000 Shares was held by Smart Captain Holdings Limited, a company incorporated in the British Virgin Islands and wholly-owned by Ms. Du Juan.
Ms. Du Juan is the spouse of Mr. Wong. Accordingly, she has a family interest under the SFO in the Shares in which Mr. Wong is interested.

(b) Particulars of Directors’ service contracts

As at the Latest Practicable Date, no Director had a service contract with any member of the Group which is not determinable by the Company within one year without payment of compensation (other than statutory compensation).

(c) Others

Save as disclosed above, as at the Latest Practicable Date:

(i) none of the Directors and chief executive of the Company held any interest or short position in the Shares, underlying Shares and debentures of the Company or any of its associated corporation (within the meaning of the SFO) 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 and short positions which they were taken or deemed to have taken under such provisions of the SFO) or which were required, pursuant to Section 352 of the SFO, to be entered in the register of the Company, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers in the Listing Rules, to be notified to the Company and the Stock Exchange;
(ii) save for the transactions contemplated under the Sale and Purchase Agreement, none of the Directors had any direct or indirect interest in any assets which has been, since the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by, or leased to any member of the Group, or are proposed to be acquired or disposed of by, or leased to, any member of the Group; and
(iii) save for the transactions contemplated under the Sale and Purchase Agreement and the continuing connected transactions as approved by the Shareholders in the Special General Meeting of the Company held on 28 July 2004 and 15 March 2005 respectively, none of the Directors is materially interested in any contract or arrangement entered into by any member of the Group which is subsisting at the date of this circular and which is significant in relation to the business of the Group.
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GENERAL INFORMATION

APPENDIX II

(d) Directors’ interests in competing business

As at the Latest Practicable Date, the interests of the Directors in the business (other than those businesses where the Directors were appointed as directors to represent the interests of the Company and/or any member of the Group) which are considered to compete or are likely to compete, either directly or indirectly, with the businesses of the Group were as follows:

	Name of	Description
	competing entity	of businesses
	whose businesses	of the entity which
	are considered	are considered
	to compete or	to compete or	Nature of
	likely to compete	likely to compete	interest of the
Name of	with the business	with the businesses	Director in the
Director	of the Group	of the Group	competing entity
Mr. Wong	Parent Group	Retailing of electrical	Beneficial owner
		appliances and consumer
		electronic products

Mr. Wong and the Company entered into a non-competition undertaking on 29 July 2004, pursuant to which Mr. Wong undertook to the Company that, among other things, he will not, and will procure that the Parent Group will not, engage in retail sales of the electrical appliances and/ or consumer electronic products in places where the Group had established any retail outlet for the sale of electrical appliances and consumer electronic products under “GOME Electrical Appliances” trade mark provided that Mr. Wong remains as the controlling shareholder of the Company. Further details of the non-competition undertaking have been set out in the circular of the Company dated 5 July 2004.

4. SUBSTANTIAL SHAREHOLDERS

Saved as disclosed above, so far as known to the Directors, there was no other person (other than the Directors or chief executive of the Company) who, as at the Latest Practicable Date, had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under that provisions of Divisions 2 and 3 of Part XV of the SFO, or, who was, directly or indirectly, beneficially interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any member of the Group or in any options in respect of such capital.

As at the Latest Practicable Date, the Directors are not aware of any person who was, as at the Latest Practicable Date, 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 meeting of any subsidiary (within the meaning of the Listing Rules) of the Group or in any options in respect of such capital.

42 -

GENERAL INFORMATION

APPENDIX II

5. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened by or against the Company or any of its subsidiaries.

6. MATERIAL ADVERSE CHANGE

Save as disclosed in this circular, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2004, the date to which the latest published audited accounts of the Company were made up.

7. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by members of the Group, within the two years preceding the Latest Practicable Date and are or may be material:

(a) The Sale and Purchase Agreement.
(b) An agreement dated 17 March 2005 and entered into between 國美電器有限公司 (GOME Appliance Company Limited) (“ GOME Appliance ”) and Beijing GOME pursuant to which GOME Appliance agreed to purchase electrical appliances and consumer electronic products from Beijing GOME from time to time.
(c) An agreement dated 17 March 2005 and entered into between GOME Appliance and Beijing GOME in relation to which GOME Appliance agreed to sell electrical appliances and consumer electronic products to Beijing GOME from time to time.
(d) A conditional agreement dated 3 June 2004 and entered into between GOME Holdings Limited, Mr. Wong and Eagle Decade Investments Limited as the purchaser for the sale and purchase of the entire issued share capital of Ocean Town Int’l Inc. at a consideration of RMB8.8 billion.
(e) A conditional agreement dated 6 February 2004 and a supplemental agreement thereto dated 24 February 2004 entered into between Mr. Han Yue Jun as the vendor and the Company as the purchaser for the sale and purchase of the entire issued share capital of Bestly at a consideration of HK$300 million.
(f) A conditional agreement dated 6 February 2004 entered into between the Company as the issuer and Shinning Crown Holdings Inc. as the subscriber for the subscription of convertible notes in the principal amount of HK$300 million.
(g) A conditional agreement dated 7 January 2004 entered into between the Company as the issuer and Shinning Crown Holdings Inc. as the subscriber for the subscription of 473,000,000 new shares at an aggregate subscription price of HK$56,760,000.
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GENERAL INFORMATION

APPENDIX II

8. EXPERTS AND CONSENTS

The following are the qualifications of the experts who have been named in this circular or have given opinion, letters or advice contained in this circulars:–

Name Qualifications

Platinum Securities a corporation deemed licensed to carry out type 1 (dealings in Company Limited securities) and type 6 (advising on corporate finance) regulated activities under the SFO

B.I. Appraisals Limited registered professional surveyors, valuer and property advisers

As at the Latest Practicable Date, each of Platinum and the Valuer had given and had not withdrawn its written consent to the issue of this circular with the inclusions therein of its letter and/or references to its name, in the form and context in which it appears.

As at the Latest Practicable Date, each of Platinum and the Valuer were not beneficially interested in the share capital of any member of the Group nor has any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

9. MISCELLANEOUS

(a) The registered office of the Company is at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.
(b) The head office and principal place of business of the Company in Hong Kong is at Unit 6101, 61st Floor, The Center, 99 Queen’s Road Central, Hong Kong.
(c) The company secretary of the Company is Miss Anna May Chan and the qualified accountant of the Company is Mr. Tse King Tak. Mr. Tse King Tak is a certified public accountant of the Hong Kong Institute of Certified Public Accountants and a fellow member of the Association of Chartered Certified Accountants.
(d) The branch share registrars of the Company in Hong Kong is Abacus Share Registrars Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.
(e) This circular has been prepared in both English and Chinese. In the case of any inconsistency, the English text of this circular will prevail over the Chinese text.
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GENERAL INFORMATION

APPENDIX II

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the Company’s office at Unit 6101, 61st Floor, The Center, 99 Queen’s Road Central, Hong Kong during business hours on any weekday, except public holidays, from the date of this circular up to and including the date of the Special General Meeting:

(a) the memorandum of association and bye-laws of the Company;
(b) the annual reports of the Company for the year ended 31 March 2004 and the nine months ended 31 December 2004 respectively;
(c) the letter from the Independent Board Committee, the text of which is set out on page 18 of this circular;
(d) the letter from Platinum, the text of which is set out on pages 19 to 32 of this circular;
(e) the property valuation report from the Valuer, the text of which is set out in Appendix I to this circular;
(f) the material contracts referred to in the paragraph headed “Material contracts” in this Appendix; and
(g) the written consent referred to in paragraph headed “Experts and consents” in this Appendix.
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NOTICE OF SPECIAL GENERAL MEETING

==> picture [64 x 36] intentionally omitted <==

GOME Electrical Appliances Holding Limited 國美電器控股有限公司[*]

(incorporated in Bermuda with limited liability)

(Stock Code: 493)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the SPECIAL GENERAL MEETING (“Meeting”) of GOME Electrical Appliances Holding Limited 國美電器控股有限公司 * (the “Company” ) will be held at Harbour View Room 3, 3rd Floor, Excelsior Hotel, 281 Gloucester Road, Hong Kong on Thursday, 15 December, 2005 at 9:00 a.m. for the purposes of considering and, if thought fit, pass with or without amendments, the following resolution as ordinary resolution of the Company:–

ORDINARY RESOLUTION

“THAT:

(a) the agreement (the “Sale and Purchase Agreement” ) dated 7 November 2005 (a copy of which is tabled at the meeting and marked “A” and initialled by the chairman of the meeting for identification purpose) entered into between GOME Electrical Appliances Holding Limited (the “Company” ), Mr. Wong Kwong Yu ( “Mr. Wong” ) and Kashmac International Limited ( “Kashmac” ) in respect of the disposal of the entire issued share capital of and the outstanding debts due from each of Artway Development Limited and Bestly Legend Limited and the transactions contemplated thereunder be and are hereby approved; and
(b) any one director, or any two directors of the Company if the affixation of the common seal is necessary, be and is/are hereby authorized to execute for and on behalf of the Company all such other documents, instruments and agreements and to do all such acts or things deemed by him/her/them to be incidental to, ancillary to or in connection with the matters contemplated in or relating to the Sale and Purchase Agreement and completion thereof.”

Yours faithfully For and on behalf of

GOME Electrical Appliances Holding Limited Ng Kin Wah Director

Hong Kong, 28 November, 2005

Principal place of business in Hong Kong

Unit 6101, 61st Floor The Center 99 Queen’s Road Central

Hong Kong

* For identification purpose only

46 -

NOTICE OF SPECIAL GENERAL MEETING

Notes:

Any member entitled to attend and vote at the meeting is entitled to appoint another person as his proxy to attend and vote instead of him. A member who is holder of two or more shares of the Company may appoint one or more proxies to attend and vote instead of him/her. A proxy need not be a member of the Company.
A form of proxy for use at the meeting is enclosed herewith. The form of proxy must be signed by you or your attorney duly authorised in writing or, in the case of a corporation, must be under its seal or the hand of an officer, attorney or other person duly authorised.
The form of proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy thereof must be lodged at the Company’s principal place of business in Hong Kong, Unit 6101, 61st Floor, The Center, 99 Queen’s Road Central, Hong Kong, not later than 48 hours before the time appointed for holding the meeting or any adjourned meeting (as the case may be) and in default the proxy shall not be treated as valid. Completion and return of the form of proxy shall not preclude members from attending and voting in person at the meeting or at any adjourned meeting (as the case may be) should they so wish.
Where there are joint registered holders of any share, any one of such person may vote at any meeting, either in person or by proxy, in respect of such share as if he/she was solely entitled thereto; but if more than one such joint holders are present at the meeting in personal or by proxy, then the vote of one of the said persons so present whose name stands first on the register of members in respect of such share shall be accepted to the exclusion of the votes of the other joint holders.
As at the date hereof, the executive directors of the Company are Mr. WONG Kwong Yu, Ms. DU Juan, Mr. LAM Pang and Mr. NG Kin Wah. The independent non-executive directors of the Company are Mr. SZE Tsai Ping, Michael, Mr. CHAN Yuk Sang and Mr. Mark C. GREAVES.
47 -

AI assistant

APT Satellite Holdings Limited — Proxy Solicitation & Information Statement 2005

49643_rns_2005-11-28_47090826-df47-4b58-8ee1-f55a92168d0e.pdf

GOME Electrical Appliances Holding Limited 國美電器控股有限公司[*]

DISCLOSEABLE AND CONNECTED TRANSACTION

DISPOSAL OF INTERESTS IN ARTWAY DEVELOPMENT LIMITED AND BESTLY LEGEND LIMITED

THE DISPOSAL

REASONS FOR THE DISPOSAL AND BENEFITS TO THE COMPANY

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

GOME Electrical Appliances Holding Limited 國美電器控股有限公司[*]

DISCLOSEABLE AND CONNECTED TRANSACTION

DISPOSAL OF INTERESTS IN ARTWAY DEVELOPMENT LIMITED AND BESTLY LEGEND LIMITED

INTRODUCTION

LETTER FROM THE BOARD

THE SALE AND PURCHASE AGREEMENT

Parties

LETTER FROM THE BOARD

The Disposal

Consideration

LETTER FROM THE BOARD

Conditions Precedent

Completion

REASONS FOR THE DISPOSAL AND BENEFITS TO THE COMPANY

LETTER FROM THE BOARD

SHAREHOLDING STRUCTURE OF THE PROPERTY GROUP

INFORMATION RELATING TO THE PROPERTY GROUP

Information relating to Artway

Information relating to Bestly

LETTER FROM THE BOARD

Information relating to the PRC JV

Information relating to the PRC Company

LETTER FROM THE BOARD

USE OF PROCEEDS

DISCLOSURE PURSUANT TO RULE 13.13 OF THE LISTING RULES

GENERAL

INDEPENDENT BOARD COMMITTEE

INDEPENDENT FINANCIAL ADVISER

SPECIAL GENERAL MEETING

RECOMMENDATIONS

ADDITIONAL INFORMATION

GOME Electrical Appliances Holding Limited 國美電器控股有限公司[*]

DISCLOSEABLE AND CONNECTED TRANSACTION

DISPOSAL OF INTERESTS IN ARTWAY DEVELOPMENT LIMITED AND BESTLY LEGEND LIMITED

CONNECTED TRANSACTION

the Independent Board Committee

MARK C. GREAVES

LETTER FROM PLATINUM

DISCLOSABLE AND CONNECTED TRANSACTION

DISPOSAL OF INTERESTS IN ARTWAY DEVELOPMENT LIMITED AND BESTLY LEGEND LIMITED

INTRODUCTION

LETTER FROM PLATINUM

PRINCIPAL FACTORS AND REASONS CONSIDERED

A. Reasons for and benefits of the Disposal:

LETTER FROM PLATINUM

B. Basis of the Total Consideration

1. The Total Consideration

LETTER FROM PLATINUM

2. Adjustment to the Total Consideration

C. Basis of the Interest Payment

LETTER FROM PLATINUM

Table 2: Interest rate of time deposit publicly offered by certain banks in Hong Kong

D. Payment terms of the Total Consideration and the Interest Payment

Financial impact of the Disposal

2. Effect on earnings

RECOMMENDATION

Re: A parcel of land located at No. 7 Xi Ba He Bei Lane (i.e. No. A7 Bei San Huan East Road), Chaoyang District, Beijing, the People’s Republic of China (the “PRC”)

BASIS OF VALUATION

VALUATION METHODOLOGY

VALUATION ASSUMPTIONS

TITLE INVESTIGATION

LIMITING CONDITIONS

REMARKS

Note:

VALUATION CERTIFICATE

Property

Description and tenure

Particulars of occupancy

APT Satellite Holdings Limited Proxy Solicitation & Information Statement 2005