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 shares in GOME Electrical Appliances Holding Limited , you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

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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)

CONTINUING CONNECTED TRANSACTIONS AND NOTICE OF SPECIAL GENERAL MEETING

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

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A letter from the Board is set out on pages 3 to 10 of this circular and a letter from the Independent Board Committee containing its recommendations to the Independent Shareholders is set out on page 11 of this circular. A letter from Platinum Securities, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 12 to 29 of this circular.

A notice convening the SGM of the Company to be held at Gloucester Room II, 3/F, The Excelsior, 281 Gloucester Road, Causeway Bay, Hong Kong on Wednesday, 24 June 2015 at 3:30 p.m. is set out on pages 35 to 36 of this circular. A form of proxy for use at the SGM is also enclosed. Such form of proxy is also published on the websites of Hong Kong Exchanges and Clearing Limited (www.hkexnews.hk) and the Company (www.gome.com.hk). Whether or not you are able to attend the SGM, please complete and sign the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar in Hong Kong, Tricor Abacus Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude shareholders from attending and voting in person at the SGM or any adjournment if they so wish.

* For identification purpose only

Hong Kong, 9 June 2015

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Letter from Platinum Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30
Notice of SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	35

– i –

DEFINITIONS

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

“2016 Pengrun Lease Agreement”

the agreement dated 26 May 2015 between the Company and GOME Hong Kong in relation to the lease of above ground properties with a GFA of approximately 39,464 square meters and basement properties with a GFA of approximately 491 square meters at the Pengrun Building;

“associate”

has the meaning ascribed to it under the Listing Rules;

“Board” the board of Directors;
“Company”

GOME Electrical Appliances Holding Limited, a company incorporated in Bermuda, the shares of which are listed on the main board of the Stock Exchange (stock code: 493);

“Consideration Shares” 450,000,000 Shares to be issued by the Company to satisfy part of the rent payment under the 2016 Pengrun Lease Agreement;
“Controlling Shareholder”
Mr. Wong Kwong Yu (黃光裕先生), the controlling shareholder of the Company;
“Director(s)” the director(s) of the Company;
“GFA” gross floor area;
“GOME Hong Kong”
GOME Home Appliances (H.K.) Limited, a company incorporated in Hong Kong and is owned by the Controlling Shareholder and his associates;
“Group” the Company and its subsidiaries;

“Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China;

“Independent Board Committee” an independent committee of the Board, comprising all the independent non-executive Directors, established to advise the Independent Shareholders on the 2016 Pengrun Lease Agreement;

– 1 –

DEFINITIONS

“Independent Financial Adviser” or “Platinum Securities”
Platinum Securities Company Limited, a corporation licensed to carry on Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activity under the SFO, and the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders in relation to the 2016 Pengrun Lease Agreement;
“Independent Shareholders” Shareholders other than the Controlling Shareholder and his associates;
“Issue Price”
HK$1.90, the issue price per Consideration Share;
“Latest Practicable Date”
4 June 2015, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular;
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange;
“Pengrun Building”

鵬潤大廈 (Pengrun Building*), an office building located at No. 26, Xiaoyun Road, Chaoyang District, Beijing (北京市朝陽區霄雲路26號), the PRC;

“PRC”
the People’s Republic of China (for the purposes of this circular, excludes Hong Kong, the Macao Special Administrative Region and Taiwan);
“SFO”
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);
“SGM” or “Special General the special general meeting of the Company to be Meeting” convened to approve the 2016 Pengrun Lease Agreement;
“Shareholders” shareholders of the Company;
“Shares” ordinary shares of HK$0.025 each of the Company; “Stock Exchange” The Stock Exchange of Hong Kong Limited; “%” per cent.

Translations of RMB into HK$ are made in this circular for illustration purpose at the rate of HK$1.00 to RMB0.78881. No representation is made that any amounts in RMB or HK$ could have been or could be converted at that rate or at any other rate or at all.

For identification purpose only

– 2 –

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 Director: ZOU Xiao Chun

Non-executive Director: ZHANG Da Zhong (Chairman)

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

Independent non-executive Directors: SZE Tsai Ping, Michael CHAN Yuk Sang LEE Kong Wai, Conway NG Wai Hung LIU Hong Yu

Principal Place of Business in Hong Kong: Suite 2915, 29th Floor Two International Finance Centre 8 Finance Street, Central Hong Kong

9 June 2015

To: the Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

1. INTRODUCTION

Reference is made to the announcement of the Company dated 26 May 2015 in relation to the 2016 Pengrun Lease Agreement. The purposes of this circular are:

(a) to provide you with further information relating to the 2016 Pengrun Lease Agreement;
(b) to set out the recommendations of the Independent Board Committee relating to the 2016 Pengrun Lease Agreement;
(c) to set out the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders relating to the terms of the 2016 Pengrun Lease Agreement; and
(d) to give you notice of the SGM to consider and, if thought fit, to approve the 2016 Pengrun Lease Agreement and the transactions contemplated thereunder.

* For identification purpose only

– 3 –

LETTER FROM THE BOARD

2. THE 2016 PENGRUN LEASE AGREEMENT

Date of the agreement:

26 May 2015

Parties to the agreement:

(i) Lessee: the Company; and
(ii) Lessor: GOME Hong Kong, which is a company owned by the Controlling Shareholder and his associates. Accordingly, GOME Hong Kong is a connected person of the Company and the transactions under the 2016 Pengrun Lease Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

Subject matter

Pursuant to the terms of the 2016 Pengrun Lease Agreement, the Company will lease from GOME Hong Kong certain office units at the Pengrun Building with an aggregate GFA of approximately 39,955 square meters for use by the Group as its office in Beijing.

Term

The 2016 Pengrun Lease Agreement has a term of 10 years commencing from 1 January 2016 and ending on 31 December 2025.

Rent

The aggregate rent payable by the Company under the entire term of the 2016 Pengrun Lease Agreement is approximately RMB1,468,349,000 (equivalent to approximately HK$1,861,474,000). The rent was determined after arm’s length negotiations between the parties with reference to the prevailing market rent of comparable properties in Beijing as at 19 May 2015 as determined by a valuation report prepared by an independent professional valuer, and is equivalent to an initial monthly rent of RMB300 (equivalent to approximately HK$380) per square meter for above ground properties at the Pengrun Building (totalling approximately 39,464 square meters), and RMB100 (equivalent to approximately HK$127) per meter for basement properties at the Pengrun Building (totalling approximately 491 square meters), which will be increased by 2% each year with a discount of 6% to the aggregate rent payable by the Company for the entire term of the 2016 Pengrun Lease Agreement being granted by GOME Hong Kong to the Company. In considering the rent payable under the 2016 Pengrun Lease Agreement, the Directors have taken into consideration the growth in consumer price index in Beijing of between 1.6% and 5.6% in the past five years and the likely continuous upward trend in rent and demand for grade A office in Chaoyang District. The Directors are of the view that the yearly increment in rent of 2% is a fair and reasonable assumption. Given that the rent was determined with reference to the prevailing market rent, the Directors also consider the 6% discount is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

– 4 –

LETTER FROM THE BOARD

The Company will settle approximately RMB674,433,000 (equivalent to approximately HK$855,000,000) of the rent by allotting and issuing to GOME Hong Kong the Consideration Shares at the Issue Price with the balance of the rent in the amount of approximately RMB793,916,000 (equivalent to approximately HK$1,006,474,000) being payable by the Company in cash in one lump sum.

The use of the Consideration Shares as one of the components to pay rent under the 2016 Pengrun Lease Agreement is to reduce the cash payment of the Company under the agreement. Upon approval of the 2016 Pengrun Lease Agreement by the Independent Shareholders and conditional upon the Listing Committee granting the approval for the listing of, and permission to trade in, the Consideration Shares, the Company will issue the Consideration Shares and pay the balance cash portion of the rent within 30 days of the satisfaction of the conditions under the 2016 Pengrun Lease Agreement.

The Company has occupied the Pengrun Building and located its headquarters there since 2004. The previous lease arrangements at the Pengrun Building were of much shorter terms of between 1 and 3 years, with the rent being reviewed upon expiry of each of the terms. Given the substantial investments by the Group in establishing its I.T. infrastructure and the scarcity of Grade A premises of such size to accommodate all of the Group’s headquarters operations, the Directors are of the view that the entering into of the 2016 Pengrun Lease Agreement with a 10-year term will be beneficial to the Company, as it will secure the premises for the Group’s headquarters operations over the next ten years and lock-in the rent to free the Group from the uncertainties of market fluctuation in rent. The Directors thus consider that the upfront payment under the 2016 Pengrun Lease Agreement is fair and reasonable as it would induce GOME Hong Kong in entering the 2016 Pengrun Lease Agreement and help secure the premises for the Group.

A deposit equivalent to 2 months’ rent and management fee is payable by the Company to GOME Hong Kong under the 2016 Pengrun Lease Agreement to guarantee the obligations of the Company thereunder. GOME Hong Kong reserves the right to forfeit such deposit payment in full or in part in the event that the Company fails to perform its obligations under the 2016 Pengrun Lease Agreement.

Consideration Shares

The Consideration Shares represent (i) approximately 2.65% of the existing issued share capital of the Company, and (ii) approximately 2.58% of the issued share capital of the Company as enlarged by the the issue of the Consideration Shares. Based on the closing price of the Shares of HK$2.17 per Share on 26 May 2015, the date of the 2016 Pengrun Lease Agreement, the Consideration Shares have a market value of HK$976,500,000.

The Consideration Shares will rank, upon issue, pari passu in all respect with the Shares in issue on the date of allotment and issue of the Consideration Shares.

An application will be made to the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares.

– 5 –

LETTER FROM THE BOARD

The Issue Price of HK$1.90 represents:

(i) a discount of approximately 12.4% to the closing price of HK$2.17 per Share as quoted on the Stock Exchange as at the date of the 2016 Pengrun Lease Agreement;
(ii) a discount of approximately 12.4% to the average closing price of HK$2.17 per Share as quoted on the Stock Exchange for the last five trading days up to and including 22 May 2015, the last trading day immediately preceding the date of the 2016 Pengrun Lease Agreement;
(iii) a discount of approximately 14.8% to the average closing price of HK$2.23 per Share as quoted on the Stock Exchange for the last ten trading days up to and including 22 May 2015, the last trading day immediately preceding the date of the 2016 Pengrun Lease Agreement;
(iv) a discount of approximately 6.4% to the closing price of HK$2.03 per Share as quote on the Stock Exchange on the Latest Practicable Date; and
(v) a premium of approximately 50.8% to the net assets value per Share of HK$1.26 as at 31 December 2014.

The Issue Price was negotiated on an arm’s length basis between the Company and GOME Hong Kong and was determined at a premium of approximately 6% to the average closing price per Share for the 45 trading days immediately preceding the date of 2016 Pengrun Lease Agreement.

Conditions

The 2016 Pengrun Lease Agreement is conditional upon, among others:

(a) the Independent Shareholders approving the 2016 Pengrun Lease Agreement and the transactions contemplated thereunder, including the allotment and issue of the Consideration Shares; and
(b) the Listing Committee of the Stock Exchange granting the approval of, and permission to deal in, the Consideration Shares.

– 6 –

LETTER FROM THE BOARD

3. HISTORICAL TRANSACTION AMOUNTS RELATED TO THE LEASES AT THE PENGRUN BUILDING

The historical transaction amounts under the leases at the Pengrun Building for the three years ended 31 December 2012, 2013 and 2014, and the 4 months ended 30 April 2015 were as follows:

	For the	For the	For the	For the
	year ended	year ended	year ended	4 months ended
	31 December	31 December	31 December	30 April
	2012	2013	2014	2015
	RMB (HK$)’	RMB (HK$)’	RMB (HK$)’	RMB (HK$)’
	million	million	million	million
Annual caps in relation to	46.08 (58.42)	78.63 (99.68)	84.48 (107.10)	116.99 (148.31)
the leases at the				(Note)
Pengrun Building
Rents paid by the Group	46.07 (58.40)	74.96 (95.03)	84.22 (106.77)	39.0 (49.44)
in relation to the leases
at the Pengrun Building

Note: For the entire year ending 31 December 2015.

4. ANNUAL CAP FOR THE 2016 PENGRUN LEASE AGREEMENT

The maximum annual cap of the 2016 Pengrun Lease Agreement is equivalent to the highest annual rent (including management fee) payable (before the 6% discount) by the Group under the 2016 Pengrun Lease Agreement of RMB170,491,000 (equivalent to approximately HK$216,137,000), which was determined with reference to the rent payable by the Group for properties leased at the Pengrun Building under the 2016 Pengrun Lease Agreement and the prevailing market rent of comparable properties in Beijing. The annual cap for each of the years under the 2016 Pengrun Lease Agreement (before the 6% discount which will be deducted on the basis of the total rent paid) is set out below:

Year	Annual Cap
	RMB
2016	142,659,000
2017	145,512,000
2018	148,423,000
2019	151,391,000
2020	154,419,000
2021	157,507,000
2022	160,657,000
2023	163,871,000
2024	167,148,000
2025	170,491,000

– 7 –

LETTER FROM THE BOARD

5. EFFECT ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

Set out below is the table of the shareholdings in the Company before and after completion of the Placing:

Shareholders the Controlling Shareholder and its associates Public shareholders Total	Shareholding as at the Latest Practicable Date Number of Shares % 5,500,503,338 32.43 11,461,070,084 67.57 16,961,573,422 100.00	Shareholding upon the allotment and issue of the Consideration Shares Number of Shares % 5,950,503,338 34.18 11,461,070,084 65.82 17,411,573,422 100.00	Shareholding upon the allotment and issue of the Consideration Shares Number of Shares % 5,950,503,338 34.18 11,461,070,084 65.82 17,411,573,422 100.00
			100.00

6. CAPITAL RAISING ACTIVITIES IN THE PAST 12 MONTHS

The Company has not carried out any other capital raising activities during the 12 months immediately preceding the Latest Practicable Date.

7. REASONS FOR THE TRANSACTIONS

The Group has occupied the Pengrun Building and located its headquarter operation there since 2004. The previous lease arrangements at the Pengrun Building were of much shorter terms of between 1 and 3 years, with the rent being reviewed upon expiry of each of the terms. Given that (i) the Pengrun Building is located in the Chaoyang District, the central business district of Beijing, (ii) the Group has committed substantial investments in establishing its I.T. infrastructure there to serve the on-line business of the Group, and (iii) the scarcity of Grade A premises of such size to accommodate all of the Group’s headquarters operations, the Directors (including the independent non-executive Directors) are of the view that it is in the interest of the Group to continue to occupy Pengrun Building as its office and renew the leases. The Directors are of the view that the entering into of the 2016 Pengrun Lease Agreement with a 10-year term will be beneficial to the Company, as it will secure the premises for the Group’s headquarters operations over the next ten years and lock-in the rent to free the Group from the uncertainties of market fluctuation in rent.

As the rent was determined after arm’s length negotiations with reference to the prevailing market rent of comparable properties in Beijing as determined by a valuation report prepared by an independent professional valuer, the Directors are of the view that the 2016 Pengrun Lease Agreement was entered into in the ordinary and usual course of business of the Group, on normal commercial terms, and that the respective terms and conditions of the 2016 Pengrun Lease Agreement, including the annual cap, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

– 8 –

LETTER FROM THE BOARD

8. LISTING RULES IMPLICATIONS

As GOME Hong Kong is owned by the Controlling Shareholder and his associates, GOME Hong Kong is a connected person of the Company and the transactions contemplated under the 2016 Pengrun Lease Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules, and will be subject to the approval by the Independent Shareholders.

At the Board meeting held to approve the 2016 Pengrun Lease Agreement, Mr. Zou Xiao Chun, who was nominated by Shinning Crown Holdings Inc. (“Shinning Crown”), a company wholly-owned by the Controlling Shareholder, as a Director, was considered to be interested in the transactions contemplated under the 2016 Pengrun Lease Agreement and have abstained from voting in respect of the resolutions proposed to approve the 2016 Pengrun Lease Agreement. Save for Mr. Zou Xiao Chun, no other Director is required to abstain from voting for the Board resolutions proposed to approve the 2016 Pengrun Lease Agreement. The Directors including all the independent non-executive Directors but excluding Mr. Zou Xiao Chun, have unanimously voted in favour of the resolutions proposed to approve the 2016 Pengrun Lease Agreement.

SGM AND PROXY ARRANGEMENT

The notice of the SGM is set out on pages 35 to 36 of this circular.

Pursuant to the Listing Rules, any vote of shareholders at a general meeting must be taken by poll. An announcement on the poll vote results will be published by the Company after the SGM in the manner prescribed under Rule 13.39(5) of the Listing Rules.

The Controlling Shareholder is considered to be interested in the transactions contemplated under the 2016 Pengrun Lease Agreement. Accordingly, the Controlling Shareholder and his associates, who are interested in 5,500,503,338 Shares, representing approximately 32.43% of the number of Shares in issue as at the Latest Practicable Date, will abstain from voting for the resolutions proposed at the SGM to approve the 2016 Pengrun Lease Agreement.

A form of proxy for use at the SGM is enclosed with this circular and such form of proxy is also published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.gome.com.hk). Whether or not you are able to attend the SGM, please complete and sign the enclosed form of proxy in accordance with the instructions printed thereon and deposited, together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power of attorney or authority at the Company’s branch share registrar in Hong Kong, Tricor Abacus Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, as soon as possible but in any event not less than 48 hours before the time appointed for holding the SGM or any adjournment thereof. Completion and delivery of the form of proxy will not preclude you from attending and voting at the SGM if you so wish.

– 9 –

LETTER FROM THE BOARD

CLOSURE OF SHAREHOLDERS’ REGISTER

For the purpose of determining the list of shareholders who are entitled to attend and vote at the Special General Meeting, the shareholders’ register of the Company will be closed on Tuesday, 23 June 2015 and Wednesday, 24 June 2015. No transfer of shares of the Company will be registered during both days. In order to qualify to attend and vote at the Special General Meeting, all instruments of transfer together with the relevant share certificate(s) must be lodged with the Company’s branch share registrar in Hong Kong, Tricor Abacus Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration no later than 4:30 p.m. on Monday, 22 June 2015.

GENERAL INFORMATION

Your attention is drawn to the appendix headed “General Information” to this circular.

RECOMMENDATIONS

Your attention is drawn to (i) the letter from the Independent Board Committee set out on page 11 of this circular which contains the recommendations of the Independent Board Committee to the Independent Shareholders regarding the proposed resolutions to approve the 2016 Pengrun Lease Agreement; and (ii) the letter from Platinum Securities set out on pages 12 to 29 of this circular which contains its advice to the Independent Board Committee and the Independent Shareholders in respect of the fairness and reasonableness of the terms of the 2016 Pengrun Lease Agreement.

The Independent Board Committee, having taken into account the advice of Platinum Securities, the Independent Financial Adviser, considers that the terms of the 2016 Pengrun Lease Agreement in relation to the connected transactions thereunder are in the interests of the Company and the Shareholders as a whole and are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the 2016 Pengrun Lease Agreement.

Yours faithfully,

By order of the Board of

GOME ELECTRICAL APPLIANCES HOLDING LIMITED Zhang Da Zhong

Chairman

– 10 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of the letter of recommendation, prepared for the purpose of incorporation in the circular, from the Independent Board Committee to the Independent Shareholders regarding the 2016 Pengrun Lease Agreement.

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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)

9 June 2015

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

We refer to the circular of the Company to the Shareholders dated 9 June 2015 (the “ Circular ”), in which this letter forms part. Unless the context requires otherwise, capitalized terms used in this letter will have the same meanings as defined in the Circular unless the context otherwise requires.

We have been appointed by the Board as the Independent Board Committee to advise the Independent Shareholders on whether the terms of the 2016 Pengrun Lease Agreement are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole.

We wish to draw your attention to the letter of advice from Platinum Securities Company Limited (“ Platinum Securities ”) as set out on pages 12 to 29 of the Circular and the letter from the Board as set out on pages 3 to 10 of the Circular.

Having considered the terms of the 2016 Pengrun Lease Agreement and the situation of the Company, and the factors and reasons considered by Platinum Securities and its opinion as stated in its letter of advice, we consider that the terms of the 2016 Pengrun Lease Agreement are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole, and accordingly recommend the Independent Shareholders to vote in favour of the ordinary resolutions proposed to approve the 2016 Pengrun Lease Agreement.

Yours faithfully, For and on behalf of the Independent Board Committee

Mr. Sze Tsai Ping, Michael Mr. Chan Yuk Sang Independent Non-executive Director Independent Non-executive Director Mr. Lee Kong Wai, Conway Mr. Ng Wai Hung Independent Non-executive Director Independent Non-executive Director

Ms. Liu Hong Yu

Independent Non-executive Director

* For identification purpose only

– 11 –

LETTER FROM PLATINUM SECURITIES

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.

9 June 2015

To the Independent Board Committee and the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our engagement as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the continuing connected transactions contemplated under the 2016 Pengrun Lease Agreement (the “Transactions”). Details of the terms of the 2016 Pengrun Lease Agreement are contained in the circular of the Company dated 9 June 2015 (the “Circular”). 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, our role is to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the 2016 Pengrun Lease Agreement, including the annual cap, and the Transactions are fair and reasonable and entered into on normal commercial terms, in the ordinary and usual course of business of the Company, and in the interests of the Company and the Shareholders as a whole.

In formulating our opinion, we have relied on the information and facts supplied to us by the Directors and/or management of the Company. We have reviewed, among other things: (i) the 2016 Pengrun Lease Agreement; (ii) the announcement of the Company dated 26 May 2015 (the “Announcement”); (iii) the audited annual report of the Company for the year ended 31 December 2014 (the “2014 Annual Report”); and (iv) the valuation report dated 19 May 2015 (the “Valuation Report”) prepared by CAREA Assets Appraisal Co., Ltd (the “Independent Valuer”).

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 have confirmed that they take full responsibility for the contents of the Circular and have made all reasonable inquiries that no material facts have been omitted from the information supplied to us.

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 Directors and/or management of the Company.

– 12 –

LETTER FROM PLATINUM SECURITIES

Furthermore, we have no reason to suspect the reasonableness of the opinions and representations expressed by the Directors and/or management of the Company 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 Company. We consider that we have reviewed sufficient information to enable us to reach an informed view and to provide a reasonable basis for our opinion regarding the Transactions.

During the past two years, Platinum Securities Company Limited had no past engagement with the Company. As at the Latest Practicable Date, we are independent from the Company or any other party to the Transactions, or their respective substantial shareholder(s) or connected person(s), as defined under the Listing Rules and accordingly, are considered eligible to give independent advice on the Transactions. 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 Transactions. 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 or any other party to the Transactions or their respective substantial shareholder(s) or connected person(s), as defined under the Listing Rules.

The Independent Board Committee, comprising Mr. Sze Tsai Ping, Michael, Mr. Chan Yuk Sang, Mr. Lee Kong Wai, Conway, Mr. Ng Wai Hung and Ms. Liu Hong Yu, has been established to advise the Independent Shareholders as to whether the terms of the 2016 Pengrun Lease Agreement, including the annual cap, and the Transactions are fair and reasonable and are entered into on normal commercial terms, in the ordinary and usual course of business of the Company and in the interests of the Company and the Shareholders as a whole.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating and giving our independent financial advice to the Independent Board Committee and the Independent Shareholders, we have taken into account the following principal factors:

1. Background of the Transactions

With reference to the Announcement, the Company entered into the 2016 Pengrun Lease Agreement with GOME Hong Kong with respect to the continuous use by the Group of certain office units at the Pengrun Building for a term of 10 years commencing on 1 January 2016 and ending on 31 December 2025. The Company will settle approximately RMB674,433,000 (equivalent to approximately HK$855,000,000) of the rent payment under the 2016 Pengrun Lease Agreement by allotting and issuing to GOME Hong Kong the Consideration Shares at the Issue Price with the balance of the rent in the amount of approximately RMB793,916,000 (equivalent to approximately HK$1,006,474,000) being payable by the Company in cash in one lump sum.

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LETTER FROM PLATINUM SECURITIES

conditional upon the Listing Committee granting the approval for the listing of, and permission to trade in, the Consideration Shares, the Company will issue the Consideration Shares and pay the balance cash portion of the rent within 30 days of the satisfaction of the conditions under the 2016 Pengrun Lease Agreement.

GOME Hong Kong is a company incorporated in Hong Kong and is owned by the Controlling Shareholder and his associates. GOME Hong Kong is a connected person of the Company and the transactions contemplated under the 2016 Pengrun Lease Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

2. Principal terms of the 2016 Pengrun Lease Agreement

Reference is made to the Circular, set out below are the principal terms of the 2016 Pengrun Lease Agreement:

Date: 26 May 2015 Parties: (i) the Company as the lessee; and (ii) GOME Hong Kong as the lessor Term: The 2016 Pengrun Lease Agreement has a term of 10 years commencing from 1 January 2016 and ending on 31 December 2025.

Major Terms: The Company will lease from GOME Hong Kong certain office units at the Pengrun Building with an aggregate GFA of approximately 39,955 square meters for use by the Group as its office in Beijing.

Rent: The aggregate rent payable by the Company under the entire term of the 2016 Pengrun Lease Agreement is approximately RMB1,468,349,000 (equivalent to approximately HK$1,861,474,000).

3. Reasons for and benefits of entering into the 2016 Pengrun Lease Agreement

3.1 Overview of Beijing

Beijing is a metropolis in northern China and the capital of China. Lying 102km (70 miles) west of Bo Hai Sea, it borders Hebei Province to the north, west, south, and for a small section in the east and Tianjin to the southeast. Furthermore, it is administered as a direct-controlled municipality under the national government, with 14 urban and suburban districts and two rural counties. Beijing Municipality is surrounded by Hebei Province with the exception of neighboring Tianjin Municipality to the southeast.

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Set out below are some of the statistics of Beijing:

Table 1 – Beijing statistics over the past 5 years

	2010	2011	2012	2013	2014
Population size (million)	19.62	20.19	20.69	21.15	21.52
Population density
(population per km2)	1,195	1,230	1,261	1,289	1,311
GDP (RMB billion)	1,411.4	1,625.2	1,788.0	1,980.1	2,133.1
GDP growth (%)	10.3%	8.1%	7.7%	7.7%	7.3%
CPI growth (%)	2.4%	5.6%	3.3%	3.3%	1.6%

Notes:

Beijing population refers to the number of permanent residents in Beijing
CPI growth refers to the year on year change in consumer price index of Beijing

Source: Beijing Statistics Bureau (http://www.bjstats.gov.cn/) and Beijing Statistical Information Net (http://www.bjstats.gov.cn)

Beijing, capital of China, has been demonstrating a healthy and steady growth over the past 5 years. As shown in Table 1 above, Beijing’s GDP growth rate ranges between approximately 7% to 10% year on year from 2010 to 2014. Although, the Beijing’s GDP growth rate showed signs of slowing down as China has experienced as a whole, 7% growth still represents a healthy and steady economic growth. Meanwhile, it is expected that the Chinese Government to continue to loosen the monetary policy and implement various stimulus tools, in order to adherence to maintain the target GDP growth rate. Therefore, Beijing’s GDP growth rate will likely to be maintained at around 7%.

Beijing’s CPI growth rate has demonstrated a relatively stable fluctuation over the past 5 years, ranging from 1.6% to 5.6%, as shown in Table 1. In particular, Beijing’s CPI growth rate of 2014 was relatively low in comparing with the previous 4 years. This was mainly due to property prices curbing measures and a general slowdown of economic growth in China. However, given the recent monetary policies imposed by the Chinese government (e.g. People’s bank of China reduced interest rate and deposit reserve ratio of banks in China), we expect there likely will be a recovery of economic growth in China and therefore Beijing’s CPI growth rate likely will pick up again. This is also evidenced by the Beijing’s CPI growth rate in April 2015, it reached 2.0% growth year-on-year and had shown an upward trend since January 2015. As such, we are of the view that 2014 was a particularly low year and on a 5-year average basis, the Beijing’s CPI growth rate is approximately 3.2%. To follow with the historical trend and evident of strong GDP growth, it suggests that Beijing’s CPI growth rate would maintain at a level of approximately 2% or above. As such, it also implies that office rental cost might continue to experience upward adjustments in accordance to the change in CPI. In this regard, we consider the rent payable to be increased by 2% annually is reasonable and moderate as compared with the Beijing’s CPI growth rate in the future, which we consider it likely will continue to rise.

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LETTER FROM PLATINUM SECURITIES

Notice that both the population and population density of Beijing had been increasing consistently over the past few years. On top of an economically sound economy, increase in population indicates an increasing size of work force which would potentially lead to a rise in demand for commercial properties.

In light of the above, we consider that the upward trend of the rental cost for Grade-A commercial property should remain due to: (1) the continuing GDP growth which strengthen the leasing activity as new setup and upgrading demand from domestic firms might increase; (2) the consistent CPI growth trend over the past five years imposing upward adjustment pressure on office rental; and (3) expansion in workforce will increase demand of commercial properties. Therefore, we are of the view that a predetermined amount of rental fee under the entire term of the 2016 Pengrun Lease Agreement should be of protect the Company and the Shareholders from the upward trend in rental price over the next 10 years.

3.2 Advantageous to secure long-term rental contract

As stated in the letter from the Board in the Circular, the Group has occupied the Pengrun Building and located its headquarters operation there since 2004. Given that the Pengrun Building is located in the Chaoyang District, the central business district of Beijing, the Directors (including the independent non-executive Directors) are of the view that it is in the interest of the Group to continue to occupy Pengrun Building as its office and renew the leases.

In assessing the fairness and reasonableness of a long-term rental contract, we had discussed with the management of the Company and they represent that supply of Grade-A office in Chaoyang District is relatively scarce. According to a research report title as “Beijing office market report Q4 2014” published by Knight Frank, one of the world’s leading independent property advisor, Beijing’s Grade-A office supply for 2013 and 2014 were almost the same but the take up jumped substantially by approximately 56%. At the same time, the vacancy rate dropped in 2014 as compared to 2013. Chaoyang district, as one of the most key supply areas of Grade-A office in Beijing, was covered as part of this research and therefore we concur with the management’s view that supply of Grade-A office in Chaoyang District is relatively scarce while demand is increasing. Moreover, approximately 98 companies out of Fortune China 500 companies have set up their headquarters in Beijing. The continuing leasing in the Pengrun Building with A-grade office facilities located in Chaoyang District would best fit GOME’s strategy as the leading market players in China and its corporation image.

Furthermore, as per our discussion with the management of the Company, GOME has previously incurred substantial initial outlay for its infrastructure, such as I.T., office equipment and fixtures in the current Pengrun Building since 2004. As such investments and upgrades in hardware are required to improve its quality of internet retail service provision without any disruption. Therefore, tenancies with short duration require, potentially, more often relocations which it might give rise to business uncertainties such

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as increase in operational risks which may be commercially disadvantageous to the Group. Regular office relocation would become an operation liability with an underlying criterion of securing a similar sized premise to guarantee a smooth operation. Hence, a short duration lease contract might not be of the best interest to the Company and the Shareholders.

With the aforementioned reasons, we concur with the Directors that the 2016 Pengrun Lease Agreement was entered into in the ordinary and usual course of business of the Group, and it is advantageous to the Company and in the interests of the Company and the Shareholders as a whole.

4. Rent

As stated in the letter from the Board in the Circular, the rent was determined after arm’s length negotiations between the parties with reference to the prevailing market rent of comparable properties in Beijing as at 19 May 2015 as determined by a valuation report prepared by an independent professional valuer, and is equivalent to an initial monthly rent of RMB300 (equivalent to approximately HK$380) per square meter for above ground properties at the Pengrun Building (totalling approximately 39,464 square meters), and RMB100 (equivalent to approximately HK$127) per meter for basement properties at the Pengrun Building (totalling approximately 491 square meters), which will be increased by 2% each year with a discount of 6% to the aggregate rent payable by the Company for the entire term of the 2016 Pengrun Lease Agreement being granted by GOME Hong Kong to the Company. In considering the rent payable under the 2016 Pengrun Lease Agreement, the Directors have taken into consideration the growth in CPI in Beijing of between 1.6% and 5.6% in the past five years and the likely continuous upward trend in rent and demand for grade A office in Chaoyang District. The Directors are of the view that the yearly increment in rent of 2% is a fair and reasonable assumption. Given that the rent was determined with reference to the prevailing market rent, the Directors also consider the 6% discount is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The Company will settle approximately RMB674,433,000 (equivalent to approximately HK$855,000,000) of the rent payment under the 2016 Pengrun Lease Agreement by allotting and issuing to GOME Hong Kong the Consideration Shares at the Issue Price with the balance of the rent in the amount of approximately RMB793,916,000 (equivalent to approximately HK$1,006,474,000) being payable by the Company in cash in one lump sum.

As discussed with the management of the Company, they had several round of discussions with GOME Hong Kong in relation to the payment terms. Unless there will be an upfront payment under the 2016 Pengrun Lease Agreement for 10-year lease rental, the parties could not reach an agreement to give a 6% discount to the aggregate rent. We consider this 6% discount, simply divided into 10 years, represent a 0.6% reduction offsetting to the 2% increase each year. Effectively, the rent may only increase by 1.4% each year and this is even lower than our analysis on CPI growth rate as discussed in the above section headed “Overview of Beijing”. As such, we consider that the upfront payment under the 2016 Pengrun Lease Agreement is fair and reasonable as it would induce GOME Hong Kong in entering the 2016 Pengrun Lease Agreement at a lower consideration and help secure the premises for the Group.

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LETTER FROM PLATINUM SECURITIES

To assess the basis in determining the rent, we have reviewed the Valuation Report, discussed with the Independent Valuer and the management of the Company. We have noted that the Independent Valuer has considered the market approach in valuing the office rent of Pengrun Building.

In conducting the valuation of the office rent of Pengrun Building, the Independent Valuer has also adopted the following assumptions:

there is an open and fair market where transactions are between knowledgeable, willing parties in an arm’s length;
Pengrun Building will continue to be used under the current condition and be free from encumbrances, restrictions and outgoings of an onerous nature which could affect their value;
there will be no significant changes in law, regulation or macroeconomic environment of the PRC and Beijing; and
the information provided to the Independent Valuer regarding Pengrun Building is true, accurate and complete.

The Independent Valuer adopted the market approach by making reference to comparable leasing evidence as available in the relevant market. The prevailing market rent is defined as the rent of office buildings in the nearby area which is comparable to Pengrun Building. We consider that the market approach is a commonly adopted and well-recognised methodology in valuing the market rent for office buildings.

Besides, we have discussed with the Independent Valuer in relation to their experiences and understood that the Independent Valuer is one of the largest and well-known independent valuers approved by the Ministry of Finance of the PRC and China Securities Regulatory Commission since 1992. The Independent Valuer has extensive experience in valuing various tangible and intangible properties. It also has a team of 67 registered asset valuers, 12 property valuers and 13 land valuers. As such, we are of the view that the Independent Valuer is qualified to provide a reliable valuation for the office rent of Pengrun Building. As discussed with the Independent Valuer, they have no current or prior relationships with any parties and connected persons to the Transactions. We also reviewed the terms of the engagement for the valuation of office rent of Pengrun Building, the scope of work performed by the Independent Valuer is consistent with the market practice and appropriate to give the opinion.

Given the market approach is a commonly adopted and well recognised methodology for valuing properties, and the major assumptions made in connection with the valuation approach are reasonable, we are of the view that the basis in determining the rent is fair and reasonable so far as the Independent Shareholders are concerned.

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LETTER FROM PLATINUM SECURITIES

We consider that the rent payable to be increased by 2% each year is fair and reasonable in consideration of the Beijing CPI growth over the last five years (between 1.6% and 5.6%) as stated in the section headed “Overview of Beijing”.

In addition, the valuation of the office rent of Pengrun Building has not assessed the factor that the rent for the 10-year lease has to be paid in advance, the rent determined by it (i.e. an initial monthly rent of RMB300 (equivalent to approximately HK$380) per square meter for above ground properties at the Pengrun Building and RMB100 (equivalent to approximately HK$127) per meter for basement properties at the Pengrun Building) is purely prevailing market rent of comparable properties in Beijing. However, after arm’s length negotiations between the parties, there is a 6% discount being granted by GOME Hong Kong to the Company to cover the requirement of upfront rental payment under the 2016 Pengrun Lease Agreement. We consider it is a fair and reasonable term to the Company and the Shareholders as a whole based on our analysis in the section headed “The duration of the 2016 Pengrun Lease Agreement in the normal business practice” below.

5. Consideration Shares

The Company will settle part of the rent by allotting and issuing to GOME Hong Kong the Consideration Shares at the Issue Price with the balance of the rent being payable by the Company in cash in one lump sum.

The Issue Price of HK$1.90 represents:

(i) a discount of approximately 12.4% to the closing price of HK$2.17 per Share as quoted on the Stock Exchange as at the date of the 2016 Pengrun Lease Agreement;
(ii) a discount of approximately 12.4% to the average closing price of HK$2.17 per Share as quoted on the Stock Exchange for the last five trading days up to and including 22 May 2015, the last trading day immediately preceding the date of the 2016 Pengrun Lease Agreement;
(iii) a discount of approximately 14.8% to the average closing price of HK$2.23 per Share as quoted on the Stock Exchange for the last ten trading days up to and including 22 May 2015, the last trading day immediately preceding the date of the 2016 Pengrun Lease Agreement; and
(iv) a discount of approximately 6.4% to the closing price of HK$2.03 per share as quoted on the Stock Exchange on the Latest Practicable Date.

As stated in the Announcement, the Issue Price was negotiated on an arm’s length basis between the Company and GOME Hong Kong and was determined at a premium of approximately 6% to the average closing price per Share for the 45 trading days immediately preceding the date of 2016 Pengrun Lease Agreement. According to the 2014 Annual Report, net asset value of the Group attributable to the Shareholders (“NAV”) is approximately HK$1.26 per Share as at 31 December 2014. The Issue Price represents a premium of approximately 50.8% over NAV.

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LETTER FROM PLATINUM SECURITIES

5.1 Review of historical price movement of the Shares

The following exhibit shows the historical price movement of the Shares from 1 May 2014 (being approximately 1 year prior to the date of the 2016 Pengrun Lease Agreement) up to the date of the 2016 Pengrun Lease Agreement (the “Review Period”).

Exhibit 1: historical price movement of the Shares

==> picture [354 x 187] intentionally omitted <==

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

HK$
3
2.5
2
1.5
1
0.5
0
May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15
----- End of picture text -----

Source: the Stock Exchange

We note that the price of the Shares was traded relatively stable between HK$1.00 and HK$1.50 before it rallied as high as HK$2.50 in April 2015. The simple arithmetical average of the closing price of the Shares during the Review Period is approximately HK$1.33. Therefore, we are of the view that the Issue Price, being HK$1.90, represents a substantial premium of approximately 42.9% over the average closing price of the Shares during the Review Period and it is favourable to the Company and fair and reasonable so far as the Independent Shareholders are concerned.

5.2 Comparable Transactions analysis

In order to assess the fairness and reasonableness of the Issue Price, we have reviewed transactions, including connected transactions, announced by companies listed on the Main Board of the Stock Exchange which involved the issuance of consideration shares (the “Comparable Transactions”) during the six months immediately prior to the date of the 2016 Pengrun Lease Agreement. We note that the companies involved in the Comparable Transactions are not engaged in the similar businesses as the principal business of the Company. However, since the Comparable Transactions were transacted at the time close to date of the 2016 Pengrun Lease Agreement under similar market conditions and investment sentiments, we are of the view that the Comparable Transactions, although not to be used in isolation in determining the fairness and reasonableness of the Issue Price, nevertheless can provide a general reference to the Independent Shareholders as they can reflect recent market trends of the terms involved in issuing shares as full or partial settlement of consideration.

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LETTER FROM PLATINUM SECURITIES

The Comparable Transactions have been selected exhaustively based on the above criteria, which have been identified, to the best of our endeavours, in our research through public information.

Table 2: Comparable Transactions analysis

			Premium/(discount) of the	Premium/(discount) of the	issue price
			over/(to) the average closing price of
				last	last
				5 trading	10 trading
				days	days
				immediately	immediately
				preceding	preceding
Date of			date of	the date of	the date of
announcement	Company name	Ticker	agreement	agreement	agreement
26-Nov-14	China Gas Holdings	384 HK	(1.42%)	1.67%	3.58%
	Ltd.
5-Dec-14	Loudong General Nice	988 HK	(9.09%)	(7.75%)	(11.19%)
	Resources (China)
	Holdings Ltd.
10-Dec-14	SinoCom Software	299 HK	(37.01%)	(29.58%)	(19.19%)
	Group Ltd.
12-Dec-14	Trigiant Group Ltd.	1300 HK	2.81%	2.21%	(6.78%)
19-Dec-14	China Agroforestry	1069 HK	17.33%	0.00%	(6.00%)
	Low-Carbon
	Holdings Ltd.
5-Jan-15	Xiwang Special Steel	1266 HK	0.00%	3.00%	7.58%
	Company Ltd.
3-Feb-15	Kiu Hung	381 HK	(18.52%)	1.85%	6.28%
	International
	Holdings Ltd.
16-Feb-15	Enterprise	1808 HK	(15.03%)	(13.56%)	(11.38%)
	Development
	Holdings Ltd.
27-Feb-15	China Fire Safety	445 HK	(40.30%)	(39.39%)	(38.46%)
	Enterprise Group
	Ltd.
3-Mar-15	China Household	692 HK	3.77%	(16.16%)	(17.04%)
	Holdings Ltd.
10-Mar-15	Madex International	231 HK	(9.91%)	(9.50%)	(9.50%)
	(Holdings) Ltd.
10-Apr-15	Hoifu Energy Group	7 HK	17.92%	17.04%	14.68%
	Ltd.
15-Apr-15	Greater China	431 HK	(20.15%)	(21.31%)	(8.96%)
	Holdings Ltd.
21-Apr-15	Yuan Heng Gas	332 HK	0.00%	(1.67%)	(6.10%)
	Holdings Ltd.

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LETTER FROM PLATINUM SECURITIES

			Premium/(discount) of the	Premium/(discount) of the	issue price
			over/(to) the average closing price of
				last	last
				5 trading	10 trading
				days	days
				immediately	immediately
				preceding	preceding
Date of			date of	the date of	the date of
announcement	Company name	Ticker	agreement	agreement	agreement
28-Apr-15	Tongda Group	698 HK	(5.29%)	0.00%	1.42%
	Holdings Ltd.
8-May-15	HC International, Inc.	2280 HK	(23.84%)	(26.34%)	(29.76%)
15-May-15	Sinoref Holdings Ltd.	1020 HK	(31.91%)	(23.99%)	(27.27%)
20-May-15	Shunfeng International	1165 HK	4.42%	2.56%	2.36%
	Clean Energy Ltd.
		Maximum	17.92%	17.04%	14.68%
		Minimum	(40.30%)	(39.39%)	(38.46%)
		Average	(9.23%)	(8.94%)	(8.65%)
		Issue Price	(12.4%)	(12.4%)	(14.8%)

Source: the Stock Exchange and respective announcements

As illustrated in Table 2, the issue prices of the Comparable Transactions ranged from a discount of approximately 40.30% to a premium of approximately 17.92% to/over the closing price of the date of agreement (the “Market Range I”) with an average discount of approximately 9.23% (the “Market Average I”), from a discount of approximately 39.39% to a premium of approximately 17.04% to/over the average closing price of the last 5 trading days immediately preceding the date of agreement (the “Market Range II”) with an average discount of approximately 8.94% (the “Market Average II”) and from a discount of approximately 38.46% to a premium of approximately 14.68% to/over the average closing price of the last 10 trading days immediately preceding the date of agreement (the “Market Range III”) with an average discount of approximately 8.65% (the “Market Average III”).

We note that the Issue Price represents a discount of approximately 12.4 % to the closing price of the Shares as at date of the 2016 Pengrun Lease Agreement (the “Issue Price Discount I”), a discount of approximately 12.4% to the average closing price of the Shares on last 5 consecutive trading days immediately preceding the date of the 2016 Pengrun Lease Agreement (the “Issue Price Discount II”) and a discount of approximately 14.8% to the average closing price of the Shares on last 10 consecutive trading days immediately preceding the date of the 2016 Pengrun Lease Agreement (the “Issue Price Discount III”).

Each of the Issue Price Discount I, the Issue Price Discount II and the Issue Price Discount III is within the Market Range I, the Market Range II and the Market Range III, respectively, and is slightly less favourable as compared to the Market Average I, the

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Market Average II and the Market Average III, respectively. For the last ten trading days up to and including 22 May 2015 (the last trading day immediately preceding the date of the 2016 Pengrun Lease Agreement) Hang Seng Index rose from 27,718.2 points to 27,992.83 points, representing an increase of 0.99% and further rose by 0.92% from 27,992.83 points to 28,249.86 points on the date of the 2016 Pengrun Lease Agreement. We consider that the rise of Hang Seng Index indicates a general upward trend of the stock market which may be one of the factors to explain the price movement of the Shares, leading to the deeper discount of the Issue Price to the price of the Shares as compared with the Comparable Transactions. As a result, we consider the Issue Price is fair and reasonable as compared with the Comparable Transactions and it is in the interests of the Company and the Shareholders as a whole.

Given that the Issue Price of HK$1.90 (i) represents a substantial premium over NAV and the average closing prices of the Shares during the Review Period; and (ii) is fair and reasonable to the Company as compared with issue prices of the Comparable Transactions, we are of the view that the Issue Price is fair and reasonable and in the interests of the Company and Shareholders as a whole.

6. Dilution effect on the shareholding interests of the Independent Shareholders

The following table illustrates the shareholding structures of the Company (i) as at the Latest Practicable Date; and (ii) upon allotment and issue of the Consideration Shares (assuming that there is no change in the issued share capital of the Company other than the issue of the Consideration Shares since the date of the 2016 Pengrun Lease Agreement):

Table 3: potential shareholding dilution effect of the Transactions

The Controlling Shareholder and its associates Public shareholders Total	As at the Latest Practicable Date Shares App. % 5,500,503,338 32.43 11,461,070,084 67.57 16,961,573,422 100.00	Upon allotment and issue of the Consideration Shares Shares App. % 5,950,503,338 34.18 11,461,070,084 65.82 17,411,573,422 100.00	Upon allotment and issue of the Consideration Shares Shares App. % 5,950,503,338 34.18 11,461,070,084 65.82 17,411,573,422 100.00
			100.00

As indicated in Table 3, the shareholding of public Shareholders will decrease from approximately 67.57% to approximately 65.82% immediately upon allotment and issue of the Consideration Shares. Such potential dilution to the shareholdings of public Shareholders represents a dilution by absolute percentage amount of approximately 1.75% and a dilution by relative percentage of approximately 2.58%.

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LETTER FROM PLATINUM SECURITIES

Taking into account that:

(i) it is in the interests of the Company and the Shareholders to enter into the 2016 Pengrun Lease Agreement;
(ii) the rent payable under the 2016 Pengrun Lease Agreement is fair and reasonable; and
(iii) the Issue Price is fair and reasonable and in the interests of the Company and Shareholders as a whole,

we consider the potential dilution effect on the shareholding interests of the public Shareholders to be justifiable.

7. Proposed caps and basis of determination for caps

The historical transaction amounts under the leases at the Pengrun Building for the year ended 31 December 2012 (“FY2012”), the year ended 31 December 2013 (“FY2013”), the year ended 31 December 2014 (“FY2014”), and the 4 months ended 30 April 2015 were as follows:

Historical transaction amounts related to the leases at the Pengrun Building

				For the
	For	For	For	4 months ended
	FY2012	FY2013	FY2014	30 April 2015
	RMB (HK$)’	RMB (HK$)’	RMB (HK$)’	RMB (HK$)’
	million	million	million	million
Annual caps in relation to	46.08 (58.42)	78.63 (99.68)	84.48 (107.10)	116.99 (148.31)
the leases at the				(Note)
Pengrun Building
Rents paid by the Group	46.07 (58.40)	74.96 (95.03)	84.22 (106.77)	39.0 (49.44)
in relation to the leases
at the Pengrun Building
Utilisation rate	99.98%	95.33%	99.69%	Not applicable

Note: For the entire year ending 31 December 2015.

Rents paid by the Group in relation to the leases at the Pengrun Building increased 82.8% from approximately RMB46.07 million for FY2012 to approximately RMB84.22 million for FY2014. We have reviewed the announcements of the Company dated 18 March 2011, 6 January 2012, 25 May 2012, 17 December 2012, 6 December 2013, 25 August 2014 and 17 November 2014 in relation to the leasing by the Group of certain properties at the Pengrun Building, and noted that the increase in the rents paid was mainly due to the increase of leasing area and increase of leasing fee per square meter. We consider that this is in line with the Group’s business development scale and the rising trend of office rent in Beijing.

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The utilization rates for FY2012, FY2013 and FY2014 are all above 95%. We consider that the historical annual caps for FY2012, FY2013 and FY2014 are almost fully utilised and the high utilization rates show the estimate by the management of the Company was relatively accurate and if there is further increase in leasing charge, the existing annual caps may not be enough to meet the Company’s needs.

Proposed annual caps and basis of determination

Year	Annual Cap
	RMB
2016	142,659,000
2017	145,512,000
2018	148,423,000
2019	151,391,000
2020	154,419,000
2021	157,507,000
2022	160,657,000
2023	163,871,000
2024	167,148,000
2025	170,491,000

The maximum annual cap of the 2016 Pengrun Lease Agreement represents an increase of approximately 46% to the annual cap for the year ended 31 December 2015. This is due to increase in GFA of office to be rented by GOME Hong Kong to the Company under the 2016 Pengrun Lease Agreement and 2% annual increase of the rent payable by the Company. We have obtained and reviewed the rental calculation in respect of the proposed annual caps and noted that the proposed annual cap will increase from RMB142,659,000 for the year ending 31 December 2016 to RMB170,491,000 for the year ending 31 December 2025. The annual incremental rate is approximately 2% which is consistent with 2% increase each year of the aggregate rent payable by the Company under the 2016 Pengrun Lease Agreement. As discussed in the section headed “Rent”, 2% annual increase is in line with the Beijing CPI growth rate which is reasonable in our opinion. As a result, we consider the proposed annual caps under the 2016 Pengrun Lease Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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8. Justification for a longer duration

The duration of the 2016 Pengrun Lease Agreement is in excess of three years and the lease agreement is in the term of ten years. In accordance to Rule 14A.52 of the Listing Rules, We, as the Independent Financial Adviser, shall explain why the Transactions require a longer term, and to confirm that it is a normal business practice for contracts of this type to be of such duration.

Based on our discussion with the management of the Company, a contract of three-year duration is not practical and commercially sound with sizeable floor spaces, as it would be essential for the tenant to ensure continuity in the Company’s headquarters operations. In addition, the Company has invested heavily on its I.T. infrastructure at the headquarters, with the Company being one of the largest privately owned electrical appliance (online and offline) retailers in the PRC, it is their usual ordinary business practice to prevent a disruption of their online retail business. It is also evident by the Company located its headquarters business at the same building since 2004.

Furthermore, it is difficult to secure suitable alternative premises of sufficient size to accommodate the Company’s core operations in one place for operational efficiency. Where, in particular, supply of Grade-A office is relatively limited in the Chaoyang district of Beijing (as discussed earlier in the section headed “Advantageous to secure long-term rental contract”), hence, a short duration lease contract might not be of the best interest to the Company.

We also concur with the Director’s view that having a longer duration than three years of tenancy will provide the Company a clear visibility on future expenditure on the rent and will facilitate the management of the Group in future planning and budgeting of the business. Therefore, we are of the view that the least agreement requires duration of ten years and it is normal business practice for agreements of this type to be of such duration.

8.1 The duration of the 2016 Pengrun Lease Agreement in the normal business practice

In order to assess the fairness and reasonableness of the terms of 10 years lease agreement, to the best of our knowledge, we have looked into companies listed on the Main Board of the Hong Kong Stock Exchange, which have made announcements for commercial property (including office premises element) lease agreement, in Mainland China, constituting a continuing connected transaction since 1 May 2012 to 30 April 2015 for reference (the “Market Comparables”). We have identified a total of 2 Market Comparables, which were involved in leasing of office premises, within such period. Based on our review, for commercial properties, especially hotels and retail malls, there were a number of precedents in the market that are entering into long term lease contracts for 10 years or above. We consider, although not in a way of direct comparison, both hotels, retail malls and office premises are sharing the same requirement of having initial investments on infrastructure and renovation upfront and entering into long term lease contracts is commercially sensible to make sure these initial investments, usually have

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LETTER FROM PLATINUM SECURITIES

longer useful lives, can be sustained to generate return during the lease period without being subject to the uncertainties of market fluctuation in rent. We therefore consider it is beneficial and in normal commercial practice for the Company to enter into long term lease contract as it will secure the premises for the Group’s headquarters operations over the next ten years after substantial investments by the Group in establishing its I.T. infrastructure. For our analysis on Market Comparables, we just focus on transactions having an office premises element as the most direct comparison. Set out below are the comparables of the leasing arrangements with 10 years term tenure:

Table 4 – Market Comparables with long duration term tenure leasing arrangements

Location (Approximate Gross/ Lettable Area)

Announcement date Company Tenure Lettable Area) 2 December 2011 Sinochem Group 10 years fixed (i) Shanghai Jin Mao Tower, Shanghai (ii) Sinochem Beijing (iii) Beijing Chemsunny World Trade Centre, Beijing (Lettable 74,000 26 June 2013 Sparkle Roll Group 10 years fixed Xinfu 2nd Village, Limited Beijing (Gross 3,019 sq.ft.)

(i) Shanghai Jin Mao Tower, Shanghai
(ii) Sinochem Tower, Beijing
(iii) Beijing Chemsunny World Trade Centre, Beijing
(Lettable 74,000 sq.ft.)

Source: the Stock Exchange and respective announcements

As illustrated in Table 4 above, the duration of the lease arrangement for sizeable floor spaces in the similar office are up to 10 years, including the renewal options. It is not unusual for the companies to enter into long term leasing contracts, therefore, we are in the view that the duration of the 2016 Pengrun Lease Agreement of ten years is in line with the normal business practice.

The Company has occupied the Pengrun Building and located its headquarters there since 2004. The previous lease arrangement at the Pengrun Building was of much shorter term of between 1 and 3 years, with the rent being reviewed upon expiry of each of the terms. After our discussion with the management of the Company, we noted there were substantial investments made by the Group since 2004 to establish its I.T. infrastructure and due to the scarcity of Grade A premises of such size to accommodate all of the Group’s headquarters operations, we are of the view that the entering into of the 2016 Pengrun Lease Agreement with a 10-year term will be beneficial to the Company, as it will secure the premises for the Group’s headquarters operations over the next ten years and lock-in the rent to free the Group from the uncertainties of market fluctuation in rent.

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LETTER FROM PLATINUM SECURITIES

We thus consider that the upfront payment under the 2016 Pengrun Lease Agreement is fair and reasonable as it would induce GOME Hong Kong in entering the 2016 Pengrun Lease Agreement and help secure the premises for the Group.

9. Requirements under the Listing Rules regarding the Transactions

We also understand from the management of the Company that there are stringent internal control policies with regard to continuing connected transactions. In particular, the independent non-executive Directors will review the Transactions every year and confirm in the annual report whether the Transactions have been entered into: (i) in the ordinary and usual course of business of the Group; (ii) on normal commercial terms or better; and (iii) according to the 2016 Pengrun Lease Agreement on terms that are fair and reasonable and in the interests of the Shareholders as a whole.

In addition, the auditors of the Company will report on the Transactions and provide a letter to the Board confirming whether anything has come to their attention that causes them to believe that the Transactions: (i) have not been approved by the Board; (ii) were not entered into, in all material respects, in accordance with the 2016 Pengrun Lease Agreement; and (iii) have exceeded the proposed annual caps.

Although the terms, including the annual caps and the relevant transaction amount under the 2016 Pengrun Lease Agreement has been fixed and would have been approved in the SGM before the completion, we consider the above internal control procedures will still protect the Independent Shareholders by ensuring that GOME Hong Kong will perform its obligation according to the 2016 Pengrun Lease Agreement during the 10 years term.

As such, we are of the view that the internal control policies of the Company with regard to Transactions are well established.

RECOMMENDATION

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

(i) the Transactions are in ordinary and usual course of business of the Group;
(ii) the terms of the 2016 Pengrun Lease Agreement, including the annual caps and Issue Price of the Consideration Shares, are fair and reasonable and in the interests of the Company and the Shareholders as a whole; and
(iii) the term of the 2016 Pengrun Lease Agreement, being 10 years, exceeds three years but it is normal business practice for agreements of this type to be of such duration.

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LETTER FROM PLATINUM SECURITIES

Having considered the above, we are of the view that the Transactions were entered into in the ordinary and usual course of business of the Company, the terms of the 2016 Pengrun Lease Agreement, including the annual cap, are on normal commercial terms, fair and reasonable, and in the interest of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves recommend, the Independent Shareholders to vote in favour of the resolutions to be proposed at the SGM to approve the Transactions.

Yours faithfully, For and on behalf of Platinum Securities Company Limited

Lenny Li

Director and Co-Head of Corporate Finance

Mr. Lenny Li is a licensed person registered with the Securities and Futures Commission and as a responsible officer of Platinum Securities Company Limited to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO and has over eight years of experience in corporate finance industry.

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Directors and Chief Executive

As at the Latest Practicable Date, the interests and short positions, if any, of each Director and chief executive of the Company in the shares, underlying shares and debentures of the Company and any of its associated corporations (within the meaning of Part XV 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 the Directors and chief executive were deemed or taken to have under provisions of the SFO), or which were required to be and are recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies adopted by the Company (the “ Model Code ”) were as follows:

Long positions in the shares, the underlying shares and debentures of the Company

				Total interests as to
				percentage of the
	Capacity		Total	Company’s issued
	in which		number of	share capital as at
Names of Directors/	interests	Personal	Shares	the Latest
Chief Executive	are held	interest	interested	Practicable Date
Wang Jun Zhou	Beneficial	10,187,000	10,187,000	0.06%
	owner	(Note 1)

Note:

The relevant interest represented 10,187,000 shares issuable upon exercise of the Options granted to Mr. Wang Jun Zhou pursuant to the Share Option Scheme.

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GENERAL INFORMATION

APPENDIX

(b) Substantial Shareholders

So far as is known to any Director or the chief executive of the Company, as at the Latest Practicable Date, Shareholders who had interests or short positions in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO were as follows:

Long positions in shares and underlying shares of the Company

		Number of	Approximate
		ordinary	percentage of
Names of Shareholders	Nature	Shares held	shareholding
Mr. Wong Kwong Yu	Long position	5,500,503,338	32.43%
(“Mr. Wong”) (Note 1)
Ms. Du Juan (Note 2)	Long position	5,500,503,338	32.43%
Shinning Crown Holdings	Long position	4,619,779,938	27.24%
Inc. (Note 3)

Notes:

(1) Of these 5,500,503,338 Shares, 4,619,779,938 Shares were held by Shinning Crown Holdings Inc. and 634,016,736 Shares were held by Shine Group Limited (both companies are 100% beneficially owned by Mr. Wong), and 240,955,927 Shares were held by Smart Captain Holdings Limited and 5,750,737 Shares were held by Wan Sheng Yuan Asset Management Company Limited (both companies are 100% beneficially owned by Ms. Du Juan, the spouse of Mr. Wong).
(2) Ms. Du Juan is the spouse of Mr. Wong. The aforesaid Shares that Mr. Wong and Ms. Du Juan are deemed to be interested refer to the same parcel of Shares.
(3) Shinning Crown Holdings Inc. is 100% beneficially owned by Mr. Wong.

Save as disclosed above, so far as is known to the Directors and the chief executive of the Company, as at the Latest Practicable Date, no other person (other than a Director or chief executive of the Company) had, or was deemed or taken to have, an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or held any option in respect of such capital.

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with any member of the Group or any associated company of the Company (excluding contracts expiring or determinable within one year without payment of compensation, other than statutory compensation).

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GENERAL INFORMATION

APPENDIX

4. COMPETING BUSINESS INTEREST OF DIRECTORS

As at the Latest Practicable Date, none of the Directors or their respective associates was interested in any business which competes or is likely to compete, either directly or indirectly, with the business of the Group as required to be disclosed pursuant to the Listing Rules.

However, during the year, Mr. Wong Kwong Yu (“ Mr. Wong ”), Ms. Du Juan being the spouse of Mr. Wong and Ms. Huang Xiu Hong being a sister of Mr. Wong, who remained as directors of certain subsidiaries of the Company had beneficial interest or held directorship or otherwise had control in companies which operate an electrical appliances and consumer electronics products retail network under the brand name “GOME” in different cities in China (the “ Non-listed GOME Group ”) separate from the Group.

On 29 July 2004 and 28 February 2006, Mr. Wong and the Company entered into non-competition undertakings to govern competitions between the Group and the Non-listed GOME Group. Pursuant to the terms of the non-competition undertakings (i) the Group is restricted from carrying on retail business of electrical appliances and consumer electronics products by whatever means (whether through conventional retail stores or non-conventional modes of business (including online sales)) in areas where the Non-listed GOME Group operated the retail business of electrical appliances and consumer electronics products under the “GOME” brand name as at 3 June 2004; and (ii) reciprocally, the Non-listed GOME Group is restricted from carrying on the retail business of electrical appliances and consumer electronics products by whatever means (whether through conventional retail stores or non-conventional modes of business (including online sales)) in areas where the Group operated the retail business of electrical appliances and consumer electronics products under the “GOME” brand name as at 3 June 2004. In May 2012, pursuant to the subscription of a 40% interest in GOME-on-line by the Non-listed GOME Group, Mr. Wong has granted to the Group a waiver from compliance with the restriction set out in (i) above (excluding conventional mode of business). The effect is that the Group is able to operate its non-conventional modes of business via GOME-on-line with no geographical restriction.

5. LITIGATION

So far as the Company is aware, as at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration of material importance and there is no litigation or claim of material importance known to the Directors pending or threatened by or against any member of the Group.

6. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2014, the date to which the latest published audited financial statement of the Group were made up.

7. EXPERT’S QUALIFICATION AND CONSENT

Platinum Securities has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and references to its name in the form and context in which it appears.

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GENERAL INFORMATION

APPENDIX

The following is the qualification of the expert or professional adviser who has given its opinion or advice contained in this circular:

Name

Qualification

Platinum Securities

A licensed corporation to conduct Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

As at the Latest Practicable Date, Platinum Securities did not have any direct or indirect interest in any assets which had been acquired, disposed of by, or leased to any member of the Group, or was proposed to be acquired, or disposed of by, or leased to any member of the Group, since 31 December 2014, the date to which the latest audited financial statements of the Group was made up; and was not beneficially interested in the share capital of any member of the Group and did not have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

8. GENERAL

(a) None of the Directors had any direct or indirect interest in any assets which had been acquired or disposed of by or leased to any member of the Group or proposed to be so acquired, disposed of by or leased to any member of the Group since 31 December 2014, being the date to which the latest published audited accounts of the Company were made up, and up to the Latest Practicable Date.
(b) Save as disclosed in this circular, as at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group, which was subsisting and was significant in relation to the business of the Group.
(c) The company secretary of the Company is Mr. Szeto King Pui, Albert. Mr. Szeto is a Hong Kong solicitor.
(d) The registered office of the Company is Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda.
(e) The principal place of business of the Company in Hong Kong is Suite 2915, 29th Floor, Two International Finance Centre, 8 Finance Street, Central, Hong Kong.
(f) The share registrars of the Company in Hong Kong is Tricor Abacus Limited.
(g) The principal share registrars of the Company is MUFG Fund Services (Bermuda) Limited.
(h) The English text of this circular shall prevail over their respective Chinese text for the purpose of interpretation.

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GENERAL INFORMATION

APPENDIX

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the Company’s principal place of business in Hong Kong at Suite 2915, 29th Floor, Two International Finance Centre, 8 Finance Street, Central, Hong Kong during normal business hours on any weekdays, except public holidays, from the date of this circular up to and including the date of the SGM:

(a) the 2016 Pengrun Lease Agreement;
(b) the letter from the Independent Board Committee, the text of which is set out on page 11 of this circular;
(c) the letter from the Independent Financial Adviser, the text of which is set out on pages 12 to 29 of this circular;
(d) the consent letter of the Independent Financial Adviser referred to in the section headed “Expert’s Qualifications and Consents” in this appendix; and
(e) this circular.

– 34 –

NOTICE OF SGM

==> picture [140 x 58] 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 AND CLOSURE OF SHAREHOLDERS’ REGISTER

NOTICE IS HEREBY GIVEN that a special general meting of GOME Electrical Appliances Holding Limited (the “ Company ” ) will be held at Gloucester Room II, 3/F, The Excelsior, 281 Gloucester Road, Causeway Bay, Hong Kong on Wednesday, 24 June 2015 at 3:30 p.m. for the purpose of considering and, if thought fit, passing the following resolutions as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT :

(a) the lease agreement dated 26 May 2015 entered into between the Company and GOME Hong Kong (the “ 2016 Pengrun Lease Agreement ”), a copy of which is produced at the meeting and marked “ A ” and initialed by the chairman of the meeting for the purpose of identification, and the transactions contemplated thereby be and is hereby approved and confirmed;
(b) subject to the Listing Committee of the Stock Exchange granting approval for the listing of, and permission to deal in, the 450,000,000 shares of the Company (the “ Consideration Shares ”) to be allotted and issued to satisfy part of the consideration under the 2016 Pengrun Lease Agreement, the allotment and issue of the Consideration Shares pursuant to the terms of the 2016 Pengrun Lease Agreement be and is hereby approved and confirmed; and
(c) any one director of the Company be and is hereby authorised to do all such acts or things and sign all documents deemed necessary by him/her for the purpose of giving effect to the 2016 Pengrun Lease Agreement and the transactions contemplated thereby.”

* For identification purpose only

– 35 –

NOTICE OF SGM

CLOSURE OF SHAREHOLDERS’ REGISTER

By Order of the Board GOME ELECTRICAL APPLIANCES HOLDING LIMITED Zhang Da Zhong

Chairman

Hong Kong, 9 June 2015

Notes:

A form of proxy for use at the meeting is enclosed herewith.
The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing or, if the appointer is a corporation, either under its seal or under the hand of any officer, attorney or other person authorised to sign the same.
Any shareholder entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote instead of him. A proxy need not be a shareholder of the Company.
In order to be valid, a form of proxy in the prescribed form together with the power of attorney or other authority (if any) under which it is signed must be deposited at the Company’s branch registrar in Hong Kong, Tricor Abacus Limited, Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time fixed for holding the meeting.
Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or at any adjourned meeting thereof (as the case may be) should you so wish, and in such an event, the form of proxy shall be deemed to be revoked.
Where there are joint registered holders of any share, any one of such joint holders may vote, either in person or by proxy, in respect of such shares as if he/she was solely entitled thereto, but if more than one of such joint holders are present at the meeting, whether in person or by proxy, the joint registered holder present whose name stands first on the register of members in respect of the shares shall be accepted to the exclusion of the votes of the other registered holders.

As at the date of this notice, the Board comprises Mr. Zou Xiao Chun as executive director; Mr. Zhang Da Zhong as non-executive director; and Mr. Sze Tsai Ping, Michael, Mr. Chan Yuk Sang, Mr. Lee Kong Wai, Conway, Mr. Ng Wai Hung and Ms. Liu Hong Yu as independent non-executive directors.

– 36 –

AI assistant

APT Satellite Holdings Limited — Proxy Solicitation & Information Statement 2015

49643_rns_2015-06-09_9ceffc4f-7267-41a4-84d5-11f29bdf443e.pdf

GOME ELECTRICAL APPLIANCES HOLDING LIMITED 國美電器控股有限公司[*]

CONTINUING CONNECTED TRANSACTIONS AND NOTICE OF SPECIAL GENERAL MEETING

CONTENTS

DEFINITIONS

DEFINITIONS

GOME ELECTRICAL APPLIANCES HOLDING LIMITED 國美電器控股有限公司[*]

CONTINUING CONNECTED TRANSACTIONS

1. INTRODUCTION

2. THE 2016 PENGRUN LEASE AGREEMENT

Date of the agreement:

Parties to the agreement:

Subject matter

Term

Rent

Consideration Shares

Conditions

3. HISTORICAL TRANSACTION AMOUNTS RELATED TO THE LEASES AT THE PENGRUN BUILDING

4. ANNUAL CAP FOR THE 2016 PENGRUN LEASE AGREEMENT

5. EFFECT ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

6. CAPITAL RAISING ACTIVITIES IN THE PAST 12 MONTHS

7. REASONS FOR THE TRANSACTIONS

8. LISTING RULES IMPLICATIONS

SGM AND PROXY ARRANGEMENT

CLOSURE OF SHAREHOLDERS’ REGISTER

GENERAL INFORMATION

RECOMMENDATIONS

GOME ELECTRICAL APPLIANCES HOLDING LIMITED Zhang Da Zhong

GOME ELECTRICAL APPLIANCES HOLDING LIMITED 國美電器控股有限公司[*]

CONTINUING CONNECTED TRANSACTIONS

Ms. Liu Hong Yu

To the Independent Board Committee and the Independent Shareholders

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

LETTER FROM PLATINUM SECURITIES

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background of the Transactions

2. Principal terms of the 2016 Pengrun Lease Agreement

3. Reasons for and benefits of entering into the 2016 Pengrun Lease Agreement

3.1 Overview of Beijing

3.2 Advantageous to secure long-term rental contract

4. Rent

5. Consideration Shares

5.1 Review of historical price movement of the Shares

Exhibit 1: historical price movement of the Shares

5.2 Comparable Transactions analysis

Table 2: Comparable Transactions analysis

LETTER FROM PLATINUM SECURITIES

6. Dilution effect on the shareholding interests of the Independent Shareholders

7. Proposed caps and basis of determination for caps

Historical transaction amounts related to the leases at the Pengrun Building

Proposed annual caps and basis of determination

8. Justification for a longer duration

8.1 The duration of the 2016 Pengrun Lease Agreement in the normal business practice

LETTER FROM PLATINUM SECURITIES

9. Requirements under the Listing Rules regarding the Transactions

RECOMMENDATION

LETTER FROM PLATINUM SECURITIES

Yours faithfully, For and on behalf of Platinum Securities Company Limited

Lenny Li

Director and Co-Head of Corporate Finance

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTERESTS

(a) Directors and Chief Executive

Long positions in the shares, the underlying shares and debentures of the Company

(b) Substantial Shareholders

Long positions in shares and underlying shares of the Company

3. DIRECTORS’ SERVICE CONTRACTS

4. COMPETING BUSINESS INTEREST OF DIRECTORS

5. LITIGATION

6. MATERIAL ADVERSE CHANGE

7. EXPERT’S QUALIFICATION AND CONSENT

Name

Qualification

8. GENERAL

9. DOCUMENTS AVAILABLE FOR INSPECTION

GOME ELECTRICAL APPLIANCES HOLDING LIMITED 國美電器控股有限公司[*]

(Stock Code: 493)

APT Satellite Holdings Limited Proxy Solicitation & Information Statement 2015