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

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

A letter from the Board is set out on pages 5 to 14 of this circular and a letter from the Independent Board Committee containing its recommendations to the Independent Shareholders is set out on page 15 of this circular. A letter from Platinum Securities Company Limited, 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 16 to 26 of this circular.

A notice convening the SGM of the Company to be held at Gloucester Room I, 3/F, The Excelsior, 281 Gloucester Road, Causeway Bay, Hong Kong on Monday, 29 February 2016 at 2:30 p.m. is set out on pages 32 to 33 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, 12 February 2016

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Letter from Platinum Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27
Notice of SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32

– i –

DEFINITIONS

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

“2013 Agreements”

the 2013 Master Merchandise Purchase Agreement and 2013 Master Merchandise Supply Agreement;

“2013 Master Merchandise Purchase Agreement”

the agreement dated 5 March 2013 between GOME Appliance, Kuba, GOME-on-line, GOME Retail and GOME Ruidong in relation to the supply of general merchandise (including but not limited to electrical appliances and consumer electronics products) by GOME Ruidong and the Parent Group to the Group (including Kuba and GOME-on-line);

“2013 Master Merchandise Supply Agreement”
the agreement dated 5 March 2013 between GOME Appliance, Kuba, GOME-on-line and GOME Retail in relation for the supply of general merchandise (including but not limited to electrical appliances and consumer electronics products) by the Group to Kuba, GOME-on-line and the Parent Group;
“2016 CCT Agreements”

2016 Master Merchandise Purchase Agreement and 2016 Master Merchandise Supply Agreement;

“2016 Master Merchandise Purchase Agreement”
the agreement dated 25 January 2016 between GOME Appliance, GOME-on-line, GOME Retail and GOME Ruidong in relation to the supply of general merchandise (including but not limited to electrical appliances and consumer electronics products) by GOME Retail, GOME Ruidong or the Parent Group to the Group (including GOME-on-line);
“2016 Master Merchandise Supply Agreement”
the agreement dated 25 January 2016 between GOME Appliance, GOME-on-line, GOME Retail and GOME Ruidong in relation to the supply of general merchandise (including but not limited to electrical appliances and consumer electronics products) by GOME Appliance or the Group to GOME-on-line, GOME Retail and GOME Ruidong;
“2016 Transitional Agreements”
The 2016 Transitional Master Merchandise Purchase Agreement and 2016 Transitional Master Merchandise Supply Agreement;

– 1 –

DEFINITIONS

“2016 Transitional Master Merchandise Purchase Agreement”
“2016 Transitional Master Merchandise Supply Agreement”
“Acquisition”
“Acquisition Circular”
“Acquisition SGM”
“associate”
“Board”
“Company”
“Controlling Shareholder”
“Director(s)”
the agreement dated 30 December 2015 between GOME Appliance, GOME-on-line, GOME Retail and GOME Ruidong in relation to the supply of general merchandise (including but not limited to electrical appliances and consumer electronics products) by GOME Retail, GOME Ruidong or the Parent Group to the Group (including GOME-on-line);
the agreement dated 30 December 2015 between GOME Appliance, GOME-on-line and GOME Retail in relation to the supply of general merchandise (including but not limited to electrical appliances and consumer electronics products) by GOME Appliance or the Group to GOME-on-line and GOME Retail;
the acquisition of Artway Development Limited by the Company;
circular of the Company dated 24 December 2015;
the special general meeting of the Company held on 22 January 2016 in which all the resolutions in relation to, among other things, the Acquisition and whitewash waiver were passed by the independent Shareholders by way of poll;
has the meaning ascribed to it under Chapter 14A of the Listing Rules;
the board of Directors;
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);
Mr. Wong Kwong Yu (黃光裕先生), the controlling shareholder of the Company, who as at the Latest Practicable Date was interested in approximately 32.43% of the issued share capital of the Company;

the director(s) of the Company;

– 2 –

DEFINITIONS

“GOME Appliance”

國美電器有限公司 (GOME Appliance Company Limited*), a wholly-owned subsidiary of the Company;

“GOME-on-line”
國美在線電子商務有限公司 (GOME-on-line e-Commerce Co., Ltd.*) (together with its subsidiaries (if any)), a company established in the PRC and a 60% non-whollyowned subsidiary of the Group, which is not a member of the Target Group;
“GOME Retail” 國美電器零售有限公司 (GOME Electrical Appliances Retail Co., Ltd.*), a company incorporated in the PRC and a member of the Parent Group and the Target Group;
“GOME Ruidong”
北京國美銳動電子商務有限公司 (Beijing GOME Ruidong e-Commerce Co., Ltd.*) (together with its subsidiary (if any)), a company established under the laws of the PRC and owned by the Controlling Shareholder and his associates, which is not a member of the Target Group;
“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 in relation to the 2016 CCT Agreements and the relevant annual caps in relation to the continuing connected transactions thereunder;
“Independent Financial Adviser” Platinum Securities Company Limited, a corporation or “Platinum Securities” 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 respect of the 2016 Master Merchandise Purchase Agreement and the 2016 Master Merchandise Supply Agreement and the relevant annual caps in relation thereto;
“Independent Shareholders”
Shareholders other than the Controlling Shareholder and his associates;

– 3 –

DEFINITIONS

“Kuba”

庫巴科技(北京)有限公司 (Kuba Technology (Beijing) Co., Ltd.*) (together with its subsidiaries (if any)), a company established under the laws of the PRC and a 60% non-wholly-owned subsidiary of the Group, which is not a member of the Target Group;

“Latest Practicable Date”
3 February 2016, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein;
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange;
“Notice of Acquisition SGM”
notice of the SGM of the Company dated 24 December 2015;
“Parent Group” a group of companies (other than the Group) controlled or more than 50% owned by the Controlling Shareholder and principally engaged in retail business;
“percentage ratio”
has the meaning ascribed to it under Chapter 14A of the Listing Rules;
“PRC”
the People’s Republic of China (for the purposes of this circular, excludes Hong Kong, the Macao Special Administrative Region and Taiwan);
“SGM” the special general meeting of the Company to be convened to approve the 2016 Master Merchandise Purchase Agreement and the 2016 Master Merchandise Supply Agreement;
“Shareholders” shareholders of the Company;
“Stock Exchange” The Stock Exchange of Hong Kong Limited;
“Target Group” Artway Development Limited together with its subsidiaries

Translations of RMB into HK$ are made in this circular for illustration purpose at the rate of HK$1.00 to RMB0.83385. No representation is made that any amounts in RMB or HK$ could have been or could be converted at that rate or at any other rate or at all.

* For identification purpose only

– 4 –

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 Directors:

ZHANG Da Zhong (Chairman) HUANG Xiu Hong YU Sing Wong

Independent non-executive Directors:

LEE Kong Wai, Conway NG Wai Hung LIU Hong Yu WANG Gao

Registered Office:

Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

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

12 February 2016

To: the Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

Reference is made to the announcement of the Company dated 25 January 2016 in relation to the 2016 Master Merchandise Purchase Agreement and 2016 Master Merchandise Supply Agreement.

The 2013 Agreements have expired on 31 December 2015. The 2016 Transitional Agreements were entered into as transitional arrangements for the Group to continue its existing operations pending approval by the independent Shareholders of, among other things, the Acquisition at the Acquisition SGM. As disclosed in the announcement of the Company dated 22 January 2016, the Acquisition was approved by the independent Shareholders at the Acquisition SGM. The 2016 Transitional Agreements will expire on 29 February 2016, the Company has entered into the 2016 CCT Agreements to renew the 2016 Transitional Agreements and 2013 Agreements.

* For identification purpose only

– 5 –

LETTER FROM THE BOARD

The purposes of this circular are:

(a) to provide you with further information relating to the 2016 Master Merchandise Purchase Agreement and 2016 Master Merchandise Supply Agreement;
(b) to set out the recommendations of the Independent Board Committee relating to the 2016 Master Merchandise Purchase Agreement and 2016 Master Merchandise Supply 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 Master Merchandise Purchase Agreement and 2016 Master Merchandise Supply Agreement; and
(d) to give you notice of the SGM to consider and, if thought fit, to approve the 2016 Master Merchandise Purchase Agreement and 2016 Master Merchandise Supply Agreement and the transactions contemplated thereunder.

2016 MASTER MERCHANDISE PURCHASE AGREEMENT

Date of the 2016 Master Merchandise Purchase Agreement:

25 January 2016

Parties to the 2016 Master Merchandise Purchase Agreement:

(a) GOME Appliance, a wholly-owned subsidiary of the Company, which is principally engaged in the retailing of electrical appliances and consumer electronics products;
(b) GOME-on-line, a 60% non-wholly-owned subsidiary of the Group, which is principally engaged in the operation of the on-line shopping platform of the Group at www.gome.com.cn. The remaining 40% equity interest in GOME-on-line is held by GOME Ruidong, a company owned by the Controlling Shareholder and his associates. GOME-on-line is therefore an associate of the Controlling Shareholder and a connected person of the Company for the purpose of the Listing Rules;
(c) GOME Retail, a company established in the PRC, which is principally engaged in the retailing of electrical appliances and consumer electronics products. GOME Retail is indirectly owned by the Controlling Shareholder and his associates and is hence a connected person of the Company for the purpose of the Listing Rules; and
(d) GOME Ruidong, a company established in the PRC, which is principally engaged in the investment holding business. GOME Ruidong is owned by the Controlling Shareholder and his associates and hence a connected person of the Company for the purpose of the Listing Rules.

– 6 –

LETTER FROM THE BOARD

Terms of the 2016 Master Merchandise Purchase Agreement

Pursuant to the terms of the 2016 Master Merchandise Purchase Agreement, GOME Retail and GOME Ruidong agreed to, and will procure other members of the Parent Group to, at the request of the GOME Appliance or GOME-on-line from time to time, supply general merchandise (including but not limited to electrical appliances and consumer electronics products) to GOME Appliance or GOME-on-line on an at-cost basis, which is determined by taking into account the total consideration (including the cost of merchandise and cost of logistics from the warehouse of the supplier to the warehouse of the Parent Group, the logistics service of which is included in the supply of goods contract entered into with the third party supplier) payable to the third party supplier under each supply of goods contract entered into between members of the Parent Group and the third party supplier, for the following three financial years subject to the following caps:

from 1 January 2016 to 31 December 2016 subject to a cap of an amount RMB6 billion (equivalent to HK$7.2 billion) (excluding value added tax)
from 1 January 2017 to 31 December 2017 subject to an annual cap of an amount RMB7 billion (equivalent to HK$8.4 billion) (excluding value added tax)
from 1 January 2018 to 31 December 2018 subject to an annual cap of an amount RMB8 billion (equivalent to HK$9.6 billion) (excluding value added tax)

Historical transaction amounts

The historical transaction amounts for general merchandise supplied by the Parent Group to the Group for the two financial years ended 31 December 2013 and 2014 and the nine-month period ended 30 September 2015 are as follows:

			For the
	For the	For the	nine-month
	year ended	year ended	period ended
	31 December	31 December	30 September
	2013	2014	2015
	RMB (HK$)’	RMB (HK$)’	RMB (HK$)’
	million	million	million
Annual caps	5,000.0 (5,996.3)	6,500.0 (7,795.2)	8,000.0 (9,594.1)
			(Note)
Transaction amounts	733.1 (879.2)	809.4 (970.7)	2,139.0 (2,565.2)

Note: For the entire year ended 31 December 2015.

Payments for products supplied under the 2016 Master Merchandise Purchase Agreement will be made within 30 business days from the receipt of the products.

The significant increase of transaction amounts in 2015 was due to the increase in purchase made by the physical stores of the Group and the significant year-on-year growth in the gross merchandise volume (“GMV”) of the e-commerce business (including GMV from the marketplace) of 112.59% for the nine-month period ended 30 September 2015.

– 7 –

LETTER FROM THE BOARD

Annual caps of the 2016 Master Merchandise Purchase Agreement

The proposed annual cap amounts of the 2016 Master Merchandise Purchase Agreement were determined after taking into consideration:

i. the above historical transaction amounts, which experienced significant year-onyear growth in transaction amounts, partly contributed by the fastest growing business segment of e-commerce business of the Group as explained below;
ii. E-commerce business has been the fastest growing business segment of the Group which has experienced significant year-on-year growth in GMV (including GMV from the marketplace) of 84.41% in 2014 and 112.59% for the nine-month period ended 30 September 2015. The Directors expect that the e-commerce business of the Group will continue to develop rapidly in the coming years, leading to the increase in demand for supply of goods to GOME-on-line, the Group’s online sales platform; and
iii. upon completion of the Acquisition, as explained in the section headed “THE ACQUISITION” below, transactions between GOME Retail and the Group will no longer be connected transactions of the Company. As such, transaction amounts arising from the supply of goods by GOME Retail to the Group will not be subject to the relevant annual caps stipulated under 2016 Master Merchandise Purchase Agreement.

2016 MASTER MERCHANDISE SUPPLY AGREEMENT

Date of the 2016 Master Merchandise Supply Agreement:

25 January 2016

Parties to the 2016 Master Merchandise Supply Agreement:

(a) GOME Appliance, a wholly-owned subsidiary of the Company, which is principally engaged in the retailing of electrical appliances and consumer electronics products;
(b) GOME-on-line, a 60% non-wholly-owned subsidiary of the Group, which is principally engaged in the operation of the on-line shopping platform of the Group at www.gome.com.cn. The remaining 40% equity interest in GOME-on-line is held by GOME Ruidong, a company owned by the Controlling Shareholder and his associates. GOME-on-line is therefore an associate of the Controlling Shareholder and a connected person of the Company for the purpose of the Listing Rules;
(c) GOME Retail, a company established in the PRC, which is principally engaged in the retailing of electrical appliances and consumer electronics products. GOME Retail is indirectly owned by the Controlling Shareholder and his associates and hence a connected person of the Company for the purpose of the Listing Rules; and

– 8 –

LETTER FROM THE BOARD

(d) GOME Ruidong, a company established in the PRC, which is principally engaged in the investment holding business. GOME Ruidong is owned by the Controlling Shareholder and his associates and hence a connected person of the Company for the purpose of the Listing Rules.

Terms of the 2016 Master Merchandise Supply Agreement

Pursuant to the terms of the 2016 Master Merchandise Supply Agreement, GOME Appliance agreed to, and will procure other members of the Group to, at the request of GOME-on-line, GOME Retail or GOME Ruidong from time to time, supply general merchandise (including but not limited to electrical appliances and consumer electronics products) to GOME-on-line, GOME Retail or GOME Ruidong on an at-cost basis, which is determined by taking into account the total consideration (including the cost of merchandise and cost of logistics from the warehouse of the supplier to the warehouse of the Group, the logistics service of which is included in the supply of goods contract entered into with the third party supplier) payable to the third party supplier under each supply of goods contract entered into between members of the Group and the third party supplier, for the following three financial years subject to the following caps:

from 1 January 2016 to 31 December 2016 subject to a cap of an amount RMB6 billion (equivalent to HK$7.2 billion) (excluding value added tax)
from 1 January 2017 to 31 December 2017 subject to an annual cap of an amount RMB7 billion (equivalent to HK$8.4 billion) (excluding value added tax)
from 1 January 2018 to 31 December 2018 subject to an annual cap of an amount RMB8 billion (equivalent to HK$9.6 billion) (excluding value added tax)

Historical transaction amounts

The historical transaction amounts for general merchandise supplied by the Group to GOME-on-line and the Parent Group for the two financial years ended 31 December 2013 and 2014 and the nine-month period ended 30 September 2015 are as follows:

			For the
	For the	For the	nine-month
	year ended	year ended	period ended
	31 December	31 December	30 September
	2013	2014	2015
	RMB (HK$)’	RMB (HK$)’	RMB (HK$)’
	million	million	million
Annual caps	5,000.0 (5,996.3)	6,500.0 (7,795.2)	8,000.0 (9,594.1)
			(Note)
Transaction amounts	1,455.8 (1,745.9)	3,392.4 (4,068.4)	4,273.2 (5,124.7)

Note: For the entire year ended 31 December 2015.

– 9 –

LETTER FROM THE BOARD

Payments for products supplied under the 2016 Master Merchandise Supply Agreement will be made within 30 business days from the receipt of the products.

The significant increase of transaction amounts in 2015 was due to the increase in purchase made by the physical stores of the Parent Group and the significant year-on-year growth in the GMV of the e-commerce business (including GMV from the marketplace) of 112.59% for the nine-month period ended 30 September 2015.

Annual caps of the 2016 Master Merchandise Supply Agreement

The proposed annual cap amounts of the 2016 Master Merchandise Supply Agreement were determined after taking into consideration:

i. the above historical transaction amounts, which experienced significant year-onyear growth in transaction amounts, partly contributed by the fastest growing business segment of e-commerce business of the Group as explained below;
ii. E-commerce business has been the fastest growing business segment of the Group which has experienced significant year-on-year growth in GMV of 84.41% in 2014 and 112.59% for the nine-month period ended 30 September 2015. The Directors expect that the e-commerce business of the Group will continue to develop rapidly in the coming years, leading to the increase in demand for supply of goods to GOME-on-line, the Group’s online sales platform; and
iii. upon completion of the Acquisition, as explained in the section headed “THE ACQUISITION” below, transactions between GOME Retail and the Group will no longer be connected transactions of the Company. As such, transaction amounts arising from the supply of goods by the Group to GOME Retail will not be subject to the relevant annual caps stipulated under 2016 Master Merchandise Supply Agreement.

REASONS FOR THE TRANSACTIONS

Both the Group and the Parent Group are engaged in the retailing of electrical appliances and consumer electronics products in the PRC. In order to enhance the operational efficiency of the Group and the Parent Group, the 2013 Master Merchandise Purchase Agreement and the 2013 Master Merchandise Supply Agreement were entered into in 2013 to enable respective members of the Group and the Parent Group to make bulk purchase of products (including but not limited to electrical appliances and consumer electronics products) from some of their mutual suppliers. Members of one group would from time to time sell part of the purchased products to members of the other group as principals on at-cost basis. Under such an arrangement, procurement of products by the Group and the Parent Group could be better co-ordinated and transacted in a more efficient manner. In particular, continuous supply of products could be ensured and temporary shortage of goods can be avoided. Without such an arrangement, the ultimate costs of securing products for both the Group and the Parent Group may increase, in particular, in cases where certain products from local branches of suppliers may not be readily available.

– 10 –

LETTER FROM THE BOARD

Where a supplier’s delivery network cannot reach or cover any specific retail location of any member of the Group or the Parent Group but can reach any other retail location of any other member of the Group or the Parent Group instead, any reachable member of the Group or the Parent Group would be able to source the products from the supplier at lower cost more efficiently than the unreachable members. Therefore, in such case, the unreachable members would have to or tend to source the products from other reachable members of the Group or the Parent Group in order to secure supply of goods in a cost efficient manner. This situation has been common and frequent since 2013, resulting in the inter-group supplies of general merchandise between the Group (including its e-commerce platform) and the Parent Group as well as the intra-group supplies of general merchandise between the Group’s e-commerce platform and other members of the Group when the Group’s e-commerce platform requires supplies of a much wider product range than before with higher probabilities that suppliers of each different type of general merchandise products may not be big suppliers and may have only relatively less extensive delivery network coverage than that of the Group’s e-commerce platform, and also when the Group and the Parent Group expand their respective physical store networks in the second-tier market which currently may not be accessible to the delivery network of some suppliers.

As explained in the method for determining the at-cost price of merchandise sold by the Group to the Parent Group and vice versa, the supply of goods contracts will include logistics services provided by the third party supplier for delivery of merchandise to the warehouse of the contracting party. Members of the Group or Parent Group will then bear their own logistics costs for the delivery of such merchandise from the warehouse of the contracting party to their respective retail locations or end customers. The Board considers that the procurement size of an order is the main factor that a third party supplier will take into account when the consideration for a supply of merchandise contract is negotiated. Administrative cost is fixed in nature and is incurred by the Group when the Group places an order with the third party supplier. Since the Group will still place orders with the relevant third party supplier to satisfy its own demand for the relevant merchandise, irrespective of whether the Group makes bulk purchases taking into account the demand from the Parent Group, there is no significant increase in any administrative costs in making bulk purchases for the Group and Parent Group. As shown in the row headed “Transaction amounts” under each of the tables under the paragraphs headed “Historical transaction amounts” for each of the respective 2016 CCT Agreements above, the historical transaction amounts of supplying general merchandise have been historically higher than the amounts of the purchasing of general merchandise. This was mainly due to the larger size of the Group in terms of the number of retailing outlets and warehouse coverage as compared to the Parent Group.

Given that the products are being sold to each other on an at-cost basis, members of the Parent Group have to bear their own logistics and administrative costs when purchasing merchandise from the Group and the reciprocal nature of the arrangement are solely for the purpose of enhancing the operational efficiency of the Group and the Parent Group, the Directors consider that the transactions under each of the 2016 Master Merchandise Purchase Agreement and the 2016 Master Merchandise Supply Agreement were negotiated on an arm’s length basis, on normal commercial terms and that the respective terms (including the method of determination of the “at-cost” price of merchandise) and conditions of the 2016 Master Merchandise Purchase Agreement and the 2016 Master Merchandise Supply Agreement,

– 11 –

LETTER FROM THE BOARD

including the annual caps, are fair and reasonable and in the interests of the Company and the Shareholders as a whole. The views of the independent non-executive Directors, after considering the advice from the independent financial adviser is set out on page 15 of this circular.

THE ACQUISITION

Reference is made to the (i) Acquisition Circular and Notice of Acquisition SGM in relation to, among other things, the major and connected transaction in relation to the Acquisition and whitewash waiver; and (ii) announcement of the Company dated 22 January 2016 in relation to, among other things, the poll results of the Acquisition SGM.

Completion of the Acquisition (“ Completion ”) is conditional upon the fulfillment and satisfaction of the conditions precedent set out in the agreement for the Acquisition. As at the Latest Practicable Date, the condition in relation to the grant of the whitewash waiver and the approval of the Acquisition and whitewash waiver by independent Shareholders, have been satisfied.

Upon Completion, GOME Retail, which is a member of the Target Group and party to both the 2016 Master Merchandise Purchase Agreement and the 2016 Master Merchandise Supply Agreement will become a wholly owned subsidiary of the Company. Accordingly, upon Completion, transactions between GOME Retail and the Group will no longer be connected transactions of the Company, while transactions among GOME Appliance, GOME-on-line and GOME Ruidong remain as connected transactions of the Company. The Target Group, when consolidated with the Group, will result in the Group in expanding its physical store network coverage and achieving certain synergies including the economies of scale. The Directors will reassess the business needs of the Group, the then market demand, business and trading prospects after Completion.

LISTING RULES IMPLICATIONS

As GOME Retail and GOME Ruidong are owned by the Controlling Shareholder and his associates and GOME-on-line is owned as to 60% by the Group and 40% by the Controlling Shareholder and his associates, each of them is a connected person of the Company. The applicable percentage ratios (other than profits ratio) in respect of the transactions under each of the 2016 Master Merchandise Purchase Agreement and the 2016 Master Merchandise Supply Agreement is respectively expected to be more than 5% on an annual basis, the transactions contemplated thereunder will be subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The Controlling Shareholder and his associates will abstain from voting at the SGM.

Shareholders and their associates with a material interest in the 2016 CCT Agreements shall abstain from voting on the resolutions approving the 2016 CCT Agreements at the SGM.

– 12 –

LETTER FROM THE BOARD

The Directors confirm that, to the best of their knowledge, information and belief after having made all reasonable enquiries, save for the Controlling Shareholder as disclosed above, no Shareholder has a material interest in the 2016 CCT Agreements. As such, no Shareholder other than the Controlling Shareholder is required to abstain from voting for the resolutions to approve the 2016 CCT Agreements at the SGM.

At the Board meeting held to approve the various 2016 CCT Agreements, each of Mr. Zou Xiao Chun, Ms. Huang Xiu Hong and Mr. Yu Sing Wong, who was nominated by the Controlling Shareholder, as a Director, is considered to be interested in the transactions contemplated under the 2016 CCT Agreements, and have abstained from voting at the Board meeting in respect of the resolutions proposed to approve such agreements.

SGM AND PROXY ARRANGEMENT

The notice of the SGM is set out on pages 32 to 33 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.

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.

ADDITIONAL 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 15 of this circular which contains the recommendations of the Independent Board Committee to the Independent Shareholders regarding the proposed resolutions to approve the 2016 CCT Agreements; and (ii) the letter from Platinum Securities set out on pages 16 to 26 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 CCT Agreements.

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LETTER FROM THE BOARD

The Independent Board Committee, having taken into account the advice of Platinum Securities, the Independent Financial Adviser, considers that the terms of the 2016 CCT Agreements 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 CCT Agreements.

Yours faithfully,

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

– 14 –

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 CCT Agreements.

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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)

12 February 2016

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

We refer to the circular of the Company to the Shareholders dated 12 February 2016 (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.

We have been appointed by the Board as the Independent Board Committee to advise the Independent Shareholders on whether the terms of the 2016 CCT Agreements 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 16 to 26 of the Circular and the letter from the Board as set out on pages 5 to 14 of the Circular.

Having considered the terms of the 2016 CCT Agreements 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 CCT Agreements 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 CCT Agreements.

Yours faithfully, For and on behalf of the

Independent Board Committee

Mr. Lee Kong Wai, Conway Ms. Liu Hong Yu Independent Non-executive Director Independent Non-executive Director Mr. Ng Wai Hung Mr. Wang Gao Independent Non-executive Director Independent Non-executive Director

For identification purpose only

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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 in respect of the 2016 CCT Agreements for the purpose of incorporation into this circular.

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12 February 2016

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 respect of the terms of the 2016 CCT Agreements, and the annual caps in relation to the continuing connected transactions contemplated under the 2016 CCT Agreements (the “ Transactions ”). Details of the Transactions are contained in the Letter from the Board as set out in the circular of the Company dated 12 February 2016 (the “ Circular ”). Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

The Board announced that on 25 January 2016, the Company has entered into the 2016 CCT Agreements to renew the 2016 Transitional Agreements, which were entered into as transitional arrangements for the Group to continue its existing operations pending approval by the independent Shareholders of, among other things, the Acquisition at the Acquisition SGM, and will expire on 29 February 2016, and the 2013 Agreements, which have expired on 31 December 2015. As disclosed in the announcement of the Company dated 22 January 2016, the Acquisition was approved by the independent Shareholders at the Acquisition SGM.

BASIS OF OUR OPINION

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 CCT Agreements and the relevant annual caps in relation to the Transactions are entered into in the ordinary and usual course of business of the Company, on normal commercial terms, 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 to give independent advice to the Independent Board Committee.

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LETTER FROM PLATINUM SECURITIES

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 CCT Agreements; (ii) the announcement of the Company dated 25 January 2016 in relation to the 2016 CCT Agreements; (iii) the announcement of the Company dated 31 December 2015 in relation to the 2016 Transitional Agreements; (iv) the announcement of the Company dated 5 March 2013 in relation to the 2013 Agreements; (v) the audited annual report of the Group for the financial year ended 31 December 2014; (vi) the unaudited interim report of the Group for the six-month period ended 30 June 2015.

We have assumed that all information, facts, opinions and representations contained in the Circular and all information, statements and representations provided to us by the Directors and/or the management of the Company, which we have relied on the same, are true, complete and accurate in all material respects as of the date hereof and we have relied on the same and the Independent Shareholders will be notified of any material changes as soon as practicable. 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.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Circular have been arrived at after due and careful consideration and there are no other facts not contained in the Circular, the omission of which would make any statement in the Circular misleading.

The Circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in the 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 in the Circular or the Circular misleading.

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. 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 Group. We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion, and we consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 13.80 of the Listing Rules.

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LETTER FROM PLATINUM SECURITIES

During the past two years, Mr. Li Lan, for and on behalf of Platinum Securities Company Limited, signed the opinion letters from the independent financial adviser contained in the Company’s circulars (i) dated 24 December 2015 in respect of major and connected transaction in relation to the acquisition of Artway Development Limited and Whitewash Waiver; and (ii) dated 9 June 2015 in respect of continuing connected transactions. The past engagements were limited to providing independent advisory services to the independent board committee and the independent shareholders of the Company pursuant to the Listing Rules. Under the past engagements, Platinum Securities Company Limited received normal professional fees from the Company. Notwithstanding the past engagements, as at the Latest Practicable Date, we were independent from, and were not associated with 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 all independent non-executive directors of the Company namely Mr. Lee Kong Wai, Conway, Mr. Ng Wai Hung and Ms. Liu Hong Yu and Mr. Wang Gao, has been established to advise the Independent Shareholders as to whether the terms of the 2016 CCT Agreements and the relevant annual caps in relation to the Transactions are entered into in the ordinary and usual course of business of the Company, on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned 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

The 2013 Agreements have expired on 31 December 2015. The 2016 Transitional Agreements, which were entered into as transitional arrangements for the Group to continue its existing operations pending approval by the independent Shareholders of, among other things, the Acquisition at the Acquisition SGM, will expire on 29 February 2016, the Company has entered into the 2016 CCT Agreements to renew the 2016 Transitional Agreements and 2013 Agreements. As disclosed in the announcement of the Company dated 22 January 2016, the Acquisition was approved by the independent Shareholders at the Acquisition SGM.

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LETTER FROM PLATINUM SECURITIES

2. Reasons for and benefits of entering into of the 2016 CCT Agreements

As discussed with the management of the Company, we noted that such kind of master merchandise purchase and supply agreements have already been entered into since 2005, with the view to enable respective members of the Group and the Parent Group to make bulk purchase of products from some of their mutual suppliers. Therefore, the procurement of products by the Group and the Parent Group could be better co-ordinated and transacted in a more efficient manner. We agree that without such an arrangement, the ultimate costs of securing products for the Group and the Parent Group may increase, in particularly in cases where certain products may not be able to source from local branches of suppliers.

The Group commenced its e-commerce business in 2011 and has expanded the product range by offering for retail sale on its on-line platforms general merchandise in addition to domestic electrical appliances and consumer electronics products. We understand from the management of the Company that since 2013, it has been common and frequent that members of the Group or the Parent Group unreachable by a supplier’s delivery network would have to or tend to source the products from other reachable members of the Group or the Parent Group, resulting. This result in the inter-group supplies of general merchandise between the Group (including its e-commerce platform) and the Parent Group as well as the intra-group supplies of general merchandise between the Group’s e-commerce platform and other members of the Group when the Group’s e-commerce platform requires supplies of a much wider product range than before with higher probabilities that suppliers of each different type of general merchandise products may not be big suppliers and may have only relatively less extensive delivery network coverage than that of the Group’s e-commerce platform, and also when the Group and the Parent Group expand their respective physical store networks in the second-tier market which currently may not be accessible to the delivery network of some suppliers.

Moreover, since the Group positions itself as an omni-channel retailer of home appliances and consumer electronic products, which sells its products through physical stores, O2M micro shops, as well as through mobile terminals and e-commerce channels, that together constitute a seamless retail continuum. As such, it is the Group’s intention to continually integrate its e-commerce business and off-line business by sharing their procurement, logistics, after-sales and information to increase its gross profit, reduce costs and improve its profitability. We concur with the management of the Company that the integration of the supply chains of the Group’s e-commerce platforms and physical stores by restructuring and extending the current mutual supply arrangements between the Group and the Parent Group to cover more general merchandise is in line with the Group’s intention to integrate its e-commerce business and off-line business and maximise the above said benefits and improvement of operational efficiency in order to maintain its competitiveness in the retail industry.

In light of above, we are of the view that it is in line with the Company’s operation and strategy and in the interests of the Company and the Shareholders as a whole to enter into the 2016 CCT Agreements.

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LETTER FROM PLATINUM SECURITIES

3. Principal terms of the 2016 CCT Agreements

3.1 2016 Master Merchandise Purchase Agreement

Date of the Master Merchandise Purchase Agreement:

25 January 2016

Parties to the 2016 Master Merchandise Purchase Agreement:

(a) GOME Appliance, a wholly-owned subsidiary of the Company, which is principally engaged in the retailing of electrical appliances and consumer electronics products;
(b) GOME-on-line, a 60% non-wholly-owned subsidiary of the Group, which is principally engaged in the operation of the on-line shopping platform of the Group at www.gome.com.cn. The remaining 40% equity interest in GOMEon-line is held by GOME Ruidong, a company owned by the Controlling Shareholder and his associates;
(c) GOME Retail, a company established in the PRC, which is principally engaged in the retailing of electrical appliances and consumer electronics products. GOME Retail is indirectly owned by the Controlling Shareholder and his associates; and
(d) GOME Ruidong, a company established in the PRC, which is principally engaged in the investment holding business. GOME Ruidong is owned by the Controlling Shareholder and his associates.

Terms of the 2016 Master Merchandise Purchase Agreement:

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LETTER FROM PLATINUM SECURITIES

of goods contract entered into with the third party supplier) payable to the third party supplier under each supply of goods contract entered into between members of the Parent Group and the third party supplier, for the following three financial years subject to the following caps:

		For the year	For the year	For the year
		ended	ended	ended
		31 December	31 December	31 December
		2016	2017	2018
		(“FY2016”)	(“FY2017”)	(“FY2018”)
		RMB (HK$)’	RMB (HK$)’	RMB (HK$)’
		million	million	million
Annual	caps (excluding
value	added tax)	6,000 (7,200)	7,000 (8,400)	8,000 (9,600)

Since the supply of general merchandise is on an at-cost basis, which is determined by taking into account the total consideration (including the cost of merchandise and cost of logistics from the warehouse of the supplier to the warehouse of the Parent Group, the logistics service of which is included in the supply of goods contract entered into with the third party supplier) payable to the third party supplier under each supply of goods contract entered into between members of the Parent Group and the third party supplier, we consider that the basis for price determination is fair and reasonable.

We further understand from the management of the Company that (i) the Group will not incur more administrative expenses which are fixed in nature; and (ii) costs are borne by the suppliers for the logistics from suppliers to the Parent Group’s warehouse and by the Group and the Parent Group for logistics from the Group’s or the Parent Group’s warehouse to their respective customers. As such, we consider that the basis for price determination is fair and reasonable.

3.2 2016 Master Merchandise Supply Agreement

Date of the Master Merchandise Supply Agreement:

25 January 2016

Parties to the 2016 Master Merchandise Supply Agreement:

(a) GOME Appliance, a wholly-owned subsidiary of the Company, which is principally engaged in the retailing of electrical appliances and consumer electronics products;
(b) GOME-on-line, a 60% non-wholly-owned subsidiary of the Group, which is principally engaged in the operation of the on-line shopping platform of the Group at www.gome.com.cn. The remaining 40% equity interest in GOMEon-line is held by GOME Ruidong, a company owned by the Controlling Shareholder and his associates;

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LETTER FROM PLATINUM SECURITIES

(c) GOME Retail, a company established in the PRC, which is principally engaged in the retailing of electrical appliances and consumer electronics products. GOME Retail is indirectly owned by the Controlling Shareholder; and
(d) GOME Ruidong, a company established in the PRC, which is principally engaged in the investment holding business. GOME Ruidong is owned by the Controlling Shareholder and his associates.

Terms of the 2016 Master Merchandise Supply Agreement:

		FY2016	FY2017	FY2018
		RMB (HK$)’	RMB (HK$)’	RMB (HK$)’
		million	million	million
Annual	caps (excluding
value	added tax)	6,000 (7,200)	7,000 (8,400)	8,000 (9,600)

Similar to the terms of the 2016 Master Merchandise Purchase Agreement, the supply of general merchandise under the 2016 Master Merchandise Supply Agreement is on an at-cost basis, which is determined by taking into account the total consideration (including the cost of merchandise and cost of logistics from the warehouse of the supplier to the warehouse of the Group, the service of which is included in the supply of goods contract entered into with the third party supplier) payable to the third party supplier under each supply of goods contract entered into between members of the Group and the third party supplier. Moreover, (i) the Group will not incur more administrative expenses which are fixed in nature; and (ii) costs are borne by the suppliers for the logistics from suppliers to the Group’s warehouse and by the Group and the Parent Group for logistics from the Group’s or the Parent Group’s warehouse to their respective customers. Therefore, we consider that the basis for price determination is fair and reasonable.

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LETTER FROM PLATINUM SECURITIES

4. Basis of the annual caps

4.1 Annual caps of the 2016 Master Merchandise Purchase Agreement

The proposed annual cap amounts of the 2016 Master Merchandise Purchase Agreement were determined after taking into consideration:

(i) the historical transaction amounts, which experienced significant year-on-year growth in transaction amounts, partly contributed by the fastest growing business segment of e-commerce business of the Group;
(ii) E-commerce business has been the fastest growing business segment of the Group which has experienced significant year-on-year growth in gross merchandise volume (“GMV”) (including GMV from the marketplace) of 84.41% for FY2014 and 112.59% for 9M2015. The Directors expect that the e-commerce business of the Group will continue to develop rapidly in the coming years, leading to the increase in demand for supply of goods to GOME-on-line, the Group’s online sales platform; and
(iii) upon completion of the Acquisition, transactions between GOME Retail and the Group will no longer be connected transactions of the Company. As such, transaction amounts arising from the supply of goods by GOME Retail to the Group will not be subject to the relevant annual caps stipulated under 2016 Master Merchandise Purchase Agreement.

To assess the reasonableness of the annual caps for the 2016 Master Merchandise Purchase Agreement, we have reviewed the historical transaction amounts for general merchandise supplied by the Parent Group to the Group for the two financial years ended 31 December 2013 and 2014 and the nine-month period ended 30 September 2015, details of which are set out as follow:

			For the
	For the	For the	nine-month
	year ended	year ended	period ended
	31 December 2013	31 December 2014	30 September 2015
	(“FY2013”)	(“FY2014”)	(“9M2015”)
	RMB (HK$)’	RMB (HK$)’	RMB (HK$)’
	million	million	million
Annual caps (excluding	5,000.0 (5,996.3)	6,500.0 (7,795.2)	8,000.0 (9,594.1)
value added tax)			(Note)
Transaction amounts	733.1 (879.2)	809.4 (970.7)	2,139.0 (2,565.2)
Utilization rate	14.7%	12.5%	26.7%

Note: For the entire year ended 31 December 2015.

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LETTER FROM PLATINUM SECURITIES

We note that the transaction amount increased significantly by approximately 1.9 times from approximately RMB733.1 million for FY2013 to approximately RMB2,139.0 million for 9M2015 and the utilization rate also improved from approximately 14.7% in FY2013 to approximately 26.7% in 9M2015. If annualised, the transaction amount for the year ended 31 December 2015 (“FY2015”) would be approximately RMB2,852 million and the utilization rate would increase to 35.7%, and the proposed annual caps (excluding value added tax) for FY2016 of RMB6,000 million, representing an increase of approximately 1.1 times from the estimated annualised transaction amount in FY2015. The proposed annual caps for FY2017 and from FY2018 represent increase of 16.7% and 14.3%, respectively, from the annual caps for the preceding year.

As discussed with the management of the Company and with reference to the circular of the Company dated 24 December 2015 in relation to the acquisition of the Target Group, we understand that upon completion of the acquisition of the Target Group, the Target Group will become subsidiary of the Company and the transactions between the Group and the Target Group will not be continuing connected transactions for the Group, therefore the actual transactions amounts to be utilized under the annual caps of the 2016 Master Merchandise Purchase Agreement will be lowered. However, we have discussed with the management of the Company and note the significant increase of transaction amounts in 2015 was due to the increase in purchase made by the physical stores of the Group as well as the significant year-on-year growth in the GMV of the e-commerce business (including GMV from the marketplace) of 112.59% for 9M2015. Taking into account the fast growing e-commerce business segment of the Group, we are of the view that the proposed annual caps of the 2016 Master Merchandise Purchase Agreement are fair and reasonable so far as the Independent Shareholders are concerned.

4.2 Annual caps of the 2016 Master Merchandise Supply Agreement

The proposed annual cap amounts of the 2016 Master Merchandise Supply Agreement were determined after taking into consideration:

(i) the historical transaction amounts, which experienced significant year-on-year growth in transaction amounts, partly contributed by the fastest growing business segment of e-commerce business of the Group;
(ii) E-commerce business has been the fastest growing business segment of the Group which has experienced significant year-on-year growth in GMV (including GMV from the marketplace) of 84.41% for FY2014 and 112.59% for 9M 2015. The Directors expect that the e-commerce business of the Group will continue to develop rapidly in the coming years, leading to the increase in demand for supply of goods to GOME-on-line, the Group’s online sales platform; and
(iii) upon completion of the Acquisition, transactions between GOME Retail and the Group will no longer be connected transactions of the Company. As such, transaction amounts arising from the supply of goods by the Group to GOME Retail will not be subject to the relevant annual caps stipulated under 2016 Master Merchandise Supply Agreement.

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LETTER FROM PLATINUM SECURITIES

To assess the reasonableness of the annual caps for the 2016 Master Merchandise Supply Agreement, we have reviewed the historical transaction amounts for general merchandise supplied by the Group to GOME-on-line and the Parent Group for the two financial years ended 31 December 2013 and 2014 and the nine-month period ended 30 September 2015, details of which are set out as follow:

	FY2013	FY2014	9M2015
	RMB (HK$)’	RMB (HK$)’	RMB (HK$)’
	million	million	million
Annual caps (excluding	5,000.0 (5,996.3)	6,500.0 (7,795.2)	8,000.0 (9,594.1)
value added tax)			(Note)
Transaction amounts	1,455.8 (1,745.9)	3,392.4 (4,068.4)	4,273.2 (5,124.7)
Utilization rate	29.1%	52.2%	53.4%

Note: For the entire year ended 31 December 2015.

We note that the transaction amount increased significantly by approximately 1.9 times from approximately RMB1,455.8 million for FY2013 to approximately RMB4,273.2 million for 9M2015 and the utilization rate also improved from approximately 29.1% in FY2013 to approximately 53.4% in 9M2015. If annualised, the transaction amount for FY2015 would be approximately RMB5,698 million and the utilization rate would increase to 71.2%, and the proposed annual caps (excluding value added tax) for FY2016 of RMB6,000 million, representing an increase of approximately 5.3% from the estimated annualised transaction amount in FY2015. The proposed annual caps for each period from FY2017 and FY2018 represent increase of 16.7% and 14.3%, respectively, from the annual caps for the preceding year. Similar to the discussion for the annual caps of the 2016 Master Merchandise Purchase Agreement, upon completion of the acquisition of the Target Group, the Target Group will become subsidiary of the Company and the transactions between the Group and the Target Group will not be continuing connected transactions for the Group, therefore the actual transactions amounts to be utilized under the annual caps of the 2016 Master Merchandise Supply Agreement will be lowered. However, we have discussed with the management of the Company and note the significant increase of transaction amounts in 2015 was due to the increase in purchase by the physical stores of the Parent Group as well as the significant year-on-year growth in the GMV of the e-commerce business (including GMV from the marketplace) of 112.59% for 9M2015. Taking into account the fast growing e-commerce business segment of the Group, we are of the view that the proposed annual caps of the 2016 Master Merchandise Supply Agreement are fair and reasonable so far as the Independent Shareholders are concerned.

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LETTER FROM PLATINUM SECURITIES

RECOMMENDATION

Having taken into account the above principal factors and reasons, in particular,

(i) it is in the interests of the Company and the Shareholders to enter into the 2016 CCT Agreements;
(ii) the terms of the 2016 CCT Agreements are on normal commercial terms, fair and reasonable and in the interests of the Group and the Shareholders as a whole; and
(iii) the annual caps under the 2016 CCT Agreements are fair and reasonable so far as the Independent Shareholders are concerned,

we are of the view that the terms of the 2016 CCT Agreements and the relevant annual caps in relation to the Transactions are entered into in the ordinary and usual course of business of the Company, on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and in the interests 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 in relation to the Transactions to be proposed at the SGM.

Yours faithfully, For and on behalf of

Platinum Securities Company Limited

Li Lan

Director and Co-Head of Corporate Finance

Mr. Li Lan 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 nine 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 of the Directors and the chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were 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 he is taken or deemed to have under such provisions of SFO), or as recorded in the register required to be kept under Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) were as follows:

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

Name	of Director/	Personal	Interest		Corporate				Approximate %
Chief	Executive	interest	of spouse		interest	Trustee		Total	shareholding
Wang	Jun Zhou	10,187,000		–	–		–	10,187,00	0.06
		(Note 1)

Notes:

The relevant interests represented 10,187,000 Shares issuable upon exercise of the options (the “Option(s)”) granted to the Chief Executive pursuant to the share option scheme adopted by the Company on 15 April 2005. These Options were held by the Chief Executive beneficially.

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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 Inc.	Long position	4,619,779,938	27.24%
(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 and Mr. Wong’s interest in the 5,500,000,000 consideration shares and warrants convertible into 2,500,000,000 underlying Shares pursuant to the Acquisition as disclosed in the Acquisition Circular of the Company dated 24 December 2015, 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.

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GENERAL INFORMATION

APPENDIX

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).

4. COMPETING BUSINESS INTEREST OF DIRECTORS

As at the Latest Practicable Date, Mr. Wong, Ms. Du Juan being the spouse of Mr. Wong and Ms. Huang Xiu Hong, being a sister of Mr. Wong (who was elected as a Director of the Company on 24 June 2015), remained as directors of certain subsidiaries of the Company and had beneficial interest or held directorship or otherwise had control in companies operate an electrical appliances and consumer electronics products retail network under the trademark of “GOME Electrical Appliances”, and their related operations, mainly in cities other than the designated cities of the PRC which the Group already operates.

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 Mr. Wong and his associates, 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.

Upon completion of the Acquisition, the 40% interest in GOME-on-line will remain with Mr. Wong and his associates, which will be the only business that carry on retail business of electrical appliances and consumer electronics products under the brand name “GOME” held by Mr. Wong and his associates.

Except as disclosed above, 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.

– 29 –

GENERAL INFORMATION

APPENDIX

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 QUALIFICATIONS AND CONSENTS

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.

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.

– 30 –

GENERAL INFORMATION

APPENDIX

(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.

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 Master Merchandise Purchase Agreement;
(b) the 2016 Master Merchandise Supply Agreement;
(c) the letter from the Independent Board Committee, the text of which is set out on page 15 of this circular;
(d) the letter from the Independent Financial Adviser, the text of which is set out on pages 16 to 26 of this circular;
(e) the consent letter of the Independent Financial Adviser referred to in the section headed “Expert’s Qualifications and Consents” in this appendix; and
(f) the circulars of the Company dated 9 June 2015, 24 December 2015 and this circular.

– 31 –

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 IS HEREBY GIVEN that a special general meeting of GOME Electrical Appliances Holding Limited (the “ Company ”) will be held at Gloucester Room I, 3/F, The Excelsior, 281 Gloucester Road, Causeway Bay, Hong Kong on Monday, 29 February 2016 at 2:30 p.m for the purpose of considering and, if thought fit, passing the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTION

Words and expressions that are not expressly defined in this notice shall bear the same meaning as that defined in the circular dated 12 February 2016 published by the Company (the “ Circular ”).

“ THAT : :

the 2016 Master Merchandise Purchase 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 (including the annual caps thereunder) be and is hereby approved and confirmed and 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 Master Merchandise Purchase Agreement and the transactions contemplated thereunder; and
the 2016 Master Merchandise Supply Agreement, a copy of which is produced at the meeting and marked “ B ” and initialed by the chairman of the meeting for the purpose of identification, and the transactions contemplated thereby (including the annual caps thereunder) be and is hereby approved and confirmed and 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 Master Merchandise Supply Agreement and the transactions contemplated thereunder.”

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 Monday, 29 February 2016. No transfer of shares of the Company will be registered on that

* For identification purpose only

– 32 –

NOTICE OF SGM

day. 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 Friday, 26 February 2016.

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

Hong Kong, 12 February 2016

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 of the Company comprises Mr. Zou Xiao Chun as executive director; Mr. Zhang Da Zhong, Ms. Huang Xiu Hong and Mr. Yu Sing Wong as non-executive directors; and Mr. Lee Kong Wai, Conway, Mr. Ng Wai Hung and Ms. Liu Hong Yu and Mr. Wang Gao as independent non-executive directors.

– 33 –

AI assistant

APT Satellite Holdings Limited — Proxy Solicitation & Information Statement 2016

49643_rns_2016-02-12_1890f9ea-a10b-43f5-a976-99ee2f7e46e3.pdf

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

CONTINUING CONNECTED TRANSACTIONS

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

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

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

Executive Director:

Non-executive Directors:

Independent non-executive Directors:

Registered Office:

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

2016 MASTER MERCHANDISE PURCHASE AGREEMENT

Date of the 2016 Master Merchandise Purchase Agreement:

Parties to the 2016 Master Merchandise Purchase Agreement:

Terms of the 2016 Master Merchandise Purchase Agreement

Historical transaction amounts

Annual caps of the 2016 Master Merchandise Purchase Agreement

2016 MASTER MERCHANDISE SUPPLY AGREEMENT

Date of the 2016 Master Merchandise Supply Agreement:

Parties to the 2016 Master Merchandise Supply Agreement:

Terms of the 2016 Master Merchandise Supply Agreement

Historical transaction amounts

Annual caps of the 2016 Master Merchandise Supply Agreement

REASONS FOR THE TRANSACTIONS

LETTER FROM THE BOARD

LETTER FROM THE BOARD

THE ACQUISITION

LISTING RULES IMPLICATIONS

LETTER FROM THE BOARD

SGM AND PROXY ARRANGEMENT

ADDITIONAL GENERAL INFORMATION

RECOMMENDATIONS

LETTER FROM THE BOARD

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

CONTINUING CONNECTED TRANSACTIONS

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

BASIS OF OUR OPINION

LETTER FROM PLATINUM SECURITIES

LETTER FROM PLATINUM SECURITIES

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background of the Transactions

2. Reasons for and benefits of entering into of the 2016 CCT Agreements

3. Principal terms of the 2016 CCT Agreements

3.1 2016 Master Merchandise Purchase Agreement

Terms of the 2016 Master Merchandise Purchase Agreement:

3.2 2016 Master Merchandise Supply Agreement

Terms of the 2016 Master Merchandise Supply Agreement:

4. Basis of the annual caps

4.1 Annual caps of the 2016 Master Merchandise Purchase Agreement

LETTER FROM PLATINUM SECURITIES

4.2 Annual caps of the 2016 Master Merchandise Supply Agreement

RECOMMENDATION

Yours faithfully, For and on behalf of

Platinum Securities Company Limited

Li Lan

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 QUALIFICATIONS AND CONSENTS

Name

Qualification

8. GENERAL

9. DOCUMENTS AVAILABLE FOR INSPECTION

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

ORDINARY RESOLUTION

APT Satellite Holdings Limited Proxy Solicitation & Information Statement 2016